TEMPE, Ariz. — 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 fourth quarter and year ended December 31, 2016. The financial statements are available on VirTra’s website and here.
Fourth Quarter 2016 Financial Highlights:
- Total revenue of $3.1 million
- Gross profit of $1.9 million
- Gross profit margin of 64%
- Net loss of ($0.3) million, or ($0.02) per diluted share
Full Year 2016 Financial Highlights:
- Record total revenue of $15.7 million
- Gross profit of $9.7 million
- Gross profit margin of 62%
- Net income of $2.1 million, or $0.12 per diluted share
- Adjusted EBITDA of $2.0 million
- Stockholders’ equity of $6.4 million as of December 31, 2016
- Cash and cash equivalents of $3.7 million as of December 31, 2016
Other Highlights for the Year:
- Approved and implemented a corporate redomestication from Texas to Nevada
- Implemented a 10 for 1 reverse stock split, effective October 20, 2016
- Appointed Mitchell A. Saltz to the Board of Directors, increasing the number of independent directors to two and the total number of directors to four
- Announced a $1.0 million share repurchase authorization
- Uplisted the Company’s common stock to the OTCQX® U.S. market
- Exercised a warrant option and purchased 1.7 million shares of stock of Modern Round Entertainment Corporation for approximately $335,000, resulting in the Company’s aggregate holdings of Modern Round to be 3.4 million shares, or 8.9% of its issued and outstanding common shares as of November 11, 2016
- Received ISO 9001:2015 Quality Management System certification for the design, development and servicing of its training simulator solutions
- Expanded its worldwide list of large and prominent law enforcement agencies using VirTra’s industry leading training simulators
- Awarded approximately $2.6 million under the previously announced indefinite delivery/indefinite quantity (IDIQ) contract by the United States Department of State that could result in up to $40 million in revenue, if all options are exercised
“2016 was another year of significant growth for VirTra as we delivered the strongest annual revenues in the history of our Company,” said Bob Ferris, Chairman and Chief Executive Officer of VirTra. “I am proud of the efforts of our entire VirTra team in achieving these outstanding results and particularly pleased that we increased our revenues by 17% and net income by 33%, while at the same time investing in our infrastructure for long term growth. We remain focused on executing and delivering solid results for 2017 and beyond.”
“Also during 2016, VirTra’s management, board of directors and shareholders came together to overwhelmingly approve a series of organizational changes intended to better prepare the Company for future growth. This effort was very successful and culminated with VirTra being accepted for listing on the OTCQX exchange. Today, I’m pleased to announce that we intend to register with the SEC as soon as possible and that we will also pursue uplisting our stock to a National exchange.”
Financial Results for the Three Months Ended December 31, 2016
Total revenue was $3.1 million for the fourth quarter of 2016, compared to $3.7 million for the fourth quarter of 2015. The quarterly decline was due to the historical variability experienced as a result of our current business and product mix.
Gross profit was $1.9 million for the fourth quarter of 2016, compared to $2.0 million for the fourth quarter of 2015.
Gross profit margin for the fourth quarter of 2016 was 64%, compared to 55% for the fourth quarter of 2015. The year-over-year increase in gross profit margin was primarily due to product and service mix and, to a lesser extent, the inclusion of the Modern Round license fees in the fourth quarter of 2016 versus none in the year ago quarter.
Net operating expense was $2.2 million for the fourth quarter of 2016, compared to $1.8 million in the fourth quarter of 2015. The higher expenses were primarily due to higher professional fees and expenses and increased spending in sales and marketing, as compared to the prior year’s fourth quarter.
Operating loss for the fourth quarter of 2016 was ($0.3) million, compared to operating income of $0.2 million in the fourth quarter of 2015. The decline in operating income was primarily due to the higher selling, general and administrative costs.
Net loss was ($0.3) million for the fourth quarter of 2016, or ($0.02) per diluted share, compared to net income of $0.1 million, or $0.01 per diluted share for the fourth quarter of 2015.
Adjusted EBITDA was a loss of ($0.3) million for the fourth quarter of 2016, compared to positive adjusted EBITDA of $0.3 million for the fourth quarter of 2015.
Financial Results for the Twelve Months Ended December 31, 2016
Total revenue was $15.7 million for 2016, an increase of 17%, compared to $13.3 million in 2015. The increase in revenue was primarily due to overall product line revenue increasing in all areas, including in simulator sales, accessories and extended warranty agreements.
Gross profit was $9.7 million for the year, an increase of 26%, compared to $7.7 million in 2015.
Gross profit margin for 2016 was 62%, compared to 58% for 2015. The year-over-year increase in the gross profit margin was primarily due to product and service mix and scale efficiencies resulting from the higher revenue.
Net operating expense was $7.6 million for 2016, an increase of 22%, compared to $6.2 million in 2015. The increased expenses in 2016 were primarily due to increases in employee costs, professional services and sales and marketing.
Operating income for the year was $2.1 million, compared to $1.5 million in 2015. The increase in operating income was due to the higher revenue and associated gross profits, partially offset by the higher selling, general and administrative expenses.
Net income was $2.1 million for fiscal year 2016, or $0.12 per diluted share, compared to $1.5 million, or $0.09 per diluted share for 2015.
Adjusted EBITDA was $2.0 million for the year, an increase of 2%, compared to $1.9 million for 2015.
Stockholders’ equity increased to $6.4 million as of December 31, 2016, an increase of 47%, compared to $4.4 million at December 31, 2015.
Cash and cash equivalents were $3.7 million at December 31, 2016, compared to $3.3 million at December 31, 2015.
The Company had essentially no outstanding debt at year-end.
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.
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.
This news release includes certain information that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements 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- – – –
|December 31,||December 31,|
|Cash and cash equivalents||$||3,703,579||$||3,317,020|
|Accounts receivable, net||3,244,852||2,346,141|
|Prepaid expenses and other current assets||357,363||51,620|
|Total current assets||8,625,738||6,617,423|
|Property and equipment, net||814,323||516,005|
|Investment in MREC||471,928||136,579|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accrued compensation and related costs||617,582||467,881|
|Accrued expenses and other current liabilities||194,668||238,347|
|Notes payable, current||11,250||–|
|Total current liabilities||3,357,084||2,738,427|
|Accrued rent liability||122,126||159,941|
|Notes payable, long-term||22,500||–|
|Total long-term liabilities||144,626||159,941|
|Commitments and contingencies|
|Preferred stock $0.0001 par value; 5,000,000 authorized; no shares issued|
|or outstanding as of December 31, 2016 and 2015||–||–|
|Common stock $0.0001 par value; 100,000,000 shares authorized; 15,855,005|
|issued and outstanding as of December 31, 2016 and 15,829,325 issued and||1,586||1,583|
|15,825,005 outstanding as of December 31, 2015|
|Class A common stock $0.0001 par value; 5,000,000 shares authorized; no shares|
|issued or outstanding as of December 31, 2016 and 2015||–||–|
|Class B common stock $0.0001 par value; 15,000,000 shares authorized; no shares|
|issued or outstanding as of December 31, 2016 and 2015||–||–|
|Additional paid-in capital||14,128,044||14,142,410|
|Treasury stock at cost; no shares and 4,320 common shares outstanding|
|as of December 31, 2016 and December 31, 2015, respectively.||–||(2,981||)|
|Total stockholders’ equity||6,410,279||4,371,639|
|TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY||$||9,911,989||$||7,270,007|
|STATEMENTS OF OPERATIONS|
|For the Three Months and Twelve Months Ended December 31, 2016 and 2015|
|Three months ended December 31,
||Year ended December 31,
|Cost of sales||1,113,151||1,672,002||5,970,058||5,652,125|
|Net operating expense||2,192,968||1,845,832||7,555,784||6,199,628|
|Income from operations||(251,504||)||192,842||2,126,326||1,490,583|
|Net other income/(expense)||(31,389||)||501||26,448||135,962|
|Income before income taxes||(282,892||)||193,343||2,152,774||1,626,545|
|Provision for income taxes||29,134||70,020||102,752||89,562|
|Earnings per common share:|
|Weighted average shares outstanding:|
|STATEMENT OF STOCKHOLDERS’ EQUITY|
|Preferred stock||Common stock|
|Balance at January 1, 2015||–||$||–||15,828,505||$||1,583||$||14,029,679||$||(2,981||)||$||(11,306,356||)||$||2,721,925|
|Stock based compensation||–||–||–||–||118,328||–||–||118,328|
|Issued shares purchased and canceled||–||–||(3,500||)||–||(5,597||)||–||–||(5,597||)|
|Balance at December 31, 2015||–||–||15,825,005||1,583||14,142,410||(2,981||)||(9,769,373||)||4,371,639|
|Stock based compensation||–||–||–||–||181,787||–||–||181,787|
|Stock options repurchased||–||–||–||–||(212,500||)||–||–||(212,500||)|
|Preferred stock issued||50,000||5||–||–||2,495||–||–||2,500|
|Preferred stock repurchased||(50,000||)||(5||)||–||–||(2,495||)||–||–||(2,500||)|
|Treasury stock retirement||–||–||–||–||–||2,981||–||2,981|
|Stock issued for options exercised||–||–||30,000||3||16,347||–||–||16,350|
|Balance at December 31, 2016||–||$||–||15,855,005||$||1,586||$||14,128,044||$||–||$||(7,719,351||)||$||6,410,279|
|STATEMENTS OF CASH FLOWS|
|December 31, 2016||December 31, 2015|
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash|
|provided (used) in operating activities|
|Depreciation and amortization||192,602||184,846|
|Cash settlement of stock options||341,838||–|
|Treasury stock cancelled||2,981||–|
|Other income received in Modern Round equity||–||(136,579||)|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other current assets||(305,743||)||6,504|
|Accounts payable and other accrued expenses||65,343||396,955|
|Net cash provided by operating activities||1,754,880||1,742,841|
|Cash flows from investing activities:|
|Investment in MREC||(335,349||)||–|
|Asset purchase – Profiles Tools, net of shop supplies||(185,450||)||–|
|Purchase of property and equipment||(309,535||)||(332,953||)|
|Net cash used in investing activities||(830,334||)||(332,953||)|
|Cash flows from financing activities:|
|Repurchase of stock-based options||(554,338||)||–|
|Common stock shares cancelled||–||(5,597||)|
|Proceeds from common stock issued for options exercised||16,351||–|
|Net cash used in financing activities||(537,987||)||(5,597||)|
|Net increase in cash||386,559||1,404,291|
|Cash, beginning of period||3,317,020||1,912,729|
|Cash, end of period||$||3,703,579||$||3,317,020|
|Supplemental disclosure of cash flow information:|
|Cash paid during period for income taxes||$||102,752||$||19,562|
|Non-cash investing and financing activities:|
|Assumption of note – Profiles Tools||$||33,750||$||–|
|Receipt of Modern Round equity||$||–||$||136,579|
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 plus (i) depreciation, (ii) stock option expense, (iii) treasury stock canceled, (iv) taxes expensed, and reduced by (v) stock option redemption costs.. 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 December 31||Year Ended December 31|
|Stock option expense||87,796||13,457||181,786||118,328|
|Stock option redemption||(163,386||)||–||(554,338||)||–|
|Treasury stock cancelled||–||–||2,981||–|
Investor Relations Counsel Larry Clark Financial Profiles, Inc. (310) 622-8223 firstname.lastname@example.org