To OTC Journal Members:

My ongoing focus on the penny market has led me to one last idea for the month of July. In the last couple of weeks I have heard dozens of stories. They all want a feature write up. The problem- upside potential. Investments in the penny market are risky. There is nothing wrong with risk as long as there is commensurate upside potential and a suitable amount of money is invested. I'm only interested in situations with strong upside potential.

I continue to believe there are many $.05 to $.20 stocks which will find their way up to $.25 to $.50 in the next several months. I also believe the larger cap names on the NASDAQ are overbought, and due for an extended pull back. September could be a troublesome month, with the Bull returning stronger than ever in October.

If I'm looking in the nanocap arena, I might as well serve up ideas which have enormous upside potential and home run opportunities. Recent ideas fit the bill- FMLY will go berserk with a hit movie; AMNM has awesome video streaming technology; IMTO has massive profit potential in the burgeoning PEO market.

Each of these stocks could trade up with the market, and each of these stocks has huge home run potential. Today's idea has nearly unparalleled upside potential from current levels. This company is entering an entirely new market segment which could lead to substantial high profile sales. The stock is near the low end of its historical trading range. All in all- an outstanding speculation.

For your consideration:
 

Trading Alert- Virtra Systems, Inc (OTC BB: VTSI)

Whatever happened to Virtual Reality? Five years ago it was everywhere. A favorite of Hollywood, we all believed suits, goggles, visors, and helmets could put us on the virtual ski slope, beach, or in a romantic encounter with our personal virtual fantasy.

Virtual Reality is all about using the interactive capabilities of computer driven environments to replicate an experience. Despite falling off the media's radar screen, virtual reality is alive and well. One Texas based company has had some commercial success with Virtual Reality products, and is now changing course towards a much more vibrant market than in past efforts.
 

Virtra Systems- It's Out There Now

Have you seen this truck at a NASCAR race or at the grand opening of a WalMart store? This is the Pennzoil "Vrooom" truck. Used primarily for promotional purposes by Pennzoil, patrons go in one door, have a virtual reality experience, and exit out the back.

The virtual reality experience takes you on a tour of the inside of a car engine. Hosted by Jay Leno, you enter the interior of the engine and look around. You actually squirt oil on various engine parts. Near the end, the whole experience transforms to you driving an Indy car around the track at the Indy 500.
 

The experience is complete with motion, sight, sound, and even smell. The odor of oil, exploding gases, and burning rubber actually invade your sinuses.

People enjoy a similar kind of virtual experience courtesy of the Red Baron Pizza chain. Red Baron fields a team of biplanes which performs at air shows throughout the country. A promotional virtual reality experience truck also follows the tour. Patrons experience flying the aerobatics aircraft.

Here are three kids enjoying the experience.
 

Virtra Systems (OTC BB: VTSI) - What's Coming

In addition to the Virtual Reality promotional products Virtra Systems sells, they have also been successful in the amusement market. They had installations at many of the major amusement parks like Six Flags, but have now exited that business. They provided the virtual reality experience at their own expense and maintained them with their own staff in return for a percentage of the gate. They found this business was unprofitable, and sold the rights to manage that division.

They continue to pursue potential new customers in the promotional market, but a new product line for a specific market is far more exciting.

Virtra Systems is aggressively entering the "Judgmental Use Of Force" market. Pictured here is the new IVR-360, introduced on the internet for the first time today, which is a virtual training environment for law enforcement or military who might find themselves in a potential "Use of Force" situation.

The virtual amusement market is estimated to be about $6 billion annually, but the Use of Force Training Simulator market is estimated to be about $36 billion. This market is growing rapidly, spurred by growing fears of terrorism and world wide conflict in our Post 911 world. The current budget has about $37.7 billion earmarked for homeland security and $400 billion set aside for defense.

The ''fixed" version provides a full, live, 360 degree training environment. No head sets are required, and the trainee uses the actual weapon which would be used in the field. This is not a screen at which you point a plastic gun. It is also the only full 360 degree training system available on the market today that truly simulates a high stress situation.

The hardware in the fixed system sells for about $750,000 without the custom designed scenarios that are created according to the client's instruction. Pictured here is the control panel where the trainer monitors the performance of the trainee and serves up the various training scenarios.

Virtra Systems has also developed a portable version of the Judgmental Use Of Force training system. Here is a mock up of the portable version, which sells for a mere $105,000. However, once purchased, Virtra still has to create training scenarios based on the customer's needs, which can lead to substantial add on sales after the initial purchase is made.
 

Conclusion

One year ago Virtra Systems was trading at $.40. Today it is about $.10. One year ago the company was focusing its efforts on the $6 billion gaming market. Today it is focusing its efforts on the $36 billion Judgmental Use of Force training market.

There are only 40 million shares issued and outstanding, meaning the company's total market value today is about $4 million. Based on March quarterly sales figures, the company is currently enjoying about $1 million in annual sales at this time.

This is another penny stock I believe could easily be trading at $.25 with a few positive developments and a more cooperative market environment. The stock is probably entitled to rebound to $.15 along with the penny stock market, but higher levels are in the cards with high profile sales of the new training simulators.

Virtra Systems is working diligently towards penetrating the training simulator market with Governmental Agencies and the military. If sales start to come in, this stock will grow wings and take off. 
 

Here are my thoughts on VTSI:

• Buy up to $.14- I believe the stock is entitled to rebound to January/February levels.
• Price Target- $.25 with a 90 day window in time. Let's give this company some time to deliver sales of the training simulators. One sale to the right high profile customer could send this stock rocketing up the charts.
• Stop Loss- $.05- worth the risk of half your risk capital versus the upside potential.

These products represent the future of the company, and considerable profit potential. If the government agencies start buying these trainers, you will wish you owned more.

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

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