Wrap Technologies, Inc. Q3 FY2025 earnings call

• Third quarter was the strongest in the past two years, shifting from device manufacturing to nonlethal response subscription solutions for law enforcement and counter UAS operations. • Through product launches, strategic partnerships, and a new US manufacturing hub, progressing in transformation. • Wrap Tactics platform is a subscription-based training platform with agencies using recurring subscription models. • Expanded product family to include WrapVision, WrapReality, and Merlin unmanned aerial payload. • Established Wrap Federal for defense and homeland security markets, and has international momentum. • Opened a US manufacturing and training facility in Norton, Virginia.

The third quarter delivered $2 million in gross revenue, with 12% of which coming from subscription-based sales.

• The company sees momentum in its transformation and growth opportunities in various markets including law enforcement, defense, homeland security, and international markets. • Focus on scaling the business, improving efficiency, and expanding high-margin recurring revenue streams.

Q: 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?

A: Yes. The board and management are regularly evaluating financial options, and the capital markets have been open to them, so they will continue to evaluate those options.

Q: What made you go back to nonlethal, and how is that different than less lethal?

A: Started as a nonlethal device company. Data shows the device is nonlethal, different from other less-than-lethal products. Data supports the nonlethal status which is clearer and different from less than lethal.

Q: Can you provide clarity on the bylaws amendment if you guys are planning on doing any splits?

A: Detailed explanation in SEC filings. No intentions to split, it was a protective measure for flexibility.

Q: What gives you the confidence that adoption is happening and that departments are moving away from other less lethal tools and solutions?

A: Documented deployments and spiking deployment data. Success stories with deployments, connected training, and policies driving adoption. Hands-on incidents increasing without proper tools, leading to injuries and claims, making nonlethal solutions more attractive.

Q: Do you have any updates on where we're at with the Chile deal you mentioned in Q2?

A: Active engagement with Chile, anticipating real business down there next year, tracking the opportunity as they look for nonlethal solutions.

Q: What makes DFRX different than DFR?

A: DFRX allows putting BolaWrap on drones, enabling interdicting, deterring, delaying, and distracting with BolaWrap technology, providing proactive control before escalation and multiple engagement opportunities.

Q: Please comment on your plans to obtain sales. Can you describe your Salesforce?

A: Ramping up sales and marketing team, going from few to close to 18 people in sales and marketing. Focus on pressing ahead with the opportunity as policies and training catch up with the technology.

Q: Comment 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. If declassified, it opens up a large international opportunity in the security guard market.