VirTra, Inc.

John Givens and Chief Financial Officer Alana Boudreaux. Following their remarks, we will open the call for questions from Virtua's institutional analysts and investors. Before we begin the call, I would like to provide Virtua'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'd like to remind everyone that this call will be made available for replay via a link in the investor relations section on the company's website at www.virtua.com. Now, I'd like to turn the call over to Virtua's Chairman and CEO, Mr. Bob Ferris. Thank you, and you may proceed, sir.

Thank you, Claudia, and thank you, everyone, for joining us this afternoon. After the market closed today, we issued a press release that provided our financial results for the first quarter ended March 31, 2023, along with highlighted business accomplishments. We also filed our 10-Q with the SEC today, which is available for review at your discretion. As a brief overview for today's call, begin by providing highlights for the first quarter, 2023, And I'll summarize some of our recent business developments before passing the call over to John to discuss operations and provide an update on our military market progress. After that, Alana will discuss our financial results in more detail. I'll then come back on to discuss how 2023 has been going so far before moving to Q&A. And with that, let's begin. Q1, we continue to build on the momentum of our 17th consecutive year of revenue growth by achieving a remarkable $10 million in quarterly revenue, our best performance ever. We achieved this remarkable growth while at the same time pushing costs downward, a difficult accomplishment with recent inflationary pressures. Our efforts to scale the company and control expenses led to our best profitability quarter on record. We increased our gross profit by an impressive 88% and achieved a gross margin of 69% of total revenue. This significant growth also led to a net income of $2.9 million. Our strong financial results are in large part thanks to the investments we have made in our infrastructure, technology, and talent over the last several quarters, which have ensured that our training solutions remain top of market by providing realistic scenarios that are highly effective in preparing individuals and teams for the field. In Q1, we continue to leverage the investments we made in our technology, including further integrating our breakthrough technology called V3 into our solution set. As discussed during our previous update, V3 stands for Virka Volumetric Video and presents a significant potential for advancing our customers' training content. The combination of high-definition video and 3D characters enables us to build a comprehensive library of training content and an affordability point and quality level unmatched in the industry. This library is uniquely adaptable for both screen-based and headset-based platforms, which provides Virch a distinct advantage to attract and retain customers. We firmly believe this most realistic and reusable training capability strengthens our position in all major aspects of training simulation, enhancing our competitive edge in 2023 and beyond. And we will not stop here. We are hard at work on new products expected to elevate the world of effective training and elevate our financial performance in 2023 and into the future. Turning our attention to the key issue of staffing. The efforts to strengthen our leadership team in recent quarters are beginning to show up in our results as well. These new team members have implemented new systems, made us more effective across our operations, and have positioned us better for long-term success. Over the past few quarters, we have centralized our operations in our Arizona and Orlando facilities, which has had a positive impact on our financial results and prospects. Our new facilities offer the necessary space and resources to support our recent growth and enable further scalability. This includes accommodating more employees, equipment, and production capacity to meet increases in demand and improve overall efficiency. Both of our facilities are equipped with awe-inspiring state-of-the-art equipment. As a result, our facility tours are more impressive than ever before, especially for those seeking the world's leading company in police and military simulation training products. These facilities have created a more collaborative and innovative environment for our employees, allowing us to be more efficient and creative. While there were short-term costs associated with the move, In the long run, we will realize gains as we permit larger scale production, eliminate redundancy, and optimize our processes. These gains should help us in rewarding our faithful and patient shareholders in the quarters and years to come. And now I'd like to provide some updates in each of our markets. Our government revenue increased by 70% to $5.5 million from $3.2 million in the prior year. The strong success was the result of improved performance in the law enforcement market, as well as an increase in federal government police contracts. Internationally, we achieved substantial progress, increasing our revenue by over $2 million to reach $3.1 million. This growth is a testament to the dedication and exceptional effort of our hardworking staff members. While this might sound like an impressive increase, keep in mind that the comparison quarter was rather light to begin with. We feel we have under-penetrated the international market, and we are implementing changes to improve in this area. We have reported strong growth from our Subscription Training Equipment Partnership, or STEP, program, which provides recurring revenue for VRCHA, and also offers an easier on-ramp for smaller agencies interested in our solution, but are perhaps budget constrained for an outright purchase. This also gives our sales staff another tool in closing the sale. Currently, our recurring revenue, including warranty revenue, represents 13% of the total quarterly revenue, but we expect this to increase in the future. In summary, our record-setting quarter has laid a strong foundation for us to continue our profitable growth path and achieve our financial and operational targets for 2023, though we still see many opportunities for improvement throughout the organization. With much of our investments behind us, a great market position, and lagging competition, we are focused on rewarding our customers, employees, and shareholders in 2023. I will now turn the call over to John.

Thank you, Bob, and good afternoon, everyone. I'd like to provide you an update on our overall company operations and our activity in the military market. First, regarding our sales effort, though bookings were lower than expected in the first quarter than we'd like to have, it's important to note that lower bookings in the first quarter and into the second quarter are not uncommon due to budget cycles and decision making skewing to the second half of the year. That being said, it is not an acceptable trend we want to continue. We are actively ramping up sales efforts, restructuring and prioritizing our sales territories, and adding more sales staff. Our sales expansion efforts include adding international sales people to cover Central South America, Canada, Africa, Europe, and Asia. as well as breaking up the domestic territories further to cultivate and grow the pipeline. While the timing of these efforts, particularly international, is difficult to predict, we see good opportunities in the pipeline and are working to increase our footprint. The sales restructuring comes off the heels of our operation streamlining effort and the success of our process improvement to handle the increased sales volume. It's worth noting that our backlog remains robust and presents ongoing opportunities for executions in the second quarter as we implement these additional sales initiatives. In a moment, Alana will brief you on our new backlog reporting, which will provide leadership and shareholders a transparent view of our progress as we target increasing our step in recurring revenue. We are confident in our ability to generate additional revenue through our sales efforts and cultivate the pipeline. Additionally, our investments in our ERP and scalability have resulted in higher capacity to install systems, increased customer service capabilities, and are assisting us in identifying areas of opportunity for cost reductions. We are also taking steps to improve our supply chain management to mitigate any potential delays or disruptions, which will serve to further improve our performance. Speaking specifically about our military operations in Q1, we have been actively engaged in building a strong pipeline of leads and connections, and we are pleased to report that our Orlando facility, which is conveniently located near key military decision makers, continues to prove invaluable in providing us access to industry and the opportunities to build relationships in person. Our team has been busy conducting tours, demos, and meeting with key industry stakeholders and prospects. We have not yet announced any significant contracts in the military market. However, we remain optimistic about the opportunities available to us. We continue to build on promising leads and relationships as we introduce our best-in-class products to the military community. We continue to target the Department of Defense fiscal year 24, which begins October of 23, as a key timeline for demonstrating strong and meaningful traction in the military market. Our operational and technological advancements have bolstered our competitive position and placed us on solid growth trajectory for the years ahead. Overall, we are confident in our ability to capitalize on the robust pipeline of opportunities in law enforcement, military, and international markets. We will continue to keep you updated on our progress and developments in the future. Our team understands we have a mission to drive revenue while delivering a quality training product, and in many ways, we're just getting started. This quarter looks good based on historical performance, but it is not where the company should be, given its history, product quality, market position, and exceptional staff. Progress is happening, and we're getting closer, but we haven't arrived just yet. And I'll turn the call over to Alana to provide financial update.