Newsletter

July 12, 2004

Volume V, Issue 66

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To OTC Journal Members:

VirTra Systems (OTC BB: VTSI) Delivers Biggest Win To Date

Dynamite news came out of VirTra Systems after the close today. The company announced its largest judgemental-use-of-force simulator sale to date.

The order is significant for several reasons: First, according to the press release, the order comes from a branch of the US Military. The US Military market for the VirTra simulator is potentially mind boggling, and could single-handedly lead to the profitability and long term success of the company. With our troops in harms way in close urban quarters against terrorists in civilian clothing, judgemental-use-of-force training is becoming an important focus in training programs.

Secondly, this order is the first $1 million order the company has received. If sales build up to 2 or 3 of these per quarter, I believe the numbers will easily justify a $1 stock price.

Thirdly, this is an add on order to an existing purchase. In past editions I have stated my belief that individual initial orders will lead to multi unit orders once customers have a chance to use the system. In this example, the customer is placing a multi unit order before taking delivery of the first simulator. This action bodes well for future order flow.

On the technical side, shares of VirTra Systems have actually held up quite well over the past 2 1/2 months during a nasty correction. As you can see from the chart, the stock has not come close to breaching its long term uptrend line to the downside, which suggests supplies of stock could be running low. The stock could move up quite easily with increasing demand. A 10 cent move would put the stock back at it's all time high, which would be a very bullish achievement in tough market conditions.

I don't have any expectations of a big run in the stock, but I would not be surprised to see VTSI back above the $.40 level as a result of having landed their first $1 million simulator order to a branch of the US Military.

The people at VirTra Systems are very excited about the future of their company. Their 360° High Definition Firearms Training Systems are second to none, and word is beginning to get out.

Short term, the stock price is a tough call. Long term, I still see this stock trading into the $1 range in the future. Additional orders like the one which was disclosed after the market closed is the medicine the doctor ordered to get this patient feeling like $1.

Here is the complete text of the news release for your review:

Press Release Source: VirTra Systems, Inc.

VirTra Systems Announces Expanded U.S. Military Contract

Monday July 12, 4:01 pm ET

ARLINGTON, Texas, July 12 /PRNewswire-FirstCall/ -- VirTra Systems, Inc. (OTC Bulletin Board: VTSI - News) today announced an expanded contract with the United States military for the company's IVR-300(TM) advanced training simulators.

The United States military customer, whose initial purchase was announced on May 17th, recently notified VirTra Systems of its intent to expand its purchase to include two customized IVR-300 HD high-resolution firearms training simulators, with training weapons and specialized scenarios, totaling nearly $1,000,000. The initial simulator is now in production, scheduled for near-term delivery.

"We are enthused with our developing relationship with the United States military," commented Michael Kitchen, VirTra Systems' vice-president of training and simulation. "This sale, less than four months after the IVR(TM) HD's public debut, serves to further solidify our status as the leader in this emerging industry, and hints at even larger orders in the future.

"Given the confidential nature of this customer's use of the simulators, it has required non-disclosure of the contract's details. However, we can conclude that these systems will be utilized to offer our military personnel the most advanced firearms training currently obtainable for its global war on terrorism," Kitchen concluded.

"We are proud of our increasing role with the U.S. military and its increasing training requirements," commented L. Kelly Jones, VirTra Systems' chief executive officer. "As we continue to deliver IVR HD systems to the marketplace, we anticipate increasing momentum as our simulators' unique characteristics are utilized by those entrusted with our safekeeping."

VirTra Systems' training simulators utilize photorealistic 360-degree training scenarios to realistically create the various encounters that military, law enforcement, and security personnel experience daily. The simulators' weapons carefully reproduce the actions of live weapons, including recoil, and the simulators provide instructors with real-time information such as trainees' situational awareness and point-of-aim.

About VirTra Systems

Utilizing patented technology, VirTra Systems markets combat, marksmanship, and situational awareness/judgmental firearms training systems to domestic military agencies such as the U.S. Air Force, and to national and international law enforcement agencies. The company also produces custom advertising/promotional virtual reality systems utilizing the sensations of motion, touch, sound, and smell for clients such as Buick, Pennzoil, Red Baron(TM) Pizza, and the U.S. Army. For more information, visit the corporate website at http://www.virtrasystems.com , or the training/simulation website at http://www.virtratraining.com .

This press release contains certain forward-looking statements. Forward- looking statements are generally preceded by the words such as "plans," "expects," "believes," "anticipates," or "intends." Investors are cautioned that all forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from current expectations. VirTra Systems urges investors to review in detail the risks and uncertainties contained within its filings with the Securities and Exchange Commission.

     Media Relations:
     MPH
     Jed Wallace, publicist
     Los Angeles, California
     310 234-3200
     jwallace@mphpr.com

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