VirTra Inc (VTSI)

[justanotherfool]

Probably no reverse.

The stock is diluting, as we all know, to pay of debt, but:

either the dilution will slow,
or the same dilution will pay off more debt.

If the company has a fast profit, then the dilution can end quickly, leaving about 55Mil shares.

For example: If the stock goes above $1, due to having a break even quater, then the next 5M dilutions will clear the most urgent debts (over 50%).

With more likely perfomance, you could expect that in 2 years, there will be about 60M shares, and less than 6M debt.

If sales continue to grow, they could exceed 15M per year.

Profit excluding debt interest at about 25-30% of sales = 4 Mil.

At $1 price, that gives 60/4 which is a PE of 15, so $2 price (PE 30) is not unreal.

But: to get to $4, thats a PE of 60.

to get to $4 price, assuming a few years later all debt is paid, they need to increase revenue above 15, increase profitability above my estimate, buy back stock or show continued strong expansion.

I don't know if the Dutchess can be repurchased at a discount (have to read the small print).

Still there are a number of measures available other than reverse split.

So: I don't think the dilution is that bad, and I don't think the reverse is likely, but it's tough out there, and they just may need to do this to get the per share price above $4.