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, 2024, 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, 2024. 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 and Chief Executive Officer, and effected by our board of directors, 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 of directors, 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, 2024, 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 and Chief Executive Officer concluded that our internal control over financial reporting was effective as of December 31, 2024. 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. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permits us to provide only management’s report in this Annual Report on Form 10-K. Changes in Internal Controls There have been no changes in our internal control over financial reporting during the year ended December 31, 2024 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. ITEM 9B. OTHER INFORMATION None . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. - 46 - Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required in response to this Item 10 will be set forth in our definitive proxy statement on Schedule 14A for the 2025 annual meeting of stockholders, which shall be filed with the Securities and Exchange Commission no later than 120 days following the Company’s fiscal year end December 31, 2024 (the “Proxy Statement”). We have an insider trading policy 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 Chief Financial Officer. A copy of the insider trading policy is included to this Annual Report on Form 10-K. 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. ITEM 11. EXECUTIVE COMPENSATION The information required in response to this Item 11 will be set forth in our Proxy Statement and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The information required in response to this Item 12 will be set forth in our Proxy Statement and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required in response to this Item 13 will be set forth in our Proxy Statement and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information required in response to this Item 14 will be set forth in our Proxy Statement and is incorporated herein by reference. - 47 - 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, 2024 and 2023 F-3 Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2024 and 2023 F-4 Statements of Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 F-5 Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 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: 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. ITEM 16. FORM 10-K SUMMARY None. - 48 - Table of Contents Exhibit Number Description 2.1 Stock Purchase Agreement, dated March 22, 2017, by and between Wrap Technologies, LLC, Petro River Oil Corp., and Megawest Energy Montana Corp (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on April 17, 2017). 2.2 Merger Agreement between Wrap Technologies, LLC and Megawest Energy Montana Corp., dated March 30, 2017 (incorporated by reference to Exhibit 2.2 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on April 17, 2017). 2.3 Asset Purchase Agreement, dated as of February 18, 2025, by and between Wrap Technologies, Inc. and W1 Global, LLC Plan (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). 3.2 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). 3.3 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 13, 2023). 3.4 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). 3.4.1 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). 3.4.2 Certificate of Amendment of Certificate of Designations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on October 15, 2024). 3.4.3 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 December 2, 2024). 3.4.4 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 December 9, 2024). 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 Investor Warrant, dated October 30, 2018 (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 November 5, 2018). 4.3 Form of Placement Agent Warrant, dated October 30, 2018 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2018). 4.4 Form of Investor Warrant, dated June 18, 2019 (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 18, 2019). 4.5 Form of Offering Agent Warrant, dated June 18, 2019 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 18, 2019. 4.6 Form of Warrant Agreement (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 2, 2020). 4.7 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). 4.8 Description of Securities (incorporated by reference to Exhibit 4.8 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 28, 2024). 4.9 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) 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+ 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). 10.3+ 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). 10.4 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). 10.5 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). 10.6 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). - 49 - Table of Contents Exhibit Number Description 10.7+ 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). 10.8+ 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). 10.8.1+ 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). 10.9+ Letter Agreement by and between Wrap Technologies, Inc. and Chris DeAlmeida, executed July 20, 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 July 25, 2022). 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). 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 Form of Amendment, dated October 14, 2024, by and between Wrap Technologies, Inc. and the investors party thereto (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on October 15, 2024). 10.21 Form of Amendment and Agreement, dated November 25, 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 December 2, 2024). 10.22 Form of Amendment and Agreement, dated November 25, 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 December 9, 2024). 10.23 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 Securities and Exchange Commission on February 28, 2025). 10.24 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). 14.1 Code of Ethics of the Registrant Applicable to Directors, Officers and Employees (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. 21.1 Subsidiaries of Wrap Technologies, Inc (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 4, 2021). 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 32.1*** Section 1350 Certification - Principal Executive Officer and 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. - 50 - Table of Contents WRAP TECHNOLOGIES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 7000 ) F-2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2024 and 2023 F-4 Consolidated Statements of Stockholders’ Equity for Years Ended December 31, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 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, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the consolidated results of its operations and its consolidated cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 audit, 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 consolidated 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 31, 2025 F- 2 Table of Contents Wrap Technologies, Inc. Consolidated Balance Sheets (in thousands, except par value and share amounts) December 31, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 3,610 $ 3,955 Short-term investments - 7,500 Accounts receivable and contract assets, net 513 3,025 Inventories, net 6,170 5,794 Prepaid expense and other current assets 178 953 Total current assets 10,471 21,227 Property and equipment, net 146 509 Operating lease right-of-use assets, net 1,964 2,256 Intangible assets, net 2,354 2,648 Goodwill - 1,610 Other assets 186 251 Total assets $ 15,121 $ 28,501 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 609 $ 1,110 Accrued liabilities 1,403 692 Customer deposits 27 1,002 Deferred revenues - short term 466 407 Operating lease liabilities - short term 567 616 Warrant liabilities 10,131 19,703 Total current liabilities 13,203 23,530 Long-term liabilities: Deferred revenues - long term 39 137 Operating lease liabilities- long term 1,629 1,671 Total long-term liabilities 1,668 1,808 Total liabilities $ 14,871 $ 25,338 Commitments and contingencies - - Stockholders’ equity: Preferred stock - 5,000,000 authorized; par value $ 0.0001 per share - - Common stock - 150,000,000 authorized; par value $ 0.0001 per share; 47,101,631 and 43,855,503 shares issued and outstanding at December 31, 2024 and 2023, respectively 5 4 Convertible preferred stock - 10,000 authorized, par value $ 0.0001 per share; 8,207 and 9,898 issued and outstanding at December 31, 2024 and 2023, respectively - - Preferred Stock - - Additional paid-in capital 105,326 101,147 Accumulated deficit ( 105,081 ) ( 97,988 ) Accumulated other comprehensive income - - Total stockholders’ equity 250 3,163 Total liabilities and stockholders’ equity $ 15,121 $ 28,501 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) 2024 2023 Year Ended December 31, 2024 2023 Revenues: Product sales $ 3,590 $ 5,337 Other revenues 917 796 Total revenues 4,507 6,133 Cost of revenues 2,042 3,227 Gross profit 2,465 2,906 Operating expenses: Selling, general and administrative 15,688 18,361 Research and development 2,344 3,267 Total operating expenses 18,032 21,628 Loss from operations ( 15,567 ) ( 18,722 ) Other income (expense): Interest income 156 375 Change in fair value of warranty liabilities 9,572 ( 11,986 ) Other ( 36 ) 113 Total other income (expense), net 9,692 ( 11,498 ) Net loss $ ( 5,875 ) $ ( 30,220 ) Less: convertible preferred stock dividends ( 1,218 ) ( 392 ) Net loss attributable to common stockholders $ ( 7,093 ) $ ( 30,612 ) Net loss per basic and diluted common share $ ( 0.16 ) $ ( 0.72 ) Weighted average common shares used to compute net loss per basic and diluted common share 45,621,214 42,324,190 Comprehensive loss: Net loss $ ( 7,093 ) $ ( 30,612 ) Comprehensive loss $ ( 7,093 ) $ ( 30,612 ) F- 4 Table of Contents Wrap Technologies, Inc. Consolidated Statements of Stockholders’ Equity (in thousands, except share and per share amounts) Shares Amount Shares Amount Capital Deficit Income (Loss) Equity Common Stock Convertible Preferred Stock Additional Paid-In Accumulated Accumulated Other Comprehensive Total Stockholders’ Shares Amount Shares Amount Capital Deficit Income (Loss) Equity Balance at January 1, 2023 41,175,993 $ 4 - $ - $ 94,333 $ ( 67,376 ) $ 94 $ 27,055 Common shares issued upon exercise of stock options 123,056 - - $ 208 - - $ 208 Share-based compensation expense - - - 2,400 - - 2,400 Dividends on convertible preferred stock 173,654 - - 232 ( 392 ) - ( 160 ) Convertible preferred stock issued, net of offering costs - 10,000 - 2,036 - - - 2,036 Common shares issued upon convertible preferred stock exercising conversion rights 76,440 ( 102 ) - - - - - Common shares issued upon vesting of restricted stock units 1,056,360 - - - - - - Issuance of common stock for acquisition 1,250,000 - - 1,938 - - 1,938 Settlement – US Treasury bills - - - - - ( 94 ) ( 94 ) Net loss for the period - - - - ( 30,220 ) - ( 30,220 ) Balance at December 31, 2023 43,855,503 $ 4 9,898 $ - $ 101,147 $ ( 97,988 ) $ - $ 3,163 Balance 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 shares issued upon convertible preferred stock exercising conversion rights 1,391,183 - ( 1,691 ) - - - - - Common shares issued upon vesting of restricted stock units 497,564 1 - - - - - 1 Net loss for the period - - - - - ( 5,875 ) - ( 5,875 ) Net loss - - - - - ( 5,875 ) - ( 5,875 ) Balance at December 31, 2024 47,101,631 $ 5 8,207 $ - $ 105,326 $ ( 105,081 ) $ - $ 250 Balance 47,101,631 $ 5 8,207 $ - $ 105,326 $ ( 105,081 ) $ - $ 250 See accompanying notes to consolidated financial statements. F- 5 Table of Contents Wrap Technologies, Inc. Consolidated Statements of Cash Flows (in thousands) 2024 2023 Year Ended December 31, 2024 2023 Cash Flows From Operating Activities: Net loss $ ( 5,875 ) $ ( 30,220 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 827 823 Impairment of goodwill and intangibles 1,631 700 Share-based compensation 2,433 1,985 Warranty provision 90 116 Change in fair value of warrant liabilities ( 9,572 ) 11,986 Non-cash lease expense 292 177 Provision for doubtful accounts ( 156 ) 180 Write off of accounts receivable 222 413 Inventory obsolescence reserve 15 465 Changes in assets and liabilities: Accounts receivable 2,446 ( 696 ) Inventories ( 391 ) ( 2,224 ) Prepaid expenses and other current assets 775 ( 179 ) Accounts payable ( 441 ) ( 617 ) Operating lease liabilities ( 91 ) ( 160 ) Customer deposits ( 975 ) 1,002 Accrued liabilities and other 700 ( 344 ) Warranty settlement ( 79 ) ( 169 ) Deferred revenues ( 39 ) 210 Other non-current assets 63 ( 151 ) Net cash used in operating activities ( 8,125 ) ( 16,703 ) Cash Flows From Investing Activities: Purchases of short-term investments - ( 10,000 ) Proceeds from maturities of short-term investments 7,500 16,355 Capital expenditures for property and equipment ( 12 ) ( 230 ) Investment in patents and trademarks ( 156 ) ( 393 ) Net cash paid for acquisition of Intrensic ( 20 ) ( 554 ) Net cash provided by investing activities 7,312 5,178 Cash Flows From Financing Activities: Proceeds from exercise of stock options 588 208 Proceeds from issuance of warrants and convertible preferred stock - 10,000 Dividends settled in cash ( 120 ) ( 58 ) Net cash provided by financing activities 468 10,150 Net decrease in cash and cash equivalents ( 345 ) ( 1,375 ) Cash and cash equivalents, beginning of period 3,955 5,330 Cash and cash equivalents, end of period $ 3,610 $ 3,955 Supplemental Disclosure of Non-Cash Investing and Financing Activities: Change in unrealized gain on short-term investments $ - $ ( 94 ) Right-of-use asset and liability recorded during period $ - $ 2,109 Issuance of common stock for acquisition $ - $ 1,938 Net assets acquired from acquisition $ - $ 2,491 Dividends on convertible preferred stock $ ( 1,098 ) $ ( 334 ) Dividends settled with common stock $ 1,158 $ 232 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® remote restraint device. The principal markets for the Company’s proprietary products and services are in North and South America, Europe, Middle East and Asia. Principles of Consolidation The Company has two wholly owned subsidiaries, Wrap Reality, Inc., an Arizona corporation, formed in December 2020 that sells a virtual reality (“ VR ”) training system primarily targeting law enforcement agencies and Intrensic, LLC, which the Company acquired in August 2023, which specializes in Body Worn Camera and Digital Evidence Management solutions. The consolidated financial statements include the accounts of these subsidiaries after elimination of intercompany transactions and accounts. 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. F- 7 Table of Contents 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. Short-Term Investments The Company’s short-term investments consist of certificates of deposits and US Treasury bills with original maturities beyond three months at the date of purchase and one year or less from the balance sheet date. As of December 31, 2023, all of the Company’s short-term investments were classified as available-for-sale and are carried at estimated fair value with any unrealized gains and losses, unrelated to credit loss factors, included in other comprehensive income in our consolidated statements of stockholders’ equity. As of December 31, 2024, the Company had no short-term investments. Share-Based Compensation The Company follows the fair value recognition provisions issued by the FASB in 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 2024 and 2023 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 expects 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 Convertible Preferred Stock (“Series A Preferred Stock”), by the weighted average number of shares outstanding during the reported period. In computing diluted EPS, we adjust 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 Preferred Stock. Such add-back would also include any adjustments to equity in the period to accrete the Series A Preferred Stock to its redemption price, 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 Preferred Stock, restricted stock units, and stock options. Stock options and restricted stock units exercisable or issuable for a total of 4,932,386 and 5,468,223 shares of Common Stock were outstanding at December 31, 2024 and 2023, respectively. These securities are not included in the computation of diluted net loss per common share for the periods 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, 2024 and 2023, the Company had an allowance for credit losses related to accounts receivable of $ 230 and $ 386 , 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. F- 8 Table of Contents 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, 2024 and 2023, the Company had $ 480 and $ 465 , respectively, in reserves for obsolescence. 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 Accounting Standards Codification (“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. F- 9 Table of Contents 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. 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. In December 2023, it was determined that the intangible related to development of proprietary software by Lumeto, Inc. would not have future economic value and was written down; the Company recognized an impairment loss of $ 700 . 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 Financial Accounting Standards Board (“ FASB ”) Accounting Standards Codification (“ 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 condensed consolidated statement of operations. Convertible Preferred Stocks 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. Advertising and Promotion Costs Advertising costs are charged to expense as incurred and were $ 575 and $ 925 for the years ended December 31, 2024 and 2023, respectively. The Company also incurred product promotion costs for demonstration products delivered to prospective customers of $ 129 and $ 225 for the years ended December 31, 2024, and 2023, 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. F- 10 Table of Contents 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, 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 were $ 125 and $ 200 for the years ended December 31, 2024 and 2023, respectively. Actual revenues from shipping and handling were $ 73 and $ 37 for the years ended December 31, 2024 and 2023, respectively. 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 $ 83 and $ 72 at December 31, 2024 and 2023. Actual warranty costs could differ from estimates. F- 11 Table of Contents Segment Information ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations. Income Taxes No income tax expense was recorded for the periods ended December 31, 2024 and 2023, due to losses incurred. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimates. Recently Issued Accounting Guidance On December 14, 2023, the FASB issued a final standard on improvements to income tax disclosures. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU 2023-09, Improvements to Income Tax Disclosures, applies to all entities subject to income taxes. For public business entities (PBEs), the new requirements will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. The Company does not plan to early adopt this standard. On March 21, 2024, the FASB issued ASU 2024-01 to clarify the scope application of profits interest and similar awards by adding illustrative guidance in ASC 718, Compensation - Stock Compensation. For PBEs, the amendments in this Update are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. The Company does not plan to early adopt this standard. The Company has reviewed recently issued, but not yet effective, accounting pronouncements and does not believe the future adoptions of any such pronouncements will be expected to cause a material impact on its financial condition or the results of operations. 2. REVENUES AND PRODUCT COSTS Revenues consist of product sales and other revenues. Product sales include selling of BolaWrap products and accessories. Other revenues includes VR revenues, service, training and shipping revenues. The table below details the activity in our contract liabilities during the year ended December 31, 2024. SCHEDULE OF CONTRACT LIABILITIES Customer Deferred Deposits Revenue Balance at January 1, 2024 $ 1,002 $ 544 Additions, net 89 856 Transfer to revenue ( 1,064 ) ( 895 ) Balance at December 31, 2024 $ 27 $ 505 Current portion $ 27 $ 466 Long-term portion $ - $ 39 As of December 31, 2024, the Company’s deferred revenues of $ 505 consisted of $ 76 related to BolaWrap extended warranties and services, $ 352 related to Intrensic extended warranties and services, $ 73 related to VR and $ 4 related to training. As of December 31, 2023, the Company’s deferred revenues of $ 544 consisted of $ 139 related to BolaWrap extended warranties and services, $ 216 related to Intrensic extended warranties and services, $ 171 related to VR and $ 18 related to training. F- 12 Table of Contents 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 and amortized consistent with the recognition timing of the revenue for any such underlying performance obligations. The Company had no such assets as of December 31, 2024 and 2023 . The Company will apply the practical expedient to expense any sales commissions related to performance obligations with an amortization of one year or less when incurred within selling, general and administrative expense. 3. ASSET ACQUISITIONS Pursuant to the Professional Services and Technology Acquisition Agreement (the “Services Agreement”), dated as of November 22, 2022, and as amended on April 2, 2023, by and among the Company, Lumeto, Inc. (“Lumeto”) and Spatial Industries Group, Inc. (collectively, the “Service Provider”), the Service Provider provides to the Company certain technology, services, and perpetual licenses for use within the Company’s Wrap Reality virtual simulation training platform (the “Technology, Services, and License”), in consideration for a one-time cash payment upon the execution of the Services Agreement of $ 700 . The Company determined during 2023 that the intangible related to software developed by Lumeto would not have future economic benefit and the value of the intangible was written off as a loss on impairment of $ 700 as a result. On August 9, 2023, the Company entered into a Membership Interest Purchase Agreement (the “Intrensic Purchase Agreement”) by and among the Company, certain members of Intrensic, including Kevin Mullins, the Company’s former Chief Executive Officer (collectively, “Sellers”) and Buford Ortale, as the Sellers’ representative. Under the terms of the Intrensic Purchase Agreement, the Company agreed to purchase, and Sellers agreed to sell, 100 % of the membership interests (the “Membership Interests”) of Intrensic for the following consideration upon the consummation of the sale of the Membership Interests (the “Intrensic Closing”): (i) $ 553,588 in cash, subject to adjustment based upon the outstanding indebtedness of Intrensic and Intrensic’s working capital as of the Intrensic Closing; and (ii) 1,250,000 shares of Common Stock of the Company the “Intrensic Acquisition”). The Intrensic Acquisition closed on August 16, 2023, in accordance with the terms of the Intrensic Purchase Agreement. (See Footnote 19). 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. F- 13 Table of Contents The following table shows the Company’s short-term investments by significant investment category as of December 31, 2024 and 2023. SCHEDULE OF SHORT TERM INVESTMENTS As of December 31, 2024 Adjusted Unrealized Unrealized Market Cost Gains Losses Value Level 1: Money Market Funds $ 2,945 $ - $ - $ 2,945 Total Financial Assets $ 2,945 $ - $ - $ 2,945 As of December 31, 2023 Adjusted Unrealized Unrealized Market Cost Gains Losses Value Level 1: Money Market Funds $ 1,793 $ - $ - $ 1,793 Certificate of Deposits 7,500 - - 7,500 Total Financial Assets $ 9,293 $ - $ - $ 9,293 Warrant liabilities are measured at fair value on a recurring basis. The subsequent measurement of the warrant liabilities as of December 31, 2024, 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. 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: SCHEDULE OF FAIR OF WARRANT LIABILITIES December 31, 2024 December 31, 2023 Level 3: Fair value at inception for December 31, 2023 or the beginning of the period for December 31, 2024 $ ( 19,703 ) $ ( 7,717 ) Change in fair value of warrant liabilities 9,572 ( 11,986 ) Fair value at end of year $ ( 10,131 ) $ ( 19,703 ) F- 14 Table of Contents The Company uses the modified Black-Scholes option pricing model to determine the fair value of warrant liabilities. The following table summarizes the assumptions used computing the fair value of the Company’s warrants: SCHEDULE OF BLACK SCHOLES OPTION PRICING MODEL OF WARRANT LIABILITIES As of December 31, 2024 As of December 31, 2023 Expected stock price volatility 88 % 143 % Risk-free interest rate 4.25 % 3.85 % Dividends yield 0 % 0 % Expected life of warrants (years) 3.50 4.50 Exercise price $ 1.45 $ 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. 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: SCHEDULE OF INVENTORY 2024 2023 December 31, 2024 2023 Finished goods $ 4,387 $ 3,521 Raw materials 2,263 2,738 Reserve for Obsolescence ( 480 ) ( 465 ) Inventories – net $ 6,170 $ 5,794 F- 15 Table of Contents 6. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT 2024 2023 December 31, 2024 2023 Production and lab equipment $ 432 $ 542 Tooling 570 562 Computer equipment 229 615 Furniture, fixtures and improvements 120 196 Property and equipment, gross 1,351 1,915 Accumulated depreciation ( 1,205 ) ( 1,406 ) Property and equipment, net $ 146 $ 509 Depreciation expense was $ 377 and $ 479 for the years ended December 31, 2024 and 2023, respectively. 7. INTANGIBLE ASSETS AND GOODWILL Intangible Assets Intangible assets consisted of the following: SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS 2024 2023 December 31, 2024 2023 Amortizable intangible assets: Patents $ 1,013 $ 873 Trademarks 264 248 Purchased software and technology 1,752 1,752 Customer Relationship 160 160 Amortizable intangible assets, gross 3,189 3,033 Accumulated amortization ( 1,256 ) ( 806 ) Total amortizable 1,933 2,227 Indefinite life assets (non-amortizable) 421 421 Total intangible assets, net $ 2,354 $ 2,648 Amortization expenses were $ 450 and $ 345 for the years ended December 31, 2024 and 2023, respectively. The Intrensic Acquisition in August 2023 resulted in several intangible assets recognized on the balance sheet including $ 80 in trademarks, $ 490 in purchased technology and $ 160 in customer relationships. The Company determined in December 2023 that the intangible related to software developed by Lumeto would not have future economic benefit and the value of the intangible was written down, incurring a loss on impairment of $ 700 . At December 31, 2024, annual amortization of intangible assets, based upon the Company’s existing intangible assets and current useful lives, is estimated to be the following: SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE 2025 $ 453 2026 366 2027 216 2028 216 2029 184 Thereafter 498 Total estimated amortization expense $ 1,933 F- 16 Table of Contents Goodwill The Company recorded an initial goodwill of $ 1,610 related to the purchase of Intrensic in August 2023. 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: SCHEDULE OF GOODWILL Balance at January 1, 2024 $ 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 $ 81 and $ 14 due to Syzygy pursuant to the License Agreement as of December 31, 2024 and 2023, respectively. Accrued liabilities consist of the following: SCHEDULE OF ACCRUED LIABILITIES 2024 2023 December 31, 2024 2023 Patent and legal costs $ 60 $ 21 Accrued compensation 121 325 Warranty costs 83 72 Royalty 81 14 Contract settlement 300 - Accrued purchase s 584 212 Taxes and other 174 48 Total $ 1,403 $ 692 Changes in our estimated product warranty costs were as follows: SCHEDULE OF PRODUCT WARRANTY LIABILITY Year Ended December 31, 2024 2023 Balance, beginning of period $ 72 $ 125 Warranty settlements ( 79 ) ( 169 ) Warranty provision 90 116 Balance, end of period $ 83 $ 72 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. F- 17 Table of Contents For leases beginning on or after January 1, 2019 , lease components are accounted for separately from non-lease components for all asset classes. On January 21, 2023, the Company’s lease was amended to extend the expiration date to July 31, 2025. Upon execution of the amendment, which was deemed a lease modification, the Company reassessed the lease liability using the discount rate determined at the modification date and recorded an additional ROU asset for the same amount. The Company’s lease contains renewal provisions and escalating rental clauses and generally requires the Company to pay for utilities, insurance, taxes and other operating expenses. The renewal provisions of the existing lease agreement were not included in the determination of the operating lease liabilities and the ROU assets. The Company also reassessed the lease classification and concluded that the lease continues to be an operating lease. Amortization of ROU operating lease assets was $ 292 and $ 138 for the years ended December 31, 2024 and 2023, respectively. Operating lease expense for capitalized operating leases included in operating activities was $ 644 and $ 177 for the years ended December 31, 2024 and 2023, respectively. Operating lease obligations recorded on the balance sheet at December 31, 2024 are: SCHEDULE OF OPERATING LEASE OBLIGATIONS Operating lease liability- short term $ 567 Operating lease liability - long term 1,629 Total Operating Lease Liability $ 2,196 Future lease payments included in the measurement of lease liabilities on the balance sheet at December 31, 2023 for future periods are as follows SCHEDULE OF OPERATING LEASE, LIABILITY, TO BE PAID, MATURITY 2025 $ 567 2026 507 2027 522 2028 538 2029 554 Thereafter 717 Total future minimum lease payments 3,405 Less imputed interest ( 1,209 ) Total $ 2,196 The weighted average remaining lease term is 6.06 years, and the weighted average discount rate is 14.7 %. 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 had $ 109 and $ 8 variable lease expenses during the year December 31, 2024 and 2023, respectively. The Company had $ 16 and $ 92 short-term lease expense during the year December 31, 2024, and 2023 respectively. The Company does not have any finance leases. 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 (the “Conversion Price”), 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 Warrants. The Company expects to use the net proceeds from the Offering for general corporate purposes (see Note 4). F- 18 Table of Contents 11. DEBT The Company’s debt at December 31, 2024 and 2023 included operating lease liabilities (see Note 9). 12. STOCKHOLDERS’ EQUITY The Company’s authorized capital consists of 150,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $ 0.0001 per share (“Preferred Stock”), of which 10,000 are designated as 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. 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 $ 2,000,000 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. F- 19 Table of Contents $ 2,036 of the net proceeds less transaction cost of the Series A Purchase Agreement was allocated to the Series A Preferred Stock. For the year ended December 31, 2024, authorized and declared dividends totaling $ 1,218 of which $ 60 was paid in cash $ 1,158 was paid in shares of the Company’s Common Stock. 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. For the year ended December 31, 2023, authorized and declared dividends totaling $ 392 , of which $ 58 was paid in cash, $ 232 was paid in shares of the Company’s Common Stock and the balance of $ 102 was accrued in payables as of December 31, 2023. As of December 31, 2023, 102 shares of Series A Preferred Stock were converted into approximately 77,000 shares of Common Stock. The Company’s failure to timely file its Annual Report on Form 10-K for the year ended December 31, 2023, its Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, each constituted a Triggering Event (the “Filing Triggering Events”) and equity conditions failures pursuant to the terms of the Certificate of Designations. As a result, the dividend rate of the Series A Preferred Stock was automatically increased to 20 % per annum beginning on April 16, 2024, or the filing deadline of the Form 10-K for the year ended December 31, 2023, and continued until such date as the Filing Triggering Event was cured on October 15, 2024 with the filing of the Form 10-Q for the quarter ended June 30, 2024. 13. SHARE-BASED COMPENSATION On March 31, 2017, the Company adopted, and the stockholders approved, the 2017 Stock Incentive Plan (the “Plan”) authorizing 2,000,000 shares of Common Stock for issuance as awards to employees, directors or consultants. In May 2019, the stockholders authorized an increase in the Plan authorizing an additional 2,100,000 shares of Common Stock, in June 2020 authorized an additional 1,900,000 shares of Common Stock, in June 2021 authorized an additional 1,500,000 shares of Common Stock, in June 2022 authorized an additional 1,500,000 shares of Common Stock, in December 2024 authorized an additional 7,500,000 shares of Common Stock for a total of 16,500,000 shares subject to the Plan. At December 31, 2024, there were 7,585,545 shares of Common Stock remaining available for grant under the Plan. The Company generally recognizes share-based compensation expense on the grant date and over the period of vesting or period that services will be provided. In April 2023, the Company recognized severance acceleration of $ 112 of share-based compensation expense resulting from the resignation of the Company’s former Chief Executive Officer and Chief Operating Officer due to a reduction in force that resulted in changes in the composition of the executives of the Company. Stock Options The following table summarizes stock option activity for the year ended December 31, 2024: SCHEDULE OF STOCK OPTION ACTIVITY Weighted Average Options on Remaining Aggregate Common Exercise Contractual Intrinsic Shares Price Term Value Outstanding January 1, 2024 4,657,635 $ 2.52 8.75 $ 3,979 Granted 1,613,000 $ 2.17 Exercised ( 232,081 ) $ 2.53 Forfeited, cancelled, expired ( 2,094,270 ) $ 3.00 Outstanding December 31, 2024 3,944,284 $ 2.12 8.30 $ 1,486 Exercisable December 31, 2024 1,467,081 $ 2.89 7.99 $ 398 F- 20 Table of Contents At December 31, 2024, there were 2,654,118 service-based stock options outstanding, and 1,290,166 performance-based stock options outstanding, 1,290,166 were granted in October 2023 to the Company’s Chief Executive Officer, the vesting of which is subject to 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: SCHEDULE OF STOCK OPTION ACTIVITY, FAIR VALUE OF ASSUMPTIONS For the Year Ended December 31, 2024 2023 Expected stock price volatility 76 % 76 % Risk-free interest rate 3.82 % 4.21 % Forfeiture rate 0 % 0 % Expected dividend yield 0 % 0 % Expected life of options – years 6.00 6.00 Weighted-average fair value of options granted $ 1.44 $ 1.33 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 for the employee stock options as the Company does not have sufficient historical exercise data. The Company used the Monte Carlo Simulation Model to value at the grant date the aggregate of 1,290,166 market condition performance options granted in October 2023 to the Company’s Chief Executive Officer. The assumptions used in the Monte Carlo Simulation were stock price on date of grant of $ 1.40 , contract term of 10 years, expected volatility of 76 % and risk-free interest rate of 4.65 %. Vesting is based on sustained market capitalization of $ 100 million, $ 150 million and $ 200 million and expected to be exercised at the midpoint of the vesting period resulted in implied service periods ranging from approximately 1 to 3 years. Stock option expense was $ 1,132 and $ 967 for the years ended December 31, 2024 and 2023, respectively. The following table summarizes information about stock options outstanding at December 31, 2024: SCHEDULE OF STOCK OPTION OUTSTANDING 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 2,870,309 9.08 $ 1.43 710,257 $ 1.39 $ 2.01 – $ 3.00 459,000 8.95 $ 2.47 291,849 $ 2.45 $ 3.01 – $ 4.00 150,000 9.08 $ 3.88 - $ - $ 4.01 – $ 5.00 91,475 6.09 $ 4.38 91,475 $ 4.38 $ 5.01 – $ 6.58 373,500 6.02 $ 5.71 373,500 $ 5.71 F- 21 Table of Contents Restricted Stock Units The 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, 2024 and 2023: SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Weighted Average Weighted Average Service-Based Grant Date Vesting RSU’s Fair Value Period (Years) Unvested at January 1, 2023 922,332 $ 2.88 2.11 Granted - service based 1,289,784 $ 1.41 Vested ( 1,056,360 ) $ 1.83 Forfeited and cancelled ( 345,168 ) $ 2.70 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 3.67 482,143 of the RSUs granted included in the table above were granted in October 2023 are performance based RSUs, and 632,911 are performance based RSUs that were granted in January 2024, both subject to vesting terms based on future market capitalization. RSU expense was $ 1,301 and $ 1,018 for the years ended December 31, 2024 and 2023, respectively. 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: SCHEDULE OF SHARE-BASED COMPENSATION FOR OPTIONS AND RESTRICTED STOCK UNITS 2024 2023 For the Year Ended December 31, 2024 2023 Selling, general and administrative $ 2,296 $ 1,696 Research and development 137 289 Total share-based expense $ 2,433 $ 1,985 As of December 31, 2024, total estimated compensation cost of stock options granted and outstanding but not yet vested was $ 2,304 which is expected to be recognized over the weighted average period of 2.27 years. As of December 31, 2024, total estimated compensation cost of RSUs granted and outstanding but not yet vested was $ 1,630 which is expected to be recognized over the weighted average period of 3.03 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, 2024 and 2023, was $ 0 and $ 0 , respectively. 15. COMMITMENTS AND CONTINGENCIES Facility Lease In November 2023, the Company commenced a lease in an office building located at 3480 Main Highway, Coconut Grove, Florida. The lease of 4,487 square feet for an initial term of 94 months, including 5 months of rent abatement in the first two years of the lease. The aggregate monthly payments will restart in 2024 for $ 40 per month, increasing 3 % each year through the lease term, plus other certain costs and charges as specified in the lease agreement. F- 22 Table of Contents Our current assembly line, and warehouse facilities are located at 1817 West 4th Street, Tempe, Arizona. The lease of 11,256 square feet commenced in June 2019 and was for an initial lease term through July 2022. In January 2022, we renewed this lease for three years with aggregate monthly payments of $ 10 commencing August 2022, increasing 4 % annually through the term ending July 31, 2025. Related Party Technology License Agreement The Company is obligated to pay royalties and development and patent costs pursuant to an exclusive Amended and Restated Intellectual Property License Agreement dated as of September 30, 2016, with Syzygy, a company owned and controlled by stockholder/consultant Mr. Elwood Norris and stockholder/consultant 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. The Company recorded $ 66 and $ 199 for royalties incurred during the years ended December 31, 2024 and 2023, respectively. The maximum payout was satisfied as of June 30, 2024. Purchase Commitments At December 31, 2024, the Company was committed for approximately $ 585 for future 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. 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. At December 31, 2024, we had no provision for liability under existing litigation. 16. RELATED PARTY TRANSACTIONS 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 . F- 23 Table of Contents 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 and $ 108 for the years ended December 31, 2024 and 2023, respectively. 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, 2024 and 2023, the Company incurred royalties to Syzygy of $ 66 and $ 199 , respectively. Intrensic Acquisition On August 9, 2023, the Company entered into the Intrensic Purchase Agreement with the Sellers, including Kevin Mullins, the Company’s former Chief Executive Officer. Under the terms of the Intrensic Purchase Agreement, the Company agreed to purchase, and Sellers agreed to sell, 100 % of the Membership Interests of Intrensic for the following consideration upon the Intrensic Closing: (i) $ 554 in cash, subject to adjustment based upon the outstanding indebtedness of Intrensic and Intrensic’s working capital as of the Intrensic Closing; and (ii) 1,250,000 shares of Common Stock of the Company. The Intrensic Acquisition closed on August 16, 2023, in accordance with the terms of the Intrensic Purchase Agreement. See Notes 8, and 15 for additional information on related party transactions and obligations. 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 provision/(benefit) for Income Taxes for the years ended December 31, 2024 and 2023, consists of the following: SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) 2024 2023 Year Ended December 31, 2024 2023 Current Tax Expense/(Benefit) $ - $ - Deferred Tax Expense/(Benefit) ( 2,712 ) $ ( 4,333 ) Change in Valuation Allowance 2,712 4,333 Income Tax Provision/(Benefit) $ - $ - 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: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION 2024 2023 Year Ended December 31, 2024 2023 U.S. Statutory Federal Income Tax Rate $ ( 1,234 ) $ ( 6,355 ) State Income Taxes, net of Federal Income tax Benefit ( 67 ) ( 421 ) Permanent differences and other ( 1,411 ) 2,433 Valuation Allowance 2,712 4,333 Income Tax Provision/(Benefit) $ - $ - F- 24 Table of Contents 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 and 2023: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2024 2023 Year Ended December 31, 2024 2023 Deferred income tax assets: Net operating loss carryforwards $ 18,832 $ 17,002 Sec. 174 capitalization 1,931 1,494 Research and development credits 81 81 Stock Based Compensation 1,708 1,447 Accruals and Other 925 994 Total deferred tax assets (gross) 23,477 21,018 Less valuation allowance ( 23,015 ) ( 20,302 ) Net deferred tax assets 462 716 Deferred income tax liabilities: - Depreciation and other ( 462 ) ( 716 ) Net deferred tax liabilities $ ( 462 ) $ ( 716 ) Net deferred income taxes $ - $ - As of December 31, 2024, the Company had available federal net operating loss carryforwards of approximately $ 703 which begin to expire in 2037, and approximately $ 82.6 million which will never expire. The Company has available state net operating loss carryforwards of approximately $ 32.9 million as of December 31, 2024, which begin to expire in 2037. As of December 31, 2024, the Company has federal research and development tax credits of approximately $ 81 . 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. ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company has no material uncertain tax positions that qualify for either recognition or disclosure in consolidated financial statements. It is the Company’s policy to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2024 and 2023, the Company has accrued no interest and no penalties related to uncertain tax positions. The Company does not have any federal, or state and local income tax returns currently under examination. F- 25 Table of Contents 18. MAJOR CUSTOMERS AND RELATED INFORMATION Major Customers 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. For the year ended December 31, 2023, revenues from one distributor accounted for approximately 37 % of revenues with no other single customer accounting for more than 10% of total revenues. Accounts receivable from one distributor accounted for 67 % of net accounts receivable at December 31, 2023. The following table summarizes revenues by geographic region. Revenues are attributed to countries based on the customer’s delivery location. SCHEDULE OF DISAGGREGATION OF REVENUE 2024 2023 For the Year Ended December 31, 2024 2023 Americas $ 4,423 $ 3,773 Europe, Middle East and Africa 76 2,302 Asia Pacific 8 58 Total revenues $ 4,507 $ 6,133 See Note 1 – Concentrations of Risks for information on reliance on suppliers. 19. BUSINESS COMBINATION On August 8, 2023, the Company entered into the Intrensic Purchase Agreement with the Sellers. The Intrensic Closing occurred on August 16, 2023. Under the terms of the Intrensic Purchase Agreement, the Company agreed to purchase, and Sellers agreed to sell, the Membership Interests for the following consideration at the Intrensic Closing: (i) $ 554 in cash, subject to adjustment based upon the outstanding indebtedness of Intrensic and Intrensic’s working capital as of the Intrensic Closing; and (ii) 1,250,000 shares of Common Stock of the Company valued at approximately $ 1,938 . The Company assessed the historical financial information of Intrensic to determine if it would materially impact the Company’s historical financial statements for the purposes of disclosing proforma financial information. The Company determined that in the current or prior reporting periods the acquired business contributed immaterially to the Company’s financial statements. Therefore, a pro forma disclosure of the Company as if the business combination had occurred is not warranted under ASC 805. The table below sets forth the allocation of the fair value of Intrensic’s net assets acquired and the corresponding line item in the Company’s consolidated balance sheet at the date of acquisition. Intangible assets were valued using established valuation techniques, as follows: Technology and trade names and trademarks were valued using the relief-from-royalty method, whereby the benefit of ownership of the intellectual property is valued as the relief from the royalty expense that would otherwise be incurred. Customer relationships were valued using the multi-period excess earnings method under the income approach. SCHEDULE OF CUSTOMER RELATIONSHIPS Cash and cash equivalents $ 3 Accounts receivable 91 Inventory 61 Technology (included in Intangibles) 490 Customer relationships (included in Intangibles) 160 Trademarks and trade names (included in Intangibles) 80 Intangible assets 80 Goodwill 1,631 Total assets $ 2,516 Liabilities 24 Equity 2,492 Total liabilities and equity $ 2,516 Legal fees incurred in connection with the transaction totaled approximately $ 38 and have been expensed as incurred. See Note 7 – Intangible Assets and Goodwill for December 2024 goodwill impairment charge. F- 26 Table of Contents 20. SUBSEQUENT EVENTS On January 3, 2025, the Company entered into a lease that will commence in October 2025, or upon the completion of the premises, whichever happens later, for a manufacturing facility located at Pad 1A of the technology park at the intersection of US 23 and US 58 Alternate in Norton, Virginia. The lease of the 20,000 square foot facility has an initial term of five years with the option to renew for an additional two-years, subject to adjustments based on the Consumer Price Index . Monthly lease payments will be $ 10,000 , calculated at $ 6 per gross square foot per year. Following two years of occupancy from the start of the lease, we may terminate the lease without penalty by providing sixty-days written notice. On February 18, 2025, the Company and W1 Global, LLC, a Delaware limited liability company (“Seller”), entered into an Asset Purchase Agreement, dated as of February 18, 2025 (the “W1 Purchase Agreement”), pursuant which, subject to the terms and conditions set forth therein, the Company agreed to acquire substantially all the assets of the Seller, including, among others, all of the Seller’s right, title and interest in and to the Seller’s properties, business, and assets of Seller used in, held for use in or relating to the business of advisory and investigative professional services, as more specifically set forth in the W1 Purchase Agreement (collectively, the “Acquired Assets”), which excludes the Excluded Assets (as defined in the W1 Purchase Agreement), and assume certain Assumed Liabilities (as defined in the W1 Purchase Agreement), upon the terms and subject to the conditions set forth in the W1 Purchase Agreement (the “Acquisition”), for a nominal purchase price equal to $ 100.00 . The closing of the Acquisition occurred on February 18, 2025 (the “Closing”). In connection with Closing, the Company and the Seller entered into certain ancillary agreements, including, (i) a bill of sale for all of the Acquired Assets that are tangible personal property, (ii) an assignment of all of the Acquired Assets that are intangible personal property, (iii) employment agreements for certain employees of the Seller, and (iv) a consulting agreement. 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 (the “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 estimated gross proceeds to the Company were $ 5.8 million, before estimated offering expenses payable by the Company. F- 27 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 WRAP TECHNOLOGIES, INC Date: March 31, 2025 By: /s/ Scot Cohen Scot Cohen (Principal Executive Officer and Interim 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 31, 2025 Scot Cohen (Principal Executive Officer and Interim Principal Financial Officer and Principal Accounting Officer) /s/ Bruce Bernstein Director March 31, 2025 Bruce Bernstein /s/ Marc Savas Director March 31, 2025 Marc Savas /s/ Rajiv Srinivasan Director March 31, 2025 Rajiv Srinivasan /s/ Timothy Szymanski Director March 31, 2025 Timothy Szymanski - 51 -