Shares of Virtra Systems are enjoying a little rebound today for the first time in a number of months. The company announced the installation of one of its systems at a branch of Utah Law Enforcement.
After trading in the $.32 to $.45 range during the second half of ’04, Virtra has been virtually cut in half over the past 6 months as the company has been existing in a complete vacuum of news. Orders for their virtual reality judgemental-use-of-force simulators have simply not been coming in despite a dearth of positive media coverage and kudos from the military and law enforcement communities.
There is one branch of the US Military that has verbally promised substantial order flow to the company, but verbal promises do not equate to sales. Like all branches of the US Military, their spending has been frozen for anything but essentials. Our military is pretty much out of money right now.
The supplemental budget working its way through Congress needs to pass and find its way to the President’s desk. This will provide an additional nearly $100 billion for military spending. The supplemental budget could be on his desk by the end of this week.
Virtra is not alone in its drop. The entire homeland security/defense sector is trading very poorly these days, largely due to the lack of government spending.
The passing of the supplemental budget will start the clock ticking. I would guess within 30 days Virtra will be able to announce significant new order flow. There are no guaranttees, but from what I’m hearing I like our chances.
In the interim, here are some thoughts as to whether or not the stock is a buy. As you can see, the stock poked its nose above the multi month downtrend line. It’ s too early to call it a trend reversal, but it’s a step in the right direction.
If you believe that past performance is the best indicator of future performance, VTSI is a high risk buy right now.The last time the stock traded to $.20 was January of ’04. If you had the courage to buy at that time, you doubled your money before the end of ’04 if you sold.
The management at VTSI will admit it has been a rough six months. However, their key customer is broke. Once money flows back to the military, money could flow to VTSI as well, and that will hopefully translate into a rebounding stock price.
For those with a propensity for high risk situations, this could be a bargain basement opportunity.
What do you think about the results? Are You still confident? Bye
Editor: I don’t know if you would call my attitude confident. I know the company is confident they will have major order flow from the US Military starting with funds from the Supplemental Budget and continuing in the fiscal ’06 budget- next October.
I believe the stock is a buy for people with high risk capital. When I say high risk- it means money you could afford to lose in a worst case scenario. I believe the best indication of future performance is past performance. In ’04 when many gave this company up for dead, the low was $.20. The stock more than doubled over the next 9 months.
If the orders flow from the military, the stock will behave better. The next thirty days should tip us off.
The quarterly results are meaningless. All that matters is contracts with the US Military in the future.
Is there a chance that the orders from the military could be canceled? How important is VirTra`s product to the military?
Editor: According to the company, their product is very important to the training of the military, especially in urban terrorist situations. Right now they have no new orders from the military, but believe they will have a bunch from both the supplemental budget which passed last week, and the 2006 fiscal budget, which starts getting spent on October 1. If they are right, shareholders should do very well from these levels. If they are wrong, be prepared for a loss. I don’t know for sure which it will be, but the company has a high level of confidence.
the stock has dropped back to the .22 level. Do you believe that it has bottomed? I got in at .23 and just curious as to what you think will happen. Thanks
Editor: I think we could easily have a repeat of 2004 if the company gets the military orders promised. The supplemental budget has passed, so we’re closing in on time to put up or shut up. Since I don’t control the gov’t, I can’t make any guarranttees, but I know the company has a high level of confidence.
I believe VTSI has got to be one of the most important training systems for the military that could save many, many lives after learning the skills provided by it’s virtual training and response lessons. It is like an actual scenerio that happens in Iraq and around the world every day and you are in the middle of it with the responsibility to observe and react to the situation. They have the capability of all the rights and wrongs and what will happen when you make a right or wrong decision. With it’s equipment you will learn the correct way to respond to a situation or get the virtual feeling of being shot without dying and learn very quickly the way to respond to an everyday way of life in a country full of insurgents. When the government releases the funds to purchase these virtual reality systems the stock will react in the way it should. UP! There has not been one negative peice of press on this stock and I can’t believe the way it has been moving. As long as the goverment funding goes through I don’t think there will be any risk with this stock at all. Right now the stock is at a very good price and if people react they way I predict they will, profits will be made for all in my opinion . Do you agree? Thank you, Mike in B.C.
Editor: As I have been saying, the company needs to get the military orders they have been promised inked. Shareholders are losing confidence, and it’s being reflected in the stock price. I know the company has a high level of confidence the orders will come. Right now, the market does not agree. This one is oversold, and will bounce easily when the news comes, but no guarantees. I agree with your assessment of the technology.
any more news on or from this company?
Editor: No, but there certainly needs to be the way the stock is selling off. They need orders from the military.
How are we supposed to find out if the government is going to fund this training and who would be the sector to call or write and urge them to fund something that will save American lives?
Editor: The company is very actively doing that themselves.
Has the supplemental budget come through? I noticed VTSI just installed it’s first military system. Could be the start of things to come if it is finally getting funded.
Editor: the $100 billion supplemental budget has passed. Yesterday’s Ft Hood installation was old business. The company has been promised some big time new business out of the supplemental budget, and huge new business out of the ’06 budget which becomes available Oct 1. If those orders come through, the stock should do extremely well.
Dear Mr. Editor, do you think VTSI is a good risk at this time? I have been holding for a long time and have seen VTSI fall and now look as though it may be coming back. Would you or do you have any prediction on what would be a good sell price? Thanks.
Editor: I don’t believe it is a good risk today. It might want to trade down a little before trying to go higher. If they get the huge pending military orders, a good sell price would be $1 sometime in ’06. If they don’t, a good sell price would be right now. If you could tell me which it’s going to be, I can tell you what to do. I’m optimistic, but that is my nature. To summarize, I believe it is a good speculation for some high risk money- anotherwords an amount of money you could afford to lose.
Should know something pretty soon with the military paying a visit. I’m betting a big order is coming. Why would the military go to them when they have all the clout. I would also guess that they have already checked out the competition at the trade shows.
Editor: Thank you for your contribution, and I hope you are right.
Why are all the bids/asks for VTSI shown on Level II at 500?
Editor: They are all like that. Market Makers never show their hand. The only place you can accuracy on those is in the electronic direct exchanges.
DEAR SIR, YOU HAD PREVIOUSLY MENTIONED THAT IF WE DID NOT RECEIVE NEWS OF MJAOR MILITARY SALES CONCERNING IVR 4G SIMULATORS THAT THE COMPANIES FUTURE MAY BE IN DOUBT. IT HAS NOW BEEN 90 DAYS WITHOUT ANY MAJOR NEWS WOULD YOU SUGGEST SELLING, HOLDING, OR BUYING SHARES AT THIS TIME? DO YOU STILL BELIEVE THIS COMPANY IS HEADED IN THE RIGHT DIRECTION? DO YOU HAVE ANY NEW DEVELOPMENTS CONCERNING MILITARY, LAY ENFORCEMENT AND OR IMMERSA DOME SALES? THANK YOU TEEROY
Editor: All I can tell you is what I am doing. The company holds about 400,000 shares, and I have decided not to sell. I have decided to give the company until the end of 2005 to deliver major sales news. If they don’t, I will take the loss and move on. If they do, there is huge upside. This is one of those stocks where it’s hard to make the right move. If you sell, they will announce a huge contract with a branch of the US Military the next day. If you hold, nothing will happen. It certainly tries your patience.
I heard way back that the military had made a verbal agreement to purchase VTSI simulators. They’ve made their visit and either kept up their end of the bargain or not. I think that if the buy did not happen we would have known by now. Knowing the government, a bunch of red tape is holding up the check and that is why we haven’t heard yet. What do you think?
Editor: I am hearing anecdotally that everyone in the space is having a hard time with purchases from the US Military. You would think they would be picking up the pace in war time, but just the opposite is happening. Our resources, both financial and human, are so stretched by the Iraq war that the US Military is not paying attention to solving some core issues. I have decided to give VTSI to the end of the year to start landing the contracts. If nothing happens by then, they will have missed the ’06 budget, and I will drop coverage.
Any news or comment about the situation? Thank you, bye
Editor: The huge orders they have been promised by a branch of the US Military have not come through yet. This is a big disappointment to the market. However, the problem is not isolated to VTSI. I have been hearing anectodaly that many supplier companies are having a hard time with all branches of the US Military due to all the resources being funneled into the Middle East. I am prepared to continue to cover corporate events through to the end of the year. If they don’t get something rolling out of the ’06 budget, which becomes available on Oct 1, it will be time to move on in my view.
Is now a good time to sell?
Editor: I don’t believe so. If you want to get out of the stock, why sell when it is quiet and no one wants it? Why not wait for some good development, and sell when the stock is in demand again. Despite the disappointments, the stock has a history of surges.
dear Ed.. What sources do you recomend for accurate up to the minute information on OTC companies? e.g. stock buys and sells, versus just volume… thanks Marc
Editor: If you are referring to live stock tracking software with time and sales information, I personally use eSignal. It’s expensive, complicated, and has a long learning curve to learn how to use. As a less expensive and easier alternative, you might consider http://www.alphatrade.com. However, most of the major online brokerage firms provide good systems to their customers for free. http://www.scottrade.com and http://www.ameritrade.com are two good choices for trading that give you low price trades and a free stock trading system.
Your comments to Mike, Carlo and recent blog entry are right on target. I’m work in military training environment and know first hand how the war has reduced training dollars for all of branches. VTSI is in a decent position becsuae we are all rapidly moving towards use of training simulators, devices, robitics etc.. VTSI partnering with SAMN is darn good move for them. IMHO, it is at a decent entry point to accumulate for a long term play. Alghough OCT is when new FY budget money becomes available, dont be surprised if orders are placed on hold. The war is driving this train.
Editor: It’s a frustrating problem. The right product at the wrong time. If they don’t get decent order flow out of the ’06 budget, they are going to have to deliver from International sources. As long as you realize it’s a long term play, you are going to be fine on this one. As Kelly Jones pointed out to me, we’ll know if there is going to be disappointment in this one if they start losing orders to competitors. There are only two, and both of their stocks are trading at 1/5 of their current levels.
One thing I don’t understand is why everyone seems to be clinging to the “Big” order by the military. VTSI has many facets to their company and they have proven to be the best product out there. There will be more orders coming from different sources hopefully soon. Like real soon I hope before my foot goes in my mouth. I want to see that big order too but I am not fixated on only one big order. I want to see the orders coming in from everywhere.
Editor: Because the promised large orders from the military completely transform the company’s profile. The ones and twos orders allow the company to continue to exist. The huge orders represent the upside for shareholders.
I have noticed lately that this stock which has hasn’t had much in announcements lately has fallen quite a bit in price on larger than normal volumes. Do you know what is happening with the company since phone call by President
Editor: I am going to provide a BLOG update later today.
I missed the blog update, what is the real deal?
Editor: Go back through the past BLOGS and past editions. You will find past editions on the left hand menu bar of the home page under profile archives.