Q4 2020 Wrap Technologies Inc Earnings Call
Please for the operate in today's society.
We have had initial contact of the introductions to numerous senators governors congresspersons attorney generals and insurance commissioners, representing the state local and federal level. We have also been working with a variety of organizations on potential alliances and partnerships.
The funding of police agencies is another topic being distressed discussed across the United States.
We were pleased to recently here of the opinion in the United States Attorney General nominee Merrick Garland.
He stated that neither he nor president Biden support the funding. Please both believe in giving additional resources to police departments to help them reform and regain the trust of their communities. He also suggested additional resources are needed to better handle mentally ill suicidal subjects and people.
Crisis for.
A day, how we championed the escalation is directly part of our growth strategy, which is comprised of three areas education training and devices.
First is education.
<unk> includes information of the benefits of limiting for us and balancing words with actions to resolve volatile matters. It also includes a better understanding of the attributes of mental illness or the behavior of those under the influence of drugs or alcohol.
Like the escalation mental illness is at an all time high in terms of awareness. There is a heightened level of appreciation across the globe about of mental health awareness and the notion that what works for some situations does not work on all especially when somebody of mentally impaired oriented crisis.
The second area is training and this has been an important part of our strategy since inception.
It is important to note that for wrap training as far beyond just how the use of bowler wrap our vision for what our training platform can do is expansive and serves as a comprehensive end to end system.
We want to be able to deliver any type of scenario of police officer member of the military or someone in security could face.
This could.
Could include avoiding escalation D escalation using verbal commands how to handle of mentally ill person with the knife and ultimately to a scenario of using a firearm.
Our goal is to be part of the reform process and the significantly upgrade the training and education law enforcement men and women receive.
We believe that long term training will be a significant part of our business.
We believe the best training system constantly evolve our deep with information and provide constant learning for individuals' plus it shouldn't be easing and entertaining.
We believe we deliver that through our selection of advanced training scenarios.
We will then put these scenarios into virtual reality, so officers can experience the situation in a realistic but stimulated atmosphere of.
Our training portal called wrap reality is a very important strategy that was reinforced this past December with our acquisition of incentives.
We were initially attracted to incentive due to its content library specific to law enforcement and corrections with 47 training modules at the time of acquisition.
We believe this is one of the largest libraries in the industry. So.
So far the integration has gone well, including the full rebranding of incentives to wrap reality.
We believe our training system will develop into one of the best in the industry from a financial model perspective. As you can appreciate we expect a wrap reality products will have higher gross margins that over time will help increase our consolidated gross margin.
More importantly, we anticipate our customers will subscribe to our training system. So public safety officers can have constant access to visually see best practices and received the requisite training.
The third growth strategy is to have an innovative portfolio of devices, which are effective and do not rely on paying compliance.
We expect to be a leader in avoiding escalation.
Current tools available to law enforcement use varying degrees of pain compliance to have an effect on the subject.
We continue to look at ways for the bowler wrap to be better more importantly, as the wrap brand becomes known for best in class products. We believe we can expand our devices and products beyond the bowl of rap.
Our research and development team is strong and is helping drive this for our company.
Combined the total available market of the elements of our growth strategy is well into the billions of dollars.
This space is very fragmented with only a few larger players we'll feel we feel we are very well positioned to sell into the total addressable market.
From day, one our mission has been bold, we want to see remote restraint become standard for every entity involved with the enforcement globally. We strongly believe that most incidents can be handled without paying compliance that is not to say there are times of enforced as required criminals of often do irrational things. However.
We believe we will make a positive impact with the right balance of education training and devices.
By doing so we will be adding to the greater good of community and society as.
As I mentioned at the beginning we strongly believe we are uniquely positioned to help make this happen.
When we do our business will grow and our shareholder value will increase.
Right now I would like to share a 45 second video highlighting wrap reality as I mentioned previously the wrap reality platform will incorporate not only the bowl of wrap but all of the different tools available to the law enforcement.
As one example, we will compare one of the training scenarios for the body Cam field use from Virginia, Minnesota, when we come back Jim will provide you with some financial details from our fourth quarter.
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Good afternoon, we had another solid quarter of revenue growth, we achieved $1.4 million of revenue for the fourth quarter and $3 9 million for the full year, both are great metrics, representing over 460% growth from prior periods.
International revenues represented 64% of total to 2020 revenues compared to 28 per cent in 2019, we.
We believe COVID-19 adversely impacted 2020 revenues domestic agencies were affected.
We're effectively closed for our business last April and May, but we adapted our sales and training to the new environment for the balance of 2020, starting last March we were unable to travel internationally to support our distributors and COVID-19 significantly impacted logistics of delivering products to the airlines.
Great disruptions only due to the international distributor of groundwork Commerce established in 2019 were we able to generate international 'twenty 'twenty sales level of times out of the prior year, we have sold product into the 36 countries demonstrating the breadth of the vote.
The wrap opportunity.
As we look for fiscal 2020, one we expect our revenue to continue to grow while we are experiencing domestic sales growth. We still expect the international sales to be a majority of 2021 revenues.
However, we expect the international travel limitations to continue to impact our business for at least the first half of the year and this could delay helping our distributors close on business in the pipeline and.
Until the environment becomes more stable our revenue could.
Still be lumpy or.
Our gross margins were 33% on the fourth quarter and 34 per cent for the year. Our goal is the improved gross margins through a combination of efficiencies and product innovation.
I am very excited about how we built the R&D team in 2020, we are developing new and improved products for the global public safety market, we filed important patent applications in 2020 and our of filing the important new applications in 2021 per.
Previous U S patent filings are now being granted and are issuing we have filed for international patent protection in 55 targeted countries to protect our IP and these patents are also starting to issue.
We are also protecting our trademarks in key countries with our wrap dot com domain name, our stock symbol change to W. R. A P and with the global patent and trademark filings. We are building a strong IP moat to protect our business.
The balance sheet remains exceptionally strong 85 per cent of our total assets are comprised of cash cash equivalents and short term marketable securities, which together we refer to as cash.
We ended 2020 with $41 6 million in cash we continue to operate with minimal debt, which is our expectation for the foreseeable future with the P. P. P loans, we were able to maintain staffing in spite of significant sales decline in March and April of last year, maintaining our staffing position.
The us for the balance of 2020, and we are well staffed for 2020, one and December are 414000 dollar P. P. P loan was forgiven.
Which we recognized on the P&L.
And the other income category, we continue to be pleased with our financial performance, especially considering the COVID-19 in civil unrest headwinds, we have a terrific team the performed admirably during a difficult year and I. Thank them for their professionalism and dedication to our mission without of I will turn the call back to <unk>.
Tom.
Great Jim Nice work for you and the finance team now I would like to give you a business review of the fourth quarter with our operations and marketing highlights first.
First as Jim mentioned, our revenue of $3 9 million for 2020 delivered solid growth year over year and quarter over quarter, finishing our fourth quarter with over $1.4 million in revenue.
At the end of 2020, there were 460 agencies trained on bowler App now we are at 520 agencies trained around the world, which is over triple what it was at the beginning of last year. Additionally, at the end of the year. We had over 1500 officers certified to train their departments, which is more than double what it was at the beginning of last.
At year trainer officers and agencies are our best leading indicator of future sales. We were very pleased with our growth here, especially with travel restrictions in place most of the year.
Despite there being many law on military bodies focused on enforcement, we are extremely focused on targeting police agencies with our initial sales efforts. There are over 18000 police agencies in the United States that have over 800000 officers at the local and state level.
Another 100000 officers of the federal level internationally. We believe the numbers are at least 12 times what they are in the United States. We have conducted demonstrations and training mainly through video conferencing to numerous international distributors and police agencies, we have sold bowler wrap products to 36 different countries to date.
As Jim mentioned about two thirds of our revenue comes from outside of the United States. We continue to drive our global presence, although we must work smarter today than usual due to travel restrictions caused by Covid. We are excited at what our business can do when travel restrictions across the globe relax one recent.
I would like to mention was in the United Kingdom. In November 2020, we received funding from the United Kingdom Defense and security accelerator program to develop a longer range bolo wrap this afforded our research and development team on an excellent demonstration opportunity that will occur later this month with one of the largest groups in Europe, highlighting our rote boats.
Restraint capabilities.
As we have said the larger the agency the longer the time it takes from introduction to order.
There are several factors, which impact timing related to sales activity, including budget availability.
Another factor that impacts timing of sales is level of distraction anytime there are unexpected distractions for police agencies pilots and tests can be delayed sometimes significantly.
We saw a significant amount of these types of distractions throughout 2020.
Starting with the remarkable number of protests and demonstrations nationwide since last summer what's left police resources spread very thin. This resulted in delays deferrals and suspended tests for many many agencies. Despite COVID-19 on these distractions, we were able to grow our domestic sales by 180% year over year.
International had its fair share of distractions, but we have continued to make very good progress around the world with over 1100% growth year over year. The Covid pandemic was impactful internationally to us since travel was severely limited for most of the year and continues into 2021 for example, our director of International.
<unk> sales Jags Gil has been confined to his home in the U K for most of the past six months due to COVID-19 restrictions.
Without as much travel we continue to head using zoom calls webcast and virtual demonstrations to many countries.
I want all our stakeholders to know that we are acutely aware of the opportunity in front of us at <unk>.
Civilized and rules following societies, the essential to our collective living our entire organization is aligned to deliver our technology platform to our global customer base to make this possible.
We can make avoiding escalation as well as D escalation of the norm I continue to be extremely excited about the opportunity we have to make a material positive contribution the global police reform and to improve society.
I now invite you to watch our two minute fourth quarter of video. These highlights are more examples of the traction and numerous field uses we are getting with a bowl of wrap we are proud of each instance, and its outcome. After the video Paul will monitor our question and answer session.
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The Batman device straight from the simple here on the belt now this is the newest step belief in our area are taking hoping to make changes in the midst of protests across the country of Alicia trying out a new way to catch the suspects you know the new state of the art device. The Safeway must train people. So that they can help that Cincinnati Police Department is currently testing our strength.
<unk> is to de escalate the situation of the Sheriff's Deputies began training today on the new device that kind of reduced Japanese use of physical for its called the bowl of wrap fallout wrap a bowl of wrap bowl of wrap called a bowl of wrap in its best described as for remote Hancock will produce safer outcomes, where for it is necessary.
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I Hope you enjoyed that great video, we will now move to Q&A with Tom and Jim We will start off the questions with our two analysts who cover us Jon Hickman from Ladenburg Thalmann, and Greg give us from Northland Capital markets. Then we'll go on to the questions that have been.
Second during the webcast, we will start with Jon Hickman from Lindbergh Zelman go ahead John.
How many questions I get the alcohol.
I know you on.
Okay.
From a gross margin can you elaborate a little bit on.
What we can do on some of those near term for the term.
Our long term.
Yeah, we have the number of efforts.
Efforts going on we're working on the production and labor efficiencies for the short term and we're working on major product innovations for the long term for longer term goal is well above 50% for margin.
It may not be achieved for a number of quarters and we are targeting that and we're working very hard to get there.
Okay.
So let's put the mention of products of let's say he does that mean day youre working on the device.
The regulators by the ETF.
Oh, Yeah, we're working on a number of different projects absolutely. That's one of you needed a.
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Well I'm going to go ahead, and the answer I hopefully everybody else can hear we.
We are and we are working on a number of.
I got it now starting everybody a little fat fingering is there so.
We are working a number of different projects and the short answer is it's.
It's going to come down to regulation.
Out of the laws with ACF are antiquated. So we'll have to determine once we get those technologies in for a look that will be able to do that but it is certainly something that we are working on for our R&D areas.
Hum.
Could you tell us about.
What's going on there on that trial.
Yeah. So we're in constant communication with LAPD and of our belief at this point now that theyre coming out of the Lockups on the Department has had a lot of things to deal with from the Covid restrictions in California that the our belief is that theyre going to continue to extend that trial that now with vaccination is coming into play and with some of those restrictions starting to lift.
They're going to be going a little bit back more to normal policing. So our belief is that that is going to be continuing for a while but until they formally say something which we expect for the next couple of weeks. That's what we're being told we don't have any further information right now on it.
You're expecting another six months of infection.
Yeah, I don't know the exact timeframe, obviously until they make a decision, but we do expect them to continue the trial as they come out of these COVID-19 restrictions with vaccines and police and getting a little back to normal I didn't hear one close that they had as many of 500 officers out on leave at any given time due to getting COVID-19 exposure. So theres been a number of things that impact of the agency and that's why we believe.
The in the discussions we're having with them that that will be extended.
And then for you.
It looks like you burn of about three.
Out of millions of dollars each quarter.
Can you get into some kind of indication of.
We would expect on learn maybe some of the rest of this year.
Yeah, we think that the burn.
Move up a little bit mostly in the research and development area, We think we're pretty well on staff and sales marketing and G&A, but we do anticipate spending a bit more funds on research and development. We have some very exciting projects that we're working on and we think theyre going to benefit of the company long term, so that's where our.
Any additional.
Miniatures will be focused on the research and development area.
Maybe one last question.
We anticipate revenues from wrap reality of the Standalone guidance.
Oh, yes, we do anticipate those revenues I'm I'm I'm not anticipating many of this year as we kind of get the products integrated with what we're going to do and kind of the bigger vision of what we have is as I said, it's gonna be well beyond ball wrap it's gonna be everything officers and counter from training and potentially having the show up on a courtroom to testify to what do you do after you use for us.
Two our bias training of the escalation training to avoid escalation to intervention.
So theres going to be a number of different things that we're doing so right now we're getting it out with some partners in the law enforcement community of domestic and international starting to show them. What our vision is how it is going to come together, but in the future. We absolutely expect it to drive revenue and become a big big part of our business.
And then would you repeat the number of agencies that are now.
The.
Train or.
Somehow.
I believe the 500 and.
So yeah. It's over 520 agencies now so we're really getting a lot of momentum, especially coming out of the COVID-19 restrictions. The duties trainings you know a lot of them had been done virtually and now we're getting them done in person.
On the numbers just continued to grow for us.
Okay. Thanks.
Alright, Thank you very much John for those great questions Greg.
Greg Davis from Northland. Please go ahead.
Yeah. Thanks, Paul good afternoon. Thanks.
Thanks for taking the question congrats on the record sales.
The headwinds that you talked about.
Potential slowdown in the holidays as well.
Was just kind of hoping to.
If you could talk a little bit about the dynamics between international and domestic sales process specifically with.
The international sales ramp quite a bit faster being more early success in those international markets, what kind of the nature of the discrepancy.
And that's of Great question and when I in my previous life. When I was traveling overseas you know most countries overseas or not as gun hearing is we are here in the United States. So they are much they deal with things a lot differently than we do here. So here in the U S.
Every officer, obviously unless you go the firearm use of force is trained a lot, but you also of 18000 plus agencies that the 18000 decision makers City Council. The managers mayors elected officials that all are going to have of saying that typically we use overseas of law enforcement community of centralized where you only have a handful of decision makers. So the process.
<unk> is the opportunity obviously is 12 times the size of the United States, but the process from them, even just doing a trial in the beginning.
<unk> is even larger than some of our smaller agencies here in the U S. And then as they adopt we use the Indonesian as an example of many times that agencies, one third of the entire size of the U S. But that agency is typically on the arms at a lot of the time. So this is the type of technology debt over my 20, plus year career that they were asking for which is why I think it's the perfect device. That's out there we don't have.
Any real competition in this space and it's the only tool it doesn't hurt people. So domestically theres, obviously, a lot of headwinds going on the Jim talked about with the escalation with the funding with the.
The the riots in the Covid and the pandemic, but internationally and domestically, we're seeing that pace pick up in it.
Just the international markets happens to adopt this quicker because they're they've been looking for something like this it doesn't hurt and again theyre not as as the.
They don't use the forces nearly as much as happens here in the United States of lot of times the.
If they do on those international locations.
Got it yeah that makes sense and if I could follow up on the R&D front I'm on.
John question.
I noticed there was a bit of a step down in expense.
Sequentially in Q4, but Jimmy you mentioned of pick up again of 2021.
Just wondering if you can talk a little bit about how big of a compare going forward relative to the Q4 quarter.
Yeah, we think it could grow.
Maybe a third more from where.
Where it's at right now in the fourth quarter. So we see those numbers going on.
The personnel, but a lot of other prototyping and we're making the big effort on the international patent filings.
The other activities for 2021.
And if I can jump in on that too. We've also been recruiting a lot of personnel on the engineering manufacturing department. So there's kind of two aspects to it one is engineering efficiency improvements and product improvements for the current products to help get the margin better as well as new next generation technologies, obviously, theres R&D going.
Into the new wrap reality program. So there's a number of different the areas that we're going to spend and invest in there that's really going to make a difference for us in the future.
Okay great.
Just wanted to ask a little bit about if.
If you could comment on how discussions are going with prospective departments are you hearing anything new.
On your talks of your conversations of the changed much over the last couple of quarters.
It really was just hoping for on any high level comments I guess you have on how those conversations have evolved or changed over time.
Yeah, and I think you saw that comes from the numbers that we talked about doubling and tripling of trainers training demos agencies using the device. There was for me it was kind of a tipping point, we cross that.
300 agencies using it that's about two per cent of the force roughly that's out there and really I think the biggest impact there is a lot of the body Cams. We were in the beginning it was a lot of videos with just demonstrations of showing it and training. We're in the latter half of the year, we were able to get these body Cam videos. There was a lot more body cam videos out there that we haven't even been able to shelf is the.
Departments of restricted us from that so you'll also notice that a lot of the body Cam videos that we're showing so far have been from smaller agencies like Virginia, Minnesota, St Cloud, Florida, Lagrange, Georgia, B for South Carolina. The reason is the bigger agencies, it's a much longer process for them to release that so I think that has had a huge impact though for officers law.
Enforcement and the communities to actually see Hey, it's not just something that's showing up in the demonstration, it's making a difference out there in the field. We're having success is doing what we said, it's going to do and it's making a difference and then theyre getting great news coverage on it I mean the the.
The headlines coming out of the media, saying that the saved the life or they didn't have to hurt somebody that really resonates with the current state of what's going on in this country and the the community's demands they are asking for law enforcement to deepen differently. So the fact that now we're getting the coverage from the media, we're able to show real world use of the body Cam. This isn't a demo this is hal.
It didn't become that next viral video we talk about that a lot of lot of bleach don't they are concerned they don't want to be that next viral video that's gonna get covered all over the media, where all of the body Cam videos that we're showing nobody has really seen them before because they ended the compensation before escalate into a higher level of force that people just didn't.
One of seats.
I've used the old adage. They don't tell you how many planes land safely every day the only cover the bad incidents while in law enforcement of spend a lot. The same they only cover the scenarios that are really bad and the bowler apps in the early intervention to prevent that from using it. So now that we've got the body cams, we're showing the other law enforcement is now rolled into our demos heavily debt.
We can actually get.
References for agencies to go talk to those departments. So thats why youre seeing more and more to officers get trained more agencies adopting it starting their demonstrations and the media coverage to continue so I would say just literally across the board of domestically. We're just really starting to pick up momentum and then internationally it's true.
I jumped on the plane and I think the second day I started with this company to go overseas because I knew that was going to be of key markets. We've got fantastic distributors of great distribution network, they've been able to carry on pressing forward with this and certainly we understand because governments are spending money on COVID-19 vaccination in PP&E, but now that that's starting to.
The word comes herd immunity is starting to happen on more and more people are have gone through it myself included I think we're seeing a lot of the discontinued to pick up and that's why the international continued strong last year and we believe it's going to be a strong part of our business going in through 2021 and even into 2022.
Great I think that's the point on.
And the last one for me just kind of related to the acquisition.
Of antenna at the end of the quarter, you know I know occasionally the latest mid December or so, but just kind of wondering how departments of responded to the additional debt virtual reality training program.
Maybe how integrations have been going.
Apologies for that acquisition so far.
Yes, it's a great question. So we did get it late in the year and so far internally we've rebranded the entire incentive brand is now all done under wrap reality.
There was only a handful of users out there that there was really a lot of time spent on context development, we actually been in conversations with the with incentives in 2019 as a platform that David and I have talked about many times of something that we wanted to get into because we're already talking to all of these trainers you look at all of the data that we put up there on all of the trainings and demos.
Working with the training academies in staff. So we're already talking to that customer. So it was a very natural fit for us to bring that in and especially if you look at how are we going to improve a lot of these situations that are going on in law enforcement and all of the protests I believe the a lot of that is going to be resolved with training. So we're working with a lot of organizations. We're also doing a lot of the federal level.
Talking with Congress of the Senate you know a lot of the again the to.
The agency representation from all levels of of the country and law enforcement that they believe virtual reality is going to be a big part of the future and we got in the early within the span of having 35 law enforcement specific in the 47 total including interactions gave us a real jumped to get in there start to really get our feet wet and now we're working with.
Advisors to come out with the right platform sort of it can be delivered to really make that difference for the communities and especially for law enforcement instead of maybe the I'm just showing up once or twice a year. Our vision is that theyre going to be using us on a much more regular basis, because it can be done just about anywhere and give them of real world experience in the kind of a continuing education curriculum development platform.
For them so.
Again, it's we're talking about it a lot I believe it's going to be a big part of our future, but we don't want to go into it too early or prematurely. If the product is not ready source and the spending a lot of time, making sure that it's it's ready for prime time of the statement I've said, so that when we do get it out there its going to really meet the needs of law enforcement and we're partnering with them to be able to start using it and give us that.
The feedback and then just make it the better and better product as we get going forward.
Great. Thanks.
Any other question for Ed.
That is all appreciate it excellent. Thank you we will go back to Paul Alright, Thank you very much Greg and John and Greg Both U.
Both of you. Thank you for your support.
A lot of very good questions coming in I'm going to try to combine some of them.
We have a lot of them here. So our first question on this.
Kind of go back to the acquisition and you kind of talk about how big is the opportunity in virtual training and with incentives.
Yeah. So we were just talking about that a little bit and there's some great data coming out right now that is showing its four times quicker to train with virtual reality, but this is a multibillion dollar market. So even though it's the large marketing opportunity. There is also a huge cost saving aspect for this for law enforcement that maybe less than 30 minutes you can get done in the training, which would take it over to <unk>.
Hours in the classroom or some other data that I was reading recently talked about the fact that youre going to have over a 2% to 300% retention.
The increase of the material versus just reading it when you go for virtual reality again versus the classroom. So it is an enormous opportunity in law enforcement.
They're going to be slow to adopt they're not they don't do things quick in general, but you can see virtual reality training starting to go into a number of different corporate worlds.
Even in the Madison Science universities, and we hope to make some announcements on some partnerships over the next couple of months on people that were working with that are going to be pioneers in this space. So I believe it's a huge huge opportunity for us.
Right, where we need to be because it's right in line with our customers that we're already talking to through the bowl of wrap training and all of the other training that we've been doing on our technology on our platform.
Alright, perfect of lot of questions coming in on your comfort or competition that says what is your competition and are there any competing products on the market and also is the is the bowl of.
Patented.
Great question and I think we have Jim talk about that we do have a lot of patents and a lot of intellectual property protection of Jim's been working very diligently with our R&D team on future patents for the new technologies that we're coming out with on getting those files as well as filing of lot of the international patents. So were very strong and very protective of our technology and what we're doing.
In that space. So there you'll see a lot of activity can continue there as far as of the bowler wrap concern. There is really no other direct competition with us we're a complementary tool with other tools on the officers belt and other tools that they have.
So all of the house with just the hammer. So we look of this as one tool, but in terms of the direct competition, we haven't seen anything out there in the market yet that's competing with us and I think of lot of that has to do with first mover advantage as well as the IP portfolio that we have in place.
And then in terms of.
The virtual reality, that's still a really really really young market. So there are other players in that space. That's one of the reasons, we jumped into an acquisition was the really kind of get in quickly with somebody that had already been working on this for several years of made a lot of investments upfront.
So we're still kind of figuring our space and there are way in that space, because there's already a lot of simulator companies, but.
I think with what we're doing today I feel very confident about how we're going to come in and work in that space competitively.
Okay. Thank you Tom.
Here's another one going forward in 2021, and even beyond where do you see the biggest growth and opportunities for wrap.
Again, I think on the short term, meaning 2021, even into 2022 it is going to be the international markets. Just as it is so much larger than the U S. We have done so much groundwork to really get the international market started.
But the domestic market is really starting to pick up for us I think I can't understate enough. The fact that we're over 2% in terms of the number of agencies out there over 500 now and also the body Cam videos literally we are just getting more and more.
Use reports every day and one of the challenges for us that we talked about a lot is trying to get those body Cam uses because so many times the <unk>.
And without requiring a higher use of forest nobody gets hurt so they don't pick up the phone the call us all the time. So a lot of these cases, we're finding out about happened quite a while ago and they are just letting us know because of our follow up checks through customer service of our sales team of our training staff. So we're trying to figure out and.
And communicate more often with the agencies to try and track that data, but at the same time, we're very cognizant that they don't report everything and because it's the low on the use of for scale potentially a lot of the uses we believe or not even showing up for us and so as we're getting dozens and dozens of these and we can get those body cams and incorporate it into our demos in training I think that's really going on.
Just continue to spread the word and continue to build that momentum domestically, but I do still think international is going to lead the way in the next year the two alright.
Alright perfect.
Just elaborated on that Tom It said, we have some great body cams and showing some real reps from officers and kind of why don't we put out anymore.
On elaborate on that otherwise you can go to the next one.
What is the status of the class action lawsuits against wrap right now.
Those are moving through the system, but normally we don't comment on ongoing litigation, but we are going to fight these vigorously and we.
We think we will prevail.
The.
Yes.
Alright, we've had a lot of questions on L. A P D and I think we've kind of talked about that earlier. So we'll move along how is the grant writing assistance program going.
So that program is doing extremely strong in fact, that's been one of the most successful programs through the police on grant efforts that we're aware of.
Conversations with them, but if I can touch on the LAPD again.
As soon as we find out information, we'll let you know but.
We are of Great communications with them, we talk to them on a regular basis and they all have to come out and say something publicly before we can say anything on their behalf, but we feel very very good about where we're sitting on that those trials are going to continue.
Alright.
Can you. Please explain the das the project that you talked about earlier.
Yeah. So this is something that's on the as normal of governments and the reason. It's so exciting is we're real new skills in the United Kingdom. So they have a research and development branch of its called depth of the defense and security programs.
And what they did is they funded us as an organization through our research and development team to develop a much longer range. All the wrap remote restraint system. So they had a very specific requirements of very specific need. So it wasn't a huge contract, but just the fact that they partnered with us.
And then we're going to be doing the demonstration of this system. Later this month, it's a great way that we get exposure within the country within the government within the research and development team on future technologies. In addition to the current bowler wrap so it just raises awareness over there.
To help us as we again try and get the bowler on marketed with both our current jet technology as well as future generations. When theyre investing in trying to help us to grow and meet needs that they may have bit of different from things here in the United States.
Alright. Thanks, Tom we have please talk about your current manufacturing facility in Tempe, do you have enough space to keep up with your demand potential demand going forward and can you tell us what the revenue run rate is that you can get to in the facility.
Yeah. So we've talked about this previously that we did invest heavily in the infrastructure for our manufacturing facility debt that we would be able to grow it at.
Adding multiple shifts within the space. We're in today, So I think in our investor deck, there's kind of three different program of three different levels that we talk about right now we're running a single shift which is meeting the demand that we see today, we're obviously focused on efficiencies and product enhancements and improvements and next generation. So as you kind of go through that we believe in the current.
Facility.
Can get us well north of about $30 million on the run rate when we add multiple shifts on in terms of an annual revenue but.
We did that investment upfront. So that we were prepared for the growth opportunities that we were foreseeing in the future as well as to have the right quality programs in R&D programs in place to develop next generation technologies.
Alright, Thanks, Tom we.
We did talk about our cash position and a little bit with the burn rate with Jon Hickman.
Here's a couple of questions have come in a cast is about $41 million. What are you using your cash for going forward.
We're focused on building the current suite of our products and our business. So that is the focus of our cash balances to build the business that we have.
Today as we talked about we believe we're staffed well and sales on G&A and we don't expect a huge increase from the burn rate there, but we will spend some money on research and development.
Alright, Thank you Jim.
Can you talk or even quantify the impact that COVID-19 had or is having on the business that sounds like we already talked about a little bit, but can you elaborate a little bit more on that Tom.
Yes, certainly.
The law enforcement community has there is the frontline they're the first ones that are getting the vaccines, but over the last year as we've all wanted to adapt to this pandemic.
We've had to restrict the number of interactions that we have the number of people attending trainings of demos if they even allowed in person demos. So it certainly had an impact the biggest impact I think for US has been the international because we have not been able to travel I think you saw on our fourth quarter of video we went to Columbia.
That's really the first overseas trip that we had since basically March when the pandemic started so the travel restrictions internationally are still.
In place with the new strain of Toby the came out of it locked folks down again, I referenced drags our new international director over in London, and basically he's getting his first vaccine shot today, so hopefully he'll be able to travel soon but he has been virtually locked up for in these departments for the last six months. So it has had an impact even here at the euro at the <unk>.
Plant in Tempe, we've had as I mentioned I had COVID-19 in November and other members of our organization of at it. So we've had several shutdowns of manufacturing just to get people out get them tested start the <unk>.
Clients with the CDC guidelines, and the Arizona Health guidelines and yet we've been able to keep our growth up we've been able to keep manufacturing running smoothly and stay ahead of of.
The sales team all of the element of keep working diligently to catch them, but it has certainly had an impact I mean, I don't think anybody in the world right now can say they haven't had an impact from Covid and were certainly no exception. So I think we've done a really good job of managing it.
The everybody aware of what the Covid. The guidelines are from the CDC perspective, being cognizant of where we're traveling the we're communicating closely with the agencies on the number of people that can attend and taking all of the safety precautions and protocols, we can to limit the exposure to our team. So.
It's had an impact, but I think we've navigated of well so far and we'll continue to do so and stay vigilant with it and continue to grow the company. Despite the challenge of the Pandemics presenting the world.
Alright. Thank you wanted to be very sensitive to everybody's time, I think I'm going to wrap up the Q&A session. Here I know there are some questions that we did not get to.
We will certainly get back to you as soon as possible or please reach out to me send me an email or call me and we'll get your questions answered. Thank you for a lot of great questions and again, sorry, we can't get to all of them.
With that I'd like to turn the call back over to Tom Smith for his closing closing comments.
Thank you Paul and I appreciate everybody's time today.
Again, where we have had a lot of questions over 40 different questions that we were not able to get into so I apologize we will get back to you on an individual basis I'd also like to thank everyone, who joined US here. This afternoon and hope you felt the excitement of energy. So we have here of wrap technologies. Our company is on a mission to be the global leader in Deescalation in prevention of escalation and we believe.
We are the only company in the World, which has the technological platform to deliver both the bowler app devices future generations and the best training solutions for situations that can and without the use of force. We believe both are critical to the success of our communities and law enforcement going forward right. Now there is an unprecedented public demand media attention and government call the action on.
Police reform of Deescalation measures, we're moving fast to take full advantage of the need and opportunity that is in front of us and we look forward to being an integral part of that global solution with our technology innovation and of course, the great team that we have here of wrap so again. Thank you all for your trust. We really appreciate it have a great evening and we'll look forward to talking to you all soon take care.
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