Wrap Technologies, Inc.

Hello. Thank you for joining WRAP's fourth quarter and full year 2024 earnings call. On the call today is CEO and Chairman Scott Cohen and President and COO Jared Novick. Good afternoon, everyone. At this time, 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 federal securities regulations. 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 solicitation of any 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. Unless otherwise stated, all reported results discussed in this call compare the fourth quarter and full year ended December 31, 2024, with the fourth quarter and full year ended December 31, 2023. I will now hand it over to Scott Cohen.

Thank you, Lou. 2024 was a transformational year for us. As many of you know, while we believed our business has always had great promise, we historically incurred consistent losses due to limited revenue and high operational expenses. To address this situation, when we came on to manage the business, we implemented a full corporate restructuring, knowing that that could cause a short-term cost to revenue and performance. However, last year's financial performance is not why we're all here. We're here to discuss our recent financial improvements and be part of a company that we believe is poised to become a leader in public safety globally. And we stand by that decision. We believe we're in a place to build the business we always thought existed within WRAP. The restructuring is now over. The business required a big step back in order to move forward. To achieve this, we aggressively slowed our burn and brought our monthly expenses to approximately $600,000 on a cash-annualized basis. We believe that that discipline gave us breathing room and time to rebuild and think the right way. Why did we go forward? Because after an intense deep dive into the BOLRAP program and talking to our customers across the country, we believe that the BOLRAP is an entry point enabling us to expand and emerge with an integrated end-to-end competitive offering. And just about 30 days ago, we put our money where our mouth is. Our confidence in that decision is reflected by the actions of our leadership team. And our most recent financing activity Purchases by entities affiliated with insiders of this company increased management's beneficial ownership by over 50%, sending a clear message. We're just not talking about alignment with shareholders. We're proving it. In 2024, revenue was $4.5 million, down 27% from $6.1 million in 2023. Cost of revenue decreased 37% from 3.2 million in 23 to 2 million in 24, with margins increasing seven points from 47% to over 54%. Operating losses improved 17% from 18.75 in 23 to 15.6 in 24. Net losses improved 81% from 30.2 million in 23 to 5.9 million in 24. I'm now going to hand it over to Jared, our CEO and President,

Thanks, Scott. Along with the transformation, we're planning a level set in return to business fundamentals. I'm going to talk about three areas, our product, our market, and our people. First, the product. We know our product works. We believe it's differentiated, and it's an offering that's making its way into officers' belts and into their vehicles. When we sat down with our top customers, and especially the customers that were fully supported by us, We saw data showing that the BOLA wrap is used more frequently than any other device on their belt. Customers consistently highlight the value of having a distraction tool they can deploy early before situations escalate to physical force. And as a result, officer injuries are reduced. The second part is the market. The demand for a solution is growing and is expanding further with the addition of new services. Across the U.S. and globally, the use of force policies are becoming increasingly restrictive. The opportunities for officers to rely on these traditional tools like tasers or batons are diminishing. This creates a clear gap in the use of force continuum. Without alternatives like ours, officers are forced to go hands-on, and injuries are rising. We believe the market has validated the need for a de-escalation tool, and along with that, a robust training program to fully support it. In our conversations with customers, they're asking us to become an end-to-end service provider and provide integrated solutions. They're asking us to go bigger. They're asking about our body cameras, virtual reality offerings, and additional services. As we step back and look at the market, we agree. It's time for a true competitor offering end-to-end services for public safety and law enforcement. Internationally, we have numerous late-stage opportunities in our pipeline, spanning various deal sizes. Many of these opportunities are the result of prior years' efforts in developing relationships and launching pilot programs, and they are expected to now bear fruit. To help accelerate our global growth, we started relationships to leverage U.S. government resources, such as the United States Export and Import Bank, and the Department of Defense's Office of Strategic Capital. We plan to be part of these efforts, which look to export made-in-the-USA offerings like the Bola Wrap, while aligning with federal initiatives to counter China's influence in emerging markets. Now, finally, and most importantly, our people. Of course, any real transformation starts with people to bring our differentiated product to this growing and validated market. So we invested in talent, and we will continue to do so. Almost every single leadership position at RAP has been revitalized with individuals who we believe bring unmatched operational experience, entrepreneurial spirit, and an unwavering commitment to our mission. The team we've assembled has a global network, a network we believe has an exceptional reputation in the law enforcement community, and it took them decades to build it. These aren't just hires, they're accelerators. We believe this team will dramatically expedite our current and future business. The recent acquisition of W1 Global and the hiring of two members from their immediate network came after several months of close collaboration in their advisory capacity. Even within a short time, the tremendous value of the W1 team became clear. Their leadership team and extended network are expected to bring immediate connectivity, trust, and credibility within the law enforcement community, both in the United States and internationally. And as a result, we believe the acquisition has already led to significant domestic and global sales opportunities. We now have enhanced access to senior leadership across global law enforcement. and we're actively building a domestic and international sales strategy centered on this powerful network. And just a moment on the pedigree of our recent additions. Their backgrounds span the public sector across organizations like the DEA, FBI, Department of Defense, NASA, DARPA, Air Force Research Labs, JSOC, Delta units, and intelligence agencies. And in the private sector, they are coming from leading companies in cybersecurity, aerospace, counterintelligence, physical threat assessments, anti-money laundering, and transactional crime. We believe this unique blend of public and private sector expertise now housed within WRAP Technologies positions us to bring talent, insight, and unmatched capabilities to both the law enforcement and the broader public safety markets. We believe our team now opens doors to critical elements of the U.S. federal government responsible for providing monetary and training support to law enforcement agencies in countries of strategic importance to the United States. The ability to unlock U.S. government-backed loans and grants is expected to greatly enhance our global offerings and expand our reach. I'll now hand it back over to Scott. Thanks, Jared.