UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| 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:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
N/A
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark 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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large, accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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As of November 5, 2025, the registrant had shares of common stock outstanding.
TABLE OF CONTENTS
| 2 |
VIRTRA, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
| September 30, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Unbilled revenue | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Deferred contract costs – short-term | ||||||||
| Total current assets | ||||||||
| Long-term assets: | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Intangible assets, net | ||||||||
| Security deposits, long-term | ||||||||
| Other assets, long-term | ||||||||
| Deferred tax asset, net | ||||||||
| Deferred contract costs – long-term | ||||||||
| Total long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued compensation and related costs | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Note payable, current | ||||||||
| Operating lease liability, short-term | ||||||||
| Deferred revenue, short-term | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Deferred revenue, long-term | ||||||||
| Note payable, long-term | ||||||||
| Operating lease liability, long-term | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (See Note 11) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock $ par value; authorized; shares issued or outstanding | ||||||||
| Common stock $ par value; shares authorized; shares issued and outstanding as of September 30, 2025 and shares issued and outstanding as of December 31, 2024 | ||||||||
| Class A common stock $ par value; shares authorized; shares issued or outstanding | ||||||||
| Class B common stock $ par value; shares authorized; shares issued or outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Retained Earnings | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited condensed financial statements.
| F-1 |
VIRTRA, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| (Restated) | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Total revenue | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Research and development | ||||||||||||||||
| Net operating expense | ||||||||||||||||
| Income (loss) from operations | ( | ) | ||||||||||||||
| Other income (expense): | ||||||||||||||||
| Other income | ||||||||||||||||
| Other (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net other income (expense) | ( | ) | ||||||||||||||
| Income (Loss) before provision for income taxes | ( | ) | ||||||||||||||
| Provision (Benefit) for income taxes | ||||||||||||||||
| Net income (loss) | $ | ( | ) | $ | $ | $ | ||||||||||
| Net income (loss) per common share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | $ | $ | ||||||||||
| Diluted | $ | ( | ) | $ | $ | $ | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
See accompanying notes to unaudited condensed financial statements.
| F-2 |
VIRTRA, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Additional | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Total | ||||||||||||||||||||||
| Nine Months Ended Sept 30, 2025 | ||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Stock options exercised | ||||||||||||||||||||||||||||
| Stock reserved for future services | - | - | ||||||||||||||||||||||||||
| RSUs issued (stock for services) | - | |||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, March 31, 2025 | ||||||||||||||||||||||||||||
| Stock options exercised | - | |||||||||||||||||||||||||||
| Stock reserved for future services | - | - | ||||||||||||||||||||||||||
| RSUs issued (stock for services) | - | |||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, June 30, 2025 | ||||||||||||||||||||||||||||
| Stock options exercised | - | |||||||||||||||||||||||||||
| Stock reserved for future services | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| RSUs issued (stock for services) | - | |||||||||||||||||||||||||||
| Net income | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, Sept 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Nine Months Ended Sept 30, 2024 | ||||||||||||||||||||||||||||
| (Restated) | ||||||||||||||||||||||||||||
| Balance, Dec 31, 2023 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Stock options exercised | - | |||||||||||||||||||||||||||
| Stock reserved for future services | - | - | ||||||||||||||||||||||||||
| RSUs issued (stock for services) | - | - | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, March 31, 2024 | ||||||||||||||||||||||||||||
| Stock options exercised | - | |||||||||||||||||||||||||||
| Stock reserved for future services | - | - | ||||||||||||||||||||||||||
| RSUs issued (stock for services) | - | |||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, June 30, 2024 | ||||||||||||||||||||||||||||
| Stock options exercised | - | |||||||||||||||||||||||||||
| Stock reserved for future services | - | - | ||||||||||||||||||||||||||
| RSUs issued (stock for services) | - | |||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, Sept 30, 2024 | $ | $ | $ | $ | ||||||||||||||||||||||||
See accompanying notes to unaudited condensed financial statements.
| F-3 |
VIRTRA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended September 30 | ||||||||
| 2025 | 2024 | |||||||
| (restated) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Right of use amortization | ||||||||
| Employee stock compensation | ||||||||
| Bad debt expense | ||||||||
| Stock issued for service | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ( | ) | ||||||
| Deferred Contract Costs – short-term | ( | ) | ||||||
| Deferred taxes | ||||||||
| Deferred Contract Costs – long-term | ( | ) | ||||||
| Unbilled revenue | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other assets | ||||||||
| Accounts payable and other accrued expenses | ( | ) | ( | ) | ||||
| Operating lease right of use | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Internal intangible assets | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash (used in) investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Principal payments of debt | ( | ) | ( | ) | ||||
| Stock issued for options exercised | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net increase (decrease) in cash | ||||||||
| Cash and restricted cash, beginning of period | ||||||||
| Cash and restricted cash, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Income taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
See Note 4. for additional details concerning intangible asset classification and see accompanying notes to unaudited condensed financial statements.
| F-4 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. Organization and Significant Accounting Policies
Organization and Business Operations
VirTra, Inc. (the “Company,” “VirTra,” “we,” “us” or “our”), located in Chandler, Arizona, is a global provider of judgmental use of force training simulators and firearms training simulators for the law enforcement, military, educational and commercial markets. The Company’s patented technologies, software, and scenarios provide intense training for de-escalation, judgmental use-of-force, marksmanship, and related training that mimics real-world situations. VirTra’s mission is to save and improve lives worldwide through practical and highly effective virtual reality and simulator technology. The Company sells its products worldwide through a direct sales force and international distribution partners. The original business started in 1993 as Ferris Productions, Inc and ultimately became VirTra, Inc., a Nevada corporation.
Basis of Presentation
The unaudited financial statements included herein have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our audited financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on March 27, 2025. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading.
The accompanying unaudited financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position on September 30, 2025, and the results of our operations and cash flows for the periods presented. We derived the December 31, 2024, balance sheet data from audited financial statements; however, we did not include all disclosures required by GAAP.
Interim results are subject to seasonal variations, and the results of operations for the three and nine months ended September 30, 2025, are not necessarily indicative of the results to be expected for the full year.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Significant accounting estimates in these financial statements include valuation assumptions for share-based payments, allowance for doubtful accounts, inventory reserves, accrual for warranty reserves, the carrying value of long-lived assets and intangible assets, income tax valuation allowances, and the allocation of the transaction price to the performance obligations in our contracts with customers.
Revenue Recognition
The Company adopted the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customer (Topic 606) (“ASC 606”) on January 1, 2018, and the Company elected to use the modified retrospective transition method which requires application of ASC 606 to uncompleted contracts at the date of adoption. The adoption of ASC 606 did not have a material impact on the financial statements.
Under ASC 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. Significant judgment is necessary when making these determinations.
| F-5 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Restatement of Year over Year Revenue Numbers for 2024
During
the audit of the 2024 financial statements, it was discovered that due to issues in the implementation of new accounting software, a
revenue line was missing in 2023. This occurred when a deposit from a 2021 customer was not accurately entered into the 2021 initial
launch of the new accounting system. $
Sources of Revenues
The Company’s primary sources of revenue are derived from simulator and accessories sales, training and installation, the sale of customizable software, the sale of customized content scenarios, and the sale of extended service-type warranties. Sales discounts are presented in the financial statements as reductions in determining net revenues. Credit sales are recorded as current assets (accounts receivable and unbilled revenue). Prepaid deposits received at the time of sale and extended warranties purchased are recorded as current and long-term liabilities (deferred revenue) until earned. The following briefly summarizes the nature of our performance obligations and method of revenue recognition:
| Performance Obligation | Method of Recognition | |
| Simulator and accessories | Upon transfer of control | |
| STEP Program | Deferred and recognized over the life of the contract | |
| Installation and training | Upon completion or over the period of services being rendered | |
| Extended service-type warranty | Deferred and recognized over the life of the extended warranty | |
| Customized software and content | Upon transfer of control or over the period services are performed depending on the terms of the contract | |
| Customized content scenario | As performance obligation is transferred over time (input method using time and materials expanded) | |
| Design and prototyping | Recognized at the completion of each agreed upon milestone | |
| Sales-based royalty exchanged for license of intellectual property | Recognized as the performance obligation is satisfied over time – which is as the sales occur. |
The Company recognizes revenue upon transfer of control or upon completion of the services for the simulator and accessories; for the installation and training and customized software performance obligations as the customer has the right and ability to direct the use of these products and services and the customer obtains all of the remaining benefit from these products and services at that time. Revenue from certain customized content contracts may be recognized over the period the services are performed based on the terms of the contract. For the sales-based royalty exchanged for license of intellectual property, the Company recognized revenue as the sales occur over time.
The Company recognizes revenue on a straight-line basis over the period of services being rendered for the extended service-type warranties as these warranties represent a performance obligation to “stand ready to perform” over the duration of the warranties. As such, the warranty service is performed continuously over the warranty period.
Each contract states the transaction price. The contracts do not include variable consideration, significant financing components or non-cash consideration. The Company has elected to exclude sales and similar taxes from the measurement of the transaction price. The contract’s transaction price is allocated to the performance obligations based upon their stand-alone selling prices. Discounts on the stand-alone selling prices, if any, are allocated proportionately to each performance obligation.
| F-6 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Disaggregation of Revenue
Under ASC 606, disaggregated revenue from contracts with customers depicts the nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors. The Company has evaluated revenues recognized and the following table illustrates the disaggregation disclosure by customer’s location and performance obligation.
| Three Months Ended September 30 | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||
| Commercial | Government | International | Total | Commercial | Government | International | Total | |||||||||||||||||||||||||
| Simulators and accessories | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Extended Service-type warranties | ||||||||||||||||||||||||||||||||
| Customized software and content | ||||||||||||||||||||||||||||||||
| Installation and training | ( | ) | ||||||||||||||||||||||||||||||
| Design & Prototyping | ||||||||||||||||||||||||||||||||
| STEP | ||||||||||||||||||||||||||||||||
| Total Revenue | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Nine Months Ended September 30 (RESTATED) | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||
| Commercial | Government | International | Total | Commercial | Government | International | Total | |||||||||||||||||||||||||
| Simulators and accessories | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Extended Service-type warranties | ||||||||||||||||||||||||||||||||
| Customized software and content | ||||||||||||||||||||||||||||||||
| Installation and training | ||||||||||||||||||||||||||||||||
| Design & Prototyping | ||||||||||||||||||||||||||||||||
| STEP | ||||||||||||||||||||||||||||||||
| Total Revenue | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| F-7 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Commercial
customers include selling through prime contractors for military or law enforcement contracts domestically. Government customers are
defined as directly selling to government agencies. For the three months ended September 30, 2025, governmental customers comprised $
Segment Information
Information
related to the Company’s
The Company has identified the following business segments:
| ● | Simulators and Accessories- These include all variations of the VirTra simulator, simulated recoil kits, Return first devices, Taser©, OC Spray, low light devices and refill options. | |
| ● | Extended Service-type warranties – Warranties on all products past 1 or more years | |
| ● | Customized software and Custom content- Contracts with specific suppliers who have asked for content related directly to their situations that we design and film or specific software requests for their system only | |
| ● | Installation and Training – Installation of our simulators at the specific sites as well as extra training classes preformed onsite, virtually or at the VirTra Training Center | |
| ● | Design and Prototyping – Specific contracts related to hardware development for specific customers | |
| ● | Subscription Training Equipment Partnership (STEP)™ is a program that allows agencies to utilize VirTra’s simulator products, accessories, and V-VICTA interactive coursework on a subscription basis. |
| Three months ending September 30, 2025 | ||||||||
| Sale of product | 2025 | 2024 | ||||||
| Simulators and accessories | $ | $ | ||||||
| Extended Service-type warranties | ||||||||
| Customized software and content | ||||||||
| Installation and training | ||||||||
| Design & Prototyping | ||||||||
| STEP | ||||||||
| Total consolidated | $ | $ | ||||||
| F-8 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
| Depreciation and amortization | 2025 | 2024 | ||||||
| Simulators and accessories | $ | $ | ||||||
| Extended Service-type warranties | ||||||||
| Customized software and content | ||||||||
| Installation and training | ||||||||
| Design & Prototyping | ||||||||
| STEP | ||||||||
| Corporate | ( | ) | ||||||
| Total consolidated | $ | $ | ||||||
| Segment income (loss) | 2025 | 2024 | ||||||
| Simulators and accessories | $ | $ | ||||||
| Extended Service-type warranties | ||||||||
| Customized software and content | ||||||||
| Installation and training | ( | ) | ( | ) | ||||
| Design & Prototyping | ||||||||
| STEP | ||||||||
| Corporate | ( | ) | ( | ) | ||||
| Total | $ | ( | ) | $ | ||||
| Net of expenditures and disposals for segment assets | 2025 | 2024 | ||||||
| Simulators and accessories | $ | $ | ||||||
| Extended Service-type warranties | ||||||||
| Customized software and content | ||||||||
| Installation and training | ||||||||
| Design & Prototyping | ||||||||
| STEP | ||||||||
| Corporate purchases | ( | ) | ||||||
| Expenditures for segment assets | $ | ( | ) | $ | ||||
| Segment assets | 2025 | 2024 | ||||||
| Simulators and accessories | $ | $ | ||||||
| Extended Service-type warranties | ||||||||
| Customized software and content | ||||||||
| Installation and training | ||||||||
| Design & Prototyping | ||||||||
| STEP | ||||||||
| Corporate Assets | ||||||||
| Segment assets | $ | $ | ||||||
| F-9 |
See Note 3. for additional details about segment asset expenditures
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
| Nine months ending September 30, 2025 | ||||||||
| Sale of product | 2025 | 2024 | ||||||
| Simulators and accessories | $ | $ | ||||||
| Extended Service-type warranties | ||||||||
| Customized software and content | ||||||||
| Installation and training | ||||||||
| Design & Prototyping | ||||||||
| STEP | ||||||||
| Total consolidated | $ | $ | ||||||
| Depreciation and amortization | 2025 | 2024 | ||||||
| Simulators and accessories | $ | $ | ||||||
| Extended Service-type warranties | ||||||||
| Customized software and content | ||||||||
| Installation and training | ||||||||
| Design & Prototyping | ||||||||
| STEP | ||||||||
| Corporate | ||||||||
| Total consolidated | $ | $ | ||||||
| Segment income (loss) | 2025 | 2024 | ||||||
| Simulators and accessories | $ | $ | ||||||
| Extended Service-type warranties | ||||||||
| Customized software and content | ||||||||
| Installation and training | - | |||||||
| Design & Prototyping | ||||||||
| STEP | ||||||||
| Corporate | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
| Net of expenditures and disposals for segment assets | 2025 | 2024 | ||||||
| Simulators and accessories | $ | $ | ||||||
| Extended Service-type warranties | ||||||||
| Customized software and content | ||||||||
| Installation and training | ||||||||
| Design & Prototyping | ||||||||
| STEP | ||||||||
| Corporate purchases | ( | ) | ( | ) | ||||
| Expenditures for segment assets | $ | $ | ||||||
| Segment assets | 2025 | 2024 | ||||||
| Simulators and accessories | $ | $ | ||||||
| Extended Service-type warranties | ||||||||
| Customized software and content | ||||||||
| Installation and training | ||||||||
| Design & Prototyping | ||||||||
| STEP | ||||||||
| Corporate Assets | ||||||||
| Segment assets | $ | $ | ||||||
| F-10 |
See Note 3. for additional details about segment asset expenditures
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Customer Deposits
Customer
deposits consist of prepaid deposits received for equipment purchase orders and for Subscription Training Equipment Partnership (“STEP”)
operating agreements that expire annually. Customer deposits are considered a deferred liability until the completion of the customer’s
contract performance obligation. When revenue is recognized, the deposit is applied to the customer’s receivable balance. Customer
deposits are recorded as both current and long-term liabilities under deferred revenue on the accompanying balance sheet. As of September
30, 2025, there was $
Warranty
The
Company warranties its products from manufacturing defects on a limited basis for a period of one year after purchase but also sells
separately priced extended service-type warranties for periods of up to four years after the expiration of the standard one-year warranty.
During the term of the initial one-year warranty, if the device fails to operate properly from defects in materials and workmanship,
the Company will fix or replace the defective product. Deferred revenue for separately priced extended warranties one year or less totaled
$
STEP Revenue
The Company’s STEP operations consist principally of leasing its simulator products under operating agreements expiring in one year. At the commencement of a STEP agreement, any lease payments received are deferred and no income is recognized. Subsequently, payments are amortized and recognized as revenue on a straight-line basis over the term of the agreement. The agreements are generally for a period of 12 months and can be renewed for an additional 12-month period up to two additional 12-month period maximum of 36-months for the entire agreement. This is a change from prior years which allowed for renewals up to 48 months for a total of 60 months. Agreements may be terminated by either party upon written notice of termination at least 60 days prior to the end of the 12-month period. The payments are generally fixed for the first year of the agreement, with increases in payments in subsequent years to be mutually agreed upon. The agreements do not include variable lease payments or free rent periods. In addition, the agreements do not provide for the underlying assets to be purchased at their fair market values at interim periods or at maturity. Each STEP agreement comes with full customer support and stand-ready advance replacement parts to maintain each system for the duration of the lease. The amount that the Company expects to derive from the STEP equipment following the end of the agreement term is dependent upon the number of agreement terms renewed. The agreements do not include a residual value guarantee. Management notes with the 4-year history of providing this service and additional revenue stream, the Company has only had cancellation of a total of 9 STEP agreements before the 5-year end date of the contract, which equates to less than 5% of all agreements.
Concentration of Credit Risk and Major Customers and Suppliers
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, certificates of deposit, and accounts receivable.
The
Company’s cash, cash equivalents and certificates of deposit are maintained with financial institutions with high credit standings
and are FDIC insured deposits. The FDIC insures deposits according to the ownership category in which the funds are insured and how the
accounts are titled. The standard deposit insurance coverage limit is $
| F-11 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Sales are typically made on credit and the Company generally does not require collateral. Management performs ongoing credit evaluations of its customers’ financial condition and maintains an allowance for estimated losses. Historically, the Company has experienced minimal charges relative to doubtful accounts.
Historically, the Company primarily sells its products to U.S. federal, state, and municipal agencies.
As
of September 30, 2025, the Company had one customer that accounted for
As
of September 30, 2025, the Company had two suppliers that accounted for
For the three months ended September
30, 2025, the Company had one customer that accounted for
For
the nine months ended September 30, 2025, the Company had no customers that accounted for more than
| Three Months Ended September 30 | ||||||||
| 2025 | 2024 | |||||||
| (restated) | ||||||||
| Net Income (Loss) | $ | ( | ) | $ | ||||
| Weighted average common stock outstanding | ||||||||
| Incremental shares from stock options | ||||||||
| Weighted average common stock outstanding, diluted | ||||||||
| Net Income (Loss) per common share and common equivalent share | ||||||||
| Basic | $ | ( | ) | $ | ||||
| Diluted | $ | ( | ) | $ | ||||
| Nine Months Ended September 30 | ||||||||
| 2025 | 2024 | |||||||
| Net Income | $ | $ | ||||||
| Weighted average common stock outstanding | ||||||||
| Incremental shares from stock options | ||||||||
| Weighted average common stock outstanding, diluted | ||||||||
| Net Income (Loss) per common share and common equivalent share | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| F-12 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 2. Inventory
Inventory consisted of the following as of:
| September 30, 2025 | December 31, 2024 | |||||||
| Raw materials, WIP, finished goods and Materials being inspected | $ | $ | ||||||
| Reserve | ( | ) | ( | ) | ||||
| Total Inventory | $ | $ | ||||||
The Company regularly evaluates the useful life of its spare parts inventory but did not have any cause to reclassify any this quarter.
Note 3. Property and Equipment
Property and equipment consisted of the following as of:
| September 30, 2025 | December 31, 2024 | |||||||
| Land | $ | $ | ||||||
| Building & Building Improvements | ||||||||
| Computer equipment | ||||||||
| Furniture and office equipment | ||||||||
| Machinery and equipment | ||||||||
| STEP equipment | ||||||||
| Leasehold improvements | ||||||||
| Construction in Progress | ||||||||
| Total property and equipment | ||||||||
| Less: Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expenses, including STEP depreciation, were $
Note 4. Intangible Assets
Intangible asset consisted of the following as of:
| September 30, 2025 | December 31, 2024 | |||||||
| Patents | $ | $ | ||||||
| Capitalized media content | ||||||||
| Capitalized software | ||||||||
| Acquired lease intangible assets | ||||||||
| Total intangible assets | ||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
| F-13 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Amortization
expenses were $
In the second quarter of 2025, the Company reclassified capitalized software development costs associated with V-XR from work in progress to an intangible asset upon the sale and delivery of the initial unit. The asset is being amortized over five years, reflecting its estimated useful life as determined through comprehensive evaluation.
Note 5. Leases
From
2016 through March 2019, the Company leased approximately
On
June 1, 2022, we entered into a new lease of approximately
The Company’s lease agreements do not contain any residual value guarantees, restrictive covenants, or variable lease payments. The Company has not entered into any financing leases.
In addition to base rent, the Company’s lease provides for additional payments for other charges, such as rental tax. The lease includes fixed rent escalations. The Company’s lease does not include an option to renew.
The Company determines if an arrangement is a lease at inception. Operating leases are recorded in operating lease right of use assets, net, operating lease liability – short-term, and operating lease liability – long-term on its balance sheets.
Operating
lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation
to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on
the present value of lease payments over the lease term. As the Company’s lease does not provide an implicit rate, the Company
uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease
payments. The incremental borrowing rate used at adoption was
| F-14 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The balance sheet classification of lease assets and liabilities as of September 30, 2025, are as follows:
| Balance Sheet Classification | September 30, 2025 | December 31, 2024 | ||||||
| Assets | ||||||||
| Operating lease right-of-use assets, December 31, 2024 | $ | $ | ||||||
| Amortization for the nine months ended September 30, 2025 | ( | ) | ( | ) | ||||
| Total operating lease right-of-use asset, September 30, 2025 | $ | $ | ||||||
| Liabilities | ||||||||
| Current | ||||||||
| Operating lease liability, short-term | $ | $ | ||||||
| Non-current | ||||||||
| Operating lease liability, long-term | ||||||||
| Total lease liabilities | $ | $ | ||||||
Future minimum lease payments as of September 30, 2025, under non-cancellable operating leases are as follows:
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| Total Lease Payments | |||||
| Less: imputed interest | ( | ) | |||
| Operating Lease Liability | $ |
Rent
expenses for the nine months ended September 30, 2025, and 2024 were $
Note 6. Accrued Expenses
Accrued compensation and related costs consist of the following as of:
September 30, 2025 | December 31, 2024 | |||||||
| Salaries and wages payable | $ | $ | ||||||
| Employee benefits payable | ||||||||
| Accrued paid time off (PTO) | ||||||||
| Profit sharing payable | ||||||||
| Total accrued compensation and related costs | $ | $ | ||||||
| F-15 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Accrued expenses and other current liabilities consisted of the following as of:
September 30, 2025 | December 31, 2024 | |||||||
| Manufacturer’s warranties | $ | $ | ||||||
| Taxes payable | ||||||||
| Miscellaneous payable | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
Note 7. Note Payable
On
August 25, 2021, the Company completed the purchase of real property located in Chandler, Arizona (the “Property”) for $
Note payable amounts consist of the following:
September 30, 2025 | December 31, 2024 | |||||||
| Short-term liabilities | ||||||||
| Note payable, principal | $ | $ | ||||||
| Accrued interest to date | ||||||||
| Note Payable, short-term | $ | $ | ||||||
| Long-term liabilities | ||||||||
| Note payable, principal | $ | $ | ||||||
| Note payable, long term | $ | $ | ||||||
Note 8. Related Party Transactions
None.
Note 9. Commitments and Contingencies
Litigation
From time to time, the Company is notified of litigation or that a claim is being made against it. The Company evaluates contingencies on an on-going basis and has established loss provisions for matters in which losses are probable and the amount of loss can be reasonably estimated. There is no known pending or threatened litigation at this time.
| F-16 |
VIRTRA, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Restricted Stock Unit Grants
During the three months ended September 30, 2025, an employee was granted shares of common stock pursuant to the vesting of a Restricted Stock Unit grant, and the Company’s Chief Executive Officer was granted shares of common stock (after deducting shares for the estimated tax liability) pursuant to a discretionary grant under his Restricted Stock Unit Agreement.
Profit Sharing
VirTra provides a discretionary profit-sharing program that pays out a percentage of Company profits each year as a cash bonus to eligible employees. The cash payment is typically split into two equal payments and distributed pro-rata in April and October of the following year to only active employees. For the nine months ended September 30, 2025, and 2024, $ was credited to the operations to account for a true up to actual net income and $ was expensed to operations for profit sharing, respectively.
Note 10. Stockholders’ Equity
Common stock activity
During the nine months ended September 30, 2025, the Company settled restricted stock units as follows:
| ● | to a Vice President by issuing him shares; | |
| ● | to the Chief Technology Officer by issuing him shares; and | |
| ● | to the Chief Executive Officer as described in Note 9 above by issuing him shares. |
Note 11. Subsequent Events
A total of shares of common stock were granted to the Company’s four directors in consideration for their services as directors.
In October of 2025, the Company’s board of directors authorized sending a letter of intent to the landlord of our Orlando office for VirTra to purchase the building on Challenger Parkway by April 1st , 2026.
| F-17 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended December 31, 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2025.
Forward-Looking Statements
The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), which are subject to the “safe harbour” created by those sections. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “should,” “could,” “predicts,” “potential,” “continue,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements. All forward-looking statements in this Quarterly Report on Form 10-Q are made based on our current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, you should specifically consider numerous factors, uncertainties and risks that could affect our future results or operations. These factors, uncertainties and risks may cause our actual results to differ materially from any forward-looking statement set forth in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties described and other information contained in the reports we file with or furnish to the SEC before making any investment decision with respect to our securities. All forward-looking statements attributable to us or people acting on our behalf are expressly qualified in their entirety by this cautionary statement.
Business Overview
VirTra, Inc. (the “Company,” “VirTra,” “we,” “us” and “our”) is a global provider of judgmental use of force training simulator and firearms training simulators for the law enforcement, military, educational and commercial markets. The Company’s patented technologies, software, and scenarios provide intense training for de-escalation, judgmental use-of-force, marksmanship, and related training that mimics real-world situations. VirTra’s mission is to save and improve lives worldwide through practical and highly effective virtual reality and simulator technology.
The VirTra firearms training simulator allows marksmanship and realistic scenario-based training to take place daily without the need for a shooting range, protective equipment, role players, safety officers, or a scenario-based training site. We have developed a higher standard in simulation training including capabilities such as: multi-screen, video-based scenarios, unique scenario authoring ability, superior training scenarios, the patented Threat-Fire® shoot-back system, powerful gas-powered simulated recoil weapons, and more. The simulator also allows students to receive immediate feedback from the instructor without the potential for sustaining injuries by the instructor or the students. The instructor can teach and re-mediate critical issues, while placing realistic stress on the students due to the realism and safe training environment created by the VirTra simulator.
| 3 |
Business Strategy
We have two main customer groups, law enforcement and military, with a plan to expand our product into the complementary markets of hospitals and private security. Our focus is to expand the market share and scope of our training simulators sales to these identified customer groups by pursuing the following key growth strategies:
| ● | Build Our Core Business. Our goal is to profitably grow our market share by continuing to develop, produce and market the most effective simulators possible. Through disciplined growth in our business, we have achieved a solid balance sheet by increasing our working capital and limiting our bank debt. We plan to add staff to our experienced management team as needed to meet the expected increase in demand for our products and services as we increase our marketing and sales activities. | |
| ● | Increase Total Addressable Market. We plan to increase the size of our total addressable market. This effort will focus on new marketing and new products and/or service offerings for the purpose of widening the number of types of customers who might consider our products or services uniquely compelling. | |
| ● | Broaden Product Offerings. Since its formation in 1993, our company has had a proud tradition of innovation in the field of simulation and virtual reality. We plan to release revolutionary new products and services as well as continue incremental improvements to existing product lines. In some cases, the company may enter a new market segment via the introduction of a new type of product or service. | |
| ● | Partners and Acquisitions. We try to spend our time and funds wisely and not tackle tasks that can be done more efficiently with partners. For example, international distribution is often best accomplished through a local distributor or agent. We are also open to the potential of acquiring additional businesses or of being acquired ourselves, based on what is expected to be optimal in benefit for both our company and our stockholders. |
Product Offerings
Our simulator products include the following:
| ● | V-300™ Simulator – a 300° wrap-around screen with video capability is the higher standard for simulation training |
| ◌ | The V-300™ is the higher standard for decision-making simulation and tactical firearms training. Five screens and a 300-degree immersive training environment ensures that time in the simulator translates into real world survival skills. The system reconfigures to support 15 individual firing lanes. | |
| ◌ | A key feature of the V-300™ shows how quickly judgment decisions must be made, and, sometimes, if they are not made immediately and accurately, it can lead to the possible loss of lives. This feature, among others, supports our value proposition to our customers is that best practices are being prepared enough for the surprises that could be around every corner and the ability to safely neutralize any life-threatening encounters. |
| ● | V-180™ Simulator – a 180° screen with video capability is for smaller spaces or smaller budgets |
| ◌ | The V-180™ is the higher standard for decision-making simulation and tactical firearms training. Three screens and a 180-degree immersive training environment ensure that time in the simulator translates into real world survival skills. |
| ● | V-100™ Simulator & V-100™ MIL – a single-screen based simulator systems |
| ◌ | The V-100™ is the higher standard among single-screen firearms training simulators. Firearms training mode supports up to 4 individual firing lanes at one time. The optional Threat-Fire™ device safely simulates enemy return fire with an electric impulse (or vibration version), reinforcing performance under pressure. We offer an upgrade path, so a V-100™ firearms training and force options simulator can affordably grow into an advanced multi-screen trainer in upgraded products that we offer customers for future purchase. |
| 4 |
| ◌ | The V-100™ MIL is sold to various military commands throughout the world and can support any local language. The system is extremely compact and can even share space with a standard classroom or fits into almost any existing facility. If a portable firearms simulator is needed, this model offers the most compact single-screen simulator on the market today – everything organized into one standard case. The V-100™ MIL is the higher standard among single-screen small arms training simulators. Military Engagement Skills mode supplies realistic scenario training taken from real world events. | |
| ◌ | The V-ST PRO™ a highly realistic single screen firearms shooting and skills training simulator with the ability to scale to multiple screens creating superior training environments. The system’s flexibility supports a combination of marksmanship and use of force training on up to 5 screens from a single operator station. The V-ST PRO™ is also capable of displaying 1 to 30 lanes of marksmanship featuring real world, accurate ballistics. |
| ● | Virtual Interactive Coursework Training Academy (V-VICTA)™ enables law enforcement agencies, to effectively teach, train, test and sustain departmental training requirements through nationally accredited coursework and training scenarios using our simulators. | |
| ● | VirTra’s Red Dot Optic Training, a 4-hour nationally certified course developed with Victory First and Aimpoint, equips law enforcement officers with the skills to transition from iron sights to pistol-mounted red dot sights through 21 practical drills. Part of the V-VICTA program, it enhances accuracy and target acquisition while addressing optic failures, offered free to VirTra customers with an annual service agreement | |
| ● | Subscription Training Equipment Partnership (STEP)™ is a program that allows agencies to utilize VirTra’s simulator products, accessories, and V-VICTA interactive coursework on a subscription basis. | |
| ● | V-Author® proprietary software allows users to create, edit, and train with content specific to the agency’s objectives and environments. V-Author is an easy-to-use application capable of almost unlimited custom scenarios, skill drills, targeting exercises, and firearms courses of fire. It also allows panoramic photos of any local location so users can train in their actual reality. | |
| ● | Simulated Recoil Kits - a wide range of highly realistic and reliable simulated recoil kits/weapons made in the USA. VirTra’s True-Fire® recoil kits do not allow for faulty extra shots. Recoil kits use either CO2 or HPA greatly reducing the need for costly ammunition. | |
| ● | Return Fire Device – the patented Threat-Fire® device applies real-world stress on the trainees during simulation training. Stress inoculation is a key component of training exercises. VirTra holds a patent for electronic simulation in simulation making the pairing of the device and the simulators a sourced item. | |
| ● | TASER©, OC spray and low-light training devices that interact with VirTra’s simulators for training. | |
| ● | V-XR is an extended reality headset-based training solution. It comes ready to use out of the box with two headsets, a trainer tablet, charging stations, a router, a casting device, and cables in a portable hard case, with a 3-year manufacturer’s warranty. |
Results of operations for the three and nine months ended September 30, 2025 and September 30, 2024
Revenues. Net sales were $5,349,993 for the three months ended September 30, 2025, compared to $7,484,269 for the same period in 2024, a decrease of $2,134,276 or 29%. Net sales were $19,489,178 for the nine months ended September 30, 2025, compared to $20,905,730 for the same period in 2024, a decrease of $1,416,552 or 7%. The decrease in revenue can be attributed to slower bookings in the second quarter and at the beginning of the third quarter, so we were unable to convert many bookings into revenue.
Cost of Sales. Cost of sales were $1,831,969 for the three months ended September 30, 2025, compared to $1,986,296 for the same period in 2024, a decrease of $154,327 or 8%. Cost of sales were $5,961,795 for the nine months ended September 30, 2025, compared to $5,168,978 for the same period in 2024 or an increase of $792,817 or 15%. The dollar increase from 2024 to 2025 correlates to the closing of multiple R&D projects in the quarter that resulted in an expense being recorded, but not related to revenue.
| 5 |
Gross Profit. Gross profit was $3,518,024 for the three months ended September 30, 2025, compared to $5,497,973 for the same period in 2024, a decrease of $1,979,949, or 36%. Gross profit was $13,527,383 for the nine months ended September 30, 2025, compared to $15,736,752 for the same period in 2024, a decrease of $2,209,369, or 14%. The gross profit margin for the three months ended September 30, 2025 and 2024 was 66% and 73%, respectively. The gross profit margin for the nine months ended September 30, 2025 and 2024 was 69% and 75%, respectively. This decline is driven by the increase in Cost of Sales for the year along with the closing of projects without supporting revenue as stated above.
Operating Expenses. Net operating expense was $3,968,184 for the three months ended September 30, 2025, compared to $4,742,341 for the same period in 2024, a decrease of $774,157, or 16%. Net operating expense was $11,695,373 for the nine months ended September 30, 2025, compared to $13,199,337 for the same period in 2024, a decrease of $1,503,964, or 11%. This decrease comes from the Company’s efforts to lower overhead and operating costs as we navigate an increasingly difficult funding environment for our government customers.
Operating Income/Loss. Operating loss was $450,160 for the three months ended September 30, 2025, compared to $755,632 operating income for the same period in 2024, a decrease of $1,205,792 or 160%. Operating income was $1,832,010 for the nine months ended September 30, 2025, compared to $3,285,392 for the same period in 2024, a decrease of $1,453,382 or 44%.
Other Income/Expense. Other income net of other expense was $89,683 for the three months ended September 30, 2025, compared to net other income of $35,469 for the same period in 2024, an increase of $54,214, or 153%, primarily from interest income. Other expense was $660,112 for the nine months ended September 30, 2025, compared to net other income of $521,610 for the same period in 2024, a decrease of $1,181,722, or 227%, primarily from gain/loss on foreign exchange.
Provision (Benefit) for Income Tax. Provision for income tax was $28,090 for the three months ended September 30, 2025, compared to $208,000 for the same period in 2024, a decrease of $179,910, or 86%. Provision for income tax was $121,091 for the nine months ended September 30, 2025, compared to $807,000 for the same period in 2024, a decrease of $685,909, or 85%. The provision for income tax is estimated quarterly applying both federal and state tax rates.
Net Income/Loss. Net loss was $388,567 for the three months ended September 30, 2025, compared to $583,101 net income for the same period in 2024, a decrease of $971,668 or 167%. Net income was $1,050,807 for the nine months ended September 30, 2025, compared to $2,252,025 for the same period in 2024, a decrease of $1,201,218 or 53%. The fluctuations in net income relate to each respective section discussed above.
| 6 |
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization. Explanation and Use of Non-GAAP Financial Measures:
Earnings before interest, income taxes, depreciation, and amortization and before other non-operating costs and income (“EBITDA”) and adjusted EBITDA are non-GAAP measures. Adjusted EBITDA also includes non-cash stock option expense. Other companies may calculate adjusted EBITDA differently. The Company calculates its adjusted EBITDA to eliminate the impact of certain items it does not consider to be indicative of its performance and its ongoing operations. Adjusted EBITDA is presented herein because management believes the presentation of adjusted EBITDA provides useful information to the Company’s investors regarding the Company’s financial condition and results of operations and because adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry, several of which present EBITDA and a form of adjusted EBITDA when reporting their results. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under accounting principles generally accepted in the United States of America (“GAAP”). Adjusted EBITDA should not be considered as an alternative for net income (loss), cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP or as a measure of profitability or liquidity. A reconciliation of net loss to adjusted EBITDA is provided in the following table:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
| (Restated) | ||||||||||||||||||||||||||||||||
| September 30, | September 30, | Increase | % | September 30, | September 30, | Increase | % | |||||||||||||||||||||||||
| 2025 | 2024 | (Decrease) | Change | 2025 | 2024 | (Decrease) | Change | |||||||||||||||||||||||||
| Net Income (Loss) | $ | (388,567 | ) | $ | 583,101 | $ | (971,668 | ) | -167 | % | $ | 1,050,807 | $ | 2,252,025 | $ | (1,201,218 | ) | -53 | % | |||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||
| Provision for income taxes | 28,090 | 208,000 | (179,910 | ) | -86 | % | 121,091 | 807,000 | (685,909 | ) | -85 | % | ||||||||||||||||||||
| Depreciation and amortization | 466,876 | 308,924 | 157,952 | 51 | % | 1,297,209 | 834,494 | 462,715 | 55 | % | ||||||||||||||||||||||
| Interest (net) | (55,831 | ) | (55,919 | ) | 88 | 0 | % | (103,958 | ) | (144,876 | ) | 40,918 | -28 | % | ||||||||||||||||||
| EBITDA | 50,568 | 1,044,106 | (993,539 | ) | -95 | % | 2,365,149 | 3,748,643 | (1,383,494 | ) | -37 | % | ||||||||||||||||||||
| Right of use amortization | 40,871 | 38,720 | 2,151 | 6 | % | 125,236 | 238,213 | (112,977 | ) | -47 | % | |||||||||||||||||||||
| Adjusted EBITDA | $ | 91,438 | $ | 1,082,826 | $ | (991,388 | ) | -92 | % | $ | 2,490,385 | $ | 3,986,856 | $ | (1,496,471 | ) | -38 | % | ||||||||||||||
Liquidity and Capital Resources
Liquidity is an enterprise’s ability to generate enough cash to meet its needs for cash requirements. The Company had $20,767,105 and $18,040,827 of cash and cash equivalents as of September 30, 2025 and December 31, 2024, respectively. Working capital was $32,912,552 and $34,826,680 as of September 30, 2025 and December 31, 2024, respectively.
Net cash provided by operating activities was $6,083,776 and $2,165,918 for the nine months ended September 30, 2025 and 2024, respectively. Net cash provided by operating activities resulted primarily from the decrease in accounts receivable and inventory.
Net cash used in investing activities was $3,164,442 for the nine months ended September 30, 2025, compared to net cash used in investing activities of $1,692,249 for the comparable 2024 period. Investing activities in 2025 and 2024 consisted of converting the V-XR software development to an intangible asset valued at approximately $2.2 million.
Net cash used in financing activities was $193,056 for the nine months ended September 30, 2025, compared to $344,944 provided for the nine months ended September 30, 2024. In both periods, cash was used primarily for principal payment of debt. In 2024, this was also offset by the proceeds from the issuance of stock options, which we no longer have in 2025.
Bookings and Backlog
The Company defines bookings as the total of newly signed contracts, awarded RFP’s and purchase orders received in a defined time period. The Company received bookings totaling $8.4 million for the three months ended and $19.4 million for the nine months ending September 30, 2025. The Company has made one change to the booking qualifications in the fourth quarter of 2024. We have strengthened the language in the STEP contract Terms and Conditions to guarantee the agreement for the full three-year term. This change secures future revenue and lowers our risk of unsigned or cancelled contracts. Since the change was only made in the fourth quarter of 2024, we still estimate that there are approximately $3.2 million in renewable STEP contract options still outstanding. Based on current renewal rates, the Company believes 95% of those options will be exercised.
| 7 |
The Company defines backlog as the accumulation of bookings from signed contracts and purchase orders that are not started, or have uncompleted performance objectives, and cannot be recognized as revenue until delivered in a future quarter. The Company splits the backlog into three categories. The first is capital which includes sales of all the simulators, corresponding accessories, installs, training custom content and custom design work. The second and third are extended warranty agreements and STEP agreements that are deferred revenue recognized on a straight-line basis over the life of each respective agreement. As of September 30, 2025, the Company’s backlog was $21.9 million, consisting of $10.2 million in Capital, $5.3 million in Service and $6.4 million in STEP.
A portion of new capital bookings received in the third quarter of 2025 was converted to revenue in the third quarter, and management recognizes that a portion of capital contracts will extend into 2026 by request of the customers. Management’s estimate for the conversion of backlog is based on current contract delivery dates; however, contract terms and install dates are subject to modification and are routinely changed at the request of the customer or due to factors outside the Company’s control.
With a new federal administration in place at the beginning of 2025, it is unknown what impact that will have on our bookings for the remainder of 2025. Additionally we note that although the Government shutdown began at the start of the fourth quarter and does not impact this third quarter report, it will make an impact on the Company in the fourth quarter as all federal funding is currently shut down. We are continuing to monitor the status and timing with all agencies as this shutdown can delay new contract bookings as well as cause delay in receipts of current deliverables that are not known at this time.
Cash Requirements
Our management believes that our current capital resources will be adequate to continue operating the company and maintaining our current business strategy for more than 12 months from the filing of this Quarterly Report. We are, however, open to raising additional funds from the capital markets, at a fair valuation, to expand our product and services offered, to enhance our sales and marketing efforts and effectiveness, and to aggressively take advantage of market opportunities. There can be no assurance, however, that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to scale down our plans for expanded marketing and sales efforts.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our unaudited financial statements, which have been prepared in accordance with GAAP. The preparation of our unaudited financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to areas that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. Significant accounting estimates in these financial statements include valuation assumptions for share-based payments, allowance for doubtful accounts and notes receivable, inventory reserves, accrual for warranty reserves, the carrying value of long-lived assets, income tax valuation allowances, the carrying value of cost basis investments, and the allocation of the transaction price to the performance obligations in our contracts with customers. We base our estimates on historical experience, our observance of trends in particular areas, and information or valuations and various other assumptions that we believe to be reasonable under the circumstances and which form the basis for making judgments about the carrying value of assets and liabilities that may not be readily apparent from other sources. Actual amounts could differ significantly from amounts previously estimated. For a discussion of our critical accounting policies, refer to Part I, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024. Management believes there have been no changes in our critical accounting policies during the three months ended September 30, 2025.
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Recent Accounting Pronouncements
See Note 1 to our financial statements, included in Part I, Item 1., Financial Information of this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements
As of September 30, 2025, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of disclosure controls and procedures
We maintain “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e), promulgated by the SEC pursuant to the Exchange Act. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officers and principal financial officer, to allow timely decisions regarding required disclosure. Our management, with the participation of our principal executive officers and principal financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our principal executive officers and principal financial officer concluded that as of September 30, 2025, our disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to material weaknesses, which we identified in our report on internal control over financial reporting contained in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 27, 2025. These weaknesses were (i) lack of multiple levels of management review on complex business, accounting, and financial reporting issues and (ii) failure to implement adequate system and manual controls. As noted in the 10-K report, until such time as we expand our staff to include additional accounting and executive personnel and accounting systems and procedures, it is likely the first material weakness will continue. With respect to the second material weakness, our Board of Directors has directed management to implement more effective system and manual controls and this process is currently underway.
Change in internal control over financial reporting
There has been no change in our internal control over financial reporting that occurred during the quarterly period ended September 30, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, during the quarter ended September 30, 2025, and continuing into 2025, we are implementing more formal review and documentation of workflow processes and increasing our ERP training for our staff. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.
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PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There is no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which we are a party or of which any of our property is the subject.
ITEM 1A. RISK FACTORS
Not required for smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
| (a) | None | |
| (b) | There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors since the filing with the SEC of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. | |
| (c) | None. |
ITEM 6. EXHIBITS
| Exhibit No. | Exhibit Description | |
| 31.1 | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VIRTRA, INC. | ||
| Date: November 10, 2025 | By: | /s/ John F. Givens II |
| John F. Givens II | ||
| Chief Executive Officer | ||
| (principal executive officer) | ||
| By: | /s/ Alanna Boudreau | |
| Chief Financial Officer | ||
| (principal financial officer) | ||
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