Chief Financial Officer Chris DeAlmeida added: "In Q4, we achieved strong revenue growth and utilized our enhanced cost controls, which led to a significantly increased gross profit and a significantly decreased cash burn rate compared to the prior year period. We anticipate achieving year-over-year growth in revenue each quarter in 2023, taking into consideration historical purchasing timelines, which assumes a greater proportion of sales in the latter part of the year, similar to what we saw in 2022. As we move forward, we are on course to achieve our long-term profitability targets."
Outlook
Based on the Company's historical revenue trends and current information, management is providing initial revenue guidance for 2023. Consistent with prior periods, Wrap's revenue is expected to follow the seasonal budget cycles of its law enforcement agency customers, resulting in a sequential decline in revenue in Q1 2023. However, the Company then expects to achieve year-over-year and sequential revenue growth throughout the remainder of the 2023 fiscal year and a high double-digit growth rate on an annualized basis. This growth is expected to come from a combination of expanding sales with existing customers domestically and internationally, as well as new contract signings in both regions.
In addition, based on current projections, management reiterates its expectation to achieve quarterly adjusted EBITDA break-even point by the end of 2023 and profitability by the end of 2024.
Wrap's outlook is based on a number of factors, many of which are outside the Company's control and all of which are subject to change. Government procurement cycles and timing are outside the Company's control, and Wrap relies on significant purchases at individual agencies where the timing can be difficult to predict. Wrap may change the outlook provided during the year as actual and anticipated results vary from these assumptions, but Wrap undertakes no obligation to do so.
Conference Call
Wrap will hold a video conference call today, March 1, 2023, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss these results.
Wrap management will host a presentation, followed by a question-and-answer period.
Webcast Link: Click here to register
Please join the webcast 5-10 minutes prior to the start time. Participants may also access the live webcast by visiting the Company's investor relations website at ir.wrap.com. A recording of the webcast will also be made available on the Company's investor relations website.
If you have any difficulty connecting with the conference call, please contact Gateway Group at 949-574-3860.
========== ========== Wrap Technologies, Inc. Consolidated Statements of Operations and Comprehensive Loss (unaudited - dollars In thousands, except share and per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 Revenues: Product sales $3,438 $2,383 $7,481 $7,381 Other revenue 146 65 568 348 ---------- ---------- ---------- ---------- Total revenues 3,584 2,448 8,049 7,729 Cost of revenues 1,885 1,709 4,315 5,734 ---------- ---------- ---------- ---------- Gross profit (loss) 1,699 739 3,734 1,995 ---------- ---------- ---------- ---------- Operating expenses (i): Selling, general and administrative 4,434 4,065 16,386 20,276 Research and development 868 1,911 5,078 6,214 ---------- ---------- ---------- ---------- Total operating expenses 5,302 5,976 21,464 26,490 ---------- ---------- ---------- ---------- Loss from operations (3,603) (5,237) (17,730) (24,495) ---------- ---------- ---------- ---------- Other income (expense) 67 7 224 46 ---------- ---------- ---------- ---------- Net loss ($3,536) ($5,230) ($17,506) ($24,449) ========== ========== ========== ========== Net loss per basic and diluted common share ($0.09) ($0.13) ($0.43) ($0.62) ========== ========== ========== ========== Weighted average common shares used to compute net loss per basic and diluted common share 41,160,136 39,281,620 41,174,812 39,281,620 ========== ========== ========== ========== Comprehensive loss: Net loss ($3,536) ($5,230) ($17,506) ($24,449) Net unrealized gain (loss) on short-term investments 32 (17) 100 (21) ---------- ---------- ---------- ---------- Comprehensive loss ($3,504) ($5,247) ($17,406) ($24,470) ========== ========== ========== ========== (i) includes stock-based compensation expense as follows: Three Months Ended Twelve Months Ended December 31, December 31, 2022 2021 2022 2021 ---------- ---------- ---------- ---------- Selling, general and administrative $503 $836 $2,684 $4,558 Research and development 93 210 541 798 ---------- ---------- ---------- ---------- Total share-based compensation expense $596 $1,046 $3,225 $5,356 ========== ========== ========== ========== Wrap Technologies, Inc. Condensed Consolidated Statements of Cash Flows (unaudited - dollars in thousands) Twelve Months Ended December 31, 2022 2021 Cash Flows From Operating Activities: Net loss ($ 17,617) ($ 24,449) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 762 478 Share-based compensation 3,225 5,356 Common shares issued for services - 239 Product line exit expense - 747 Gain on sale of assets - (27) Warranty provision 210 10 Software impairment charge - 170 Change in contingent liability - (23) Non-cash lease expense 101 88 Provision for doubtful accounts 72 123 Changes in assets and liabilities: Accounts receivable 957 (2,111) Inventories (2,410) 559 Prepaid expenses and other current assets 93 (109) Accounts payable (360) 546 Operating lease liability (91) (94) Customer deposits (43) 41 Accrued liabilities and other 609 (54) Warranty settlement (181) 38 Deferred revenue 68 249 Net cash used in operating activities (14,603) ($ 18,223) ---- ------------ --- ----------- Cash Flows From Investing Activities: Purchase of short-term investments (30,466) (55,014) Proceeds from maturities of short-term investments 46,600 50,005 Capital expenditures for property and equipment (256) (995) Investment in patents and trademarks (173) (187) Investment in long-term deposits (700) (750) Proceeds from long-term deposits (92) 4 Net cash provided by (used) in investing activities 14,913 (6,937) ---- ------------ --- ----------- Cash Flows From Financing Activities: Proceeds from exercise of warrants - 12,047 Proceeds from exercise of stock options 83 1,678 Repayment of debt - (275) Net cash provided by financing activities 83 13,450 ---- ------------ --- ----------- Net decrease in cash and cash equivalents 393 (11,710) Cash and cash equivalents, beginning of period 4,937 16,647 Cash and cash equivalents, end of period $ 5,330 $ 4,937 ==== ============ === ===========
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