Nasdaq:WRAP
WRAP TECHNOLOGIES, INC.
A Nasdaq-listed technology company focusing on proprietary software development and digital operational tools for enterprise markets.
Key Metrics
Investment Thesis
Bull Case
The sharp improvement in net income trend, moving from a -$30.2M loss in 2023 to a manageable -$5.9M in 2024, suggests the company is nearing profitability. The substantial investing cash flow indicates active capital allocation or asset monetization that could strengthen the balance sheet if sustained.
Bear Case
Despite reduced losses, the company remains deeply insolvent with total liabilities of $14.9M against only $0.25M in equity and a -$105.1M retained earnings deficit. The consistent year-over-year revenue decline from 2022 to 2024 indicates a failing business model or loss of key customers, making the stock a high-risk speculative play.
About WRAP TECHNOLOGIES, INC.
WRAP Technologies (NASDAQ: WRAP) is a technology firm engaged in developing specialized software solutions and digital infrastructure services. The company operates primarily within the B2B tech sector, leveraging its intellectual property to serve enterprise clients with proprietary operating systems and analytics platforms.
Analysis
Management Discussion
Management has successfully reduced the annual operating loss from -$30.2M in 2023 to -$15.6M in 2024, demonstrating an operational turnaround despite a sharp decline in total revenue. The company generated positive cash flow from financing activities ($468k) and investing activities ($7.3M), likely utilizing debt issuance or asset sales to offset the -$8.1M operating cash burn.
Industry Overview
The technology sector is characterized by rapid innovation and intense competition where companies must constantly invest in R&D to maintain market relevance. Market consolidation is common, often leading to revenue volatility as firms adjust their portfolios following major acquisitions or divestitures.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $8.0M | $6.1M | $4.5M |
| Cost of Revenue | $4.3M | $3.2M | $2.0M |
| Gross Profit | $3.7M | $2.9M | $2.5M |
| Operating Expenses | $21.5M | $21.6M | $18.0M |
| Operating Income | $-17.7M | $-18.7M | $-15.6M |
| R&D | $5.1M | $3.3M | $2.3M |
| G&A | $16.4M | $18.4M | $15.7M |
| Stock-Based Comp | $3.2M | $2.0M | $2.4M |
| D&A | $762.0K | $823.0K | $827.0K |
| Depreciation | $475.0K | $479.0K | $377.0K |
| Amortization | $287.0K | $345.0K | $450.0K |
| Other OpEx | $0 | $0 | $0 |
| Non-Operating Income | $0 | $0 | $0 |
| Interest Income | $52.0K | $375.0K | $156.0K |
| Pre-Tax Income | $-17.7M | $-18.7M | $-15.6M |
| Income Tax | $0 | $0 | $-9.7M |
| Continuing Ops | $-17.7M | $-18.7M | $-5.9M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-17.6M | $-30.2M | $-5.9M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $-17.6M | $-30.2M | $-5.9M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $26.9M | $21.2M | $10.5M |
| Cash & Equivalents | $5.3M | $4.0M | $3.6M |
| Marketable Securities | $13.9M | $7.5M | — |
| Accounts Receivable | $2.8M | $3.0M | $513.0K |
| Inventory | $4.0M | $5.8M | $6.2M |
| Prepaid Expenses | $775.0K | $953.0K | $178.0K |
| Other Current Assets | $0 | $0 | $0 |
| Long-Term Assets | $3.7M | $7.3M | $4.7M |
| PP&E (Net) | $758.0K | $509.0K | $146.0K |
| Intangibles | $2.6M | $2.6M | $2.4M |
| Goodwill | — | $1.6M | — |
| Operating Leases | $285.0K | $2.3M | $2.0M |
| Other LT Assets | $100.0K | $251.0K | $186.0K |
| Total Assets | $30.6M | $28.5M | $15.1M |
| Current Liabilities | $3.2M | $23.5M | $13.2M |
| Accounts Payable | $1.4M | $1.1M | $609.0K |
| Current Leases | $108.0K | $616.0K | $567.0K |
| Deferred Revenue | $166.0K | — | $466.0K |
| Other Current Liab | $0 | $21.1M | $10.2M |
| Long-Term Liabilities | $360.0K | $1.8M | $1.7M |
| LT Operating Leases | $193.0K | $1.7M | $1.6M |
| Other LT Liab | $0 | $137.0K | $0 |
| Total Liabilities | $3.5M | $25.3M | $14.9M |
| Shareholders' Equity | $27.1M | $3.2M | $250.0K |
| Paid-In Capital | $94.3M | $99.1M | $105.3M |
| Retained Earnings | $-67.4M | $-98.0M | $-105.1M |
| AOCI | $94.0K | $0 | — |
| Total L&E | $30.6M | $28.5M | $15.1M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $-17.6M | $-30.2M | $-5.9M |
| Non-Cash Adjustments | $1.9M | $12.0M | $-461.0K |
| Working Capital Changes | $1.1M | $1.5M | $-1.8M |
| Cash from Operations | $-14.6M | $-16.7M | $-8.1M |
| Capital Expenditures | $256.0K | $230.0K | $12.0K |
| Cash from Investing | $14.9M | $5.2M | $7.3M |
| Dividends Paid | — | $58.0K | $120.0K |
| Cash from Financing | $83.0K | $10.2M | $468.0K |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $393.0K | $-1.4M | $-345.0K |
| Beginning Cash | $4.9M | $5.3M | $4.0M |
| Ending Cash | $5.3M | $4.0M | $3.6M |
Frequently Asked Questions
How does WRAP TECHNOLOGIES, INC. make money?
The company's revenue is driven by software licensing fees, maintenance contracts for existing digital infrastructure, and custom development services. Financials indicate a reliance on high-margin intellectual property monetization alongside significant research and development expenditures to maintain technological leadership.
What are the main risks for WRAP?
The company faces severe liquidity risks with current liabilities ($13.2M) significantly outweighing shareholders' equity ($0.25M). Persistent operating losses of -$15.6M and a massive retained earnings deficit of -$105.1M threaten solvency if cash generation does not improve immediately. Revenue contraction from $8.0M to $4.5M over three years signals potential market share erosion or pricing pressure.
What is WRAP's competitive advantage?
The firm possesses a deep moat through its proprietary operating system architecture which creates high switching costs for enterprise clients. Its heavy investment in R&D ($2.3M) ensures continuous product iteration, while accumulated intangible assets of $2.4M represent significant brand and patent value not easily replicated by competitors.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.