Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $5.3 million, down from $7.5 million in the prior year period, primarily due to lower government sector revenues caused by funding delays [10] - Government revenue for Q3 was $4.1 million compared to $6.9 million in the prior year, while international revenue increased to $1.2 million from $0.4 million [10] - Gross profit for Q3 was $3.5 million, or 66% of total revenue, down from $5.5 million, or 73% in the prior year [10] - Net loss for Q3 was $0.4 million, or $0.03 per diluted share, compared to net income of $0.6 million, or $0.05 per diluted share in the prior year [12] Business Line Data and Key Metrics Changes - The STEP program remains a strong selling point, particularly for smaller agencies, driving consistent adoption and high renewal rates, contributing to recurring revenue [6] - The introduction of the V1 portable simulator is aimed at expanding the addressable market for smaller departments [7] - International revenue more than doubled compared to the same period last year, indicating growing global recognition of VirTra's training solutions [8] Market Data and Key Metrics Changes - The operating environment is affected by federal funding delays, with agency procurement cycles moving slower than normal due to budget clarity and grant awards [4] - The Department of Justice COPS Grants Program has identified agencies for funding, but announcements were delayed due to federal shutdowns [4] - Military work is progressing, with a successful demonstration of the Soldier Virtual Trainer system for the U.S. Army [8] Company Strategy and Development Direction - The company is focused on improving sales processes, products, and operations to strengthen its foundation and prepare for growth as funding resumes [15] - The recent entry into the GSA procurement cycle channel is expected to streamline sales processes and shorten delivery timelines [5] - The updated STEP program with three-year commitments enhances recurring revenue visibility and reinforces long-term customer relationships [14] Management's Comments on Operating Environment and Future Outlook - Management noted that while the operating environment is challenging due to funding delays, there is strong engagement with customers and a growing backlog of opportunities [3] - The company anticipates improved revenue conversions once grant awards and customer acceptance pick up [4] - Management expressed optimism about future growth as funding resumes and highlighted the importance of building relationships with military partners [9] Other Important Information - Cash and cash equivalents as of September 30, 2025, totaled $20.8 million, up from $18 million at the end of 2024 [13] - Backlog as of September 30, 2025, stood at $21.9 million, with $10.2 million in capital, $5.3 million in service, and $6.4 million in STEP contracts [14] Q&A Session Summary Question: Were there any multi-year deals that skewed booking results? - A booking of about $4.8 million was received at the end of the quarter, primarily from an international customer, which is expected to convert to revenue in 2026 [17] Question: How does the funding backdrop impact military prospects? - The funding shutdown affects both military and police agency businesses, with significant reliance on government funding [19] Question: Can you break down the backlog in terms of funded versus unfunded? - The backlog includes $10.2 million in capital, with conversion dependent on customer purchasing and readiness [22][24] Question: Is the company considering acquisitions or buybacks? - The company is strategically waiting for funding clarity before considering acquisitions, focusing on technologies that align with its core offerings [26] Question: What is the outlook for gross margins going forward? - Gross margins are expected to remain similar to current levels, with a potential slight decrease, aiming for a range between 60% and 65% [30]