Good morning, everyone. Thank you for joining Wrap’s Q1 2025 Call. In attendance this morning is Scot Cohen, Chief Executive Officer; and Jared Novick, President and Chief Operating Officer. At this time, I want to remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the federal securities regulations. Such forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risks, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company’s filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call and the company is not obligated to publicly update or revise them.
Statements are made during this call do not constitute an offer to sell or solicitation of any offer to buy any securities. Securities will not now be offered only by means of a registration statement and prospectus, which can be found at www.sec.gov. Unless otherwise stated, all reported results discussed in this call compare the first quarter 2025 earnings. Wrap’s Q1 2025 financial results are as follows. Cash increased to $6.2 million, up from $3.6 million in Q1 2024. Margins increased over 21 points from 56.6% in Q1 2024 to 77.8% in Q1 2025, with cost of revenues decreasing 73.4% from $640,000 to $170,000, respectively. Operating loss improved 5.2% from negative $4.1 million in Q1 2024 to negative $3.9 million in Q1 2025. Q1 2025 revenue was $765,000. Net income was $109,000 in Q1 2025 as compared to $117,000 in Q1 2024. I will now hand it over to Scot.
Thanks, Lou. Good morning, everybody. I’m going to unpack some of the progress in the first quarter along with some recent insights. We are in the earliest stages of building out our business, along with leading a very important discussion around the use of force. In this country, 20,000 people a day are arrested and 20% of the time they resist. That’s 4,000 people a day resisting arrest, and 90% of the time, it goes hands-on. Why? Because they are unarmed, they’re not an immediate threat, or they are having a mental episode. And 10 years ago, it was very different. Body cams weren’t on the scene. Policies haven’t shifted the way they’re shifting now. As a result of these policies dramatically shifting, you’re seeing big behavior change in the show of force and the use of force around guns, batons, pepper sprays, and tasers. 50% of the time, officers go hands-on, they’re getting hurt. This is causing very large bills to society.
Injury, workers’ comp, and lawsuits are costing this country billions of dollars a year. Up until now, there has been no solution for this problem. After six months of deep conversations with customers, departments, politicians, and various individuals to gather data from our program, we finally have enough to present some facts that have now become the driving force of what we’re doing here. The opportunity is to support what we’re already seeing, and I think we’ve got a path to do that. I’m tracking over a dozen departments using the BolaWrap 2 to 3 to even 5 times more than any other device on the belt today, and this is without solid support from our company. This was a startup six years ago; it’s a new device, lots of turnover, lots of change, that’s fine. But now we are absolutely clear. The data is in. The programs are thriving when we’re connected, and we’re going to lean into that and support them in ways they just haven’t been supported in the past.
This new training we’re about to introduce should accelerate deployment, making our BolaWrap programs the obvious choice anytime an officer is going hands-on, which is 4,000 times a day in this country. We’re proving that BolaWrap makes an officer safer. What’s driving this is data finally. It’s not easy to gather this data. We’ve been at it seven years. We thought the first 10 body cams six years ago would put us on the map, and the rest of the country would follow suit. The number went up to 100, then it went dark. Why? I’m finding out that the use of force is a sensitive topic. Even the FBI struggles with collecting it. They say 60% of departments around the country report on it. What makes it tougher is that 50% of our customers that have BolaWraps don’t even view it as reportable use of force. So if they’re not reporting it to their constituents, how are we supposed to know? Connecting with these customers in difficult and sensitive conversations has been key.
Remember, these uses of force are active investigations or evidence. If you say the wrong thing or someone gets ahold of data, this could be reported up, and you could end up with a federal monitor and consent decrees, losing control of your agency. So no chief wants this to happen. This is a big fear. But it’s time to step into the light and execute. We’re seeing the data, we’re pressing policy at the state and federal levels, and we’re building partnerships with communities and advocacy groups. We’ve built out sales and marketing infrastructure in anticipation for a real sweep in this country to get this product out there because we see it’s working in dozens of accounts to levels that were a surprise for us. We know this is just a starting point, and it’s going to accelerate. When that does, it’s going to make this device the most actively used one on the belt today. We’re already seeing it in a dozen or so accounts we’ve been able to contact.
It’s not just by a little bit; it’s by a lot. The light needs to be shined on this for everybody to see. It’s not going to go unnoticed. This is a very sensitive topic. We’ve got to solve for something that’s causing this country a lot of pain and money. We have the only hands-on tool in the marketplace with more usage than any other tool on the belt with connected customers. You made the right bet with this device. With the recent field data received, we are clear this device will be a standard piece of equipment on every officer’s belt. The data is coming from customers, telling us everything we need to know. We will lean into it, we will ensure that this data is clear, and we will continue to gather more data. We believe we have the right people and strategy to make these BolaWrap programs thrive throughout the country and the world. All the things we talked about regarding our end-to-end solution are on the way.
But first, we need to support the BolaWrap because it’s working, and it's working better than anybody knows, including us. This is great news; it’s inspiring and it’s going to drive us to build out this business and create real value for our shareholders, and I believe, give a real place in public safety for BolaWrap.
This concludes the formal remarks. We will now open the floor for questions. Lou, could you please introduce the first question? Yes. Okay. Here is the first question. What is Wrap doing to drive more sales and increased product awareness?
Well, I’ll start with this one. I find it to be pretty amazing that we’ve sold close to – over $30 million of the product without real data. The data was hard to gather, but we sold that based on what this product could do and what we thought it could achieve. But now we actually have the data to prove it, which is new. So we’re collecting that, and already the conversations we’ve had with some major cities, and some departments that previously canned the program in recent conversations on this newly acquired information, they’re looking to restart these programs. Data is going to drive everything. So, let’s just start with that. The data will be packaged in a way for everybody to see what we’re seeing. It will make it obvious that BolaWrap lowers use of force, costs on workers’ comp, officer injury, subject injury, and lawsuits. It is crystal clear with dozens of accounts, and there is no reason why that shouldn’t be widespread in this country.
There is nothing those accounts are doing differently that these other accounts can’t adapt to. When I’ve gotten in front of some major cities recently, the conversation is the same. Back it up and let’s have a conversation, because we missed it. So look, for us, we’ve tightened up. Now we’re building up our sales and marketing infrastructure. I said that on the phone. I just said this on the call. And you’re going to see a big focus now starting on sales and marketing because we finally have the data, which is our narrative. Data is going to drive decisions going forward. This is something that politicians will understand, city leaders will understand, and departments will understand. Jared, do you want to add to that?
It is important. Good morning, everybody. Jared Novick. Look, we’re not in the business of selling snake oil; that’s how a lot of these conversations start when I talk about it. We have a responsibility to shareholders and to our communities. What we start with in these conversations is what's the story, is it working? When I talk to departments from Colorado to Texas to California, New Jersey, and towns in Virginia, they are surprised that it is working more frequently than they report or write down. That’s the hard work we’ve done. To make a compelling sales pitch, it must be validated, and we have validated through trusted conversations because, as Scot has mentioned, that data is hard to get. Data doesn’t self-report. Should it report in the future? Absolutely; that’s in our R&D effort. That’s in our product road map. But right now, we have what we have, which are trusted conversations.
Before we go out there and repeat the same mistakes this company has had, unfortunately, over the last several years, we need to have a real conversation with real data. Now that we have that, with a validated value proposition for the product and the technology to support it, we’re ready to put that collateral and scale it broadly. The first step is to have the right message. The second is not selling things onesie-twosie or in an inefficient and costly way; we need to find an efficient, scalable way to sell domestically and internationally. So, we are focused on a scalable and repeatable sales motion. That’s where we focused our efforts in Q1. I think that we’ve signed something significant that we’re looking forward to announcing, allowing us to address things broadly. I feel confident about a validated message, about a validated product and trust that we are reestablishing because our brand matters and it means something. That is a coordinated sales, marketing, and product message. Our priority is go-to-market. The time is now.
Great. On to question two. Are there any plans to shift sales efforts towards political leadership rather than police directly?
Lou, if you don’t mind, I’ll jump on that one real quickly. I’m actually calling from Washington, D.C. today. The answer is yes, absolutely. A lot of these discussions surround the use of force and the use of force continuum. We’re in a national use of force conversation. If we look at that, there are things from verbal to hands-on all the way up to lethal. We find ourselves in much larger and broader discussions than just our individual product. We’re engaged in conversations about consent decrees, which is an interesting national conversation that I think will surface. My instinct is that this will happen in short order. What are major cities doing in America to address the critical needs we see growing in our communities? We’re not just with Chiefs of Police, who are key stakeholders; we are also working at the federal level, with political leadership, because it takes a coordinated effort with the right leaders, both domestically and internationally.
This is a global issue, and I know everyone sees the potential. It’s our responsibility collectively to lead that conversation. Our sales and marketing is not just focused on the individual buyer, which may be a police chief or a City Risk Manager; it’s actually coordinated through political motions. It’s time we do that as part of our federal strategy. More recently, as everyone knows, we’ve been able to scale through W1 and their talented personnel, which brings valuable industry and government contacts for our cause. We are not falling asleep at the wheel; we recognize this as a critical element of our planning, and we’re executing on it.
I want to add one thing to that. The same data we’re now reintroducing to chiefs and trainers, and everyone in our ecosystem is a bigger sell to the politicians. We’re seeing reactions from the politicians that our presentation is kind of mind-boggling. We’ve been able to position this before the way we did, and like I said, sell as much as we did. But now, it should be a lot easier because we finally have backup. The body cams were great—it showed what it could do—but weren’t enough. We’re able to quantify it in ways that we haven’t before, and this is the unlock we’ve been waiting for.
I’ll give a concrete example of that just because I think the numbers matter. In Colorado, in the 12-month period, their crisis response teams have about 50 BolaWrap devices. In that same 12-month period, they’ve used it about 28 times, which is more than twice a month. When we ask them, in confidence, how other uses of force happen that involve the belt, it far exceeds that. And I would say that electronic weapons are below that number, even though there are more electronic weapons on the belt. This validates that we do have a place on the use of force continuum, providing opportunities for responsible actions for both safety for the officers and the communities. The politicians want to know where it's working, what is the data, and it’s a very positive message.
I’m sorry, I’m going to reiterate that. One of our largest customers, a major city, spoke with us about six months ago. We asked him what a successful BolaWrap program looks like. He thought about it and reflected that usage should be the metric. Show me that this is the most actively deployed device on the belt. We took that back, and we started focusing on hammering down the data. This is what’s driving us. In his department, right now, usage is trending up. As a result of a new policy that came into place about eight months ago, the usage of other devices has dropped by close to 70%. Here we have a major city where the program hasn’t taken off; it’s decent, we’ve retrained them, but policy has been put in place that has resulted in a significant drop in other devices and has shifted to hands-on, making it the environment where we fit in. Usage is going down on the belt because policies are becoming harder to use with the existing devices. This change is happening organically for us, with the shift in policies driving behavior change. I believe those are the tailwinds that will drive deployments.
Next question. Does Wrap engage with community leaders as part of its outreach plan?
I’ll take that. In the past, we have engaged with community leaders, and it has been very effective. There are still efforts ongoing, but to be honest, not to the extent it should be. This will be part and is part of our new go-to-market strategy for this year. Community leaders and advocacy groups play an extremely important role in this. We get good buy-in from these groups, and the data supports our thesis here. Expect that activity to start picking up.
Okay. Next question. How will the end of Governor Youngkin’s term and a potential new candidate impact Wrap’s outlook in Virginia?
Scot, I’ll take that one. The impact should be negligible. The issue of mental and behavioral emergencies across America, particularly in Virginia, applies to both sides of the aisle. Neither side wants a bad answer to what are we doing with communities in need, such as children with autism in crisis. This is a publicly visible issue, and violence isn't the answer in many of these cases. The connections we’re making now and the momentum we’re building will persevere through any political changes. While many topics are polarized and swing from left to right in America, this isn't one of them. We’re building lasting and trusted connections, preserving our momentum in Virginia and federally with political leaders on these issues.
Thank you. Jared, to that end, in Virginia, what is the current status of the Virginia manufacturing facility?
I’m happy to say that the move is now complete. All restructuring costs associated with that are now done. It’s a tremendous achievement led by outstanding team members in our organization. We are now completely out of Arizona. The facility in Virginia is temporary, as our new building, coordinated through Governor Youngkin’s office and Virginia Economic Development, is underway and expected to be completed at the end of the year. Given our inventory levels, we can meet demand as we see it right now. Should we need to develop more BolaWraps, we have the raw materials to convert them to finished goods for both BolaWrap 150 and the cassettes. So we’re in an outstanding position, we’ve moved quickly, and we are fully aligned in Virginia. We can meet demand with existing inventory and have created jobs in Southwestern Virginia.
Great. Thank you. Next question. Can you provide an update on international orders, specifically, Chile and Italy?
I’ll take that. Italy, I don’t have an update, but let me shed some light on Chile—it’s a significant event for our company, and many eyes are on it. Chile started, I think, around three or even four years ago, with the first devices sent to them less than two years ago. They began with 500, doubled that, and then moved to 2,000. The results drove their decision to standardize this equipment, and they made that public. We’ve had contact with our team there, and they indicate it's going to be a multi-year rollout expected this year. They are indicating it’s much bigger than what we were initially told, which was full deployment around the Carabineros, which consists of 33,000 officers. We’re receiving this information just as you are; they’re making it public. Every indication is that it’s a go. We’re optimistic about Chile; it’s big for us. We’ve also had many other countries indicate and inform us that they’re watching and discussing our program with the Chilean police. We’re seeing acceleration in other countries as well. I feel optimistic about Chile, and our overseas opportunities are massive, as you know. With the behavioral shift we see domestically, it’s going to expand internationally.
I’ll just add, when I look at Chile, a tremendous opportunity in itself, I see how we can replicate this elsewhere. Part of that strategy is an accomplishment in Q1, which is bringing on the former Chief Banking Officer at EXIM Bank, the United States Export and Import Bank, as an adviser. EXIM provides financing solutions for devices manufactured in America. We are proud to say that the BolaWrap is assembled in the USA and qualifies for EXIM financing options. While Chile may do it for themselves, other international interests signal the potential to use it as a model elsewhere. Recently, Scot and I were invited to meet with embassies of many countries in D.C. They’re asking us about Chile’s public program, and we ensure they understand how they can replicate and establish a similar approach. Each country is unique in their processes, but it’s our responsibility to respond. In building a repeatable, scalable domestic model, we are looking to enhance our international go-to-market strategy. Being a reputable publicly traded company means we must enter reputable ways, and we plan to do exactly that.
Great. Thank you. Next question. What happened with the LAPD testing of the BolaWrap a few years back?
I’ll take it. Several years of a pilot did not go well. You can blame politics, attrition in our company, leadership, training, the weather—there are a ton of excuses—but the bottom line is it just didn’t go off the way we wanted. I've got my opinion on it. Not unlike any other major city, there have been several high-profile cases of major cities that had BolaWrap programs but chose not to move forward. This was in the media and it looked pretty dismal to see a major city cancel or not proceed. Recently, however, by sharing the data we’ve recently gathered, this conversation has changed. It’s altered the mindset and put us in a different discussion. I wouldn’t be surprised if LA or any major city that had a BolaWrap program that thought about it would consider us again based on the data. The data speaks for itself. It’s not going to be easy, but it’s black and white, and we’re seeing positive reactions. BolaWrap is working; it’s working really well. Adoption is increasing, and we think we have better training methods and delivery to accelerate what we’re doing. We’ll present this data to major cities, and we believe it will compel them to re-engage with us.
Great. Thank you. Final question here. With all of these new hires, is Wrap building something similar to Kroll Associates?
Hey, Lou, I’ll take that one. Kroll Associates is a model I’m familiar with. The answer is, in some ways, yes, and in some ways, no. How are we doing something similar? We have tremendous talent that we’ve brought together more recently. Our press releases have announced former leaders from the FBI, DEA, intelligence community, and sensitive components from the Pentagon. These individuals have accomplished careers with global networks, sometimes with national police or government agencies. In that way, it's similar to Kroll's approach to expanding their global footprint and forming trusted relationships in the private sector with tradecraft and methodologies that were previously used only in government and are now available to private companies and high-net-worth individuals. The difference is our revenue model. Professional services can lead to immediate revenue growth but can be bumpy. We want to build a scalable, tech-enabled business. So the way we’re dissimilar is that these individuals act as a managed service supporting our BolaWrap program. Many of these people are law enforcement professionals, providing the credibility and prestige our technology requires. We will have a managed service that is tech-enabled, creating a recurring business line and bolstering the BolaWrap program while expanding our offerings to increase revenue.
I want to add to that. It was a thought and theory before the acquisition, but after meetings with them, we realized they have deep connections not only in our State Department but embassies worldwide. We thought they could help us gather information on the ground and push through embassy support to shine a light on our program, gaining backing from the U.S. where it’s needed. Some of our biggest opportunities are overseas, allowing us to work through our embassies and support distributors effectively, something we’ve never had in the past. This approach is well received and gives us connectivity we lacked before. With the financing option through EXIM Bank, we have a strong value proposition and relationships we can leverage to accelerate deals across borders. I believe this has broadened our scope and is making our opportunities even larger.
Yes, that was the last question. This concludes Wrap’s Q1 2025 earnings call. On behalf of our entire team, we want to thank you for joining us today. We appreciate your continued support as we execute on our mission to create safer outcomes for officers and communities. Thank you.