VirTra Q2 Sales Dip to $11.1M, Down from $12.1M Year-Over-Year

TL;DR

VTSI Q2 sales down YoY, $11.1M vs $12.1M. Watch for recovery.

AI Summary

VirTra, Inc. filed its 10-Q for the period ending June 30, 2024, reporting on its financial performance. The company's net sales for the second quarter of 2024 were $11.1 million, a decrease from $12.1 million in the same quarter of 2023. For the six months ended June 30, 2024, net sales were $21.5 million, down from $24.1 million in the prior year period. The filing details changes in assets, liabilities, and equity, with total assets at $76.7 million as of June 30, 2024.

Why It Matters

This filing provides insight into VirTra's recent financial health, indicating a decline in sales which could impact future growth and investor confidence.

Risk Assessment

Risk Level: medium — The reported decrease in net sales for both the quarter and year-to-date periods suggests potential challenges in the company's market or sales execution.

Key Numbers

• $11.1M — Q2 2024 Net Sales (Represents a decrease compared to the prior year's Q2.)
• $21.5M — Year-to-Date Net Sales (2024) (Shows a decline from the same period in 2023.)
• $76.7B — Total Assets (As of the end of the reporting period, June 30, 2024.)

Key Players & Entities

• VirTra, Inc. (company) — Filer of the 10-Q
• 20240630 (date) — End of the reporting period
• $11.1 million (dollar_amount) — Net sales for Q2 2024
• $12.1 million (dollar_amount) — Net sales for Q2 2023
• $21.5 million (dollar_amount) — Net sales for the six months ended June 30, 2024
• $24.1 million (dollar_amount) — Net sales for the six months ended June 30, 2023
• $76.7 million (dollar_amount) — Total assets as of June 30, 2024

FAQ

Key Financial Figures

• $0.0001 — nge on which registered Common Stock, $0.0001 par value VTSI Nasdaq Capital Marke

Filing Documents

• form10-q.htm (10-Q) — 860KB
• ex31-1.htm (EX-31.1) — 8KB
• ex31-2.htm (EX-31.2) — 8KB
• ex32-1.htm (EX-32.1) — 5KB
• 0001493152-24-031281.txt ( ) — 4862KB
• vtsi-20240630.xsd (EX-101.SCH) — 33KB
• vtsi-20240630_cal.xml (EX-101.CAL) — 54KB
• vtsi-20240630_def.xml (EX-101.DEF) — 167KB
• vtsi-20240630_lab.xml (EX-101.LAB) — 295KB
• vtsi-20240630_pre.xml (EX-101.PRE) — 232KB
• form10-q_htm.xml (XML) — 795KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) F-1 Condensed Balance Sheets as of June 30, 2024 and December 31, 2023 F-1 Condensed Statements of Operations for the Three and Six Months ended June 30, 2024 and 2023 F-2 Condensed F-3 Condensed Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 F-4 Notes to the Unaudited Financial Statements F-5 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 3 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 8 Item 4.

Controls and Procedures

Controls and Procedures 8 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 9 Item 1A.

Risk Factors

Risk Factors 9 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 9 Item 3. Defaults Upon Senior Securities 9 Item 4. Mine Safety Disclosures 9 Item 5. Other Information 9 Item 6. Exhibits 9

SIGNATURES

SIGNATURES 10 2 PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS VIRTRA, INC. CONDENSED BALANCE SHEETS (unaudited) June 30, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 18,411,634 $ 18,849,842 Accounts receivable, net 9,124,425 15,724,147 Inventory, net 13,470,715 12,404,880 Unbilled revenue 1,389,658 1,109,616 Prepaid expenses and other current assets 1,953,015 906,803 Total current assets 44,349,447 48,995,288 Long-term assets: Property and equipment, net 16,575,177 15,487,012 Operating lease right-of-use asset, net 519,375 716,687 Intangible assets, net 563,096 567,540 Security deposits, long-term 35,691 35,691 Other assets, long-term 201,670 201,670 Deferred tax asset, net 3,780,112 3,630,154 Total long-term assets 21,675,121 20,638,754 Total assets $ 66,024,568 $ 69,634,042 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,013,483 $ 2,282,427 Accrued compensation and related costs 1,920,367 2,221,416 Accrued expenses and other current liabilities 573,510 3,970,559 Note payable, current 230,457 226,355 Operating lease liability, short-term 189,098 317,840 Deferred revenue, short-term 5,619,406 6,736,175 Total current liabilities 9,546,321 15,754,772 Long-term liabilities: Deferred revenue, long-term 3,022,676 3,012,206 Note payable, long-term 7,690,940 7,813,021 Operating lease liability, long-term 353,710 432,176 Total long-term liabilities 11,067,326 11,257,403 Total liabilities 20,613,647 27,012,175 Commitments and contingencies (See Note 9) - - Stockholders' equity: Preferred stock $ 0.0001 par value; 2,500,000 shares authorized; no shares issued or outstanding - - Common stock $ 0.0001 par value; 50,000,000 shares authorized; 11,112,230 shares and 11,107,230 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively 1,11

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) Note 1. Organization and Significant Accounting Policies Organization and Business Operations VirTra, Inc. (the "Company," "VirTra," "we," "us" or "our"), located in Chandler, Arizona, is a global provider of judgmental use of force training simulators and firearms 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. The Company sells its products worldwide through a direct sales force and international distribution partners. The original business started in 1993 as Ferris Productions, Inc and ultimately became VirTra, Inc., a Nevada corporation. Basis of Presentation The unaudited financial statements included herein have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with our audited financial statements for the year ended December 31, 2023 included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on April 1, 2024. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading. The accompanying unaudited financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position on June 30, 2024, and the results of our op

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) The Company's primary sources of revenue are derived from simulator and accessories sales, training and installation, the sale of customizable software and the sale of extended service-type warranties. The Company's policy is to typically invoice upon completion of installation and/or training until such a time the performance obligations that have been satisfied are included in unbilled. Sales discounts are presented in the financial statements as reductions in determining net revenues. Credit sales are recorded as current assets (accounts receivable and unbilled revenue). Prepaid deposits received at the time of sale and extended warranties purchased are recorded as current and long-term liabilities (deferred revenue) until earned. The following briefly summarizes the nature of our performance obligations and method of revenue recognition: Performance Obligation Method of Recognition Simulator and accessories Upon transfer of control STEP Program Deferred and recognized over the life of the contract Installation and training Upon completion or over the period of services being rendered Extended service-type warranty Deferred and recognized over the life of the extended warranty Customized software and content Upon transfer of control or over the period services are performed depending on the terms of the contract Customized content scenario As performance obligation is transferred over time (input method using time and materials expanded) Design and prototyping Recognized at the completion of each agreed upon milestone Sales-based royalty exchanged for license of intellectual property Recognized as the performance obligation is satisfied over time – which is as the sales occur. The Company recognizes revenue upon transfer of control or upon completion of the services for the simulator and accessories; for the installation and training and customized software performance obligations

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) Disaggregation of Revenue Under ASC 606, disaggregated revenue from contracts with customers depicts the nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors. The Company has evaluated revenues recognized and the following table illustrates the disaggregation disclosure by customer's location and performance obligation. Schedule of Disaggregation of Revenue Commercial Government International Total Commercial Government International Total Three Months Ended June 30 2024 2023 Commercial Government International Total Commercial Government International Total Simulators and accessories $ 136,571 $ 1,927,438 $ 477,837 $ 2,541,846 $ 73,099 $ 7,365,343 $ 355,630 $ 7,794,072 Extended Service-type warranties 72,000 1,332,049 22,103 1,426,152 21,367 599,390 16,257 637,014 Customized software and content - 17,127 82,500 99,627 4,800 277,555 82,855 365,210 Installation and training 4,196 157,691 6,650 168,537 19,702 154,280 208,141 382,123 Design & Prototyping - 863,582 - 863,582 - - - - STEP - 965,810 9,486 975,296 - 1,140,948 17,536 1,158,484 Total Revenue $ 212,767 $ 5,263,697 $ 598,576 $ 6,075,040 $ 118,968 $ 9,537,516 $ 680,419 $ 10,336,903 Commercial Government International Total Commercial Government International Total Six Months Ended June 30 2024 2023 Commercial Government International Total Commercial Government International Total Simulators and accessories $ 212,351 $ 5,738,695 $ 1,756,095 $ 7,707,141 $ 562,908 $ 12,114,712 $ 3,507,795 $ 16,185,415 Extended Service-type warranties 72,000 2,202,851 26,305 2,301,156 44,711 1,138,598 35,680 1,218,989 Customized software and content - 282,533 82,500 365,033 24,300 284,751 65,994 375,045 Installation and training 4,196 394,030 11,814 410,040 40,264 403,834 261,829 70

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) Warranty The Company warranties its products from manufacturing defects on a limited basis for a period of one year after purchase, but also sells separately priced extended service-type warranties for periods of up to four years after the expiration of the standard one-year warranty. During the term of the initial one-year warranty, if the device fails to operate properly from defects in materials and workmanship, the Company will fix or replace the defective product. Deferred revenue for separately priced extended warranties one year or less totaled $ 2,510,297 and $ 2,627,763 as of June 30, 2024, and December 31, 2023, respectively. Deferred revenue for separately priced extended warranties longer than one year totaled $ 2,930,779 and $ 2,974,710 as of June 30, 2024, and December 31, 2023, respectively. The accrual for the one-year manufacturer's warranty liability totaled $ 295,000 and $ 354,000 as of June 30, 2024, and December 31, 2023, respectively. We did not see any change in the amount of warranty repairs, due to new quality controls and equipment, so we maintained our warranty liability for another quarter. During the six months ended June 30, 2024, and 2023, the Company recognized revenue of $ 2,301,156 and $ 1,218,989 , respectively, related to the extended service-type warranties that was amortized from the deferred revenue balance at the beginning of each period. Changes in deferred revenue amounts related to extended service-type warranties will fluctuate from year to year based upon the average remaining life of the warranties at the beginning of the period and new extended service-type warranties sold during the period. Concentration of Credit Risk and Major Customers and Suppliers Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, certificates of deposit, and accounts receivable. The Company's cash, cash equivalents

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (Unaudited) Net Income per Common Share The net income per common share is computed by dividing net income by the weighted average of common shares outstanding. Diluted net income per share reflects the potential dilution, using the treasury stock method, that would occur if outstanding stock options and warrants were exercised. Earnings per share computations are as follows: Schedule of Earnings Per Share 2024 2023 Three Months Ended June 30 2024 2023 Net Income (Loss) $ 1,200,727 $ 1,026,635 Weighted average common stock outstanding 11,063,366 10,924,714 Incremental shares from stock options 2,500 8,416 Weighted average common stock outstanding, diluted 11,065,866 10,933,130 Net Income (Loss) per common share and common equivalent share Basic $ 0.11 $ 0.09 Diluted $ 0.11 $ 0.09 2024 2023 Six Months Ended June 30 2024 2023 Net Income (Loss) $ 2,416,901 $ 3,973,009 Weighted average common stock outstanding 10,885,965 10,921,033 Incremental shares from stock options 4,669 Weighted average common stock outstanding, diluted 10,885,965 10,925,702 Net Income (Loss) per common share and common equivalent share Basic $ 0.22 $ 0.36 Diluted $ 0.22 $ 0.36 Note 2. Inventory Inventory consisted of the following as of: Schedule of Inventory June 30, 2024 December 31, 2023 Raw materials, WIP, finished goods and Materials being inspected $ 13,961,002 $ 12,834,368 Reserve ( 490,287 ) ( 429,488 ) Total Inventory $ 13,470,715 $ 12,404,880 The Company regularly evaluates the useful life o

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View this 10-Q filing on SEC EDGAR