Greetings. Welcome to the VirTra, Inc. Virtual Annual General Meeting of stockholders. At this time, all participants are in a listen-only mode. If you would like to ask a question during this presentation, please click on the Ask Question box on the left side of your screen, type in your question, and hit Submit. Please note this conference is being recorded. I will now turn the conference over to your host, Mr. Bob Ferris, Chairman and CEO of VirTra, Inc. Please go ahead.
Thank you. Good afternoon. Will the meeting please come to order? My name is Bob Ferris, and I am the Chairman of the Board and Co-CEO of VirTra. Welcome to the 2022 Annual Meeting of the Stockholders of VirTra. This meeting is being webcast live, and the webcast will be posted on our website for a period of time after the meeting. The matters on which the stockholders at the meeting are voting are to, one, elect five directors. Two, ratify the appointment of Haynie & Company as the company's independent registered public accounting firm for the year ending December 31, 2022. And three, transact any other business that may properly come before the meeting. I would like to begin the meeting by introducing the current members of the company's board of directors. They are myself, Bob Ferris. I also serve as Chairman and Co-CEO.
John Givens also serves as Co-CEO. Jeffrey Brown, Jim Richardson. We also have Fay Matsukage present, who serves as our outside corporate legal counsel. We also have Gregg Johnson present, who is a current shareholder and a board of directors nominee. Fay Matsukage will serve as secretary of the meeting and record the proceedings. She has delivered an affidavit of Issuer Direct Corporation as to the mailing of the notice of the meeting, which states that on September 23, 2022, notice of Internet availability of proxy materials was mailed to all stockholders of record as of the close of business on September 23, 2022, the record date for the meeting. This affidavit is available if any stockholder wishes to examine it and will be filed with the minutes of this meeting. Fay Matsukage will now discuss the procedures for transacting the business of the meeting.
Good afternoon. When an item of business on the agenda is before the meeting for consideration, questions and comments should be limited to that item. If a stockholder has a question or comment not related to a business item on the agenda, an opportunity to raise other questions and comments will be provided after voting on the proposals described in the proxy statement. Stockholders will have the opportunity to ask a question or make a statement about any resolution pending on the floor. If you wish to ask such a question or make such a statement, please type your question or comment into the Ask a Question tab on the left-hand side of your screen and click Send. Please keep your questions and statements brief and limited to the specific item up for discussion. Following the agenda items, Bob Ferris will accept general questions from stockholders or proxy holders.
If you wish to ask a question at that time, again, please type your question or comment into the Ask a Question tab on the left-hand side of your screen and click Send. If any stockholder has any matter of individual concern, please contact our investor relations professionals directly. In addition, I want to remind those listening in on this meeting of forward-looking statements. Certain information set forth in this presentation contains forward-looking information, which includes forward or future-oriented financial information and financial outlook under applicable securities laws, which are commonly referred to as forward-looking statements.
Except for statements of historical fact, the information contained in this presentation constitutes forward-looking statements and includes, but is not limited to, things such as the projected financial performance of the company, the expected development of the company's business, projects and joint ventures, execution of the company's vision and growth strategy, sources and availability of third-party financing for the company's projects, completion of the company's projects that are currently underway in development or otherwise under consideration, and future liquidity, working capital, and capital requirements. Forward-looking statements are provided to allow potential investors the opportunity to understand management's beliefs and opinions in respect to the future so that they may use such beliefs and opinions as one factor in evaluating an investment. These statements are not guarantees of future performance, and undue reliance should not be placed on them.
Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Although forward-looking statements contained in this presentation are based upon what management of the company believes are reasonable assumptions, there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The company undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, except as required by applicable securities laws. I'm gonna turn this back to you, Bob.
Thank you, Fay. I hereby appoint a representative of Issuer Direct as Inspector of Election for the meeting and any adjournment or postponement of this meeting. They have signed an oath to act as Inspector of Election, and this oath will be filed with the minutes of this meeting. The inspector has the stockholder list of the company as of the close of business on September 23rd, 2022 , the record date for the meeting, which shows the stockholders and their respective number of shares entitled to vote at this meeting. This list is available if any stockholder wishes to examine. It will be filed with the minutes of this meeting. Fay has advised us that a quorum is present at the meeting, so I declare the meeting duly and lawfully convened. The meeting is now open and ready for business.
The first item of business is the election of five directors of the company. The proxy statement made available to you earlier listed the company's nominees for director. The candidates for director who have been nominated to serve as directors by the company's Nominating and Corporate Governance Committee are Bob Ferris, John Givens, Jeff Brown, Jim Richardson, and Gregg Johnson. In accordance with the bylaws of the company, stockholders are required to provide advance notice of their intent to nominate candidates for directors. No such notice was received. Therefore, I declare the nominations for directors closed. A motion to elect five directors as described in the proxy statement is now in order.
Good afternoon. My name is Gregg Johnson. As a stockholder, I hereby move that each of the company's nominees be elected as directors to serve until the next annual general meeting of stockholders or until their respective successors are elected and qualified.
Does anyone second the motion?
My name is Jeffrey Brown, and I'm a stockholder. I second the motion.
Are there any questions or comments on this motion? If not, I hereby call the question and declare the polls open to vote on the motion. Any stockholders attending via webcast who desire to vote should do so at this time. The second item of business is to ratify the appointment of Haynie & Company as the company's independent registered public accounting firm for the year ending December 31, 2022. The appointment of Haynie & Company is described in the proxy statement that was made available to you earlier. A motion to ratify the auditor appointment as described in the proxy statement is now in order.
Good afternoon. My name is Gregg Johnson once again. I am a stockholder, and I hereby move that the appointment of Haynie & Company as the company's independent registered public accounting firm for the year ending December 31, 2022 be ratified.
Does anyone second the motion?
I second the motion.
Are there any questions or comments on this motion? If not, I hereby call the question and declare the polls open to vote on the motion. Any stockholders attending via webcast who desire to vote should do so at this time. Is there anyone else who wishes to vote in person? The Inspector of Election will report on the results of the voting later in the meeting after tabulation has been completed. We will now wait for the tabulation to occur. While we wait, I would like to open up the meeting to any questions that stockholders may have. If you have any questions relating to the company but not to the matters already voted on at the meeting, you may raise them while the vote is being tabulated. Only matters that may concern all stockholders should be raised at this time.
Any matter of individual concern to a stockholder should be raised directly with our investor relations professionals. I believe we already have some questions that have been logged, so I will just start with those. Please feel free to add new questions to the list while the tabulation is occurring. The first question is: Why was the shareholder meeting held virtually? And is there plans in the future to have shareholders meet in person? The shareholder meeting was decided to be virtual due to the ongoing COVID pandemic, as well as the construction that's occurring in our headquarters. We also have a lot of sensitive information in our headquarters, and we also are concerned about having folks come in and notice things that are not public information.
Trying to sanitize all the work areas at our facility, would be very time-consuming. For both health reasons as well as for just the productivity of our operations and the safety due to construction work that's ongoing, it was decided that we would have a virtual annual general meeting. As far as next year's, that will be reviewed by the board of directors and decided upon when we're closer to that meeting. The next question: The original accounting firm for 2021 was paid over $100,000. You also paid over $80,000 to the replacement accounting firm. Are you going to request a refund from the original accounting firm? If not, why not? The accounting firm fees were looked over by management and were approved if valid.
However, because VirTra ended up switching firms, that did not negate the work already spent from the other firm. It would be unreasonable to request a refund for work that had been completed. No, we are not requesting a refund from an accounting firm that provided a valid invoice. You currently have two CEOs. For a company with $25 million in sales, it sounds excessive and costing the shareholders a lot of money. Please comment. I believe our company is very fortunate that out of all of the job opportunities that John Givens had, that he decided to come to VirTra, particularly for our vision of growing the military simulation side of our business that could be incredibly profitable and very good for our shareholders.
John Givens' background necessitated a title that was more appropriate for his skill level, his experience, and his track record. Co-CEO is the most appropriate title for him. Both the two Co-CEOs serve at the pleasure of the board of directors and the shareholders of this company. Their goal is to generate far more value than their cost is to the company. I'm very encouraged that John Givens, although he is at the level of Co-CEO, he will be generating a tremendous value to the shareholders to really help take VirTra to the next level.
I think that the combination of two Co-CEOs in a company that has a lot of our research and development efforts, has a lot of sales efforts, has a lot of production and customer service efforts, and serves both law enforcement and military. I think that it is very useful for a company such as that to have Co-CEOs. So far, John and I have gotten along wonderfully. I think he's raised the bar at VirTra, and I'm very excited about the years ahead with his input. All right. Let me get to the next question.
Go up one.
Have you given any thought of allowing shareholders to appoint a shareholder representative on the board of directors? The board of directors currently we are looking for a leader in the law enforcement community and a leader in the military community. These would be very influential folks that are thought leaders and could help take VirTra to the next level. That is. The board of directors believes that is an area where we could add more value to the shareholders of the company. The board of directors will review and look for various candidates for that. I would point out that Gregg Johnson is a shareholder, and he was on the advisory board alongside a lot of other shareholders on that board.
His combination of a legal background and corporate compliance background is rather unique, and he has been added. If the vote goes in his favor, he will be added to our board of directors as of today. That'll be the first really sort of a compliance legal representative that's been on our board of directors since we've been a publicly traded company under the name of VirTra. Can you give an update about the military market? How do VirTra's new products fit in, and is there still strong demand for more traditional products like recoil kits? A couple things about this. We are excited about the progress we're making in the military market.
Our new facility that just had a grand opening in Orlando, that was well attended, is very. That grand opening went extremely well. Having that location in the epicenter of the military simulation group is critical to us, we think. It's obvious that John Givens has tremendous contacts and he has a great reputation in the marketplace, and that's very valuable to companies such as VirTra. It's also obvious that a lot of our recoil kits and our capabilities are sought after. I would say, though, that the traditional products in our market were actually very expensive, custom-made simulated weapons, and they were very fragile and would break. They were not made by VirTra. They were made by other companies. VirTra is moving to take over some of that business with drop-in recoil kits.
That's the new technology for the military market. Now, we've been perfecting it in the police market for many years, and so it's very common and standard throughout the police market for drop-in recoil kits. The military market, that's a new and emerging opportunity for expansion with drop-in recoil kits. It feels like the core of this question is there still strong demand? I would say there is, if anything, growing demand for effective, affordable simulation training, and I think VirTra's in a fantastic position to do that. We do need to prepare for the scaling that will come with military contracting, and that's been John Givens' primary focus, is to prepare VirTra for the kind of avalanche of orders that could come based on his track record.
You know, in the past, again, the forward-looking statements, but in the past, he has done well with bringing in contracts, military simulation contracts. A company needs to have the wherewithal and the scale in order to accept that kind of increase in demand and orders. At least that's what we're hoping for. Yes, it's encouraging signs. VirTra's sales organization underperforms, that's not correct, but our organization is the best performing in the market. Why does selling systems and services to municipal departments seem to be difficult for other companies in our market? It is very difficult. VirTra's been extremely lucky that we've grown by leaps and bounds.
We started out with a tiny fraction of the market share of this industry, and we have grown to now dominate the police market. I would estimate we're probably over 80%-ish of the police simulation market, and when we began, we were 0% of that market. That took an enormous amount of effort. Will VirTra be reorganizing the sales organization? Yes, actually, we have just gone through a reorganization at VirTra, and John Givens, when he came in, he went to all the different departments. He went back and started shipping product. He helped with service, and he sat with hardware engineers, and he really was on the ground floor of VirTra for several months, working 20-hour days, learning about the company.
After he investigated the company, he recommended some changes in the organizational matrix of the company. We are now currently operating under a new organization, a new organizational chart at VirTra. That has occurred. We are still reviewing it because it's just a brand-new reorg that we've done. We are looking to see what we've been able to make more efficient and any areas where we've possibly not made it more efficient. We're looking to revise it. You know, John and myself, we try to be extremely open-minded and see what the data points to. It's not, you know, it's not about our ideas winning. It's about the best idea winning, and we wanna do whatever's most effective for the shareholders and makes us the most competitive company possible.
Please add some color with respect to the recent departure of the CFO. Such a short tenure cast all involved in a bad light. Thank you. I can't say a lot about the departure of the CFO, except to agree with the last part of that question, which is, having a CFO be hired and then depart a company in a short span, does look bad. You know, it does need to be a correct fit between the candidate and the company. You know, I think it's important that a company makes sure that the fit is right for the long-term benefit of the shareholders. You know, if the fit's not right, it's better to know that sooner than later.
I can't give any more information than that. Yes, you know, I do agree that it's not at all ideal to have a CFO be hired and then a CFO depart in a short span. Can you give an update and timeframe on hiring a new CFO? Yes. We have a very encouraging candidate. We have a primary candidate right now, and we think we might have found a new CFO for us. Of course, we're doing the due diligence necessary, and we certainly want to get that decision right. We are encouraged, and I am hopeful to have good news on the CFO front here shortly. Okay. We're looking for some more. See if there's some more questions.
Oh, there are some more questions. Okay. All right. When is the board of directors going to be filled? Depending on the votes today, our board of directors will all be filled at the end of today, assuming that the nominations at the vote goes in favor of the recommended nominations. Has the capital spend been fully completed for both the Arizona and Orlando facilities? No, there is still capital being spent on the Arizona facility. I think the Orlando facility is complete or very minor amounts of money would be necessary. The Arizona is still in the process of some construction work. We have gotten a lot of it done. In fact, we just finished our main sales demo room yesterday, and it's pretty gorgeous.
We're really happy with how some of our work has gone. What type of efficiencies does the new filming studio create for the company? That's a great question. This probably relates to our recent press release about V3. V3 is VirTra Volumetric Video. It's a new technology where we take the advantages of film, which is photorealism and natural human movement, and we combine it with the flexibility of computer-generated imagery, also often known as avatars. The problem with CGI avatars is they don't look real, they don't have proper emotion, there's something off about them, and that actually really damages any training value that you can have with things like de-escalation and human interaction. That's an area where VirTra leads the world in. It's human interaction training.
What VirTra's been able to figure out with the help of another company called 4Dviews out of France, where we have exclusivity for police training and military training, is we've been able to get the best of both worlds and do it cost effectively. The cost factor now that we've already done the investment in the studio technology, it's now just essentially some electricity because we actually can do the rendering and all of the process locally. We can do it all at our facility. Other companies out there that try to do something similar, they have to take it up to the cloud, pay for processing, pay to bring it back down off the cloud, and the fees get pretty enormous.
They have to travel to whatever studio and book time on the studio, and it's a very clumsy process. VirTra has a real huge advantage. One of the most critical areas of training is the content. It's often overlooked, but the training content that a company like ours has is where a huge amount of our value and our competitive moat resides. We expect it's going to have a lot of cost savings and not just immediate cost savings where we get actually three-dimensional realistic human beings, but those are really reusable over and over again. They're very future-proof. It's very likely we'll be using the work we do today for five, 10, 15, 20 years possibly into the future.
Yes, technology will get better and better, but the technology has now hit that trigger point where we see it as an inflection point with the volumetric video capture, where we could see it being incredibly valuable for a long period into the future. Whereas other companies, a lot of their content could potentially become outdated as VR headsets and other AR headsets and other technologies begin to pervade the market. There's a question about how often we receive offers to buy VirTra. You know, VirTra, we are looking for whatever is best for our shareholders. We would entertain offers.
I really can't speak to any active offers going on with VirTra, but I do think we have a very unique position between the police market that we have and then the growing military market position that we have. I do. The last part of this question is, you know, think that they would think there would be a lot of opportunity given our leadership position, and I agree with that. There could be a point in time when VirTra does receive a serious offer that's very beneficial to our shareholders and we are open to that possibility, should it arise. The last question is.
Oh, the next question is on international market, and, COVID really did hit a pause on our international market initiatives, and, we have seen some of that work coming back. We are encouraged by that. I do think as you, as everyone on this call probably knows, we did win the standing offer for the country of Canada, and we are expecting orders from them. Again, that's forward looking. Time will tell what orders we get from our good friends in Canada. Yes, I do believe that we have a lot of potential growth on the international market in the quarters to come. Okay. The next one has to do with a training act. The bill passed the Senate, sits at the desk of the House.
Is the company aware of this bill? What benefits it could have? We monitor closely, and we do work. We have folks that work on our behalf in Washington, D.C. with the legislature. We do see that there are grants and bills, and we monitor them closely. We do think that VirTra fits into a lot of those bills. We have customers purchase from us using various methods that come from some of these training bills. Things are moving in the direction that we hoped, which is a higher standard of training.
It's not always moving as quick as we would like, but we do feel like some of these bills that are coming out are pushing the dialogue, and the attitude that there needs to be higher standards of training and simulation training and scenario-based training is often a very effective way of doing that. Okay. I think tabulation has occurred.
Yes, it has. The preliminary report of the inspection of election indicates that Bob Ferris, John Givens, Jeff Brown, James Richardson, and Gregg Johnson have been elected as directors by the stockholders. Each candidate received the affirmative vote of a majority of those shares present in person via webcast or by proxy at the meeting. Ratification of the appointment of Haynie & Company as the company's independent registered public accounting firm for the year ending December 31, 2022, has been approved by the stockholders by the affirmative vote of the majority of the votes present in person via webcast or by proxy at the meeting.
I hereby request that the final report of the inspector of election be filed with the minutes of this meeting. You've now heard the results of the voting, and this completes the business to be conducted at this meeting. If there are no other matters to come before the meeting, a motion to adjourn the meeting is now in order.
I hereby move that this meeting be adjourned.
Do I have a second on this motion?
I second the motion.
All in favor of the motion of adjournment, please signify by saying aye.
Aye.
Aye.
Those opposed, please signify by saying no. The motion has been carried. I would like to take this opportunity to thank you for your attendance today. Also, please know that your interest in VirTra is very much appreciated, and that the incredible support of our stakeholders has been critical to our successes. I personally think our best days are in front of us. Thank you and God bless. I hereby declare this meeting adjourned.
Bob, if I could interrupt just briefly. There was one question that came in very late saying, "What were the totals for each director?" We will be publishing those via an 8-K in the next day or two.
Okay. Thank you, and thanks everyone for your attendance. Have a great day.
This concludes today's conference call, and you may disconnect at this time. Thank you for your participation.