Exhibit 99.1

 

 

VirTra Reports Third Quarter and Nine Month 2020 Financial Results

 

Sales Momentum Drives $6.4 Million in Revenue, EPS of $0.11, and Record $14.4 Million Backlog

 

TEMPE, Ariz. — November 10, 2020 — VirTra, Inc. (NASDAQ: VTSI) (“VirTra”), a global provider of training simulators for the law enforcement, military, educational and commercial markets, reported results for the third quarter and nine months ended September 30, 2020. The financial statements are available on VirTra’s website and here.

 

Third Quarter 2020 and Recent Highlights:

 

  Awarded $1.9 million IDIQ (indefinite delivery/indefinite quantity) contract to develop training content in support of the Air Force Research Laboratory’s Airman Decision Making and Interface Research (ADMIRE) program as a result of recent partnership with Infoscitex (IST)
  Received $1.5 million order from the U.S. Department of Homeland Security’s Federal Law Enforcement Training Centers (FLETC), which will result in VirTra’s simulators being installed at all four of FLETC’s training centers by December 2020
  Received $863,000 order from U.S. Customs and Border Protection (CBP) for simulation training products and services, including new, drop-in recoil kits
  Appointed military simulation training expert, John Givens, to the Company’s board of directors to fill the vacancy left by Mitchell Saltz’s passing
  Backlog increased to a record $14.4 million as of September 30, 2020

 

Third Quarter and Nine Month 2020 Financial Highlights:

 

All figures in millions, except per share data  Q3 2020   Q3 2019   % Δ   YTD 2020   YTD 2019   % Δ 
Total Revenue  $6.4   $6.7    -4%  $12.5   $12.8    -2%
                               
Gross Profit  $4.0   $3.8    6%  $7.1   $7.1    1%
Gross Margin   61.9%   55.9%   11%   57.0%   55.2%   3%
                               
Net Income/Loss  $0.9   $0.9    -7%  $(0.1)  $(0.0)   N/A 
Diluted EPS  $0.11   $0.12    -8%  $(0.02)  $(0.00)   N/A 

 

Management Commentary

 

“Despite our sales and installation teams facing the inherent challenges of a pandemic, our talented staff adapted to changing circumstances to produce financial results for the third quarter that were essentially in-line with our near record performance last year and new sales that exceeded last year’s performance,” said Bob Ferris, chairman and chief executive officer of VirTra. “Financially, the quarter was highlighted by revenue of $6.4 million, net income of $0.9 million, which drove EPS of $0.11 and adjusted EBITDA of $1.6 million, and perhaps most impressive, a record backlog of $14.4 million. Operationally, we built upon our relationship with FLETC, a national leader in law enforcement training, and we expanded our footprint in the military market with the $1.9 million contract we received through our partnership with IST on the ADMIRE program for the benefit of the Department of Defense.

 

 
 

 

“In 2019, we surged in the latter part of the year to deliver our 14th consecutive year of topline growth. While challenges to installations persist, the financial results of this quarter coupled with our increasing backlog demonstrate that, despite the unprecedented COVID-19 related headwinds, VirTra continues to effectively sell and service the essential needs of our customers. We are cautiously optimistic that, should the macro environment in the fourth quarter be similar to what it was in the third, we will deliver strong results for the rest of 2020.”

 

Third Quarter 2020 Financial Results

 

Total revenue decreased 4% to $6.4 million from $6.7 million in the third quarter of 2019. The decrease in total revenue was due to reduced equipment installations due to COVID-19 travel restrictions.

 

Gross profit increased 6% to $4.0 million (61.9% of total revenue) from $3.8 million (55.9% of total revenue) in the third quarter of 2019. The increase in gross profit was primarily due to reduced direct material costs and travel costs resulting from reduced sales.

 

Operating expense was $2.7 million compared to $2.5 million in the third quarter of 2019. The increase in operating expense was mainly due to a $266,000 impairment in the investment in That’s Eatertainment Corp. (“TEC”) which was recorded as operating expense.

 

Operating income was $1.2 million compared to $1.2 million in the third quarter of 2019.

 

Net income totaled $868,000, or $0.11 per diluted share, compared to net income of $937,000, or $0.12 per diluted share, in the third quarter of 2019.

 

Adjusted EBITDA was $1.6 million compared to $1.4 in the third quarter of 2019.

 

Financial Results for the Nine Months Ended September 30, 2020

 

Total revenue was $12.5 million compared to $12.8 million in the first nine months of 2019. The change in total revenue was due to reduced equipment installations due to COVID-19 travel restrictions.

 

Gross profit was $7.1 million (57.0% of total revenue) compared to $7.1 million (55.2% of total revenue) in the first nine months of 2019. The slight increase in gross profit was primarily due to sales volume and product mix, which tends to remain fairly consistent as a percentage of total revenue when compared annually.

 

Operating expense was $7.3 million compared to $7.2 million in the first nine months of 2019. The increase in net operating expense was primarily due to a $406,000 impairment in the investment of TEC, which was recorded as operating expense and was offset by reduced selling, general, and administrative costs from COVID-19 restrictions on travel and tradeshows.

 

Loss from operations was $115,000 compared to a loss from operations of $94,000 in the first nine months of 2019.

 

 
 

 

Net loss totaled $123,000, or $(0.02) per diluted share, compared to net loss of $10,000, or $(0.00) per diluted share in the comparable period a year ago.

 

Adjusted EBITDA was $615,000 compared to adjusted EBITDA of $339,000 in the first nine months of 2019.

 

At September 30, 2020, backlog totaled approximately $14.4 million, a $3.1 million increase compared to backlog of $11.3 million as of September 30, 2019. Accounts receivable and unbilled revenues totaled approximately $6.2 million as of September 30, 2020, compared to $5.9 million at December 31, 2019, an increase of $325,000. Cash and cash equivalents totaled $4.1 million at September 30, 2020 compared to cash and cash equivalents and certificates of deposit of $3.3 million at December 31, 2019, an increase of $0.8 million.

 

Conference Call

 

VirTra management will hold a conference call today (November 10, 2020) 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: 844-602-0380

International number: 862-298-0970

 

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 the company’s website.

 

A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through November 24, 2020.

 

Toll-free replay number: 877-481-4010

International replay number: 919-882-2331

Replay ID: 38151

 

About VirTra

 

VirTra (NASDAQ: VTSI) is a global provider of judgmental use of force training simulators, firearms training simulators and driving 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 EBITDA

 

Adjusted 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 income to Adjusted EBITDA is provided in the following tables:

 

Reconciliation of net income (loss) to adjusted EBITDA

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30,   Increase   %   September 30,   September 30,   Increase   % 
   2020   2019   (Decrease)   Change   2020   2019   (Decrease)   Change 
                                 
Net Income (Loss)  $868,084   $937,107   $(69,023)   -7%  $(122,586)  $(9,526)  $(113,060)   1187%
                                         
Adjustments:                                        
Provision for income taxes   354,941    347,787    7,154    2%   40,467    23,539    16,928    72%
Depreciation and amortization   95,259    77,259    18,000    23%   274,866    222,471    52,395    24%
EBITDA  $1,318,284   $1,362,153   $(43,869)   -3%  $192,747   $236,484   $(43,737)   -18%
Impairment loss on That’s Eatertainment, related party   266,000    -    266,000    100%   406,000    -    406,000    100%
Reserve for note receivable   9,461    -    9,461    100%   220,997    102,473    118,524    116%
Adjusted EBITDA  $1,593,745   $1,362,153   $231,592    17%  $819,744   $338,957   $480,787    142%

 

Forward-Looking Statements

 

The 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 Securities and Exchange Commission (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 SEC 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.

 

Investor Relations Contact:

 

Matt Glover or Charlie Schumacher

VTSI@gatewayir.com

949-574-3860

 

 
 

 

VirTra, Inc.

Condensed Balance Sheets

 

   September 30, 2020   December 31, 2019 
   (Unaudited)     
ASSETS          
Current assets:          
Cash and cash equivalents  $4,097,484   $1,415,091 
Certificates of deposit   -    1,915,000 
Accounts receivable, net   2,523,131    2,307,972 
Interest receivable   -    7,340 
Inventory, net   3,441,764    1,949,414 
Unbilled revenue   3,689,442    3,579,942 
Prepaid expenses and other current assets   461,612    353,975 
           
Total current assets   14,213,433    11,528,734 
           
Long-term assets:          
Property and equipment, net   1,089,385    1,028,198 
Operating lease right-of-use asset, net   1,169,876    1,390,873 
Intangible assets, net   266,843    217,930 
That’s Eatertainment note receivable, long term, net, related party   285,288    291,110 
Security deposits, long-term   19,712    19,712 
Other assets, long-term   332,990    351,236 
Deferred tax asset, net   1,712,000    1,792,000 
Investment in That’s Eatertainment, related party   434,000    840,000 
           
Total long-term assets   5,310,094    5,931,059 
           
Total assets  $19,523,527   $17,459,793 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current liabilities:          
Accounts payable  $649,293   $621,127 
Accrued compensation and related costs   995,946    611,487 
Accrued expenses and other current liabilities   557,891    334,751 
Note payable, current   601,696    - 
Operating lease liability, short-term   315,476    297,244 
Deferred revenue, short-term   3,369,569    2,490,845 
           
Total current liabilities   6,489,871    4,355,454 
           
Long-term liabilities:          
Deferred revenue, long-term   1,321,857    1,748,257 
Note payable, long-term   724,265    - 
Operating lease liability, long-term   935,622    1,174,882 
           
Total long-term liabilities   2,981,744    2,923,139 
           
Total liabilities   9,471,615    7,278,593 
           
Commitments and contingencies (See Note 11)          
           
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; 7,767,530 shares issued and outstanding as of September 30, 2020 and 7,745,030 shares issued and outstanding as of December 31, 2019   778    775 
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   -    - 
Additional paid-in capital   13,887,975    13,894,680 
Accumulated deficit   (3,836,841)   (3,714,255)
           
Total stockholders’ equity   10,051,912    10,181,200 
           
Total liabilities and stockholders’ equity  $19,523,527   $17,459,793 

 

See accompanying notes to unaudited condensed financial statements.

 

 
 

 

VirTra, Inc.

Condensed Statements of Operations

(Unaudited)

 

   Three Months Ended   Nine Months Ended 
   September 30, 2020   September 30, 2019   September 30, 2020   September 30, 2019 
Revenues:                    
Net sales  $6,395,356   $6,682,728   $12,472,106   $12,696,810 
That’s Eatertainment royalties/licensing fees, related party   16,005    28,561    45,247    100,993 
Other royalties/licensing fees   2,360    2,120    4,310    21,257 
Total revenue   6,413,721    6,713,409    12,521,663    12,819,060 
                     
Cost of sales   2,446,455    2,957,865    5,381,403    5,748,001 
                     
Gross profit   3,967,266    3,755,544    7,140,260    7,071,059 
                     
Operating expenses:                    
General and administrative   2,250,348    2,127,422    6,050,798    6,074,213 
Research and development   497,645    381,654    1,204,011    1,090,960 
                     
Net operating expense   2,747,993    2,509,076    7,254,809    7,165,173 
                     
Income (loss) from operations   1,219,273    1,246,468    (114,549)   (94,114)
                     
Other income (expense):                    
Other income   7,067    38,426    45,359    114,158 
Other expense   (3,315)   -    (12,929)   (6,031)
                     
Net other income   3,752    38,426    32,430    108,127 
                     
Income (loss) before provision for income taxes   1,223,025    1,284,894    (82,119)   14,013 
                     
Provision for income taxes   354,941    347,787    40,467    23,539 
                     
Net income (loss)  $868,084   $937,107   $(122,586)  $(9,526)
                     
Net income (loss) per common share:                    
Basic  $0.11   $0.12   $(0.02)  $(0.00)
Diluted  $0.11   $0.12   $(0.02)  $(0.00)
                     
Weighted average shares outstanding:                    
Basic   7,760,799    7,745,030    7,753,034    7,748,543 
Diluted   7,842,475    7,721,574    7,753,034    7,748,543 

 

See accompanying notes to unaudited condensed financial statements.

 

 
 

 

VirTra, Inc.

Condensed Statements of Cash Flows

(Unaudited)

 

   Nine Months Ended 
   September 30, 2020   September 30, 2019 
         
Cash flows from operating activities:          
Net loss  $(122,586)  $(9,526)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:          
Depreciation and amortization   274,866    434,405 
Right of use amortization   220,997    - 
Reserve for note receivable   16,738    102,473 
Deferred taxes   80,000    17,000 
Impairment of investment in That’s Eatertainment, related party   406,000    - 
Changes in operating assets and liabilities:          
Accounts receivable, net   (215,159)   (129,398)
That’s Eatertainment note receivable, net, related party   (10,916)   - 
Trade note receivable, net   -    652 
Interest receivable   7,340    3,923 
Inventory, net   (1,492,350)   (1,206,098)
Unbilled revenue   (109,500)   (1,422,221)
Prepaid expenses and other current assets   (107,637)   (120,642)
Other assets   18,246    (48,140)
Security deposits, long-term   -    320,044 
Accounts payable and other accrued expenses   635,765    799,915 
Payments on operating lease liability   (221,028)   (178,909)
Deferred revenue   452,324    1,719,878 
           
Net cash (used in) provided by operating activities   (166,900)   283,356 
           
Cash flows from investing activities:   -    - 
Purchase of certificates of deposit   -    (3,560,000)
Redemption of certificates of deposit   1,915,000    5,135,000 
Purchase of intangible assets   (55,580)   (160,000)
Purchase of property and equipment   (329,386)   (489,518)
Proceeds from sale of property and equipment   -    2,631 
Net cash provided by investing activities   1,530,034    928,113 
           
Cash flows from financing activities:          
Repurchase of stock options   (26,667)   (16,110)
N/P Payable -Profiles   -    (11,250)
Stock options exercised   19,965    11,426 
Purchase of treasury stock   -    (318,204)
Note payable-PPP Loan   1,325,961    - 
Net cash provided by (used in) financing activities   1,319,259    (334,138)
           
Net increase in cash   2,682,393    877,331 
Cash, beginning of period   1,415,091    2,500,381 
Cash, end of period  $4,097,484   $3,377,712 
           
Supplemental disclosure of cash flow information:          
Cash (refunded) paid:          
Taxes (refunded) paid  $(39,533)  $6,539 
Interest paid   5,247    - 
           
Supplemental disclosure of non-cash investing and financing activities:          
Conversion of That’s Eatertainment note receivable to long term, related party   -    292,138 

 

See accompanying notes to unaudited condensed financial statements.

 

 

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