NASDAQ: VTSI

Effective
March 2, 2018, we effected a 1-for-2 reverse stock split of our issued and outstanding Common Stock (the “Reverse Stock Split”).
All references to shares of our Common Stock in this Annual Report on Form 10-K refer to the number of shares of Common Stock after giving
effect to the Reverse Stock Split and are presented as if the Reverse Stock Split had occurred at the beginning of the earliest period
presented.

Business
Overview

VirTra,
Inc. (the “Company,” “VirTra,” “we,” “us” and “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, 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 highly effective virtual reality and simulator technology.

The
VirTra firearms training simulator allows marksmanship and realistic scenario-based training to take place on a daily basis 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 is able to teach and remediate critical issues, while placing realistic stress on the
students due to the realism and safe training environment created by the VirTra simulator.

Business
Strategy

We
have two main customer groups, namely, law enforcement and military. These are different markets and require different sales and marketing
programs as well as personnel. Our focus is to expand the market share and scope of our training simulator 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 highly effective simulators
and critical in-house integration components. We focus on delivering integrated solutions that enhance performance, reliability, and scalability
for our customers. Through disciplined execution, we have strengthened our financial position by increasing working capital and limiting
bank debt. We plan to selectively expand our management and technical teams as needed to support anticipated demand and increased marketing
and sales activities.

4

●
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 customer types 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 new products and services, as well as continue incremental improvements to existing product lines. In certain
cases, the Company may enter new market segments through the introduction of new types of products or services. We also intend to leverage
advancements in artificial intelligence and large language models to enhance realism, improve user interaction and client relatability,
and reduce development time and costs across our product portfolio.

●
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 for our long-term
future 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 practice is 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.

○
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.

5

●
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™
Software allows users to create, edit, and train with content specific to 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 courseware
proven to be highly effective for users of VirTra simulation products.

●
True-Fire™ is
the improved version of VirTra’s patented drop-in recoil kits that greatly increases reliability of laser
activation. VirTra’s experienced engineering team introduced  proprietary mechanical enhancements
and upgraded firmware/software to enable more accurate differentiation of intentional versus unintentional activation of
the recoil kit laser.   This helped to further reduce the rare chance of laser activation when the weapon is
manipulated, tapped, or dropped during simulation training.

●
Return
Fire Device – the patented Threat-Fire™ device which applies real-world stress on the trainees during simulation training.

●
VirTra
has installed a volumetric video capture studio in order to create training scenarios that are used in either screen-based simulators
or headset-based simulators. Volumetric video realism far exceeds that of computer-generated avatars which likely gives VirTra a
strategic advantage for highly desired de-escalation training, especially when simulating human interaction is required. By using
this studio, along with outside filming, we are able to offer customers the ability to purchase custom scenarios to meet their specific
needs.

●
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.

Operations
and Suppliers

We
produce some of our own products. We also rely on a variety of suppliers. Management is uncertain whether we might encounter future delays
with suppliers that would have a material impact on us.

6

Competition
and Competitive Landscape

We
compete against a number of established companies that provide similar products and services, some of which have financial, technical, marketing, sales, manufacturing, distribution and other resources significantly greater than ours. There are also companies
whose products do not compete directly but are sometimes closely related to the products we offer. Axon, Laser Shot, Inc., InVeris, MILO,
Conflict Kinetics, and Ti Training Corp are our main competitors in some or all our markets.

We
believe that our products and services are superior to those offered by our competitors based on our association with industry experts,
the strength in developing a more effective training solution ecosystem, our patented products and our extensive library of training
content that is certified by IADELST that would require time and a substantial investment by a competitor to offer a comparable product.

VirTra
buys and tests new headsets on a regular basis and has made some software and content preparations to add a variety of commercial
off the shelf headset-based product to our offerings. VirTra recoil kits, return fire devices and other accessories would likely
also work with a headset-based product in an indirect way.

Intellectual
Property

We
own or have rights to trademarks or trade names that we use in connection with the operation of our business, including our corporate
names, logos and website names. In addition, we own or have the rights to copyrights, trade secrets and other proprietary rights that
protect the content of our products and the formulations for such products. This Annual Report on Form 10-K may also contain trademarks,
service marks and trade names of other companies, which are the property of their respective owners. Our use or display of third parties’
trademarks, service marks, trade names or products in this Annual Report on Form 10-K is not intended to, and should not be read to,
imply a relationship with or endorsement or sponsorship of us. Solely for convenience, some of the copyrights, trade names and trademarks
referred to in this Annual Report on Form 10-K are listed without their ©, ® and ™ symbols, but we will assert, to the
fullest extent under applicable law, our rights to our copyrights, trade names and trademarks. All other trademarks are the property
of their respective owners.

We
rely on certain proprietary technology and seek to protect our interests through a combination of patents, trademarks, copyrights, know-how,
trade secrets and security measures, including confidentiality agreements. Our policy generally is to secure protection for significant
innovations to the fullest extent practicable. Further, we seek to expand and improve the technological base and individual features
of our products through ongoing research and development programs.

As
of the end of 2025, VirTra owns 8 issued patents, one of which was granted in 2025. Three previously filed patent applications are
under USPTO examination and awaiting determination, a process that can take up to 30 months from the application date, and longer in
some cases. In addition, two patent applications were filed with the USPTO in 2025. Finally,
VirTra is in the drafting phase of five patent applications that have not yet been filed with USPTO.

We
own the trademarks for “VirTra,” “VirTra Systems”, “Threat-Fire”, “ArmorGen” and many
other branding trademarks. These trademarks are registered in the United States. We consider the protection of our trademarks to be important
to our business.

We
also have copyright protection for our intellectual property produced for use in our products.

We
rely on the laws of unfair competition and trade secrets to protect our proprietary rights. We attempt to protect our trade secrets and
other proprietary information through confidentiality and non-disclosure agreements with customers, suppliers, employees and consultants,
and through other security measures. However, we may be unable to detect the unauthorized use of or take appropriate steps to enforce
our intellectual property rights. Effective trade secret protection may not be available in every country in which we offer or intend
to offer our products and services to the same extent as in the United States. Failure to adequately protect our intellectual property
could harm or even destroy our brands and impair our ability to compete effectively. Further, enforcing our intellectual property rights
could result in the expenditure of significant financial and managerial resources and may not prove successful. Although we intend to
protect our rights vigorously, there can be no assurance that these measures will be successful.

7

Research
and Development

During
the years ended December 31, 2025, and 2024, our research and product development expenses were $2,383,595 and $3,003,302,
respectively. The decrease in research and development costs in 2025 was primarily attributable to the capitalization of certain
significant development initiatives rather than expensing those costs as incurred. The Company continues to invest in new product offerings
and innovative ideas to enhance and expand its product portfolio.

Sources
and Availability of Raw Materials/Manufacturing and Assembly

We
obtain the key components of our products from a variety of sources that we purchase on a purchase order basis from local suppliers at
market prices based on our production requirements. We believe alternative sources generally exist for the components used in our products.

Our
manufacturing, assembly, warehouse and shipping facilities are in Chandler, Arizona. See Item 2 – Properties.

Employees

As
of March 23, 2026, we employed 94 full-time employees and 4 part-time employees. We maintain a satisfactory working relationship with
our employees

Operations

Our
operations are conducted from our principal executive office in Chandler, Arizona. In 2022 we opened a facility in Orlando, Florida to
support east coast operations. We do not currently have any employees internationally; however, our U.S.-based sales force works to secure
contracts to supply our products in U.S. and foreign markets. As of December 31, 2025, we have performed sales contracts and warranty
service obligations in the U.S. and various foreign countries. When our products are introduced into an international market, it is either
pursuant to a contract directly with a vetted customer located in the foreign country, a vetted foreign distributor, a foreign government
agency, or pursuant to a contract between our Company and a U.S. government agency (such as the U.S. Department of State). In the latter
instance, our customer is the relevant U.S. government agency. The government agency may then distribute our products to third parties
within that particular country.

Regulatory
Matters

Our
business is regulated in most of our markets. We deal with numerous U.S. government agencies and entities, including, but not limited
to, branches of the U.S. military and the Department of Homeland Security. Similar government authorities exist in our international
markets.

We
are also subject to export laws and regulations. These laws include, among others, the U.S. Export Administration Regulations, administered
by the U.S. Department of Commerce, Bureau of Industry and Security, the International Traffic in Arms Regulations (the “ITAR”),
administered by the U.S. Department of State, Directorate of Defense Trade Controls, and trade sanctions, regulations and embargoes administered
by the U.S. Department of Treasury, Office of Foreign Assets Control. Among its many provisions, the ITAR requires a license application
for the export of firearms and congressional approval for any application with a total value of $1 million or higher.

Any
failures to comply with these laws and regulations could result in civil or criminal penalties, fines, investigations, adverse publicity
and restrictions on our ability to export our products and repeat failures could carry more significant penalties. Any changes in export
regulations may further restrict the export of our products. The length of time required by the licensing processes can vary, potentially
delaying the shipment of products and the recognition of the corresponding revenue. Any restrictions on the export of our products could
have a material adverse effect on our competitive position, results of operations, cash flow, or financial condition.

For
additional information related to export regulations, see Item 1A, “Risk Factors – Risks Related to Our Business.”

8

Government
Contracts

The
U.S. government, and other governments, may terminate any of our government contracts at their convenience, as well as for default, based
on our failure to meet specified performance requirements. If any of our U.S. government contracts were to be terminated for convenience,
we generally would be entitled to receive payment for work completed and allowable termination or cancellation costs. If any of our government
contracts were to be terminated for default, generally the U.S. government would pay only for the work that has been accepted and can
require us to pay the difference between the original contract price and the cost to re-procure the contract items, net of the work accepted
from the original contract. The U.S. government can also hold us liable for damages resulting from the default. For additional information
related to government contracts, see