VTSI 10-Q
VirTra, Inc (VTSI)
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:
VIRTRA, INC.
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
| (I.R.S. Employer |
incorporation or organization) |
| Identification No.) |
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(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 |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of August 4th, 2026, the registrant had
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PAGE NO. |
PART I |
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Item 1. |
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Condensed Balance Sheets as of June 30, 2026, and December 31, 2025 |
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Condensed Statements of Operations for the Three and Six Months ended June 30, 2026 and 2025 |
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Condensed Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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PART II |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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CONDENSED BALANCE SHEETS
(Unaudited)
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| June 30, 2026 |
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| December 31, 2025 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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Accounts receivable, net |
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Inventory, net |
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Unbilled revenue |
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Prepaid expenses and other current assets |
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Deferred Contract Costs, short term |
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Total current assets |
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Long-term assets: |
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Property and equipment, net |
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Operating lease right-of-use asset, net |
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Intangible assets, net |
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Security deposits, long-term |
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Other assets, long-term |
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Deferred tax asset, net |
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Deferred Contract Costs, long term |
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Total long-term assets |
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Total assets |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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Accrued compensation and related costs |
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Accrued expenses and other current liabilities |
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Notes payable, current |
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Operating lease liability, short-term |
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Deferred revenue, short-term |
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Total current liabilities |
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Long-term liabilities: |
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Deferred revenue, long-term |
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Notes payable, long-term |
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Operating lease liability, long-term |
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Total long-term liabilities |
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Total liabilities |
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Commitments and contingencies (See Note 10) |
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Stockholders’ equity: |
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Preferred stock $ par value; shares authorized; shares issued or outstanding |
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Common stock $ par value; shares authorized; shares issued and outstanding as of June 30, 2026 and as of December 31, 2025 |
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Class A common stock $ par value; shares authorized; shares issued or outstanding |
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Class B common stock $ par value; shares authorized; shares issued or outstanding |
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Additional paid-in capital |
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Retained Earnings |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
| $ |
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See accompanying notes to condensed unaudited financial statements.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenues: |
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Net sales |
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$ |
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$ |
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$ |
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Total revenue |
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Cost of sales |
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Gross profit |
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Operating expenses: |
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General and administrative |
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Research and development |
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Net operating expense |
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Income (loss) from operations |
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Other income (expense): |
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Other income |
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Other (expense) |
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Net other income |
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Income (Loss) before provision for income taxes |
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Provision (Benefit) for income taxes |
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Net Income (loss) |
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$ | ( |
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$ |
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$ | ( |
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$ |
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Net Income (loss) per common share: |
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Basic |
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$ | ( |
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$ |
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$ | ( |
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Diluted |
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$ |
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$ | ( |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes to condensed unaudited financial statements.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
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Additional |
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Preferred Stock |
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Common Stock |
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Paid in |
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Accumulated |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Earnings |
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Total |
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Six months ending June 30, 2026 |
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Balance, December 31, 2025 |
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- |
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$ |
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$ |
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$ |
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$ |
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$ |
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Stock reserved for future services |
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- |
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- |
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RSUs issued (stock for services) |
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- |
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- |
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Net income |
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- |
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- |
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Balance, March 31, 2026 |
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- |
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$ |
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$ |
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$ |
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$ |
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$ |
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Stock options exercised |
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- |
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- |
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Stock reserved for future services |
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- |
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- |
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RSUs issued (stock for services) |
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- |
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15,739 |
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Net income |
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- |
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Balance, June 30, 2026 |
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- |
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$ |
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$ |
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$ |
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$ |
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$ |
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Six months ending June 30, 2025 |
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Balance, December 31, 2024 |
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- |
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$ |
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$ |
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$ |
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$ |
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$ |
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Stock options exercised |
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- |
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Stock reserved for future services |
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- |
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- |
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RSUs issued (stock for services) |
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- |
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4,500 |
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Net income |
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- |
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- |
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Balance, March 31, 2025 |
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- |
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$ |
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$ |
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$ |
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$ |
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$ |
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Stock options exercised |
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- |
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- |
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- |
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Stock reserved for future services |
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- |
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- |
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RSUs issued (stock for services) |
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- |
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Net income |
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- |
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- |
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Balance, June 30, 2025 |
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- |
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$ |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed unaudited financial statements.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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Six Months Ended June 30, |
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2026 |
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2025 |
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Cash flows from operating activities: |
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Net (loss) |
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$ | ( |
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$ |
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Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |
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Depreciation and amortization |
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Right of use amortization |
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Employee stock compensation |
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Bad Debt Expense |
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( |
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Loss on disposal of lease |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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Inventory, net |
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( |
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Other assets-LT |
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Deferred taxes |
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Unbilled revenue |
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( |
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Other assets |
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Prepaid expenses and other current assets |
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( |
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Accounts payable and other accrued expenses |
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( |
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Operating lease right of use |
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( |
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( |
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Deferred revenue |
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( |
) |
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|
|
Net cash provided (used in) 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 |
|
|
( |
) |
|
|
( |
) |
Net cash (used in) financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
Net (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 (refunded) |
|
$ | ( |
) |
|
$ |
|
|
Interest paid |
|
$ |
|
|
$ |
|
||
Noncash investing & financing activities disclosure: |
|
|
|
|
|
|
|
|
Assumption of lease asset (Lessor) |
|
$ |
|
|
$ |
|
||
Mortgage to Purchase Building |
|
$ | ( |
) |
|
$ |
|
|
See accompanying notes to condensed unaudited financial statements.
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. In September 2001, Ferris Productions, Inc. merged with GameCom, Inc. to ultimately become 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, 2025 included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 26, 2026. 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 June 30, 2026, and the results of our operations and cash flows for the periods presented. We derived the December 31, 2025 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 six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the full year.
F-5
Revision of Previously Issued Financial Statements
In the prior year, the Company identified an immaterial error in the 2023 financial statements related to the functional currency designation of a Canadian sales transaction, which resulted in a $
After giving effect to this correction and other prior-year revisions, the only permanent impact to retained earnings is the $
| | For the Year Ending December 31, 2024 (Restated) | | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | Additional | | | | | | | | | | |
| | Preferred Stock | | | Common Stock | | | Paid in | | | Accumulated | | | | | | ||||||||||||
| | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Earnings | | | Total | | |||||||
Balance, December 31, 2023 | | | - | | | $ | | | | | | $ | | | $ | | | $ | | | $ | | ||||||
Stock options exercised | | | - | | | | | | | | | | | | | | | | | | | | ||||||
Stock reserved for future services | | | - | | | | | | | - | | | | | | | | | | | | | | |||||
Net income | | | - | | | | | | | - | | | | | | | | | | | | | | |||||
Balance, March 31, 2024 | | | - | | | | | | | | | | | | | | | | | | | | ||||||
Stock options exercised | | | - | | | | | | | | | | | | | | | | | | | | ||||||
Stock reserved for future services | | | - | | | | | | | - | | | | | | | | | | | | | | |||||
Net income | | | - | | | | | | | - | | | | | | | | | | | | | | |||||
Balance, June 30, 2024 | | | - | | | | | | | | | | | | | | | | | | | | ||||||
RSUs issued (stock for services) | | | - | | | | | | | | | | | | | | | | | | | | ||||||
Stock reserved for future services | | | - | | | | | | | - | | | | | | | | | | | | | | |||||
Net income | | | - | | | | | | | - | | | | | | | | | | | | | | |||||
Balance, September 30, 2024 | | | - | | | | | | | | | | | | | | | | | | | | ||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RSUs issued (stock for services) | | | - | | | | | | | | | | | | | | | | | | | | ||||||
Stock reserved for future services | | | - | | | | | | | - | | | | | | | | | | | | | | |||||
Net income | | | - | | | | | | | - | | | | | | | | | | ( | ) | | | ( | ) | |||
Balance, December 31, 2024 | | | - | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | ||||||
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 credit losses and notes receivable, inventory reserves, accrual for warranty reserves, the carrying value of long-lived assets and intangible 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.
F-6
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.
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 expended) |
|
|
|
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 |
F-7
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 substantially 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-8
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 June 30, |
| |||||||||||||||||||||||||||||
|
| 2026 |
|
| 2025 |
| ||||||||||||||||||||||||||
|
| 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 |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||||
|
| Six Months Ended June 30, |
| |||||||||||||||||||||||||||||
|
| 2026 |
|
| 2025 |
| ||||||||||||||||||||||||||
|
| 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 |
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||||||
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 June 30, 2026, governmental customers comprised $
F-9
Segment Information
Information related to the Company’s reportable operating business segments is shown below. The Company’s reportable segments are reported in a manner consistent with the way management evaluates the businesses. The results of operations are regularly reviewed by the Company’s chief operating decision maker (“CODM”), the Chief Executive Officer. The Company identifies its reportable business segments based on differences in products and services. The accounting policies of the business segments are the same as those described in the summary of significant accounting policies. To evaluate each reportable segment’s performance, the CODM uses income from operations as a measure of profit and loss. The CODM compares operational performance against management expectations when making decisions regarding allocation of operating and capital resources to each .
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 request 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. |
F-10
|
| Three Months Ended June 30, |
| |||||
Sale of product |
| 2026 |
|
| 2025 |
| ||
Simulators and accessories |
| $ |
|
| $ |
| ||
Extended Service-type warranties |
|
|
|
|
|
| ||
Customized software and content |
|
|
|
|
|
| ||
Installation and training |
|
|
|
|
|
| ||
Design & Prototyping |
|
|
|
|
|
| ||
STEP |
|
|
|
|
|
| ||
Total consolidated |
| $ |
|
| $ |
| ||
Depreciation and amortization |
| 2026 |
|
| 2025 |
| ||
Simulators and accessories |
| $ |
|
| $ |
| ||
Customized software and content |
|
|
|
|
|
| ||
Design & Prototyping |
|
|
|
|
|
| ||
STEP |
|
|
|
|
|
| ||
Corporate |
|
|
|
|
|
| ||
Total consolidated |
| $ |
|
| $ |
| ||
Segment income (loss) | | 2026 | | | 2025 | | ||
Simulators and accessories | | $ | | | $ | | ||
Extended Service-type warranties | | | | | | | ||
Customized software and content | | | | | | | ||
Installation and training | | | ( | ) | | | | |
Design & Prototyping | | | | | | | ||
STEP | | | | | | | ||
Corporate | | | ( | ) | | | ( | ) |
Total | | $ | ( | ) | | $ | | |
Expenditures for segment assets |
| 2026 |
|
| 2025 |
| ||
Simulators and accessories |
| $ |
|
| $ |
| ||
Extended Service-type warranties |
|
|
|
|
|
| ||
Customized software and content |
|
|
|
|
|
| ||
Installation and training |
|
|
|
|
|
| ||
Design & Prototyping |
|
|
|
|
|
| ||
STEP |
|
|
|
|
|
| ||
Corporate purchases |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Segment assets |
| 2026 |
|
| 2025 |
| ||
Simulators and accessories |
| $ |
|
| $ |
| ||
Customized software and content |
|
|
|
|
|
| ||
Design & Prototyping |
|
|
|
|
|
| ||
STEP |
|
|
|
|
|
| ||
Corporate Assets |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
F-11
|
| Six Months Ended June 30, |
| |||||
Sale of product |
| 2026 |
|
| 2025 |
| ||
Simulators and accessories |
| $ |
|
| $ |
| ||
Extended Service-type warranties |
|
|
|
|
|
| ||
Customized software and content |
|
|
|
|
|
| ||
Installation and training |
|
|
|
|
|
| ||
Design & Prototyping |
|
|
|
|
|
| ||
STEP |
|
|
|
|
|
| ||
Total consolidated |
| $ |
|
| $ |
| ||
Depreciation and amortization |
| 2026 |
|
| 2025 |
| ||
Simulators and accessories |
| $ |
|
| $ |
| ||
Customized software and content |
|
|
|
|
|
| ||
Design & Prototyping |
|
|
|
|
|
| ||
STEP |
|
|
|
|
|
| ||
Corporate |
|
|
|
|
|
| ||
Total consolidated |
| $ |
|
| $ |
| ||
Segment income (loss) |
| 2026 |
|
| 2025 |
| ||
Simulators and accessories |
| $ |
|
| $ |
| ||
Extended Service-type warranties |
|
|
|
|
|
| ||
Customized software and content |
|
|
|
|
|
| ||
Installation and training |
|
|
|
|
|
| ||
Design & Prototyping |
|
|
|
|
|
| ||
STEP |
|
|
|
|
|
| ||
Corporate |
|
| ( | ) |
|
| ( | ) |
Total |
| $ | ( | ) |
| $ |
| |
Expenditures for segment assets |
| 2026 |
|
| 2025 |
| ||
Simulators and accessories |
| $ |
|
| $ |
| ||
Customized software and content |
|
|
|
|
|
| ||
STEP |
|
|
|
|
|
| ||
Corporate purchases |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Segment assets |
| 2026 |
|
| 2025 |
| ||
Simulators and accessories |
| $ |
|
| $ |
| ||
Customized software and content |
|
|
|
|
|
| ||
Design & Prototyping |
|
|
|
|
|
| ||
STEP |
|
|
|
|
|
| ||
Corporate Assets |
|
|
|
|
|
| ||
| ||||||||
| $ |
|
| $ |
|
F-12
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 a current liability, and for the items that will be delivered or converted into revenue later than one year, deposits are recorded to a long-term liability under deferred revenue on the balance sheet. As of June 30, 2026, 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 periods 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 sixty 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, the assets are owned by VirTra and are required to be returned upon lease termination. 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.
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-13
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.
As of June 30, 2026, the Company had customers that accounted for
For the three months ended June 30, 2026, the Company had customer accounting for
Net Income per Common Share
The net income per common share is computed by dividing net income by the weighted average of common shares outstanding. Diluted net income per share reflects the potential dilution, using the treasury stock method, that would occur if outstanding stock options and warrants were exercised. Earnings per share computations are as follows:
| | Three Months Ended June 30, | | |||||
| | 2026 | | | 2025 | | ||
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 | | $ | ( | ) | | $ | | |
|
| Six Months Ended June 30, |
| |||||
|
| 2026 |
|
| 2025 |
| ||
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 |
| $ | ( | ) |
| $ |
| |
Note 2. Inventory
Inventory consisted of the following as of:
| | June 30, 2026 | | | December 31, 2025 | | ||
| | | | | | | | |
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.
F-14
Note 3. Deferred Contract Costs
Deferred contract costs consisted of the following as of:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Deferred Contract Costs - Short-Term |
| $ |
|
| $ |
| ||
Deferred Contract Costs - Long-Term Adjustment |
|
|
|
|
|
| ||
Expense as of June 30, 2026 |
|
| ( | ) |
|
| ( | ) |
Total Short-Term Contract |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Deferred Contract Costs - Long-Term |
| $ |
|
| $ |
| ||
Deferred Contract Costs - Short-Term Adjustment |
|
| ( | ) |
|
| ( | ) |
Expense as of June 30, 2026 |
|
|
|
|
| ( | ) | |
Total Long-Term Contract |
| $ |
|
| $ |
| ||
|
|
|
| |
|
|
| |
Total Deferred Contract Costs |
| $ |
|
| $ |
| ||
During the year ended December 31, 2025, the Company entered into a customer agreement that includes development services and a three-year step-priced arrangement. The consideration under the agreement is structured to recover development and other fulfillment costs over the full contract term. In accordance with ASC 340-40, the Company capitalized costs incurred that (i) relate directly to the contract, (ii) generate or enhance resources that will be used in satisfying performance obligations in future periods, and (iii) are expected to be recovered through the transaction price. Capitalized costs primarily include internal and third-party development labor and materials.
Deferred contract costs are amortized on a systematic basis consistent with the pattern of transfer of the related services, which the Company currently estimates to be over the three-year contractual term. The Company evaluates deferred contract costs for impairment each reporting period.
At June 30, 2026 and 2025, deferred contract costs totaled $
Note 4. Property and Equipment
Property and equipment consisted of the following as of:
| | June 30, 2026 | | | December 31, 2025 | | ||
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 | | | ( | ) | | | ( | ) |
Property and equipment, net | | $ | | | $ | | ||
F-15
Depreciation expenses, including STEP depreciation, were $
Note 5. Intangible Assets
Intangible asset consisted of the following as of:
| | June 30, 2026 | | | December 31, 2025 | | ||
Patents | | $ | | | $ | | ||
Capitalized media content | | | | | | | ||
Capitalized software | | | | | | | ||
Acquired lease intangible assets | | | | | | | ||
| | | | | | | | |
Total intangible assets | | | | | | | ||
Less accumulated amortization | | | ( | ) | | | ( | ) |
| | | | | | | | |
Intangible assets, net | | $ | | | $ | | ||
In connection with the acquisition of the Orlando property, VirTra assumed two existing long-term lease agreements for the second building. The acquisition resulted in the recognition of lease-related intangible assets totaling $
Note 6. Leases
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 generally 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-16
Effective June 1, 2022, the Company obtained a right-of-use asset in exchange for a new operating lease liability in the amount of $
VirTra completed the purchase of the Orlando property on May 22, 2026. As a result, the related right-of-use (ROU) asset and lease liability associated with the property were derecognized and removed from the balance sheet. Accordingly, these lease-related balances have been fully written off and no longer appear in the Company's financial position as of the purchase date. As on June 30, 2026 the company wrote off the
The balance sheet classification of lease assets and liabilities as of June 30, 2026 are as follows:
Balance Sheet Classification |
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Assets |
|
|
| |
|
|
| |
Operating lease right-of-use assets, December 31, 2025 |
| $ |
|
| $ |
| ||
Amortization for the six months ended June 30, 2026 |
|
| ( | ) |
|
| ( | ) |
Write off of right-of-use asset |
|
| ( | ) |
|
|
| |
|
|
|
| |
|
|
| |
Total operating lease right-of-use asset, June 30, 2026 |
| $ |
|
| $ |
| ||
Liabilities |
|
|
| |
|
|
| |
Current |
|
|
| |
|
|
| |
Operating lease liability, short-term |
| $ |
|
| $ |
| ||
Non-current |
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| |
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| |
Operating lease liability, long-term |
|
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|
| ||
|
|
|
| |
|
|
| |
Total lease liabilities |
| $ |
|
| $ |
| ||
There are no future minimum lease payments as of June 30, 2026
Rent expenses for the six months ended June 30, 2026 and 2025 were $
Note 7. Accrued Expenses
Accrued compensation and related costs consist of the following as of:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Salaries and wages payable |
| $ |
|
| $ |
| ||
Employee benefits payable |
|
|
|
|
|
| ||
Accrued paid time off (PTO) |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total accrued compensation and related costs |
| $ |
|
| $ |
| ||
Salaries and Wages payable is up significantly from December due to the timing of payroll dates and the number of days accrued at the end of the second quarter versus the days accrued at the end of the year.
Accrued expenses and other current liabilities consisted of the following as of:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
Manufacturer’s warranties |
| $ |
|
| $ |
| ||
Taxes payable |
|
|
|
|
|
| ||
Miscellaneous payable |
|
|
|
|
|
| ||
|
|
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|
|
|
|
|
Total accrued expenses and other current liabilities |
| $ |
|
| $ |
| ||
F-17
Note 8. Notes Payable
On May 22, 2026, the Company completed the purchase of real property located in Orlando, Florida (the “Orlando Property”) for $
On August 25, 2021, the Company completed the purchase of real property located in Chandler, Arizona (the “Chandler Property”) for $
Notes payable amounts consist of the following:
|
| June 30, 2026 |
|
| December 31, 2025 |
| ||
|
|
|
|
|
|
|
|
|
Short-term liabilities |
|
|
|
|
|
|
|
|
Notes payable, principal |
| $ |
|
| $ |
| ||
Accrued interest to date |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Notes Payable, short-term |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Long-term liabilities |
|
|
|
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|
|
|
|
Notes payable, principal |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Notes payable, long term |
| $ |
|
| $ |
| ||
Note 9. Related Party Transactions
In the first two quarters of 2026, the Company paid Vialytix, LLC, a company owned by the CEO (John Givens) and his wife, $
In the fourth quarter of 2025, the Company paid Vialytix, LLC $
F-18
Note 10. Commitments and Contingencies
Litigation
There is no pending litigation at this time.
Restricted Stock Unit Grants
There were awards of
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 six months ended June 30, 2026 and 2025, $
Note 11. Stockholders’ Equity
Common stock activity
There were
Note 12. Subsequent Events
None
F-19
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, 2025 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, 2025, filed with the Securities and Exchange Commission (the “SEC”) on March 26, 2026.
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 harbor” 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 risk 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 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 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.
Business Strategy
We have two main customer groups, namely, law enforcement and military. These are very 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 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 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 |
|
|
|
|
● |
Increase Total Addressable Market. We plan to increase the size of our total addressable market. This effort will focus on new marketing and new product and/or service offerings for the purpose of widening the number of types of customers who might consider our products or services uniquely compelling. |
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|
|
|
● |
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 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. |
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|
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|
● |
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 practices 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. |
|
|
|
|
○ |
The V-100 NG-Next generation is a portable high fidelity simulation system that combines advanced simulation capabilities in a compact, self contained system designed for rapid setup, flexible deployment and instructor-led training across a wide range of operational scenarios for verbal use of force training and marksmanship skill development |
|
● |
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. |
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|
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|
● |
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 |
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|
● |
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. |
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|
● |
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. |
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|
● |
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. |
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|
● |
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. |
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|
● |
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. |
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|
● |
TASER©, OC spray and low-light training devices that interact with VirTra’s simulators for training. |
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|
● |
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. |
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● |
APEX is a revolutionary, web-based platform that helps organizations collect, evaluate, analyze and report their training data through secure and consistent processes, these processes operate in real -time, ensuing workflow and training sessions are maximized for effectiveness. This platform through a partnership with Vialytics comes with the base subscription on every VirTra system with an Apex pro-option available as an upgrade |
Results of operations for the three and six months ended June 30, 2026, and June 30, 2025
Revenues. Net sales for the three months ended June 30, 2026 were $5,763,358, compared to $6,978,938 for the same period in 2025, representing a decrease of $1,215,580, or 17%. Net sales for the six months ended June 30, 2026 were $9,237,504 compared to $14,139,185 for the same period in 2025, representing a decrease of $4,901,681, or 35%. The decrease was primarily the result of delayed revenue recognition related to temporary customer delivery deferrals. Importantly, backlog remains strong, supporting future revenue conversion as deliveries resume. Additionally, a larger portion of bookings came in at the end of the quarter, which resulted in revenue conversion of these bookings in the third quarter at the earliest. Revenue continues to be affected by our concentration in government-funded customers, including international customers whose purchases are funded through U.S. federal programs. The end of the second quarter was the first time the Company began to see funding start to open up, with a few large orders coming in from our long-term customers that finally had funds released.
Cost of Sales. Cost of sales increased to $2,347,656 for the three months ended June 30, 2026, from $2,166,461 for the same period in 2025, an increased of $181,195, or 8%, primarily due to a few content projects closing out which is charged to cost of goods as they finish and are sent to all customers. Cost of sales decreased to $3,687,998 for the six months ended June 30, 2026, from $4,129,828 for the same period in 2025, a decrease of $441,830, or 11%, primarily due to lower sales volumes. Cost of sales decreased on a year-over-year basis; however, the corresponding reduction was less significant than the decline in revenue, resulting in an increase in cost of sales as a percentage of revenue. This was driven primarily by development and content creation costs that are not directly variable with revenue levels.
Gross Profit. Gross profit was $3,415,702 for the three months ended June 30, 2026, compared to $4,812,477 for the same period in 2025, a decrease of $1,396,775, or 29%. Gross profit was $5,549,506 for the six months ended June 30, 2026, compared to $10,009,357 for the same period in 2025, a decrease of $4,459,851, or 45%. The gross profit margin for the three months ended June 30, 2026 and 2025 was 59% and 69%, respectively. The gross profit margin for the six months ended June 30, 2026 and 2025 was 60% and 71%, respectively. This decrease in margin is driven by the Company continuing to work on new scenarios for all our customers and improve our integrations with other software, including VBS and Vialytics, which will help drive revenue.
Operating Expenses. Net operating expense was $3,603,166 for the three months ended June 30, 2026, compared to $3,898,111 for the same period in 2025, a decrease of $294,945, or 8%. Net operating expense was $7,065,011 for the six months ended June 30, 2026, compared to $7,727,189 for the same period in 2025, a decrease of $662,178, or 9%. Operating expenses decreased during the period as a result of management's continued focus on cost-control measures and overhead optimization in anticipation of lower revenue levels.
Operating Income. Operating loss was ($187,464) for the three months ended June 30, 2026, compared to operating income of $914,366 for the same period in 2025, a decrease of $1,101,830 or 121%. Operating loss was ($1,515,505) for the six months ended June 30, 2026, compared to operating income of $2,282,168 for the same period in 2025, a decrease of $3,797,673 or 166%. The year-over-year decline was driven principally by lower revenues and higher cost of sales, while operating expenses decreased only marginally during the period.
Net Other Income. Other income net of other expense was $14,645 for the three months ended June 30, 2026, compared to net other expense of $748,052 for the same period in 2025, an improvement of $762,697, or 102%. Other income net of other expense was $68,053 for the six months ended June 30, 2026, compared to net other expense of $749,794 for the same period in 2025, an improvement of $817,847 or 109%. The change from expense to income is primarily attributable to a significant foreign exchange (FX) loss recognized in the second quarter of 2025, compared with minimal FX expense and higher interest income in 2026.
Provision (Benefit) for Income Tax. Provision for income tax was $88,439 for the three months ended June 30, 2026, compared to ($9,000) benefit for the same period in 2025, a decrease of $97,439, or 1083%. Provision for income tax was $142,438 for the six months ended June 30, 2026, compared to $93,000 for the same period in 2025, an increase of $49,438, or 53%. Provision for income tax is estimated quarterly applying both federal and state tax rates.
Net Income. Net loss was ($261,258) for the three months ended June 30, 2026, compared to net income of $175,314 for the same period in 2025, a decrease of $436,572 or 249%. Net loss was ($1,589,890) for the six months ended June 30, 2026, compared to net income of $1,439,374 for the same period in 2025, a decrease of $3,029,264 or 210%. The fluctuation in net income relates to each respective revenue section discussed above.
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 Three Months Ended |
|
|
For Six Months Ended |
|
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|
|
June 30, |
|
|
June 30, |
|
|
Increase |
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|
|
% |
|
June 30, |
|
|
June 30, |
|
|
Increase |
|
|
|
% |
||||||||
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
(Decrease) |
|
|
Change |
|
||||||||
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|
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|
|
|
Net Income (Loss) |
|
$ | (261,258 |
) |
|
$ | 175,314 |
|
|
$ | (436,572 |
) |
|
|
-249 |
% |
|
$ | (1,589,890 |
) |
|
$ | 1,439,374 |
|
|
$ | (3,029,264 |
) |
|
|
-210 |
% |
Adjustments: |
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|
|
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|
|
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|
|
|
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|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
88,439 |
|
|
|
(9,000 |
) |
|
|
97,439 |
|
|
|
-1083 |
% |
|
|
142,438 |
|
|
|
93,000 |
|
|
|
49,438 |
|
|
|
53 |
% |
Depreciation and amortization |
|
|
520,368 |
|
|
|
513,693 |
|
|
|
6,675 |
|
|
|
1 |
% |
|
|
990,394 |
|
|
|
829,841 |
|
|
|
160,553 |
|
|
|
19 |
% |
Interest (net) |
|
|
6,426 |
|
|
|
(26,876 |
) |
|
|
33,302 |
|
|
|
-124 |
% |
|
|
(15,346 |
) |
|
|
(48,127 |
) |
|
|
32,781 |
|
|
|
-68 |
% |
EBITDA |
|
|
353,975 |
|
|
|
653,131 |
|
|
|
(299,156 |
) |
|
|
-46 |
% |
|
|
(472,404 |
) |
|
|
2,314,088 |
|
|
|
(2,786,492 |
) |
|
|
-120 |
% |
Right of use amortization |
|
|
29,280 |
|
|
|
42,501 |
|
|
|
(13,221 |
) |
|
|
-31 |
% |
|
|
72,773 |
|
|
|
84,365 |
|
|
|
(11,592 |
) |
|
|
-14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ | 383,255 |
|
|
$ | 695,632 |
|
|
$ | (312,377 |
) |
|
|
-45 |
% |
|
$ | (399,631 |
) |
|
$ | 2,398,453 |
|
|
$ | (2,798,084 |
) |
|
|
-117 |
% |
Liquidity and Capital Resources. Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. The Company had $14,312,743 and $ 18,594,598 of cash and cash equivalents as of June 30, 2026, and December 31, 2025, respectively. Working capital was $28,373,949 and $30,793,890 as of June 30, 2026, and December 31, 2025 respectively.
Net cash used in operating activities was $2,720,870 and net cash provided by operating activities was $6,047,430 for the six months ended June 30, 2026 and 2025, respectively. Net cash used in operating activities resulted primarily from the net loss for the period and increases in inventory to support future growth and $1,000,000 used for the Orlando building purchase deposit.
Net cash used in investing activities was $1,442,859 for the six months ended June 30, 2026, compared to net cash used in investing activities of 3,261,941 for the six months ended June 30, 2025. Investing activities in 2026 and 2025 consisted of purchases of property and equipment.
Net cash used in financing activities was $122,116 for the six months ended June 30, 2026, compared to $128,962 used in the six months ended June 30, 2025. In both periods, cash was used primarily for principal payment of debt and in 2026 the creation of the new mortgage note for the purchase of the Orlando building.
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 $5.5 million for the three months ended June 30, 2026 and bookings totaling $9.3 million for the six months ended June 30, 2026. The Company has made one change to the booking qualifications. As previously disclosed, in 2024 we strengthened the language in the STEP contract Terms and Conditions to better ensure the agreement remains in effect for the full three-year term. This change was done to secure future revenue and lower our risk of unsigned or cancelled contracts. Therefore, with this change, we believe there are $1.7 million in renewable STEP contract options still outstanding, and based on current renewal rates, the Company believes 95% of those options will be exercised.
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 June 30, 2026, the Company’s backlog was $13.2 million in Capital, $3.8 million in Service and $7.9 million in STEP, for a total of $24.9 million. This is a decrease in backlog from December 31, 2025 which sat at $13.8 million in Capital, $5.1 million in Service and $6.7 million in STEP, for a total of $25.6 million
Management estimates that most new capital bookings received in the second quarter of 2026 will be converted to revenue in 2026. Management recognizes that there are a percentage of capital contracts that will extend into 2027 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.
Cash Requirements
Our management believes that our current capital resources will be adequate to continue operating our 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 purchase a business or assets, expand our production capacity, expand our product and services, to enhance our sales and marketing efforts and effectiveness, and to aggressively take advantage of emerging 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, 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, 2025. Management believes that there have been no changes in our critical accounting policies during the three months ended June 30, 2026.
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 June 30, 2026, 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 guaranteed 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 June 30, 2026, 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, 2025, filed with the SEC on March 26, 2026. 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 10-K, 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.
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 June 30, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, during the quarter ended June 30, 2026, and continuing through 2026, 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.
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.
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.
| (a) | |
|
|
|
| (b) | There have been 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 -K for the year ended December 31, 2025. |
| (c) |
Exhibit No. |
|
Exhibit Description |
10.1 |
|
|
|
|
|
10.2 |
|
|
|
|
|
10.3 |
|
|
|
|
|
31.1 |
|
|
|
|
|
31.2 |
|
|
|
|
|
32.1 |
|
|
|
|
|
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) |
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: August 13, 2026 |
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) |
13
Exhibit 10.1
Principal $4,000,000.00 | Loan Date 5/15/2026 | Maturity 5/15/2033 | Loan No | Call / Coll | Account 512221694 | Officer *** | Initials |
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations. |
|||||||
Borrower: | VirTra, Inc. 295 E. Corporate Place Chandler, AZ 85225 | Lender: | UMB BANK, n.a. Chandler Banking Center 1000 N. 54th Street Chandler, AZ 85226 (480) 844-4540 |
|
|
|
|
Principal Amount: $4,000,000.00 | Date of Note: May 15, 2026 |
PROMISE TO PAY. VirTra, Inc. (“Borrower”) promises to pay to UMB BANK, n.a. (“Lender”), or order, in lawful money of the United States of America, the principal amount of Four Million & 00/100 Dollars ($4,000,000.00), together with Interest on the unpaid principal balance from May 15, 2026, until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan in accordance with the following payment schedule:
Borrower will pay this loan in 84 consecutive monthly payments beginning June 15, 2026, and continuing on the 15th calendar day of each month thereafter. Borrower’s final interest payment will be due on May 15, 2033. Borrower will make regular principal payments according to the Amortization Schedule attached hereto in the amounts and on the dates set forth therein.
Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any late charges; and then to any unpaid collection costs. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing. All payments must be made in U.S. dollars and must be received by Lender consistent with any written payment instructions provided by Lender. If a payment is made consistent with Lender’s payment instructions but received after 5:00 PM Central Time, Lender will credit Borrower’s payment on the next business day.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the Term SQFR Rate as defined below as determined on each Reset Date as described below (the “Index”). The Index is not necessarily the lowest rate charged by Lender on its loans. Lender will tell Borrower the current Index rate upon Borrower’s request. The interest rate change will not occur more often than each or as adjusted pursuant to the terms set forth in the paragraph title “Index and Margin Values”.
Definitions:
"Business Day" means any day that is not a Saturday, Sunday, or other day that is a legal holiday under the laws of the State of Missouri or is a day on which banking institutions in such state are authorized or required by law to close.
"Conforming Changes" means, with respect to either the use or administration of the Index or the use, administration, adoption, or implementation of any replacement to the Index (pursuant to the "Index and Margin Values" section below) any technical, administrative, or operational changes (including changes to the definition of "Business Day"), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, and other technical, administrative, or operational matters) that Lender decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by Lender in a manner substantially consistent with market practice (or, if Lender decides that adoption of any portion of such market practice is not administratively feasible or if Lender determines that no market practice for the administration of any such rate exists, in such other manner of administration as Lender decides is reasonably necessary in connection with the administration of this Note and other related documents).
PROMISSORY NOTE
(Continued) | Page 2 |
"Index" means the Term SOFR Rate as adjusted or as substituted by Lender on a temporary or permanent basis as set forth herein.
"Index Floor" means a rate of interest equal to zero percent (0.00%).
"Floor" means the minimum amount of interest charged on the outstanding principal balance of this Note as described in the paragraph titled "Index and Margin Values".
"Interest Period" means a period commencing on the date of the first advance of funds and ending on the day before the Reset Date, then resetting monthly thereafter beginning on the Reset Date and ending on the day before the Reset Date, without adjustment for non-Business Days. Notwithstanding the foregoing, no Interest Period shall extend beyond the scheduled maturity described herein.
"Margin" means the percentage points over the Index as set forth in the paragraph titled "Index and Margin Values".
"Reset Date" means the fifteenth (15th) day of each month following the date hereof, without adjustment for non-Business Days.
"SOFR" means a rate equal to the secured overnight financing rate as administered by the Federal reserve Bank of New York (or successor administrator).
"Term SOFR Rate" means the Term SOFR Reference Rate selected by Lender for the second (2nd) U.S. Government Securities Business Day before (i) the date of the first advance of principal for the first Interest Period, and thereafter (ii) each Reset Date. At no time shall the Term SOFR Rate be less than the Index Floor, unless prohibited by the paragraph below titled "Interest Rate Swap".
"Term SOFR Reference Rate" means the interest rate per annum determined by Lender as the forward-looking term rate based on SOFR for a 1-month tenor, published by CME Group Benchmarks Administration Limited (or a successor administrator designated by the relevant authority) as reported on Bloomberg Screen TSFR1M or other similar service selected by Lender.
"U.S Government Securities Business Day" means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
Interest Rate Swap. In the event Borrower or affiliate of Borrower enters into an interest rate swap transaction with Lender or affiliate of Lender with respect to interest accruing under this Note then any floor or ceiling, including the Index Floor or the Floor, will automatically be deemed not to apply to the principal portion of this Note that is so hedged for the duration of such interest rate swap transaction and the foregoing is limited solely to an interest rate swap transaction with the Lender or affiliate of Lender and shall not apply to any other derivative product, such as in interest rate cap or collar. Notwithstanding the foregoing, at no time shall the interest rate on this Note be more than the maximum rate allowed by applicable law.
Conforming Changes. In connection with the use of the Index or the use of a replacement to the Index pursuant to the "Index and Margin Values" section below, notwithstanding anything to the contrary in this Note or related documents, Lender may make Conforming Changes from time to time which will become effective without any further action or consent of any other party to this Note or other related documents. Lender will notify Borrower from time to time of the effectiveness of any Conforming Changes.
Index and Margin Values. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 3.639% per annum. Interest on the unpaid principal balance of this Note will be calculated as described in the "INTEREST CALCULATION METHOD" paragraph using a rate of 2.250 percentage points over the Index (the "Margin"), adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 5.889% per annum based on a year of 360 days. If Lender determines, in its sole discretion, that the Index has become unavailable or unreliable, either temporarily, indefinitely, or permanently, during the term of this Note, Lender may amend this Note by designating a substantially similar substitute index. Lender may also amend and adjust the Margin to accompany the substitute index. The change to the Margin may be a positive or negative value, or zero. In making these amendments, Lender may take into consideration any then-prevailing market convention for selecting a substitute index and margin for the specific Index that is unavailable or unreliable. Such an amendment to the terms of this Note will become effective and bind Borrower 10 business days after Lender gives written notice to Borrower without any action or consent of the Borrower. NOTICE: Under no circumstances will the interest rate on this Note be less than 2.250% per annum or more than the maximum rate allowed by applicable law. Whenever changes occur in the interest rate, Lender, at its option, may do one or more of the following: (A) change the amounts of Borrower's payments to maintain the original amortization schedule, (B) increase Borrower's payments to cover accruing interest if the interest rate adjustment is an increase, (C) change the number of Borrower's payments, and (D) continue Borrower's payments at the same amount and change Borrower's final payment amount.
PROMISSORY NOTE
(Continued) | Page 3 |
INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method. This calculation method results in a higher effective interest rate than the numeric interest rate stated in this Note.
EFFECTIVE RATE. Borrower agrees to an effective rate of interest that is the rate specified in this Note plus any additional rate resulting from any other charges in the nature of interest paid or to be paid in connection with this Note.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrower's making fewer payments. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: UMB Bank, n.a., Attn: Loan Accounting, PO Box 419226 - MS #1170203 Kansas City, MO 64141-6226.
LATE CHARGE. If a payment is 29 days or more late, Borrower will be charged 10.000% of the unpaid portion of the regularly scheduled payment or $50.00, whichever is less.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding an additional 2.000 percentage point margin ("Default Rate Margin"). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.
DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this Note.
Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.
PROMISSORY NOTE
(Continued) | Page 4 |
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.
ADDITIONAL EVENTS OF DEFAULT. In addition to the Events of Default described herein, the following shall be an Event of Default if applicable: (i) Borrower, any Guarantor or any grantor of collateral securing the Note fails to comply with any terms or conditions of any agreement with Lender or any UMB Financial Corporation Affiliate (as herein defined) or makes a representation or statement to Lender or any UMB Financial Corporation Affiliate that is false in any material respect; (ii) Borrower or any Guarantor revokes or disputes the validity of any of its liabilities or obligations under any Note, related agreement, or any other agreement with Lender or any UMB Financial Corporation Affiliate; (iii) any change in ownership of an aggregate of twenty-five percent (25%) or more of the common stock, members' equity or other ownership interest in Borrower or any general partner of Borrower or any Guarantor, (iv) the withdrawal, resignation or expulsion of any one or more of the general partners in Borrower or any Guarantor with an aggregate ownership interest in Borrower or such Guarantor of twenty-five percent (25%) or more; or (v) Borrower or any Guarantor or any chairman, CEO, CFO, president, manager or general partner of Borrower or any Guarantor, nor any officer, member, or shareholder with an ownership interest of twenty-five percent (25%) or more of Borrower or any Guarantor, has been or is convicted of a felony; or (vi) any restructuring of the legal entity (whether by merger, division or otherwise) of Borrower, any general partner of Borrower, or any Guarantor without the express written consent of Lender. For purposes of this provision, "UMB Financial Corporation Affiliate" shall mean UMB Financial Corporation and any present or future subsidiary of UMB Financial Corporation.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. However, Borrower will only pay attorneys' fees of an attorney not Lender's salaried employee, to whom the matter is referred after Borrower's default. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.
GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Arizona without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of Arizona.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Maricopa County, State of Arizona.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower makes a payment on Borrower's loan and the check or preauthorized charge with which Borrower pays is later dishonored.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph.
PROMISSORY NOTE
(Continued) | Page 5 |
COLLATERAL. Borrower acknowledges this Note is secured by collateral as described on MORTGAGE and ASSIGNMENT OF LEASES AND RENTS of even date, executed by Borrower to Lender.
ADDITIONAL TERMS. Borrower shall not a) voluntarily transfer any assets into trust or, b) if already owned in trust, shall not voluntarily transfer title to such trust assets to any other person or entity, without giving Lender at least 30 days prior written notice thereof.
PRIMARY DEPOSIT ACCOUNT. Borrower agrees to maintain Borrower's primary deposit account with Lender and keep such account at all times in good standing. If Borrower does not maintain a separate deposit account for its operations, but rather its operations are primarily administered through a deposit account of Borrower's parent or affiliate, then Borrower agrees to cause such parent or affiliate to maintain its primary deposit account with Lender. As used herein, "primary deposit account" means the deposit account into which substantially all of the receipts from the operations of Borrower, or of Borrower's parent or affiliate if applicable, are deposited and from which substantially all of its disbursements for its operations are made.
EVENTS OF DEFAULT; RIGHT TO CURE. Notwithstanding anything to the contrary in this Note or any Related Documents, a default defined as an Event of Default, other than a default defined herein as an "Immediate Default" or a "Swap Default", shall not be considered an Event of Default until seven (7) days following the payment due date with respect to a monetary default or thirty (30) days following the occurrence of a non-monetary default, and the failure of Borrower to cure such default or to cause such default to be cured within such period of time. "Immediate Default" shall mean an event of default due to (i) voluntary bankruptcy or insolvency of Borrower or any Related Party; (ii) the failure of Borrower or any Related Party to diligently contest and obtain the prompt dismissal of any involuntary bankruptcy or other insolvency proceedings filed against such Borrower or Related Party; (iii) appointment of a receiver, trustee, custodian or liquidator of a substantial part of the assets of Borrower or any Related Party, (iv) service of a writ of garnishment, levy or other seizure with respect to any collateral securing a promissory note or credit agreement, or any accounts of Borrower or any Related Party, (v) submission to Lender of any required financial statement or certificate of Borrower or any Related Party that is incorrect, false or misleading in any material respect when furnished or made, or (vii) breach of any covenant or obligation of Borrower or any Related Party that is not reasonably curable within thirty (30) days of such breach. "Related Party" shall mean each co-borrower, guarantor, beneficiary, grantor, mortgagor, trustor or other party executing any Related Document.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.
ELECTRONIC RECORDS AND SIGNATURES/TRANSFERABLE RECORD. Borrower consents to the use of electronic records and signatures (when Lender offers them) in connection with this Note and all related documents and information. This consent is provided in accordance with the federal Electronic Signatures in Global and National Commerce Act or any other applicable law addressing the use of electronic records and signatures (including the Uniform Electronic Transactions Act, as adopted by the state whose law governs this Note (collectively, the "Electronic Signature Laws")). Lender may store this Note and all related documents and information as electronic records (including by imaging or converting any original paper documents into electronic records) and may destroy any original paper documents after doing so. All electronic records and signatures used in connection with this Note and all related documents and information will have the same legal effect, validity and enforceability as original paper documents and original manual signatures. If Borrower uses an electronic signature to sign an electronic record of this Note, Borrower expressly agrees that such electronically signed electronic record of this Note is a transferrable record within the meaning of, and for all purposes under, the Electronic Signature Laws.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.
PROMISSORY NOTE
(Continued) | Page 6 |
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
BORROWER:
VIRTRA, INC. |
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By: | /s/ Alanna Boudreau |
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| Alanna Boudreau, CFO of VirTra, Inc. |
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Florida Documentary Stamp Tax
Florida documentary stamp tax in the amount required by law has been paid with respect to this Note on the Mortgage securing this Note.
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LaserPro, Ver. 25.4.40.001 Copr. Finastra USA Corporation 1997, 2026 All Rights Reserved. - AZ. D:\APPSIHFS\CFIILPL\020.FC TR-223547 PR-2832
Exhibit 10.2
THIS IS A BALLOON MORTGAGE AND THE FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL BALANCE DUE UPON MATURITY IS $3,427,888.81, TOGETHER WITH ACCRUED INTEREST, IF ANY, AND ALL ADVANCEMENTS MADE BY THE MORTGAGEE UNDER THE TERMS OF THIS MORTGAGE.
Florida documentary stamp taxes in the amount of $14,000.00 and Florida non-recurring Intangible taxes in the amount of $8,000.00 are being paid upon the recordation of this instrument.
WHEN RECORDED MAIL TO:
| UMB BANK, n.a. |
| Chandler Banking Center |
| 1000 N. 54th Street |
| Chandler, AZ 85226 |
This Mortgage prepared by:
| Name: Victoria A. Davis, Commercial Loan Closing Coordinator II |
| Company: UMB BANK, n.a. |
| Address: 1000 N. 54th Street , Chandler, AZ 85226 |
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MORTGAGE
FUTURE ADVANCES
MAXIMUM LIEN. The total amount of indebtedness secured by this Mortgage may decrease or increase from time to time, but the maximum amount of principal indebtedness which may be outstanding at any one time shall not exceed $8,000,000.00, plus interest, and amounts expended or advanced by Lender for the payment of taxes, levies or insurance on the Property, and interest on such amounts.
THIS MORTGAGE dated May 15, 2026, is made and executed between VirTra, Inc., a Nevada for profit corporation, whose address is 295 E. Corporate Place , Chandler, AZ 85225 (referred to below as "Grantor") and UMB BANK, n.a., whose address is 1000 N. 54th Street , Chandler, AZ 85226 (referred to below as "Lender").
GRANT OF MORTGAGE. For valuable consideration, Grantor mortgages to Lender all of Grantor's right, title, and interest in and to the following described real property, together with all existing or subsequently erected or affixed buildings, improvements and fixtures; all easements, rights of way, and appurtenances; all water, water rights, watercourses and ditch rights (including stock in utilities with ditch or irrigation rights); and all other rights, royalties, and profits relating to the real property, including without limitation all minerals, oil, gas, geothermal and similar matters, (the "Real Property") located in Orange County, State of Florida:
The Eastern two (2) acres of Lot 2, Block 22, Central Florida Research Park, Section IV, according to the plat thereof as recorded In Plat Book 28, Page 65, of the Public Records of Orange County, Florida.
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Being more particularly described as follows: Begin at the Southeast corner of Lot 2, Block 22, Central Florida Research Park, Section IV; thence N 00°15’30” W along the East line of said Lot 2 for 488.32 feet to the Northeast corner of said Lot 2; thence S 89°39’51” W along the North line of said Lot 2 for 192.41 feet; thence departing said North line S 00°15’30” E for 416.49 feet to a point of intersection on the North Right-of-Way line of Challenger Parkway, as recorded in the aforementioned Plat Book 28, Page 65, said point being on a curve concave Northerly having a radius of 1900.00 feet, through a central angle of 00°49’59”; thence Southerly along said curve for 27.62 feet; thence S 69°28’56” E along the aforementioned North Right-of-Way line for 142.37 feet to a point of curvature of a curve concave
Northerly having a radius of 547.00 feet, through a central angle of 03°41’57”; thence Southeasterly along said curve 35.32 feet to the Point of Beginning.
The Real Property or its address is commonly known as 12301 & 12361 Challenger Parkway, Orlando , FL 32826.
CROSS-COLLATERALIZATION. In addition to the Note, this Mortgage secures the following described additional indebtedness: this instrument secures all obligations, debts and liabilities, plus interest thereon, of either Grantor or Borrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower and Grantor or any one or more of them, whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Borrower or Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become otherwise unenforceable.
Grantor presently assigns to Lender all of Grantor's right, title, and interest in and to all present and future leases of the Property and all Rents from the Property. In addition, Grantor grants to Lender a Uniform Commercial Code security interest in the Personal Property and Rents.
FUTURE ADVANCES. In addition to the Note, this Mortgage secures all future advances made by Lender to Grantor whether or not the advances are made pursuant to a commitment. Specifically, without limitation, this Mortgage secures, in addition to the amounts specified in the Note, all future amounts Lender in its discretion may loan to Grantor within twenty (20) years of the date of this Mortgage, together with all interest thereon.
THIS MORTGAGE, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL OBLIGATIONS UNDER THE NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $4,000,000.00, THE RELATED DOCUMENTS, AND THIS MORTGAGE. THIS MORTGAGE IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS:
PAYMENT AND PERFORMANCE. Except as otherwise provided in this Mortgage, Grantor shall pay to Lender all amounts secured by this Mortgage as they become due and shall strictly perform all of Grantor's obligations under this Mortgage.
POSSESSION AND MAINTENANCE OF THE PROPERTY. Grantor agrees that Grantor's possession and use of the Property shall be governed by the following provisions:
Possession and Use. Until the occurrence of an Event of Default, Grantor may (1) remain in possession and control of the Property; (2) use, operate or manage the Property; and (3) collect the Rents from the Property.
Duty to Maintain. Grantor shall maintain the Property in tenantable condition and promptly perform all repairs, replacements, and maintenance necessary to preserve its value.
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Compliance With Environmental Laws. Grantor represents and warrants to Lender that: (1) During the period of Grantor's ownership of the Property, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from the Property; (2) Grantor has no knowledge of, or reason to believe that there has been, except as previously disclosed to and acknowledged by Lender in writing, (a) any breach or violation of any Environmental Laws, (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Property by any prior owners or occupants of the Property, or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters; and (3) Except as previously disclosed to and acknowledged by Lender in writing, (a) neither Grantor nor any tenant, contractor, agent or other authorized user of the Property shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from the Property; and (b) any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations and ordinances, including without limitation all Environmental Laws. Grantor authorizes Lender and its agents to enter upon the Property to make such inspections and tests, at Grantor's expense, as Lender may deem appropriate to determine compliance of the Property with this section of the Mortgage. Any inspections or tests made by Lender shall be for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Grantor or to any other person. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Property for Hazardous Substances. Grantor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any such laws; and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Mortgage or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release occurring prior to Grantor's ownership or interest in the Property, whether or not the same was or should have been known to Grantor. The provisions of this section of the Mortgage, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the satisfaction and reconveyance of the lien of this Mortgage and shall not be affected by Lender's acquisition of any interest in the Property, whether by foreclosure or otherwise.
Nuisance, Waste. Grantor shall not cause, conduct or permit any nuisance nor commit, permit, or suffer any stripping of or waste on or to the Property or any portion of the Property. Without limiting the generality of the foregoing, Grantor will not remove, or grant to any other party the right to remove, any timber, minerals (including oil and gas), coal, clay, scoria, soil, gravel or rock products without Lender's prior written consent.
Removal of Improvements. Grantor shall not demolish or remove any Improvements from the Real Property without Lender's prior written consent. As a condition to the removal of any Improvements, Lender may require Grantor to make arrangements satisfactory to Lender to replace such Improvements with Improvements of at least equal value.
Lender's Right to Enter. Lender and Lender's agents and representatives may enter upon the Real Property at all reasonable times to attend to Lender's interests and to inspect the Real Property for purposes of Grantor's compliance with the terms and conditions of this Mortgage.
Subsequent Liens. Grantor shall not allow any subsequent liens or mortgages on all or any portion of the Property without the prior written consent of Lender.
Compliance with Governmental Requirements. Grantor shall promptly comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the use or occupancy of the Property, including without limitation, the Americans With Disabilities Act. Grantor may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Grantor has notified Lender in writing prior to doing so and so long as, in Lender's sole opinion, Lender's interests in the Property are not jeopardized. Lender may require Grantor to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest.
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No Prohibited Activities. Grantor is not engaged in, and the Property shall not be used in connection with, any Prohibited Activities. Grantor shall not make any payments to Lender from funds derived from Prohibited Activities. Grantor will include in any agreement for the use, occupancy, or possession of the Property a provision expressly prohibiting any person using, occupying, or possessing the Property from engaging in or permitting others to engage in any Prohibited Activities on the Property. If Grantor becomes aware that any such person is likely engaged in or permitting Prohibited Activities on or at the Property, Grantor shall terminate the agreement and take all actions permitted by law to discontinue or cause the discontinuance of such Prohibited Activities. Grantor shall keep Lender fully advised of actions and plans to comply with this section. Grantor agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Mortgage. Notwithstanding any provision in this Mortgage or any Related Documents to the contrary, no direct or indirect disclosure to Lender and no knowledge of Lender of the existence of any Prohibited Activities shall estop Lender or waive any right of Lender to invoke any remedy under the Mortgage or any Related Documents for any Prohibited Activities.
Duty to Protect. Grantor agrees neither to abandon or leave unattended the Property. Grantor shall do all other acts, in addition to those acts set forth above in this section, which from the character and use of the Property are reasonably necessary to protect and preserve the Property.
DUE ON SALE - CONSENT BY LENDER. Lender may, at Lender's option, declare immediately due and payable all sums secured by this Mortgage upon the sale or transfer, without Lender's prior written consent, of all or any part of the Real Property, or any interest in the Real Property. A "sale or transfer" means the conveyance of Real Property or any right, title or interest in the Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary; whether by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold interest with a term greater than three (3) years, lease-option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding title to the Real Property, or by any other method of conveyance of an interest in the Real Property. If any Grantor is a corporation, partnership or limited liability company, transfer also includes any restructuring of the legal entity (whether by merger, division or otherwise) or any change in ownership of more than twenty-five percent (25%) of the voting stock, partnership interests or limited liability company interests, as the case may be, of such Grantor. However, this option shall not be exercised by Lender if such exercise is prohibited by federal law or by Florida law.
TAXES AND LIENS. The following provisions relating to the taxes and liens on the Property are part of this Mortgage:
Payment. Grantor shall pay when due (and in all events prior to delinquency) all taxes, payroll taxes, special taxes, assessments, water charges and sewer service charges levied against or on account of the Property, and shall pay when due all claims for work done on or for services rendered or material furnished to the Property. Grantor shall maintain the Property free of any liens having priority over or equal to the interest of Lender under this Mortgage, except for those liens specifically agreed to in writing by Lender, and except for the lien of taxes and assessments not due as further specified in the Right to Contest paragraph.
Right to Contest. Grantor may withhold payment of any tax, assessment, or claim in connection with a good faith dispute over the obligation to pay, so long as Lender's interest in the Property is not jeopardized. If a lien arises or is filed as a result of nonpayment, Grantor shall within fifteen (15) days after the lien arises or, if a lien is filed, within fifteen (15) days after Grantor has notice of the filing, secure the discharge of the lien, or if requested by Lender, deposit with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender in an amount sufficient to discharge the lien plus any costs and reasonable attorneys' fees, or other charges that could accrue as a result of a foreclosure or sale under the lien. In any contest, Grantor shall defend itself and Lender and shall satisfy any adverse judgment before enforcement against the Property. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings.
Evidence of Payment. Grantor shall upon demand furnish to Lender satisfactory evidence of payment of the taxes or assessments and shall authorize the appropriate governmental official to deliver to Lender at any time a written statement of the taxes and assessments against the Property.
Notice of Construction. Grantor shall notify Lender at least fifteen (15) days before any work is commenced, any services are furnished, or any materials are supplied to the Property, if any mechanic's lien, materialmen's lien, or other lien could be asserted on account of the work, services, or materials. Grantor will upon request of Lender furnish to Lender advance assurances satisfactory to Lender that Grantor can and will pay the cost of such improvements.
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PROPERTY DAMAGE INSURANCE. The following provisions relating to insuring the Property are a part of this Mortgage:
Maintenance of Insurance. Grantor shall procure and maintain policies of fire insurance with standard extended coverage endorsements on a replacement basis for the full insurable value covering all Improvements on the Real Property in an amount sufficient to avoid application of any coinsurance clause, and with a standard mortgagee clause in favor of Lender. Grantor shall also procure and maintain comprehensive general liability insurance in such coverage amounts as Lender may request with Lender being named as additional insureds in such liability insurance policies. Additionally, Grantor shall maintain such other insurance, including but not limited to hazard, business interruption and boiler insurance as Lender may require. Policies shall be written by such insurance companies and in such form as may be reasonably acceptable to Lender. Grantor shall deliver to Lender certificates of coverage from each insurer containing a stipulation that coverage will not be cancelled or diminished without a minimum of thirty (30) days' prior written notice to Lender and not containing any disclaimer of the insurer's liability for failure to give such notice. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. Should the Real Property be located in an area designated by the Administrator of the Federal Emergency Management Agency as a special flood hazard area, Grantor agrees to obtain and maintain flood insurance, if available, for the full unpaid principal balance of the loan and any prior liens on the property securing the loan, up to the maximum policy limits set under the National Flood Insurance Program, or as otherwise required by Lender, and to maintain such insurance for the term of the loan. Flood insurance may be purchased under the National Flood Insurance Program, from private insurers providing "private flood insurance" as defined by applicable federal flood insurance statutes and regulations, or from another flood insurance provider that is both acceptable to Lender in its sole discretion and permitted by applicable federal flood insurance statutes and regulations.
Application of Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Property. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. Whether or not Lender's security is impaired, Lender may, at Lender's election, receive and retain the proceeds of any insurance and apply the proceeds to the reduction of the Indebtedness, payment of any lien affecting the Property, or the restoration and repair of the Property. If Lender elects to apply the proceeds to restoration and repair, Grantor shall repair or replace the damaged or destroyed Improvements in a manner satisfactory to Lender. Lender shall, upon satisfactory proof of such expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration if Grantor is not in default under this Mortgage. Any proceeds which have not been disbursed within 180 days after their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to pay any amount owing to Lender under this Mortgage, then to pay accrued interest, and the remainder, if any, shall be applied to the principal balance of the Indebtedness. If Lender holds any proceeds after payment in full of the Indebtedness, such proceeds shall be paid to Grantor as Grantor's interests may appear.
Grantor's Report on Insurance. Upon request of Lender, however not more than once a year, Grantor shall furnish to Lender a report on each existing policy of insurance showing: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured, the then current replacement value of such property, and the manner of determining that value; and (5) the expiration date of the policy. Grantor shall, upon request of Lender, have an independent appraiser satisfactory to Lender determine the cash value replacement cost of the Property.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Property or if Grantor fails to comply with any provision of this Mortgage or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Mortgage or any Related Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Property and paying all costs for insuring, maintaining and preserving the Property. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Mortgage also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon the occurrence of any Event of Default.
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WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of the Property are a part of this Mortgage:
Title. Grantor warrants that: (a) Grantor holds good and marketable title of record to the Property in fee simple, free and clear of all liens and encumbrances other than those set forth in the Real Property description or in any title insurance policy, title report, or final title opinion issued in favor of, and accepted by, Lender in connection with this Mortgage, and (b) Grantor has the full right, power, and authority to execute and deliver this Mortgage to Lender.
Defense of Title. Subject to the exception in the paragraph above, Grantor warrants and will forever defend the title to the Property against the lawful claims of all persons. In the event any action or proceeding is commenced that questions Grantor's title or the interest of Lender under this Mortgage, Grantor shall defend the action at Grantor's expense. Grantor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of Lender's own choice, and Grantor will deliver, or cause to be delivered, to Lender such instruments as Lender may request from time to time to permit such participation.
Compliance With Laws. Grantor warrants that the Property and Grantor's use of the Property complies with all existing applicable laws, ordinances, and regulations of governmental authorities.
Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Mortgage shall survive the execution and delivery of this Mortgage, shall be continuing in nature, and shall remain in full force and effect until such time as Grantor's Indebtedness shall be paid in full.
CONDEMNATION. The following provisions relating to condemnation proceedings are a part of this Mortgage:
Proceedings. If any proceeding in condemnation is filed, Grantor shall promptly notify Lender in writing, and Grantor shall promptly take such steps as may be necessary to defend the action and obtain the award. Grantor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of its own choice, and Grantor will deliver or cause to be delivered to Lender such instruments and documentation as may be requested by Lender from time to time to permit such participation.
Application of Net Proceeds. If all or any part of the Property is condemned by eminent domain proceedings or by any proceeding or purchase in lieu of condemnation, Lender may at its election require that all or any portion of the net proceeds of the award be applied to the Indebtedness or the repair or restoration of the Property. The net proceeds of the award shall mean the award after payment of all reasonable costs, expenses, and attorneys' fees incurred by Lender in connection with the condemnation.
IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following provisions relating to governmental taxes, fees and charges are a part of this Mortgage:
Current Taxes, Fees and Charges. Upon request by Lender, Grantor shall execute such documents in addition to this Mortgage and take whatever other action is requested by Lender to perfect and continue Lender's lien on the Real Property. Grantor shall reimburse Lender for all taxes, as described below, together with all expenses incurred in recording, perfecting or continuing this Mortgage, including without limitation all intangible personal property taxes, documentary stamp taxes, fees, and other charges for recording or registering this Mortgage.
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Taxes. The following shall constitute taxes to which this section applies: (1) a specific tax, including without limitation an intangible personal property tax, upon this type of Mortgage or upon all or any part of the Indebtedness secured by this Mortgage; (2) a specific tax on Grantor which Grantor is authorized or required to deduct from payments on the Indebtedness secured by this type of Mortgage; (3) a tax on this type of Mortgage chargeable against the Lender or the holder of the Note; and (4) a specific tax on all or any portion of the Indebtedness or on payments of principal and interest made by Grantor.
Subsequent Taxes. If any tax to which this section applies is enacted subsequent to the date of this Mortgage, this event shall have the same effect as an Event of Default, and Lender may exercise any or all of its available remedies for an Event of Default as provided below unless Grantor either (1) pays the tax before it becomes delinquent, or (2) contests the tax as provided above in the Taxes and Liens section and deposits with Lender cash or a sufficient corporate surety bond or other security satisfactory to Lender.
SECURITY AGREEMENT; FINANCING STATEMENTS. The following provisions relating to this Mortgage as a security agreement are a part of this Mortgage:
Security Agreement. This instrument shall constitute a Security Agreement to the extent any of the Property constitutes fixtures, and Lender shall have all of the rights of a secured party under the Uniform Commercial Code as amended from time to time.
Security Interest. Upon request by Lender, Grantor shall take whatever action is requested by Lender to perfect and continue Lender's security interest in the Rents and Personal Property. In addition to recording this Mortgage in the real property records, Lender may, at any time and without further authorization from Grantor, file executed counterparts, copies or reproductions of this Mortgage as a financing statement. Grantor shall reimburse Lender for all expenses incurred in perfecting or continuing this security interest. Upon default, Grantor shall not remove, sever or detach the Personal Property from the Property. Upon default, Grantor shall assemble any Personal Property not affixed to the Property in a manner and at a place reasonably convenient to Grantor and Lender and make it available to Lender within three (3) days after receipt of written demand from Lender to the extent permitted by applicable law.
Addresses. The mailing addresses of Grantor (debtor) and Lender (secured party) from which information concerning the security interest granted by this Mortgage may be obtained (each as required by the Uniform Commercial Code) are as stated on the first page of this Mortgage.
FURTHER ASSURANCES; ATTORNEY-IN-FACT. The following provisions relating to further assurances and attorney-in-fact are a part of this Mortgage:
Further Assurances. At any time, and from time to time, upon request of Lender, Grantor will make, execute and deliver, or will cause to be made, executed or delivered, to Lender or to Lender's designee, and when requested by Lender, cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such times and in such offices and places as Lender may deem appropriate, any and all such mortgages, deeds of trust, security deeds, security agreements, financing statements, continuation statements, instruments of further assurance, certificates, and other documents as may, in the sole opinion of Lender, be necessary or desirable in order to effectuate, complete, perfect, continue, or preserve (1) Grantor's obligations under the Note, this Mortgage, and the Related Documents, and (2) the liens and security interests created by this Mortgage as first and prior liens on the Property, whether now owned or hereafter acquired by Grantor. Unless prohibited by law or Lender agrees to the contrary in writing, Grantor shall reimburse Lender for all costs and expenses incurred in connection with the matters referred to in this paragraph.
Attorney-in-Fact. If Grantor fails to do any of the things referred to in the preceding paragraph, Lender may do so for and in the name of Grantor and at Grantor's expense. For such purposes, Grantor hereby irrevocably appoints Lender as Grantor's attorney-in-fact for the purpose of making, executing, delivering, filing, recording, and doing all other things as may be necessary or desirable, in Lender's sole opinion, to accomplish the matters referred to in the preceding paragraph.
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FULL PERFORMANCE. If Grantor pays all the Indebtedness, including without limitation all future advances, when due, and otherwise performs all the obligations imposed upon Grantor under this Mortgage, Lender shall execute and deliver to Grantor a suitable satisfaction of this Mortgage and suitable statements of termination of any financing statement on file evidencing Lender's security interest in the Rents and the Personal Property. Grantor will pay, if permitted by applicable law, any reasonable termination fee as determined by Lender from time to time.
EVENTS OF DEFAULT. Each of the following, at Lender's option, shall constitute an Event of Default under this Mortgage:
Payment Default. Grantor fails to make any payment when due under the Indebtedness.
Default on Other Payments. Failure of Grantor within the time required by this Mortgage to make any payment for taxes or insurance, or any other payment necessary to prevent filing of or to effect discharge of any lien.
Other Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Mortgage or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Grantor.
False Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantor's behalf under this Mortgage or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Defective Collateralization. This Mortgage or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
Insolvency. The dissolution or termination of Grantor's existence as a going business, the insolvency of Grantor, the appointment of a receiver for any part of Grantor's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Grantor or by any governmental agency against any property securing the Indebtedness. This includes a garnishment of any of Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Breach of Other Agreement. Any breach by Grantor under the terms of any other agreement between Grantor and Lender that is not remedied within any grace period provided therein, including without limitation any agreement concerning any indebtedness or other obligation of Grantor to Lender, whether existing now or later.
Adverse Change. A material adverse change occurs in Grantor's financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the Indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of an Event of Default and at any time thereafter, Lender, at Lender's option, may exercise any one or more of the following rights and remedies, in addition to any other rights or remedies provided by law:
Accelerate Indebtedness. Lender shall have the right at its option without notice to Grantor to declare the entire Indebtedness immediately due and payable, including any prepayment penalty that Grantor would be required to pay.
UCC Remedies. With respect to all or any part of the Personal Property, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code.
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Collect Rents. Lender personally, or by Lender's agents or attorneys, may enter into and upon all or any part of the Property, and may exclude Grantor, Grantor's agents and servants wholly from the Property. Lender may use, operate, manage and control the Property. Lender shall be entitled to collect and receive all earnings, revenues, rents, issues, profits and income of the Property and every part thereof, all of which shall for all purposes constitute property of Grantor. After deducting the expenses of conducting the business thereof, and of all maintenance, repairs, renewals, replacements, alterations, additions, betterments and improvements and amounts necessary to pay for taxes, assessments, insurance and prior or other property charges upon the Property or any part thereof, as well as just and reasonable compensation for the services of Lender. Lender shall apply such monies first to the payment of the principal of the Note, and the interest thereon, when and as the same shall become payable and second to the payment of any other sums required to be paid by Grantor under this Mortgage.
Appoint Receiver. In the event of a suit being instituted to foreclose this Mortgage, Lender shall be entitled to apply at any time pending such foreclosure suit to the court having jurisdiction thereof for the appointment of a receiver of any or all of the Property, and of all rents, incomes, profits, issues and revenues thereof, from whatsoever source. The parties agree that the court shall forthwith appoint such receiver with the usual powers and duties of receivers in like cases. Such appointment shall be made by the court as a matter of strict right to Lender and without notice to Grantor, and without reference to the adequacy or inadequacy of the value of the Property, or to Grantor's solvency or any other party defendant to such suit. Grantor hereby specifically waives the right to object to the appointment of a receiver and agrees that such appointment shall be made as an admitted equity and as a matter of absolute right to Lender, and consents to the appointment of any officer or employee of Lender as receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, and to collect the Rents from the Property and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. The receiver may serve without bond if permitted by law. Lender's right to the appointment of a receiver shall exist whether or not the apparent value of the Property exceeds the Indebtedness by a substantial amount. If permitted by law, employment by Lender shall not disqualify a person from serving as receiver.
Judicial Foreclosure. Lender may obtain a judicial decree foreclosing Grantor's interest in all or any part of the Property.
Deficiency Judgment. If permitted by applicable law, Lender may obtain a judgment for any deficiency remaining in the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this section.
Tenancy at Sufferance. If Grantor remains in possession of the Property after the Property is sold as provided above or Lender otherwise becomes entitled to possession of the Property upon default of Grantor, Grantor shall become a tenant at sufferance of Lender or the purchaser of the Property and shall, at Lender's option, either (1) pay a reasonable rental for the use of the Property, or (2) vacate the Property immediately upon the demand of Lender.
Other Remedies. Lender shall have all other rights and remedies provided in this Mortgage or the Note or available at law or in equity.
Sale of the Property. To the extent permitted by applicable law, Grantor hereby waives any and all right to have the Property marshalled. In exercising its rights and remedies, Lender shall be free to sell all or any part of the Property together or separately, in one sale or by separate sales. Lender shall be entitled to bid at any public sale on all or any portion of the Property.
Notice of Sale. Lender shall give Grantor reasonable notice of the time and place of any public sale of the Personal Property or of the time after which any private sale or other intended disposition of the Personal Property is to be made. Reasonable notice shall mean notice given at least ten (10) days before the time of the sale or disposition. Any sale of the Personal Property may be made in conjunction with any sale of the Real Property.
Election of Remedies. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Mortgage, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies. Nothing under this Mortgage or otherwise shall be construed so as to limit or restrict the rights and remedies available to Lender following an Event of Default, or in any way to limit or restrict the rights and ability of Lender to proceed directly against Grantor and/or against any other co-maker, guarantor, surety or endorser and/or to proceed against any other collateral directly or indirectly securing the Indebtedness.
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Attorneys' Fees; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Mortgage, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys' fees at trial and upon any appeal. Whether or not any court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs that in Lender's opinion are necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest at the Note rate from the date of the expenditure until repaid. Expenses covered by this paragraph include, without limitation, however subject to any limits under applicable law, Lender's reasonable attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including reasonable attorneys' fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services, the cost of searching records, obtaining title reports (including foreclosure reports), surveyors' reports, and appraisal fees and title insurance, to the extent permitted by applicable law. However, Grantor will only pay reasonable attorneys' fees of an attorney not Lender's salaried employee, to whom the matter is referred after Grantor's default. Grantor also will pay any court costs, in addition to all other sums provided by law.
NOTICES. Any notice required to be given under this Mortgage, including without limitation any notice of default and any notice of sale shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Mortgage. Any party may change its address for notices under this Mortgage by giving written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor's current address. Unless otherwise provided or required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.
COMMERCIAL CREDIT CARD OBLIGATIONS. All obligations and indebtedness incurred by Borrower to Lender by the use of the Borrower of any commercial credit card(s) issued by Lender to Borrower shall constitute Indebtedness under this Agreement, and shall be secured in all respects by the Collateral and the terms and provisions of this Agreement. All obligations and indebtedness incurred by Borrower to any Affiliate of Lender by the use by Borrower of any commercial credit card(s) issued by such Affiliate to Borrower shall constitute Indebtedness under this Agreement, and shall be secured in all respects by the Collateral and the terms and provisions of this Agreement.
The word "Affiliate" means any entity that, directly or indirectly through one or more intermediaries, controls or is under common control with Lender or any subsidiary of Lender. For the purposes of this definition, "control' means the power to direct the management and policies of such Affiliate entity, directly or indirectly, whether through the ownership of voting securities or interests, by contract or otherwise.
CONSIDERATION. It is understood and agreed that UMB Bank, n.a., is making the Loan to the Borrower described in this Mortgage in consideration of, among other things, the request of the undersigned that UMB Bank, n.a., do so and the willingness of the undersigned to sign this Mortgage.
ADDITIONAL TRUST TERMS. If Grantor is a revocable trust and to the extent the foregoing described Trust Agreement does not specifically authorize this Mortgage, the provisions of said Trust Agreement are hereby amended to the extent necessary to authorize the same and the performance of all the provisions hereof. In the event said Trust Agreement is revoked prior to the payment in full of all obligations of Borrower to Lender and secured by the Property, this Mortgage shall nonetheless remain in full force and effect until all such obligations of the Borrower are paid in full.
SWAP SUPPLEMENTAL DEFINITIONS, PROVISIONS AND TERMS.
A. The paragraph above "THIS MORTGAGE, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL OBLIGATIONS UNDER THE NOTE, THE RELATED DOCUMENTS, AND THIS MORTGAGE. THIS MORTGAGE IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS:" is hereby deleted in its entirety and replaced with the following: THIS MORTGAGE, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY AND ALL OBLIGATIONS UNDER THE NOTE, THE RELATED DOCUMENTS, EACH SWAP, AND THIS MORTGAGE. THIS MORTGAGE IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS:
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B. The PAYMENT AND PERFORMANCE section above, is hereby deleted in its entirety and replaced with the following: PAYMENT AND PERFORMANCE. Except as otherwise provided in this Mortgage, Grantor shall pay to Lender all amounts secured by this Mortgage as they become due and shall strictly perform all of Grantor's obligations under each Swap and this Mortgage.
C. The FULL PERFORMANCE section above, is hereby deleted in its entirety and replaced with the following: FULL PERFORMANCE. Upon the full performance of all the obligations under the Note and this Mortgage, and payment and performance of all other Indebtedness secured hereby, Lender may, upon production of documents and fees as required under applicable law, release this Mortgage, and such release shall constitute a release of the lien for all such additional sums and expenditures made pursuant to this Mortgage. Lender agrees to cooperate with Grantor in obtaining such release and releasing the other collateral securing the Indebtedness. Any release fees required by law shall be paid by Grantor, if permitted by applicable law.
D. The following additional provision shall be added to the EVENTS OF DEFAULT section above: Swap Default. (i) Borrower or any Grantor of collateral securing the Note or any Guaranty fails to comply with or to perform any term, obligation, covenant, or condition applicable to it contained in any documentation related to a Swap (after giving effect to any explicit notice requirement, cure or grace period set forth in such Swap documentation) or (ii) an early termination date is designated or deemed designated with respect to such Swap documentation by Lender or any affiliate of Lender.
E. The definition of "Accelerate Indebtedness" as set forth in RIGHTS AND REMEDIES ON DEFAULT section above, is hereby deleted in its entirety and replaced with the following: Accelerate Indebtedness. Lender shall have the right at its option without notice to Grantor or Borrower to declare, in whole or in part, the Indebtedness immediately due and payable, including any prepayment penalty which Grantor or Borrower would be required to pay.
F. The following additional provision shall be added to the DEFINITIONS section below: Swap. Any "Swap," as defined in the Commodity Exchange Act (7 U.S.C. §1 et. seq.) and related regulations (collectively, the "CEA"), that Borrower, individually or collectively with others, has entered into with Lender or an affiliate of Lender, together with any and all related swap documentation, including without limitation an ISDA master agreement and schedule, any swap confirmation, and any further swap documentation executed and delivered by the parties to facilitate compliance with the CEA.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Mortgage:
Amendments. This Mortgage, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Mortgage. No alteration of or amendment to this Mortgage shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Annual Reports. If the Property is used for purposes other than Grantor's residence, Grantor shall furnish to Lender, upon request, a certified statement of net operating income received from the Property during Grantor's previous fiscal year in such form and detail as Lender shall require. "Net operating income" shall mean all cash receipts from the Property less all cash expenditures made in connection with the operation of the Property.
Caption Headings. Caption headings in this Mortgage are for convenience purposes only and are not to be used to interpret or define the provisions of this Mortgage.
Governing Law. With respect to procedural matters related to the perfection and enforcement of Lender's rights against the Property, this Mortgage will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Florida. In all other respects, this Mortgage will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Arizona without regard to its conflicts of law provisions. However, if there ever is a question about whether any provision of this Mortgage is valid or enforceable, the provision that is questioned will be governed by whichever state or federal law would find the provision to be valid and enforceable. The loan transaction that is evidenced by the Note and this Mortgage has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of Arizona.
Choice of Venue. If there is a lawsuit, Grantor agrees upon Lender's request to submit to the jurisdiction of the courts of Maricopa County, State of Arizona.
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No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Mortgage unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Mortgage shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Mortgage. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Mortgage, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Prohibited Activities. Notwithstanding anything to the contrary in this Mortgage, Grantor shall not be entitled to receive any notice of or right to cure an Event of Default related to any Prohibited Activities.
Severability. If a court of competent jurisdiction finds any provision of this Mortgage to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Mortgage. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Mortgage shall not affect the legality, validity or enforceability of any other provision of this Mortgage.
Merger. There shall be no merger of the interest or estate created by this Mortgage with any other interest or estate in the Property at any time held by or for the benefit of Lender in any capacity, without the written consent of Lender.
Successors and Assigns. Subject to any limitations stated in this Mortgage on transfer of Grantor's interest, this Mortgage shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Property becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor's successors with reference to this Mortgage and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Mortgage or liability under the Indebtedness.
Time is of the Essence. Time is of the essence in the performance of this Mortgage.
Waive Jury. All parties to this Mortgage hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Mortgage. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Mortgage shall have the meanings attributed to such terms in the Uniform Commercial Code:
Borrower. The word "Borrower" means VirTra, Inc. and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the events of default set forth in this Mortgage in the events of default section of this Mortgage.
Grantor. The word “Grantor” means VirTra, Inc..
Guaranty. The word "Guaranty" means the guaranty from guarantor, endorser, surety, or accommodation party to Lender, including without limitation a guaranty of all or part of the Note.
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Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Improvements. The word "Improvements" means all existing and future improvements, buildings, structures, mobile homes affixed on the Real Property, facilities, additions, replacements and other construction on the Real Property.
Indebtedness. The word "Indebtedness" means all principal and interest together with all other indebtedness, costs and expenses for which the Borrower or a Related Party is responsible under the Note or Related Documents, and all liabilities and obligations of the Borrower or Related Party under any Swap, together with all renewals of, extensions of, modifications of, consolidations of and substitutions for the Note, Related Documents or any Swap. Specifically, without limitation, Indebtedness includes: (i) any future advances set forth in a “Future Advances” provision, together with all interest thereon and (ii) any amounts expended or advanced by Lender to discharge a Related Party's obligations, or expenses incurred by Trustee or Lender/Beneficiary to enforce a Related Party's obligations under this instrument or any Related Documents, together with interest on such amounts as provided herein. “Related Party” shall mean each co-borrower, guarantor, beneficiary, grantor, mortgagor, trustor or other party executing any Related Document.
Lender. The word "Lender" means UMB BANK, n.a., its successors and assigns.
Mortgage. The word "Mortgage" means this Mortgage between Grantor and Lender.
Note. The word "Note" means and includes without limitation all of Borrower's promissory notes and/or credit agreements evidencing Borrower's loan obligations in favor of Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for promissory notes or credit agreements. The final maturity date of the Note is May 15, 2033. NOTICE TO GRANTOR: THE NOTE CONTAINS A VARIABLE INTEREST RATE.
Personal Property. The words "Personal Property" mean all equipment, fixtures, and other articles of personal property now or hereafter owned by Grantor, and now or hereafter attached or affixed to the Real Property; together with all accessions, parts, and additions to, all replacements of, and all substitutions for, any of such property; and together with all proceeds (including without limitation all insurance proceeds and refunds of premiums) from any sale or other disposition of the Property.
Prohibited Activities. The words "Prohibited Activities" mean any activity relating to the use, sale, possession, cultivation, manufacture, storage, distribution, or marketing of cannabis, marijuana, or marijuana-based products which constitutes in any manner a violation of any applicable federal, state, or local law or regulation, regardless of whether applicable conflicting law permits the same.
Property. The word "Property" means collectively the Real Property and the Personal Property.
Real Property. The words "Real Property" mean the real property, interests and rights, as further described in this Mortgage.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
Rents. The word "Rents" means all present and future rents, revenues, income, issues, royalties, profits, and other benefits derived from the Property.
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GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS MORTGAGE, AND GRANTOR AGREES TO ITS TERMS.
GRANTOR:
VIRTRA, INC.
By: | /s/ Alanna Boudreau |
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Alanna Boudreau, CFO of VirTra, Inc. |
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LENDER:
UMB BANK, N.A.
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CORPORATE ACKNOWLEDGMENT
STATE OF Florida | ) |
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The foregoing instrument was acknowledged before me by means of [X] physical presence or [ ] online notarization, this 22nd day of May, 20 by Alanna Boudreau, CFO of VirTra, Inc., a Nevada corporation, each on behalf of the corporation. He or she is personally known to me or has produced driver’s license as identification.
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LaserPro, Ver. 25.4.40.001 Copr. Finastra USA Corporation 1997, 2026. All Rights Reserved. - FL/AZ D:\APPS\HFS\CFI\LPL\G03.FC TR-223547 PR-2832 (M) |
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Exhibit 10.3
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Space Above Line Reserved For Recorder’s Use
1. | Title of Document: | Assignment of Leases and Rents |
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2. | Date of Document: | May 15, 2026 |
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3. | Grantor: | VirTra, Inc. |
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4. | Lender: | UMB Bank, n.a. |
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5. | Statutory Mailing Addresses: |
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| Grantor: | 295 E. Corporate Place |
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| Chandler, AZ 85225 |
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| Lender: | 1010 Grand Boulevard |
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| Kansas City, MO 64106 |
6. | Legal description: | Legal description of the property is set out on page 1. |
7. | Reference(s) to Book(s) and Pages: | N/A |
ASSIGNMENT OF LEASES AND RENTS
This ASSIGNMENT OF LEASES AND RENTS (“Assignment”), dated as of May 15, 2025, is made by VirTra, Inc., a Nevada for profit corporation (“Borrower”), having a mailing address of 295 E. Corporate Place , Chandler, AZ 85225, for the benefit of UMB Bank, n.a. (“Lender”), having a mailing address of 1010 Grand Banking Center, 1010 Grand Boulevard, Kansas City, MO 64106. The following recitals are made a material part of this Assignment.
RECITALS:
A. Lender has agreed to make a certain loan to Borrower, and Borrower’s obligation to repay such loan (the “Indebtedness”) is evidenced by that certain Promissory Note, including any amendments, modifications, extensions or renewals thereof, in the principal amount of $4,000,000.00, made payable by Borrower to the order of Lender and dated as of the date of this Assignment (the “Note”). The Loan Agreement and the Note are secured in part by that certain Mortgage and Assignment of Leases and Rents (the “Mortgage”), DATED as of the date of this Assignment, covering certain property (the “Real Property”) located in Orange County, State of Florida:
The Land is described as follows:
The Eastern two (2) acres of Lot 2, Block 22, Central Florida Research Park, Section IV, according to the plat thereof as recorded In Plat Book 28, Page 65, of the Public Records of Orange County, Florida.
Being more particularly described as follows: Begin at the Southeast corner of Lot 2, Block 22, Central Florida Research Park, Section IV; thence N 00°15’30” W along the East line of said Lot 2 for 488.32 feet to the Northeast corner of said Lot 2; thence S 89°39’51” W along the North line of said Lot 2 for 192.41 feet; thence departing said North line S 00°15’30” E for 416.49 feet to a point of intersection on the North Right-of-Way line of Challenger Parkway, as recorded in the aforementioned Plat Book 28, Page 65, said point being on a curve concave Northerly having a radius of 1900.00 feet, through a central angle of 00°49’59”; thence Southerly along said curve for 27.62 feet; thence S 69°28’56” E along the aforementioned North Right-of-Way line for 142.37 feet to a point of curvature of a curve concave Northerly having a radius of 547.00 feet, through a central angle of 03°41’57”; thence Southeasterly along said curve 35.32 feet to the Point of Beginning.
The Real Property or its address is commonly known as 12301 & 12361 Challenger Parkway, Orlando, FL 32826.
B. The Indebtedness and all other obligations of Borrower under this Assignment, the Loan Agreement, the Note, the Mortgage, the other Loan Documents and any other document or agreement evidencing, securing and/or guaranteeing repayment of the Indebtedness (collectively, the “Obligations”) are to be secured by this Assignment.
NOW, THEREFORE, in consideration of the loan agreed to be made by Lender to Grantor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby assign, transfer and set over to the Lender the right to receive and collect the rents, security deposits, escrows, income, proceeds, earnings, royalties, revenues, issues and profits payable under any lease of any portion of the Property, (collectively, the “Leases” or each, a “Lease”) and the rights to enforce, at law or in equity, all provisions and options thereof (collectively, the “Rents”) and the right to apply the same to the payment and performance of the Obligations.
Page 1 of 5
ASSIGNMENT OF LEASES AND RENTS
To protect and further the security of this Assignment, Borrower agrees as follows:
1. Agreements Regarding Leases. Borrower agrees, represents and warrants unto Lender as follows:
(a) Borrower is the sole owner of the entire interest of the landlord in the Leases; without Lender’s prior written consent, Borrower will not transfer, sell, assign, pledge, encumber or grant a security interest in any of the Leases;
(b) Borrower shall not hereafter permit any Lease to become subordinate to any lien other than the lien of the Mortgage and any liens to which the Mortgage is now, or may pursuant to its terms become, subordinate; and
(c) Borrower shall perform all of its covenants and agreements under the Leases.
Any amounts received by Borrower or its agents for performance of any actions prohibited by the terms of this Assignment and any amounts received by Borrower as rents, income, issues or profits from the Real Property from and after the date of any Event of Default under any of the Loan Documents, which Event of Default shall not have been cured within the time periods, if any, expressly established therefor, shall be held by Borrower as trustee for Lender and all such amounts shall be accounted for to Lender and shall not be commingled with other funds of Borrower. Any person acquiring or receiving all or any portion of such trust funds shall acquire or receive the same in trust for Lender as if such person had actual or constructive notice that such funds were impressed with a trust in accordance herewith; by way of example and not of limitation, such notice may be given by an instrument recorded with the Recorder of Deeds of the county in which the Real Property is located stating that Borrower has received or will receive such amounts in trust for Lender.
2. Waiver of Liability. Nothing herein contained shall be construed as constituting Lender a “mortgagee in possession” in the absence of the taking of actual possession of the Real Property by Lender pursuant to the provisions hereinafter contained. In the exercise of the powers granted by the Mortgage, no liability shall be asserted or enforced against Lender, all such liability being expressly waived and released by Borrower.
3. Further Assurances and Assignments. Borrower further agrees to execute and deliver immediately upon the request of Lender, all such further assurances and assignments concerning the Leases or the Real Property as Lender shall from time to time reasonably require.
4. Exercise of Remedies. Upon the occurrence of an Event of Default, as defined in the Loan Agreement, the Note, the Mortgage or the other Loan Documents (in each instance after applicable grace periods have expired) and upon demand of Lender, Borrower agrees to surrender to Lender and Lender shall be entitled to take actual possession of the Real Property or any part thereof personally, or by its agents or attorneys, and Lender in its discretion may, with or without force or notice and with or without process of law, enter upon and take and maintain possession of all or any part of the Real Property, together with all the documents, books, records, papers and accounts of Borrower or the then owner of the Real Property relating thereto, and may exclude Borrower, its agents, or servants, wholly therefrom and may as attorney in fact of Borrower or agent of Borrower, or in its own name under the powers granted by the Mortgage or herein granted, hold, operate, manage and control the Real Property and conduct the business, if any, thereof either personally or by its agents, with full power to use such measures, legal or equitable, as in its discretion may be deemed proper or necessary to enforce the payment of security of the rents, income, issues and profits of the Real Property, including actions for the recovery of rent, actions in forcible detainer and actions in distress of rent, hereby granting full power and authority to exercise each and every of the rights, privileges and powers herein granted at any and all times hereafter, and with full power to extend, modify, renew, amend, enter into any Lease or sublease, to cancel or terminate any Lease or sublease for any cause or on any ground which would entitle Borrower to cancel the same, to elect to disaffirm any Lease or sublease made subsequent to the Mortgage or subordinated to the lien thereof, to make all necessary or proper repairs, decorating, renewals, replacements, alterations, additions, betterments and improvements to the Real Property that may seem judicious, in its discretion, to insure and reinsure the same for all risks incidental to Lender’s possession, operation and management thereof and to receive all such rents, income, issues and profits.
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ASSIGNMENT OF LEASES AND RENTS
5. Indemnity. Lender shall not at any time (regardless of any exercise by Lender, or right of Lender to exercise, any powers herein conferred) be obligated to perform or discharge, nor does it hereby undertake to perform or discharge, any obligation, duty or liability under any Leases or rental agreements relating to the Real Property, and Borrower shall and does hereby agree to indemnify and hold Lender harmless of and from any and all liability, loss or damage which Lender may or might incur under or by reason of (a) any Leases, (b) the assignment thereof, (c) any action taken by Lender or its agents hereunder, unless constituting willful misconduct or gross negligence, or (d) claims and demands which may be asserted against it by reason of any alleged obligations or undertakings on its part to (or to cause Borrower to) perform or discharge any of the terms, covenants or agreements contained in the Leases.
6. Application of Proceeds. Lender in the exercise of the rights and powers conferred upon it by this Assignment shall have full power to use and apply the rents, income, issues and profits of the Real Property to the payment of or on account of the following, in such order as Lender may determine:
(a) operating expenses of the Real Property, including costs of management and leasing thereof (including reasonable compensation to Lender and its agents, and lease commissions and other compensation and expenses of seeking and procuring tenants and entering into Leases), establishing any claims for damages, and premiums on insurance hereinabove authorized; it being expressly understood and agreed that Lender in the exercise of such powers may so pay any claims purporting to be for any operating expenses of the Real Property, without inquiry into, and without respect to, the validity thereof and whether such claims are in fact for operating expenses of the Real Property;
(b) taxes and special assessments now due or which may hereafter become due on the Real Property;
(c) the costs of all repairs, decorating, renewals, replacements, alterations, additions, or betterments, and improvements of the Real Property, including, without limitation, the cost from time to time of installing or replacing such fixtures, furnishings and equipment therein, and of placing the Real Property in such condition as will, in the reasonable judgment of Lender, make it readily rentable;
(d) any indebtedness secured or guaranteed by the Mortgage or any deficiency which may result from any foreclosure sale.
7. Occurrence of Default. Although it is the intention of the parties that this assignment is a present assignment, Lender shall not exercise any of the rights and powers conferred upon it herein, and Borrower shall have the exclusive right to enter into all Leases and to collect and receive all rents and other payments under the Leases, until and unless there shall occur an Event of Default, as defined in and under the Loan Agreement, the Note, the Mortgage or the other Loan Documents, in each instance after any applicable grace periods shall have expired. Nothing herein contained shall be deemed to affect or impair any rights which Lender may have under the Note, the Mortgage or other Loan Documents or to affect the impression of a trust upon funds received by a trustee in the manner provided for in Paragraph 1 above.
8. Instruction to Tenants. Borrower further specifically and irrevocably authorizes and instructs each and every present and future tenant or tenant under any Lease of the whole or any part of the Real Property to pay all unpaid rental agreed upon in any Lease or other agreement for occupancy of any part of the Real Property to Lender upon receipt of demand from Lender so to pay the same, without any inquiry as to whether or not said demand is made in compliance with the immediately preceding paragraph hereof. Lender has not received or been transferred any security deposit with respect to any Lease, and assumes no responsibility for any such security deposit until such time such security deposit (specified as such with specific reference to the Lease pursuant to which deposited) may be transferred to Lender and accepted by Lender by notice to the tenant under said Lease.
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ASSIGNMENT OF LEASES AND RENTS
9. Election of Remedies. The provisions set forth in this Assignment shall be deemed a special remedy given to Lender, and shall not be deemed exclusive of any of the remedies granted in the Note, the Mortgage or other Loan Documents but shall be deemed an additional remedy and shall be cumulative with the remedies therein and elsewhere granted Lender, all of which remedies shall be enforceable concurrently or successively. No exercise by Lender of any of its rights hereunder shall cure, waive or affect any default hereunder or default under the Note, the Mortgage on the other Loan Documents. No inaction or partial exercise of rights by Lender shall be construed as a waiver of any of its rights and remedies, and no waiver by Lender of any such rights and remedies shall be construed as a waiver by Lender of any of its other rights and remedies.
10. Continual Effectiveness. No judgment or decree which may be entered on any debt secured or intended to be secured by Lender shall operate to abrogate or lessen the effect of this instrument, but that the same shall continue in full force and effect until the payment, discharge and performance of any and all indebtedness and obligations evidenced by the Note or secured or guaranteed by the Mortgage or other Loan Documents, in whatever form, and until all bills incurred by virtue of the authority herein contained have been fully paid out of rents, income, issues and profits of the Real Property, or by Borrower, or until such earlier time as this instrument may be voluntarily released. This instrument shall also remain in full force and effect during the pendency of any foreclosure proceedings or of the enforcement of any other right or remedy of Lender, both before and after sale, until the issuance of a deed pursuant to a foreclosure decree or sale, unless all indebtedness secured or guaranteed by the Mortgage is fully satisfied before the expiration of any period of redemption.
11. Notices. Any notice, demand or other communication which any party hereto may desire or may be required to give to any other party shall be in writing, and shall be deemed given when delivered in accordance with the Loan Agreement.
12. Binding Agreements. This Assignment and all provisions hereof shall be binding upon Borrower, its successors and assigns, and all other persons or entities claiming under or through them, or any of them, and the word “Borrower,” when used herein, shall include all such persons and entities and any others liable for the payment of the indebtedness secured hereby or any part thereof, whether or not they have executed the Note or this Assignment. The word “Lender,” when used herein, shall include Lender’s successors, assigns, and legal representatives, including all other holders, from time to time, of the Note.
13. Governing Law; Interpretation. This Assignment shall be governed by the internal substantive laws of the State of Missouri (without regard to its conflicts-of-law principles). Wherever possible each provision of this Assignment shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Assignment shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Assignment. Time is of the essence of this Assignment.
14. Miscellaneous. Neither this Assignment nor any provision hereof may be amended, modified, waived, discharged or terminated orally. The Section headings used herein are for convenience of reference only and shall not define or limit the provisions of this Assignment. As used in this Assignment, the singular shall include the plural and the plural shall include the singular, and masculine, feminine, and neuter pronouns shall be fully interchangeable, where the context so requires.
[Remainder of page intentionally blank. Signature page follows.]
Page 4 of 5
ASSIGNMENT OF LEASES AND RENTS
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be executed as of the day and year first above written.
| GRANTOR: |
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| VirTra, Inc., |
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| a Nevada for profit corporation |
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| By: | /s/ Alanna Boudreau |
| Name: Alanna Boudreau |
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| Title: CFO |
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STATE OF Florida | ) |
| ) SS. |
COUNTY OF Seminole | ) |
On this 22nd day of May, 2026, before me appeared Alanna Boudreau, CFO of VirTra, a Nevada for profit corporation, known to me to be the person who executed the within instrument on behalf of said corporation and acknowledged to me that they executed the same for the purposes therein stated.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid on the day and year first above written.
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| /s/ |
| Notary Public |
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My Commission Expires:
Page 5 of 5
ASSIGNMENT OF LEASES AND RENTS
Exhibit 31.1
CERTIFICATIONS
I, John F. Givens II, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2026, of VirTra, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15I and 15d-15I) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(b) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 13, 2026 | /s/ John F. Givens II |
| John F. Givens II |
| Chief Executive Officer (principal executive officer) |
Exhibit 31.2
CERTIFICATIONS
I, Alanna Boudreau, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2026, of VirTra, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, considering the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 13, 2026 | /s/ Alanna Boudreau |
| Alanna Boudreau |
| Chief Financial Officer (principal financial officer) |
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report on Form 10-Q of VirTra, Inc. (the “Company”) for the quarter ended June 30, 2026 as filed with the Securities and Exchange Commission (the “Report”), we, John F. Givens II, Chief Executive Officer, and Alanna Boudreau, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
Date: August 13, 2026 | /s/ John F. Givens II |
| John F. Givens II, Chief Executive Officer |
| (principal executive officer) |
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Date: August 13, 2026 | /s/ Alanna Boudreau |
| Alanna Boudreau, Chief Financial Officer |
| (principal financial officer) |