Wrap Technologies(WRAP) - 2023 Q4 - Annual Report

Market Potential - The global non-lethal products market is expected to grow to $16.1 billion by 2027, indicating significant market potential for the company's offerings[12]. - The virtual training and simulation market is projected to reach $602 billion by 2027, presenting growth opportunities for the company's VR training solutions[26]. Product Development and Innovation - The company focuses on research and development to enhance existing products and introduce new ones, ensuring competitive advantages in the market[15]. - The BolaWrap device is designed to safely restrain individuals from a distance of 10-25 feet, providing a non-lethal alternative to traditional force options[27]. - The BolaWrap 150 was launched in late Q1 2022, replacing the BolaWrap 100, with a focus on modern electronic deployment and reduced production costs[35]. - The company spent approximately $3.3 million on research and development in 2023, equating to 53% of revenue, compared to $5.1 million or 63% of revenue in 2022[72]. - The company has 22 issued US patents related to the BolaWrap technology and six additional US patents pending, with a total of 67 issued domestic and international patents[69]. Training Solutions - The Wrap Reality VR training platform has 45 scenarios for law enforcement and corrections, providing immersive training solutions that are crucial for modern policing[13]. - The Wrap Reality Virtual Training platform now offers 38 training scenarios for law enforcement, with the potential for countless additional scenarios[36]. - The company has developed 38 fully formed law enforcement scenarios and 25 corrections and societal reentry scenarios in 3D for its virtual reality training[64]. International Expansion - The company has established distribution agreements with 35 international distributors covering 75 countries, indicating a strong global presence and market penetration[15]. - The company has shipped restraint products to 62 countries, showcasing its international reach and commitment to expanding its market share[15]. - The company anticipates that international sales will continue to represent a significant portion of revenues, driven by centralized purchasing decisions in international markets[21]. - The commercialization strategy targets over 18,000 law enforcement agencies in the US and the 100 largest police forces internationally, totaling over 12 million police officers[53]. Financial Management - The company plans to maintain financial prudence while pursuing business opportunities domestically and internationally, including potential acquisitions[54]. - Supply chain challenges, such as component shortages and increased lead times, may impact production schedules and financial performance[56]. - As of December 31, 2023, the company had a backlog of approximately $209 thousand, which was delivered in the first quarter of 2024[57]. - The company is obligated to pay royalties of 4% of revenue from products employing the licensed device technology, with $919 thousand paid out as of December 31, 2023, leaving a maximum of $81 thousand to be paid in the future[74]. Workforce and Operations - The company employs 52 full-time employees, with 50 located in the U.S. and two in the United Kingdom, including personnel in sales, marketing, production, research and development, and administration[75]. - The company implemented a more automated supply chain in 2022 to support increased production volume for the BolaWrap 150[35]. Competitive Positioning - The company believes the BolaWrap product may be used more often than certain other tools, positioning it uniquely in the law enforcement market[60]. - The company recognizes that competitors may have greater resources but believes its unique positioning and strong product foundation provide a competitive advantage[63]. - The company aims to equip every public safety officer with a BolaWrap, enhancing community relations and reducing the need for higher-level use of force tools[19]. Collaborations and Acquisitions - In August 2021, the company announced a collaboration with Amazon Web Services to enhance the Wrap Reality platform with secure cloud services[37]. - The acquisition of Intrensic in August 2023 allows the company to expand its product suite and address a wider market in law enforcement and public safety[38]. - Wrap Intrensic's platform includes features for secure cloud storage and evidence management, enhancing accountability within law enforcement[39]. Legislative Efforts - The company is actively working to improve legislation to allow its products to be directly transferred to private security forces and individuals[65].