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Elise Silagy

December 1, 2020

VirtualArmour Reports Q3 2020 Results

16% Growth in Managed & Professional Services

CENTENNIAL, Colorado, – (November 30, 2020) – VirtualArmour International Inc. (CSE:VAI) (OTCQB:VTLR), a premier cybersecurity managed services provider, reported results for the third quarter ended September 30, 2020. Financial results are in U.S. dollars, with comparisons made to the same year-ago quarter unless otherwise noted. For complete details, please refer to our financial statements and discussion found here: 

2020-Q3 Financial Highlights

  • Managed and professional services revenue for the quarter increased to $1.6 million, increasing by 15.6% year-over-year. 
  • Gross profit margins for managed and professional services exceeded 52% with overall gross profit margin, including lower margin resale revenue, of 38.2%. 
  • The company realized $130,000 in operating income in the quarter ending September 30, 2020.
  • Adjusted EBITDA was $218,000 for the quarter ending September 30, 2020. See Supplemental Non-GAAP Financial Measures below.
  • Annual recurring revenue (ARR) totaled $5.1 million at September 30, 2020, representing an increase of  8% from $4.7 million at September 30, 2019. ARR is defined as the value of VirtualArmour’s service contracts normalized to a one-year period.

2020-Q3 Operational Highlights 

  • Launch of new Essential Core Managed SOCaaS service offering and initial customer activated to the service. These economical service offerings enable current and new clients to extend, renew, or establish contracts with VirtualArmour given the current market conditions. 
  • Won 595k Managed SIEM, Endpoint Detection & Response contract win with high-tech manufacturing client.
  • VirtualArmour & Dynamic Funding Partnership enables financial options for clients to defer payments on managed service costs. Locks in for the term – hardware, software, and managed services for reduced upfront cashflow expenditure.
  • Strengthened relationship within the IBM Partner program, as well as new relationship expansion to Forescout Technologies, driving additional leads into the business. 
  • Digital marketing tactics expanded to Colorado region podcast audio advertisements and The Guardian UK online digital advertisements.
  • Memorandum of Understanding signed with Teesside University; strengthening the ties with Local University to UK SOC. Allowing VirtualArmour to conduct advanced research and development projects which lead to cutting edge solutions that would solve real life VirtualArmour problems, enriched access to hiring and module input.

2020-Q3 Financial Summary

  • Revenue totaled $2.76 million for the three months ending September 30, 2020. Managed and professional services revenue totaled $1.6 million in the third quarter reflecting a 15.6% increase in managed and professional services revenue year-over-year and Product revenue increased year-over-year by 11.0% to $1,128,000.
  • Q3 2020 Cost of sales totaled $1.7 million, same as 2019.
  • Gross profit was $1.06 million for the third quarter 2020 as compared to $723,000 in 2019. The change in gross profit was due to higher margin revenues from managed services and higher utilization of professional services resources in the third quarter 2020.
  • Total operating expenses were $926,000 in the third quarter 2020 as compared to $1.07 million in the prior year. 
  • Operating income was $130,000 for the third quarter 2020 compared to an operating loss of $342,000 in 2019. Net income was $185,500 or $(0.00) per share in the third quarter as compared to a net loss of $492,000 or $(0.01) per share in the prior year. 
  • Cash totaled $16,262 at September 30, 2020, compared to $72,358 at September 30, 2019.

Management Commentary

Tianyi Lu, VirtualArmour VP Product Strategy, highlights, “We have had great results from the launch of our new Essential Core Service offerings, so we have expanded these offerings to include SOCaaS. This new offering is intended for businesses that are less complex, but still require management of their SIEM while being mindful of their budgets.”

VirtualArmour CEO, Russ Armbrust, gives an overview of market conditions, “We are seeing an increase in the market for managed and professional security services when working with new clients that are looking to out-source their IT needs.”

VirtualArmour Outlook 2020

COVID-19 pandemic has forced a rapid shift in business to a remote workforce, something most companies were not prepared to do. With employees working from home for the first time, many IT departments are overwhelmed in regard to their cybersecurity posture and the expansion of their Remote Access VPNs. While having employees work from home reduces the risk of spreading and contracting the virus, this also puts business data at risk of malicious security threats. An unprotected remote workforce increases a company’s chance of security threats and can lead to detrimental consequences for a business – some even being forced into bankruptcy. In order to protect the remote workforce and prevent data loss, businesses will need to keep a close eye on security or hire an outside Managed Security Services Provider (MSSP) to ensure their information is secure. Due to its focus and go-to market on Managed Services, VirtualArmour is better prepared operationally and strategically to address these rapidly evolving needs compared to others that may have a narrower focus on just hardware/software resale.

Due to this rapidly evolving environment, VirtualArmour’s customers have approached the Company for needed expertise on filling their ever-changing needs. Companies are laying off IT staff to cut costs which results in an increased reliance on MSPs. Customers are relying on VirtualArmour as their strategic partner to help them with not only the planning and design, but also on-going managed services post COVID. VirtualArmour is well-positioned to capitalize on this growth opportunity and continues to deepen its penetration into the healthcare, financial, retail and service provider industries. VirtualArmour has seen an uptick in professional services around SSL VPN migrations and implementations due to a shifting workforce to all remote employees. The Company’s ability to provide Network Managed Services has been emphasized due to client base having to work fully remote with a reliance on digital communications’ uptime/availability critical to their success.

In order to increase managed services gross margin and further internal operational efficiency, VirtualArmour has enhanced its roadmap for automation. Based on existing KPI’s, it is expected that the productivity of our SOC analysts will drastically increase due to automating more of their typical workload, allowing us to accomplish more with less. SOC automation will allow VirtualArmour to resolve current and future threats quickly with automated proprietary playbooks, as attackers are becoming more sophisticated in their tactics and techniques. This differentiator keeps VirtualArmour at the forefront of stopping cybersecurity threats and increasing our clients’ security postures. The SOC Automation project in conjunction with Teesside University is due to commence in early September and the expectation is that we will start to see results by the end of 2020 – setting the foundations for expansion at scale in 2021.

About VirtualArmour 

VirtualArmour International is a global cybersecurity and managed services provider that delivers customized solutions to help businesses build, monitor, maintain and secure their networks. 

The company maintains 24/7 client monitoring and service management with specialist teams located in its U.S. and UK-based security operation centers. Through partnerships with best-in-class technology providers, VirtualArmour delivers leading hardware and software solutions for customers that are both sophisticated and scalable, and backed by industry-leading customer service and experience. The company’s proprietary CloudCastr client portal and prevention platform provides clients with unparalleled access to real-time reporting on threat levels, breach prevention and overall network security. VirtualArmour services a wide range of clients, which include Fortune 500 companies and several industry sectors in over 30 countries across five continents. For further information, visit

Supplemental Non-GAAP Financial Measures

In addition to GAAP financial measures, management uses non-GAAP financial measures to assess the company’s operational performance. It is likely that the non- GAAP financial measures used by the company will not be comparable to similar measures reported by other issuers or those used by financial analysts as their measures may have different definitions.  Generally, a non-GAAP financial measure is a numerical measure of an entity’s historical or future financial performance, financial position or cash flows that is neither calculated nor recognized under GAAP. Management believes that such non-GAAP financial measures can be important as they provide users of the financial statements with a better understanding of the results of the company’s recurring operations and their related trends, while increasing transparency and clarity into its operating results. Management also believes these measures can be useful in assessing the company’s capacity to discharge its financial obligations.

Management assesses adjusted EBITDA as the net gain (loss) for the period as reported excluding depreciation and amortization, change in fair value of warrant derivative liabilities, share-based compensation and interest expense. Adjusted EBITDA is not a term recognized under GAAP and non-GAAP measures do not have standardized meaning. Accordingly, non-GAAP measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. 

The table below provides a reconciliation of net gain (loss) for the period as reported to non-GAAP adjusted EBITDA for the three months and nine months ended September 30, 2020 and 2019:

Important Cautions Regarding Forward Looking Statements

This press release may include forward-looking information within the meaning of Canadian securities legislation and U.S. securities laws. This press release includes certain forward-looking statements concerning a service contract VirtualArmour has entered into with a current client, VirtualArmour’s continued relationship with various suppliers, the future performance of our business, its operations and its financial performance and condition, as well as management’s objectives, strategies, beliefs and intentions. The forward-looking information is based on certain key expectations and assumptions made by the management of VirtualArmour. Although VirtualArmour believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information as VirtualArmour cannot provide any assurance that it will prove to be correct.

Forward-looking statements are frequently identified by such words as “may”, “will”, “plan”, “expect”, “anticipate”, “estimate”, “intend” and similar words referring to future events and results. Forward-looking statements are based on the current opinions and expectations of management. All forward-looking information is inherently uncertain and subject to a variety of assumptions, risks and uncertainties, including the success of the Company in performing the IT implementation and migration, performance under the contract by all parties, the ability of VirtualArmour to meet timelines, the continued availability of necessary hardware, the absence of any trade war or tariffs affecting VirtualArmour’s ability to perform, competitive risks and the availability of financing. These forward-looking statements are made as of the date of this press release and VirtualArmour disclaims any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.


Three months ended 

September 30

Nine months ended 

September 30

Notes 2020








Revenue 11 2,762,208 2,429,105 7,891,313 8,679,594
Cost of sales 12 (1,706,870) (1,705,750) (4,956,277) (6,207,712)
Gross Profit 1,055,338 723,355 2,935,036 2,471,882
General and administrative  12 466,727 452,492 1,466,969 1,742,458
Research and development 12 97,647 53,034 279,749 154,986
Sales and marketing 12 361,412 559,770 1,231,862 1,815,814
Total Expenses 925,786 1,065,296 2,978,580 3,713,258
Gain (Loss) from Operations 129,552 (341,941) (43,544) (1,241,376)
Other Income (Expenses)
Change in fair value of warrant derivative liabilities 131,485 20,376
Interest expense (75,678) (150,096) (808,851) (299,362)
Net and Comprehensive Gain (Loss) for the period 185,359 (492,037) (832,019) (1,540,738)
Gain (Loss) per share – basic and diluted 0.00 (0.01) (0.01) (0.02)
Weighted average number of shares outstanding – basic and diluted 106,508,822 63,599,447 95,546,573 63,599,447


Notes September 30,           2020


December 31,   2019


Current Assets
Cash  16,262 145,268
Accounts receivable 3 1,720,878 3,776,520
Other receivables 47,513
Prepaid expenses 222,853 279,003
Contract assets  1,010,710 722,683
Total Current Assets 2,970,703 4,970,987
Operating lease right-of-use assets 9 19,860 88,242
Property and equipment 4 331,223 555,860
Intangible assets 5 33,648 45,519
Contract assets  139,937 542,012
Total Assets  3,495,371 6,202,620
Current Liabilities
Accounts payable and accrued liabilities 6 1,459,139 5,305,786
Factoring payable 3 501,295 377,740
Deferred revenue 11 2,699,910 1,099,387
Loans payable 7 838,536 1,206,468
Current portion of operating lease liabilities 9 22,578 100,772
Current portion of finance lease liabilities 9 27,632 138,441
Due to related parties 8 401,699
Total Current Liabilities 5,549,090 8,630,293
Deferred revenue 11 215,820 626,178
Loans payable  7 429,082 281,984
Warrant liabilities 571,945
Finance lease liabilities 9 12,188
Total Liabilities  6,765,937 9,550,643
Common stock, no par value, 300,000,000 shares authorized Issued and outstanding: 106,508,822 (2019 – 63,599,447) shares 8,578,654 7,670,975
Additional paid-in capital 2,015,242 2,013,445
Deficit (13,864,462) (13,032,443)
Total Stockholders’ Deficit  (3,270,566) (3,348,023)
Total Liabilities and Stockholders’ Deficit  3,495,371 6,202,620

Company Contact

Russ Armbrust, CEO

VirtualArmour International Inc.

Tel (720) 644-0913

Email Contact

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