VirTra is without a doubt one of the best performing Pink Sheet stocks around, having posted six consecutive profitable quarters and rather quickly making its way onto the seventh. With worldwide government spending on simulation and virtual training totalling $7.9B and increasing each year, this booming market continues to post record numbers as countries around the world seek new and innovative ways to attain a competitive advantage over enemies during warfare. Add the fact that the U.S. defence budget is growing, and you have yourself one of the top growing markets of the new year. Training with both real and toy guns, bullets, costly equipment and machinery is now a thing of the past– High-Definition (HD) firearms training simulators is the future of combat training, offering a much needed cost-effective alternative to its predecessor. On the even of what could be a century plagued by terrorism, certain companies will be looking to pocket big bucks as the world looks for a safe haven. Led by the “Grandfather of Virtual Reality” himself, CEO, Bob Ferris, VirTra seems ripe to make a splash in 2010.
The company has had tremendous interest from new and existing shareholders as of late on the eve of its seventh profitable quarter, making it one of the only Pink Sheet companies in its class to have achieved this feat. If you’re looking to make a valuable long-term investment in a company that’s bound to hit a major index in the near future, you’ve stumbled upon the right place.
Many small cap investors spend years trying to find a legitimate company which rakes in some sort of revenue, at least enough to cover regularly incurred costs and expenses thus allowing for a net income to be made. Those who have been following these types of stocks are well aware of the rarity in finding that hidden gem company which encompasses fundamentals and technicals in one nice return on investment (ROI) bundle of goodies. Once in a blue moon however, a shooting star blows by the midnight skies and reveals a reality that these dreams can come true. Welcome to VirTra Systems Incorporated ladies and gentlemen.
So you’ve done your homework, read the news and growing trends around the world. Having Scoured the deepest parts of the penny stock ocean, you’ve come across a list that tickles your inner most desires, and within that list lies VirTra Systems. Like a consciousness creeping up amidst the darkness, you begin to have doubts whether all the good news regarding this company could be true. How is it possible that they’ve been so undiscovered? Why is it that the volume hasn’t been anything special as of late? The answer is really quite easy, this company believes that achieving success is treating your shareholders well, and having your business grow naturally on generating deals and revenues rather than paying for promoters, something all too common. It’s easy to see they remain so confident in their fundamentals when looking at the 2008 federal contracts (totalling $26,760) versus 2009 federal contracts (totalling $550,862). How is this achieved? For example, one simulator costs $50,000 to $250,000 depending on specifications, thus four full version, fully loaded simulator being sold equates to roughly $1M being pocketed by the company. This represents an extremely high profit margin for a company floating around the Pink Sheets. Looking at the numbers, Q3 net profit margin was 43% and the revenue growth was 40%.
We have also interviewed CEO, Bob Ferris and have provided the Q & A session towards the bottom of this article. He was also pleased to confirm a live investor conference call tentative towards the end of March in order to discuss earnings, future operations and as well take questions from investors in a live web-cast where the public will be free to tune in. Roughly 10 investors will be chosen to be a part of the questioning period, more details regarding enrollment will be provided closer to the date (TBA).
About VirTra Systems Inc.
Since 1993, VirTra Systems has led the shooting simulation marketplace by creating firearms training simulators that replicate real-world scenarios so intensely and precisely that trainees are far better prepared when faced with actual life-and-death situations. VirTra designs and manufactures two distinct product lines comprising the world’s first 360-degree firearms training simulators: the IVR™ 4G military series, and the IVR™ HD law enforcement series. The HD law enforcement series delivers incredible decision making scenarios, 360-degree situational awareness, use-of-force training, real-world marksmanship, digital shoot-house, and of course marksmanship courses (from basic to advanced). The 4G military series delivers military skills training exercises, marksmanship and qualification courses (from basic to advanced), real-world marksmanship, immersive combat simulation, and digital shoot-house (CQB and MOUT training).
With best-in-class customer service and unparalleled technology like 360 degree high-definition real-world scenarios and the Threat-fire safe return fire system (both patent pending), it is no surprise that the finest military and law enforcement agencies in the US and throughout the world have hand selected VirTra’s simulators after trying out all other options.
For a full list of products, please visit the company’s training overview: http://www.virtrasystems.com/tr_ivrtraining_overview.html
Let’s cut right to the chase and give you the top 10 reasons for owning this stock:
- Six consecutive profitable quarters, CEO highly optimistic for 7th which is scheduled in the coming days / weeks.
- Lockheed Martin (LMT). Four separate press releases (11 June, 25 August, 27 August, 01 September) indicate Lockheed Martin’s interest evaluating VTSI’s technology. I-Hub board members have thrown around estimates / revenue projections and speculation could amount to millions of USD, but nothing has been formerly announced by VTSI at this time. UPDATE: 10/6/09 VTSI Receives Largest Order to Date from LMT. Terms and details of the transaction are not being disclosed publicly, at the request of LMT.
- Foreign Orders. We’ve seen a sizable order amounting to half a million dollars with Saudi Aramco, one of the largest oil manufacturers in the world. VTSI had its 11th simulator sale through its partnership in Mexico with Lonexi. UPDATE 19 January: Three more simulators (IVR-300, IVR-180, IVR-100) with full kits sold to Mexican law enforcement. The company made strides selling technology down under, to a police department in Australia. VTSI has alliances all over the globe, which includes a strategic one with Agora in Brazil. Three simulators were sold through Agora in September, raising the total number of simulators sold in that market to five since January. VirTra Secured a $3 Million International Sales Commitment from Agora, over a three year time period. Agora will be the exclusive distributor of VTSI products in South America (excluding Mexico).
- Threat Dynamics Partnership. VTSI is in plans with Threat Dynamics to build 11 facilities across the US as part of a plan to open fire arm training centers. The first training center in Hillsboro, Oregon appears to be a successful venture.
- Domestic Orders. Orders from domestic police departments are continuing. An order took place on 29 June, when the Bellevue Police Department in Washington state purchased VTSI’s simulators. On 22 September, the company issued a publication that they sold five simulators to various domestic law enforcement agencies, which includes the US Marshals Great Lakes Regional Fugitive Task Force, the Holliston Police Department in Massachusetts, the West Virginia State Police, the Gwinnett County Sheriff’s Department in Georgia, and the Department of Defense in a currently undisclosed U.S. location. UPDATE: 11/16 Two IVR-180 sold to Metro Nashville Police Training Acadamy and the Henry County Police Department in Georgia.
- Military Orders. 26 October PR on an announced order of five screen 300 degree IVR-300 simulators to the 819th Global Support Squadron.
- Leadership. Bob Ferris is a young leader, but is considered the grandfather of virtual reality and simulation by journalists that cover the industry. He is the driver behind this company, striking deals to reduce debt with Dutchess Capital Management and the IRS since his arrival as CEO a year ago.
- Research and Development. The company continues to be the industry leader and has shown continuous efforts to upgrade its current technology. The best example of this was the introduction of the new generation of Threat Fire Belt (Threat Fire II) in August, 2009.
- VTSI has only captured 1% to 3% of the overall market, in relation to the potential of its current products.
- 142,031.154 are the total number of shares outstanding. 118,435,075 shares are in the float. The latter increased 3 million as a result of Dutchess dilution. A reverse split or buyout by LMT is also unlikely, thus eliminating any controversy related to that. Refer to the latest quarterly report as there are no pending or anticipated events of this kind.
Moreover, Morgan Keegan, award winning analyst sees wave of acquisitions in defense industry beginning in q3 2010: although VirTra was not mentioned, rest assured they are at the forefront of some bigger players looking to capitalize on their tremendeous technology. Could a government buyout be looming ahead? This has been highly speculated lately among traders as both domestic and foreign contracts continue to pile in.
Press Coverage on VirTra
For further coverage on VirTra Systems in the news, visit the company’s media coverage section: http://www.virtrasystems.com/pr_mediacoverage.html
For a financial analysis, visit this link: http://docs.google.com/Doc?docid=0AV4yqvNr9UV5ZGdwcXNuaHJfNmZ0NnQ4cmp0&hl=en
For a technical analysis overview visit this link: http://www.themarketfinancial.com/virtra-systems-in-the-spotlight-technical-analysis/1548
We recently had the opportunity of speaking to CEO, Bob Ferris who has done a marvelous job leading this company to the promise land, and he was nothing short of optimistic towards the future.
1) Please introduce yourself and the experience you bring to the company.
A: My name is Bob Ferris and I am the CEO of VirTra Systems, Inc. I have been working in the field of Simulation and Virtual Reality since 1993 when I formed Ferris Productions, Inc. which eventually became VirTra Systems, Inc.
2)You are considered by many to be the “Grandfather of Virtual Reality”, how did you acquire this nickname and what does it mean to you.
- A: During the 1990s there was tremendous excitement surrounding the development of simulation and virtual reality as computer technology was emerging the early capabilities to create synthetic worlds. Due to the fact that a started and operated a company during these embryonic years of the industry, a journalistic referred to me as “one of the Grandfather’s of Virtual Reality”.
- What is your “vision” for this company.
- A: VirTra Systems, Inc. has the ability to profitably expand in the markets that we currently operate as well as to expand to related market spaces. My vision is to continue down our current path, to develop even better products with enhanced marketing and grow the company. We must remain the finest simulation company with the most realistic simulators in the world.
3) What is VirTra’s business model?
- A: We hire the best people in their field, we empower them with the best resources and infrastructure money can buy and then they usually produce amazing results. We have almost no middle management levels and we pass these savings through to our shareholders through higher profitability.
- A: Our products are usually the very best in their class, and often at a price that is less than competitor’s often inferior products. This combination of better product at a lower price has been a cornerstone of our rapid success.
- A: Our customers are usually military or law enforcement, both in the US as well as countries throughout the world.
- A: VirTra has one of the lowest debts of any public company in our space and I think VirTra makes more percentage profit than any other public companies in our space by carefully managing our costs, less middle management and reasonable executive pay.
4) Since you took over as CEO of VirTra what has changed?
A: First, we greatly reduced costs that were not helping VirTra grow a profitable business. Some of these costs were related to being listed on the Bulletin Board, we moved to the pinksheets and are in the highest category possible without audited financial statements. I closed an office in Texas and our Phoenix staff did a heroic job of picking up a share of the workload.
Second, I personally worked in sales and was blessed with success, thus expanding our sales revenue.
The combination of increased sales and decreased expenses permitted us to pay down debt, and invest money into return on investment activities (such as tradeshows and more sales people), which has further increased sales. When you understand how outstanding our products are and you walk through the decisions, it is not surprising that VirTra achieved back-to-back record quarters, over and over again.
5) You have struck numerous deals to reduce debt, please describe them and their respective specifics.
A: When I took over as CEO, whenever we had extra cash, I would offer it to reduce debt and struck numerous deals paying off creditors. I simply used some of the cost savings to pay down debt and now our credit rating as a company is excellent and our debt load exceptionally light.
6) During the recent recession, six consecutive profitable quarters is a remarkable feat alone for a major index company never mind a Pink Sheet, do you expect a 7th?
A: I will wait for the final numbers, but I can say that we continue to be very blessed as a company.
- Do you have any rough ball park estimates?
- A: Not at this time.
7) Can you safely say that dilution is out of the question due to your already highly profitable business?
A: I can safely say that having a profitable business reduces the risk of dilution. However, if I can increase the business value by 10% through a dilution of 1%, I must make the best decision for the shareholders.
8 ) Have you looked into entering the Educational Market, perhaps for students of law enforcement?
A: Yes we have, but the details are confidential.
9) Apart from the Military and Law Enforcement, what other outlets for your technology are your pursuing?
A: This information is considered confidential.
- The possibilities are endless: health and safety, educational, flight simulators, leisure industry and many more, rescue situations its endless… Have you discussed any of these with your management team for future plans?
- A: Yes but the details are confidential.
10) Do you plan on releasing figures surrounding your Lockheed (LMT) orders?
A: No, per the request of the customer.
11) Can you give an overview of some of VirTra’s foreign orders?
A: VirTra’s foreign orders have expanded considerably in 2009. The highpoints have been new simulator sale to Australia, Mexico expanded sales, Brazil expanded sales, and new simulator sales to the Middle East.
- Do you expect more foreign orders in 2010?
- A: yes.
12) Shed some light on the Threat Dynamics Partnership, and the plans of building 11 facilities across the US as part of a plan to open fire arm training centers.
A: This is considered confidential.
- Is this going according to schedule and when can we expect more facilities to be completed?
- A: I’m not at liberty to comment.
13) Seems like you have been receiving a lot of domestic orders, please provide some brief details on them.
A: We are pleased to see both military and law enforcement sales from domestic agencies.
- Do you foresee these orders increasing in 2010?
- A: yes.
14) It seems like 2010 has once again renewed the fears of terrorism, do you feel VirTra can capitalize on this thus have increased military orders?
A: VirTra helps save lives, unfortunately terrorism exists and thus the requirement for the best training available.
- Are you currently in talks with the military to supply more of your systems?
- A: Yes, this is part of the sales pipeline process.
15) Competition is always an important aspect to consider, what steps have you take to ensure VirTra stays above and beyond from other products of similar functionalities in the marketplace?
- Any new products currently being developed through R&D?
- A: Confidential
16) Please inform us on your intellectual property.
- Patents, trademarks, ect.
- A: VirTra has considerable intellectual property. Some of the IP involves current or pending patent applications, and I cannot discuss until a patent is issued.
17) Lastly, where do you see VirTra: In one year? In five years?
I see VirTra as the very best small arms firearm training company in the world, with the happiest customers, and with percentage profitability exceeding all peer-group companies.
Disclosure: Long VTSI