VirTra, Inc.

Good afternoon and welcome to Virtra's second quarter 2022 earnings conference call. My name is Laura and I will be the operator for today's call. Joining us for today's presentation are the company's chairman and co-CEO, Bob Ferris, co-CEO, John Givens, and Chief Accounting Officer, Marsha Fox. Following their remarks, we will open the call for questions for Virtra's institutional analysts and investors. Before we begin the call, I would like to provide Virtra's safe harbor statement That includes cautions regarding forward-looking statements made during this call. During this presentation, management may discuss financial projections, information or expectations about the company's products and services or markets, or otherwise make statements about the future, which are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. The company does not undertake any obligation to update them as required by law. Finally, I would like to remind everyone that this call will be made available for replay via a link in the investor relations section of the company's website at www.vertra.com. Now, I would like to turn the call over to Vertra's chairman and co-CEO, Mr. Bob Farris. Sir, please proceed.

Thank you, Laura, and thank you, everyone, for joining us this morning. Before the market opened today, we issued a press release that provided our financial results for the second quarter and six months ended June 30, 2022, along with highlighted business accomplishments. We also filed our 10-Q at the SEC, which is available for review at your discretion. The first half of 2022 has been a strong start for Virtua, putting us on track for another year of record revenues as total revenue in the first half of 2022 was up over 50% from the comparable period in 2021, which was our highest revenue period in our history. The operational momentum we are capturing is noteworthy as we continue to penetrate our key growth markets in commercial, government, and international. Additionally, this growth is being achieved while generating profits, as adjusted EBITDA grew 33% in the first half of the year, and we remained profitable on a GAAP net income basis. This strong growth is being largely driven by the international commercial markets. You might notice that our government sales is down slightly, but keep in mind that normally the high season for us to receive new government orders is during the third quarter, and our sales pipeline is strong. Internationally revenue in the first half of 2022 increased 125% from the prior year comparable period, but this was due to an unusual circumstance. As we have discussed on past calls, the international business was negatively impacted in 2020 and 2021 due to COVID related travel restrictions. With travel restrictions now largely removed and international business travel resuming, we have been better able to sell our products and services internationally. which is manifesting itself in our 2022 results. With this momentum now reestablished, we are optimistic about our continued international growth, which was recently highlighted by another order in Canada under the standing offer we have with their government that provides a streamlined and standardized process for multiple federal, provincial, and municipal agencies in the country with VRTHA as the sole provider. In our commercial segment, which includes military sales through a prime contractor, revenue grew over five-fold in the first half of the year to $5.2 million as we continue to penetrate key markets where Virtua has a competitive solution. Importantly, commercial revenue in the second quarter of $3.6 million exceeded the $3.2 million of commercial revenue we generated for all of 2021. Additionally, while we do not disclose margins by revenue segment, I think it is clear that we are generating healthier margins in the commercial market given it represented 45% of revenue in the second quarter and we generated almost 60% gross margins as a company in the quarter. What also gets me excited about this market is this growth is essentially achieved all before co-CEO John Givens took his current position earlier this year. So with his addition, we think we are only in the very early stages of fully capturing this larger military market opportunity for Virtra. So with that, I'm going to pass it over to John to discuss his thoughts on his work at Virtra so far. John?

Thanks, Bob. Thank you. I'd like to focus my remarks today on the first 100 days or so at Virtra and tell you that we've been very busy day, night, weekends. As discussed in our last conference call, which was my first since joining the company, I felt we needed a presence in Orlando, Florida, if we wanted to significantly expand our ability to capture the opportunities within the military market. Orlando is known as a worldwide epicenter for modeling and simulation industry for the military. Their four major military branches all have procurement centralized out of Orlando, where they manage multi-billion dollar portfolios, including military PEO STRI for the U.S. Army, PM TRACES for the U.S. Marines, AFAMS for the U.S. Air Force, and NAVAIR for the U.S. Navy. So in my experience, if you don't have a physical presence in Orlando to easily demonstrate your products and conduct on-site meetings, you're going to have a real hard time penetrating those markets. As you might guess, all the major defense contractors have offices in Orlando for this very reason. Since I've joined, we have leased a building right in the heart of this action. It's already up and operational, and we have a respected and seasoned program manager based in Orlando and expect to add business development and other personnel in the coming months. We have virtual equipment on site. We've already completed demos and expect to be actively conducting regular demonstrations with military personnel over the remainder of the year. To succeed in the military space, In the military market, I believe we need three key ingredients. First and foremost, you need a great product offering, which Virtra clearly possesses. The other two are presence in Orlando and relationships to facilitate buying support for your product within the military. The two latter Virtra has historically lacked, but I'm confident that the company is now well positioned to begin investing capturing more opportunities in the military market. The other item I've been intensely focused on during my first 100 days is ensuring Virtra has the right corporate structure in place to ensure efficient operations and scalability. As is often the case with a rapid growth company, there can be some inefficiencies unintentionally created as a result of operations racing to keep up with record sales being recorded year after year. With fresh eyes from an outsider's perspective and my experience scaling up an operation at Bohemia to 200 million, it became evident to me that there were some areas of optimization. Accordingly, we effected a reorganization at Virtua on August 16th, which will reduce our staff by about 10%. Now, I want to be clear. This is not an adjustment merely to cut costs. I expect this improvement to greatly improve the operational efficiency of virtual staff by eliminating the redundancies and streamlining the org chart based on functionality and focusing on facilitating significant scaling for virtual employees to increase the potential for business or business. I'm excited about the direction we're taking, and I'm now going to turn it over to our Chief Accounting Officer, Marcia Fox, to provide financial updates.