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

Hello. Welcome to the Wrap Technologies webcast. Today is a really exciting day for the company over a year in the making, to launch our next generation of the BolaWrap. We've been building a great team at Wrap Technologies, and I'm excited to be joined by my colleague today, Mario Knapp.

Hi. My name is Mario Knapp, and I'm the VP of Training for Wrap. I'm also a 27-year veteran of the Miami-Dade Police Department, and I'm equally as excited.

The BolaWrap started several years ago into production and has now proven and earned its spot on the belt for officers around the country and in 44 countries around the globe because it's the only tool that does not rely on pain compliance to stop an individual. And Mario, you've seen this with all the other great tools that are out there. This is another tool in the toolbox, allowing police that window of opportunity to stop somebody without pain compliance.

Yes. It's definitely a game changer. And when used early and often in an encounter, it sometimes will allow the ability for officers never even to use force, and they won't have to because they would have ended it early on in the incoming.

And the bodycams have given us that window into how it's being used out there in the streets and really answered a lot of those questions about being used at daytime, nighttime, indoors, outdoors, and really showing the capability that the BolaWrap can provide in that early intervention to stop it before it escalates to those higher uses of force. And Mario, that's one of the keys for police in solving these community issues that we're seeing over the last 1.5 years.

Yes. And it's really changing the landscape of force as far as law enforcement goes because before with other conducted energy weapons, what we ended up seeing was they would use conducted energy weapons and firearms as backup. And now what we're watching in these body-worn cameras is we're watching the BolaWrap being used and the conducted energy weapon as a backup, which inherently is lowering the amount of force they use.

And changing the risk and ending it much earlier in that confrontation filling that gap between verbal communication and those other tools that are available to law enforcement. So with that, let's jump right into it and talk about the next-generation BolaWrap, the BolaWrap 150. I'm really excited to introduce the new BolaWrap 150. This product has been in design for over a year and really is taking us to the next generation of this technology. And we're going to go through a lot of the features right now and all the voice of the customer comments that Mario and myself and our team have been working on and getting feedback on the original Bola 100 to incorporate into this product, which is really rugged, designed for durability, and answers a lot of the questions, and upgrades that customers have requested after they've had the Bola 100 in the field for a while, which Mario that always a key is to get that voice of the customer feedback on improving a product. In designing the BolaWrap 150, one of the things that our engineers did was take a look at something that was going to make it serviceable in the field with only 2 items, our new cassette, and our battery pack. And Mario, that's a key because it makes it really on the officer, it's very simple with just 2 items to service.

Not only for officers, but for management and armors. I mean, this way, you don't have to go out and go to Amazon or go to gas stations and hunt for batteries. You put the battery pack that lasts 2 or 3 years, you don't have to worry about it again.

So one of the items is our new cassette. We'll talk about that in more detail later. The second item is our battery pack. One of the requests we had from our original model was to increase the length of time the battery would last in the field and we're now over 3,000 milliamp hours compared to 300 before. And again, that when you're out on duty, you don't have to worry about it because it's going to give you an indication on our LED indicator lights. So one of the things that we've done now is listen to the company -- customer request that said, how do I really know if it's ready to go in the field? And when I take it and power on the device, I get a green LED indicator now that tells me it's ready to go.

Right. And if you notice that what the cassette did was it shook hands with the device. If you notice here, I've got no cassette in here and what you'll notice is when I turn it on, it will stay red. So it's an indication to the user that there's no cassette in here, something is wrong, it's not ready to deploy.

When you power on the device, one of the new advantages in this system because it's completely electronic is the fact that it's going to go through a complete system check and look at the initiators inside the cassette, the device itself. So it's going to tell you if it's green, it's good to go or if it's red, we have a critical failure either in the cassette or in the device itself and give the feedback right in the field to the officer immediately, right. So another design feature for the Bola 150 based on feedback from the field is making sure we integrated some textured grips because Mario, when it gets wet or you're from the Miami area, it's really humid. On our original device, it was all solid plastic. So sometimes we had officers complain or say that they couldn't get a really good grip on it. Now with these integrated texture grips, it's a perfect feel.

It's so much easier. And we've played with this thing outside in Arizona and my hands are sweaty and it grips perfectly.

Are you saying it's hot here?

It's very hot here. It's a dry heat.

With the BolaWrap 150 going from a mechanical BolaWrap 100 to completely electronic, one of the things I'm really excited about is our new multi-dot green laser instead of on the original device it was what we called a line laser. This is now a multi-dot array that's really making it easy for the officers. And we've also added an LED indication or LED illumination on either side of it to help in those dark situations to brighten the subject, so you know exactly where you're going to deploy.

And from my point of view, that LED illuminator is so much brighter than I expected it to be at night.

So when I power on the device, I'm going to get that multi-dot array with the LED illumination. At the same time, I don't have to think about it, which is really going to help that visibility in a dark situation.

Right. It eliminates all the thought process for the officer. All he's got to do is switch it on and there you have the multi-dot array. You have your flashlight and all you got to do is aim and ready to go.

The new design of our BolaWrap 150 cassette is completely different than our original designs, where they were fired mechanically. This is now deployed through an electronic deployment of a micro gas generator. So think of the airbag initiation system in your car. When you first turn on your keys, it does a check and shows that the airbags are ready to go. When the cassette is installed in the BolaWrap 150, as we mentioned before, one of the checks that it does is to make sure that the cassettes to micro-gas generators are ready to go, again, giving that indication to the officer that it's ready for deployment in the field. So we also now ship it with a safety cover Mario that has a new function with it as well.

Yes. So the shipping cover looks like this, and it comes like this on the -- on each cassette when delivered. And all you do is you snap it out, and there's your cassette. Now this is a multifunction type of deal where this is also used to remove the anchor from the clothing of the subject when deployed.

We watched a lot of our users in the field when they were trying to take the anchor off of the subject or even in training, they were having to push from the back of the anchor, which exposed them to slipping and getting it hooked into the finger, now by using this and the shipping cover, you can now pull the anchor off instead of having to push it from behind.

It not only simplifies the process, but it just makes it safer for everybody involved.

The cassette also now has a circuit board on the back of it, which is what's going to connect internally through the electronic system with the BolaWrap 150. That's where the initiation is going to come from when you have it on your subject and you press the activation button, it's going to then activate these circuit boards to fire the 2 micro-gas generators.

Right. And not only does it fire them, but it offsets the deployment of each one, so they're not both flying out at the same time. What ends up happening is one comes out a few microseconds before the other.

It's imperceptible, so you won't see it, and we will have some film on there, so you can see it happen live because it's -- to the average person, you don't hear it or see it, it's so quick. Finally, when all of these mechanics come together, we create the new BolaWrap 150 cassette that's now ready to go for field deployment, and it's really been done through very high-tech technology used in our manufacturing process because Mario has to work each and every time in the field.

Has to work every time because we're not only trying to save lives, but save officers' careers.

As you can tell, there's been a lot of technology put into this small package of the BolaWrap 150. We couldn't be more excited about the work that's been done with our research and development team, our operations team, our manufacturing team. But like any good tool for policing, it's only as good as the training. So as we look at the training that's being done by our instructors, a year ago, we had a little over 1,100 certified instructors training on the BolaWrap. In a short 12-month period, we've added over 2,150 instructors, a 194% increase creating 3,250-plus instructors who are the subject matter experts at their respective agencies so that they can really provide accurate information to their command staff into their communities on the BolaWrap and what it's been -- what it's doing. During that same time period, even though we've had challenges and headwinds from COVID, we've also conducted nearly 400 trainings more than 1 a day on average.

As far as training those, transition from the BolaWrap 100 to the 150 is going to require additional training because while the concept and the theories are exactly the same, there are some really cool advances to not only mechanical, but now even software improvements that have been made, that's going to require some attention when you go out and train your instructors.

As I listen to Mario, it reminds me how critical the training is for the implementation of our next-generation BolaWrap 150. There's never been more pressure on law enforcement than there has been over the last 18 months to change the way they're using force. And the BolaWrap 150 answers a lot of those situations. So I'm really excited about what we're doing as a company. And I'm also listening to our customers that, I think, Mario, one of the things they're certainly going to want to know is what are the differences between the original BolaWrap 100 and the BolaWrap 150. So let's get into it and explain those differences.

Absolutely.

So as we get into this discussion now, we really had focused previously on just the BolaWrap 150. And a lot of you are going to want to know what the differences are between our next-generation technology and the original BolaWrap 100. So Mario, let's start with the BolaWrap 100 cartridge.

So the 100 cartridge while innovative for its time is made out of aluminum, so it's bigger, heavier and bulkier, and it's also deployed mechanically by a partial 380 blank, and that's what propels the cartridge.

And that compares to our coplanar design that's lightweight, it's sleek, it's easier to carry and it's fired electronically versus mechanically, but a real other big improvement is the anchors.

Previously, on the 100 anchors, there were a bunch of pieces put together with a safety cap on top.

The new BolaWrap 150 cassette integrates metal injection molding technology for a single unit made with the safety cap, the hooks and the body all into 1 piece, a much more efficient design.

And the new safety caps reduce the risk of piercing the skin for the subjects and the officers.

So while we pointed out the functional differences between the BolaWrap 150 cassette and the Bola 100 cartridge, Operationally, it's still the same of deployment of a distance of 10 to 25 feet with the same 7.5-foot Kevlar core. So let's talk about now the difference between the BolaWrap 150 device and the original BolaWrap 100. Starting with a lot of the voice of customer feedback that we had was you could not tell from looking at the BolaWrap 100, whether it had been charged ready for deployment or not just from looking at it.

You couldn't. The only thing that you knew was that if you remove the safety switch, all that would happen was the device would vibrate and that the line laser would be active. But it wouldn't -- it doesn't give you an indication on whether there's a cartridge in the front unless you physically look at it. And it doesn't tell you whether the device is charged.

Where we've gone from a 3-step process in the BolaWrap 100, we've now gone to a 2-step process with the Bola 150. You simply turn the power on, and you get an LED indicator that's green, good to go. Red, there's a critical failure, not or blinking amber tells you to change the battery, where on the Bola 100, we had a different indication through the laser system.

Exactly. And it removes all the thinking work for the officer. All he's got to do with the 150 is remove it, turn it on and aim leaving more bandwidth to deal with the situation.

And while we're talking about the other difference, too, is that we now have a multi-dot laser array and 2 100 lumen LEDs to illuminate a subject at night, that feature simply wasn't available on the original BolaWrap 100.

It wasn't on the original, if you wanted to illuminate the subject, you had to need a flashlight in one hand and the BolaWrap on the other, and this one, it solves that problem, one-handed device.

The next feature I want to highlight in differences between the BolaWrap 150 and the BolaWrap 100 is the original BolaWrap 100 was completely plastic. We've now integrated texture pads that makes it easier for an officer to hold in a wet or humid environment.

Which ironically would have assisted the 100 because it requires your 2 hands to be able to charge this thing where this one is technically a one-handed device.

And that's a key feature. The BolaWrap 100 did usually require 2 hands for the operation of the charging handles even in the cartridge removal, and the feature of the 2-handed operation with the cartridge you had to use the cartridge release lever to replace it once they have been deployed. On the Bola 150, we have 2 cassette release buttons on the side to release the cassette after it's been deployed. So again, it's a one-handed operation. It's a much simpler 2-step operation versus the 3-step operation on the BolaWrap 100. The next feature I'd like to talk about came back again through voice of the customer. One of the requests have been to increase the battery life. The original BolaWrap 100 had a 300 milliamp power battery. We've now upped that to a 3,000 milliamp battery, but more importantly, to protect that battery life, we've integrated a cutoff.

Right. And so now the way it works is if you were to mistakenly leave the device on or the power switch on, what will happen is, it will have an automatic cutoff after 5 minutes.

And then you simply cycle the power switch to restart the next 5-minute cycle should it be needed.

That's it, just turn it off, turn it right back on, and you're right back in business.

So I know today, we've been spending a lot of time on the technical differences between the 2 platforms. The BolaWrap 100 has really established itself as a viable technology to use for police through all these bodycam videos we've been receiving.

And we've seen it time after time over these body-worn camera videos that we've received from different agencies, and we've learned a lot that it's a really good and applicable tool for de-escalation.

So while the BolaWrap 100 was purely mechanical, the BolaWrap 150 is completely electronic. It is our next generation, and I'd like to spend some time now talking about one of the most important features and that is pricing. The pricing on the BolaWrap 150 is the same as the BolaWrap 100. So we've been able to incorporate all of this technology, all of this improvement, all of these advances, all of the feedback we've received from our customers into a new platform yet keep the price the same for our law enforcement customers.

And the fact that we've been able to maintain the same price for the customers is excellent.

That was one of our design goals from day 1, and it was very important for these departments that are facing budget allocation issues or looking at how to bring this technology to the field that while we've incorporated all these advancements, all this new technology that the BolaWrap's stay affordable for the use by the frontline officers to make a difference in the communities.

How long will we support the 100?

The BolaWrap 100 being our founding product is going to be supported into about mid-'22. [Presentation]

Wrap Technologies launched the BolaWrap 100 a little over 2 years ago. In that time, it has proven itself to be an effective tool for deescalating intense situations filling the gap between verbal commands and pain compliance tools. It's been seen in the bodycam footage from the field and heard from our users. WRAP has continued to innovate in community policing solutions with the creation of WRAP Reality our fully immersive police training platform. I'm proud of the progress we've made, the team that we've built, and I'm excited with the launch of the BolaWrap 150 as the next step in ensuring our officers have the best tools to protect and serve our communities. Thank you again for joining us today to learn about the next-generation BolaWrap 150, and I look forward to talking with all of you again soon as we continue to bring innovative and transformative technologies to market. Thank you.