WRAP TECHNOLOGIES, INC.

Recent Developments (Subsequent to Quarter End):

The ATF’s classification of BolaWrap 150 as an instrument of restraint and rescue, and not a firearm or weapon under applicable federal statutes, represents much more than regulatory clarity. It removes a significant historical barrier around where and how the technology can be considered and deployed. Combined with the evolving constitutional focus on the totality of an encounter, WRAP now occupies a differentiated position: a technology designed to provide an earlier response option that the federal government does not classify as a weapon. That significantly expands the environments, customers, and applications we can pursue and creates a structural opportunity that simply did not exist with this level of clarity several months ago.

The immediate consequence of the ATF determination is that law enforcement is no longer the boundary of our addressable market. There are more than 1.2 million licensed security officers in the United States, many working in environments where firearms are either inappropriate or unavailable but where personnel are still expected to manage conflict and escalating behavior. BolaWrap’s classification changes that conversation, while WrapTactics gives us a scalable way to train and maintain proficiency across large, geographically distributed workforces. We have already had dozens of conversations with prospective private-sector organizations following the determination. This is not simply taking the same product into another sales channel. The regulatory environment changed the addressability of the product and opened an entirely new commercial market for WRAP.

At the same time our core market is expanding, WrapShield extends WRAP into a much larger set of funded public-safety, homeland-security, defense, and technology opportunities. We are deliberately aligning the company with where customers are allocating capital. Domestically, that means following the return of public-safety and DOJ grant funding, including the 11 active programs we have identified that can support BolaWrap, body-worn cameras, de-escalation training, and virtual-reality training. Beyond that, funding is accelerating around autonomous systems, counter-UAS, sensing, border security, and public safety. WrapShield gives us an architecture to participate in those markets while remaining anchored to the same core thesis: detect risk earlier, make better decisions, and enable an earlier and more appropriate response. The combination of ATF declassification, private-sector expansion, and WrapShield therefore does more than add individual opportunities. It materially expands WRAP’s addressable market and positions the company around where customer demand and funding are increasingly moving.