Wrap Technologies, Inc. (WRAP) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and welcome to the 2020 Wrap Technologies Annual Virtual-only Meeting of Stockholders. My name is Paul Manley, I'm Vice President of Investor Relations at Wrap Technologies. We are pleased to host today's meeting through a virtual webinar platform accessible to all of our stockholders irrespective of physical location. The Board of Directors and management appreciate your interest in attending today's virtual meeting. And we hope you are staying safe and healthy during this unusual time. We are holding this meeting virtually due to the serious worldwide impact of the COVID-19 pandemic and to protect the health and well-being of our community, stockholders, employees, partners and others participating in and attending today's stockholder meeting. Before we begin the formal meeting, I would like to review a few preliminary matters. Today's meeting will consist of 3 parts: first, the formal portion of the meeting that will be conducted by David Norris, our CEO and a Director; following the termination of the formal portion of the meeting, David Norris and our President, Tom Smith, will make a presentation focusing on Wrap Technologies' current activities, including a short BolaWrap video. Following the presentation, there will be a question-and-answer period. I'd like to remind you that while we have many guests attending today's meeting, the question period is for stockholder or proxyholders only who must be on the webinar page at live.webinar.com/wrap-technologies. [Operator Instructions] Any questions related to a specific item of business should be posted to the web portal during the formal part of the meeting. General questions regarding the business may be posted any time throughout the formal meeting or during the presentation and will be answered during the question-and-answer period. Registered shareholders may still vote during the business portion of the meeting by clicking on the Wrap logo at the top right of the webinar page. Registered shareholders are those holding Wrap stock in their name at our transfer agent, Colonial Stock Transfer. [Operator Instructions] We will address as many questions as possible during the allotted time. The rules for this meeting are posted on our website and on the side end portion of the web portal for the meeting. Please note, this meeting is being recorded. However, no one attending is permitted to use any audio recording device or otherwise record and distribute a recording of this meeting or parts thereof in any fashion whatsoever. Please be aware that some of the comments made during this meeting may include forward-looking statements within the meaning of the federal securities laws. Statements about the company's beliefs and expectations containing words such as may, will, could, believe, expect, anticipate and similar expressions constitute forward-looking statements. These statements involve risks and uncertainties regarding the company's operations and future results that could cause Wrap Technologies' results to differ materially from management's current expectations. The company encourages you to review the safe harbor statements and the risk factors contained in the company's filings with the Securities and Exchange Commission, including, without limitation, the company's most recent annual report on Form 10-Q and 10-K and other periodic reports, which identify the risk factors that may cause actual results or events to differ materially from those described in forward-looking statements. The company does not undertake to publicly update or revise any forward-looking statements after the date of this meeting. Now to commence the formal part of this meeting, please welcome David Norris.

Hello. I'd like to call this meeting to order. This is David Norris. Good morning, ladies and gentlemen. It's my pleasure to welcome all of you to our Virtual 2020 Annual Meeting of Stockholders. My name is David Norris, and I serve as the Chief Executive Officer and Director of Wrap Technologies Inc. And for the purpose of this meeting, I will act as the Chairman -- or the Chair of the meeting. This meeting is being held virtually. As a result, you may access a copy of the agenda online at www.colonialstock.com/wrap2020, or simply click on the Wrap logo at the top righthand corner of your webinar screen. A copy of our proxy and annual report is also available online at that location. As indicated in the agenda, the agenda items for the meeting include my introduction of certain company officers who are also virtual attendants; confirmation of a quorum; review of proposals outlined in the company's proxy statement; tabulation of votes by designated Inspector of Election; and adjournment of the meeting. After the formal meeting, as is customary, we will present a brief management presentation. Also, after the formal meeting, we will, during the time allowed, answer shareholder questions you have submitted online and those submitted by stockholders during the meeting through the virtual meeting web portal. [Operator Instructions] Daniel Rumsey, with Disclosure Law Group, has been appointed to serve as the Inspector of the Election for this meeting. James Barnes, as our Chief Financial Officer and Corporate Secretary, will act as Secretary of the meeting. Moving to announcements and introductions. I would like to introduce those members of our Board, management and independent auditors and identify those are attendant, albeit virtually today. In addition to myself, members of the Board include: Scot Cohen, who is the Chairman of the Board; and fellow Directors, Patrick Kinsella, Michael Parris, and Wayne Walker. Members of management include Tom Smith, who serves as President; James Barnes, our CFO and Corporate Secretary; Michael Rothans, who is the Chief Operating Officer; and Elwood Norris, our Chief Technology Officer. Lastly, Robert Quick from Rosenberg Rich Baker and Berman, our independent auditor, is also in virtual attendance. Moving to notice of quorum. Proxies to vote more than a majority of the shares entitled to vote on all matters have been received from our stockholders, and this constitutes a quorum. A list of all stockholders as of the record date of April 9, 2020, has been compiled and certified by the company's Inspector of Election. A copy of the Notice of the Annual Meeting was mailed to stockholders on or about April 23, 2020, as well as copies of the company's proxy statement and annual report on Form 10-K for the year ended December 31, 2019, each of which are also available online at www.colonialstock.com/wrap2020, or if you are logged into the virtual meeting platform, by clicking the Wrap logo in the top-right corner. This Annual Meeting is now declared lawfully and properly convened. Most stockholders have already voted by way of proxy. Any registered stockholder who has not voted by proxy or who otherwise desires to vote by online ballot may do so now by voting online or any time prior to the closing of the meeting by accessing //livewebinar.com/wrap space -- actually, I can't remember that -- -technologies.com, then following the online instructions or by clicking the Wrap logo in the top-right corner of the webinar page. At the end of voting, the Inspector of Elections will tabulate the vote. The votes will not be tabulated until all of the proposals on the agenda have been introduced as stockholders have the opportunity to vote on each item. Lastly, if you have any technical difficulties during the meeting or trouble accessing the materials, please call 877-285-8605. And for references, international calls, that is a U.S. number. Election of directors. The first item on the agenda is the election of the directors, each of whom, if elected, will serve for a 1-year term or until a successor is duly elected and qualified. Please note that the company's Articles of the Incorporation does not authorize cumulative voting. Therefore, ballots will take place without cumulative voting. The 5 director nominees who receive the highest number of votes will be elected as directors of the company. First, I will ask a stockholder to place in nomination the Board of Director nominees. Good morning?

I would like to nominate the following persons to serve as directors, each for a 1-year term ending at the conclusion of the company's 2021 Annual Meeting of Stockholders or until a successor is duly elected and qualified: Scot Cohen; Patrick Kinsella; David Norris; Michael Parris; and Wayne Walker. May I have a second to these nominations?

I second the nomination. The following persons have been nominated for election as director, each to serve for a 1-year term, which expire at the conclusion of 2021 Annual Meeting of Stockholders or until its successor is duly elected and qualified: Scot Cohen; Patrick Kinsella; myself, David Norris; Michael Parris; and Wayne Walker. Mr. Secretary, are there any questions from our shareholders pertinent to this item of business?

There are none.

Are there any other nominations?

There are none.

As no further nominations have been made, the election of directors will now be put to a vote. The polls will remain open regarding the election of directors until after the introduction of the remaining items on the agenda. Any registered stockholder, shareholder, who wishes to vote online ballots may do so now by accessing the voting link provided at www.colonialstock.com/wrap2020 and following the instructions. This page may also be accessed by clicking the Wrap Technologies logo on the upper portion of the webinar page. Any stockholder whose shares are held in a street name through a bank or broker should vote as instructed on the proxy card previously received by email or mail. [Voting]

Moving to approval of the company's 2017 equity compensation plan. The next item on the agenda is a proposal to approve an amendment to the company's 2017 equity compensation plan to increase the number of shares of common stock available for issuance thereunder from 4.1 million shares to 6 million shares and ratify all issuances thereunder to date. Upon the approval of this proposal, we'll also ratify all issuances thereunder. Mr. Secretary, are there any questions from our shareholders pertinent to this item of business?

There are none.

I will now ask for a motion from the floor for the approval of the amendment of the company's 2017 equity compensation plan and ratification of all awards made thereunder to date.

I move that the company's 2017 equity compensation plan be approved and that all issuances made thereunder to date be ratified. Is there a second for this motion?

I second the motion. It has been moved and seconded that the company's 2017 equity compensation plan be approved and that all issuances made thereunder be ratified. The motion will now be put to a vote. Again, any registered stockholder who wishes to vote online ballot may do so now by accessing the voting link previously discussed. Any stockholder whose shares are held in a street name through a bank or a broker should vote as instructed on the proxy card previously received by email or mail. [Voting]

Moving to ratification of appointment of independent auditors. On the next item on the agenda is a proposal to ratify appointment of Rosenberg Rich Baker Berman, P.A. to serve as the company's independent certified public accountant for the fiscal year ending December 31, 2020. It is important to note that the Audit Committee or the Board of Directors may terminate the appointment of Rosenberg Rich Baker Berman, P.A. without the approval of the company's stockholders, whether the Audit Committee or the Board of Directors deems it necessary or appropriate. Mr. Secretary, are there any questions from shareholders pertinent to this item of business?

There are none.

I will now ask for a motion from the floor to ratify the appointment of Rosenberg Rich Baker Berman, P.A., as indicated.

I move that the appointment of Rosenberg Rich Baker Berman, P.A. as the company's independent certified public accountants for fiscal year ending December 31, 2020, be ratified. Is there a second for this motion?

I second the motion. It has been moved and seconded that the appointment of Rosenberg Rich Baker Berman, P.A. as our independent certified public accountants for the current fiscal year be ratified. This motion will now be put to a vote. As a reminder, any registered stockholder who wishes to vote online ballot may do so now by accessing the voting link previously discussed. Any stockholder whose shares are held in a street name through a bank or broker should vote as instructed on the proxy card previously received by email or mail. [Voting]

There being no other items on the agenda, I'll ask the Inspector of Election to tally the votes. Have we been waiting long enough? The polls are now closed. I received a preliminary report of the votes cast and approval of the Inspector of Election. The preliminary report of the Inspector of election shows that the following director nominees have received the necessary number of votes for election as directors of the company: Scot Cohen; Patrick Kinsella; David Norris; Michael Parris; and Wayne Walker. As such, the individuals are hereby declared elected to serve as directors of the company, each for a 1-year term until the conclusion of the company's 2021 Annual Meeting of Stockholders. According to the Inspector's preliminary report, Item 2, approval of the amendment to the company's 2017 equity compensation plan and item 3 ratification of Rosenberg Rich Baker Berman, P.A. as the company's independent certified public accountants for the current fiscal year received in excess of a majority of the shares represented in person by proxy at this meeting. As a result, items 2 and 3 are hereby approved. The results of the final tabulation of the Inspector of Election shall be reported on a Form 8-K to be filed with the Securities and Exchange Commission within 4 business days of the adjournment of this meeting. Moving to the agenda. There are no more items on the agenda. No further business before this meeting. This meeting is now adjourned. I would like to extend my sincere appreciation to the stockholders who are in virtual attendance today as well as those who submitted their proxies who were unable to attend. As the Chief Executive Officer, I will now make a couple of remarks, and I will actually pass this time in a moment over to Tom Smith, our President, and he will be joined by 2 other executives of our company and 2 other personnel, Don De Lucca -- Chief Don De Lucca and Commissioner Richard Ross in just a moment. We ask that you go ahead and post questions. Be simple and concise to assist us and effectively responding. If you wish to make a comment concerning the general business of the company, please feel free to contact me or any one of the other officers of the company, and we will be happy to speak with you at a mutually convenient time. I would like to now turn it over to Tom Smith to talk about the importance of what we do in this business, why we're here in the first place, and he will be joined by 2 others of our team. Tom Smith?

Good morning, everyone. My name is Tom Smith, President of Wrap Technologies, and I'd like to welcome you today. I appreciate you taking the time. Obviously, policing is changing as it's going. So we're going to have a lot of topics to talk about, and we're going to jump right in and talk about Wrap for the company. So this company was started about oh, four or five [Technical Difficulty] that have mental illness. It's a big problem here in the United States. And obviously, people want to deal with this, and we're seeing how policing is changing literally by the minute over the last 10 days. And I've personally been touched by mental illness. My mom has Alzheimer's, so I've seen what happens. And when my mom attacked my dad, we called the police. So they become the [Technical Difficulty]. And in that situation, the last thing I wanted was [Technical Difficulty] because these people that have mental illness have very [Technical Difficulty] so the last thing you want to do is hurt these people. And again, we're seeing in what's going on in society today, a big demand for de-escalation and using tools like the BolaWrap which is a perfect tool to be able to solve this. So we're going to play a quick video here, show you how we've been receiving a lot of information and media coverage, especially as of late. [Presentation]

So obviously, a timely subject that we're very honored to be a part of. And let's talk about the BolaWrap itself. It's a handheld device. You can see its yellow color, so it differentiates. We make it very simple to use. It has a safety. It has an activation button. And then it has a cartridge that you're able to reload. So the cartridge deploys an 8-foot tether. It goes out of a distance of 10 to 25 feet. So in the age of social distancing, it's the only tool that doesn't rely on pain to hurt somebody. And right now, that's a big deal within law enforcement communities that we'll talk about with our guests here shortly. The great thing is we're starting to receive photos from the officers out in the field, actually carrying it on their belt. So for us, that's the final endorsement, right? The line level guy that's actually having to rely on this to do his job, sending us photos that he's carrying it on his belt. And that just -- that's fantastic because it's leading to the field-use increases that we're seeing as well. We're getting tremendous inquiries. We're getting 1,700 agencies around the U.S. have already inquired and requested demos. That number is going up daily. Over 90 countries around the world have already contacted us. And so we're getting just huge increase with over 600 people from the international community contacting us. So it's showing that there's a demand, and this is a huge market opportunity. It's not only law enforcement, [indiscernible] law enforcement here in the United States. There's over 12 million law enforcement internationally. Plus now you roll in a number of inquiries that we're getting from the private security markets and from the consumer markets. So the business opportunity for Wrap is just incredible for what we're looking at down the road. And in this day of social distancing, there is no magic bullet. But we believe that this tool is going to help change the culture of policing because it's the only one that doesn't hurt them. It allows that early intervention before it requires escalation to another level of force that's much higher and it's going to hurt somebody. So it's not the perfect tool for every situation, but we do believe it's the perfect tool for a lot of the situations before they escalate requiring a higher level of force. So right now, we're going to go into our draft training room here in Tempe, Arizona, and we're going to show you a live demonstration with some of our trainers, so you can see actually how the product is working. [Presentation]

So that really highlights for us the opportunity that the BolaWrap presents. It doesn't hurt anybody. It's the only tool that doesn't use pain compliance. By getting a wrap on the legs, he can't kick, he can't run away, and then you saw a double wrap there as well. So that's something that we wanted you to be able to see. So let's talk a bit about the business. Where are we at today? We have 11 distributors, covering 45 states here in the United States. And we also have 15 distributors internationally that are on the exclusive basis covering 26 countries. So we've done the groundwork over the last 12 months, getting all of our distribution in place, ready for the growth and the expansion that we're anticipating as we go forward. We also invested very heavily in our manufacturing process to make sure we were able to meet demand. You can see here on the chart that we are all primed and ready to go with our facilities and our infrastructure that we can ramp very, very quickly as we continue to see demand, and we can respond quickly. It's not a capital-intensive investment because we've already done that to be prepared. The other key investment highlights: a year ago, we only had 2,000 shareholders. Today, we have over 11,000 shareholders. Obviously, this past week, we were able to get some more investment funds and really solidify our balance sheet and let us really focus on executing on the business. So we really appreciate that support from all of our investors to allow us to do that. So we're over 30 million shares now outstanding in float. We were at $15-plus million on the balance sheet. We've obviously added to that earlier this week to get it into the high $20 millions. And again, very well capitalized, no debt, we're really set to be able to go into the future very, very well. So we're really excited about our opportunity. And at that point, I'm going to introduce -- run a quick video of our 2 guests that are going to be joining us now. And let them speak for themselves, and then they'll be joining the conversation for the rest of the webinar. [Presentation]

So welcome, gentlemen. I'd like to welcome Commissioner Richard Ross, Retired Chief Don De Lucca to the webinar this morning. So you just saw their backgrounds, and it's -- what struck me was the same comments that these gentlemen were making in that video from years ago still apply today with the social distancing with dealing with the mentally ill. So Chief De Lucca, you started with this company in the very beginning. You saw it when you were a Chief, when you were in those positions. How has that changed where we're at today?

Well, Tom, I think the last 2 weeks are kind of redefining where we're at. We started out this product as really for people in the mental health crisis, the mentally ill, we were trying to deal with. And you mentioned it, we've become the de facto social services. But now we see recalibration because people are looking at the tools we use and how we use it and when. When you only give your officers extreme force or pain compliance tools, we're now coming into question. What we do is not always pretty. Art Acevedo, the Chief of Houston, mentioned it last night, the optics of what we do come into question. So if we only give our officers extreme force, we need to have another tool. Now we have a non-pain compliance tool where you can securely wrap somebody, get ahold of them and take them into control. So that's what it's calling for. Now this change is going to take quick fast. We're not going to be able to do what we did last week going forward. So the rules are going to change. We're going to have to move forward in a much different fashion and I know the Commissioner is going to talk about that. But change is on the way, and BolaWrap's going to be one of those need-to-have tools, just like a police radio, just like you have handcuffs going forward.

I agree 100%. And all of us have been talking to chiefs and the media around the country. Chief Commissioner Acevedo joined me on a couple of these shows recently and, Chief De Lucca, you have before. What we're seeing right now, though, is really with the restraint of the coronavirus, everybody was locked up. And then as they started to reopen, it was really a tinder box and the tragic death of Floyd up in Minneapolis, really kind of set that off, not only here and domestically, but in the world. Chief Commissioner Ross, one of the things we've talked about is the culture of policing changing and the BolaWrap being a tool for that. What are you hearing when you talk to these Chiefs?

Well, I mean, as Don has said, times have changed, and we've got to move with them in law enforcement and we can't be afraid to do it. And so you're seeing more and more chiefs, particularly some of the progressive ones, who understand that they have to make these moves, not only for their police officers and making them safe, but making their respective communities safe. As you said, the worst thing that can happen is to call the police to help a loved one and then something tragic happens out of that. And so we've got to take every step that we possibly can to ensure that all the parties involved are safe as they can be. The sanctity of life, we talk about this over and over and over again and become a buzz phrase in law enforcement across the nation because it's very, very real. I mean communities expect more from their police departments, and it's understandable that they do. And so in order to close that kind of loop, if you will, we've got to give those police officers the tools that they need.

How does the Wrap work on moving targets, which we're going to talk about right now because, in addition to these chiefs, Chief Ross just mentioned progressive. Chiefs, I did an interview earlier this week with a progressive police chief down in Texas who used it on such a subject. So let's take a listen to that interview. [Presentation]

[ I remember ] when we started TASER back in the day, and so I'm lucky enough to get to do this twice. And we're super excited about this one because it doesn't hurt people, as you know. And I was really honored to hear the details of your story.

Yes, we're sitting there talking with an undercover gang unit officer. And gentleman walked by us and he said, "Hey, that guy has felony warrants out for aggravated robbery, both federal and city warrants for aggravated robbery." So we turned around and tried to get another unit to come back us up, but there was an apartment complex there and we didn't want him to get in there and disappear on us. So we went up and made a U-turn and went at him head on and made contact with him. I got out on the driver's side. And there's a second gentleman, about 15 feet behind him, and the subject we were going after, asked what we were doing. And I said, "Hey, we're going to talk to the guy behind you." So I kind of walked behind him, but he kept his eyes on me the entire time, and I turned towards him and started walking towards him. And as he begin to run, I already had the BolaWrap at hand. I went ahead and fired down at his legs. And like I said, when I talked to him, he had just began to start to run when I deployed the BolaWrap on him.

Yes, and then he can't get away from you. So you're not having to chase him and it doesn't have it escalate to a higher level of force. So that's...

Yes. Do all the run now.

Me too, me too. And so that's exactly what we designed this for. So I'm so glad we were able to help you out there and keep anybody from getting hurt.

Yes, sir. I'm very impressed with it. I mean, I like it when I went to the instructor's course and just seeing the classroom portion of it, but being seeing it in actual application is a totally different thing, totally different feeling.

Well, that's fantastic. And I can tell you, you're the first chief of police to deploy the BolaWrap and that's why we wanted to give you a call. And again, thank you for your belief in our system. And so excited to hear how it was able to help you in this. And again, it's the only tool that doesn't use pain compliance, and you proved that out here, and were able to detain the guy without hurting him.

I am definitely in the process of trying to get more.

Fantastic, sir. Anything we can ever do to help, please let us know.

Thank you once again. I'm delighted. I'm very impressed with it.

All right, Chief. Thank you. You have a great day and a great weekend.

Yes, sir. You have a blessed one. Thank you.

So we're getting more and more field uses every day. That one was really exciting because it's our first chief of police that got to use it. We mentioned the progressive chief earlier. The 2 gentlemen with us today are both retired chiefs. Chief De Lucca, you were with the agencies for a long time, the President of the International Association of Chiefs of Police. Here's a chief calling us telling us about how this tool really made a difference for him while it's moving. We're talking to chiefs all over the country. What are they talking to you about, especially this last week?

It's the same thing, Tom. We're seeking answers in law enforcement on how to do our job better. The world is calling upon us as a profession to move forward. So here's the tool that fills that gap in the tools we currently carry. And I think Rich talks about think of it like the optics in how we move forward, and we're going to have to move forward. They're going to look at our policies, review boards and what is going to be the answer? You're going to have to come out and say the techniques, the training and the tool we have to resolve issues quicker is going to be something called the BolaWrap. We can't do what we did yesterday, and I'm really adamant about that. So the solution is we have a humane restraint, securing somebody from a distance, not going hands on, rolling around the ground, officers getting injured, subjects getting injured, lawsuits that follow. This will save hundreds of millions of dollars in policing over the next few years by using the right tools.

As you're looking at the changes, Chief Commissioner Ross, that we're seeing out there in the public today or with the police, we've been on TV, we've all been on TV. You don't want to be that chief on front of TV that you're being asked about a technology that can help de-escalate and having to answer those questions without a response, like the BolaWrap being available.

No, you don't. It's nothing more embarrassing than to be grilled in front of millions of people, depending on your jurisdiction, about an incident that occurred, one of which could have been prevented. And with regard to people, even chiefs that I talk to who believe, well, I don't have the money and which they can always find, as Don always says, it's a matter of whether you're going to pay upfront or pay severely on the back end. And when I talk about severely, I'm not just talking about lawsuits as was alluded to previously. I'm talking about the damage that is done to your reputation as an organization; the damage that's done to your community as a whole; the damage that's done to relationships that you have, some of which you've built up. I took a call this morning from a pastor and also a state rep down in North Carolina. He was asking me, he says, "What is it that law enforcement can do?" This is an individual who's very progressive, and he said, "Look, what can we do?" And I talked about these less than legal options, and this is one of them because we have an obligation to ensure everyone goes home safely. This is not just about the police officer going home safely. I revere police officers and law enforcement immensely. But we've got to make sure everybody goes home safely because that's just the bottom line. People will accept nothing less than that right now.

And that's demanding change within law enforcement as we're seeing because it's front and center. It's really pushed to the forefront. Coronavirus has become a back issue at this point. It's a top story with what's going on in this country [Technical Difficulty]. How do you see the future trials unfolding? And how quickly do you see these departments going forward? Chief Ross, especially after we talked to Houston, you saw how quickly they moved from your conversation to getting units out on the streets for the trials?

Well, look, sadly, like in business, crisis will spark not only action, but opportunity. And in this case, as you've got to deal with the fact that we are in a bit of a crisis in law enforcement around the nation. And it hasn't gone away from the last 5 to 7 years. And you just don't want to get caught short in any agency, small or large. But you'd better be certain that you're on top of what's going on out there, and that's the bottom line.

And that change is coming. And again, it's a pleasure and an honor for us to all be a part of that.

Absolutely. And Tom, you know the other night at midnight, we're on the phone with the Dubai Police Department updating their training so they can get it done. It's a need-to-have situation right now. There's a crisis at the forefront here. And people want to get the train, they want to get the device, they need an answer. And I think the response is not just going to be in the next few weeks. This is going to grow for us.

Compared to my days at TASER, it's happening much, much quicker. And I think that's what's really exciting is we continue to see the demand worldwide for this because law enforcement is going to change. And again, I'd like to thank Chief De Lucca, Chief Ross, for joining us this morning. And again, I appreciate all of your time for joining us, and everybody, have a great day. Again, gentlemen, thank you for joining us. Take care.

So I'd like to thank Tom Smith, Commissioner Ross, Chief De Lucca for their thoughtful comments for answering some of the more common questions that we get. I'd like to now open it up for questions for all of our stockholders. Tom, can you come join me? As you know, many of our forward-looking statements contained in this room in my remarks or the answers to your questions are subject to a variety of risks and uncertainties, including those set forth in the company's report filed with the Securities and Exchange Commission. So what I've decided to do is have Paul Manley, who was in at the beginning of this, go ahead and give us the questions, and either myself, Tom Smith or Michael Rothans, will jump in and answer the questions.

Okay. First question we have coming in. With the tariffs and trade issues with China, et cetera, are we able to get all the parts that we need to ship to manufacture?

That's a great question. Actually, there's no parts today that we actually receive from China. The only part on our device that actually comes from another country is the actual laser diode, which is from Germany. And so to date, we've had no supply chain issues at all. The majority of our parts are made either in San Diego, Michigan, and then everything is assembled in Tempe, Arizona.

Okay. Another question that says: last quarter, you stated you had $17 million in cash at the start of the quarter and $15.5 million still available. With that being the case, why another raise of approximately $12 million?

Well, everybody's asking the tough questions today. No, it's a great question, actually, and it was actually a difficult decision for us to make as a company. Truth is we know some things to be true. We know that the market needs our product. We know that the market is accepting our product. Things that we don't know is how will corona actually affect the markets going forward. We have good ideas. [indiscernible] a recent press release on us, working with the grant program for police departments to ensure if there are challenges with the budget. But the truth is it's very hard to predict what the future is going to look like and having extra cash on your balance sheet makes a lot of sense to it. I think also, it really shows strength in the company that we were able to raise capital at this time and raise capital with institutional investments, so it shows faith across the board in the company.

Another question coming in: last quarter, $1.5 billion in backlog. What's the backlog at the end of last quarter?

So we -- a lot of the backlog that we've had is really from our international markets. Domestically, it's more of a purchase order and ship type of arrangement. And obviously, that's the only number that we report. We report it each quarter. I think at the end of 2019, we were at $1.7 billion. And then at the end of Q1, it was 2020. So we'll update that each quarter. But usually, it's for orders and deposits that are received against future orders from our international markets.

Okay. Another good question coming in: What are you hearing about the change or what legislators and activists have been asking for?

We're going to probably put that question to Mr. Rothans. Mr. Rothans, can you help us with that one?

Certainly. Thank you. Even this morning, there was a press conference by Speaker Nancy Pelosi to talk about introducing Bipartisan legislation on police reform. And there's been a push for a long time with regards to standardizing policy regarding use of force, standardizing policy regarding national tracking of use of force and de-escalation training. And so that's the type of thing I think that there's motivation actually get done today. There has been legislation over the years in each individual state to change the definition and requirements for use of force, in particular, deadly force. That's happened in the state of California, where they changed the standard from objectively reasonable to necessary. And I can see that taking place across the country. And what that does actually for our product is it helps us quite a bit because our product really is the only tool out there with regards to de-escalation. And Tom talked about it earlier, our products can be deployed from a safe distance without the use of pain compliance. That's certainly what we've been hearing across the last couple of weeks when these protests have started, of agencies that are reaching out to us looking for a tool, not to cause pain, but to gain people's compliance.

Thank you.

Okay. Another question coming in: are you still on track to launch a new version of the BolaWrap in Q3?

It's also a good question. I would say that at this point, it is unlikely we will launch a new product in Q3. The truth is, the product we have today is being accepted very well. It is too fast to launch a new product into law enforcement. Many have just recently purchased the current product. We've learned a lot. We want to add significant features and benefits to the new product. We will double down our investment now that we have more capital to continue to build better, robust products to meet market demand, but we do think that Q3 is too fast to be launching a brand new version of the product.

It looks like we only have one more question, gentlemen, in the queue. This person says: I'm repeatedly asked by friends, "What's the biggest risk in deploying this?" Can you answer what keeps you up at night regarding risk of use?

Do you want to give that one to Mr. Rothans or shall we get it?

Sure. Mike, do you want to start with that one?

I think the bigger risk is not using the device. I don't think there's a risk in using the device. I think the risk is having a situation where you could de-escalate early, restrict somebody's mobility and control them without hurting them. So by not using it, Rich Ross spoke about it earlier, the issues that you're going to face later are much larger than the issues you face initially.

And Mike, we've been talking about it, too. You mentioned Nancy Pelosi. This is going to get attention at the national level, at all levels to change the way policing is done. And if you're going to ask those police to have a cultural change or a change of the way they're doing business, and you'd ask them to do that with the same tools, you're not going to have a change. So the BolaWrap is the perfect tool to bring in de-escalation, early use, early prevention of it going to a higher level of force so that we are not the only part, but we are a part of the solution in addition to training and policy change that's going to help de-escalate and lower those use-of-force situations. So it's -- again, it's not the perfect tool, but it's the perfect tool for a lot of situations out there that are going to help de-escalate and just its mere presence is going to contribute to that discussion and contribute to that change that's going to be demanded by what's going on in our country today.

There's an old saying that you can't learn something without changing your behavior, and you can't change your behavior without learning something. A law enforcement officer can't learn about how our tool works and put it on his or her belt without changing their behavior because they had to go through an entire process of really understanding the why of humane restraint. So it is a first step in really providing law enforcement officers how to deal with the problems that they have today.

Okay. I guess we have one more -- we have time for one more question that just came in. And this says: they watch the interview on Varney & Co. Can you give a little color on LAPD and how many units they may have in the field?

Great question. So they do have 200 units in the field. They trained over trained over 1,000 officers, and they put them on the streets in early February. We are working with them closely because they've had actually more uses than we anticipated. And it's obviously been going very well, but they'll be commenting officially on it as they extend the trial, the virus -- when they put them out on the streets, it was between 90 days and 1 year. And they've obviously been working with us to extend that. So Mike, I don't know if you have anything further on the LAPD trials?

I think you're correct. All the feedback we've received has been very positive. As Tom mentioned, they actually are the agency that use it the most in the field. And so everything is going along very smoothly actually with that trial.

Yes. And Mike, I think it's amazing too. We've had probably more uses in the last 10 days than we did in all of last year with uses in the field on the street by the line level officers and not only Los Angeles, but in Sacramento and Fresno and Minneapolis and city of Oak Ridge in Texas and West Palm Beach. So we're seeing the officers, those line level guys, trusting in the technology and using it to de-escalate those situations.

All right. Gentlemen, it looks like that's it from the questions. Thank you very much.

Thank you.

Thank you, Paul. I'd like to thank everyone for attending the meeting today, our virtual meeting, and I wish each of you safety and good health. Thank you very much and take care.