Wrap Technologies, Inc. (WRAP) Q2 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Wrap Technologies, Inc. Q2 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Louis Springer.

Thank you. Good afternoon, and welcome to Wrap Technologies Second Quarter 2026 Earnings Conference Call. I'm Louis Springer, Vice President of Finance. Joining me today is Scot Cohen, Chief Executive Officer; and Jared Novick, President and Chief Operating Officer. We appreciate your time and continued interest in Wrap. Before we begin, I want to remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the federal securities regulations. Please review the forward-looking and cautionary statements section at the end of our second quarter 2026 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. Such forward-looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call, and the company is not obligated to publicly update or revise them. Statements made during this call do not constitute an offer to sell or a solicitation of an offer to buy any securities. Securities will be offered only by means of a registration statement and prospectus, which can be found at www.sec.gov. Also, during today's call, we will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. Descriptions of those non-GAAP financial measures that we use and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings release. Unless otherwise stated, all reported results discussed in this call will compare the second quarter ended June 30, 2026, to second quarter ended June 30, 2025. The earnings release will be available on the Financial Information section of our website at ir.wrap.com. In addition, a replay of this earnings call will be posted to our website after the call. I will now hand it over to Scot.

Thanks, Lou, and thank you, everybody, for joining the call today. We're coming off our best quarter in years. Revenue doubled quarter-over-quarter and we doubled compared to the second quarter last year. Operations continue to become more efficient. We're expanding sales. We productize our training. We're growing our BolaWrap programs, and we have doubled our product offerings. Today, we can serve -- we serve federal, state and local private sector customers. But the big difference now is the money is flowing from the state, local and federal level, and we're following that money. There are funded requirements, which we now have capabilities to service for the first time in a long time. We transformed Wrap from a single product company into a portfolio of solutions with a strong emphasis on scalable training delivered through our learning management system. And we've accomplished all this at a fraction of the expense of the past. But that's not the real story. Three recent developments have put us in a truly unique position that we intend to capitalize on. The first is the ATF determination issued in early July that BolaWrap is not classified as a firearm or a weapon. For years, that uncertainty limited our ability to pursue the private security market, a market significantly larger than the domestic law enforcement business. One company I spoke to last week employs more security guards than there are police officers in this entire country. In the past 30 days, we've had dozens of conversations with potential customers in this market, and we've already received our first grant-funded training order. This opportunity is significant and the time to pursue it is right now. Security guards face many of the same challenges as our law enforcement officers do, but with one major difference. Most of them are unarmed and they receive very little training. The average police officer receives roughly 800 hours of training before becoming -- before receiving their badge. By comparison, security guards receive fewer than 50 hours at best. The problem is access to the training and it's the budget. BolaWrap now has a solution these professionals can actually carry and our LMS allows us to deliver consistent, scalable training wherever they operate. Even more encouraging is the insurance companies that are interested in supporting its adoption, and we're going to get more into that when Jared presents. Dozens of conversations with private sector organizations given us clear direction, and we're going for this market aggressively. Dozens -- the second development is the return of DOJ grant funding. We've identified 11 active programs that could fund the BolaWrap, can fund our body cameras that are funding deescalation training and virtual training. Most of our customers are small and midsized departments where grant funding is essential to purchasing equipment, providing effective training. The funding window has reopened, and we're positioned to help customers take advantage of it. And the third development is the Frenel opportunity. We've been watching this technology for years, and I'll spare you the long story. But when we received a call telling us that the tech was finally operational, we dug in. We saw it detect a wide range of threats, including drones that couldn't be tracked by some of the most advanced thermal systems. Its polarization layer identified both material characteristics and heat signatures. One screen was blue sky and the other screen was a clear threat. That conclusion was obvious to us. Frenel could see what other systems could not. This technology has critical applications for our cities, our borders and our national defense. More importantly, it gives Warp a structural advantage that competitors simply cannot copy, replicate or acquire. Wrap now holds an exclusive U.S. and NATO rights to TriCore by Frenel, a physics-based polarimetric sensing technology detects, identifies and classifies objects based on the materials and shapes. It is one of the few technologies capable of addressing RF-silent and camouflaged targets in dense urban GPS denied, cluttered, and RF contested environments. In plain English, it can distinguish a drone from a bird under conditions where conventional systems struggle. No jamming, no spoofing, no countermeasures. Together, these 3 developments open new markets across private security, law enforcement and national defense. This is a significant opportunity for Wrap and for all of us. With that, Lou, it's back to you.

Thank you, Scot. Second quarter 2026 financial highlights are as follows: Total revenue increased 103% to $2.1 million compared to $1 million in the prior year period. Gross profit increased 217% to $1.5 million, compared to $0.5 million in the prior year period, and gross margin expanded to approximately 75%, compared to approximately 48% in the prior year period. Our loss from operations improved 21% to $2.3 million, compared to a loss of $2.9 million in the prior year period. Net loss improved 39% to a loss of $2.3 million compared to a loss of $3.7 million in the prior year period. The prior year period quarter included a $0.9 million noncash loss from the change in fair value of warrant liabilities that did not recur. Cash and cash equivalents were $4.8 million at June 30, 2026, compared to $3.5 million at December 31, 2025. Lastly, total liabilities were reduced to $2 million at June 30, 2026, from $3.9 million at December 31, 2025, reflecting the termination of the company's former office lease. Now I'll hand it over to Jared.

Thanks, Lou. I'm about to describe a company that's changing, new markets, bigger markets, a new revenue model and a new platform. And let me tell you that story in 5 parts. First, the environment around this company changed this year, twice, both were outside of Wrap. The first came from the Supreme Court in 2025. Barnes v. Felix rejected the narrow reading on the use of force. It's the Supreme Court decision. And the question of what an officer faced in the final seconds changed. The whole encounter now matters, what happened before it, what officers knew and how the situation developed. That matters to us because our thesis has always been about creating another option earlier before an encounter reaches its most dangerous point. The second came in June. ATF classified the BolaWrap 150 as an instrument restraint and a rescue tool. Under the federal statute defining firearms and weapons, the BolaWrap 150 is neither. Now you put those side by side. The constitutional lens has widened to what they call the totality of circumstances, the totality of the encounter now matters. And the federal government has determined that our tool built to create an option earlier is no longer a weapon. That only is not a firearm, it's not a weapon. We didn't manufacture the constitutional change. We didn't control the federal classification, but we built the technology that now sits at the intersection of both. That's a structural advantage. And it doesn't exist with this clarity until just a few short months ago when all this came into fruition. That's a big one. Second. The second part is what we're selling. What we sell is changing. A BolaWrap in a holster is not a capability. It becomes a capability when an officer recognizes the moment, deploys it correctly under stress and still has that proficiency months later. We all know proficiency decades. A 1-day certification class doesn't reliably survive a year on the street. So we did something about it. The real product isn't the device. We're selling readiness and Wrap tactics is how we deliver it. We launched earlier this year. And as of this month, the core content library is complete. And here's what that changes. Instead of spending classroom time where we did instruction in person on foundational material that can't be learned beforehand, we now send digital training in advance. And now we use in-person time for what actually requires being in the room for, scenario worth of what they see in the streets every day, coaching, certification and the customer relationship. Digital does not replace the instructor. It makes the instructor more valuable. And it lets the relationship continue after the instructor leaves. Commercially, that means we can take proficiency to market as a subscription. The customer stops buying a device in a single training day. They start buying a standard of readiness that we can help them maintain. Recurring training, recurring proficiency, recurring engagement. The recurring revenue is the economic consequence of this model. And let me be precise where we are. The capability is built and it's ready to sell. This revenue is ahead of us, not behind us. The shift is real because it changes what we are from a company that closes a sale to a company that maintains a capability. Thirdly, our market just got materially larger. Everything so far has been about law enforcement. That's been our market. It's no longer the boundary of it. Start with private security. A significant portion of those officers are unarmed and in some environments, they cannot be armed. But they're still expected to manage conflict and respond when behavior escalates. When it does, there's an enormous gap between the verbal command and then calling law enforcement. And sometimes the only real choice is to act or not act. And either way, the outcome carries legal consequence and suboptimal results. That gap is operational risk, and it's a liability for employers, insurers, property owners and security providers, all of whom increasingly have to answer one question. What options were available and what did we give these people before the situation became an emergency? Well, a tool the federal government just declassified as not a firearm or not a weapon sounds to be a pretty good option for that. There are over 1.2 million licensed security officers in the United States. That's a larger population than all law enforcement, but the number isn't the point. The point is why it exists now. This isn't Wrap marketing the same product to a new segment. The regulatory change altered the addressability of the product. And the service architecture I just described gives us a way to support those customers. Fourth, we're working on federal opportunities built on the same logic. We are putting resources in Washington, D.C. The logic is early response in options and environments where use of force carries significant legal and most important public scrutiny. And we're aligning ourselves where the money is. Now I want to be disciplined here. Prospective federal opportunities are not in our guidance, and I'm not asking anyone to assign value to those contracts we haven't won. But it isn't theoretical either. We've announced this. Wrap received a purchase order from the Department of Homeland Security. And in the second quarter, we delivered training to DHS, completing what we believe is an initial phase of support to their operational requirements. Timing matters here. Public safety funding is reopening. At the same time, federal and defense investment is accelerating around autonomous systems and counter-UAS in response of those technologies. It's a matter of time, but those threats that we see across the ocean and internationally are now here in the homeland, and we need to face that reality and start thinking about the integration of those technologies into the public safety. Those sound like separate markets, but underneath them is the same problem we've been describing [ all call ]. The environments may differ, but the core capability that addresses them does not. And fifth, this is lastly, where does this all go? Everything today follows one line, a device that gives officer an earlier adoption, training that keeps our customers and keeps it usable, a commercial model that keeps customers engaged, and a regulatory change that opens our new bigger markets. Each step makes the next one possible. Our strategy reflects the convergence of funding, regulation, technology and customer need. I'm going to make some points here. We are following the funding. Public safety funding is returning. Counter-UAS is moving from defense to homeland-security and public safety. Detection is the common requirement, better sensing by time and time creates options. Our Frenel investment gives Wrap a truly differentiated position in this direction. The ATF classification expands our core addressable market. We are moving from product to readiness and consequently, subscription. These markets are connected by one strategic thesis, detect risk earlier, make better decisions, enable an earlier and more appropriate response. And the technologies we built around that thesis have valuable adjacencies. It's not just about counter-UAS, border security and maritime surveillance. We hear about autonomous platforms. We hear about ISR from the military and potentially, our technologies have space-based applications. This is the logic behind WrapShield. We're not abandoning our core. We're taking the competency at the center of Wrap earlier in invention and extending it across a much larger set of markets, customers and funded opportunities. Scot, back to you.

Thanks, Jared. Let me leave you with where I think all this goes. The market indicators are clear. The ATF determination cracked open a private market that's been untapped, and that market is driven by risk mitigation, which puts us directly inside the insurance conversation. Expect partnerships, expect additional pipeline. With Frenel, we have already started building WrapShield into a platform that will eventually carry the full envelope of integrated solutions and establish a multichannel revenue model underneath it. I can tell you, we have already had much larger conversations with international customers and with our own government about how to move that vision forward. Frenel is an example of what happens when you get ahead of the game. We chose to build a solution to evolving threats instead of reacting after our competitors had secured their positions and traction has followed. This kind of foresight has to become a permanent part of how Wrap builds its business, and we intend to keep expanding it by continuously adding new solutions and new products. Some of these conversations, we are handling directly with governments. Others will require partnerships and players deeply already entrenched in the space. It has been 30 days, and we can already see where this is going. There is a category being created here and no one else is building it. Others sell cameras, radios, electrical weapons. We are building a layer that sits between the tool and the moment of life that's at stake, backed by the training that makes it accountable and the sensing that makes it intelligent. This is the company we intend to be, and we intend to own that category. We do not take any of these advantages for granted. From this moment, we will move quickly on hires, partnerships and on execution. Lou, I know we've got a bunch of questions in the hopper. I think it's time to get to our Q&A.

Absolutely. If we don't get to all of our questions, everyone is welcome to e-mail ir@wrap.com because we do have a lot here, and we are time constrained. So the first question came in from our Investor Relations inbox, and it says, where is the company at with Chile? What is the latest update?

Let me take that one. We actually met with our distributor just a couple of weeks ago. They came to visit us here in Miami. They're still expecting business this year, but they have cited a funding gap with the Chilean government. So at this point, we're waiting for funding to become available. There is an opportunity that we're pursuing right now to see if our government will fund, which they have funded Chile's police for public safety business in the past, INL has, which we're actively exploring. But for now, we don't have any Chile business in our forecasted revenue for '26. So we're playing it safe with Chile. They've indicated and they put large numbers in their budget for all of us to see. We've seen it, but we're not putting it in our forecast, and that's where we stand. We'll update as we get updates from -- directly from the customer.

The next question also came in through our Investor Relations inbox. What is the company's plans with insurance companies?

Yes, Scot, I can start that. Let's talk about this one together. Insurance companies are in our future. And it's because the ATF declassification changed the world. I mean we always thought about insurance companies in the past. We were kind of stymied by declassification of a firearm and a weapon. We knew insurance had plays somehow through risk pools that I think, Scot, you know more about than I do in the past, to law enforcement. But excitingly, the active conversations we have is now that we're no longer a firearm and no longer a weapon, we know insurance has to be part of our service as an integrated service to private companies or even security markets directly. So the insurance company conversation that we've learned at some of these big box stores retailers or critical infrastructure or health care or transportation, they surely use security guards and they should. But when we make a value proposition, the security guard companies say, we do whatever our customer wants us to, which then means they point right back to the customer we're trying to support. So when we go to that customer, we now can say and the aim is, well, we have a device that's a rescue tool, no longer a firearm alongside our insurance where we hope to be a provider for us, we can give you preferred terms. It's a value proposition. And what we can do as Wrap as the orchestrator of all this is coordinate across 3 parties; the insurance underwriter, the security guard, both armed or unarmed provider and ultimately, all of us focused on the customer. So we think this is central. Insurance companies are central to our go-to-market to take a large bit of the private security space.

Let me add to that. So on the public safety side, law enforcement side. I remember from almost day 1, we had a meeting, it was right when we launched the company with -- we were in San Diego at an entrepreneur's home that was hosting us. And he started talking to us about insurance saying, "Gosh, the PDs aren't your play. It is the insurance companies. You need to focus on the insurance companies." We all hope that was a good idea, but we had no real clear plan for it. And just thinking back over the years, there's been plenty, lots of insurance pools, insurance carriers, reinsurance companies approaching us for years. And in fact, 2 states where we've got backing from insurance companies, were paying -- one was paying for 50% of the device, and the other was paying for 100% of the device. This is 7, 8 years ago. So early, early days. Now that we've developed the learning management system, and we're launching that and we've got a training line that we were actually -- we're putting a lot of effort into and it's supporting the BolaWrap, that training is now going to make this much more attractive to insurance companies. The training is focused on outcomes. The training is focused on sight, sound and sensation, all 3 elements. It also now is in training, it's considering the human factors. What happens with officer judgment, how to improve your judgment, how to make decisions and risk and time-sensitive risk situations, how to use persuasion skills. All that's being trained now in a new partnership that we're into on the LMS, and you're going to hear more about it. But that training line, we didn't -- that was not available to our customer base for the year. So it's only become available now. I believe that's going to get the insurance business on the law enforcement side, much more engaged, reengaged in the very near future. And this reclassification by the ATF. I think that's going to bode really well. We've had 2 conversations with large insurance companies, and they were really focused on that fact. So there's a lot more coming, and there's a lot more to unpack about the ATF and that determination. But I can tell you right now the insurance companies, it was a wake up to them, and it's good to be back in touch with them on the public safety side. But Jared was just giving you a recent conversation we're having on the private side, which we're very encouraged about.

Great. The next question comes from our chat. What are the latest updates with Wrap reality?

Okay. Our virtual reality is great. I mean when we go to our customers, they are continually impressed about the depth and breadth of what it offers. And accordingly, we've resourced that product line appropriately. We've made significant updates in care and feeding and maintenance of the system. It's both hardware and software updates. It's a very, very compelling value proposition at the price point. It falls in line with de-escalation training and it falls in line with our go-to-market of blended training, both digitally through the LMS, in person and to follow-up on readiness with virtual reality. New scenarios have been added. And honestly, we see the recent developments from Barnes v. Felix, the totality of circumstances, ripe for application into virtual reality, and how that's trained and delivered. Virtual reality is with us, it's core to us. It's not on the periphery, it's central, and we can continue to deliver that and integrate it closer as a cohesive product and service to departments.

The next question comes from our Investor Relations inbox. Are you going to be raising money? If yes, what would it be for?

I'll take that one. As in the past, we regularly explore financing options that we believe are beneficial to all shareholders. As we look forward, we continue to be thoughtful and disciplined about how we capitalize this business. As everybody knows, I'm a significant shareholder in this company, so dilution affects me alongside of every other shareholder. I am highly sensitive to it. Any capital decision we made needs to be weighed against the value we believe that capital can create.

The next question comes from the chat. Are you pursuing anything with border or DHS?

Well, border and DHS are kind of 2 things to me. I mean, well, look, we are pursuing things with both border and DHS. The answer to that is yes. So the way we look at that is DHS is very broad in the duties that they have to our country. It's both in carrying out an important law enforcement function and also concern on the borders of our country, clearly. And our role in that applies. When it comes to federal law enforcement, again, referenced in our earnings script, we had a purchase order from DHS. We delivered training, which means we have to know how to integrate into their operations and be clear about our value that we deliver. But when it comes to border, this is where WrapShield becomes increasingly important. Drones are a problem. Bad guys with drones are a problem, and you need to detect them as early as possible. And yes, the government and DHS has a lot to do with the detection of drones, but there are blind spots. These RF silent drones present a unique problem, which means you got to go to some other type of phenomenology or physics to kind of get into that. And so part of the allure and the motivation and subsequent investment into Frenel, is that it's a differentiated way in its application for early detection of some of our nation's most emerging threats. So our conversation in DHS is largely on different fronts. First is supporting via BolaWrap and everything we went through today for law enforcement and then delivering and being part of an integrated system, which starts with detection. And Frenel is a way to do that. But I know, Scot, when you think border, you think of more than just the U.S. border.

We've got -- we've been -- everybody knows, a large part of our revenues come from overseas. And when we're overseas, we're typically talking about national police forces. In those conversations, it's very common to have an interior minister present or involved in the decision-making, particularly when you're talking about a countrywide deployment with the national police force, standardizing on some of this equipment. The same people that we're meeting on the BolaWrap programs when we're talking about training, when we're talking about cameras and speaking about VR, too, are the same customers we find ourselves in a Frenel called threat detection. They are worried just like ours about their borders, and they're spending quite a bit of money to protect the borders just like we are. So the same events that are happening here are happening all over other countries, allied countries of ours, and we're finding ourselves very easily in that conversation, and we're in a position to compete for that business. And that's exactly what we're going to do because Frenel has such a unique advantage. It's different than anything that's been out there. Nothing has been presented like this, and it's a really simple demonstration. You show the threats with our technology. And then you look at the most modern advanced thermal detectors with RF detection and maybe some other capability and you just simply can't see the threats the same way as we're able to image it. So it feels really good to go into accounts that we've been in for years and in different stages in different places in the sales cycle. Some we've already sold to, and they are repeat customers growing their business, growing their programs and some we're still trying to crack. But very easily, almost effortlessly we find ourselves in a threat detection discussion about Frenel and the question -- it's really not a sales pitch. It's when can we see this and how many -- what the supply chain look like? That becomes the question. And I've got it enough, where we don't -- we're not going to be having a sales issue. We're going to have a delivery issue. Technology speaks for itself. And the problem itself is very obvious. That's what I've got to say on border. And just a lot of the clients that are already dealing many of them so far at least, it's only been a month or so in change, but trust me, we're out talking to our most closest relationships and the reaction is when can we get a demonstration. So we're going to be busy in the next 12 months. We're going to be very busy.

The next question came in through our Investor Relations inbox. You mentioned that DC is a big part of your strategy. What are you doing there?

I'll take -- I'll take those things first. Look, I have my roots in D.C. in many ways. And to me, the first question says, what's your federal strategy that we're going to follow the money. As you got to go where the money is, which means the government knows they have a problem, when they have a problem, they put down a requirement. When they write down the requirement they allocate budget against it. So the DC being part of our strategy can be as simple as that for now, which is requirements, funding, and then our job is to marry our emerging capabilities, the solutions we've presented both from BolaWrap 150 to WrapShield and map our capability to funding that's already been identified. You can't get blood from a turnup is what they say, right? So you got to go where the money is. And so that means federally in D.C., there are a couple of different categories. First, there's DHS and others, and we have capabilities that measure those requirements, and we know there is money there. So we put effort against that. Then there's the Department of War, when we talk about early threat detection right now through Frenel, early threat detection with Frenel. So our DC strategy is to align our capabilities to where there is funding and requirements and then to put the people in our company who can work those channels appropriately to make that marriage.

I'm going to just add to this. It actually reminds me of the first business that I started 25 years ago with a couple of partners. We were literally matching money to companies that needed it. It was -- there were funds that were literally had a specific investment profile that they were looking for. And we knew the companies that had gaps in their balance sheet that needed to be filled. We're connecting buyers to sellers. It's not that difficult. And what I really like about what Jared was just saying and what I'm realizing, we started this company. We had to create our own requirement. There was no requirement out for what we've created, a remote restraint device, a device that uses no pain to bring anyone into subject into compliance, a device that uses sight and sound in restraint, they got sidetracked as a fire or and it got sidetracked as a fire and there you go. So you know how hard that, that push was, I didn't. If I knew what I knew probably never would have launched it. It was way harder and there were no requirements for this, so we had to do what we did. We're talking to insurance companies, we're bringing prototypes, we are doing the dog and pony show. Look how great this is. Look, we've revised this. We've optimized this. The device has gotten a lot better. And it works so much better than the past. We're having consistent outcomes with it. We're training it in a much more connected way. And finally, we have a way to answer the training issue, which is how do you scale training when we just -- we're just about to launch that and show our customers how to scale training. So what I love about this where we're going to. The requirements are there federally already. They're there. They're in place. And so part of our Hill strategy is we're identifying the money, and we're going right for it. We're going where the money is. It's really simple, and that's a big part of our DC strategy. Yes, there's bills we're going to produce. And yes, there's legislation and policies that we want to bring forward all of that. Yes, yes, yes. But right now, there's plenty of money that's already available, that's stated requirements, and we're going for that money. We're going to connect those dots.

Thank you. The next question came into our Investor Relations inbox. you're targeting 100% growth year-over-year. Is there anything that you feel that didn't materialize that caused you to miss the target?

Let me take it. Our prior guidance on our projected revenue growth was a good faith estimate at the time. And we do not have any information today that would cause us to update it. So at this time, we recognize the nature of our business. One or two meaningful orders, particularly the timing of those orders can obviously have a significant impact on where we ultimately finish the year. We're not backing away from any opportunities that we're pursuing right now, and we're not changing our expectations today. We also want to be transparent with our shareholders that as the year progresses, and we gain greater visibility into the timing of those opportunities, the target could move either up or down. And I just want to be super clear on that.

Got it. The next question came into our chat. Does the ATF's declassification apply to any other product lines besides BolaWrap?

Yes. The short answer is no, it just applies to BolaWrap 150. Look, it was a great effort by our company to work in concert with everyone, and we like that ruling clearly on the BolaWrap 150. Now when we look at our entire product suite and with the recent announcement of Raptor MX, our company will again work closely with the ATF, and we're hopeful, but to answer it directly, ATF classification only applies to BolaWrap 150 at this time.

Got it. All right. This question came in through our Investor Relations inbox. Can you walk us through management's history and relationship with Frenel before Wrap made investment into the company? And when those relationships began and how the opportunity came about?

Sure. The opportunity has actually been on our radar for years. We first became aware of it through one of our largest customers. but about 6 months ago, when we saw the technology operationalize, our perspective changed significantly. At that point, we brought the opportunity to the Board and I think it's important to understand the level of experience around that table. We have a retired Navy Admiral with direct experience in this area of warfare, who's evaluated technologies like these professionally almost his whole career. We have a private equity manager with decades of investment experience managing over $1 billion, and we have significant operational technical expertise on this board. So this was not a casual decision. The board conducted a robust evaluation of the technology, the market opportunity, and it is a strategic fit where Wrap is going and they greenlighted it. That's what happened. We saw something operationally that changed our perspective. We put it in front of people with the experience, the challenge it faces. They did the work, we made the decision to move forward. We've got to wrap things up. So if you don't mind, let's just 1 more and we'll call it a day.

You got it. The last question came into our Investor Relations inbox. If revenue does approximately double this year, what happens to cash consumption? And then at what level does the existing business become sustainably cash flow breakeven without relying on additional equity?

We're not changing our spending profile today. We're currently operating around a $3 million breakeven and we don't anticipate any dramatic increase in spending in the near term. That said, based on everything that we're seeing in front of us today, there is absolutely a scenario where we might accelerate it. And frankly, our bias right now is towards acceleration because the opportunities -- because of the opportunities we're actually seeing. But we're going to let the market and the opportunities earn that investment. If we begin to see the traction develop the way we believe it can, we will be prepared to increase our investment to capture it, and we will be prepared to access the capital markets to support that growth. So the message is no significant change in spending today. But based on what we're seeing, we could become much more aggressive. As such, it is not possible to accurately predict the amount of revenue we'll need to become profit.

Thank you. That concludes our question-and-answer portion. I know we didn't have time to get to all of the questions. So if you have more, please send them into ir@wrap.com, and we will get back to you. On behalf of Scot, Jared and the entire Wrap team, thank you for your engagement and support. We look forward to updating you on our progress. This concludes Wrap Technologies' Second Quarter 2026 Earnings Conference Call. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.