VirTra Systems, Inc. (OTCMKTS:VTSI) Is Up As Gun Control Take Center Stage

Source: ABC News

There's no hotter topic in the US right now than law enforcement use of deadly force. This attention has proven to be just what VirTra Systems, Inc. (OTCMKTS:VTSI) needed to pick up some upside momentum across the last quarter or so. President Obama spoke in Dallas on Tuesday to address the five police officers killed on duty, and media scrutiny surrounding the situation is set to intensify in the coming weeks and months. There's every chance, therefore, that VirTra could extend its year to date gains.The company is up 125% since April 1.Where does VirTra fit in to the picture? The company develops, distributes and sells firearms training simulators. Its current lead products include a 360-degree system designed to mimic real world deadly force situations in large spaces (commercial, government, that sort of environment) and, for the smaller, domestic environment, a 180-degree system.On July 7, the company announced that it had received a second order for delivery of one of its lead products types – law enforcement simulators – under the previously announced indefinite delivery/indefinite quantity (IDIQ) contract by the United States Department of State (DOS). Right now, it's an order worth just shy of $1 million, but going forward, it could be worth up to $40 million across a five-year period.Bob Ferris, CEO, had this to say:

We are pleased to have received this delivery order to supply additional firearm training simulator systems under this IDIQ contract in support of the U.S. Foreign Assistance Program. Our commitment is to supply the most effective training simulator equipment available, while exceeding our customer’s expectations. We are proud to be working with the DOS and look forward to a long and mutually beneficial relationship.

This isn’t the only government contract the company has picked up recently, either. At the end of June, VirTra reported the awarding of a contract worth $1 million from the Australian Border Force.Ferris, again:

It is an honor to add the Australian Border Force to our expanding list of large international customers who have selected VirTra’s industry leading training simulators.

Government work is big business, and can make the difference between success and failure in an industry like this. Boeing Co (NYSE:BA) relies heavily on government contracts – it picked up more than $16 billion worth during 2015 alone. Lockheed Martin Corporation, the biggest government contractor in the US by dollar spend value, (NYSE:LMT) pulled in $36 billion of government funds across the same period.The takeaway here is that economic forces are combining with general sentiment to create a perfect environment for companies like VirTra to increase sales, and the contracts it is picking up prove it can take advantage of this environment. As more contracts come in, further gains should follow.Finances look strong for a company of this size as things stand, with the VirTra reporting circa $2 million revenues during each of the last three quarters, and pulling in an – albeit small – positive bottom line across the period. Cash at last count came in at $2.35 million, so the only real risk at this point is the delivery on its contracts. The company needs to build the products it sells, and while the upfront capital associated with the government contracts will likely cover the majority of the build costs, VirTra will have to fund any unforeseen shortfall. There's also the potential for a near term correction as longs unwind and book speculative profits.We'll keep an eye on things as they play out, and notify our subscribers as the implications of the big government contracts become clear. Subscribe below to get our interpretation of all the pertinent info as it comes in.Disclosure: We have no position in VTSI and have not been compensated for this article.