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 | |||||||