Good afternoon, and welcome to Wrap Technologies Fourth Quarter and Full Year 2022 earnings conference call. Joining me today are Wrap Technologies Chief Executive Officer; T.J. Kennedy; and our President, Kevin Mullins. [Operator Instructions]. I would like to remind everyone that this call will be recorded and made available for replay via a link in the Investor Relations section of our website at ir.wrap.com. Additionally, we ask all interested parties to register on our new website at ir.wrap.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 undertake no obligation to update the forward-looking statements. Now I would like to turn the call over to our CEO, T.J. Kennedy. TJ?

Good afternoon, everyone. Thank you for joining us today. After the market closed, we issued a press release announcing our results for the fourth quarter and full year ending December 31, 2022. A copy of the press release is available on our Investor Relations website at ir.wrap.com, which is also accessible through our corporate site, wrap.com. We recently made a major overhaul to our IR website, which will allow us to more effectively house all news, filings and information that may be relevant to our investors. As an example, we recently hosted the first 2 episodes in our ongoing series of Investor Insight Webcast which are available for video replay on the new IR site. In these videos, I and the senior management team members showcase successful deployment of BolaWrap, provide further insight on current policing topics such as use of force. We plan to hold these investor sessions on a semi-regular basis. So for everyone interested in following our progress more closely, I encourage you to sign up to receive our e-mail alerts through a new IR site so that you can stay up to date on our most recent moves. With these housekeeping items covered, let's begin. As an overview of today's discussion, I'll begin by providing a high-level summary of the fourth quarter and full year 2022 before I hand it over to our CFO, Chris DeAlmeida, to discuss our financial results in more detail. Our President, Kevin Mullins, will then provide a progress update on our go-to-market strategy. I'll then close out our discussion before we move on into Q&A. Q4 2022 highlights. 2022 was a milestone year for Wrap, one in which we transformed our company, including our senior leadership team, transitioned to the next generation of our safer policing technologies, conducted a cloud VR…

Thank you, TJ, and good afternoon, everyone. Moving to our financial results for the fourth quarter. In Q4, we generated net revenues of $3.6 million compared to $2.4 million in the prior year period. Our Q4 2022 revenue was a company record and a 50% increase year-over-year. This was highlighted by the record deals in the Americas and the large deal in the EMEA region that T.J. referenced earlier. Q4 domestic sales grew 250% to $1.8 million from $500,000 in the prior year period, while international sales fell 6% to $1.8 million from $1.9 million in the prior year period. The small reduction in international sales is a result of the timing of one lower-margin award in the fourth quarter of 2021. Looking at our performance for the full year. Net revenues increased 5% to $8.1 million from $7.7 million in the prior year period, marking the fourth consecutive year of sequential sales growth. Increase for sales in the year was driven by strong performances in both the domestic and international markets, promotional pricing associated with converting customers to the BolaWrap 150, which is customary in our industry, is largely phased out at this time. However, we may continue to see some effects on the top line through the first half of 2023 due to some agencies with long procurement cycles. Gross profit for the fourth quarter of 2022 improved significantly to a record $1.7 million or 46% of net revenue and over 140% year-over-year increase from $700,000 or 30% of net revenue in the prior year period. Looking at the full year results, gross profit increased 88% to a record $3.7 million or 46% of net revenue from $2 million or 26% of net revenue in the prior year period. This achievement reflects our shift to a higher-margin product…

Thanks, Chris. As TJ noted at the beginning of the call, we have continued to see encouraging results from our revamped sales approach that we put in place last year. Building our go-to-market strategy is a fundamental component of our strategic road map as we aim to build achievable and predictable sales in the U.S., ramp up our international sales and continue to expand within current departments through our customer success function. Driving new sales growth is a top priority for 2023. We continue to implement new processes and add members to our dedicated sales team with plans to continue building our sales infrastructure this year and going forward. We have also continued to evolve the way we sell the BolaWrap 150 accessories, including improving our monetization efforts at a holistic level. As an example, we now begin charging for training services. That was a decision we made during our strategic road map process that was consistent with industry standards and has continued to be well received with given the value of our programs, which we provide. Separately, as TJ noted, in the fourth quarter, we began to record increases in the number of cassettes we sell per device, which we believe is a great sign for both increased adoption with existing agencies and buy-in from new customers as well. In the past, a typical sales contract would include approximately 6 cassettes per device per officer. As of today, that number now stands at 12 per device per officer. This increased capacity gives law enforcement officers the flexibility to deploy BolaWrap for effective training, practice and ensuring they're prepared to use our products properly in the field and driving safer outcomes in real-life situations. We also strongly believe that officers should be using the BolaWrap more often than all the…

Thank you, Kevin. I am proud of the progress we have made thus far to execute against our strategic road map and transform the company. We are now nearing deployment in 1,000 agencies around the globe. And I'm confident that we have the right plan and are building the right team to continue to grow our recurring revenue, drive stronger margins that support long-run profitability. Looking ahead, we remain committed to delivering on our adjusted EBITDA and profitability outlook for 2023 and 2024, respectively, while continuing to invest for top line growth. Recent events have amplified discussions around de-escalation. Law enforcement agencies are looking for alternatives to paying compliance, and that is where BolaWrap is playing a key role. Many departments are deploying BolaWrap early and often as an alternative to higher-level use, of course, which not only creates safer outcomes, but also avoids expensive settlements. Wrap Reality is also gaining interest as the public puts a renewed focus on how law enforcement officials are trained and equipped. We believe with our recent addition of the ADAPT module, and new cloud technology through our acquisition agreement with Lumeto that Wrap Reality can become a crucial tool of law enforcement and corrections department training regimens around the country. Our efforts are all part of a continuous push to improve the way the law enforcement and correction departments train. This is at the core of Wrap's mission to deliver effective solutions and contribute to the movement of safer outcomes. We want to create positive change moving forward. Now as we look to the year ahead, I can confidently say that we are making strides as a company and also making a difference in the communities that are using our products. I will now turn the call back over to Chris to facilitate the question-and-answer session.

Thank you, TJ. We now want to open up the line for questions from our analysts as well as preselected questions submitted from our investors. Our first question will come from Greg Gibas of Northland Capital Markets. Greg, thanks for joining us today, and you can go ahead.

Congrats on the strong results. I think first, just regarding your outlook for the year, could you maybe discuss what gives you confidence in those expectations? And maybe speak to the level of visibility you have on future orders?

Sure. I'll go ahead and cover this. Just like Chris talked about, we know that seasonality exists in the public safety market, and we expect Q1 to be lower than Q4 was, but we do expect throughout the year to have a fairly similar approach to what we had last year and that growth in Q2, Q3 and Q4. We definitely have a much better insight today into our pipeline than we did 9 months ago. We spent a lot of time with our sales team working through real opportunities. One of the things we started to do in the end of Q3 with our customer success team was reach out proactively to many of our existing customers and have discussions about them, not just converting from a BolaWrap 100 to BolaWrap 150 but also to expand in those existing agencies. There was not a huge focus on internal expansion before. Now we're hitting that internal expansion and full deployment of patrol officers, both with existing customers and new customers. Kevin mentioned one of our large customers had started a full deployment. We had another customer this week come in at full deployment to start off. So one, we're doing a much better job of talking through agencies about the value and benefits of going full deployment from day 1, where there are policies and every officer is wearing a BolaWrap on their gun belt or on their vest each and every day at work and the value that comes from that. We're also going back to the previous agencies to be able to have that same discussion and discuss where we fit into the use of force continuum for them and from a policy perspective and what are the outcomes they can expect from having every officer deployed. So…

Great. Good to hear. And if I could, sorry if I missed this in your release, but could you break out maybe device or launcher sales versus cartridge sales in the quarter? And then similarly, repeat purchases from departments, but I do imagine the vast majority of sales are new department sales. If you could break that out, that would be helpful.

Today, we don't have that breakout published. Chris, anything else to add to that?

No, we don't. I mean, Greg, we saw a significant increase in device sales throughout the year. And as CJ mentioned in his prepared comments, that includes all 150 devices. We did have cassette and cartridge sales this year with the 150 and 100. We're very pleased with the progress we made this year and really planted a lot of seeds in 2022 that should bear fruit into 2023 and beyond as far as seeing that increase. we'll look at giving out that metric potentially in the future, but at this point, we haven't broken that out.

Okay. Sounds good. And I guess lastly, any updates on the LAPD trial that you can provide?

Sure. We continue to engage with the LAPD on their large trial in the Hollywood and Central divisions. It's continuing to be successful, and they have an expectation, at least that we do from them at this point that it's going to continue for approximately another 6 months. That will be a 1-year trial deployment with the BolaWrap 150. They'll give an update in the not-too-distant future, kind of a midyear update internally on that. And when we get that, we're happy to share that update as well. But right now, we expect that they will continue to work that pilot for the remaining 6 months of the pilot trial period and then at that point, make their decision on next steps.

Got it. Yes, I look forward to an update there.

All right. Appreciate it, Greg. Thank you. We also have a couple of inquiries from investors that we'd like to address as well. Starting off, Kevin, how have the efforts to increase recurring revenue been progressing?

It's good question because there are a number of reasons why reoccurring is so important really to sustaining revenue, especially when you're selling into a cyclical vertical with an extended sales cycle, as TJ mentioned earlier, such as public safety. But building on recurring, we can build predictability, we build scalability, it helps with visibility, also flexibility and expense management. But most importantly, it's retention. So those are focuses that we're working on. So we're building in what is a recurring model from the BolaWrap standpoint, it's because that's per device, whereas before, we were recommending 6 cassettes per device, now it's 12. And so we've doubled on that. And it's not just a revenue generating, but it's getting really the officers familiar with the technology and being able to repeat that motion with what they're doing. We're also adding extended warranties. We're growing our training opportunities. As we discussed earlier, we've created a leasing model. Now we have bundling of service packages. And so we're also building on our early and often message, and that builds a recurring cassette sales as well. On the Wrap Reality side, we've changed our model. We've changed our model from a onetime enterprise purchase, now moving to a SaaS subscription model. We also can see recurring on module creation. We have support plans that are built into Wrap Reality, but it also allows for bundling opportunities. We recognize the value that recurring builds for our shareholder base and will continue to grow on that.

Thank you, Kevin. Additionally, TJ, can you remind us about the upgrades from the BolaWrap 100 to the BolaWrap 150 and speak to our R&D priorities going forward?

Yes. So from a BolaWrap 100 to BolaWrap 150 perspective, there were so many different changes, about 11 major changes between those 2 devices. First off, at the high level, it's about 20% lighter and smaller. So it takes up less space on the gun belt. And now that we have an expectation that every officer will carry it, certainly, that is critically important. It's also rated IP63, which is geared towards the industrial build out and the rigor rating like you would see a going to different levels. And so that allows us to sell it into the typical environment that police officers operate where it rains, it snows, dust, those things as well. The anchor system is now metal injection molded. So that's also improved. The laser system went from a much more basic green line laser to a laser array with 7 different lasers that makes it quite obvious, and we're actually seeing more times that the device is pulled out and the laser is put on somebody and they give up right away kind of we call that laser compliance because that laser is so obvious. In addition to the laser, we were asked during the usage of the early BolaWrap 100, could we have a flashlight built into the device. So it now has 2 LEDs -- 2 flashlights built into it as well, and they can be turned on or off, but most officers really like to leverage that. Different types of parameters and how we build the device, which also now is much more predictable, had less total parts and it has much higher margins as well. Battery life is probably one of the most important. The battery life is almost 4x longer. It's a 2-year battery that is in there. It allows…

Perfect. And finally, TJ, in light of the recent national tragedies, have you seen any shift in discussions with law enforcement officials about BolaWrap as you continue to speak with customers around the nation?

Yes, especially just in the past few months, we've seen a significant shift to a couple of things that I think are really important to all of our shareholders. One, more often than not, when I go to demo or present to an agency, to chiefs, to key decision-makers, we're seeing that they already know about BolaWrap that they already have a desire to have it and that they know it works and it's effective. We have enough agencies now that most are talking to an agency that is successfully using the device today. And because of that knowledge, it gives them the ability to come in and really talk more about how do we move into a full deployment of that agency. And when we look at the kinds of issues that have come up around use of force and duty to intervene, we're getting requests both for Wrap Reality and some of the duty to intervene technology we have in our VR training system as well as the need to have BolaWrap fit into their force continuum. One of the most important things we determined during the strategic road map and it changed our training curriculum was the fact that we know where BolaWrap fits into an agency's use of force policy, it's a bit different than where I think we started. We now know that when verbal commands fail for an officer that is engaging with a subject who need to either be taken into custody for a criminal event or taken into protective custody and mental health or other situation that when those verbal commands fail is where BolaWrap should be used. It's very early in those altercations. And as Kevin mentioned earlier, it's something that's happening much more often. We see this as a tool that should be utilized more than all the other less lethal tools that are out there. And from the BolaWrap perspective, we believe that, that early interaction actually de-escalates situations from growing into something worse and it also ends up saving lives and saving careers of the officers and those subjects that they interact with. So when we look at some of the deaths that have happened in custody, some of the chases that happened, we showed at the beginning of this earnings call on the high-speed Chase that then turned into a foot chase that was ended with a suspect who was running away being wrapped up by BolaWrap 150 by the officer in Alpine, Texas. That's a great example where that situation was de-escalated and the call was over after that individual was apprehended into handcuffs after being wrapped and something that would have turned into a much more dangerous situation and could have had a much more tragic outcome.

Great. At this time, this concludes our question-and-answer session. As a final reminder, we encourage you to visit our new website at ir.wrap.com. And even if you've previously signed up for our e-mail alert system, we've launched a new one. It's got a lot more functionality to it. So we ask that you please re-sign up again and again, just go to ir.wrap.com or you can visit from our main page at wrap.com. Thank you for joining us today, and thank you for joining the Wrap Technologies Fourth Quarter and Full Year 2022 Earnings Conference Call. You may now disconnect.