Good day, and thank you for standing by. Welcome to the Wrap Technologies, Inc. Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. Webcast viewers can type in questions at any time via the webcast Q&A function. 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. I'm Louis Springer, Vice President of Finance. Joining me today are Scot Cohen, Chief Executive Officer, and Jared Novick, President and Chief Operating Officer. We appreciate your time and continued interest in Wrap Technologies, Inc. Before we begin, please note that certain statements made on today's call are forward-looking statements within the meaning of the federal securities law. These statements are based on current expectations, assumptions, and projections and involve risks and uncertainties that may cause actual results to differ materially. Important factors are discussed in our filings with the US Securities and Exchange Commission, which are available at sec.gov. The forward-looking statements included in this conference call are only made as of the date of this call, and we disclaim any obligation to update forward-looking statements except as required by law. Nothing on this call constitutes an offer to sell or the solicitation of an offer to buy any security. Any offering, if made, will be pursuant to an effective registration statement and prospectus. Unless otherwise indicated, our commentary compares the quarter ended 09/30/2025, with the prior year period. As a reminder, we may reference non-GAAP measures to provide additional insight into our operating performance. Reconciliations to the most directly comparable GAAP measures are or will be provided in our supplemental materials. With that, I'll turn the call over to our CEO, Scot Cohen.

Thanks, Lou. Good afternoon, everybody, and thank you for joining us. The third quarter represented our strongest in the past two years, delivering $2 million in gross revenue, 12% of which came from subscription-based sales. Suggesting a clear improvement in our core fundamentals. We believe it also marked a pivotal stage in our transformation from being a straightforward device manufacturer to a provider of nonlethal response subscription solutions for law enforcement and counter UAS operations. Through a series of coordinated product launches, strategic partnerships, and the opening of our new US manufacturing hub, we believe we are advancing our mission of safer outcomes while expanding our reach into federal, defense, and international markets. Beyond the financial results, we believe Q3 was a pivotal moment of traction and validation. Demonstrating the strength of our technology in the field and the clarity of our direction guiding us forward. Over the past ninety days, data collected from 516 law enforcement agencies shows a measurable and accelerating shift in use of force practices. Wrap adoption continues to rise while we have observed TASER, pepper spray, and baton use declining. I wish we could take credit for it, but it's the fact that the policies are tightening around the country, making it harder to use the tools on the belt today. At the same time, we're observing a huge run-up in hands-on incidents. And as that happens, this results in officer injury and litigation expenses that far exceed the billions of dollars incurred. Many times, these events occur when the officer is at the highest risk—closing the gap of time and distance. That is precisely where our nonlethal response aims to change the equation. We are now seeing that when departments are fully deployed and properly trained, BolaWrap becomes the most used tool on the belt. Allowing officers to recognize the opportunity to gain safely at a distance through a nonlethal pre-escalation solution. As of today, BolaWrap 150 has demonstrated a 92% field success rate with zero reported deaths, zero serious injuries, and zero lawsuits. A record unmatched by any other known or widely deployed tool in public safety. Departments across North Carolina, Colorado, and Kentucky are reporting to us that their BolaWrap deployments are outpacing TASER use even though there are fewer BolaWraps in circulation. We attribute this acceleration to policy reform, community expectations, and command-level support across the country. As these conversations deepen, we uncover a powerful truth: that successful nonlethal adoption isn't just about delivering devices or providing training. A critical element is policy alignment. That realization—that success deeply depends on training and policies—is driving our evolution. We're now building a nonlethal response ecosystem.

Thank you, Scot. Here at Wrap, we are building a connected ecosystem of training, policy, and tools designed to work together to deliver safer outcomes, measurable performance improvements, and recurring value for our customers. I'll break this down into three areas. For training, our Wrap Tactics platform is a subscription platform. It provides behavioral, scenario-based officer training. It's now active in agencies such as Highland Park in Illinois and Lee County in Florida, both of which have converted to recurring subscription models that combine BolaWrap use with ongoing digital learning, analytics, and performance tracking. Through our collaboration with Lead Tech USA, we're helping departments nationwide create nonlethal responses and policies that align with tactical needs. These aim to ensure agencies not only have the tools and training but also the policy framework to use them effectively. Beyond the BolaWrap 150, we've expanded our product family to include WrapVision, the body-worn camera system, and WrapReality, an immersive VR training platform. And now our new Merlin unmanned aerial payload, enabling drone-based response and interdiction. Together, these three pillars—training, policy, and tools—form the foundation of a recurring systems business model. Transforming what was once a one-time hardware sale into a multi-year subscription contract that integrates hardware, software, and training. We believe this model creates scale, predictability, and enduring partnerships with agencies by shifting Wrap from transactional sales to a long-term systems provider at the heart of modern nonlethal response. This advancement is also reflected in our financial results. While managed services contributed lower-margin professional services, the higher-margin system sales driven by BolaWrap, Wrap Tactics, and WrapVision delivered the majority of our growth. We believe this shift towards recurring and integrated systems revenue is driving margin expansion and positioning Wrap for profitability. Our focus remains on scaling the business responsibly, improving efficiency, strengthening the balance sheet, and expanding high-margin recurring revenue streams. With that, I'll pass it back to Scot.

Thanks, Jared. Wrap is bringing nonlethal responses back to the forefront. I now predict a clear future where nonlethal responses can integrate with drones, law enforcement, defense, and homeland security. A future where policy leaders demand that ground robots, protecting schools, hospitals, and transportation systems, invest in nonlethal responses. We've already demonstrated the world's first drone-to-person interdiction using BolaWrap's patented technology, demonstrating that Wrap's capability extends beyond the street into the sky, into the future of public safety. We believe our integrated ecosystem positions Wrap to lead the next era of innovation across multiple domains. The US law enforcement market includes roughly 18,000 agencies and approximately 1,000,000 officers. An enormous opportunity to own. But the adjacent markets—the private security market, the commercial market, corrections, healthcare, transportation, and defense—are at least 20 times larger. Looking at the counter-UAS market, which our Merlin and PANDA programs address, is projected to exceed $15 billion globally by 2030. By integrating our nonlethal response technology into aerial and robotic systems, Wrap is tapping into one of the fastest-growing segments in defense and homeland security. Jared, why don't you give an explanation of what we're doing federally?

Yeah. Thanks, Scott. Now that our total addressable market is no longer limited to just law enforcement, it is now expected to encompass all global public safety. To support our expansion into defense and homeland security markets, we established Wrap Federal. It's designed to be our DCAA-compliant federal division, and we've begun building a presence in Washington, DC. We've added new hires and contracted federal advisers to strengthen relationships across key agencies and to ensure that we, as Wrap, are aligned with the Department of Defense and the Department of Homeland Security and their procurement standards. This structure through Wrap Federal positions us to participate in upcoming federal modernization initiatives focused on nonlethal counter-UAS and machine-demand capabilities. Internationally, Wrap continues to demonstrate strong momentum. These international markets also represent significant reorder volume and growing demand for officer recertifications as agencies expand training programs and renew subscriptions under our Wrap Tactics ecosystem. Together, our federal and international efforts reflect a unified strategy, advancing Wrap's mission from a US law enforcement solution to a global provider of scalable, nonlethal response. In September, we officially opened our Norton, Virginia manufacturing and training facility, inaugurated by Governor Glenn Youngkin and state leadership. This facility anchors our Made in America production strategy. We are seeking to expand capacity, create high-tech jobs, and ensure Wrap's eligibility under federal procurement preferences for domestic content. It also serves as our hub for R&D, product demonstration, and immersive training—bringing agencies and partners together to experience Wrap's technologies firsthand. This investment is intended to strengthen our ability to scale, innovate, and deliver systems that keep people safe, all built right here in the United States. We acknowledge that lethal tools will always have a role in policing and defense, but our mission is to ensure that nonlethal comes first. That's the bridge between today's encounters and tomorrow's outcomes—saving lives, reducing liability, restoring trust. Our integrated ecosystem of training, policy, and tools presents a key opportunity to extend into commercial, healthcare, transportation, defense, and education sectors, protecting communities, schools, hospitals, and critical infrastructure across the US and abroad. I'll pass it back to Scot.

The third quarter has shown that our fundamentals are solid, our systems are working, and our strategy is gaining traction. We're bringing today's momentum to tomorrow's larger opportunity—one that is intended to reshape the role of nonlethal response worldwide. What began as a single device is now a nonlethal response with tools, training, and policy that operate on the ground, in the air, and across public domains. Our mission remains clear: safer outcomes for officers, safer outcomes for the community. And we believe our opportunity has never been greater. Thank you for your continued trust and support. We're now going to turn the line over to questions. Lou? Back in your court.

Thanks, Scott. The first question coming in is from Twitter. Now that the company seems to be heading in the right direction, as you think about your future capital needs, do you see Wrap finally being able to approach the capital markets and execute a public secondary as opposed to very dilutive and expensive private placements and preferred offerings of the past?

Yes. I do see us being able to tap those markets. The board and management are regularly evaluating financial options, and yes, the capital markets have been open to us, so the answer to that is yes. We will continue to evaluate those options.

Thank you. The next question comes from online. What made you go back to nonlethal, and how is that different than less lethal?

You know, we started this company as a nonlethal device company. In fact, we started a site, nonlethalnews.com. The Axon, at the time, was called Taser, and pepper spray companies were all categorizing themselves as nonlethal. And, actually, we went to market as a nonlethal tool, if some of you remember from way back in the early days. But it wasn't until the data that we've been so aggressively seeking. And as we've really gotten to look at this data and shared it with a number of different influencers in the space, use of force experts, and a number of different types of lawyers that specialize in this area, we are absolutely clear this device is nonlethal. And you're going to hear us talk a lot more about that. That puts us in a different category than the other companies or products that are on the belt today. They've all gone into a less-than-lethal category. And we feel very strong about our nonlethal status. As we continue to examine the data, and as it continues to build, that nonlethal status just gets clearer and clearer. So I think bringing back that word was really driven by the data we're looking at. And when you look at the datasets that we're looking at, it's super clear to us. So, yes, we're coming back. And yes, we think there's a big difference between less than lethal and lethal. And this is the space that we're playing in. This is the space where we're going to grow, and this is the space where we're going to innovate, both on the policy side, the tools side, and the training front.

Got it. Thank you. The next question comes from Twitter. Can you provide clarity on the bylaws amendment if you guys are planning on doing any splits?

On the bylaw amendment, there's a detailed explanation in the SEC filings. So anybody who wants the details, it's right there for you. It's pretty lengthy, so I suggest you go to that. And with splits, we have no intentions to split. That was a protective measure that offers flexibility. So there's no intention to do any kind of reverse split.

Thanks. Next question comes from online. What gives you the confidence that adoption is happening and that departments are moving away from other less lethal tools and solutions?

I want to have a conversation about this. So, Jared, I would like you to weigh in here.

Sure. What's driving our clarity is the documented cases, the documented deployments. The deployment data is spiking, and we're getting reports regularly. Yesterday, we just got a report of a department that had 10 devices. They used it 17 times successfully in less than eighteen months with 70 laser deployments. Those numbers—that's just 10 devices. But if you think about it, there's no reason why that should be an isolated success story. That success was led by a connected trainer who had a certain belief and mindset around our program. I haven't talked to that chief directly, but that dataset right there, if you just take that to a neighboring county, and if you compare that to the TASER use of a neighboring department or county, our device is being deployed 1800% more than a TASER or pepper spray. So I just have to think, with that kind of traction and usage, to me, it's clear—it's being adopted. I'd love to take credit for it, but I think a lot of the success is coming from policies that are getting tighter and tighter. And as a result, they're going to the BolaWrap because their choices are now limited. As we get our training integrated in a more connected way, we're seeing this happening. Deployments continue to take off, and I believe that with the rate we're seeing this, it will have to spread to the rest of the country because it's being used. It's being used because it's needed. It's making officers safer. It's giving them an advantage—a clear advantage they never had. I think our whole company believes in that because we're looking at the videos, the body cam footage, and the data, and it gets clearer every day.

Yeah, I'll add to it.

I can add in on that. Look, the reason we feel that way is because in our conversations—and remember, we've spent time over the last quarter and previous quarters directly engaging with departments that have BolaWraps. We also engage with departments that don't have BolaWraps. For those that do, this data is coming right from them and their conversations. They are using the BolaWrap to gain an advantage in time and distance. We started having these conversations, asking how many arrests you make a day that end up in handcuffs. The answer is, that's probably one of the riskiest things an officer does. When they put their hands on a subject, it's the exact moment when the subject is likely to resist violently. That's when their reality sets in, like this is getting real. When you give an officer a BolaWrap and they have the legal right to apprehend someone, how are they going to close that distance and minimize the risk? They're not maybe legally allowed in their policy to use higher uses of force. They may not be allowed in policy to use a TASER or a baton or anything else. What we're seeing in these discussions—these are trusted conversations— is that hands-on incidents are going up because they don't have a tool. When the hands-on incidents go up with someone who has unknown intentions, they're getting into a fistfight. It means injuries are going up, and claims are going up. So when that light bulb goes off, it's less about the buttons on the BolaWrap. While we certainly have a great training program to teach you how to use a BolaWrap, the real key is when and how. Realizing as soon as there's a legal right to apprehend, and an officer has to get from over here…

Thank you, guys. Next question came from the online portal. Do you have any updates on where we're at with the Chile deal you mentioned in Q2?

I'll take it. We get dealings with Chile on a weekly, sometimes a daily basis. It's a constant effort. There’s just tremendous opportunity that we're all reading about in Chile. We get the news when you get the news. We're seeing it. We're very active, and we're anticipating doing some real business down there. Hopefully, it's next year. But lots of engagement. And we continue to fight the fight and present and show up when we need to show up. But we're tracking it. We think they're looking for a nonlethal solution. When you're looking for a nonlethal solution, there aren't too many options out there. If nonlethal is what you truly want, you're going to find us. Hopefully, we find you, but you'll find us because this is the only place you can get it right now. So that’s why we don’t believe Chile's going anywhere. We don't believe any of these conversations are going anywhere. We've got to get them over the line. We're putting the team together to execute and get these deals over the line to bring what we all want, which is a much bigger business. We had to discover who we were, and that took a lot of work. It took a long time. We apologize for that. But guess what? We're here now, and we're clear. We know what we've got, and you guys invested in the right tool. This tool works. But it just couldn't be a tool that was sold. It had to be coupled with integrated training, and policies matter. We're in policy discussions on a daily basis here now. It's part of our go-to-market strategy. It's part of our talk track. It matters. So the clarity is setting in, and there's a lot of movement. You'll be hearing us unpack over the next couple of quarters how we're positioning and how we're getting after this opportunity.

Thank you. The next question comes from online. What makes DFRX different than DFR?

Hey, Scott. I can take that one.

Please.

Well, you know, law enforcement and public safety today are now becoming more and more accustomed to drones as a first responder. Just the idea of drones was somewhat new not too long ago. And the way they're being utilized today by a large part, at least in public safety, is to put what we call eyes on in advance and respond quickly with situational awareness to officers. They can be rapidly launched. There's sometimes two-way audio, and they relay video. But in terms of capability beyond that, they are largely limited to just a remote passive observer. Now with the expansion of what we do, just the idea, can you put a BolaWrap on a drone? Well, technically, you don't need a yellow device to launch and deploy a BolaWrap. So that means you now have a small form factor. Because drones have limited size, weight, and power, we're actually able to stack small form factors of cassettes onto the drone. When you do that, you can have four, six, eight, however many the drone can support. Remind you, we can partner with any drone capability that we'd like. So now you're giving officers everything they have with drones as a first responder but now allowing them to do something. That doing something is the X part in DFRX. We believe that when you put these cassettes on the drone, you now can interdict. What does that mean? When you manage the threat and are trying to increase safety and buy time and distance—those are our mottos. You're actually able to deter, delay, and distract with BolaWrap technology. That's novel, unique, and protected. We have a proprietary way to add a nonlethal response that's not just on the belt but also on a drone, taking us to the skies. So what we are doing with DFRX is taking the next evolutionary step in DFR. We're giving a proactive control element before things escalate. Multiple engagement opportunities with the aim of keeping everyone safer.

Thanks, Jared.

Yeah. We're going to go pretty quick on these last two, Lou. You want to ask the next one, and I'll take the next two.

Sure. Absolutely. The next question came from the online portal. Please comment on your plans to obtain sales. Can you describe your Salesforce?

Yeah. Probably about eighteen months ago or call it two years ago, we were getting pretty close to 150 or so employees, and we've dropped all the way down to probably 15, I think, at a low point about eight months ago. Now we're ramping. Why are we ramping? Because we're clear. We've taken offense. We've gone from one person in marketing and one person in sales to a total count of close to 18 people that touch sales and marketing, including the DC office. It's a huge push. It's the largest resource, and it's the biggest hiring spree we've done, all in sales and marketing. It shows you what we're thinking. We're going to press this because the time is now. You don't get this opportunity many times in your lifetime. There's a problem out there, and technology got ahead of the policies. No one had ever seen this tech before—nobody had thought of it before. There weren't policies supporting it. There wasn't training. Supporting it. We came up with our own training that is changing, and we get to ride that change. We believe this will move a lot faster now. The heavy work, the heavy lifting, a lot of wood chopped was done. But now, with this kind of Salesforce and team, it's a big indicator. We think there's a very big and large opportunity for us there. I think the final question was where's the company on declassification. The government shutdown didn't help things, but we think we don't think this should have been classified as a firearm to begin with. We've put a lot of effort into it because we know what it unlocks. If we get this declassified, it opens up a very large international opportunity for us, allowing us to sell into a much larger security guard market where guards are basically unarmed and not trained, and they have really lousy policies. So the corporate side, let's call it the commercial side of this, is actually bigger, and that's hard to get your head around. Jared mentioned that TAM has gotten massive here. So if this starts tracking like we hope, and we're all on the call here because you're downloading our latest and greatest. But this company should be going on a hiring spree. This company is going through a growth phase now, and we're certainly putting our money and resources behind marketing and selling the product. That's what we need to do right now. The big step is, we know, we finally know who we are, and we're clear about it.

That's it. I think, Lou, let's wind this up.

Thank you, Scott. That concludes our question and answer portion. On behalf of Scott, 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 Third Quarter 2025 earnings call. Have a good evening.

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