Hard Times are here.
For those who have experienced life in third world countries or have traveled to them, you might be observing similar patterns unfolding in cities throughout the United States, Canada, and Europe. What characterizes third world cities? Dirty streets, widespread poverty, visible homelessness, unsafe neighborhoods, and high crime rates. In countries categorized as third world, an atmosphere of uncertainty and insecurity is evident throughout. Sounds familiar? This is increasingly reminiscent of the current state of major cities in North America and Europe.
When we turn our gaze towards iconic cities like Paris or Rome, a disconcerting transformation is evident – garbage on the streets, graffiti, a surge in homelessness, and a concerning increase in violent crimes. This phenomenon isn't limited to a few isolated instances; it spans across major Western cities in both Canada and the USA. The question arises: What is unfolding within our urban landscapes?
Over the past decade, a series of global conflicts, from the turmoil in Syria and various African nations to the instability in the Middle East, Afghanistan, Venezuela, and Central America, has triggered an influx of immigrants seeking refuge in Western nations. Unfortunately for those of us in Western nations, this surge of uncontrolled immigration has brought forth a significant challenge – amidst the influx of millions of refugees entering our nation, a significant portion bears criminal tendencies or backgrounds, bringing their criminal inclinations with them.
Hence, it's unsurprising that over the past few years, cities that were typically considered safe havens – such as London, Rome, Paris, Stockholm, Vancouver, and Toronto – have experienced a noticeable increase in gang activities, stabbings, murders, and violent crimes. The relentless influx of immigrants into these urban centers shows no signs of abating, which suggests that the situation could further deteriorate. An article in The Globe & Mail dated August 29, 2023, reported that during the previous month, the Canada Border Services Agency (CBSA) documented a total of 37,326 active immigration arrest warrants. Out of these, 33,032 were intended for individuals to be removed from Canada, as conveyed by The Globe and Mail. Moreover, among these warrants, 306 were Canada-wide and aimed at individuals deemed potential threats to the safety of the Canadian public.
Meet the new neighbors.
Another pressing worry within our cities involves the emergence of tent encampments sprouting across major urban hubs. These tent communities are expanding throughout North America and Europe, presenting substantial health and safety hazards for the general populace. This introduces an added layer of risk, creating an ideal environment for a surge in criminal activities.
What's driving the proliferation of these tent cities? And how dire is the situation becoming? While I'm not an expert, my speculation is that the opioid crisis and mental health challenges contribute to this phenomenon. It's also likely that the exorbitant cost of housing and rentals in major cities is a factor pushing some individuals into these tent communities. In a recent piece published by the Wall Street Journal, a narrative unfolds about the plight of homeless individuals occupying parks in the town of Missoula, Montana. Within this small community, around 600 individuals lack housing. The catalyst for the surge in homelessness within this locale? Escalating living expenses. According to the article, the price tag for a one-bedroom apartment has soared to $1,195, marking a staggering 50% increase since 2019. With the rise in interest rates, the situation could deteriorate further. More middle-class individuals might be pushed closer to the poverty threshold, potentially normalizing these encampments in our neighborhoods. The sense of safety in our communities is eroding.
Adding to these concerns, a notable surge in shoplifting is currently afflicting most major cities, and this trend is not isolated to any specific region; it's gaining momentum across both North America and Europe. This rise in shoplifting is accompanied by an alarming uptick in violent incidents within retail establishments. The intricate interplay of various factors—ranging from the unprecedented global population size and mass migration to Western countries, to the soaring cost of living, the opioid crisis, growing social unrest, and the looming shadow of a significant economic downturn that might lead to widespread joblessness—could potentially lay the groundwork for a looming crisis in the near future.
In my view, the world currently resembles a dark room filled with powder kegs, with individuals navigating through while carrying lit candles. The tiniest misstep could ignite a volatile scenario, potentially propelling our planet into what I term a clash of cultures.
Crime is spreading like an epidemic, enveloping communities in its wake.
I could talk endlessly about what's happening in our cities today, but this newsletter is all about spotting trends, getting ready, and finding good investment opportunities. Looking ahead, especially with the upcoming US 2024 elections, I expect more of the same – more crime, shoplifting, homelessness, social unrest, etc.
To fit with this outlook, I've found a small company that's catching the attention of police departments globally. The company delivers cutting-edge public safety solutions that empower law enforcement agencies to carry out safe apprehensions without the use of force, thus minimizing the risk of injury to individuals and officers.
In a world grappling with upheaval, WRAP Technologies (NASDAQ: WRAP) finds itself in the perfect place and time. Communities worldwide yearn for innovative solutions to the escalating crime wave, making WRAP's offerings an essential lifeline. Through their pioneering public safety solutions, they equip law enforcement agencies with the tools to manage apprehensions without resorting to force, a groundbreaking approach that safeguards both individuals and officers.
Wrap Technologies' journey reminds me of Axon (NASDAQ: AXON) formerly known as Taser International. Their offerings share a remarkable parallel – advanced public safety solutions that minimize the use of force while maximizing safety for both individuals and law enforcement officers. Wrap's BolaWrap®, an innovative remote restraint device, echoes the spirit of Taser guns, introducing a revolutionary approach to non-lethal force application. This handheld device deploys a Kevlar® tether to safely restrain individuals, serving as an early intervention measure, reducing risks, and avoiding tragic outcomes. Bolawrap is the only law enforcement tool that doesn't rely on pain compliance.
Like Axon's VR Training, Wrap Reality™ immerses officers in virtual reality training, honing their skills in handling dynamic law enforcement scenarios. And now, with the addition of Intrensic LLC., Wrap is set to provide a comprehensive body-worn camera and evidence management solution that rivals Axon's offerings in the field of body cameras. The prospect of Axon acquiring Wrap in the coming years is a plausible scenario worth considering.
Q2/2023 Financial Data
| In USD$ | June30/23 | June30/22 |
|---|---|---|
| Sales | $1.20M | $1.17M |
| Gross profit | $668K | $457K |
| Gross margin | 56% | 39% |
| Net income | -$5.0M | -$4.8M |
| Cash & S/T Investments | $18.2M | $19.3M |
| Total debt | $0 | $0 |
| FCF (to date) | -$842k | -$6.4M |
| Working Cap | $16.6M | $23.7M |
| Current ratio | 2.5 | 8.5 |
| Shares Outstanding | 41.5M | 40.9M |
During the second quarter sales grew 3% to $1.2 million from $1.17 a year ago. The company saw record Wrap Reality™ sales and a surge in demand for both Wrap Reality™ and BolaWrap® solutions. This performance lays a strong foundation for an optimistic second half of the year. Notably, the expansion of the sales team to cater to growing domestic and international demand is a key development. The acquisition of Intrensic, a state-of-the-art digital evidence management system and body-worn camera company, aligns seamlessly with Wrap's strategic vision, enhancing its law enforcement and security offerings.
Wrap Technologies appears to be in a robust financial position, boasting a cash and short-term investments reserve of $18 million, while maintaining a debt-free status. Overall, the company has taken proactive steps to improve operational efficiency, control costs, and fortify its balance sheet. These measures position Wrap for sustainable growth and financial strength as it moves into the second half of the year and executes its growth strategy.
Significant Insights and Progress
Innovative Pubic Safety Solutions
BolaWrap® is a patented hand-held restraint device that uses a Kevlar® tether to safely immobilize individuals from a distance, proactively preventing escalation.
Wrap Reality™ is an immersive virtual reality training system that equips first responders with skills to prevent conflicts and apply tactical measures. It offers a range of scenarios for modern law enforcement situations, contributing to positive safety outcomes, step by step.
Intrensic, Wrap’s solution, provides a secure and efficient body-worn camera and evidence management system. It captures, handles, stores, and tracks evidence transparently, fostering trust in law enforcement and the justice system, and expediting justice with integrity.
Trendpost Takeaway
While this overview is not an exhaustive exploration of Wrap Technologies, it serves as a springboard for delving into more comprehensive research about the company. Presently, investing in Wrap is speculative in nature. However, the company's potential for growth appears promising, fueled by its innovative solutions, robust financial position, and strategic positioning within the evolving landscape of public safety challenges.
My sentiment towards WRAP is positive; its prospective trajectory aligns with my investment philosophy. Should the company sustain its strong performance and further amplify its sales orders, the potential for WRAP to become a remarkable investment grows. As of now, I'm adding WRAP to my watchlist, keeping a keen eye on its developments. Over the last year, the stock has presented several favorable entry opportunities. As recently as June of this year, the stock hit $1.00/share. I would not be surprised to see the share price go back below a dollar in the near future.
Remember that the content of this newsletter is neither a stock recommendation nor investment advice. This is just something to consider. You can access the watchlist and portfolio through the link below. By clicking the link below you accept all responsibility for any potential losses that might result from buying any of the financial instruments mentioned in this newsletter.