VirTra, Inc. (NASDAQ: VTSI)
(“VirTra”), a global provider of training simulators for
the law enforcement, military, educational and commercial markets,
reported results for the first quarter ended March 31, 2019. The
financial statements are available on VirTra’s website
and here.
First Quarter 2019 and Recent Highlights:
- In January 2019, the board of directors increased the company’s
stock repurchase program from $1.0 million to $2.0 million; between
January 1 and April 30, 2019, the company purchased an additional
$318,000 of common stock
- Launched Subscription Training Equipment and Partnership (STEP)
program, allowing agencies to utilize VirTra’s products on a
subscription basis, thereby increasing VirTra’s total addressable
market and recurring revenue
- Launched Driving Simulator product line and secured a $1.9
million, inaugural contract for driving simulators from the
Department of State for the Republic of Mexico
- Acquired simulated firearm technology patent portfolio to
enhance its current product lineup of drop-in recoil kits with
jamming as well as create new training equipment for both military
and law enforcement simulation training
- Launched the only accredited simulator training curriculum for
high-risk vehicle stops
- VirTra V-300 simulator and Threat-Fire™ used in joint
behavioral study by the U.S. Army Research Laboratory, University
of Pennsylvania, and University of California, Santa Barbara to
measure interdependence among emotional reactivity, stress, and
anxiety
- Debuted new drop-in recoil kits for new weapons at the Shot
Show in January 2019
First Quarter 2019 Financial Highlights:
|
|
All figures in
millions, except per share data |
Q1 2019 |
Q1 2018 |
% Δ |
|
Q1 2019 |
Q4 2018 |
% Δ |
|
|
Total
Revenue |
$ |
3.05 |
|
$ |
3.29 |
|
-7 |
% |
|
$ |
3.05 |
|
$ |
2.53 |
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
$ |
1.80 |
|
$ |
2.26 |
|
-20 |
% |
|
$ |
1.80 |
|
$ |
0.96 |
|
88 |
% |
|
|
Gross Margin |
|
59.0 |
% |
|
68.8 |
% |
-14 |
% |
|
|
59.0 |
% |
|
37.8 |
% |
56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
$ |
(0.31 |
) |
$ |
(0.09 |
) |
-265 |
% |
|
$ |
(0.31 |
) |
$ |
(1.06 |
) |
70 |
% |
|
|
Diluted EPS |
$ |
(0.04 |
) |
$ |
(0.01 |
) |
-300 |
% |
|
$ |
(0.04 |
) |
$ |
(0.13 |
) |
69 |
% |
|
|
|
|
|
|
|
|
|
|
|
Management Commentary
“The first quarter of 2019 marked an important point in our
company’s development, as we began implementing new strategic
growth initiatives, which we believe will have a substantial
positive impact on our business in the years to come,” said Bob
Ferris, Chairman and Chief Executive Officer of VirTra. “In the
first quarter, we launched the STEP program, a subscription model
for our products that lowers the barrier to entry for many
customers, we introduced new curriculum for high-risk vehicle
stops, and announced our new Driving Simulator product line for
which we have already secured a $1.9 million contract with an
existing customer. In addition to these exciting new initiatives,
we strengthened our product offerings by acquiring key patents for
drop-in recoil kits, along with bolstering our management team with
the addition of industry veteran Steve Handel, who is now serving
as our new VP of Program Management.
“From a financial perspective, we saw many sequential
improvements in our results, including a 20% increase in revenue,
an 88% increase in gross profit, and gross margins increasing to
59%, which is more in-line with our historical numbers. Our balance
sheet continues to remain strong with nearly $4.6 million in cash,
cash equivalents and CDs. During the first quarter, we repurchased
68,239 shares of common stock at an average cost of $3.82 per share
and retired all outstanding treasury shares of our common stock.
Subsequent to the quarter, we repurchased an additional 14,450
shares at an average cost of $3.97 per share. In addition, new
bookings for the first quarter totaled $5.3 million and backlog
increased to $9.0 million, which bodes well for our business and
gives us confidence in our outlook that 2019 has the potential to
be a strong year for VirTra.
“While the benefits of these new initiatives will take time to
come to fruition, we are confident that they will be of great value
to our business over the coming quarters and years. We believe that
the additions of our new programs and our ever-improving product
suite, combined with our strong balance sheet, mean that VirTra is
now more flexible, dynamic, and in the best position in our
company’s history to capture a greater share of our core law
enforcement market, while also expanding into the military market.
We believe that these positive changes ultimately will translate to
greater value for our loyal shareholders and better training that
saves lives. This is an exciting time at VirTra, and we look
forward to building on our progress throughout the year.”
First Quarter 2019 Financial
Results
Total revenue increased 20% to $3.1 million from $2.5 million in
the prior quarter and decreased 7% from $3.3 million in the first
quarter of 2018. The year-over-year decrease in total revenue was
due to lower simulator and accessories sales, which were partially
offset by increases in recurring extended warranty and other
revenues.
Gross profit increased 88% to $1.8 million (59.0% of total
revenue) from $1.0 million (37.8% of total revenue) in the prior
quarter and decreased 20% from $2.3 million (68.8% of total
revenue) in the first quarter of 2018. The year-over-year decrease
in gross profit was primarily due to differences in the product mix
and quantity of systems, accessories and services sold.
Net operating expense decreased 20% to $2.3 million from $2.8
million in the prior quarter and decreased 7% from $2.4 million in
the first quarter of 2018. The decrease in net operating expense
was due to reduced selling, general and administrative costs for
labor, benefits, professional services, public company expense,
research and development expenses and bad debt.
Loss from operations was $457,000 compared to a loss of $1.9
million in the prior quarter and a loss of $158,000 in the first
quarter of 2018.
Net loss totaled $313,000, or $(0.04) per diluted share,
compared to a loss of $1.1 million, or $(0.13) per diluted share,
in the prior quarter and a loss of $86,000, or $(0.01) per diluted
share, in the first quarter of 2018.
Cash and cash equivalents and certificates of deposit totaled
$4.6 million at quarter end.
Adjusted EBITDA loss totaled $278,000 compared to a loss of
$46,000 in the first quarter of 2018.
Conference Call
VirTra management will hold a conference call today (May 13,
2019) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss
these results. VirTra’s Chairman and CEO, Bob Ferris, and CFO, Judy
Henry, will host the call, followed by a question and answer
period.
U.S. dial-in number: 877-407-8031International number:
201-689-8031
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact VirTra’s IR team at
949-574-3860.
The conference call will be broadcast live and available for
replay here and via the investor relations section of VirTra’s
website.
A replay of the conference call will be available after 7:30
p.m. Eastern time on the same day through May 27, 2019.
Toll-free replay number: 877-481-4010International replay
number: 919-882-2331Replay ID: 48710
About VirTra VirTra (NASDAQ: VTSI) is a global
provider of training 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 practical and
highly-effective virtual reality and simulator technology. Learn
more about the company at www.VirTra.com.
About the Presentation of Adjusted
EBITDAAdjusted earnings before interest, income taxes,
depreciation and amortization and before other non-operating costs
and income (“Adjusted EBITDA”) is a non-GAAP financial measure.
Adjusted EBITDA also includes non-cash stock option expense and
other than temporary impairment loss on investments. Other
companies may calculate Adjusted EBITDA differently. VirTra
calculates its Adjusted EBITDA to eliminate the impact of certain
items it does not consider to be indicative of its performance and
its ongoing operations. Adjusted EBITDA is presented herein because
management believes the presentation of Adjusted EBITDA provides
useful information to VirTra’s investors regarding VirTra’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 VirTra’s
industry, several of which present 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 VirTra’s results as reported under
accounting principles generally accepted in the United States of
America (“GAAP”). Adjusted EBITDA should not be considered as an
alternative for net income, cash flows from operating activities
and other consolidated income or cash flows statement data prepared
in accordance with GAAP or as a measure of profitability or
liquidity. A reconciliation of net loss to Adjusted EBITDA is
provided in the following table:
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
Increase |
|
|
% |
|
|
|
2019 |
|
|
2018 |
|
|
(Decrease) |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(312,902 |
) |
|
$ |
(85,787 |
) |
|
$ |
(227,115 |
) |
|
|
265 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
141,783 |
|
|
|
68,619 |
|
|
|
73,164 |
|
|
|
107 |
% |
Provision for income tax benefit |
|
|
(107,000 |
) |
|
|
(29,194 |
) |
|
|
(77,806 |
) |
|
|
267 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
(278,119 |
) |
|
$ |
(46,362 |
) |
|
$ |
(231,757 |
) |
|
|
500 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Looking StatementsThe information in
this discussion contains forward-looking statements and information
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are subject to the “safe harbor” created by those
sections. The words “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “may,” “plans,” “projects,” “will,” “should,”
“could,” “predicts,” “potential,” “continue,” “would” and similar
expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. We may not actually achieve the plans,
intentions or expectations disclosed in our forward-looking
statements and you should not place undue reliance on our
forward-looking statements. Actual results or events could differ
materially from the plans, intentions and expectations disclosed in
the forward-looking statements that we make. The forward-looking
statements are applicable only as of the date on which they are
made, and we do not assume any obligation to update any
forward-looking statements. All forward-looking statements in this
document are made based on our current expectations, forecasts,
estimates and assumptions, and involve risks, uncertainties and
other factors that could cause results or events to differ
materially from those expressed in the forward-looking statements.
In evaluating these statements, you should specifically consider
various factors, uncertainties and risks that could affect our
future results or operations. These factors, uncertainties and
risks may cause our actual results to differ materially from any
forward-looking statement set forth in the reports we file with or
furnish to the SEC. You should carefully consider these risk and
uncertainties described and other information contained in the
reports we file with or furnish to the Securities and Exchange
Commission before making any investment decision with respect to
our securities. All forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their
entirety by this cautionary statement.
Media Contact: Susan LehmanSlehman@virtra.com
510-599-6555 Investor Relations Contact:Matt
Glover or Charlie Schumacher VTSI@gatewayir.com949-574-3860
|
VIRTRA, INC. |
CONDENSED BALANCE SHEETS |
|
|
|
|
|
|
|
March 31, 2019 |
|
December 31, 2018 |
|
|
(Unaudited) |
|
|
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
$ |
1,286,578 |
|
|
$ |
2,500,381 |
|
|
Certificates of deposit |
|
3,290,000 |
|
|
|
3,490,000 |
|
|
Accounts receivable, net |
|
1,339,245 |
|
|
|
1,302,010 |
|
|
Interest receivable |
|
22,412 |
|
|
|
21,385 |
|
|
That's Eatertainment note
receivable, net, related party |
|
301,876 |
|
|
|
292,138 |
|
|
Trade note receivable,
net |
|
30,860 |
|
|
|
96,282 |
|
|
Inventory, net |
|
1,708,671 |
|
|
|
1,612,002 |
|
|
Unbilled revenue |
|
1,130,438 |
|
|
|
689,153 |
|
|
Prepaid expenses and other
current assets |
|
812,204 |
|
|
|
377,520 |
|
|
|
|
|
|
|
Total current
assets |
|
9,922,284 |
|
|
|
10,380,871 |
|
|
|
|
|
|
Long-term
assets: |
|
|
|
|
Property and equipment,
net |
|
700,296 |
|
|
|
678,245 |
|
|
Operating lease right-of-use
asset |
|
1,604,867 |
|
|
|
- |
|
|
Intangible assets, net |
|
158,519 |
|
|
|
- |
|
|
Trade note receivable,
long-term |
|
61,875 |
|
|
|
6,843 |
|
|
Security deposits,
long-term |
|
339,756 |
|
|
|
339,756 |
|
|
Other assets, long-term |
|
348,461 |
|
|
|
292,298 |
|
|
Deferred tax asset, net |
|
2,507,000 |
|
|
|
2,400,000 |
|
|
Investment in That's
Eatertainment, related party |
|
1,120,000 |
|
|
|
1,120,000 |
|
|
|
|
|
|
|
Total long-term
assets |
|
6,840,774 |
|
|
|
4,837,142 |
|
|
|
|
|
|
Total
assets |
$ |
16,763,058 |
|
|
$ |
15,218,013 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
$ |
616,254 |
|
|
$ |
429,948 |
|
|
Accrued compensation and
related costs |
|
728,183 |
|
|
|
613,692 |
|
|
Accrued expenses and other
current liabilities |
|
665,997 |
|
|
|
632,606 |
|
|
Note payable, current |
|
11,250 |
|
|
|
11,250 |
|
|
Operating lease liability,
short-term |
|
262,575 |
|
|
|
- |
|
|
Deferred revenue,
short-term |
|
2,091,206 |
|
|
|
1,924,307 |
|
|
|
|
|
|
|
Total current
liabilities |
|
4,375,465 |
|
|
|
3,611,803 |
|
|
|
|
|
|
Long-term
liabilities: |
|
|
|
|
Deferred revenue,
long-term |
|
963,019 |
|
|
|
962,356 |
|
|
Deferred rent liability |
|
- |
|
|
|
46,523 |
|
|
Operating lease liability,
long-term |
|
1,400,987 |
|
|
|
- |
|
|
|
|
|
|
|
Total long-term
liabilities |
|
2,364,006 |
|
|
|
1,008,879 |
|
|
|
|
|
|
Total
liabilities |
|
6,739,471 |
|
|
|
4,620,682 |
|
|
|
|
|
|
Commitments and contingencies (See Note 10) |
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
Preferred stock $0.0001 par value; 2,500,000 authorized; no shares
issued |
|
|
|
|
or outstanding |
|
- |
|
|
|
- |
|
Common stock $0.0001 par value; 50,000,000 shares authorized;
7,748,705 shares |
|
|
|
|
issued and outstanding as of
March 31, 2019 and 7,827,651 issued |
|
775 |
|
|
|
783 |
|
|
and 7,816,944 shares
outstanding as of December 31, 2018 |
|
|
|
Class A common stock $0.0001 par value; 2,500,000 shares
authorized; no shares |
|
|
|
|
issued or outstanding |
|
- |
|
|
|
- |
|
Class B common stock $0.0001 par value; 7,500,000 shares
authorized; no shares |
|
|
|
|
issued or outstanding |
|
- |
|
|
|
- |
|
Treasury stock at cost; nil shares outstanding as of March 31, 2019
and |
|
- |
|
|
|
(37,308 |
) |
|
10,707 shares outstanding as
of December 31, 2018 |
|
|
|
Additional paid-in capital |
|
13,974,692 |
|
|
|
14,272,834 |
|
Accumulated deficit |
|
(3,951,880 |
) |
|
|
(3,638,978 |
) |
|
|
|
|
|
Total stockholders' equity |
|
10,023,587 |
|
|
|
10,597,331 |
|
|
|
|
|
|
Total
liabilities and stockholders' equity |
$ |
16,763,058 |
|
|
$ |
15,218,013 |
|
|
|
|
|
|
|
VIRTRA, INC. |
CONDENSED STATEMENTS OF OPERATIONS |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, 2019 |
|
March 31, 2018 |
Revenues: |
|
|
|
|
Net sales |
$ |
3,011,701 |
|
|
$ |
3,242,824 |
|
|
That's
Eatertainment royalties/licensing fees, related party |
|
39,637 |
|
|
|
43,788 |
|
|
Other
royalties/licensing fees |
|
- |
|
|
|
2,180 |
|
|
Total revenue |
|
3,051,338 |
|
|
|
3,288,792 |
|
|
|
|
|
|
|
|
Cost of sales |
|
1,250,869 |
|
|
|
1,026,156 |
|
|
|
|
|
|
|
|
Gross profit |
|
1,800,469 |
|
|
|
2,262,636 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
General and
administrative |
|
1,901,931 |
|
|
|
2,053,305 |
|
|
Research and
development |
|
355,641 |
|
|
|
367,544 |
|
|
|
|
|
|
|
|
Total operating expense |
|
2,257,572 |
|
|
|
2,420,849 |
|
|
|
|
|
|
|
|
Loss from
operations |
|
(457,103 |
) |
|
|
(158,213 |
) |
|
|
|
|
|
|
Other
income (expense) |
|
|
|
|
|
Other income |
|
42,282 |
|
|
|
43,298 |
|
|
|
Other expense |
|
(5,081 |
) |
|
|
(66 |
) |
|
|
|
|
|
|
|
Net other
income |
|
37,201 |
|
|
|
43,232 |
|
|
|
|
|
|
|
|
Loss before
provision for income taxes |
|
(419,902 |
) |
|
|
(114,981 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
(benefit) for income taxes |
|
(107,000 |
) |
|
|
(29,194 |
) |
|
|
|
|
|
|
Net
loss |
|
$ |
(312,902 |
) |
|
$ |
(85,787 |
) |
|
|
|
|
|
|
Net loss per
common share: |
|
|
|
|
Basic |
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
Diluted |
$ |
(0.04 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
Weighted average
shares outstanding: |
|
|
|
|
Basic |
|
7,765,624 |
|
|
|
7,904,307 |
|
|
Diluted |
|
7,765,624 |
|
|
|
7,904,307 |
|
|
|
|
|
|
|
|
VIRTRA, INC. |
CONDENSED STATEMENTS OF CASH FLOWS |
(Unaudited) |
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, 2019 |
|
March 31, 2018 |
|
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
Net loss |
|
$ |
(312,902 |
) |
|
$ |
(85,787 |
) |
|
Adjustments to reconcile net loss to net cash used by operating
activities: |
|
|
|
|
|
Depreciation and amortization |
|
141,783 |
|
|
|
68,619 |
|
|
|
Deferred taxes |
|
(107,000 |
) |
|
|
(29,818 |
) |
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
Accounts receivable, net |
|
(37,235 |
) |
|
|
(194,502 |
) |
|
|
That's Eatertainment note receivable, net, related party |
|
(3,652 |
) |
|
|
- |
|
|
|
Trade note receivable, net |
|
4,304 |
|
|
|
- |
|
|
|
Interest receivable |
|
(1,027 |
) |
|
|
- |
|
|
|
Inventory |
|
(96,669 |
) |
|
|
(361,916 |
) |
|
|
Unbilled revenue |
|
(441,285 |
) |
|
|
743,966 |
|
|
|
Prepaid expenses and other current assets |
|
(434,684 |
) |
|
|
(143,341 |
) |
|
|
Other assets |
|
(56,163 |
) |
|
|
- |
|
|
|
Accounts payable and other accrued expenses |
|
334,188 |
|
|
|
461,062 |
|
|
|
Payments on operating lease liability |
|
(57,818 |
) |
|
|
- |
|
|
|
Deferred revenue |
|
167,562 |
|
|
|
(853,618 |
) |
|
|
|
|
|
|
|
Net cash used by
operating activities |
|
(900,598 |
) |
|
|
(395,335 |
) |
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
Purchase of
certificates of deposit |
|
(1,880,000 |
) |
|
|
- |
|
|
Redemption of
certificates of deposit |
|
2,080,000 |
|
|
|
- |
|
|
Purchase of
intangible assets |
|
(160,000 |
) |
|
|
|
Purchase of
property and equipment |
|
(94,994 |
) |
|
|
(167,490 |
) |
|
Proceeds from sale
of property and equipment |
|
2,631 |
|
|
|
- |
|
|
|
|
|
|
|
|
Net cash used in
investing activities |
|
(52,363 |
) |
|
|
(167,490 |
) |
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
Purchase of
treasury stock |
|
(260,842 |
) |
|
|
- |
|
|
|
|
|
|
|
|
Net cash used in
financing activities |
|
(260,842 |
) |
|
|
- |
|
|
|
|
|
|
|
|
Net decrease in
cash |
|
(1,213,803 |
) |
|
|
(562,825 |
) |
Cash, beginning of
period |
|
2,500,381 |
|
|
|
5,080,445 |
|
|
|
|
|
|
|
|
Cash, end of
period |
$ |
1,286,578 |
|
|
$ |
4,517,620 |
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
Cash paid: |
|
|
|
|
Taxes |
|
$ |
- |
|
|
$ |
21,698 |
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash investing and financing activities: |
|
|
|
|
Conversion of accounts to notes receivable |
|
- |
|
|
|
400,906 |
|
|
|
|
|
|
|
|
Virtra (NASDAQ:VTSI)
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From Feb 2024 to Mar 2024
Virtra (NASDAQ:VTSI)
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From Mar 2023 to Mar 2024