Good afternoon. Welcome to VirTra’s Third Quarter 2018 Earnings Conference Call. My name is Hector and I will be your operator for today’s call. Joining us for today’s presentation are the Company’s Chairman and CEO, Bob Ferris; and CFO, Judy Henry. Following their remarks, we will open up the call for your questions. 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 link in the Investor Relations’ section of the Company’s website at www.virtra.com. Now, I would like to turn the call over to VirTra’s Chairman and CEO, Mr. Bob Ferris. Sir, please proceed.

Thank you. Good afternoon, everyone, and thank you for joining us today. After the market closed, we issued our financial results for the third quarter of 2018 in a press release. A copy of which is available in the Investor Relations’ section of our website. On our last call, we reported that Q2 was a record quarter for VirTra in nearly every metric. And while we were pleased with our financial results last quarter, we were also cautiously aware that due to the nature of our business not every quarter would be quite as successful from a financial perspective. However, for those of you who have followed our story for some time, these results should not be surprising, nor should they deter from our long-term growth prospects. Rather these results merely reflect the current nature of our business, which we have discussed on prior calls. While our total addressable market is growing and demand for our solutions is increasing, our revenue is not often recognized in a steady quarter-over-quarter format and our financial results particularly our topline can fluctuate considerably at a quarterly granularity. However, when looking at VirTra on an annual basis and backtesting for many years, our financial results to smooth out. In fact from a topline perspective, we have achieved an 18% compounded growth rates since 2014, while our net income has grown 25% annually over the same period. So with that in mind, on an annual basis, we’re still on track to have a solid year. Our nine-month revenues increased 10% to a record $15.5 million from $14.1 million in the first nine months of last year. Our gross profit increased 8% to $10 million in the first nine months of 2018 from $9.3 million in the same period of last year. On top of this,…

Thank you, Bob, and good afternoon, everyone. Our total revenue for the third quarter of 2018 was $3.5 million. This was a 24% decreased from the $4.7 million of revenue we recognized in Q3 of last year. The decrease in total revenue for the quarter was due to reduce sales of simulators, assessed recent scenarios relative to the third quarter of last year. For the nine months ended September 30, 2018, our total revenue increased 10% to $15.5 million from $14.1 million in the first nine months of last year. The increase in total revenue for the nine-month period ended September 30, 2018 was due a good increase in sales of simulators, accessories, licensing fees, warranties and other services. Our gross profit for the third quarter of 2018 decreased 33% to $2.1 million or 58.8% of revenue from $3.1 million or 66.4% of revenue in the third quarter of 2017. For the first nine months of the year, our gross profit increased 8% to $10 million or 64.8% of total revenue from $9.3 million or 65.7% of total revenue. The gross margin variation for each period resulted from differences in the type of quantity of systems and accessories sold. Our net operating expense for the third quarter of 2018 decreased 15% to $2 million from $2.4 million in Q3 of last year. The decrease in net operating expenses in the quarter was primarily the result of reduced accounting, legal and consultant expenses. For the first nine months of 2018, our net operating expense increased 11% to $7.2 million from $6.4 million in the same period a year ago. The increase for the nine month period was due to increases in general and administrative expenses and impairment loss on investments in TEC, formerly known as Modern Round Entertainment Corp recorded as…

Thanks, Judy. On our last call, I spent a good amount of time discussing the importance of our strategic partnerships. We believe these relationships will help our partners, our customers, as well as strengthen and expand the VirTra brand. We are actively working with our partners, including Haley Strategic and Force Science Institute to expand quality content and further distinguish VirTra and set ourselves apart as the gold standard for the industry. We recognize that it is the efficacy of our products, our reputation, and our massive investment in time and money and immersive simulation training for the past 17 years that help set us apart from our competition. We offer the highest quality and only all encompassing solution to deescalation and use of force training and critical human encounters with life or death consequences. To remain at the top requires constant attention to innovating, evolving and expanding our products remain on the cutting edge of our industry. We require grounding in the present but a keen eye for the future in VirTra, we have a strong history of finding the balance between satisfying current demands while planning for anticipated future trends. And I founded the company in the early ’90s, my goal was to make the most effective simulators possible. Our V-300 simulator is the best in the world and we have built out what is the largest and most comprehensive library of training content on the market for immersive police training. And now we’ve taken what we believe to be the next logical step. In the development of law enforcement training and education by creating V-VICTA, which stands for VirTra-Virtual Interactive Coursework Training Academy. I’m proud to say that V-VICTA has met the exacting standards of the International Association of Directors of Law Enforcement Standards and Training National…

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Jaeson Schmidt with Lake Street Capital Markets. Please proceed with your question.

Hey guys, thanks for taking my questions. Wondering if you could comment if you’ve seen any significant change to your visibility given the change in the macro backdrop over the last three months here?

At this point, we have not seen any change to our visibility given the macro backdrop that’s occurring. So I would say no, we’ve not seen any, at least not any negative impact from the macro.

Okay, that’s helpful. And regarding your win with Homeland Security, do you expect that to be delivered here in Q4?

No, that has a future contract date into next year.

Okay. And the last one from me, and I’ll jump back into queue. Given your current engagement pipeline, do you envision needing to significantly add to headcount next year to address all of these opportunities?

We currently believe our headcount might need some increase depending on exactly what contracts we secure. But that would be based on national contract wins. Our headcount is sitting at about 81 right now and that is currently adequate with the contracts were well under.

Okay, that’s helpful. Thanks a lot guys.

Thank you.

[Operator Instructions] Our next question comes from the line of [indiscernible] Private Investor. Please proceed with your question.

Hey Bob, just a question, can you update us or go into any information on any of the product pipeline coming up maybe?

Ralph, we – when it comes to the product pipeline, we really keep that under wraps. So we try that to not give any information until the product is passed all testing internally and is ready for prime time. And so I can’t comment until we’re ready at that point. It’s obviously for really important competitive reasons and also if we signal the type of work we’re doing that can also allow our competitors to make adjustments accordingly. So I can’t say that we have several items in our product pipeline currently, but unfortunately I can’t give you more specifics.

Okay, great. Thanks.

At this time, this concludes our question-and-answer session. And I’d like to turn the call back over to Mr. Bob Ferris for closing remarks.