VirTra Reports Earnings for the First Quarter of 2017

Generates Record First Quarter Orders

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| Source: VirTra Systems, Inc.

TEMPE, Ariz., May 15, 2017 (GLOBE NEWSWIRE) -- VirTra, Inc. (OTCQX:VTSI), (the “Company”), a leading provider of judgmental use of force simulators and firearms training simulators, today announced its financial results for the first quarter ended March 31, 2017. The financial statements are available on VirTra’s website and here

First Quarter 2017 Financial Highlights:

  • Total revenue of $4.2 million
  • Gross profit of $2.4 million
  • Gross profit margin of 58%
  • Net income of $0.4 million, or $0.03 and $0.02 per basic and diluted share, respectively
  • Adjusted EBITDA of $0.6 million

“We are pleased with the start of our fiscal year, where we delivered revenue of $4.2 million and net income of $0.4 million, while at the same time booking new orders of $4.9 million, a record for any first quarter in our history,” said Bob Ferris, Chairman and Chief Executive Officer of VirTra. “While our first quarter revenues did not exceed last year’s record amount, they increased sequentially by approximately $1.2 million from the fourth quarter of 2016. We are encouraged by our record level of new orders received during the first quarter of 2017 and the traction that we continue to receive in both the domestic and international markets based on our ongoing investment in sales and marketing. As a result, year-to-date in 2017, we have secured more new business from the top 50 law enforcement agencies in the United States than at any other time in our past.” 

Financial Results for the Three Months Ended March 31, 2017

Total revenue was $4.2 million for the first quarter of 2017, compared to $6.2 million for the record first quarter of 2016. The year-over-year decline primarily resulted from recognizing $2.7 million in revenue on a single international contract during the first quarter of 2016, which was not repeated in this year’s first quarter.

Gross profit was $2.4 million for the first quarter of 2017, compared to $4.1 million for the first quarter of 2016.

Gross profit margin for the first quarter of 2017 was 58%, compared to 66% for the first quarter of 2016. The year-over-year decrease in gross profit margin was primarily due to product and service mix and the lower amount of system sales.

Operating expenses were $2.0 million for the first quarter of 2017, compared to $1.7 million in the first 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, as compared to the prior year’s first quarter.

Operating income for the first quarter of 2017 was $0.5 million, compared to operating income of $2.4 million in the first quarter of 2016.  The decline in operating income was primarily due to the lower revenue and gross profit margin, combined with the higher operating expenses.

Net income was $0.4 million for the first quarter of 2017, or $0.02 per diluted share, compared to net income of $2.4 million, or $0.14 per diluted share for the prior year’s first quarter.

Adjusted EBITDA was $0.6 million for the first quarter of 2017, compared to adjusted EBITDA of $2.5 million for the first quarter of 2016.

Stockholders’ equity increased to $6.9 million at March 31, 2017, compared to $6.4 million at December 31, 2016.

Cash and cash equivalents were $4.6 million at March 31, 2017, compared to $3.7 million at December 31, 2016. 

The Company had essentially no outstanding debt at March 31, 2017.

 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 leading provider of the world's most realistic and effective judgmental use of force simulators. VirTra is the higher standard in firearms training simulators, offering a variety of simulator platforms, powerful gas-powered recoil kits and the patented Threat-Fire™ simulated hostile return fire system. VirTra’s products provide the very best simulation training available for personnel that are entrusted with lethal force and critical missions.  The Company’s common stock is not registered under the Securities Exchange Act of 1934 and the Company does not currently file periodic or other reports with the Securities and Exchange Commission.

www.VirTra.com

Forward-looking Statements

This press release includes certain information that may constitute forward-looking statements which are typically identified by terminology such as "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, 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.

            - - - -FINANCIALS FOLLOWING- - - -

  
  
VIRTRA, INC. 
CONDENSED STATEMENTS OF OPERATIONS 
(unaudited) 
       
   Three Months Ended 
 
   March 31, 2017 March 31, 2016 
REVENUES    
 Net sales$4,165,476 $6,232,293 
 Royalties/Licensing Fees 43,812  - 
 Total revenue 4,209,288  6,232,293 
       
 Cost of sales 1,778,945  2,101,025 
       
 Gross profit 2,430,343  4,131,268 
       
OPERATING EXPENSES    
 General and administrative 1,614,498  1,537,283 
 Research and development 342,190  204,765 
       
 Net operating expense 1,956,688  1,742,048 
       
 Income from operations 473,655  2,389,220 
       
OTHER INCOME (EXPENSE)    
  Other income 6,233  517 
       
 Net other income 6,233  517 
       
 Income before income taxes 479,888  2,389,737 
       
 Provision for income taxes 78,000  33,240 
       
NET INCOME$401,888 $2,356,497 
       
Earnings per common share    
 Basic$0.03 $0.15 
 Diluted$0.02 $0.14 
       
Weighted average shares outstanding    
 Basic 15,855,005  15,828,505 
 Diluted 16,295,774  16,685,333 
       

 

VIRTRA, INC.
CONDENSED BALANCE SHEETS
     
   March 31, December 31,
    2017   2016 
   (unaudited) (audited)
ASSETS    
     
CURRENT ASSETS    
 Cash and cash equivalents $4,563,321  $3,703,579 
 Accounts receivable, net  2,506,963   3,244,852 
 Inventory  1,115,096   1,319,944 
 Prepaid expenses and other current assets  1,648,386   357,363 
      
 Total current assets  9,833,766   8,625,738 
      
Property and equipment, net  792,713   814,323 
Investment in MREC  471,928   471,928 
      
TOTAL ASSETS $11,098,407  $9,911,989 
      
LIABILITIES AND STOCKHOLDERS' EQUITY    
      
CURRENT LIABILITIES    
 Accounts payable $543,936  $467,679 
 Accrued compensation and related costs  788,871   617,582 
 Accrued expenses and other current liabilities  263,063   194,668 
 Notes payable, current  11,250   11,250 
 Deferred revenue  2,493,009   2,065,905 
      
 Total current liabilities  4,100,129   3,357,084 
      
Long-term liabilities:    
 Accrued rent liability  111,948   122,126 
 Notes payable, long-term  22,500   22,500 
      
 Total long-term liabilities  134,448   144,626 
      
Total liabilities  4,234,577   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 outstanding as of March 31, 2017 and December 31, 2016, respectively  1,586   1,586 
   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  -   - 
Additional paid-in capital  14,179,707   14,128,044 
Accumulated deficit  (7,317,463)  (7,719,351)
      
Total stockholders' equity  6,863,830   6,410,279 
      
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,098,407  $9,911,989 
      


VIRTRA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
       
    Three Months Ended 
    March 31, 2017 March 31, 2016
       
Cash flows from operating activities:   
 Net income$401,888  $2,356,497 
 Adjustments to reconcile net income to net cash   
 provided (used) in operating activities   
     Depreciation and amortization 58,207   45,555 
     Stock-based compensation 69,163   33,990 
     Cash settlement of stock options 31,000   - 
 Changes in operating assets and liabilities:   
     Accounts receivable 737,890   (2,511,827)
     Inventory 204,848   (68,838)
     Prepaid expenses and other current assets (1,291,024)  (44,844)
     Accounts payable and other accrued expenses 315,941   169,916 
     Deferred revenue 427,104   (214,046)
       
Net cash provided by operating activities 955,017   (233,597)
       
Cash flows from investing activities:   
 Purchase of property and equipment (46,775)  (32,126)
       
Net cash used in investing activities (46,775)  (32,126)
       
Cash flows from financing activities:   
 Repurchase of stock-based options (48,500)  - 
       
Net cash used in financing activities (48,500)  - 
       
Net increase in cash 859,742   (265,723)
Cash, beginning of period 3,703,579   3,317,020 
       
Cash, end of period$4,563,321  $3,051,297 
       
Supplemental disclosure of cash flow information:   
 Cash paid during period for income taxes$78,000  $21,610 
       

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
     
  Three Months Ended March 31,
     
   2017  2016
     
Net Income$  401,888 $  2,356,497
 Adjustments:   
 Depreciation   58,207    45,555
 Non-cash stock option expense   69,163    33,990
 Provision for income taxes   78,000    33,240
     
     
Adjusted EBITDA$  607,258 $  2,469,282
     
Investor Relations Counsel
Larry Clark
Financial Profiles, Inc.
(310) 622-8223
vtsi@finprofiles.com