Investment Thesis
Wrap Technologies is a deeply unprofitable micro-cap company burning cash at $1.2M annually on only $1.1M in revenue, resulting in -408.6% net margins and -27.1% ROA. While the strong $7.3M cash position and zero debt provide temporary runway, the company lacks clear path to profitability with minimal revenue growth (3.7% YoY) and exploding losses. The 62.2% gross margin indicates unit economics potential, but operating expenses consume revenue 4x over, making the current business model fundamentally unsustainable.
Strengths
- Strong liquidity with 7.59x current ratio and $7.3M cash providing 5+ year runway
- Zero long-term debt and favorable capital structure offering financial flexibility
- Gross margin of 62.2% demonstrates unit economics viability if operational scale achieved
Risks
- Massive operating losses of -$4.8M on $1.1M revenue with -408.6% net margin
- Negative operating cash flow of -$1.2M indicating unsustainable business model and cash burn
- Minimal revenue growth trajectory (3.7% YoY) with no demonstrated path to profitability or positive operating income
- Shareholder dilution accelerating with -37.5% YoY EPS decline despite revenue growth
Key Metrics to Watch
- Operating cash flow trend and achievement of positive FCF
- Revenue growth acceleration and gross profit dollar expansion
- Operating expense reduction as percentage of revenue
- Cash balance runway and quarterly burn rate sustainability
Financial Metrics
Revenue
1.1M
Net Income
-4.5M
EPS (Diluted)
$-0.09
Free Cash Flow
-1.3M
Total Assets
16.7M
Cash
7.3M
Profitability Ratios
Gross Margin
62.2%
Operating Margin
-429.3%
Net Margin
-408.6%
ROE
-31.5%
ROA
-27.1%
FCF Margin
-112.6%
Balance Sheet & Liquidity
Current Ratio
7.59x
Quick Ratio
5.15x
Debt/Equity
0.00x
Debt/Assets
13.7%
Interest Coverage
N/A
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-15T10:25:34.810172 |
Data as of: 2026-03-31 |
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