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SirFelix,
As you are in the world to please me and other board members, could you find another graphic? The old Felix had charm, great charm, but this one is a mere automaton.
Thank you.
am glad that sense is prevailing (or is it shared desperation?). is good news that Kelly is involved again.
a personal note. i bought into Virtra because i was following Arotech and was impressed that Kitchen would jump ship.
he seems to have made a mistake, though perhaps the personal benefit outweighed the weakness in sales.
Christopher Hitchens mentions STP:
"A ... forward approach to Nigeria, São Tomé and Príncipe, and the other countries of Western Africa that are under attack by jihadists and are also the location of vast potential oil reserves, whose proper development could help emancipate the local populations from poverty and ourselves from dependence on Middle Eastern oil."
http://www.city-journal.org/html/17_1_urbanities-steyn.html
i assume that many of us either have this guy on ignore or are skipping his posts. i suggest that everyone do so, forever.
yes, this note itself breaks the discipline, just this once.
It's interesting that so many are now talking about SEO giving up control. From your lips to God's ear.
I think that there have been studies (Harvard Business School kind of stuff) showing that companies with control by one or two are worth measurably less than are companies with a distributed shareholder base.
How could it be otherwise? The price is discounted to take the power situation into account.
Another aspect of Offor's life situation.
http://www.jihadwatch.org/archives/014246.php
abstinence is next to godliness. <eom>
yes, you have a point. he is not legally manipulative, only manipulative in a human way. and the effect (whether the price is up or down) has no relevance.
i like the dogs, dislike the gaming.
this is quite specific. is it quite legal?
i like your cross-eyed dogs, but am also aware that folks have been successfully prosecuted for stock manipulation. or for attempts at stock manipulation.
Unfortunate that no one is in line to do a bridge loan until dollars come in from sales and until a new proxy.
Also... I suppose it would be too expensive to handle the paperwork to do a share-purchase equitably, but existing investors should be invited to buy shares at the preferred price, so that investors can continue to own the same percentage of the firm.
"Equitably" would mean having the right to buy shares in line with how many you already own.
"I’ve got the purchase orders in hand, and we can’t produce those products... "
Does a failed proxy mean that "we can't produce those products"? Most here seem unwilling to risk an assertion of shareholder rights in this case.
The decision (at least here) is that we ought not leave open the possibility of a delay in producing product, with the potential for lost contracts now or (because of a bad record) in future.
We will pay more in number of shares because the price per share is discounted to reflect the excessive number of authorized shares. That's the unnecessary price, even if the story works out with the highest level of management integrity.
the variations are as follows (but someone please correct me if i'm wrong): if you send in a blank proxy, the vote is "no." if you have share certificates and fail to vote, the vote is "no." if you have shares in street name and fail to vote, the vote is "yes," although one board member suggests that this may not be a firm rule.
firm enough for those of us who think that a "no" vote is probably a long-term benefit to shareholders but is willing to let go of the argument. (my votes will not make a difference one way or the other.)
i abstain, thanks. <eom>
They seem to have a running tally. Have my shares in street name and am inclined not to interfere with the majority opinion on this Board. (And how often does a 3-star General leave a message on my answering machine, after all?) As of now, am not intending to vote, which is an implicit "Yes," though I try not to think of this.
Would be good if, during another proxy (for a merger, perhaps) the firm would raise the stock price simply by reducing the number of authorized shares.
OT: Things not to do if you are in a sales situation or negotiation:
a) Characterize the other's behavior or motivations
b) Say "You can afford it" (which is another kind of presumptuousness)
"... turning shades of green." I do not know what the source of your animus is. If I knew, I might have a better insight into the company's situation.
As it happens, Kelly's comments were completely in line with what had been posted.
Many of us are glad to hear his comments. If you aren't, I suppose you can just remove him from the Board. As it is, you are a kind of attack dog.
A mystery.
Firm says that the comments were more general, as in "expecting 2.5 - 3 million by end of year." Is conscious of selective-disclosure requirements.
The possible sloppiness is another reason to have a lawyer on the Board, especially as the 7.4% owned by a particular lawyer might become important.
Whatever. People kill golden geese all the time.
OT:
The United Way realized that it had never received a donation from the city's most successful lawyer. So a United Way volunteer paid the lawyer a visit in his lavish office.
The volunteer opened the meeting by saying, "Our research shows that even though your annual income is over two million dollars, you don't give a penny to charity. Wouldn't you like to give something back to your community through the United Way?"
The lawyer thinks for a minute and says, "First, did your research also show you that my mother is dying after a long, painful illness and she has huge medical bills that are far beyond her ability to pay?"
Embarrassed, the United Way rep mumbles, "Uh... no, I didn't know that."
"Secondly," says the lawyer, "my brother, a disabled veteran, is blind and confined to a wheelchair and is unable to support his wife and six children."
The stricken United Way rep begins to stammer an apology, but is cut off again. "Thirdly, did your research also show you that my sister's husband died in dreadful car accident, leaving her penniless with a mortgage and three children, one of whom is disabled and another that has learning disabilities requiring a huge array of private tutors?"
The humiliated United Way rep, completely beaten, says, "I'm so sorry, I had no idea."
And the lawyer says, "So...if I didn't give any money to them, what makes you think I'd give any to you?"
RoseBowl, I may have misunderstood or forgotten... is your perception that the vote associated with Virtra shares (if the shares are in street name and have not voted)is "No" by default? (I gather that shares held outside of street name are "No" by default.)
The company seems to believe that the company can include unvoted street-name shares as Yes and that the proxy's success is hindered by those shares only if street-name investors explicitly vote No.
The most interesting angle is that your return would reassure the market and would give you some input into the direction of your investment.
Why do I keep remembering Rodney King?
The asset-purchasing deal is gone; and I don't see why the company is better off without you, even if you were to dissent.
You might think about this in a different way.
And in this analysis, is Kelly failing to give a resounding "Yes" now out of pique? Could be, but like SirFelix, I assume that Kelly is trying to get something from the company (a fifth Board seat is open, after all). I suppose you're right and he votes "Yes" in the end, but maybe the company should be approaching him. The market would be reassured if Kelly (a party in a lawsuit that would be put aside) joined the Board.
Unlike SirFelix, I see no shame in Kelly's trying to work the deal. We're talking about a simple negotiation.
I wouldn't want to be a fly on the wall at Virtra, by the way. Do you sense that these folks know what they're doing? They claim to be "vigorously" fighting a debt that everyone here, at least, seems to assume is real. If the Board's perception is right... isn't this a stupid way to do business?
We could send Kelly unmarked proxies.<eom>
am still long and would prefer that the guy counting all his money is what the pie represents. (i can't believe, by the way, that i'm discussing an oilphant clue!)
i don't think the uptick on reasonable volume is caused by pie pictures or their interpretation. like many, i've come to be afraid to hope for anything.
mrogop, be of light heart. it was a joke.<eom>
Sing a song of sixpence a pocket full of rye,
Four and twenty blackbirds baked in a pie.
When the pie was opened the birds began to sing,
Oh wasn't that a dainty dish to set before the king?
The king was in his counting house counting out his money,
The queen was in the parlour eating bread and honey
The maid was in the garden hanging out the clothes,
When down came a blackbird and pecked off her nose!
Which is to say, Sir Offor is going to mutilate the shareholders.
Well! We are a happy band.
In France, there are also happy bands, "youths" who ignite an average of 100+ cars a night. That's a new normal, not counting the occasional attacks on buses and subways.
In England (as reported here), the hapless multiculturalists are now dealing with 30 major terrorist plots.
In Sweden, the lovely blonde women are doing what they can to make themselves look plain in Malvo and other cities, lest they partake of the huge increase in rapes.
Similar stories are elsewhere in Western Europe, a growing horror. Virtra could help contain it.
RoseBowl, if those are the choices, and you think that voting "yes" now might be the best alternative... well, your saying so might affect folks on and off the Board.
Is part of your aversion to making a decision now (when you might be able to affect the outcome) that you're seeking something from the company, if only respect, if not a seat at the table? For what it's worth, I see nothing wrong in that; but if that is not what you're thinking, please... bring folks into your kitchen and decide what to bake.
It seems to me a reasonable interpretation that if you are not saying "yes," you don't think that "no" is worse or at least not much worse; and might be better. That's how I see it, but you know, SirFelix's comments about the firm not being able to fulfill its current orders sits in the back of my mind, waiting for an insight from someone wiser than I.
Am wondering if a reverse without shareholder approval would bring on lawsuits.
"I apologize if my debating strategy has offended you in any way."
It has, and I forgive you, but I will always be wary. And our physical relationship is over.
Oh! Maybe we'll hear after all. <eom>
If you were Kelly and wanted a "Yes" vote, wouldn't you say so? You might feel yourself restricted from making the "No" explicit, as you still might be on minimal speaking terms with the powers that be.
Kelly's silence is telegraphing "No."
"stop telling the company how to run itself"
In the matter of the vote, I'm telling the company how to treat me and how to run the business that I own, to the exact extent that I own it.
You don't need to answer, I'll be quiet now.
"What prevents another proxy from being sent out next year adjusting the OS downward?"
I assume you mean the AS. A reduction is unlikely because it reduces the power of the Board, taking away what some have called "the tools."
Nothing wrong with an advisory group. The CEO wanted to hear opinions of folks he trusted. He has every right, and it was in our interest that he listen. A greater danger is a small group of people (that is, members of the Board) who may have worked closely for a while and have come to agree with every idea that comes up. Whatever your opinion of Kelly, you might cut him some slack on his instituting an advisory process that matched his personality and his way of making decisions. On the other hand, the good doctor's lack of understanding about authorized shares caused me to wonder about the quality of insight offered at those advisory sessions.
"There appears to be insufficient time to adjust the proxy after it was submitted to the SEC."
I believe that the General is saying, "I'm a good man (although not sure of every detail of corporate governance) and have made a decision. We will not back down now."
Is it really a case of "We CANNOT back down now"?
I wonder what people have to say, not about what ought to happen (haven't we said it all, with some sense on each side?). I'd like to hear disinterested opinions on the tally.
One poster suggested that we "face" that the proposal will not pass because, among those relatively few who will vote, at least 15 percent will say "No."
If you consider the case without emotion, does that seem to you a reasonable prediction?
I would guess that Kelly votes "No" unless they deal with him, by the way. Rosebowl, have you taken a vow of silence?
Thanks, Cee-It. <eom>
I like ztect's comments; but my sense remains that the request for 400 M is excessive and that the firm will not end if we say "No" but that we'll benefit from the Board's having to deal with the crisis. Their negotiation with other firms will be different after a refusal; they will be sure not to distribute 10 million here, 10 million there; they will not bring us something that is so questionable in future; and my guess is that the General will soldier on and prevail, as would be in character.
It was simply a mistake for General to ask for this level of increase. Most every stock failure I have ever experienced has involved dilution. (Yes, I know the difference between... etc.)
If you have a firm that has $2.5 million in purchase orders and owes $1+ million... I may be naive, but believe that something will turn up if we force the issue.
I'd like to hear Rosebud's opinions. In truth, I'd welcome RB's being asked to take his place on the Board.
FWIW, my vote will not make a difference in the overall scheme of things; and I wouldn't sell no matter the outcome.
Notes on Conference Call. (I missed one question, and these notes are not verbatim; hear the playback for the reality.)
Haag: Major General Dalby has seen battle, has extensive experience in contracts.
Dalby: Expect many meetings over the next year. My goal is to grow the company by supporting and assisting sales, R&D, creating new markets, personal hands-on involvement with worldwide contacts especially in Middle East, as in anti-terrorist training.
I entertain mergers, joint ventures, acquisitions of complementary business units, and any growth strategy. We have entered into a critical time, with opportunities for growth. Sales are growing. We are near the max in shares of reserved stock and must request an increase in authorized shares.
I value each of you as a shareholder. The proxy vote schedule is for the 27th of November and we're asking for 400 million shares more. Why that number? Expensive and time-consuming to ask for another proxy. I'd just as soon ask for the entire amount and ask you to trust me to use the shares as you would expect me to do.
Seventy million of the current (nearly) one-hundred million are free-trading shares.
When we went forward, the price was 2-3 cents and we blew through many shares quickly. Having the extra shares would be helpful to me. I have no plans to increase the float by any great extent. I want to protect the issuance of stock and to place restrictions to the extent that I can. I have shares, too, and have a vision of a strong, diversified company. Before I would ever enter into mergers, and so forth, I'd want the shareholders' consent.
Great damage would come to this company in the absence of shares. Two critical needs. Duchess issues debentures, which go back to 2002. The cost to service this debt has been hard to sustain. We owe about 1/2 million dollars to pay the Duchess debt. They've been issued and sold about 30 million shares, in open market. Many purchase orders are lined up, but it's hard to overcome that number of shares in the open market.
We've paid $4 million to Duchess. Am not sure what it will cost to pay this off. Retirement of the debt will rid us of penalties and fees. We are close to going into the penalty box with Duchess debentures. Must raise equity in a private placement or issue them more shares until we can pay them off.
Second, we have an IRS obligation, created many years ago and left unresolved by previous management. We have been notified and must settle up with the IRS. Can't pay off that debt without a private placement of stock.
Third, we are addressing a recent lawsuit from Jones & Cannon. Our position is that we vigorously defend the shareholders. Our lawyers Provost Humphreys advise us not to comment on this case.
Fourth, we need working capital to handle 2.5 million dollars in purchase orders, from every major branch of the armed services, from police departments, and from overseas; and we see the trend continuing.
We have certain long-lead inventory items that must be paid for upfront. I'd like to maintain an inventory for quick turnaround, to improve cash flow. Would meet the needs of our joint venture with TI Training, as many as 100 single-screen products in the first year. These are small-margin systems, but in aggregate, this is $2 million in this joint venture alone.
We enjoy tech superiority but must obtain an R&D program, which is non-existent now. Must improve margins, reliability. We want to meet the need of our current customer base. Now have one vendor for certain inputs. If something happens to that vendor, we're shut down for that product.
Finally, trade shows have been almost non-existent. We need to advertise along with our competitors to increase sales and improve our bottom line.
I have no plans to issue other shares and will work hard to ensure that any shares issued are restricted.
We need to register about 40 million shares now to handle the need. Am quite concerned about future prospects if we cannot register those now.
I cannot take credit for activity and sales of late. Virtra Systems had the best 3rd and 4th Q ever. POs are more than what the firm has received in last 2 years.
Have met a number of potential clients in the Middle East. Bob Ferris is a great young man. Other folks, too, including expert salesmen in the field: Tom Milkes (Immersadome) and Kitchen. Steve Haag and Edie Seville. These are the people who make the company a success.
Q: Why not bank financing?
A: Little can be obtained from a purchase order financing. Third-tier lending interest rates are excessive. We've tried, looked at every possible source.
Q: Why so many, so soon?
A: Best to have the known quantity in place. No value in going back month after month, year after year. While we have the opportunity, let's do it now. Trust. We could go through at 2 cents a share pretty quick.
Q: Won't the increased AS lower the PPS? And would it be expensive to go piecemeal?
A: I'll get back to shareholders on the rationale.
Q: If you'll issue 40 million now. Where will they go?
A: We can't move forward until we have the right. No shares are promised for compensation.
Q: Are we at risk at not fulfilling the orders?
A: Yes. We have pretty good margin for buying product. Our terms and conditions are payment net 30.
Q: What about the reverse merger?
A: All I know is what shares we have.
Q: How much do we owe the IRS?
A: We don't know the exact amount. It's sizeable. A fairly serious amount for this company, in payroll taxes.
Q: If the Board members acted against the best interests of the shareholders re the events that led to Kelly's resignation, what protects us now?
A: I have a new Board, only one of whom was there before: Bob Ferris. We now have Michael Kitchens and Frank Stanley, with Cushman and Wakefield. Nothing sinister about the 400 million shares because I felt that with that, I can use them wisely and move forward and not have to raise equity to run the company. Not my private shares of stock, is going into the corporate treasury, to use judiciously.
Q: You might leave. The Board members seem to have acted in a questionable way before.
A: There was a confidentiality agreement on the prior situation, so I'm not at liberty to discuss that. I've never cut and run, and I don't intend to do that now.
Q: Can you give us insight into the sales pipeline beyond the current purchase orders?
A: Greatest percent increase in sales was in Tom Milkes' business. Am going to see him at Case Western. A lot of interest in non-military applications. As we see military budgets being strained, one area that might be left wanting is in the training arena. Interested in domestic law-enforcement, border requirements. I met with the 3 top businesses that deal with security, one of whom had more than 400 trained security officers, 50 sniffer dogs in Kuwait alone. They would be a prime prospect for numerous systems, and their training requirements would be significant. Terrorism will be here for a long time. We seek a certification process for our systems and to joint venture with entities that do drug screening and background investigations, as would be useful to Middle East.
Q: Is it safe to say that 1/3 of the 40 million is for Duchess, 1/3 for IRS?
A: Pretty perceptive, but we just don't know. Not cash out of our account to move the product out the door. If we can get past this first funding, we can leave the stock alone, we can leave the stock alone.
Q: How many of those 400 million will be used up in a merger?
A: Can take care of business with 40 million, can then focus on growing shareholder value by increasing the market cap, to find successful entities and bring them in as business units. I can read a balance sheet pretty well and can hire others to do so, but want entities that can add to cash flow. Hard to sustain stock value more than it is. If we can get $20-25 million yearly sales, would take 2-3 years; but we might be able to do this more quickly with acquisitions.
You've got to trust the Board.
Q: What happened to the purchase of the 3, then 2 companies?
A: The announcements were premature. We have no shares with which to shop. The added AS will not affect the value of the stock; but not handling the situation now will. Are boxed into a corner. I don't want to be faced with any alternatives but success.
Q: How much debt will remain?
A: Should be none. Will be close (in 1Q 2007 at the plus column, as we collect on invoices.
Q: Why not go for 100 million shares now? And what about the fiscal responsibility before? Non-payment of taxes to the IRS, for example.
A: That's conservative logic and has merit. But what if it goes down to 2 cents again? I don't want to breach fiduciary responsibility. If we can't resolve this, I won't be here. Am trying to improve the value of your stock. I want to be here for 2-3 years to see this executed. Would love to hear your thanks.
Q: Wouldn't it increase the negotiating position by being refused? Would this be a terrible situation?
A: I don't think we'd get to another proxy. Not because of me. I want to operate from a position of strength. Don't want to say that we'd have no choice.
Q: Wouldn't you want to grow the company organically and thereby work from a position of strength?
A: Want to be able to go to trade shows, demonstrate products, and this is the first priority. If I can't demonstrate that we have the capability to leverage our own product, why would they trust our products to our management? I'm asking for the leverage as a publicly traded company to look at private companies that are complementary in nature.
Q: What is your vision with the 400 million? And without?
A: Our biggest key to success is the four issues described earlier. You'll see a corresponding value in shares.
Q: Is there a vehicle to hold those shares in some sort of abeyance pending a further approval, as a protection to shareholders?
A: I wouldn't venture to respond. I just don't know.
You've challenged me, and it's been positive. Thanks.
Haag: www.virtra.com or call 832-242-1100.
as in, takes in a foul odor? yes.
i don't know for sure who or what is right, but have an opinion different from yours and seek clarity.
can we let this go now?
"how vindictive someone is capable of being" -- ok, sounded like evil to me, but i see your point. i don't believe i spoke of slinging mud.
the "vindictive" statement suggests but does not say that you mean kelly. i think folks should say what they mean.
spiteful or a negotiating tactic.
having the issue become public makes sense if kelly's in the right.
"Only people who have seen it first hand can really know how vindictive someone is capable of being when they feel things haven't gone their way."
So, your perception (guess? insight?) is that Kelly is the heavy in this deal. Are you saying that you have seen his evil?
I don't like the undercurrent of statement in place of a straightforward statement. But maybe this is enough of commenting on your purposes and knowledge.
The contributor who said that we can't resolve this here is quite right. Am unhappy that the resolution of the legal bill will be more expensive than necessary, whoever is to blame.
Two statements do not jive:
From today's VTSI statement: "The current management and board of directors disagree with the merits of this case and intend to contest these matters vigorously."
From Rosebud's bud: "This relationship, and the growing amount owed to the law firm, were disclosed in every single 10-K and registration statement over the years, which were signed off by all the directors."
As my saintly grandmother used to say, "W T F?"