VirTra Reports Earnings for the Second Quarter of 2017

TEMPE, Ariz., Aug. 14, 2017 (GLOBE NEWSWIRE) -- VirTra, Inc. (OTCQX:VTSI), (the “Company”), a global provider of simulators for the law enforcement, military, educational and commercial markets, today announced its financial results for the second quarter ended June 30, 2017. The financial statements are available on VirTra’s website and here

Second Quarter 2017 Financial Highlights:

  • Total revenue of $5.3 million
  • Gross profit of $3.8 million
  • Gross profit margin of 71%
  • Net income of $1.6 million, or $0.10 per basic and diluted share
  • Adjusted EBITDA of $1.8 million

“We are very pleased with our financial results for the second quarter of 2017, where we delivered revenue of $5.3 million and net income of $1.6 million, converting a significant amount of our record first quarter orders into revenue and profit,” said Bob Ferris, Chairman and Chief Executive Officer of VirTra. “Our exceptionally strong gross profit margins were due to a mix of higher margin products and services, as well as realizing the benefits from producing our own parts and products at our recently acquired machine shop. We continue to be encouraged by the traction that we are receiving in both the domestic and international markets based on our ongoing investment in sales and marketing.”

Financial Results for the Three Months Ended June 30, 2017

Total revenue was $5.3 million for the second quarter of 2017, compared to $3.4 million for the second quarter of 2016, an increase of 55%. The year-over-year increase was due to higher sales of simulators, accessories, warranties and other services, compared to the second quarter of 2016. In addition, royalties increased by approximately $150,000, compared to the prior year’s second quarter.

Gross profit was $3.8 million for the second quarter of 2017, compared to $1.9 million for the second quarter of 2016, an increase of 90%.

Gross profit margin for the second quarter of 2017 was 71%, compared to 58% for the second quarter of 2016. The year-over-year increase in gross profit margin was primarily due to product and service mix, the higher amount of system sales and the benefit of producing a number of our own parts and products at our recently acquired machine shop.

Operating expenses were $2.1 million for the second quarter of 2017, compared to $1.6 million in the second quarter of 2016. The higher expenses were primarily due to increases in employee costs, higher professional fees and expenses, and increased spending in research and development and sales and marketing, compared to the prior year’s second quarter.

Income from operations for the second quarter of 2017 was $1.6 million, compared to $0.4 million in the second of 2016.  The increase in operating income was primarily due to the higher revenue and gross profit margin, partially offset by the higher operating expenses.

Net income was $1.6 million for the second quarter of 2017, or $0.10 per basic and diluted share, compared to net income of $0.3 million, or $0.02 per basic and diluted share for the prior year’s second quarter.

Adjusted EBITDA was $1.8 million for the second quarter of 2017, compared to adjusted EBITDA of $0.4 million for the second quarter of 2016.

Stockholders’ equity increased to $10.0 million at June 30, 2017, compared to $6.4 million at December 31, 2016.

Cash and cash equivalents were $4.3 million at June 30, 2017, compared to $3.7 million at December 31, 2016. 

The Company had essentially no outstanding bank debt at June 30, 2017.

Share Repurchase

The Company has recently begun to repurchase shares of its common stock under the current share repurchase authorization approved by its Board of Directors in October of 2016. To date, these shares have been purchased in the open market pursuant to a trading plan that has been adopted in accordance with Rule 10b-18 of the Securities and Exchange Commission. During the six months ended June 30, 2017, the Company purchased 6,900 shares at a cost of $13,800.  Subsequent to June 30, 2017, and through today’s date, the Company purchased an additional 10,851 shares in the open market at a cost of $21,656. The Company plans to retire any shares purchased through this program before the end of the current year.

Capital Raise

We are committed to positioning VirTra for further potential growth by raising funds in the capital markets in a Regulation A+ offering in the coming months and a possible uplisting of our common stock to a national stock exchange.  Any additional funds we raise are planned for expansion of our products and services offered, enhancement to our sales and marketing efforts and effectiveness, and aggressively taking advantage of market opportunities. As of today, no offering statement relating to our plans to raise capital has been filed with the Securities and Exchange Commission. We will, however, provide more information as we move forward with our plans.

 Webcast

The Company will host a live webcast later today at 12:30 p.m. Eastern time/9:30 a.m. local time, to discuss these results. As part of the webcast, management will be answering questions received in advance by email. Individuals interested in listening to the webcast live via the Internet may do so by visiting the Company’s website at www.VirTra.com.  A webcast replay will be available for 60 days.

About VirTra

VirTra is a global provider of simulators for the law enforcement, military, educational and commercial markets. The Company’s patented technologies, software and scenarios provide intense training for de-escalation, judgmental use-of-force, marksmanship and related training that mimics real world situations. VirTra’s mission is to save and improve lives worldwide through realistic and highly-effective virtual reality and simulator technology. Learn more about VirTra at www.VirTra.com.

Forward-looking Statements

This news release includes certain information that may constitute forward-looking statements.  Forward-looking statements are typically identified by terminology such as “could,” “may,” "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," “proposed,” “planned,” “potential” and similar expressions, or are those, which, by their nature, refer to future events.  All statements, other than statements of historical fact, included herein, including statements about VirTra's beliefs and expectations, are forward-looking statements.  Forward-looking information is necessarily based upon a number of assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information.  Although VirTra believes that such statements are reasonable, it can give no assurance that such forward-looking information will prove to be accurate. VirTra cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward-looking statements as a result of various factors.  Accordingly, due to the risks, uncertainties and assumptions inherent in forward-looking information, readers and prospective investors in the Company's securities should not place undue reliance on forward-looking information.  All forward-looking information contained in this press release is given as of the date hereof, and is based upon the opinions and estimates of management and information available to management as at the date hereof and is subject to change.  The Company assumes no obligation to revise or update forward-looking information to reflect new circumstances, whether as a result of new information, future events or otherwise, except as required by law.

No money or consideration is being solicited by the information in this press release or any other communication and, if sent, money will not be accepted and will be promptly returned. No offer by a potential investor to buy our securities can be accepted and, if made, any such offer can be withdrawn before qualification of an offering by the SEC. A potential investor's indication of interest does not create a commitment to purchase the securities we are considering offering. Any such indication of interest may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance is given and all other requirements to accept an investment from a potential investor are met after the offering qualification date. Any offering will be made only by means of an Offering Circular. Any information in this press release or any other communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification for sale as provided in Regulation A+ in any such state or jurisdiction.

            - - - -FINANCIALS FOLLOWING- - - -

   
   
 VIRTRA, INC. 
 CONDENSED STATEMENTS OF OPERATIONS 
 (Unaudited) 
            
    Three Months Ended Six Months Ended 
    June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 
 REVENUES        
  Net sales$  5,091,148  $  3,375,967  $  9,256,623  $  9,608,261  
  Royalties/licensing fees   160,417     9,915     204,229     9,915  
   Total revenue    5,251,565     3,385,882     9,460,852     9,618,176  
            
  Cost of sales   1,501,467     1,410,700     3,280,412     3,511,725  
            
  Gross profit   3,750,098     1,975,182     6,180,440     6,106,451  
            
 OPERATING EXPENSES        
  General and administrative   1,850,561     1,444,156     3,465,060     3,230,544  
  Research and development   278,917     169,383     621,106     432,356  
            
  Net operating expense   2,129,478     1,613,539     4,086,166     3,662,900  
            
  Income from operations   1,620,620     361,643     2,094,274     2,443,551  
            
 OTHER INCOME (EXPENSE)        
   Other income   35,254     2,118     41,488     2,635  
   Other expense   (7,783)    (9,771)    (7,783)    (9,771) 
            
  Net other income   27,471     (7,653)    33,705     (7,136) 
            
  Income before income taxes   1,648,091     353,990     2,127,979     2,436,415  
            
            
  Provision for income taxes   -      31,963     78,000     65,203  
            
 NET INCOME$  1,648,091  $  322,027  $  2,049,979  $  2,371,212  
            
 Earnings per common share        
   Basic$  0.10  $  0.02  $  0.13  $  0.15  
   Diluted$  0.10  $  0.02  $  0.12  $  0.15  
            
  Weighted average shares outstanding        
   Basic   15,854,677     15,825,005     15,854,841     15,825,005  
   Diluted   17,054,585     16,764,523     17,007,076     16,241,183  
            


 VIRTRA, INC.
 CONDENSED BALANCE SHEETS
  
     June 30, December 31,
      2017   2016 
     (Unaudited)  
   ASSETS     
 CURRENT ASSETS     
  Cash and cash equivalents  $  4,283,216  $  3,703,579 
  Accounts receivable, net     3,725,431     3,244,852 
  Inventory     1,333,692     1,319,944 
  Unbilled revenue     2,367,405     107,297 
  Prepaid expenses and other current assets     305,532     250,066 
        
  Total current assets     12,015,276     8,625,738 
        
 Property and equipment, net     746,289     814,323 
 Investment in MREC     1,988,174     471,928 
        
 TOTAL ASSETS  $  14,749,739  $  9,911,989 
        
   LIABILITIES AND STOCKHOLDERS' EQUITY     
        
 CURRENT LIABILITIES     
  Accounts payable   $  604,598  $  467,679 
  Accrued compensation and related costs     816,339     617,582 
  Accrued expenses and other current liabilities     298,551     194,668 
  Notes payable, current     11,250     11,250 
  Deferred revenue     2,850,545     2,065,905 
        
  Total current liabilities     4,581,283     3,357,084 
        
 Long-term liabilities:     
  Deferred rent liability      100,277     122,126 
  Notes payable, long-term     22,500     22,500 
        
  Total long-term liabilities     122,777     144,626 
        
 Total liabilities     4,704,060     3,501,710 
        
 Commitments and contingencies     
        
 STOCKHOLDERS' EQUITY     
  Preferred stock $0.0001 par value; 5,000,000 authorized; no shares issued    
  or outstanding     -      -  
 Common stock $0.0001 par value; 100,000,000 shares authorized; 15,855,005 issued  
  and 15,848,105 outstanding as of June 30, 2017 and 15,855,005 issued and     1,586     1,586 
  outstanding as of December 31, 2016.     
   Class A common stock $0.0001 par value; 5,000,000 shares authorized; no shares  
  issued or outstanding     -      -  
   Class B common stock $0.0001 par value; 15,000,000 shares authorized; no shares  
  issued or outstanding     -      -  
 Treasury stock at cost; 6,900 shares and no shares outstanding    (13,800)    -  
  as of June 30, 2017 and December 31, 2016, respectively    
 Additional paid-in capital     15,727,265     14,128,044 
 Accumulated deficit     (5,669,372)    (7,719,351)
        
 Total stockholders' equity     10,045,679     6,410,279 
        
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $  14,749,739  $  9,911,989 
        


 VIRTRA, INC. 
 CONDENSED STATEMENTS OF CASH FLOWS 
 (Unaudited) 
         
      Six Months Ended 
 
     June 30, 2017 June 30, 2016 
         
 Cash flows from operating activities:    
  Net income$  2,049,979  $  2,371,212  
  Adjustments to reconcile net income to net cash    
   provided (used) in operating activities    
   Depreciation and amortization   117,108     78,719  
   Stock compensation   117,975     63,990  
   Cash settlement of stock options   50,250     290,224  
  Changes in operating assets and liabilities:    
   Accounts receivable   (480,579)    (1,117,809) 
   Inventory   (13,749)    (70,485) 
   Unbilled revenue   (2,260,108)    (107,297) 
   Prepaid expenses and other current assets   (55,466)    (105,237) 
   Accounts payable and other accrued expenses   439,559     13,859  
   Deferred revenue   784,641     23,957  
         
 Net cash provided by operating activities   749,610     1,441,133  
         
 Cash flows from investing activities:    
  Purchase of property and equipment   (70,923)    (221,374) 
         
 Net cash used in investing activities   (70,923)    (221,374) 
         
 Cash flows from financing activities:    
         
  Treasury stock   (13,800)    -   
  Repurchase of stock options   (85,250)    (467,724) 
         
 Net cash used in financing activities   (99,050)    (467,724) 
         
 Net increase in cash   579,637     752,035  
 Cash, beginning of period   3,703,579     3,317,020  
         
 Cash, end of period$  4,283,216  $  4,069,055  
         
 Supplemental disclosure of cash flow information:    
  Cash paid:    
  Taxes $  78,000  $  142,413  
         

Explanation and Use of Non-GAAP Financial Measures

Earnings before interest, income taxes, depreciation and amortization and other non-operating costs and income (“EBITDA”) and adjusted EBITDA are non-U.S. GAAP measures. Adjusted EBITDA means net income (i) plus depreciation, (ii) plus non-cash stock option expense, and (iii) plus provision for income taxes. Other companies may calculate adjusted EBITDA differently. We calculate adjusted EBITDA to eliminate the impact of certain items we do not consider to be indicative of the performance of our ongoing operations. Adjusted EBITDA is presented herein because management believes the presentation of adjusted EBITDA provides useful information to the Company’s investors regarding the Company’s financial condition and results of operations and because adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, several of which present EBITDA and a form of adjusted EBITDA when reporting their results. Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Adjusted EBITDA should not be considered as an alternative for net (loss) income, cash flows from operating activities and other consolidated income or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. A reconciliation of net income to adjusted EBITDA is provided in the following table:

            
 RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(Unaudited) 
            
   Three Months Ended Six Months Ended
   June 30, June 30,
 June 30, June 30,
   2017 2016
 2017 2016
            
 Net Income$  1,648,091 $  322,027  $  2,049,979 $  2,371,212 
  Adjustments:         
  Depreciation and amortization   70,572    50,622     138,957    96,177 
  Non-cash stock option expense   48,812    30,000     117,975    63,990 
  Provision for income taxes   -     31,963     78,000    65,203 
            
            
 Adjusted EBITDA$  1,767,475 $  434,612  $  2,384,911 $  2,596,582 
            
Investor Relations Counsel
Larry Clark
Financial Profiles, Inc.
(310) 622-8223
vtsi@finprofiles.com

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