Greetings, and welcome to the Verna Technologies Fiscal Third Quarter 2021 Earnings Conference Call and Webcast. As a reminder, this conference call is being recorded and Before turning the call over to Brian Gans, Verna Technologies' Chief Executive Officer, I will read the Safe Harbor statement. All discussions made today may include forward looking statements. Actual results could differ materially from the statements made today. Please refer to Verna's most recent 10 ks and 10 Q filings for a more complete description of risk factors that could affect these projections and assumptions.
The company assumes no obligations to update forward looking statements as a result of new information, future events or otherwise. As this call will include references to non GAAP results, please see the press release in the Investors section of our website, ir. Berna.com. For further information regarding forward looking statements and reconciliations of non GAAP results to GAAP results. I'll now turn the call over to Mr.
Brian Ganz. Also, sir, please go ahead.
Thank you. Good morning. Thank you for joining us also for Burnet's 2021 Third Quarter Earnings Call. Just as a clarification, at the end of the call, we will be taking questions also recorded in the press release. During this quarter, we have continued to execute also on our strategy to grow Verna through increased visibility and brand awareness, new product introductions and all of our segments are being recorded and the opening of new markets and new sales channels.
Our performance in the Q3 was marked by success, I think, in all of these areas. Perhaps most importantly, we completed a successful public offering as all of you know, raising $56,800,000 after fees. And all of our shareholders are in the range of $60,000,000 of the bank and no debt, we really have the resources to fully implement our growth strategy. All participants are ready to take questions. Compared with Q3 2020, we have more than doubled our net revenues to $8,700,000 with a strong contribution all from our international dealer network, although admittedly we were down from the prior quarter, which benefited from a $5,000,000 surge in sales attributed also attributed to Sean Hannity mentioning the Burna HD on his nightly show.
Gross profit more than doubled to $4,900,000 and our gross margin improved to 56%. This margin was higher than we had projected at our last earnings call and also as the introduction of a number of our new higher margin products offset pressure from growth in our lower margin international sales. All participants will
be available for the Q1.
We introduced a slate of new game changing products this quarter that are helping us transform our business, scale our brands, also improve our margins and open new markets.
So we
took an important step this quarter to expand from essentially a one product, one also a multi product, multi channel company with the launch of BERNA's Amazon e commerce platform, also the introduction of the BERNST personal security device and the Mission 4 long barrel launcher. Also includes the addition of 82 Buy Mart locations throughout the Pacific Northwest. Also we acquired the assets of Ballistapax and introduced the BurnaShield product line. We conducted our 1st Learn Safe School training program and also for Public School District in Texas. And we strengthened our management team with the addition of Mike Gillespie as Chief Operating Officer.
Many of you may have had a chance to see Mike on our Analyst Day a few weeks ago. And Michael Wager is Chief Strategy Officer, all of our stakeholders are going to be tasked with finding strategic opportunities for us. Although
all participants are in the process.
I personally have the privilege each quarter of addressing our investors and discussing our operations and successes. All participants will be available without the continued hard work and dedication of everyone at Verna. As I noted during our Analyst Day presentation, the burnout teammates are a unique breed. They prioritize our mission of saving lives. Also the also, this is a script that I wrote last night, but I just want to add something on a personal note.
Last night, I left the office at 8 pm and there were still a half dozen Bernd team members working away. And when I arrived this morning, a little past 7, once again the office was already bustling with activity. You cannot buy this type of dedication or loyalty. All participants are ready to take questions. It is only possible when people truly believe in the mission as is the case with the Burnet team.
Now I'm going to hand this call over to David North, our I'll now turn the call over to Mr. CFO to discuss our Q3 financial performance and then I'll come back on to discuss some recent developments and take questions. All participants will be available.
Thanks, Brian, and thanks, everyone, for joining us today. Today, I'll review the financial results for the fiscal Q3 ended August 31, 2021, also provide an update on the company's liquidity position and discuss the company's full year 2021 outlook. Revenues for the Q3 of 2021 were 8 all $7,000,000 compared to $4,200,000 in the Q3 of 2020. The increase was driven by higher e commerce and international sales, all new product launches and growing market awareness of the Burna product portfolio. 3rd quarter gross profit rose at a faster also the full year adjusted EBITDA margin was up 130 percent to $4,900,000 from $2,100,000 in last year's Q3.
All participants are in the range of $50,000,000,000. Gross profit margin was 56.2 percent of net revenue compared to 50.7 percent of net revenues in last year's Q3 and 56.4% last quarter. These improvements were driven by higher sales volumes, greater manufacturing efficiencies following investments in the company's U. S. Also includes the introduction of new high margin products.
Gross margins were essentially flat compared to the immediate year preceding also in the prior quarter as higher margins new product sales were offset by an increase in lower margin international sales. All operating expenses for the Q3 were $6,700,000 compared to $2,700,000 in the prior year period and $5,500,000 for the previous quarter. The year over year increase was driven largely by investments in corporate infrastructure necessary to support Verna's all of our business continues to be strong. This included expanding and retaining our management team and administrative staff, which resulted in a payroll increase of $1,500,000 and a $1,000,000 increase in long term stock based compensation expense from last year's Q3. The increase also reflected also higher variable expenses such as freight, which rose by $300,000 and also incremental costs, including public company costs, all legal expenses and increased R and D expenditures.
3rd quarter operating expenses were $1,100,000 higher than operating expenses of 5 point also $5,000,000 reported for the Q2. This increase is primarily due to further expansion of and incentives to retain our management team all in support of continued growth, including $300,000 due to increases in headcount, dollars 400,000 increase in the accrual for annual bonuses and $100,000 increase in stock compensation expense. In order to promote continuing growth, we also increased marketing expenses by $200,000 over the prior quarter. Legal expenses were $300,000 higher primarily due to the one time cost also includes an investment in protection of our intellectual property. Finally, insurance expense increased by $100,000 all participants will be conducting a call to questions.
Net loss for the Q3 of 2021 was $1,800,000 or $0.08 per share compared with a net loss of all $600,000 or $0.04 per share in the Q3 of 2020. Adjusted for approximately $1,000,000 of non cash all of our non GAAP adjusted net loss was approximately $900,000 or $0.04 per share also recorded a loss of $500,000 or $0.04 per share in last year's Q3. Non GAAP adjusted all of our earnings call will be recorded.
EBITDA was a loss
of $900,000 compared with a loss of $500,000 for the Q3 of fiscal year 2020. All participants are currently reporting. For 2021 year to date, the company is reporting a modest profit of $48,000 adjusted for non cash items, all including depreciation, amortization and approximately $2,500,000 of non cash stock based compensation costs. All non GAAP adjusted net income is approximately $2,400,000 or $0.07 per share. As of August 31, we had an open order
also includes a strong
backlog of approximately $400,000 with e commerce orders being fulfilled in an average of 2 to 3 days. Now turning to the balance sheet. We ended the Q3 with the strongest balance sheet in our history following the completion of a public offering in July 2021. All participants are ready to take questions. At that time, the company issued and sold an aggregate of 2,875,000 registered shares of its common stock at a price of $21 per share.
The net proceeds to the company after deducting $4,400,000 in underwriting all the financials and operating expenses were approximately $56,000,000 We ended the quarter with all of our cash flow is being recorded and all of our cash flow is being recorded and all of our cash flow is being recorded and all of our cash flow is being recorded and no current or long term debt on our balance sheet. We intend to use the proceeds from the offering also to fund the working capital needs of the company's continued growth and to take advantage of strategic acquisition opportunities. All participants are ready to take questions. Following the public offering, our total share count at quarter end was 23,603,996 all shares. We've continued to focus on inventory management and sourcing initiatives in anticipation of growth.
We currently have approximately all of our customers are currently in line with the 3rd party. We are now ready to open up the call to questions. All participants are ready to take questions. At the opening of Verna's Amazon store in August and our desire to be able to handle a surge in sales, we believe that this has been the prudent approach, particularly considering all fulfillment issues we faced due to surges while we were building capacity over the past 2 years. We are reiterating our all of our financial results are being recorded.
We expect fiscal year 2021 revenue
guidance of $40,000,000 to $42,000,000 reflecting year over year growth of approximately 140 at 6% at the midpoint of the range. The guidance is based on the company's current order flow and the growth expected from: 1, the recent and planned introduction of new products 2, e commerce sales via our dedicated Amazon store that kicked off at the end of August this year 3, anticipated increases in domestic and international dealer sales and 4, broader brand awareness among customers. All participants are ready to take questions. With respect to gross margin, our fiscal year 2021 expectations call for a range of 53% to 56% and all participants are ready to
take questions. As compared to a gross
margin of 45.3% in fiscal year 2020, the anticipated improvement in gross margin is expected to be driven by the planned introduction of new higher margin products and the benefits of our investments in the Fort Wayne production facility. Now I'll turn the call back over to Brian.
Thanks, David. Let me start with and all of our questions are being recorded. At the very end of August, we launched on Amazon and used this platform as the avenue to introduce the new Berna SD. All participants are ready to take questions. The sales contribution for the Q3 was de minimis.
I think we did about $49,000 of sales on Amazon during the last few days of August. Also a reminder, we expect to see Amazon become an increasingly important sales channel over time and we are already beginning to see a positive trend. Over the last month, Amazon sessions grew from approximately 7.50 per day the 1st week of all of our segments. We are now
in the Q1 of 2019 to approximately 3,000 sessions
per day the last week of September. And while this is still less than 15% of the almost 22 and also a 1,000 average daily sessions on Verna's own website during the month of September. Amazon traffic is growing rapidly and we expect to see activity on our Amazon storefront ultimately equal or exceed the activity on our own BERNA website. Also we've also seen a significant increase in members of BurnaNation. This is the group of consumers that have opted into our email database.
All participants are participating in the quarter. This is up from approximately and all of our customers
are in the process of providing
a all sales platforms and they are a very important component of our strategy. For example, as I mentioned, our average daily sessions at berna.com all participants are in the same period. If we look at September of 2020, our average daily sessions were 7,660. So we've seen an 186% increase over the last 12 months. During the same time, as I mentioned, BurnaNation email subscriptions have risen from around $30,000 to $185,000 for a 500% increase and we are seeing an open rate in excess of 40%.
So this list enables Burna to keep members of Burna Nation aware of new product developments, also includes special offerings, pertinent news regarding non lethal self defense. However, Along with the e commerce presence, the retail presence is vital for new customer acquisition, particularly for a relatively young company like Verna. All participants are going to be able to purchase it from a trusted location. If one were to look also includes a Venn diagram of consumer buying habits. There are essentially 2 types of consumers, those that prefer to buy online and all that we have to do is to buy in a brick and mortar store.
And while there is some overlap, it's not as great as one would think. Moreover, all participants are in the all store and then go online to buy. And we also see conversely our website driving business to our brick and mortar store and all that we have to do is to take a look at our dealer locator and then go to a brick and mortar store so that they can touch the product. All participants will be participating in the future.
We are going to
be putting a tremendous emphasis over the next several quarters on the development of our retail all participants will be available to all kick off a number of new marketing campaigns that we've only been dreaming of since our inception. All participants will be participating in the Q1 of 2019. We will continue to see a number of key initiatives in the Q1 of 2019. All of our segments. If this works as we expect it will, also we will expand this campaign to many, many more cities.
We are also going to be kicking off a direct mail campaign. All effective way for us to build brand awareness and drive sales. And although conversion rates are low with direct mail, all participants will be participating in the 1% conversion rate would result in a ROAS or return on advertising spend in excess of 10 times. Also we are buying outsourced e mail lists. We'll be sending e mails to more than all of our target demographics.
Again, this is a very cost effective way for also allows us to reach out to potential customers. We've hired a firm to help us with our influencer campaign. Also there are going to be 10 to 15 anchor influencers who will launch content in October and another 25 to 30 all influences that will launch content in November. Now the influencer campaign is more hit or miss. Also When it hits, the returns can be enormous.
In September, one of our customers posted a video all. This video went viral on YouTube, getting more than 6,000,000 views and also a reminder of the business and driving significant traffic to the
burner website.
We'll also be kicking off an SMS text message marketing campaign. Also, this will allow burner to reach out to members of burner nation by text where the open rates are much higher than they are with email. And finally, we're kicking off a Printz Media advertising campaign this month of October also available on our website with ads in Gun Digest, Concealed Carry, RV Living Magazines among others. All of the other ways that we look to grow revenue is through new product introductions. And I just I want to review some of the new product introductions during Q3.
First was the Bernabanche personal safety alarm. All participants are in the same store. BERNA was looking for something we could first advertise on platforms where we could not advertise the BERNA personal security device and also provide visitors to the Verna store with a price point product. With the Verna HD, our AOB or average order value for first time customers was over $4.80 So this is a significant purchase. And all the other folks that were coming to the website left without buying anything.
By providing a At 29.99 Burnaby Banshee, we have a product that's affordable to almost everyone. The Banshee is a personal safety alarm also a replay of the siren and flashing strobe that draws attention and thus can toward a potential attack. Also we introduced the Bernard Banchay on July 22. We did had an initial production run of 2,000, which we sold out in the 1st 48 hours. To date, we have sold more than 5,700 Banshees, and that's just since July 22.
We think just also anecdotally that this will be a very good stocking stuffer for Christmas. The Berno Eco Kinetic 68 caliber round,
all participants are ready to take questions. One of
the unintended consequences of our success is that we've been selling millions all of rounds of ammunition that are produced from plastic. And the remnants of these rounds are often left in lawns and fields strewn across America. All participants are ready to take questions. It was important to the management team at Werna that we develop projectiles that were not just biodegradable, also, which would take years to decay, but were in fact water soluble that would simply dissolve in a matter of weeks when left out in the elements. Also the Ecokinetic Round, which is constructed of food products, is completely safe for the environment and non toxic in case it's ingested also recorded by pets or small children.
So we brought out the Eco Kinetic projectile to replace both all of the Kinetic and the Inert practice rounds. It is one of the lowest priced non lethal rounds on the market at only $0.25 per round all people buy it in a 400 count container. We launched this product on August 1. And in the last 2 months, we have shipped also more than 1,250,000 ecokinetic rounds, not counting the tens of thousands of rounds we shipped as part of our and also available on the commercial side of
the business. We believe
that our Eco Kinetic Round will become the best selling projectile and all of our customers are going to be able to see the benefits of the burnout. So all participants are ready to take questions.
We are going to be
kicking off a recreational campaign, encouraging people to practice their shooting skills in their backyard, also having funds with friends and family. From a selfish standpoint, this of course will drive ammo sales and sales of CO2 and also help owners become more proficient with their personal security devices and more comfortable in the event that they need to deploy their Verna in a real world self defense situation. The next thing that we launched was the Verna HD XL. The HD XL is an extended length version of the HD. All participants are ready to take questions.
All participants will be ready to
take questions. The HDXL is
produced by incorporating a longer barrel and the burner boost, and also includes a 12 gram CO2. The HD XL sells for $100 more than the standard HD. And all of our customers are in the Q3, the XL represented 25% of all HD launcher sales and this went a long way to helping us
all participants will be able to boost BERNA's gross
profit margin. The BERNA SD launcher, this is our next generation launcher. It is the natural all of our technology is being an evolutionary step from our popular extremely popular HD model. The SD incorporates an improved trigger, a honeycomb grip, also includes the enhanced siting system. The Verna SD became available on August 26, just a few days before the end of the quarter, in connection with our launch on Amazon.
And the BERNA SD was initially offered exclusively on Amazon, also can now be ordered directly on the Verna website and through the Verna retail network. Also with an MSRP for the basic SD Ready kit of $3.99 which is $40 more than the Verna HD, also the Verna SB is also helping us grow our profit margin, while at the same time providing for greater customer satisfaction. All participants will be available. We introduced at the end of the quarter in August the Berna M4 High Capacity Rifle. All participants are ready to take questions.
The M4 is created from technology acquired in the Mission acquisition and it expands our brand also includes the integrated and regulatory capabilities. And all participants are ready to take questions. The M4 or Mission 4 is modeled on the ARM4 platform, fires rounds at 3 25 feet per second and is an also extremely effective non lethal security device that will be immediately familiar to all AR users. All participants are ready to take questions. Since August 1, we have sold 6.60 units to both consumers and law enforcement officers at a price of $8.99 Now, while I received some feedback that also, the Mission 4 too closely resembles an actual AR and as such appeals only to gun owners.
Also we believe that every time we are able to put a non lethal security device in the hands of someone all that might otherwise be carrying a lethal weapon, we are taking one more step toward accomplishing our mission of saving lives. Speaking of saving lives, in August we announced the acquisition of Ballistapax or certain assets of Ballistapax. Also a company that had developed a single handed readily deployable bulletproof backpack. All of our stakeholders are being recorded. As part of the transaction, we acquired inventory, several patents, trademarks and other assets.
All participants are ready to take questions.
It was a very, very small
acquisition, but we felt it was an important tuck in acquisition because it allowed us to go after also not just an offensive way of protecting oneself, but also a defensive way of protecting oneself. On August 20, we launched the Burna Shield Ballistic Backpack, which features, as we said, also included a solid consolidated, concealable, readily deployable ballistic body armor system. Since that time, we have sold 160 backpacks. All participants are ready to take questions. The burnished shield looks just like an ordinary backpack until it's deployed, at which time the backpack is actually transformed and also includes a full body armor capable of stopping multiple rounds.
The backpack also comes with an anti bleed kit, allowing the wearer to immediately tend to any distance of gunfire. We believe that the Ballistic Backpack will have strong all of our employees are being recorded to our approximately 185,000 members of BurnaNation, but more importantly also to other consumers and security professionals looking for a really discreet way to have access to full body armor without also the intimidation of wearing a tactical bulletproof vest. In fact, one of the first purchasers of these backpacks was the DEA
all participants
are going to be focusing our burnished shield on school safety officers. We believe that the burnished shield will allow them to be prepared For an active shooter situation without having to wear a tactical vest, which would be very, very intimidating. All participants will be prepared to both confront the threat and to treat any victims of gunfire with the anti bleed kit that
all comes
with it. New products are going to be released in the balance of this year and into 2022. Offered very, very shortly. We expect to see sales of this in our Q4. It's offered in both the semiautomatic and fully automatic configuration, which is capable of firing 12 rounds per second.
The MLR has 120 shot all capacity fires rounds at 3 40 feet per second, law enforcement will be able to order the MLR in either a and also includes CO2 or HPA or high pressure air configuration, and we've already seen significant interest from our law enforcement customers. Also we have been talking about the Verna LE for a while. This is also a security device geared towards law enforcement. It is planned for release in the first order of 2022. It will it is modeled on the Verna SD and outwardly will look very similar to the Verna SD, also has a new valve system, which results in significantly higher muzzle velocity.
It also has fiber optic sites, and also a 7 plus 1 Magazine, extreme cold weather capabilities. And we will be offering this to our consumer market once we initially open it up to our law enforcement customers. We also plan to launch the Berna TCR or and also a tactical compact rifle later this quarter. This will be the 1st launcher that we build completely in house and also on IP acquired from the Mission acquisition. The TCR is a very easy to use and all the other aircraft that can fire 19 rounds in rapid succession at more than 300 feet per second.
And also a reminder, this conference call is being recorded. And also a reminder, it stands apart from other shoulder fired launchers because it uses easy to find and readily available all of the 12 grams CO2 cartridges. We'll be introducing next year our pump action launcher and the significance of this all participants
are ready to take questions.
The pump action launcher will be the 1st launcher designed to fire Verna's patented Fintail projectile. And all participants
are ready to
take their questions. And these are the projectiles that are designed to spin stabilize in flight. They are significantly more accurate, carry greater payloads, travel at higher all speeds over longer distances than the traditional round ball projectiles that are used today. Also being designed to offer law enforcement the ability to disarm a threat at distances of up to 150 feet without the need to resort to lethal force. We demonstrated the capabilities of this launcher in June in Los Angeles, all of our employees are in the room where there were representatives of several police and sheriff's departments and they were able to test fire a prototype PAL.
Also concludes the call.
Now before the PAL comes out, we are hoping to release the 12 gauge round. Also the 12 gauge round will be a shotgun round with the 0.68 caliber Fintail projectile inside. Also, what this does for us is it allows Burna to access the almost 100 the owners of almost 100,000,000 shotguns in the United States alone and provide them with a highly effective 68 caliber non lethal round all participants are ready to take questions. Without having to spend as much as $1,000 to purchase the pump action launcher, we expect that these 12 gauge all rounds based on the 68 caliber Fintail projectile will sell in 5 count and 10 count boxes with approximately $7 per round price. Other third quarter highlights, also includes the SEC.
Law enforcement, last quarter, we discussed the formation of a team dedicated to bring Verna's suite of non lethal products
also to the law enforcement and private
security markets. During the Q3, this team trained and certified 85 law enforcement officers and private all security professionals from 30 agencies as Verna instructors bring the total number of agencies using the Verna to more than 150. In conclusion, I want to say that I'm extremely proud of the amazing progress all the company has achieved this year. Sales for 2021 are already up more than 100% compared with all full year 2020. Based on the Amazon launch, the new marketing campaigns the company is implementing and all of our segments are being recorded.
We believe we are really well positioned for continued significant growth in 2020 and beyond. With that, I'd like to turn this back over to the operator and we will be happy to take questions from our all analysts and institutional investors.
Our first question is from Jeff Van Sinderen from B. Riley. Please proceed with your question.
All. Good morning, everyone, and thanks for taking my question. Can you speak more about the new products that all Are being added to Amazon or plans to add new products to Amazon since I know Amazon is a topic on a number of people's minds?
All We started off with a limited number of products at Amazon because they gave us limited shelf space. So initially, we could have 1,000 units at Amazon. Within the 1st week, as they saw the all traffic, they raised that to 3,000 and we added additional products. They have now raised that limit again. All participants are ready to take questions.
Also our goal will be for Amazon to carry everything that we carry on the burnout all website. So I don't know how long it will take. The way these algorithms work is the more success we have, all the time. The more they promote the product and the more shelf space they give us, but our intention is to have the complete range available on Amazon.
Okay. And then I just wanted to touch on, I know there was another, sadly another school shooting this week that was in the news. Just all participants may be able to take a look
at the future. Maybe if
you could touch on your strategy going after the school market, what are the milestones that maybe we should
also The school market the interesting thing or the ironic thing is also We developed the Berna because at the time we were offering products that were available only to all the information we have available to our employees and all of our stakeholders are making sales to the government is a lengthy and difficult process involving budgetary concerns and bureaucratic concerns. Also we pivoted to the consumer market. With the success that we've had in the consumer market, our products have come to the attention of law enforcement agencies. In fact, this week, we are training the ATF. They're now buying furnace as well.
Also But it's still a slow process. As I mentioned, we've brought on 150 law enforcement agencies. All
participants are in
the U. S. That's 150 out of 18,500 agencies in the U. S. We are finding the also same thing with breaking into schools.
So, although we've been making a lot of presentations, all participants will be ready to take questions. We have to have a sign off from the school resource officers and from the and all the other items that we have discussed in the past. So all participants will be available. We have not built anything
into our projections for the school
program. Although this is an important project for me personally, also there's nothing that I would like more than to be able to have the Burna Shield and the Burna all of our employees are working on. Personal security devices on every school resource officer in America. I just don't know how quickly that's going to happen, Jeff. But it is something that we're devoting resources to and we'll continue to focus management's attention on.
All Okay, great. And then if I can squeeze in one more. I know you've added new accounts recently or new retailers. Any more color you can give us on the latest trends you're also, I'm not seeing in the dealer channel, and then I know that's a focus. Just anything we should look for over the next couple
of quarters in new retailers?
Also What we've discovered is that the retailers that are best for us are companies like this new retailer Buy Mart. All of our members are being recorded. Buy Mart has ordered numerous times this quarter since coming on board. Buy Mart is sort of a mini at Walmart. It's sort of a general merchandise store that caters to a broad population within its regional footprint.
So that tells us that other stores like Walmart all should be a target for us. And we are currently in discussions with many of the sort of big box stores that you would and I think that this is an approach that we should take. Where we found that we are not making good headway is with the all the FFLs with the firearms dealers themselves. As those of you who are firearms owners know, and all of these locations, people are buzzed in. There's not a lot of foot traffic going up and down the aisles.
People go to a gun store also specifically to buy something that they want, either ammunition or a specific weapon that they want, and all of our employees are not going to focus our efforts also ongoing after the gun market through gun stores. We think going after the gun market through gun shows, and all of that is being recorded through things like the print media advertising that we're talking about, the e mail campaign that we're talking about. But we're going to try to pull back on our efforts also to sell through federally licensed firearms dealers and refocus our attention on more general merchandise stores.
Okay. Thanks so much and best of luck for the rest of the quarter.
Thank you very much, Jeff.
Our next question is from Brian Gesuale from Raymond James. Please proceed with your question.
All. Hey, good morning and thanks for taking my question. Brian, can you maybe talk a little bit about how you might also the evolution of product sales during the holiday season, what incremental marketing you may do, how we might start thinking about the seasonality and natural shape of the business over the course of a given
all Up until this point, we've not had enough product to ever all participants will be participating in the holiday season. So last year, we did not run any specials. This year, I'm happy to say that we're in a much better position in terms of product. As David North mentioned, we're going out of our all the way to use some of the cash that we raised to significantly increase inventory levels so that we will be prepared for also a surge in demand. Because of our unusual fiscal year ending at the end of November, all of our customers will not result in any sales for this quarter all participants are ready to take questions.
Because by the time we get the sale in and ship it out, we'll be past November 30, which I think is a Tuesday. So we are but that said, we do think that there will be a significant consumer demand, all participants are in the audience. Particularly as we now have a very large installed user base, we're well over 110,000 launchers sold. And all that we have to do is continue to buy ammo. We're bringing on additional products from apparel to the Berta Banshee, obviously these new Meco Kinetic rounds, new holsters.
So we will be running a robust Black Friday, Cyber Monday campaign also because of our year end November 30, we'll probably also do something like a burn up Friday, also may be a week or 2 ahead of Black Friday so that we can try to gain some of these holiday sales in the 4th all quarter, but I would expect that most of the holiday sales will end up in Q1 of next year.
All participants are ready to take questions. That makes sense. And so we would obviously expect Q1 to sequentially grow off of your 4Q, not only with the momentum and also an inherent growth in the business, but perhaps even maybe a little bit of a bigger increase sequentially than we typically see.
Yes, I would have to say that's right. Q1 should seasonally be a strong quarter for us.
All. Okay, terrific. You've really grown out kind of awareness. You've got 185,000 all of our e mail subscribers. Can you talk maybe about potentially making the subscription model available?
It seems like ammunition is tracking ahead of and all in presumably that leads to more used cartridges. Are there any plans underway to get some subscribers from that list? And maybe how might you think that could progress over time?
You're welcome to join the management because you're thinking exactly as we do. All participants are ready to take questions. We are planning on introducing a subscription model. We're going to kick it off with Amazon because all Amazon purchases are very familiar with subscription models. Up until this point, we've really been constrained on ammo.
And we've been particularly constrained because we had a sole source supplier. All participants are in the same store. If people read through Burner Nation or Burner Owners Group, I think the one consistent complaint has been the fact that we don't have a regular all of the quality problems we had with ammo. With the all the information we have today. And with the introduction of our own production of ammo now, so we are actually producing also we're producing Berna Trainu or Berna Inert rounds ourselves in addition to the 3rd party supplier that we're buying from.
All we have is now available to our customers. We will be introducing ammo in more configurations. So all participants will be ready to take questions. We've always sold the inert rounds in 95 count. We'll be introducing a 25 count this month.
All participants will be able to do is to take a look
at the market. We think that would
be an ideal thing for the subscription model. So we will test out the markets on the subscription model first with Amazon and all that we have to do is to roll it out to the burner website as well.
That sounds exciting. And maybe just final one for me. Can all.
Can you maybe give
us just a little bit of
help on how we want to think about OpEx growth as you're in this hyper growth period over the course of the next in 12 or 18 months and how you just see that running its course.
Yes. Look, I will be also I was not happy with the OpEx numbers for this quarter. And we are working hard to reduce what I will call structural OpEx. So in other words, payroll and other all the infrastructure costs. And we've already I will just tell you, I've already reduced all payroll by over $530,000 on an annual basis.
Dave, do you want to
chat a little bit about what we're doing there?
Yes. I mean, all participants are ready to take questions. Looking at it from the big picture, and I think in our last call, I said that we should expect OpEx to continue growing as sales continue growing, and also not at the rate that we had seen in the prior year. That continues to be the case, and that's just the natural development of maturity of the company. Right now, we are in the Q4, and so naturally, we are going through the intensive process of building out our budget also for next year and we'll be looking at all of this in that context.
But something very big has changed between this quarter end and the in our prior quarter end and that's that capital raise. We've got $56,000,000 in the bank. It's very safely invested, but that means also, it gets very little return and we've got to figure out how to invest in marketing and also in people also to promote the growth of those sales. So, we do not expect to have quarter on quarter increases of this percentage that we've seen from Q2 to in all of our Q3. We do expect to see continuing gradual growth in this number, however.
Yes. And again, just the way we're going to be looking at this is what's structural and what sort of marketing. So right now, we are spending, I wouldn't say like drunken sailors, but I went through all of the all new programs that we're kicking off this quarter. We plan to spend heavily on marketing. Also we plan to tighten the belt a little bit.
I think that we're going to look to see how we can control those costs. And all participants are ready to take questions. But from a marketing standpoint, getting the brand recognition is everything. I think I mentioned, all participants will be ready to take questions. Every once in a while, you think, boy, we've been so successful, look how we've grown.
But the fact is very, very few people know who Berna is. When I meet people, invariably, it's 1 out of 20, 1 out of 50 all of our customers that have any idea who BERNA is, what BERNA does. So it's clear to us that we need to continue to expand the brand recognition. And to the extent that there is growth in OpEx, it's going to be on the marketing side.
All participants are ready to take questions.
Okay. Thank you.
Our next question is from Jim McIlree from Dawson James. Please proceed with your question.
All participants are ready to take questions.
Thank you. Good morning.
I was hoping you could share with us data that you have on all purchases by customers after the initial purchase of a launcher that is if I purchased a launcher also a year ago, how much in additional sales do you average with that customer for accessories, ammo, also maybe an additional launch or things like that. Do you have those statistics and can you share that with us?
I don't have those statistics at my fingertip, and all that we have is not in the industry standards. So if we look at the Mission acquisition, so Mission was a more mature company, had been in business longer. And all participants are in the range of $1,000,000,000. If we look at PepperBall and we had a number of people that were that work for us that were at PepperBall, PepperBall also has about 50% all of their 50% of their revenue from recurring sales. Also we see of the 20,000, 22,000 people that come to our website, 50% are first time visitors and 50% are recurring visitors.
We would expect as a result that also, over time, hopefully many, many years into the future, where our growth starts to moderate, all that we will see the repeat sales being 50% of our business. In this industry generally, all participants are ready to take questions. Most purchasers spend as much on ammo and accessories over the 1st 18 months of their purchase also as they spend on the initial purchase itself. But keep in mind that while we've sold 110,000 launchers, all participants are ready to take their questions. If we look back 8 quarters to sort of the very beginning of when we started to sell launchers, the numbers were very small.
So the largest number of launchers have been sold in the last two quarters. So we are seeing all probably 80% of our people come back and order at least one additional time in the 1st 90 days. Also we have probably 20% of people that come back and order 5 times in the 1st 90 days. And all that we have is a very important part of our business as our installed user base grows.
And all. And thank you. That's helpful. And just to clarify, Brian, the metric that you mentioned, and all of the other participants are spending as much in the next 18 months as they did on the launch. That is currently or that's what you saw initially?
No. That's an industry also So, when we were trying also to build out our model for Verna, we were looking at what were analogous industries. And in the firearms industry, people and this was before all the time, the price of ammunition went crazy. People were spending as much on ammo and accessories during the 1st 18 months. And all participants are ready to take questions.
And the other thing that we're hoping with that will be analogous to the firearms industry is the average gun owner in the United States owns 3.5 firearms. And all that we have is that they'll buy a firearm initially, they'll use it quite a bit, they'll go to the range, they'll use a lot of ammo, they'll buy accessories. And after 18 months that will start to trail off and they will buy another firearm. So if they had a revolver, they'll buy a 9 millimeter. All we think with the introduction of these new products, both the long guns and the Verna LE, also the upcoming Verna PE that we will be able to take advantage of the same trend that those people that really like their Verna HD all participants will want to have the latest greatest model.
So we think that we'll benefit not only from the recurring sales of AMOLED accessories also for the existing launcher that they have, but that we will also benefit from them being a brand supporter and that they will buy follow on products. Okay. That's helpful. And we have seen that happen. Also So of the Mission Force, which was not an insignificant all quantities.
So we've sold $660,000 in 2 months at $900 each. So this is about $600,000 of sales. Also This was all to existing burn up customers. So we have not advertised this at all outside of our own ecosystem. So this was all sold off of emails to our existing Burna Nation subscribers.
Also we're in the process of putting together creative for advertising programs. Also we think that our thesis all that we will see our customers come back and buy our new products is proving to be true.
Are there any other
questions? All participants will be available. We have reached
the end of the question and answer session. And I will now turn the call over to Mr. Brian Ganz for closing remarks.
Great. Thank you very much. Again, I just want to thank everybody for their support. I can assure you that we remain as committed and convinced as ever and all of our stakeholders are in the business. We're strong believers that we are just at the very early stages just beginning to all scratched the market in terms of brand awareness and growth.
And we're excited about the prospects for this quarter and for 2022 and beyond. And again, thank you very much for your support.
This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.