I had lunch with Kelly today...
Let me start this by saying that if you have never taken the time to talk with Kelly either in person or by email you are missing out. Anybody invested in or thinking of investing in VTSI should do their own due diligence, but part of that due diligence should include talking with Kelly. Not many CEO's would take time out of their schedule to answer your questions. Thanks again Kelly.
Now to the discussion. After talking about how UT is going to beat USC (go Longhorns) we started in on VirTra. I have outlined the major points of the discussion below:
1) The trip to Asia went well. The market is huge and should prove fruitful very soon. A sale is expected to be announced to an important military branch of a country in Asia. Sale could be announced before year end.
2) Company wants to go to Europe for demonstartions as there have been numerous requests from several countries.
3) The company is in late stage negotiations with several U.S. military branches. These have been in negotiations for a longtime (1-2 years) but seem to be coming to fruition. These are for numerous systems. Kelly reiterated that the sales cycle is very long.
4) Immersadome has been very quiet. Several large proposals with Fortune 500 companies are on the table. Should know one way or the other before long.
5) Itsec was an absolute success. No other simulator came even close to VirTra's. I find it interesting that FATS chose not to bring any weapons (if you have them why not show them off) and other companies had to reboot their systems multiple times before they would work. Many many many flawless presentations by VirTra to multiple branches of the military.
6) I know there was another sale that should close soon, but for the life of me I can't remember the details. Sorry guys.
We spent a great deal of time discussing the proposeed merger and what this will/can mean for VirTra.
1) Formal agreement to be signed by year end. More regulatory documents to be filed but hopefully closing by 1st quarter 2006.
2) The merger will significantly recapitalize the company. Balance sheet will be much stronger than VirTra alone.
3) Companies are performing well ahead of projections but terms of the deal are not being renegotiated.
4) ProForma consolidated company will show profitability.
5) By mergering, several parts will be able to manufactured in house which will save the company money, especially when the large orders hit.
6) Merging companies already making sales to the U.S. military.
7) Dutchess should be paid off after merger. This will be big in and of itself.
8) Easier to raise capital and receive more favorable financing once comapnies are merged.
9) Expects to be on NASDAQ Small Cap or AMEX by mid to late 2006.
Have some of these points been made several times before? Yes. Have some of these been promised for a long time? Yes. Will they finally come through? That's for you to decide. My vote is yes and I am more confident than ever in Kelly and VirTra's pending success. This was the most upbeat that I have ever seen Kelly. He had a quiet confidence about him that this thing is about to take off sooner rather than later. He mentioned numerous times that the merger was done on very favorable terms and that we should be very happy once the details emerge. Guys this has been a long road but the light at the end of the tunnel is closer and brighter than ever. I hope the longtime shareholders stick it out a little longer.
