Wrap Technologies, Inc.

Good afternoon and welcome to the WRAP Technologies third quarter 2023 earnings conference call. We'll get started in about five minutes as we let people file into the room. Thank you. Good afternoon and welcome to the Wrapped Technologies third quarter 2023 earnings conference, Carl. We'll start the call in just a couple of minutes as we let people file into the room. Thank you. Good afternoon and welcome to the Wrapped Technologies Third Quarter 2023 Earnings Conference Call. My name is JD Methvessel and I'm the Director of Strategy and Communications for Wrapped Technologies. Joining me today is Wrapped Technologies Chief Executive Officer Kevin Mullins and our Chief Financial Officer Chris D'Almeida. Following the prepared remarks, we will have a few questions submitted from shareholders. I would like to remind everyone that this call will be recorded and made available for reply via a link in the investor relations section of the company's website at ir.rap.com. Additionally, the company asks that all interested parties register on the investor relations website at ir.rap.com to continue to receive alerts and stock information. As a reminder to listeners, certain statements made during the call today constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties are described in our earnings release and more fully in our filings with the SEC. The forward-looking statements today are made as of the date of this call, and we do not undertake any obligation to update the forward-looking statements. Now I would like to turn the call over to our CEO, Kevin Mullins. Kevin?

Good afternoon and thank you for joining us. It is an honor to shed light on RAP's commendable strides and achievements throughout the third quarter of 2023. The past quarter stands as a testament of our relentless dedication to excellence and our pursuit of innovation. Our third quarter performance brims with milestones, not merely in financial terms, but as a clear indication of our expanding global influence. Significant demand from international avenues, particularly the African continent, coupled with a robust deployment order from the Northeast sector of the United States, sentiments our dominant market stature. In our ongoing endeavor to consistently elevate the standards, RAP Reality continues to see significant demand, leading to the second consecutive quarter of record sales. This success stems from our content focus of our training platform and rolling out new scenarios monthly, reinforcing the unparalleled caliber of our product ensemble. Furthermore, we are enthusiastically embarking on an officer mental health and wellness initiative, which we will continue to develop over the coming months. We're also seeing good progress with sales for the recently acquired Intrinsic platform in the third quarter. Early feedback shows the solution integrates well into our market and product set, which promises steady growth for us. With today's focus on clear transparency and strong responsibility, our improved products meet the changing needs of today's market and transform RAP as a complete solutions provider. Our achievements in Q3 highlight the strong plans we have, our dedication to being the best, and the bright future we see ahead. As we move throughout this year, we're optimistic about our earnings in the coming months thanks to great results from Rapp's products. This quarter shows how hard we've worked to grow our presence in the market. With strong demand, our Q3 sales are a testament to our reach, both locally and internationally. We've had another record sales period with RAP Reality, and we're starting to see good success from our new intrinsic platform as well. We're heading into the last full quarter with hope and excitement. We've made some updates to our sales process to better meet our customers' growing needs. Looking ahead, RAP is set for strong growth. Our commitment to constant innovation and understanding the needs of international law enforcement positions us as a top choice for public safety tech worldwide. Our past success is just the beginning. In 2024 and the years that follow, we plan to expand our global reach, offer more products, and strengthen our relationships with law enforcement groups. Everyone is sensing the positive direction of RAP. With our team's energy and strong financial position, we're ready to achieve even more. Our goal is clear. It's to make real improvements in public safety. Thanks to our shareholders' trust and our team's hard work, we're preparing for great things ahead. Lastly, a massive thank you to everyone who's been with us on this journey, our partners, our stakeholders, and our dedicated team. Together, we're working towards a safer and more transparent future in public safety. I'll now turn the call over to Chris for an in-depth exploration of our financial performance for this quarter. Chris.

Good afternoon, everyone. Thank you, Kevin. Our third quarter performance solidifies the strength and relevance of our offerings in the market. Both domestic and international sales have responded positively, positioning WRAP for consistent growth. During the third quarter, we had record quarterly revenue as a result of continued strong demand for our solutions as we gained traction worldwide. In the Americas, our revenues were relatively in line with the prior year period. However, our international revenues showed strong improvement year on year driven by a large order, which we announced. This is a reflection of the strong foundation we have built in these markets. For the third quarter, we had record gross profit both in terms of dollars and as a percent of revenue. Our gross profit for the third quarter increased by 139% from the prior year period, going from $910,000 to $2.18 million. Our efforts to increase production efficiency and manage costs for our BoloWrap 150 product have paid off. And this is clearly reflected in our gross margin of 60%. Operating expenses for the third quarter increased by 2% from the same period last year, mainly due to one-time items related to certain legal expenses, the financing that we completed, and the one-time costs associated with the intrinsic acquisition. If we exclude these one-time items, our operational expense for Q3 2023 decreased by 15%, reflecting our ongoing commitment to maintaining operational efficiency and financial discipline. Our net loss for the third quarter of 2023 improved significantly from the second quarter and on a year-over-year basis. Excluding the one-time items I mentioned earlier, our net loss was just under $2 million, which is a significant 50% improvement over the prior year period. Going forward, we will continue to maintain tight controls on costs while we focus on revenue growth. Looking at our balance sheet, it remains healthy and robust. As of September 30, 2023, we had cash and cash equivalents in short-term investments, totaling approximately $15 million, compared to $19 million at the end of 2022. On the note of key performance indicators, I am pleased to share that the total number of trained law enforcement agencies has grown by 14%, and certified officer instructors have increased by 14% from the prior year period. These are continuing promising indicators of our ability to expand our footprint and influence in the public safety market. In summary, our solid financials, ongoing operational enhancements, our recent acquisition and market growth sets us up for a promising end of 2023. With these strategies and our strong financial position, we're well-placed for future success and increasing shareholder value. For Q3 2023, RAP set notable milestones with record revenues and an all-time high in gross profit. These accomplishments reflect our company's resilience and adaptability amidst industry dynamics. Furthermore, our strategic efforts have been successful in improving the net loss position, a trend we anticipate will persist. Looking ahead to Q4 in 2024, our recent achievements set a solid foundation. We are confident in sustaining this growth trajectory, capitalizing on our record financials, and further improving our overall financial performance. With a focus on innovation and market expansion, WRAP is poised for a robust performance, underpinning our commitment to shareholder value creation. With that, I'll turn the call back over to Kevin to discuss our outlook in more detail.