10QSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

or

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ________________ to ______________________

Commission File Number 000-28381

VIRTRA SYSTEMS, INC.

 (Exact name of registrant as specified in its charter)

Texas	93-1207631
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

440 North Center, Arlington, TX	76011
(Address of principal executive offices)	(Zip Code)

(817) 261-4269

(Registrant's telephone number, including area code)

Check whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES |X| NO |_|

As of May 12, 2003, the Registrant had outstanding 39,220,112 shares of common stock, par value $.005 per share.

PART I.  FINANCIAL INFORMATION

Item 1.

Financial Statements.

Balance Sheet as of March 31, 2003 and December 31, 2002

Statement of Operations for the three months ended March 31, 2003 and 2002

Statement of Changes in Stockholders’ Deficit for the three months ended

  March 31, 2003

Statement of Cash Flows for the three months ended March 31, 2003 and 2002

Selected Notes to Financial Statements

VIRTRA SYSTEMS, INC.

BALANCE SHEET

March 31, 2003 and December 31, 2002

__________

	March 31,	December 31,
	2003	2002
ASSETS	(Unaudited)	(Note)
Current assets:
Cash and cash equivalents	$                -	$    98,442
Accounts receivable	100,846	93,929
Costs and estimated earnings in excess of billings on uncompleted contracts	-	17,342
Total current assets	100,846	209,713
Property and equipment, net	301,570	346,114
Note receivable-related party	67,885	67,885
Intangible assets, net	31,729	36,261
Total assets	$   502,030	$   659,973
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable	$   859,106	$   889,324
Obligations under product financing arrangements	5,426,982	5,240,418
Notes payable-stockholders	910,031	910,031
Convertible debentures	245,736	308,262
Book overdraft	31,585	-
Accounts payable	1,214,491	1,201,849
Accrued liabilities	635,023	643,879
Billings in excess of costs and estimated earnings on uncompleted contracts	52,332	82,613
Total current liabilities	9,375,286	9,276,376
Redeemable common stock, 778,291 shares at $.005 par value	3,891	3,891
Stockholders’ deficit:
Common stock, $.005 par value, 100,000,000 shares authorized, 38,091,448 and
37,331,448 shares issued and outstanding at March 31, 2003 and December 31,	190,458	186,658
2002, respectively
Additional paid-in capital	2,982,639	2,922,833
Accumulated deficit	(12,050,244)	(11,729,785)
Total stockholders’ deficit	(8,877,147)	(8,620,294)
Total liabilities and stockholders’ deficit	$      502,030	$   659,973

Note:  The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

See accompanying notes.

VIRTRA SYSTEMS, INC.

STATEMENT OF OPERATIONS

for the three months ended March 31, 2003 and 2002

__________

(Unaudited)

	2003	2002
Revenue:
Theme parks and arcades	$     45,805	$   79,529
Custom applications and other	348,001	127,572
Total revenue	393,806	207,101
Cost of sales and services	160,513	86,780
Gross margin	233,293	120,321
General and administrative expenses	325,330	433,576
Loss from operations	(92,037)	(313,255)
Other income (expenses):
Interest expense and finance charges	(228,422)	(480,746)
Other income	-	6,872
Total other income (expenses)	(228,422)	(473,874)
Net loss	$ (320,459)	$ (787,129)
Weighted average shares outstanding	37,551,448	33,504,660
Basic and diluted net loss per common share	$    (0.01)	$    (0.02)

See accompanying notes.

VIRTRA SYSTEMS, INC.

STATEMENT OF STOCKHOLDERS’ DEFICIT

for the three months ended March 31, 2003

__________

(Unaudited)

	Common Stock		Additional Paid-In	Accumulated
	Shares	Amount	Capital	Deficit	Total
Balance at December 31, 2002	37,331,448	$   186,658	$2,922,833	$(11,729,785)	$(8,620,294)
Common stock issued upon
conversion of debentures	747,105	3,736	58,792	-	62,528
Common stock issued for
payment of interest	12,895	64	1,014	-	1,078
Net loss	-	-	-	(320,459)	(320,459)
Balance at March 31, 2003 (unaudited)	38,091,448	$   190,458	$2,982,639	$(12,050,244)	$(8,877,147)

See accompanying notes

VIRTRA SYSTEMS, INC.

STATEMENT OF CASH FLOWS

for the three months ended March 31, 2003 and 2002

__________

(Unaudited)

	Three Months Ended
	March 31,
	2003	2002
Cash flows from operating activities:
Net income (loss)	$  (320,459)	$ (787,129)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	49,076	136,464
Amortization of debt issuance costs	60,192	268,566
Stock issued for interest and financing fees	1,078	174,500
Stock issued as compensation for services	-	2,000
(Increase) decrease in operating assets	10,425	(5,193)
Increase (decrease) in accounts payable and accrued expenses	99,879	85,960
Net cash used in operating activities	(99,809)	(124,832)
Cash flows from investing activities:
Capital expenditures	-	-
Net cash used in investing activities	-	-
Cash flows from financing activities:
Payments on notes payable	(30,218)	(11,470)
Proceeds from notes payable to stockholders	-	174,500
Increase (decrease) in book overdraft	31,585	(33,172)
Net cash provided by financing activities	1,367	129,858
Net increase (decrease) in cash and cash equivalents	(98,442)	5,026
Cash and cash equivalents at beginning of period	98,442	-
Cash and cash equivalents at end of period	$              -	$      5,026
Non-cash investing and financing activities:
Interest paid	$    20,351	$   12,657
Income taxes paid	$              -	$            -
Common stock issued upon conversion of debentures	$    62,528	$            -

See accompanying notes.

VIRTRA SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS

__________

1.

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the U.S. Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2002. They do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements for the year ended December 31, 2002 included in the Company’s Form 10-KSB and Form DEF 14A filed with the Securities and Exchange Co mmission. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been included. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the respective full year.

2.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures.  Actual results could differ from those estimates.

3.

Income Taxes

The difference between the 34% federal statutory income tax rate and amounts shown in the accompanying interim consolidated financial statements is primarily attributable to an increase in the valuation allowance applied against the tax benefit from the future utilization of net operating loss carryforwards.

4.

Subsequent Event

On April 30, 2003, VirTra Systems, Inc. (the “Company”) entered into an agreement to sell its contracts and the assets used in its theme park operations for $120,000, payable in four equal installments of $30,000 upon signing of the term sheet; $30,000 on April 30, 2003; $30,000 on May 31, 2003; and $30,000 on June 30, 2003.  The transaction resulted in a loss on sale of assets of approximately $35,000.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The statements contained in this Report that are not historical are forward-looking statements, including statements regarding our expectations, intentions, beliefs or strategies regarding the future. Forward-looking statements include our statements regarding liquidity, anticipated cash needs, and availability and anticipated expense levels. All forward-looking statements included in this Report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statement. It is important to note that our actual results could differ materially from those in such forward-looking statements. The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Report.

Overview

Effective May 6, 2002, our name was changed from “GameCom, Inc.” to “VirTra Systems, Inc.,” pursuant to authority granted to the board of directors by the shareholders at its September, 2001 meeting.

Effective September, 2001, we completed the acquisition of Ferris Industries, Inc., a leading developer and operator of virtual reality devices. Ferris designed, developed, and distributed technically-advanced products for the entertainment, simulation, promotion, and education markets. Its virtual reality (VR) devices are computer-based and allow people to view and manipulate graphical representations of physical reality. The acquisition provided us with a wider array of products within our industry, an experienced management team, an existing revenue stream, and established distribution channels. Until we acquired Ferris, we had devoted substantially all of our efforts to implementing our `Net GameLink™ product, an interactive entertainment system designed to allow a number of players to compete with one another in a game via an intranet or the Internet. We inte nd to continue development and deployment of that entertainment system while at the same time expanding Ferris' business. Post-merger, the anticipated deployment of our existing virtual reality technology is anticipated to be highly profitable.

The Ferris acquisition was accounted for as a pooling of interests. Ferris was much larger than GameCom in terms of assets, and had substantial revenues whereas GameCom had essentially no revenues at the time of the acquisition. As a result, the discussion below relates in major part to the former Ferris operations rather than GameCom's.

Future revenues and profits will depend upon various factors, including market acceptance of our two advanced training systems, and the success of our continued sales to the advertising/promotion market. Our anticipated entry into the training/simulation market was advanced by the aftermath of September 11, 2001. We unveiled our initial product in this market, the IVR-p™ advanced training simulator, in December, and we have recently conducted numerous demonstrations of the IVR-p™ in Washington, D.C. We remain in advanced discussions with representatives of Homeland Security regarding our technology, and our capabilities in the detection and mitigation of risks; in fact, we have recently learned that one federal protective agency has budgeted to buy several of our advanced systems upon the agency's approval of the applicable prototype.  There can be no a ssurances that these advanced discussions will be fruitful or that the prototype will be satisfactory.

We face all of the risks, expenses, and difficulties frequently encountered in connection with the expansion and development of a business, difficulties in maintaining delivery schedules if and when volume increases, the need to develop support arrangements for systems at widely dispersed physical locations, and the need to control operating and general and administrative expenses. While the Ferris acquisition provided an established stream of revenues and historically favorable gross margins, Ferris had not yet generated a profit, and substantial additional capital, or major highly-profitable custom applications, will be needed if those operations are to become profitable.

Results of Operations

Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002

Three major factors affected our results of operations for the three months ended March 31, 2003, compared to the corresponding period of 2002. First, revenues increased. Second, general and administrative expense decreased. Finally, interest expense and finance charges also decreased.

Revenues from both of our historic virtual reality product lines -- theme parks and arcades and custom applications -- are somewhat unpredictable. Theme park and arcade revenues are affected by both the overall traffic at facilities of this type and by the extent to which we are able to provide new and attractive content to attract more users and increase repeat business. Custom applications tend to consist of a few large projects at any time, and the stage of completion of any particular project can significantly affect revenue. We had revenue of $393,806 for the three months ended March 31, 2003, compared to $207,101 for the corresponding three months of 2002. Revenue from theme parks and arcades declined primarily because of a significant national decline in theme park attendance, and because we did not substantially update the content of our virtual reality systems at these facilities during 2002 or 2003. Revenue from custom applications and other sources increased. The main components of this item are revenue from the recently announced and completed contract with Shell/Pennzoil for a promotional virtual reality project, as well as the initial revenue from the recently-announced Red Baron® 3-D Flying Adventure™. Cost of sales and services increased almost directly in proportion to the increased revenue from custom applications. General and administrative costs of $325,330 for the three months ended March 31, 2003, compared to $433,576 for the three months ended March 31, 2002, decreased primarily due to a reduction in professional and consulting fees, and management’s efforts to reduce general overhead expense.  

Interest expense and finance charges decreased to $228,422 for the three months ended March 31, 2003, compared to $480,746 for the corresponding period of 2002, largely because of a significant reduction in common shares issued as interest or financing fees, and because the debt issuance costs on a majority of the product financing arrangements have now been fully amortized.   

Liquidity and Plan of Operations

As of March 31, 2003 our liquidity position remained precarious. However, our recent increase in revenue from custom applications for the advertising/promotional market has given us some breathing room. As of March 31, 2003 we had current liabilities of $9,375,286, including $5,426,982 in obligations under the lease financing for the virtual reality systems formerly utilized in our amusement applications, $1,214,491 in accounts payable, and short-term notes payable of $859,106, some of which were either demand indebtedness or were payable at an earlier date and were in default. As of March 31, 2003 there were only $100,846 in current assets available to meet those liabilities.  We will be able to continue operations only if holders of our short-term notes and lease obligations continue to forebear enforcement of those obligations.

On July 12, 2002, we entered into an agreement with Dutchess Private Equities, L.P., pursuant to which Dutchess and other investors participated in the private placement of $450,000.00 in convertible debentures, as well as a private equity line of $5,000,000.00 over the next two years.  Registration of the shares to be issued under the terms of the agreement was accomplished pursuant to the terms of an SB-2 filed with the Securities and Exchange Commission on August 12, 2002, and which became effective on September 2, 2002.  Dutchess has fully funded the debentures.

The Dutchess private equity line may not be a viable funding mechanism, as the price and volume of trading in our shares may be too low to make that source of financing attractive.  To date we have met our capital requirements by acquiring needed equipment under non-cancelable leasing arrangements, through capital contributions, loans from principal shareholders and officers, certain private placement offerings, and the Dutchess convertible debentures.  For the three months ended March 31, 2003, the net loss was ($320,459). Approximately $210,225 of the loss was attributable to non-cash charges for depreciation and amortization, amortization of interest and debt issuance costs, payment in common stock of financing fees and interest, and increases in accounts payable and accrued liabilities. After taking into account the non-cash items included in that loss, o ur cash requirements were approximately $130,000. To cover these cash requirements, we utilized our cash on hand in the sum of $98,442, and increased our book overdraft by $31,585.  

The opinion of our independent auditor for each of the last two fiscal years expressed substantial doubt as to our ability to continue as a going concern. We will either need substantial additional capital, or to be successful with lucrative custom application projects in the promotional/advertising markets, or for our entry into the training/simulation market to be successful so as to generate profits to fund the company.  We may need additional financing in order to carry out our expansion plans.  Based upon our anticipated increase in the stock's trading volume following our entry into the training/simulation market, management believes that the Dutchess financing will allow us to continue our operations for at least the next 12 months, provided holders of our short-term notes and equipment lease obligations continue to give us the breathing room necessary for our new applications to make significant contributions to revenue.  

Item 3.

Controls and Procedures

Based upon an evaluation performed within 90 days of this report, our CEO and CFO has concluded that our disclosure controls and procedures are effective to ensure that material information relating to our company is made known to management, including the CEO and CFO, particularly during the period when our periodic reports are being prepared, and that our internal controls are effective to provide reasonable assurance that our financial statements are fairly presented in conformity with generally accepted accounting principles.

In accord with SEC requirements, the CEO and CFO notes that, since the date of his evaluation to the date of this Quarterly Report, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On May 8, 2003, we filed a declaratory judgment lawsuit in the 348^th state district court of Tarrant County, Texas against Legg Mason Wood Walker Incorporated and the Depository & Clearing Corporation, now pending as cause number 348-198792-03. In this suit, we refer to the district court’s prior ruling that our cancellation of shares of the company’s common stock formerly in the name of William E. K. Hathaway II c/o Olympic Holdings, L.L.C. was proper, and in this suit we seek a further judicial determination that Hathaway’s subsequent endorsement of his certificate to these companies was ineffective, as the certificate was no longer genuine and could not be registered, and further due to other alleged irregularities, resulting in our having no liability to these companies.      

Item 4. Submission of Matters to a Vote of Security Holders

N/A

Item 5. Other Information

On May 6, 2003, we sold our amusement/theme park operations, formerly known as our VR Zones, to Global VR for a negotiated cash price of $120,000. This sale is designed to allow us to focus our attention on the larger and potentially more lucrative training/simulation market.

VIRTRA SYSTEMS, INC.

UNAUDITED PROFORMA FINANCIAL STATEMENTS

On April 30, 2003, VirTra Systems, Inc. (the “Company”) entered into an agreement to sell its contracts and the assets used in its theme park operations for $120,000 payable in four equal installments of $30,000 upon signing of the term sheet; $30,000 on April 30, 2003; $30,000 on May 31, 2003; and $30,000 on June 30, 2003. The following Unaudited Proforma Balance Sheet as of March 31, 2003 gives effect to the transaction as if it had occurred at that date. The Unaudited Proforma Statement of Operations for the three months ended Mach 31, 2003 and the year ended December 31, 2002 give effect to the transaction as if it had occurred on January 1, 2002.

The Unaudited Proforma Financial Statements are presented for informational purposes only and are not necessarily indicative of the results of operations that would have been achieved had the transaction been completed at January 1, 2002, nor are they indicative of the Company’s future results of operations.

The Unaudited Proforma Financial Statements should be read in conjunction with the historical financial statements of the Company and related notes thereto.

VIRTRA SYSTEMS, INC.

UNAUDITED PROFORMA BALANCE SHEET

March 31, 2003

	Historical	Proforma	Proforma
	Balance	Adjustments	Balance
Current assets:
Cash and cash equivalents	$                -	$               -	$              -
Accounts receivable	100,846	-	100,846
Note receivable	-	(a)120,000	120,000
Costs and estimated earnings in excess of billings on
uncompleted contracts	-	-	-
Total current assets	100,846	120,000	220,846
Property and equipment, net	301,570	(b)(155,189)	146,381
Note receivable-related party	67,885	-	67,885
Intangible assets, net	31,729	-	31,729
Total assets	$   502,030	$    (35,189)	$   466,841
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable	$   859,106	$                -	$   859,106
Obligations under product financing arrangements	5,426,982	-	5,426,982
Notes payable-stockholders	910,031	-	910,031
Convertible debentures	245,736	-	245,736
Book overdraft	31,585	-	31,585
Accounts payable	1,214,491	-	1,214,491
Accrued liabilities	635,023	-	635,023
Billings in excess of costs and estimated earnings on
uncompleted contracts	52,332	-	52,332
Total current liabilities	9,375,286	-	9,375,286
Redeemable common stock, 778,291 shares at $.005 par value	3,891	-	3,891
Stockholders’ deficit:
Common stock, $.005 par value, 100,000,000 shares authorized,
38,091,448 shares issued and outstanding	190,458	-	190,458
Additional paid-in capital	2,982,639	-	2,982,639
Accumulated deficit	(12,050,244)	(c)(35,189)	(12,085,433)
Total stockholders’ deficit	(8,877,147)	(35,189)	(8,912,336)
Total liabilities and stockholders’ deficit	$      502,030	$     (35,189)	$     466,841

See notes to unaudited proforma financial statements.

VIRTRA SYSTEMS, INC.

UNAUDITED PROFORMA STATEMENT OF OPERATIONS

for the three months ended March 31, 2003

	Historical	Proforma	Proforma
	Balance	Adjustments	Balance
Revenue:
Theme parks and arcades	$     45,805	$   (a)(38,268)	$       7,537
Custom applications and other	348,001	-	348,001
Total revenue	393,806	(38,268)	355,538
Cost of sales and services	160,513	(a)(46,487)	114,026
Gross margin	233,293	8,219	241,512
General and administrative expenses	325,330	(a)(37,840)	287,490
Loss from operations	(92,037)	(46,059)	(45,978)
Other income (expenses):
Interest expense and finance charges	(228,422)	-	(228,422)
Other income	-	-	-
Total other income (expenses)	(228,422)	-	(228,422)
Net loss	$ (320,459)	$   (b)(46,059)	$  (274,400)
Weighted average shares outstanding	37,551,448	-	37,551,448
Basic and diluted net loss per common share	$      (0.01)	$             (b)  -	$      (0.01)

See notes to unaudited proforma financial statements.

VIRTRA SYSTEMS, INC.

UNAUDITED PROFORMA STATEMENT OF OPERATIONS

for the year ended December 31, 2002

	Historical	Proforma	Proforma
	Balance	Adjustments	Balance
Revenue:
Theme parks and arcades	$1,216,283	$(a)(1,208,936)	$       7,347
Custom applications and other	1,064,201	-	1,064,201
Total revenue	2,280,484	(1,208,936)	1,071,548
Cost of sales and services	1,318,119	(a)(974,878)	343,241
Gross margin	962,365	(234,058)	728,307
General and administrative expenses	2,119,229	(a)(423,845)	1,695,384
Loss from operations	(1,156,864)	(189,787)	(967,077)
Other income (expenses):
Interest income	130	-	130
Interest expense and finance charges	(1,549,142)	-	(1,549,142)
Other income	13,121	-	13,121
Total other income (expenses)	(1,535,891)	-	(1,535,891)
Net loss	$(2,692,755)	$  (b)(189,787)	$(2,502,968)
Weighted average shares outstanding	35,358,153	-	35,358,153
Basic and diluted net loss per common share	$        (0.08)	$       (b)(0.01)	$        (0.07)

See notes to unaudited proforma financial statements.

VIRTRA SYSTEMS, INC.

NOTES TO UNAUDITED PROFORMA FINANCIAL STATEMENTS

1.

Basis of Presentation

On April 30, 2003, VirTra Systems, Inc. (the “Company”) entered into an agreement to sell its contracts and the assets used in its theme park operations for $120,000 payable in four equal installments of $30,000 upon signing of the term sheet; $30,000 on April 30, 2003; $30,000 on May 31, 2003; and $30,000 on June 30, 2003. The following Unaudited Proforma Balance Sheet as of March 31, 2003 gives effect to the transaction as if it had occurred at that date. The Unaudited Proforma Statement of Operations for the three months ended Mach 31, 2003 and the year ended December 31, 2002 give effect to the transaction as if it had occurred on January 1, 2002.

The Company believes that the assumptions used in preparing the unaudited proforma financial statements provide a reasonable basis for presenting all of the significant effects of the sale of the assets used in its theme park operations and that the proforma adjustments give effect to those assumptions in the Unaudited Proforma Financial Statements.

2.

Earnings Per Share

Net loss per share of common stock was computed by dividing the net income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Due to the net loss, all of the common stock equivalents were excluded from this calculation due to their anti-dilutive effect.

3.

Proforma Adjustments

Proforma adjustments to the Unaudited Proforma Balance Sheet are as follows:

a.

Reflects the note receivable established for the purchase of the assets.

b.

Reflects the disposition of the assets sold and related accumulated depreciation.

c.

Reflects the loss incurred on sale of the assets.

Proforma adjustments to the Unaudited Proforma Statements of Operations are as follows:

a.

Reflects the removal of the revenue, cost of sales and general and administrative expenses related to the theme park operations.

b.

Reflects the effect on net loss and loss per share upon removal of the theme park operations.

Item 6. Exhibits and Reports on Form 8-K.

(a)          Exhibits

2          Asset Purchase Agreement

99.1     Chief  Executive Officer and  Chief Financial Officer - Sarbanes-Oxley Act Section  906 Certification

(b)          We have not filed any reports on Form 8-K during the last quarter of the period covered by this report.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

VIRTRA SYSTEMS, INC.

Date: May 14, 2003	/s/ L. Kelly Jones
	L. Kelly Jones
	Chief Executive Officer and Chief Financial Officer

Chief  Executive Officer and Chief Financial Officer - Sarbanes-Oxley Act Section  302 Certification

I, L. Kelly Jones, certify that:

1.           I have reviewed this quarterly report on Form 10-QSB of Virtra Systems, Inc.;

2.           Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.           Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.           The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)           designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)           evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)           presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.           The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)           all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)           any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.           The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 14, 2003	/s/ L. Kelly Jones
	L. Kelly Jones
	Chief Executive Officer and Chief Financial Officer

In stating that the above matters are true "based on his knowledge," the signer does not mean that he knows such matters to be true, but means that after reasonable inquiry he does not know of any facts which indicate to him that such matters are not true. He further notes that there are no "other certifying officers."

EX-2

Exhibit 2

ASSET PURCHASE AGREEMENT

dated as of

April 30, 2003

by and among

VIRTUAL TECHNOLOGIES, INC.
D/B/A GLOBAL VR,

GLOBAL VR EXTREME, INC.

and

VIRTRA SYSTEMS, INC.

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TABLE OF CONTENTS
(continued)

Page

TABLE OF CONTENTS

Page

1.1

Agreement to Purchase and Sell

ARTICLE II ASSUMPTION OF LIABILITIES

2.1

Agreement to Assume

2.2

No Expansion of Third Party Rights

ARTICLE III PURCHASE PRICE, MANNER OF PAYMENT AND CLOSING

3.1

Consideration

3.2

Amount

3.3

Time and Place of Closing

3.4

Transfer Taxes

ARTICLE IV REPRESENTATIONS AND WARRANTIES

4.1

Authority

4.2

No Conflict

4.3

Litigation

4.4

Title to Property

4.5

Taxes

4.6

Material Contracts

4.7

Purchased Assets.

4.8

No Injunctions or Restraints; Illegality.

4.9

Representations Complete

ARTICLE V EMPLOYMENT RIGHTS

5.1

Right to Solicit and Hire Employees and Consultants

5.2

No Employment Obligations

5.3

Post-Closing Liabilities

ARTICLE VI POST-CLOSING COVENANTS

6.1

Release of Liens

6.2

Covenant Not to Sue.

6.3

Covenant Not to Compete

6.4

Covenant Not to Solicit

6.5

Separate Covenants

6.6

Payments of Accounts Receivable

6.7

Further Assurances

6.8

Bulk Sales Laws

ARTICLE VII INDEMNIFICATION

7.1

Survival of Representations, Warranties and Covenants

7.2

Indemnification of Parent and Acquisition Sub.

7.3

Procedure

ARTICLE VIII GENERAL PROVISIONS

8.1

Notices

8.2

Counterparts

8.3

Entire Agreement; No Third Party Beneficiaries

8.4

Severability

8.5

Remedies Cumulative

8.6

Governing Law

8.7

Assignment

SCHEDULES

Schedule 1.1(a)

List of Transferred Property

Schedule 1.1(c)

List of Contracts

Schedule IV

Disclosure Schedule

Schedule 4.2

Locations of Seller Employees

Schedule 6.1

Lien Release Schedule

EXHIBITS

Exhibit A

Form of Bill of Sale

Exhibit B

Form of Assignment and Assumption Agreement

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of April 30, 2003, by and between Virtual Technologies, Inc., d/b/a Global VR, a Delaware corporation (Parent”), Global VR Extreme, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Acquisition Sub”), and VirTra Systems, Inc., a Texas corporation (“Seller”).

RECITALS

WHEREAS, Seller desires to sell to Acquisition Sub, and Acquisition Sub desires to purchase from Seller, certain assets upon the terms and subject to the conditions set forth herein (the “Asset Acquisition”).

WHEREAS, prior to the the execution and delivery of this Agreement, as a condition and further inducement to Parent and Acquisition Sub to enter into this Agreement, Key Employees of the Seller are entering into Employment Agreements with Parent and Acquisition Sub.

NOW, THEREFORE, in consideration of the covenants, representations, warranties and mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE OF ASSETS

1.1

Agreement to Purchase and Sell

.  Upon the terms and subject to the conditions set forth in this Agreement, upon the date of this Agreement (the “Closing Date”), Seller agrees to convey, sell, transfer, assign and deliver to Acquisition Sub, and Acquisition Sub shall purchase from Seller, all right, title and interest existing now or at any time hereafter through the Closing Date (whether or not in inchoate form) in or to the assets, properties and rights of Seller listed below:

(a)

the property, intangible and intangible, listed on Schedule 1.1(a) (the “Transferred Property”);

(b)

any and all revenue collected or accounts receivable from customers arising from the operation of the Transferred Property on or after March 10, 2003 (the “Receivables”); and

(c)

the contracts, agreements, contract rights, license agreements and other executory rights of Seller and commitments of third parties that are set forth on Schedule 1.1(c) (the “Contracts”).

The assets, properties and rights to be conveyed, sold, transferred, assigned and delivered to Acquisition Sub pursuant to this Section 1.1 are sometimes hereinafter collectively referred to as the “Purchased Assets.”  The Purchased Assets shall be sold to Acquisition Sub free and clear of any mortgages, liens, pledges, charges or encumbrances of any kind or character (collectively, “Liens”), other than the Liens permitted by Schedule 6.1 which will be subsequently released by the holders of such Liens.

ARTICLE II

ASSUMPTION OF LIABILITIES

2.1

Agreement to Assume

.  Acquisition Sub shall assume and agree to discharge and perform when due those liabilities and obligations of Seller, and only those liabilities and obligations of Seller, that directly relate to the maintenance and operation of Transferred Property that accrued or arose on or after March 10, 2002 (the “Assumed Liabilities”).  Neither Parent nor Acquisition Sub shall assume any liabilities and obligations of Seller, nor be liable or obligated with respect to any such liabilities or obligations, except for the Assumed Liabilities.

2.2

No Expansion of Third Party Rights

.  The assumption by Acquisition Sub of the Assumed Liabilities shall not expand the rights or remedies of any third party against Acquisition Sub or Seller as compared to the rights and remedies which such third party would have had against Seller had Acquisition Sub not assumed the Assumed Liabilities.  Without limiting the generality of the preceding sentence, the assumption by Acquisition Sub of the Assumed Liabilities shall not create any third party beneficiary rights.

ARTICLE III

PURCHASE PRICE, MANNER OF PAYMENT AND CLOSING

3.1

Consideration

.  Upon the terms and subject to the conditions contained in this Agreement, in consideration for the Purchased Assets and the rights and covenants contained in Articles V and VI hereof and in full payment therefor, (i) Parent (or, at its option, Acquisition Sub) will pay to Seller, or cause to be paid to Seller, the purchase price set forth in Section 3.2 and (ii) Acquisition Sub will assume the Assumed Liabilities.

3.2

Amount

.  The aggregate consideration payable by Parent and Acquisition Sub to Seller for the Purchased Assets and the Employment Rights are:

(a)

cash in the amount of $120,000, paid in the following installments: $30,000 on April 25, 2003 (the “Down Payment”), which amount shall be secured by a promissory note which may be forgiven in accordance with subsection 3.2(b), and $30,000 on each of April 30, 2003; May 31, 2003; and June 30, 2003 (each a “Future Payment”); provided, however, that Parent and Acquisition Sub shall only be obligated to make a Future Payment if Seller has complied with the obligations and covenants under Article VI without interruption until the date of such Future Payment.  In no event shall the aggregate of all amounts paid by Parent and Acquisition Sub pursuant to this Section 3.2 exceed $120,000 (the “Purchase Price”).

(b)

effective as of April 30, 2003, Parent shall forgive a promissory note, in the principal amount of $30,000, and any accrued interest thereto, granted to Parent by Seller on April 25, 2003.

3.3

Time and Place of Closing

.  The transactions contemplated by this Agreement shall be consummated as of the Closing Date (the “Closing”).  

At the Closing:

(a)

Seller shall deliver to Acquisition Sub the Bill of Sale in the form as set forth in Exhibit A and such other endorsements, consents, assignments, instruments of conveyance and transfer documents (including the Assignment and Assumption Agreement in the form set forth in Exhibit B) in the form and substance as Acquisition Sub may reasonably request to vest in Acquisition Sub all right, title and interest in, to and under the Purchased Assets.  Simultaneously with the consummation of the transactions contemplated hereby, Seller, through its officers, agents and employees, will put Acquisition Sub into full possession and enjoyment of all tangible Purchased Assets, subject to the release of Liens in accordance with Section 6.1, at the facilities where they are located as of the Closing Date.

(b)

Seller and Acquisition Sub shall execute and deliver the Assignment and Assumption Agreement.

3.4

Transfer Taxes

.  Seller shall be solely liable for, and shall pay when due, any sales, use, excise or other transfer taxes (“Transfer Taxes”) incurred in connection with the sale, purchase or transfer of the Purchased Assets, and shall indemnify Parent and Acquisition Sub against any such Transfer Taxes, such indemnity to be governed by the provisions of Article VII hereof.  To the extent permitted by applicable law, the parties hereto shall cooperate in minimizing any Transfer Taxes.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Parent, Acquisition Sub and Seller represent and warrant to each other that the statements contained in this Article IV are true and correct, except as set forth in Schedule IV.

4.1

Authority

.  Each party hereby represents and warrants to the other that such party has the right, power and authority to enter into this Agreement and to fully perform all of its obligations hereunder, and entering into this Agreement does not and will not violate any agreement or obligation existing between such party and any third party.

4.2

No Conflict

.  Seller represents and warrants that: (a) each employee or consultant of Seller employed or providing services at a location identified on Schedule 4.2 or whose primary responsibility is to oversee such locations (the “Seller Employee”) is not obligated under any agreement or contract, or subject to any judgment, decree or order of any court or administrative agency, that would conflict with the business activities of Parent; and (b) neither the execution nor delivery of this Agreement, nor the carrying on of the business activities of Parent, as presently conducted or proposed to be conducted, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any transferred Contract.

4.3

Litigation

.  There is no private or governmental action, suit, proceeding, claim, arbitration or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the knowledge of Seller, threatened (including allegations that could form the basis for future action) nor any judgment, decree or order against Seller, or, to the knowledge of Seller, any of its directors or officers (in their capacities as such), that could prevent, enjoin, or materially alter or delay any of the transactions contemplated by this Agreement, or that could reasonably be expected to have a material adverse effect on Seller or the Purchased Assets.  Seller does not have any plans to initiate any litigation, arbitration or other proceeding against any third party.

4.4

Title to Property

.  Seller has good and marketable title to all of the Purchased Assets, in each case free and clear of all Liens.

4.5

Taxes

.  Seller hereby affirms to Parent and Acquisition Sub that all taxes, including without limitation, income, property, sales, use, franchise, added value, withholding, and social security taxes, imposed by the United States, any state, municipality, other local government or other subdivision or instrumentality of the United States, or any foreign country or any state or other government thereof, or any other taxing authority, that are due or payable by Seller, and all interest and penalties thereon, whether disputed or not, and which would result in the imposition of a lien, claim or encumbrance on the Purchased Assets or against Parent or Acquisition Sub, other than taxes which are not yet due and payable, have been paid in full, all tax returns required to be filed in connection therewith have been accurately prepared and duly and timely filed an d all deposits required by law to be made by Seller with respect to employees’ withholding taxes have been duly made.  Seller is not delinquent in the payment of any foreign or domestic tax, assessment or governmental charge or deposits which would result in the imposition of a lien, claim or encumbrance on the Purchased Assets or against Parent or Acquisition Sub, and Seller does not have a tax deficiency or claim outstanding, proposed or assessed against it, and there is no basis for any such deficiency or claim, which would result in the imposition of any lien, claim or encumbrances on the Purchased Assets or against Parent or Acquisition Sub.

4.6

Material Contracts

.  Schedule 1.1(c) contains a list of all contracts that are material to the maintenance and operation of the Transferred Property.  Seller has performed all of the obligations required to be performed by it and is entitled to all benefits under, and is not alleged to be in default in respect of any Contract.  Each of the Contracts is in full force and effect, unamended, and there exists no default or event of default or event, occurrence, condition or act, with respect to Seller or, to the knowledge of Seller, with respect to the other contracting party, or otherwise that, with or without the giving of notice, the lapse of the time or the happening of any other event or conditions, could reasonably be expected to (A) become a default or event of default under any Contract or (B) result in the loss or expiration of any mat erial right or option by Seller (or the gain thereof by any third party) under any Contract.  True, correct and complete copies of all Contracts have been delivered to Parent and Acquisition Sub.

4.7

Purchased Assets.   The Purchased Assets do not constitute all or substantially all of the assets of Seller.  Seller represents that the consideration received by Seller hereunder is full and adequate consideration for the Purchased Assets and reflects the fair market value of the Purchased Assets.  The board of directors of Seller has approved and adopted the Agreement and the Asset Acquisition and has approved the valuation of the Purchased Assets by the Agreement.  No approval or consent of the stockholders of Seller is required by applicable law for the sale or transfer of the Purchased Assets to Acquisition Sub.  

4.8

No Injunctions or Restraints; Illegality.  No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal or regulatory restraint or prohibition preventing the consummation of the Asset Acquisition is in effect, nor is any proceeding brought by an administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, seeking any of the foregoing pending; nor has there been any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Asset Acquisition, which makes the consummation of the Asset Acquisition illegal.  

4.9

Representations Complete

.  None of the representations or warranties made by Seller or in any Schedule hereto, including Schedule IV, or certificate furnished by Seller pursuant to this Agreement,  when all such documents are read together in their entirety, contains or will contain at the Closing any untrue statement of a material fact, or omits or will omit at the Closing to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading.

ARTICLE V

EMPLOYMENT RIGHTS

5.1

Right to Solicit and Hire Employees and Consultants

.  Parent and Acquisition Sub shall have the right to, directly or indirectly, (a) identify, solicit, encourage or take any other action which is intended to induce or encourage, or has the effect of inducing of encouraging, any Seller Employee to terminate his or her employment or consulting relationship with Seller and (b) hire any Seller Employee (the “Employment Rights”).

5.2

No Employment Obligations

.  Nothing contained herein, expressed or implied, is intended to confer upon any Seller Employee the right to employment with Parent or Acquisition Sub for any period by reason of this Agreement.  Nothing contained herein is intended to confer upon any Seller Employee any particular term or condition of employment.  Any employment or consulting relationships between Parent or Acquisition Sub and a Seller Employee shall be on an “at-will” basis.

5.3

Post-Closing Liabilities

.  Seller shall be responsible for all liabilities, severance payments, salaries, benefits and similar employer payment obligations, including, without limitation, health care continuation coverage with respect to plans maintained by the Seller and damages or settlements arising out of any claims of wrongful or illegal termination, arising out of, relating to, or resulting from the termination of service of any Seller Employee as a result of the Asset Acquisition, and Seller agrees to indemnify Parent and Acquisition Sub for any such liabilities or obligations.

ARTICLE VI

POST-CLOSING COVENANTS

6.1

Release of Liens

.  Upon receipt of the Down Payment and upon receipt of each Future Payment listed in Section 3.2(a), Seller shall promptly cause any secured parties holding any Lien encumbering any Transferred Property to release such Lien in accordance with Schedule 6.1.  Seller shall promptly provide written evidence to Parent or Acquisition Sub of each such release, in no case later than the date of the following Future Payment.

6.2

Covenant Not to Sue.  Seller shall not commence any litigation, action or claim relating to the employment or engagement by Parent or Acquisition Sub of any Seller Employee.

6.3

Covenant Not to Compete

.  Beginning on the Closing Date and ending on the third anniversary of the Closing Date (the “Restricted Period”), Seller shall not directly or indirectly or through any entity engage, in any business and any activities associated, directly or indirectly, with the operation of virtual reality arcade games for entertainment.  During the Restricted Period, Seller shall use its best efforts to ensure that neither Seller’s stockholders nor employees violate the terms of this section.

6.4

Covenant Not to Solicit

.  Seller acknowledges that the employees and consultants of Parent and Acquisition Sub, including any Seller Employees hired by Parent or Acquisition Sub in connection with the transactions contemplated herein, are a valuable asset to Parent and Acquisition Sub and are difficult to replace.  Accordingly, during the Restricted Period, Seller agrees that it will not directly or indirectly, personally or through others, knowingly encourage, induce, attempt to induce, solicit or attempt to solicit any Parent or Acquisition Sub employee or consultant to leave his or her employment with Parent or Acquisition Sub.  In the event that the period of the non-solicitation obligations set forth above are determined to be unenforceable by a court of competent jurisdiction, the provision shall be enforced for the maximum period allowable.  In the e vent that Seller breaches the provisions of this Section 6.4, the parties agree that it would be difficult to determine the amount of actual damages to Parent and Acquisition Sub that would result from such breach and that Parent and Acquisition Sub shall therefore be entitled to preliminary and other injunctive relief and to specific performance of the terms and provisions hereof.  During the Restricted Period, Seller shall use its best efforts to ensure that neither Seller’s stockholders nor employees violate the terms of this section.

6.5

Separate Covenants

.  The covenants contained in Sections 6.3 and 6.4 shall be construed as a series of separate covenants, one for each country, province, state, city or other political subdivision.  Except for geographic coverage, each such separate covenant shall be deemed identical in terms to the covenants contained in Sections 6.3 and 6.4.  If, in any judicial proceeding, a court refuses to uphold the validity of any of such separate covenants (or any part thereof), then such unenforceable covenant (or such part) shall be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be deemed valid.  In the event that the provisions of Sections 6.3 and 6.4 are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable laws.

6.6

Payments of Accounts Receivable

.  In the event Seller shall receive any instrument of payment of any Receivable, Seller shall forthwith deliver it to Acquisition Sub, endorsed where necessary, without recourse, in favor of Acquisition Sub.

6.7

Further Assurances

.  The parties shall execute such further documents, and perform such further acts, as may be necessary to transfer and convey the Purchased Assets to Acquisition Sub, on the terms herein contained, and to otherwise comply with the terms of this Agreement and consummate the transaction contemplated hereby.

6.8

Bulk Sales Laws

.  Each of Parent, Acquisition Sub and Seller hereby waives compliance by the other with the so-called “bulk sales law” and any other similar laws in any applicable jurisdiction in respect of the transactions contemplated by this Agreement.

ARTICLE VII

INDEMNIFICATION

7.1

Survival of Representations, Warranties and Covenants

.  Notwithstanding any investigation conducted before or after the Closing, and notwithstanding any actual or implied knowledge or notice of any facts or circumstances which Parent, Acquisition Sub or Seller may have as a result of such investigation or otherwise, Parent, Acquisition Sub and Seller will be entitled to rely upon the other party’s representations, warranties and covenants set forth in this Agreement.  Unless otherwise specified herein, the obligations of Parent, Acquisition Sub and Seller with respect to their respective representations, warranties, agreements and covenants will survive the Closing and continue in full force and effect until the date two (2) years following the Closing Date.

7.2

Indemnification of Parent and Acquisition Sub.  Seller shall defend, indemnify and hold Parent and Acquisition Sub harmless from and against any liabilities, losses, claims, damages, costs, expenses and settlement amounts (including, without limitation, reasonable attorneys’ fees) arising out of or in connection with, directly or indirectly,

(a)

any inaccuracy or breach of a representation or warranty made by Seller in the Agreement or related transaction documents;

(b)

any failure by Seller to perform or comply with any of its covenants contained herein;

(c)

any action, suit, proceeding, claim, arbitration or investigation initiated by employees, founders, or stockholders of, or creditors to, Seller, or any other third party, against Seller, Parent or Acquisition Sub or any of their respective directors, officers and stockholders, including, without limitation, any such action, suit, proceeding, claim, arbitration or investigation relating to a bankruptcy filing by Seller; and

(d)

the failure of Seller to cause secured parties to release Liens encumbering the Purchased Assets in accordance with Schedule 6.1.

7.3

Procedure

.  Indemnification claims by Parent or Acquisition Sub pursuant to this Article VII shall be satisfied by first deducting the amounts of such claims from any Future Payments owed by Parent or Acquisition Sub to Seller pursuant to Article III herein.  In the event that an indemnification claim by Parent or Acquisition Sub is not satisfied by such Future Payments, Seller shall be liable for any remaining amounts.

ARTICLE VIII

GENERAL PROVISIONS

8.1

Notices

.  All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or mailed by registered or certified mail (return receipt requested) or sent via facsimile (with confirmation of transmission) to the parties at the following address (or at such other address for a party as shall be specified by like notice):

(a)

if to Parent or Acquisition Sub, to:

Global VR

1991 Hartog Drive

San Jose, CA 95131

Attention: Milind Bharvirkar

Facsimile No.:

(408) 501-0001

Telephone No.:

(408) 501-0000

with a copy to:

Wilson Sonsini Goodrich & Rosati P.C.

650 Page Mill Road

Palo Alto, CA 94304

Attention: Mark E. Bonham

Facsimile No.:

(650) 493-6811

Telephone No.:

(650) 493-9300

(b)

if to Seller, to:

VirTra Systems, Inc.

440 North Center

Arlington, TX 76011

Attention: L. Kelly Jones

Facsimile No.:

(817) 261-4269

Telephone No.:

(817) 265-1440

8.2

Counterparts

.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

8.3

Entire Agreement; No Third Party Beneficiaries

.  This Agreement and the documents and instruments and other agreements specifically referred to herein or delivered pursuant hereto, including the Exhibits, the Schedules, including Schedule IV, (a) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and (b) are not intended to confer upon any other person any rights or remedies hereunder.

8.4

Severability

.  In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.  The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

8.5

Remedies Cumulative

.  Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.

8.6

Governing Law

.  This Agreement will be interpreted and construed in accordance with the laws of the State of California and the United States of America, without regard to conflict of law principles.

8.7

Assignment

.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties.  Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

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IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase Agreement as of the date first above written.

PARENT:

VIRTUAL TECHNOLOGIES, INC.
D/B/A GLOBAL VR

By:

Name:

Milind Bharvirkar

Title:

President

ACQUISITION SUB:

GLOBAL VR EXTREME, INC.

By:

Name:

Title:

SELLER:

VIRTRA SYSTEMS, INC.

By:

Name:

L. Kelly Jones

Title:

Chief Executive Officer

SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT

[Schedules omitted]

SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT

EX-99

Exhibit 99.1

CERTIFICATE

          As required by 18 U.S.C. Section 1350, (as amended by Section 906 of the Sarbanes-Oxley act of 2002), I certify that:

          (1)        The Quarterly Report of VirTra Systems, Inc. for the quarter ending March 31, 2003, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

          (2)        The information contained in that Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ L. Kelly Jones     

L. Kelly Jones

Chief Executive Officer and Chief Financial Officer

May 14, 2003