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VirTra Systems Inc (OTCMKTS:VTSI): Skyrocketing Due To Government Contracts

VirTra Systems Inc (OTCMKTS:VTSI): Skyrocketing Due To Government Contracts
Written by
Aaron Smith
Published on
October 5, 2016
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VirTra Systems Inc (OTCMKTS:VTSI) is skyrocketing. The stock is up 50% in roughly the past two weeks, from $0.20 on September 19th to $0.30 today.For those who have been following Insider Financial, we've been touting VTSI for a while, since it was $0.11 in March and, again, in July, after the stock was up over 125%.As we stated in our last report, VTSI announced that it had received a second order for delivery of one of its lead products types – law enforcement simulators. It was an order worth just shy of $1 million but could be worth up to $40 million over a five-year period.If you've been following VTSI closely, you might have had some idea to the stock might rise because on August 31st every single share sold short was covered. Short interest dropped 100%, from 212,388 shares to zero.They are in the right place at the right time as gun control has taken center stage and the U.S. government decided to do something about it. As we stated in our last report,

"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."

A new announcement came on September 26th, VTSI stated on that it received two contracts from U.S. Customs and Border Protection, an agency within the U.S. Department of Homeland Security. Under the first $3.2 million award VirTra will be the sole provider of ongoing service and maintenance on law enforcement training simulators installed by the company under a previous contract. Under the second $9 million award VirTra will fulfill the purchase of additional V-300™ systems and accessories, for a maximum combined value of $12.2 million over the next five years.

Under its previously announced contract with the U.S. Department of Homeland Security, VirTra delivered and installed its V-300 multiple screen systems at 28 separate U.S. Customs and Border Protection field locations, all of which are currently in operation. The new award will extend service and maintenance of those systems and accommodate additional systems to be installed at existing and future field locations over the next five years. VirTra General Manager Jason Mulcahy commented,

“These sizeable follow-on single source awards demonstrate the value provided to the customer through VirTra’s unique firearms training and decision-making simulation products. We are proud to serve the U.S. Customs and Border Protection and other agencies within the Department of Homeland Security and look forward to continuing to exceed customer expectations as we expand this program.”

Additionally, VTSI received their third and fourth orders under the contract by the U.S. Department of State. This is valued at $1.4 million which involves the delivery of law enforcement simulators. The contract that was announced by the Department of State could result in up to $40 million in revenue for law enforcement training simulator equipment and services. These orders are presently valued at approximately $1.4 million and will consist of both multi and single screen training simulators, related accessories and training for three additional locations in Mexico and six new locations in Costa Rica. Bob Ferris, Chairman and CEO of VirTra said,

“We are pleased to have received these delivery orders under our IDIQ contract with the DOS to supply additional firearm training simulator systems for the U.S. Foreign Assistance Program. With these orders, we will have installed our training simulators in fifteen of the eighteen locations identified for this program to date, bringing the total value of the contracts that we have been awarded to approximately $2.6 million. We are proud to be working with the DOS and look forward to an ongoing and mutually beneficial relationship.”

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. We will be updating our subscribers as soon as we know more. For the latest updates on VTSI, sign up below!

Disclosure: We have no position in VTSI and have not been compensated for this article.

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