VirTra Systems went on Mr. Toad’s wild ride yesterday. The stock, which has been drifting lower in a newsless environment of late, got clobbered and then rebounded all in one trading session.
VTSI traded to a low print of $.22, but managed to close at $.31 x $.32 for a $.01 gain on the day. Completely unfounded rumors were flying around that the company was losing business, going out of busines, etc. etc. It was all nonsense.
It is true that new orders have slowed down at the company. The US Military has become their primary customer, and new military spending is currently on hold as we await the approval of the supplemental defense budget.
Exacerbating the selling pressure was the company’s recent shopping trip for capital. The company has been putting out some feelers for funding requirements to finance future growth. The sleazeballs in this industry will short a stock to drive the price down in order to cut a deeper discount on the stock. The company has chosen not to pursue any of the pending proposals with new potential sources of capital. This might also help explain the rebound in the price as any unscrupulous sellers could have been covering .
Chairman Kelly Jones published one of his letters to shareholders mid day reassuring everyone that all the rumors were absurd, and that the company was fine. The stock came rocketing back. I hope none of you sold the stock in a panic as it traded to absurd lows.
The company is on the cusp of some major new business, but is being slowed by pressures on the defense budget. Patience is a virtue in this case.
The one year chart now has a very ugly glitch. As you can see, the long term uptrend was violated in nasty fashion to the downside, but the stock rebounded and closed .01 below the uptrend line.
Where we go from here technically is anybody’s guess. If you’re nevous about the long term propects for the company just sell the stock and get out. Yesterday’s action was technically very negative. If, on the other hand you have some patience and are long term, hang in there.
Not sure what the heck is going on with this stock, but it doesn’t give me a warm and cozy feeling. I hope their future isn’t tied to closely to government contracts and the budget. Nervous.
Editor: At this point in time the primary driver of their future business is the US Military. They have many verbal indications for orders, but right now the military is broke. They have been spending a lot of money in other places around the world. Until the supplemental budget passes, it seem like their military orders will be on standby. Therefore, if you are not a long term investors and are worried about where the stock could trade in the next several months, you probably should get out. On the other hand, they have developed a far superior product to anything out there. Nothing even comes close. When sales do ramp up, they will become the recognized leader in the field. You could be giving up that upside potential.
This is of interest, they restated: http://ragingbull.lycos.com/mboard/boards.cgi?board=VTSI&read=13252
Editor: Thanks for the contribution.
I’ve been hopeing for new postings on the status of VTSI…. Any updates on the horizon re: the defence budget progress..?? I’m down under, and follow your site with interest… thanks…. marc
Editor: VTSI has been very disappointing on the order flow side in recent days. If they had the news, believe me, I would cover it. They have a lot of pending orders with the US Military, but the US Military has spent its entire budget for this fiscal year. Orders are promised with the next budget, but there are on guarantees. Could pick up any day now. However, in light of the 2005 news flow, I’m surprised it has held up as well as it has.
Wow…after reading the 10ksb and looking at the numbers, VTSI is downright scary. I previously liked the stock and sold out last year after the first spike up because of the gap it left (at .17 I think, but I’d have to double check), with plans to buy back in when it covers. I think it will in the comng days. In any case, if it weren’t for the debt forgiveness, the losses would continue to mount (2.3M loss this year) vs (1.6M) last year. Also, the amunt of current liabilities is astronomical compared to current assets. They can continue to fund operations by printing more shares, but that will cause its own shakeout eventually…I’d have to agree with the accountants on this one that there is a significant going concern risk for the forseeable future. …bruce
Editor: I cannot disagree with any of your comments. It is highly risky. On the plus side, I can tell you they have some huge military contracts lined up when the DOD gets past its current cash crisis with the supplemental budget and next year’s budget.