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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2024

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: 001-38420

INC.

 (Exact
name of registrant as specified in its charter)

 Nevada

 93-1207631

 (State
 or other jurisdiction of

 (I.R.S.
 Employer

 incorporation
 or organization)

 Identification
 No.)

 E. Corporate Place, Chandler, AZ

 85225

 (Address
 of principal executive offices)

 (Zip
 Code)

 Registrant's
telephone number, including area code: (480) 968-1488

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common
 Stock, $0.0001 par value

 VTSI

 Nasdaq
 Capital Market

 Securities
registered pursuant to Section 12(g) of the Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes No

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. Yes No

by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a 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

 Non-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.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

 The
aggregate market value of the voting stock and non-voting common equity held by non-affiliates of the registrant, based upon the closing
sale price of the registrant's common stock on June 30, 2024, was approximately $ 79,606,037.

 As
of March 24, 2025, the registrant had 11,260,209
 outstanding shares of common stock.

 DOCUMENTS
INCORPORATED BY REFERENCE

 None.

 TABLE
OF CONTENTS

 Page

 Numbers

 Item
 1.

 Item
 1A.

 Risk Factors

 Item
 1B.

 Unresolved Staff Comments

 Item
 1C.

 Cybersecurity

 Item
 2.

 Properties

 Item
 3.

 Legal Proceedings

 Item
 4.

 Mine Safety Disclosures

 Item
 5.

 Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

 Item
 6.

 Reserved

 Item
 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item
 8.

 Financial Statements and Supplementary Data

 Item
 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

 Item
 9A.

 Controls and Procedures

 Item
 9B.

 Other Information

 Item
 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspection

 Item
 10.

 Directors, Executive Officers and Corporate Governance

 Item
 11.

 Executive Compensation

 Item
 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item
 14.

 Principal Accountant Fees and Services

 Item
 15.

 Exhibit and Financial Statement Schedules

 Item
 16.

 Form 10-K Summary

 Signatures

 FORWARD-LOOKING

 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 (the "Securities Act"), 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 Annual Report on Form 10-K 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 various 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 Annual Report on Form 10-K. You should carefully consider these risk and uncertainties described and other
information contained in the reports we file with or furnish to the Securities and Exchange Commission (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.

 PART
I

 ITEM
1. BUSINESS.

 Our
Corporate History

 We
are a corporation organized and existing under the laws of the State of Nevada. The original business started in 1993 as Ferris Productions,
Inc. In September 2001, Ferris Productions, Inc. merged with GameCom, Inc. to ultimately become VirTra Systems, Inc., a Texas corporation.

 Effective
as of October 1, 2016, we completed a conversion from a Texas corporation to a Nevada corporation pursuant to a Redomestication Plan
of Conversion (the "Plan of Conversion") that was approved by our Board of Directors on June 23, 2016, and by our stockholders
on September 16, 2016.

 As
part of the Plan of Conversion, we filed Articles of Incorporation in Nevada whereby we changed our name from VirTra Systems, Inc. to
VirTra, Inc. and revised our capitalization. Our Articles of Incorporation filed in Nevada authorize us to issue 62,500,000 shares, of
which (1) 60,000,000 shares shall be common stock, par value $0.0001 per share (the "Common Stock"), of which (a) 50,000,000
shares shall be Common Stock, (b) 2,500,000 shares shall be Class A Common Stock, par value $0.0001 per share (the "Class A Common
Stock"), and (c) 7,500,000 shares shall be Class B Common Stock, par value $0.0001 per share (the "Class B Common Stock")
and (2) 2,500,000 shares shall be Preferred Stock, par value $0.0001 per share, which may, at the sole discretion of the Board of Directors,
be issued in one or more series (the "Preferred Stock"). We also adopted new bylaws as part of the Plan of Conversion.

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

Overview

 VirTra,
Inc. (the "Company," "VirTra," "we," "us" and "our"), located in Chandler,
Arizona, is a global provider of judgmental use of force training simulators and firearms training simulators for the law enforcement,
military, and commercial markets. The Company's patented technologies, software, and scenarios provide intense training for de-escalation,
judgmental use-of-force, marksmanship and related training that mimics real-world situations. VirTra's mission is to save and improve
lives worldwide through highly effective virtual reality and simulator technology.

 The
VirTra firearms training simulator allows marksmanship and realistic scenario-based training to take place on a daily basis without the
need for a shooting range, protective equipment, role players, safety officers, or a scenario-based training site. We have developed
a higher standard in simulation training including capabilities such as: multi-screen, video-based scenarios, unique scenario authoring
ability, superior training scenarios, the patented Threat-Fire shoot-back system, powerful gas-powered simulated recoil weapons,
and more. The simulator also allows students to receive immediate feedback from the instructor without the potential for sustaining injuries
by the instructor or the students. The instructor is able to teach and remediate critical issues, while placing realistic stress on the
students due to the realism and safe training environment created by the VirTra simulator.

Strategy

 We
have two main customer groups, namely, law enforcement, and military. These are different markets and require different sales and marketing
programs as well as personnel. Our focus is to expand the market share and scope of our training simulator sales to these identified
customer groups by pursuing the following key growth strategies:

 Build
 Our Core Business. Our goal is to profitably grow our market share by continuing to develop, produce and market the most
 effective simulators possible. Through disciplined growth in our business, we have achieved a solid balance sheet by increasing our
 working capital and limiting our bank debt. We plan to add staff to our experienced management team as needed to meet the expected
 increase in demand for our products and services as we increase our marketing and sales activities.

 Increase
 Total Addressable Market. We plan to increase the size of our total addressable market. This effort will focus on new marketing
 and new products and/or service offerings for the purpose of widening the number of customer types who might consider our products
 or services uniquely compelling.

 Broaden
 Product Offerings. Since its formation in 1993, our Company has had a proud tradition of innovation in the field of
 simulation and virtual reality. We plan to release revolutionary new products and services, as well as to continue incremental
 improvements to existing product lines. In some cases, the Company may enter a new market segment via the introduction of a new type
 of product or service.

 Partners
 and Acquisitions. We try to spend our time and funds wisely and not tackle tasks that can be done more efficiently with partners.
 For example, international distribution is often best accomplished through a local distributor or agent. We are also open to the
 potential of acquiring additional businesses or of being acquired ourselves, based on what is expected to be optimal for our long-term
 future and our stockholders.

 Product
Offerings

 Our
simulator products include the following:

 V-300
 Simulator – a 300 wrap-around screen with video capability is the higher standard for simulation training

 The
 V-300 is the higher standard for decision-making simulation and tactical firearms training. Five screens and a 300-degree
 immersive training environment ensures that time in the simulator translates into real world survival skills. The system reconfigures
 to support 15 individual firing lanes.

 A
 key feature of the V-300 shows how quickly judgment decisions must be made, and, sometimes, if they are not made immediately
 and accurately it can lead to the possible loss of lives. This feature, among others, supports our value proposition to our customers
 is that best practice is being prepared enough for the surprises that could be around every corner and the ability to safely neutralize
 any life-threatening encounters.

 V-180
 Simulator – a 180 screen with video capability is for smaller spaces or smaller budgets

 The
 V-180 is the higher standard for decision-making simulation and tactical firearms training. Three screens and a 180-degree
 immersive training environment ensure that time in the simulator translates into real world survival skills.

 V-100
 Simulator & V-100 MIL – a single-screen based simulator systems

 The
 V-100 is the higher standard among single-screen firearms training simulators. Firearms training mode supports up to 4 individual
 firing lanes at one time. The optional Threat-Fire device safely simulates enemy return fire with an electric impulse (or
 vibration version), reinforcing performance under pressure. We offer an upgrade path, so a V-100 firearms training and force
 options simulator can affordably grow into an advanced multi-screen trainer in upgraded products that we offer customers for future
 purchase.

 The
 V-100 MIL is sold to various military commands throughout the world and can support any local language. The system is extremely
 compact and can even share space with a standard classroom or fits into almost any existing facility. If a portable firearms simulator
 is needed, this model offers the most compact single-screen simulator on the market today – everything organized into one standard
 case. The V-100 MIL is the higher standard among single-screen small arms training simulators. Military Engagement Skills
 mode supplies realistic scenario training taken from real world events.

 The
 V-ST PRO a highly realistic single screen firearms shooting and skills training simulator with the ability to scale to multiple
 screens creating superior training environments. The system's flexibility supports a combination of marksmanship and use of
 force training on up to 5 screens from a single operator station. The V-ST PRO is also capable of displaying 1 to 30 lanes
 of marksmanship featuring real world, accurate ballistics.

 Virtual
 Interactive Coursework Training Academy (V-VICTA) enables law enforcement agencies, to effectively teach, train, test and
 sustain departmental training requirements through nationally accredited coursework and training scenarios using our simulators.

 VirTra's Red Dot Optic Training, a 4-hour nationally-certified
 course developed with Victory First and Aimpoint, equips law enforcement officers with the skills to transition from iron sights
 to pistol-mounted red dot sights through 21 practical drills. Part of the V-VICTA program, it enhances accuracy and target acquisition
 while addressing optic failures, offered free to VirTra customers with an annual service agreement

 Subscription
 Training Equipment Partnership (STEP) is a program that allows agencies to utilize VirTra's simulator products, accessories,
 and V-VICTA interactive coursework on a subscription basis.

 V-Author
 Software allows users to create, edit, and train with content specific to agency's objectives and environments. V-Author
 is an easy-to-use application capable of almost unlimited custom scenarios, skill drills, targeting exercises and firearms courseware
 proven to be highly effective for users of VirTra simulation products.

 Simulated
 Recoil Kits - a wide range of highly realistic and reliable simulated recoil kits/weapons. These drop-in conversion kits fit into
 real weapons but safely simulate the most powerful recoil on the market and even lock-back when out-of-ammunition or simulating a
 dud. True-Fire is a patented solution that uniquely empowers VirTra customers with such reliable and accurate firing events
 so they can perform simulator-based weapon qualification and courses of fire (COF). During 2022, VirTra's engineering team
 further enhanced True-Fire technology with new patent pending features. In addition, VirTra has formulated the unique ArmorGen(TM)
 coating to certain recoil kit parts to increase durability and reduce maintenance requirements beyond any other coating we have tested.

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

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

 TASER,
 OC spray and low-light training devices that interact with VirTra's simulators for training.

 V-XR is an extended reality headset-based training solution. It comes ready
to use out of the box with two headsets, a trainer tablet, charging stations, a router, a casting device, and cables in a portable hard
case, with a 3-year manufacturer's warranty.

 Operations
and Suppliers

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

 Competition
and Competitive Landscape

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

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

 VirTra
buys and tests new headsets on a regular basis and has made some software and content preparations to add a headset-based product to
our offerings. VirTra recoil kits, return fire devices and other accessories would likely also work with a headset-based product.

 Intellectual

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

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

 Our
patent portfolio includes seven issued U.S. patents, which expire between 2025 and 2037. In 2019, VirTra completed an Asset Purchase
Agreement with Tiberius Technology, LLC, that included purchase of a patent and two pending patents. All patent ownership was transferred
effective March 13, 2019, and the two pending patents were issued as patents. In 2022, we submitted patent applications that will remain
confidential until awarded or will remain confidential if not awarded or abandoned.

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

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

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

 Research
and Development

the years ended December 31, 2024, and 2023, our research and product development expenses were $3,003,302 and $2,794,314, respectively.

 Sources
and Availability of Raw Materials/Manufacturing and Assembly

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

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

 Employees

 As
of March 18, 2025, we employed 111 full-time employees. We maintain a satisfactory working relationship with our employees

 Operations

 Our
operations are conducted from our principal executive office in Chandler, Arizona. In 2022 we opened a facility in Orlando, Florida to
support east coast operations. We do not currently have any employees internationally; however, our U.S.-based sales force works to secure
contracts to supply our products in U.S. and foreign markets. As of December 31, 2024, we have performed sales contracts and warranty
service obligations in the U.S. and various foreign countries. When our products are introduced into an international market, it is either
pursuant to a contract directly with a vetted customer located in the foreign country, a vetted foreign distributor, a foreign government
agency, or pursuant to a contract between our Company and a U.S. government agency (such as the U.S. Department of State). In the latter
instance, our customer is the relevant U.S. government agency. The government agency may then distribute our products to third parties
within the particular country.

 Regulatory
Matters

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

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

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

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

Contracts

 The
U.S. government, and other governments, may terminate any of our government contracts at their convenience, as well as for default, based
on our failure to meet specified performance requirements. If any of our U.S. government contracts were to be terminated for convenience,
we generally would be entitled to receive payment for work completed and allowable termination or cancellation costs. If any of our government
contracts were to be terminated for default, generally the U.S. government would pay only for the work that has been accepted and can
require us to pay the difference between the original contract price and the cost to re-procure the contract items, net of the work accepted
from the original contract. The U.S. government can also hold us liable for damages resulting from the default. For additional information
related to government contracts, see Item 1A. "Risk Factors – Risks Related to Our Business."

 Environmental

 We
are subject to various federal, state, local and non-U.S. laws and regulations relating to environmental protection, including the discharge,
treatment, storage, disposal and remediation of hazardous substances and wastes. We continually assess our compliance status and management
of environmental matters to ensure our operations are in substantial compliance with all applicable environmental laws and regulations.
Investigation, remediation, operation and maintenance costs associated with environmental compliance and management of sites are a normal,
recurring part of our operations. These costs often are allowable costs under our contracts with the U.S. government. It is reasonably
possible that continued environmental compliance could have a material impact on our results of operations, financial condition or cash
flows if additional work requirements or more stringent clean-up standards are imposed by regulators, new areas of soil and groundwater
contamination are discovered and/or expansions of work scope are prompted by the results of investigations.

 ITEM
1A. RISK FACTORS

 In
addition to the other information contained in this Annual Report on Form 10-K, we have identified the following risks and uncertainties
that may have a material adverse effect on our business, financial condition or results of operations. You should carefully consider
the risks described below before making an investment decision.

 Risks
Related to Our Business

 We
depend on government contracts for substantially all of our revenues and the loss of government contracts or a delay or decline in funding
of existing or future government contracts could decrease our backlog or adversely affect our sales and cash flows and our ability to
fund our growth.

 Our
revenues from contracts, directly or indirectly, with foreign and U.S. Federal, state, regional and local governmental agencies represented
substantially all of our total revenues in fiscal year 2024. Although these various government agencies are subject to common budgetary
pressures and other factors, many of our various government customers exercise independent purchasing decisions. As a result of the concentration
of business with governmental agencies, we are vulnerable to adverse changes in our revenues, income and cash flows if a significant
number of our government contracts, subcontracts or prospects are delayed or canceled for budgetary or other reasons.

 The
factors that could cause us to lose these contracts and could decrease our backlog or otherwise materially harm our business, prospects,
financial condition or results of operations include:

 budget
 constraints affecting government spending generally, or specific departments or agencies such as U.S. or foreign defense and transit
 agencies and regional transit agencies, and changes in fiscal policies or a reduction of available funding;

 re-allocation
of government resources as the result of actual or threatened terrorism or hostile activities or for other reasons;

 increasing
 customers' demands for broad uncapped indemnifications provisions with no termination date and unwillingness to agree to request
 to remove such clauses when possible or negotiate caps and a defined end point to our obligations;

 disruptions
 in our customers' ability to access funding from capital markets;

 curtailment
 of governments' use of outsourced service providers and governments' in-sourcing of certain services;

 the
 adoption of new laws or regulations pertaining to government procurement;

 government
 appropriations delays or blanket reductions in departmental budgets;

 suspension
 or prohibition from contracting with the government or any significant agency with which we conduct business;

 increased
 use of shorter duration awards, which increases the frequency we may need to recompete for work;

 impairment
 of our reputation or relationships with any significant government agency with which we conduct business;

 decreased
 use of small business set asides or changes to the definition of small business by government agencies;

 increased
 use of lowest-priced, technically acceptable contract award criteria by government agencies;

 increased
 aggressiveness by the government in seeking rights in technical data, computer software, and computer software documentation that
 we deliver under a contract, which may result in "leveling the playing field" for competitors on follow-on procurements;

 impairment
 of our ability to provide third-party guarantees and letters of credit;

 delays
 in the payment of our invoices by government payment offices; and

 national
 or international health emergencies, such as the COVID-19 public health pandemic.

spending priorities and terms may change in a manner adverse to our businesses.

 A
significant percentage of our revenue comes from domestic or foreign police and military forces. If these government entities must cut
their budgets, it is possible that we will lose this source of revenue, which could materially adversely affect our business, prospects,
financial condition or results of operations. We are working on diversifying our business so that we are not as dependent, but there
is no assurance that we will be successful at doing so.

 Intense
competition could negatively impact on our sales and operating results.

 Our
products are sold in highly competitive markets with limited barriers to entry. We compete against established companies that provide
similar products and services, some of which have financial, technical, marketing, sales, manufacturing, distribution and other resources
significantly greater than ours. There are also companies whose products do not compete directly but are sometimes closely related to
the products we offer (see Competition and Competitive Landscape Discussion in Item 1 above).

 We
believe that our products and services are superior to those offered by our competitors based on our strength in developing higher quality
software solutions, our patented accessories and our extensive library of training scenario content that would require a substantial
investment of money and time by a competitor to offer a comparable product. The introduction by competitors of lower-priced or more innovative
products could, however, result in a significant decline in our revenues and have a material adverse effect on our operating results,
financial position and cash flow.

 If
we are unable to anticipate customer preferences or to effectively identify, market and sell future products, our future revenues and
operating results could be adversely affected.

 Our
future success depends on our ability to effectively identify, market and sell new products that respond to new and evolving customer
preferences. Accordingly, our revenues and operating results may be adversely affected if we are unable to identify or acquire rights
to new products that satisfy customer preferences. In addition, any new products that we market may not generate sufficient revenues
to recoup their identification, development, acquisition, marketing, selling and other costs.

 Decline
in federal, state, or local government spending would likely negatively affect our product revenues and earnings.

 The
success of each of the products we plan to sell depends substantially on the amount of funds budgeted by federal, state and local government
agencies that make up our current and potential customers. Global credit and financial markets have experienced extreme disruptions in
the recent past, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic
growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that similar disruptions
will not occur in the future. Deterioration in general economic conditions may result in lower tax revenues that could lead to reductions
in government spending, especially spending for discretionary simulation training products such as ours. Poor economic conditions could
in turn lead to substantial decreases in our net sales or have a material adverse effect on our operating results, financial position
and cash flows.

 We
may not be able to receive or retain the necessary licenses or authorizations required for us to export or re-export our products, technical
data or services, or to transfer technology from foreign sources and to work collaboratively with them. Denials of such licenses and
authorizations could have a material adverse effect on our business and results of operations.

 U.S.
regulations concerning export controls require us to screen potential customers, destinations, and technology to ensure that sensitive
equipment, technology and services are not exported in violation of U.S. policy or diverted to improper uses or users. For us to export
certain products, technical data or services, we are required to obtain licenses from the U.S. government, often on a transaction-by-transaction
basis. These licenses are generally required for the export of military versions of our products and technical data and for defense services.
We cannot be sure of our ability to obtain the U.S. government licenses or other approvals required to export our products, technical
data and services for sales to foreign governments, foreign commercial customers or foreign destinations.

 In
addition, for us to obtain certain technical know-how from foreign vendors and to collaborate on improvements on such technology with
foreign vendors, we may need to obtain U.S. government approval for such collaboration through manufacturing license or technical assistance
agreements approved by U.S. government export control agencies. The U.S. government has the right, without notice, to revoke or suspend
export licenses and authorizations for reasons of foreign policy, issues over which we have no control. Failure to receive the required
licenses or authorizations would hinder our ability to export our products, data and services and to use some advanced technology from
foreign sources. This could have a material adverse effect on our business, results of operations and financial condition.

 Our
failure to comply with export control rules could have a material adverse effect on our business.

 Our
failure to comply with the export control rules described above could expose us to significant criminal or civil enforcement action by
the U.S. government, and a conviction could result in denial of export privileges, as well as contractual suspension or debarment under
U.S. government contracts, either of which could have a material adverse effect on our business, results of operations and financial
condition.

 Failure
to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

 We
are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery
or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Corruption, extortion, bribery,
pay-offs, theft and other fraudulent practices occur from time to time in the foreign countries where we sell our products and services.
We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible.
If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences
that may have a material adverse effect on our business, financial condition and results of operations.

 We
may face competition from providers of comparable products. Increased competition in those product categories could negatively affect
our future revenues and operating results.

 Since
we will not be the only seller and since we have a limited number of patents, the introduction of comparable products designed to compete
with our products may increase in the future. With so much focus on homeland security and terrorism, it is possible that more companies
will enter our business and sell new and/or innovative training tools. One area of particular concern is new virtual reality (VR) hardware
and software. If other companies are able to create new training tools that are more realistic or effective, we may not be able to compete
effectively. Introduction by competitors of comparable products, a maturing product lifecycle or other factors could result in a decline
in our revenues derived from these products. A significant decline in our sales of these products, without offsetting sales gains, would
have a material adverse effect on our operating results, financial position and cash flow.

 We
operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively
than we can, resulting in a loss of our market share and a decrease in our revenues and gross profit.

 The
markets for law enforcement and military simulation training are highly competitive and include many new competitors as well as increased
competition from established companies expanding their production and marketing of products. Despite owning patents, trademarks and copyrights,
our current and future competitors could manufacture and sell products with performance characteristics and functionality like the products
we sell and that we plan to sell. Some of our competitors are large companies with strong worldwide brand recognition that have significantly
greater financial, distribution, marketing and other resources than we do (see Competition and Competitive Landscape section above).
Some of our competitors have significant competitive advantages, including longer operating histories, larger sales forces, bigger advertising
budgets, better brand recognition, greater economies of scale and long-term relationships with key military customers that are potentially
highly valuable because of the significant volume that our competitors sell to them.

 As
a result, these competitors may be better equipped than we are to influence customer preferences or otherwise increase their market share
by:

 quickly
 adapting to changes in customer requirements;

 readily
 taking advantage of acquisition and other opportunities;

 discounting
 excess inventory that has been written down or written off;

 devoting
 resources to the marketing and sale of their products, including significant advertising, media placement and product endorsement;

 adopting
 aggressive pricing policies; and

 engaging
 in lengthy and costly intellectual property and other disputes.

 Disruptions
could negatively impact revenue and results of operation.

 Our
ability to manufacture and/or sell our products may be impaired by damage or disruption to our manufacturing, warehousing or distribution
capabilities, or to the capabilities of our suppliers, contract manufacturers, logistics service providers or independent distributors.
This damage or disruption could result from execution issues, as well as factors that are hard to predict or are beyond our control,
such as product or raw material scarcity, adverse weather conditions, natural disasters, fire, terrorism, pandemics, strikes, cybersecurity
breaches, government shutdowns, disruptions in logistics, supplier capacity constraints or other events. Failure to take adequate steps
to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, may adversely affect
our business or financial results, particularly in circumstances when a product is sourced from a single supplier or location. Disputes
with significant suppliers, contract manufacturers, logistics service providers or independent distributors, including disputes regarding
pricing or performance, may also adversely affect our ability to manufacture and/or sell our products, as well as our business or financial
results. We are actively monitoring economic instability and its potential impact on our supply chain and operations.

 Some
of the components of our products pose potential safety risks which could create potential liability exposure for us.

 Some
of the components of our products contain elements that may pose potential safety risks. In addition to these risks, there can be no
assurance that accidents in the facilities that use our products will not occur. Any accident, whether occasioned using all or any part
of our products or technology or by our customers' operations, could adversely affect commercial acceptance of our products and
could result in claims for damages resulting from injuries or death. Any of these occurrences would materially adversely affect our operations
and financial condition. If our products fail to perform as specified, users of these products may assert claims for substantial amounts.
These claims could have a materially adverse effect on our financial condition and results of operations. There is no assurance that
the amount of the general product liability insurance that we maintain will be sufficient to cover potential claims or that the present
amount of insurance can be maintained at the present level of cost, or at all.

 Assertions
by third parties of infringement or other violation by us of their intellectual property rights could result in significant costs and
substantially harm our business and operating results.

 Companies
engaged in the sales of products are frequently subject to litigation based on allegations of infringement, misappropriation or other
violations of intellectual property rights. Some companies, including some of our competitors, own large numbers of patents, copyrights,
trademarks and trade secrets, which they may use to assert claims against us. Third parties may in the future assert that we have infringed,
misappropriated or otherwise violated their intellectual property rights. Existing laws and regulations are evolving and subject to different
interpretations, and various federal and state legislative or regulatory bodies may expand current or enact new laws or regulations.
We cannot guarantee that we are not infringing or violating any third-party intellectual property rights.

 We
cannot predict whether assertions of third-party intellectual property rights or any infringement or misappropriation claims arising
from such assertions will substantially harm our business and operating results. If we are forced to defend against any infringement
or misappropriation claims, we may be required to expend significant time and financial resources on the defense of such claims, even
if without merit, settled out of court, or determined in our favor. Furthermore, an adverse outcome of a dispute may require us to: pay
damages, potentially including treble damages and attorneys' fees, if we are found to have willfully infringed a party's
intellectual property; cease making, licensing or using products or services that are alleged to infringe or misappropriate the intellectual
property of others; expend additional development resources to redesign our products; enter into potentially unfavorable royalty or license
agreements in order to obtain the right to use necessary technologies or materials; or to indemnify our partners and other third parties.
Royalty or licensing agreements, if required or desirable, may be unavailable on terms acceptable to us, or at all, and may require significant
royalty payments and other expenditures. In addition, we do not carry broadly applicable patent liability insurance and any lawsuits
regarding patent rights, regardless of their success, could be expensive to resolve and would divert the time and attention of our management
and technical personnel.

 Our
business is dependent on proprietary rights that may be difficult to protect and could affect our ability to compete effectively.

 Our
ability to compete effectively will depend on our ability to maintain the proprietary nature of our technology and content through a
combination of patent, trademark, copyright and trade secret protection, non-disclosure agreements and licensing arrangements.

 Litigation,
or participation in administrative proceedings, may be necessary to protect our proprietary rights. This type of litigation can be costly
and time consuming and could divert Company resources and management attention to defend our rights, and this could harm us even if we
were to be successful in the litigation and there is no guarantee we would be successful in such litigation. In the absence of patent
protection, and despite our reliance upon our proprietary confidential information, our competitors may be able to use innovations like
those used by us to design and manufacture products directly competitive with our products. In addition, no assurance can be given that
others will not obtain patents that we will need to license or design around. To the extent any of our products are covered by third-party
patents, we could need to acquire a license under such patents to develop and market our products.

 Despite
our efforts to safeguard and maintain our proprietary rights, we may not be successful in doing so. In addition, competition is intense,
and there can be no assurance that our competitors will not independently develop or patent technologies that are substantially equivalent
or superior to our technology. In the event of patent litigation, we cannot assure you that a court would determine that we were the
first creator of inventions covered by our issued patents or pending patent applications or that we were the first to file patent applications
for those inventions. If existing or future third-party patents containing broad claims were upheld by the courts or if we were found
to infringe third-party patents, we may not be able to obtain the required licenses from the holders of such patents on acceptable terms,
if at all. Failure to obtain these licenses could cause delays in the introduction of our products or necessitate costly attempts to
design such patents, or could foreclose the development, manufacture or sale of our products. We could also incur substantial costs in
defending ourselves in patent infringement suits brought by others and in prosecuting patent infringement suits against infringers.

 We
also rely on trade secrets and proprietary know-how that we seek to protect, in part, through non-disclosure and confidentiality agreements
with our customers, employees, consultants, and entities with which we maintain strategic relationships. We cannot assure you that these
agreements will not be breached, that we will have adequate remedies for any breach or that our trade secrets will not otherwise become
known or be independently developed by competitors.

 We
depend on our executive officers, the loss of whom could materially harm our business.

 We
rely upon the accumulated knowledge, skills and experience of our executive officers and significant employees. Our Chief Executive Officer,
John Givens, has unique expertise and long-standing relationships in the military simulation market that could have a material impact
on our Company's future. If he were to leave us or become incapacitated, we might suffer in our planning and execution of business
strategy and operations, impacting our financial results. We also do not maintain any key man life insurance policies for any of our
employees.

 If
we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence
in the accuracy and completeness of our financial reports and the market price of our Common Stock may decline.

 As
a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such
internal control. Further, we are required to report any changes in internal controls on a quarterly basis. In addition, we are required
to furnish a report by management on the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley
Act of 2002, as amended (the "Sarbanes-Oxley Act").

 We
will design, implement, and test the internal controls over financial reporting required to comply with these obligations. If we identify
material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404
in a timely manner or assert that our internal control over financial reporting is ineffective, investors may lose confidence in the
accuracy and completeness of our financial reports and the market price of the Common Stock could be negatively affected. We also could
become subject to investigations by the stock exchange on which the securities are listed, the SEC, or other regulatory authorities,
which could require additional financial and management resources.

 We
do incur significantly increased costs because of operating as a public company, and our management is required to devote substantial
time to new compliance initiatives.

 As
a public company with an obligation to file reports with the SEC under the Exchange Act, we do incur significant legal, accounting and
other expenses that we would not incur as a private company. In addition, the Sarbanes-Oxley Act imposes various requirements on public
companies including requiring establishment and maintenance of effective disclosure and financial controls. Our management and other
personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased and
could continue to increase our legal and financial compliance costs and could make some activities more time-consuming and costly. For
example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain directors' and
officers' liability insurance, which could make it more difficult for us to attract and retain qualified members of our Board of
Directors. We cannot predict or estimate the amount of additional costs we will incur to meet our additional disclosure obligations under
the Exchange Act or the timing of such costs.

 The
Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure
controls and procedures. We must perform system and process evaluation and testing of our internal control over financial reporting to
allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley
Act. In addition, we are required to have our independent registered public accounting firm attest to the effectiveness of our internal
control over financial reporting the later of (i) our second annual report on Form 10-K, or (ii) the first annual report on Form 10-K
following the date on which we are no longer an emerging growth company and no longer qualify as a smaller reporting company. Our compliance
with Section 404 of the Sarbanes-Oxley Act could require that we incur substantial accounting expense and expend significant management
efforts including the potential of hiring additional accounting and financial staff with appropriate public company experience and technical
accounting knowledge. If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent
registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material
weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory
authorities, which would require additional financial and management resources.

 Our
ability to successfully implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate
financial statements. We expect to continue improving the existing and implementing new operational and financial systems, procedures
and controls to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, new or enhanced
systems, procedures or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over financial
reporting is effective and to obtain an unqualified report on internal controls from our auditors as required under Section 404 of the
Sarbanes-Oxley Act. This, in turn, could have an adverse impact on trading prices for our Common Stock, and could adversely affect our
ability to access the capital markets.

 Risks
Relating to Our Stock

 NASDAQ
may delist our Common Stock from trading on its exchange, which could limit stockholders' ability to trade our Common Stock.

 Our
Common Stock is listed for trading on NASDAQ and requires us to meet certain financial, public float, bid price and liquidity standards
on an ongoing basis to continue the listing of our Common Stock. If we fail to meet these continued listing requirements, our Common
Stock may be subject to delisting. If our Common Stock is delisted and we are not able to list our Common Stock on another national securities
exchange, we expect our securities would be quoted on an over-the-counter market. If this were to occur, our stockholders could face
significant material adverse consequences, including limited availability of market quotations for our Common Stock and reduced liquidity
for the trading of our securities. In addition, we could experience a decreased ability to issue additional securities and obtain additional
financing in the future.

 Our
Common Stock price is likely to be highly volatile because of several factors, including limited public fluctuation.

 The
market price of our Common Stock has been volatile in the past and the market price of our Common Stock could be volatile in the future.
You may not be able to resell shares of our Common Stock following periods of volatility because of the market's adverse reaction
to volatility.

 Other
factors that could cause such volatility may include, among other things:

 actual
 or anticipated fluctuations in our operating results, including the loss of a large or key customer or vendor;

 the
 absence of securities analysts covering us and distributing research and recommendations about us;

 we
 may have a low trading volume for a few reasons, including that a large portion of our stock is closely held;

 overall
 stock market fluctuations;

 announcements
 concerning our business or those of our competitors;

 actual
 or perceived limitations on our ability to raise capital when we require it, and to raise such capital on favorable terms;

 conditions
 or trends in the industry;

 litigation;

 changes
 in market valuations of other similar companies;

 future
 sales of Common Stock;

 departure
 of key personnel or failure to hire key personnel; and

 general
 market conditions.

 Any
of these factors could have a significant and adverse impact on the market price of our Common Stock. In addition, the stock market in
general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating
performance of companies. These broad market fluctuations may adversely affect the trading price of our Common Stock, regardless of our
actual operating performance.

 Because
our officers and Board of Directors will make all management decisions, you should only invest in our securities if you are comfortable
entrusting our directors to make all decisions.

 Our
Board of Directors will have the sole right to make all decisions with respect to our management. Investors will not have an opportunity
to evaluate the specific projects that will be financed with future operating income. You should not purchase our securities unless you
are willing to entrust all aspects of our management to our officers and directors.

 Our
issuance of additional Common Stock in exchange for services or to repay debt would dilute your proportionate ownership and voting rights
and could have a negative impact on the market price of our Common Stock.

 We
may generally issue shares of Common Stock and Common Stock issuable upon exercise of stock options and warrants to pay for debt or services,
without further approval by our stockholders based upon such factors as our Board of Directors may deem relevant at that time. It is
possible that we will issue additional shares of Common Stock under circumstances we may deem appropriate at the time.

eligible for future sale may adversely affect the market.

 From
time to time, certain of our stockholders may be eligible to sell all or some of their shares of Common Stock by means of ordinary
brokerage transactions in the open market pursuant to Rule 144 promulgated under the Securities Act, subject to certain limitations.
In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months, subject only to the current public
information requirement. Affiliates may sell after six months, subject to the Rule 144 volume, manner of sale (for equity
securities), current public information, and notice requirements. Of the approximately 11,260,209 shares of our Common Stock
outstanding as of March 24, 2025, 7,500 shares are restricted subject to Rule 144 with the remaining shares tradable without
restriction. Given the limited trading of our Common Stock, resale of even a small number of shares of our Common Stock pursuant to
Rule 144 or an effective registration statement may adversely affect the market price of our Common Stock.

 Our
equity incentive plan allows us to issue stock options and award shares in our Common Stock. We may in the future create additional equity
incentive plans, which may at that time require us to file a registration statement under the Securities Act to cover the issuance of
shares upon the exercise or vesting of awards granted or otherwise purchased under those plans. As a result, any shares issued or granted
under the plans may be freely tradable in the public market. If equity securities are issued under the plans, if implemented, and it
is perceived that they will be sold in the public market, then the price of our Common Stock could decline substantially.

 No
holders of any shares of our Common Stock have the right to require us to file registration statements for the public resale of such
shares.

 The
provisions of our Articles of Incorporation and Bylaws may delay or prevent a takeover which may not be in the best interests of our
stockholders.

 The
provisions of our Articles of Incorporation and our Bylaws may be deemed to have anti-takeover effects, which include when and by whom
special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions
of the Nevada Revised Statutes also may be deemed to have certain anti-takeover effects which include that control of shares acquired
more than certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a
corporation's disinterested stockholders. Further, our Articles of Incorporation authorize the issuance of up to 2,500,000 shares
of preferred stock with such rights and preferences as may be determined from time to time by our Board of Directors at their sole discretion.
Our Board of Directors may, without stockholder approval, issue additional series of preferred stock with dividends, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other rights of the holders of our Common Stock.

 We
have never paid dividends on our Common Stock and have no plans to do so in the future.

 Holders
of shares of our Common Stock are entitled to receive such dividends as may be declared by our Board of Directors. To date, we have paid
no cash dividends on our shares of Common Stock, and we do not expect to pay cash dividends on our Common Stock in the foreseeable future.
We intend to retain future earnings, if any, to provide funds for the operations of our business. Therefore, any return investors in
our Common Stock may have will be in the form of appreciation, if any, in the market value of their shares of Common Stock.

 ITEM
1B. UNRESOLVED STAFF COMMENTS.

 Not
applicable.

 ITEM
1C. CYBERSECURITY.

 We
are committed to our goal to protect sensitive business-related and personal information, as well as our information systems. Although
the size and scope of our operations is limited compared to larger global operations, we are subject to numerous and evolving cybersecurity
risks that could adversely and materially affect our business, financial condition, and results of operations. In that regard, we have
increased our investment in information systems by hiring a Director of Technology in 2024 to replace limited outsourced services previously
utilized and bolstered our IT department with other hires. In 2024 we evaluated and implemented top tier security enhancements
across company data systems in the form of new virus, malware, and ransomware protections, SEIM, email and systems security protections,
improved systems management, and email/phishing security training for staff. Additionally completing National Institute of Standards
and Technology (NIST) 800-171a enclave assessment and requirements. We are currently working towards CMMC certification and expect
to be ready for a third-party assessment sometime during the 2025 fiscal year.

 Our
Management Leadership Team, with oversight from the Board of Directors, plans to further implement a comprehensive cybersecurity program,
including incident response process, aligned with the NIST Cybersecurity Framework and NIST Computer Security Incident Handling Guide
(NIST SP 800-61) to assess, identify, address and manage risks from cybersecurity threats that may result in material adverse effects
on the confidentiality, integrity and availability of our business and information systems.

 Our
 Director of Technology reports to our Chief Financial Officer and has operational responsibility for our information security programs,
protections, and efforts, along with leading efforts for implementing, monitoring, and maintaining cybersecurity and data security strategy,
policy, standards, architecture, and practices across our business. We anticipate that our Director of Technology will update the Chief
Financial Officer and Chief Executive Officer on these matters and work closely with these Senior Executives to oversee compliance with
legal, regulatory, and contractual security requirements with the guidance of outside counsel.

 We
anticipate that our Board, in coordination with the Audit Committee, will oversee the Company's enterprise risks arising from cybersecurity
threats and will periodically review the measures we have implemented to identify and mitigate data protection and cybersecurity risks.
We have a NIST enclave Cybersecurity Incident Response Plan ("CSIRP"), but do not currently have a company-wide CSIRP to
provide the organizational and operational structure, processes, and procedures for investigating, containing, documenting and mitigating
cybersecurity incidents. We expect to further implement a risk-based approach to identifying, preventing, and mitigating cybersecurity
threats and incidents, while also further implementing controls and procedures that provide for the prompt escalation of certain cybersecurity
incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner.

 We
also rely on information technology and third-party vendors to support our operations, including our secure processing of personal, confidential,
sensitive, proprietary, and other types of information. Despite improved data protections and efforts to continuously improve our and
our vendors' ability to protect against cyber incidents, we may not be able to fully protect all information systems from all evolving
threats. Such incidents may lead to reputational harm, loss of goodwill, revenue and customer loss, legal actions, and statutory
penalties, among other consequences. While we have not experienced any material cybersecurity incidents in recent years, there can be
no guarantee that we will not be the subject of future threats or incidents.

 ITEM
2. PROPERTIES.

 On
August 25, 2021, we purchased an industrial building of approximately 76,650 square feet situated on approximately 4.3 acres at 295 East
Corporate Place in Chandler, Arizona. We believe that this building allows for our expected growth in simulator development and production,
recoil kit development and production, training content creation as well as administrative, customer and technology support as we plan
to scale, in addition to providing a larger and centralized facility to enhance efficiency. In addition to the centralization we were
also able to convert the additional space to a dedicated training and demo space. This allows us to offer onsite training in the use
of our systems and allows us to do remote demos of our systems to our harder to reach departments.

 On
June 1, 2022, we moved into a newly leased space in Orlando, Florida, that is approximately 9,350 square feet. We believe this space
will be instrumental in growing our military business and supporting an east coast customer service

 ITEM
3. LEGAL PROCEEDINGS.

 There
is no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which we are a party
or of which any of our property is the subject.

 ITEM
4. MINE SAFETY DISCLOSURES.

 Not
applicable.

 PART
II

 ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 Market
Information

 Our
Common Stock is traded on The NASDAQ Capital Market under the stock symbol, "VTSI."

 Holders
of Common Stock

 As
of March 24, 2025, 11,260,209 shares of our Common Stock were outstanding and held by approximately 36 holders of record. In
addition, we have no shares of Class A Common Stock, Class B Common Stock or Preferred Stock issued and outstanding.

 ITEM
6. [RESERVED]

 ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 The
following discussion and analysis should be read in conjunction with our financial statements and related notes thereto included in this
Annual Report on Form 10-K. The discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our
actual results may differ materially from those anticipated in those forward-looking statements because of many factors, including, but
not limited to, those set forth under "Risk Factors" and elsewhere in this Annual Report on Form 10-K.

Overview

 VirTra,
Inc. (the "Company," "VirTra," "we," "us" and "our") is a global provider
of judgmental use of force training simulators, firearms training simulators and driving 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.

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 the most
 effective simulators possible. Through disciplined growth in our business, we have achieved a solid balance sheet by increasing our
 working capital and limiting our bank debt. We plan to add staff to our experienced management team as needed to meet the expected
 increase in demand for our products and services as we increase our marketing and sales activities.

 Increase
 Total Addressable Market. We plan to increase the size of our total addressable market. This effort will focus on new marketing
 and new 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.

 Broaden
 Product Offerings. Since its formation in 1993, our Company has had a proud tradition of innovation in the field of simulation
 and virtual reality. We plan to release revolutionary new products and services as well as continue incremental improvements to existing
 product lines. In some cases, the Company may enter a new market segment via the introduction of a new type of product or service.

 Partners
 and Acquisitions. We try to spend our time and funds wisely and not tackle tasks that can be done more efficiently with partners.
 For example, international distribution is often best accomplished through a local distributor or agent. We are also open to the
 potential of acquiring additional businesses or of being acquired ourselves, based on what is expected to be optimal 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.

 Virtual Interactive Coursework Training Academy (V-VICTA) enables law enforcement agencies, to effectively teach, train, test and sustain departmental training requirements through nationally accredited coursework and training scenarios using our simulators.

 VirTra's Red Dot Optic Training, a 4-hour nationally-certified course
developed with Victory First and Aimpoint, equips law enforcement officers with the skills to transition from iron sights to pistol-mounted
red dot sights through 21 practical drills. Part of the V-VICTA program, it enhances accuracy and target acquisition while addressing
optic failures, offered free to VirTra customers with an annual service agreement

 Subscription Training Equipment Partnership (STEP) is a program that allows agencies to utilize VirTra's simulator products, accessories, and V-VICTA interactive coursework on a subscription basis.

 V-Author proprietary software allows users to create, edit, and train with content specific to the agency's objectives and environments. V-Author is an easy-to-use application capable of almost unlimited custom scenarios, skill drills, targeting exercises, and firearms courses of fire. It also allows panoramic photos of any local location so users can train in their actual reality.

 Simulated Recoil Kits - a wide range of highly realistic and reliable simulated recoil kits/weapons made in the USA. VirTra's True-Fire recoil kits do not allow for faulty extra shots. Recoil kits use either CO2 or HPA greatly reducing the need for costly ammunition.

 Return Fire Device – the patented Threat-Fire device applies real-world stress on the trainees during simulation training. Stress inoculation is a key component of training exercises. VirTra holds a patent for electronic simulation in simulation making the pairing of the device and the simulators a sourced item.

 VirTra has installed a volumetric video capture studio in order to create training scenarios that could work in either screen-based simulators or in 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.

 TASER, OC spray and low-light training devices that interact with VirTra's simulators for training.

 V-XR is an extended reality headset-based training solution. It comes ready to use out of the box with two headsets, a trainer tablet, charging stations, a router, a casting device, and cables in a portable hard case, with a 3-year manufacturer's warranty.

 Results
of operations for the years ended December 31, 2024, and December 31, 2023

 Revenues. Revenues
were $26,350,819 for the year ended December 31, 2024, compared to $38,791,337 for the same period in 2023, representing a decrease
of $12,440,518 or 32%. The decrease was primarily the result of a challenging booking year in a continuing resolution environment
which started at the beginning of 2024. This delayed the signing of multiple contracts until Q3 and mainly Q4 2024, As a result, we
were unable to convert these bookings to revenue by the end of the year. Also contributing to the decrease was a particularly large
contract in 2023, for which revenues of approximately $7.1 million were recognized. This contract is ongoing, but only $2.8 million
of this contract was recognized in 2024.

 Cost
of Sales. Cost of sales were $6,938,304 for the year ended December 31, 2024, compared to $11,378,264 for the same period in
2023, representing a decrease of $4,439,960 or 39%. The year-over-year decrease was due to lower revenues.

 Gross
Profit. Gross profit was $19,412,515 for the year ended December 31, 2024, compared to $27,413,073 for the same period in 2023,
representing a decrease of $8,000,558 or 29%. The gross profit margin was 74% for the year ended December 31, 2024, and 71% for the same
period in 2023. The gross profit decrease was mainly due to the decrease in revenue. The Company, however, was able to slightly increase
its margins as it continues to optimize its processes.

 Operating
Expenses. Net operating expense was $17,416,184 for the year ended December 31, 2024, compared to $17,029,508 for the same period
in 2023, representing an increase of $386,676, or 2%, with general and administrative expenses increasing by $177,688 or 1% and research
and development expenses increasing by $208,988 or 7%. The increase in general and administrative expenses was driven by an increase
in travel costs, IT infrastructure to prep VirTra for NIST compliance, and increased labor costs. R&D costs increased as VirTra continues
to improve its systems, processes and tools as to remain competitive in its space.

 Other
Income. Other net income was $254,636 for th e year ended December 31, 2024, compared to other income of $586,082 for the
same period in 2023, representing a decrease of $331,446. This decrease is due to seven fewer months of rental income, partially
offset by an increase in interest income.

 Income Tax
Expense. Income tax expense was $887,286 for the year
ended December 31, 2024, compared to an expense of $1,818,812 for the same period in 2023, representing a decrease in expense of $931,526
or 51%.

 Net
Income. Net income was $1,363,681 for the year ended December 31, 2024, compared to $9,150,835 for the same period in 2023,
representing a decrease of $7,787,154 or 85%. All the factors above played a role in the net result, with our main issue being the revenue
year over year decrease. We continue to improve our margins, which offset some of the decrease in revenues.

 Adjusted
Earnings Before Interest, Taxes, Depreciation and Amortization (AEBITDA). Explanation and Use of Non-GAAP Financial Measures:

(loss) 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, impairment expense and bad debt
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 U.S. GAAP. Adjusted EBITDA should not be
considered as an alternative for net income, cash flows from operating activities and other income or cash flow statement data prepared
in accordance with U.S. GAAP or as a measure of profitability or liquidity. A reconciliation of net income to adjusted EBITDA is provided
in the following table:

 For the Year Ended

 Dec 31,

 Dec 31, 2023

 Increase

 %

 2024

 (Decrease)

 Change

 Net Income (Loss)

 $

 $

 $
 (7,787,154
)

 -85
 %

 Adjustments:

 Provision for income taxes

 $
 (931,526
)

 -51
 %

 Depreciation and amortization

 1,136,812

 928,545

 $
 208,267

 %

 Interest (net)

 (182,018
)

 (20,440
)

 $
 (161,578
)

 %

 EBITDA

 $
 3,205,761

 $
 11,877,752

 $
 (8,671,991
)

 -73
 %

 Right of use amortization

 (279,592
)

 496,127

 $
 (775,719
)

 Adjusted EBITDA

 $
 2,926,169

 $
 12,373,879

 $
 (9,447,710
)

 -76
 %

 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 $18,040,827 and $18,849,842 of cash and cash equivalents as of December 31, 2024 and 2023, respectively.
Working capital was $34,826,680 and $33,988,492 as of December 31, 2024 and 2023, respectively.

 Net
cash provided by operating activities was $1,257,266 for the year ended December 31, 2024, as compared to $6,682,616 of cash provided
by operating activities for the year ended December 31, 2023. The decrease in cash provided by operating activities was mostly due to
the lower net income.

 Net
cash used in investing activities was $1,845,572 for the year ended December 31, 2024, and net cash used by investing activities was
$1,128,187 for the year ended December 31, 2023. Investing activities for both years consisted of increases to property, plant and
equipment, through the addition of the machine shop in 2024 and remodeling the Chandler office and opening a training center in
2023.

 Net
cash used in financing activities was $220,709 for the year ended December 31, 2024, as compared to $188,184 used in financing activities
for the year ended December 31, 2023. Financing activities in both years consisted of principal payments of debt, offset by proceeds from the exercise of stock options.

 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 $12.2 million for the three months ended December 31, 2024. This brings the total booking for the year
ended 2024 to $29.6 million. The Company has made one change to the booking qualifications. We have
strengthened the language in the STEP contract Terms and Conditions to guarantee the agreement for the full three-year term. This means
beginning in Q4 we had 8 STEP contracts with the full contract 3-year value recorded as bookings amounting to an additional $1.9 million.
This change also secures future revenue and lowers our risk of unsigned or cancelled contracts. Since the change was only made in Q4 we
still estimate, there are $5.3 million in renewable STEP contract options still outstanding, 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 are 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 December 31, 2024, the
Company's backlog was $10.6 million in Capital, $6.6 million in Service and $4.8 million in STEP for a total of $22 million.

 Management
estimates the majority of the new bookings received in the fourth quarter of 2024 will be converted to revenue in 2025. Management's
estimate for the conversion of backlog is based on current contract delivery dates, however, contract terms and install dates are subject
to modification and are routinely changed at the request of the customer or due to factors outside the Company's control.

 With
a new federal administration in place at the beginning of 2025, it is unknown what impact that will have on our bookings for 2025. Budget cuts have been discussed and we have seen some grants and other
federal funding frozen for most of the first quarter, but nothing definitive has occurred as of the date of this report.

 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 Annual 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 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

 We
have identified the following policies below as critical to our business and results of operations. Our reported results are impacted
by the application of the following accounting policies, some of which require management to make subjective or complex judgments. These
judgments involve making estimates and assumptions about the effect of matters that are inherently uncertain and may significantly impact
quarterly or annual results of operations. For all of these policies, management cautions that future events rarely develop exactly as
expected, and the best estimates routinely require adjustment. The methods, estimates, interpretations and judgments we use in applying
our most critical accounting policies can have a significant impact on the results that we report in our financial statements.

 The
following discussion provides supplemental information regarding the significant estimates, judgments and assumptions made in implementing
the Company's critical accounting policies.

 Basis
of Presentation and Use of Estimates

 Our
financial statements have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions 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. On an ongoing basis, management evaluates its estimates and judgments. Management bases the estimates on historical experience
and on various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. For any given individual
estimate or assumption, we make, it is possible that other people applying reasonable judgment to the same facts and circumstances could
develop different estimates. Significant accounting estimates in these financial statements include valuation assumptions for share-based
payments, Allowance for Credit Losses, 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. Actual results could differ significantly from those estimates.

 Allowance for Credit Losses

 The
Company only ships products when it has reasonable assurance that it will receive payment from the customer. When such assurance is not
available, the Company will require payment in advance. For customers other than United States governmental agencies, the Company generally
requires advance deposits prior to shipment. The assessment of a customer's creditworthiness is reliant on management's judgment
regarding such factors as previous payment history, credit rating, credit references and market reputation. The Company has decided to
take a more conservative approach to the bad debt reserve by calculating a percentage of all outstanding AR and updating the reserve
quarterly based-on the age of the accounts receivable.

Valuation

is stated at the lower of cost or net realizable value with cost being determined on the average cost method. Work in progress and finished
goods inventory includes an allocation for capitalized labor and overhead. Provision is made for obsolete, slow moving or defective items
where appropriate. This estimated valuation requires that management make certain judgments about the likelihood that specific inventory
items may have minimal or no realizable value in the future. These judgments are based on the current quantity of the item on hand compared
to historical sales volumes, potential alternative uses of the products and the age of the inventory item.

and Equipment

and equipment are carried at cost, net of depreciation. Depreciation commences at the time the assets are placed in service. Depreciation
is provided using the straight-line method over the estimated economic lives of the assets or for leasehold improvements, over the shorter
of the estimated useful life or the remaining lease term. In determining the depreciation rate, historical disposal experience, holding
periods and trends in the market are reviewed.

 We
periodically perform reviews to determine whether facts and circumstances exist which indicate that the carrying amount of assets may
not be recoverable or that the useful life of assets is shorter or longer than originally estimated. We assess the recoverability of
our assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their estimated
remaining lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the
fair value of those assets.

 Revenue
Recognition

 We
account for revenue recognition in accordance with the Financial Accounting Standards Board's ("FASB") Accounting Standards
Codification ("ASC") 606, Revenue from Contracts with Customers, which we adopted on January 1, 2018, using the modified
retrospective transition method. We evaluated the distinct performance obligations and the pattern of revenue recognition of our contracts
upon adoption of the standard. Consequently, after our review of contracts, we concluded that the impact of adopting the standard did
not have a significant effect on our balance sheets, statements of operations, changes in stockholders' equity, or cash flows.

 Revenues
include sales of products and services and are in net of discounts. Product sales consist of simulators, upgrade components, scenarios,
scenario software, recoil kits, Threat-Fire and other accessories. Services include installation, training, limited assurance-type
warranties, extended service-type warranty agreements, related support, customer content and design work.

 We
determined our revenue recognition through the identification of the contract with a customer, identification of the performance obligations
within the contract, determination of the transaction price, allocation of the transaction price to the performance obligations within
the contract and recognition of revenue when, or as, the performance obligations have been satisfied.

 In
reviewing our contracts, the identification of the performance obligations within the contracts, allocation of the transaction price
to the performance obligations and the point when performance obligations were satisfied required significant judgment. In identifying
the performance obligations, the Company considered whether the customer has a reasonable expectation that the Company will provide those
goods or services and would view those goods or services as part of the negotiated exchange. The Company believes that, generally, our
performance obligations are explicit in the contracts. The Company allocates the transaction price to the performance obligations based
on the relative standalone selling price basis. This required consideration and determination of the stand-alone selling price for each
distinct good or service using various sources of information. Under ASC 606, the Company recognizes revenue only when it satisfies a
performance obligation by transferring the good or service to the customer. To determine when the performance obligation had been transferred
to the customer, the Company considered control of the performance obligation transferred once the customer had the right and ability
to direct the use of the product or service and the customer obtained substantially all the remaining benefit from the products and services.

 Stock-Based
Compensation

 The
Company calculates the cost of awards of equity instruments based on the grant date fair value of the awards using the Black-Scholes-Merton
option pricing valuation model, which incorporates various assumptions including volatility, expected term and risk-free interest rates.

 The
expected term of the options is the estimated period of time until exercise and was determined using the SEC's safe harbor rules,
using an average of vesting and contractual terms, as we did not have sufficient historical experience of similar awards. Expected stock
price volatility is based on the historical volatility of the Company's stock. The risk-free interest rate is based on the implied
yield available on United States Treasury zero-coupon issues with an equivalent remaining term. The estimated fair value of stock-based
compensation awards and other options is amortized on a straight-line basis over the relevant vesting period. Share-based compensation
expense is recognized based on awards ultimately expected to vest. Forfeitures are recorded in subsequent periods when they occur.

 Income
Taxes

 We
use significant judgment in determining the provision for income taxes, deferred tax assets and liabilities, and any valuation allowance
recorded against net deferred tax assets. In preparing our financial statements, we are required to estimate income taxes in each of
the domestic and foreign jurisdictions in which we operate. This process involves estimating the actual current tax liability together
with assessing temporary differences resulting from differing treatment of items, such as depreciation and amortization of property and
equipment and benefits of net operating loss tax carryforwards. These differences result in deferred tax assets, which include tax loss
carryforwards, and liabilities. We then assess the likelihood that deferred tax assets will be recovered from future taxable income,
and to the extent that recovery is not likely or there is insufficient operating history, we establish a valuation allowance. In evaluating
our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and
negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies,
and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions about
the amount of future state, federal, and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions
about future taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying
business. To the extent we establish or change a valuation allowance in a period, we include an adjustment within the tax provision of
our statements of operations.

tax assets reflect current statutory income tax rates in effect for the period in which the deferred tax assets are expected to be realized.
As changes in tax laws or statutory tax rates are enacted, deferred tax assets and liabilities are adjusted through the provision of
income taxes.

 The
calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude
of jurisdictions across our global operations. A tax benefit from an uncertain tax position may be recognized when it is more likely
than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes,
based on the technical merits. We (1) record unrecognized tax benefits as liabilities in accordance with ASC 740 and (2) adjust these
liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity
of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate
of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the
period in which new information is available.

 Warranty
Reserve

 For
sales to customers within the U.S. and for all international sales, we typically provide a one-year assurance-type warranty but may provide
longer warranty periods if contractually required. We provide a warranty on our simulators that covers the cost of replacement parts
and labor on defective products. We estimate, based upon a review of historical warranty claim experience, the costs that may be incurred
under our warranty policies and record a liability in the amount of such estimate at the time a product is sold. Factors that affect
our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. At
our discretion, based upon the cost to either repair or replace a product, we have occasionally replaced such products covered under
warranty with a new or refurbished model. We periodically assess the adequacy of our recorded warranty liability and make adjustments
to the accrual as claims data and historical experience warrants.

 Recent
Accounting Pronouncements

 See
Note 1 to our financial statements, included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

 Off-Balance
Sheet Arrangements

 As
of December 31, 2024, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction,
agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising
under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to
such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

 ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 Not
applicable.

 ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

TO HISTORICAL FINANCIAL STATEMENTS

 Audited
 financial statements for the years ended December 31, 2024 and 2023

 Report of Independent Registered Public Accounting Firm (Haynie & Company, Salt Lake City, Utah, PCAOB ID 457)

 Balance Sheets as of December 31, 2024 and 2023

 Statements of Operations for the years ended December 31, 2024 and 2023

 Statements of Changes in Stockholders' Equity for the years ended December 31, 2024 and 2023

 Statements of Cash Flows for the years ended December 31, 2024 and 2023

 Notes to Financial Statements for the years ended December 31, 2024 and 2023

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Board of Directors and

 Stockholders
of VirTra, Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying balance sheets of VirTra, Inc. (the Company) as of December 31, 2024 and 2023, and the related statements
of operations, stockholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the
related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its
cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted
in the United States of America.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

 Critical
Audit Matters

 The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 Revenue
Recognition – Multiple Element Arrangements

 Description
of the Matter:

 The
Company recognized approximately $26.4 million in revenue during the year ended December 31, 2024. As discussed in Note 1 to the financial
statements, the Company enters into several different types of revenue arrangements that often consist of multiple performance obligations
and result in multiple revenue streams. Management must use judgment to determine the appropriate value and allocation of revenue to
these performance obligations.

 Auditing
management's assumptions and judgments can be complex, involves judgment, and requires a thorough understanding of the Company's
various revenue streams.

 How
We Addressed the Matter in Our Audit:

 We
obtained and reviewed documentation to support the revenue recognition criteria. We tested performance obligations by reviewing the underlying
contracts, evaluating management's determination of the method and timing of measuring revenue, and testing management's
allocation of revenue to the performance obligations.

 Haynie
& Company

 Salt
Lake City, Utah

 March 27, 2025

 PCA0B
# 457

 We
have served as the Company's auditor since 2022.

 F- 1

INC.

 BALANCE
SHEETS

 2024

 2023

 December 31,

 2024

 2023

 ASSETS

 Current assets:

 Cash and cash equivalents

 $
 18,040,827

 $
 18,849,842

 Accounts receivable, net

 8,005,452

 16,472,123

 Inventory, net

 14,583,400

 12,404,880

 Unbilled revenue

 2,570,441

 1,109,616

 Prepaid expenses and other current assets

 1,273,115

 906,803

 Total current assets

 44,473,235

 49,743,264

 Long-term assets:

 Property and equipment, net

 16,204,663

 15,487,013

 Operating lease right-of-use asset, net

 437,095

 716,687

 Intangible assets, net

 558,651

 567,540

 Security deposits, long-term

 35,691

 35,691

 Other assets, long-term

 148,177

 201,670

 Deferred tax asset, net

 3,595,574

 3,630,154

 Total long-term assets

 20,979,851

 20,638,755

 Total assets

 $
 65,453,086

 $
 70,382,019

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:

 Accounts payable

 $
 957,384

 $
 2,282,427

 Accrued compensation and related costs

 1,253,544

 2,221,416

 Accrued expenses and other current liabilities

 657,114

 3,970,559

 Note payable, current

 230,787

 226,355

 Operating lease liability, short-term

 192,410

 317,840

 Deferred revenue, short-term

 6,355,316

 6,736,175

 Total current liabilities

 9,646,555

 15,754,772

 Long-term liabilities:

 Deferred revenue, long-term

 2,282,996

 3,012,206

 Note payable, long-term

 7,567,536

 7,813,021

 Operating lease liability, long-term

 265,111

 432,176

 Total long-term liabilities

 10,115,643

 11,257,403

 Total liabilities

 19,762,198

 27,012,175

 Commitments and contingencies (See Note 9)

 -

 -

 Stockholders' equity:

 Preferred stock $ 0.0001 par value; 2,500,000 authorized; no shares issued or outstanding

 -

 -

 Common stock $ 0.0001 par value; 50,000,000 shares authorized; 11,255,709 shares and 11,107,230 shares issued and outstanding as
 of December 31, 2024 and 2023, respectively

 1,125

 1,109

 Class A common stock $ 0.0001 par value; 2,500,000 shares authorized; no shares issued or
 outstanding

 -

 -

 Class B common stock $ 0.0001 par value; 7,500,000 shares authorized; no shares issued or
 outstanding

 -

 -

 Common stock value

 -

 -

 Additional paid-in capital

 32,915,112

 31,957,765

 Retained earnings

 12,774,651

 11,410,970

 Total stockholders' equity

 45,690,888

 43,369,844

 Total liabilities and stockholders' equity

 $
 65,453,086

 $
 70,382,019

 See
accompanying notes to financial statements.

 F- 2

INC.

OF OPERATIONS

 2024

 2023

 For the years ended

 December 31,

 December 31,

 2024

 2023

 Revenues:

 Net sales

 $

 $

 Total revenue

 Cost of sales

 6,938,304

 11,378,264

 Gross profit

 19,412,515

 27,413,073

 Operating expenses:

 General and administrative

 14,412,882

 14,235,194

 Research and development

 3,003,302

 2,794,314

 Net operating expense

 17,416,184

 17,029,508

 Income from operations

 1,996,331

 10,383,565

 Other income (expense):

 Other income

 829,618

 888,464

 Other (expense) income

 ( 574,982
)

 ( 302,382
)

 Net other income

 254,636

 586,082

 Income before provision for income taxes

 2,250,967

 10,969,647

 Provision for income taxes

 $

 $

 Net income per common share:

 Basic

 $
 0.12

 $
 0.85

 Diluted

 $
 0.12

 $
 0.85

 Weighted average shares outstanding:

 Basic

 11,162,917

 10,958,448

 Diluted

 11,162,917

 10,963,477

 See
accompanying notes to financial statements.

 F- 3

INC.

OF CHANGES IN STOCKHOLDERS' EQUITY

 For
Years Ended December 31, 2024 and 2023

 Stock

 Total

 For the Year ending 2023 (Restated)

 Preferred Stock

 Common Stock

 Additional

 Paid-In

 Treasury

 Accumulated

 Stock

 Total

 Balance at Dec 31, 2022

 -

 $
 -

 10,900,759

 $
 1,089

 $
 31,420,395

 $
 -

 $
 2,260,135

 $
 33,681,619

 Stock options exercised

 -

 -

 54,899

 -

 -

 54,900

 RSUs Issued (stock for services)

 -

 -

 175,456

 -

 -

 -

 Stock options repurchased

 -

 -

 -

 -

 -

 -

 -

 -

 Stock issued for services

 -

 -

 16,015

 74,999

 -

 -

 75,000

 Stock reserved for future services

 -

 -

 -

 -

 407,472

 -

 -

 407,472

 -

 -

 -

 -

 -

 -

 Balance at Dec 31, 2023

 -

 $
 -

 11,107,230

 $
 1,109

 $
 31,957,765

 $
 -

 $
 11,410,970

 $
 43,369,844

 Stock

 Total

 For the Year ending 2024

 Preferred Stock

 Common Stock

 Additional

 Paid-In

 Treasury

 Accumulated

 Stock

 Total

 Balance at Dec 31, 2023

 -

 $
 -

 11,107,230

 $
 1,109

 $
 31,957,765

 $
 -

 $
 11,410,970

 $
 43,369,844

 Balance

 -

 $
 -

 11,107,230

 1,109

 31,957,765

 -

 11,410,970

 43,369,844

 Stock options exercised

 -

 -

 5,000

 20,150

 -

 -

 20,153

 RSUs Issued (stock for services)

 -

 -

 143,479

 -

 -

 -

 Stock options repurchased

 -

 -

 -

 -

 -

 -

 -

 -

 Stock issued for services

 -

 -

 -

 -

 -

 -

 -

 Stock reserved for future services

 -

 -

 -

 -

 937,197

 -

 -

 937,197

 -

 -

 -

 -

 -

 -

 Balance at Dec 31, 2024

 -

 $
 -

 11,255,709

 $
 1,125

 $
 32,915,112

 $
 -

 $
 12,774,651

 $
 45,690,888

 Balance

 -

 $
 -

 11,255,709

 $
 1,125

 $
 32,915,112

 $
 -

 $
 12,774,651

 $
 45,690,888

 See
accompanying notes to financial statements.

 F- 4

INC.

OF CASH FLOWS

 2024

 2023

 For the Years Ended December 31

 2024

 2023

 Cash flows from operating activities:

 $

 $

 Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

 Depreciation and amortization

 1,136,812

 928,545

 Right of use amortization

 279,592

 496,127

 Bad debt expense

 ( 166,640
)

 308,657

 Employee stock compensation

 777,093

 75,037

 Stock reserves for future services

 160,104

 407,453

 Changes in operating assets and liabilities:

 Accounts receivable, net

 8,633,309

 ( 13,777,894
)

 Inventory, net

 ( 2,178,520
)

 ( 2,812,552
)

 Deferred taxes

 34,580

 ( 1,391,392
)

 Unbilled revenue

 ( 1,460,825
)

 6,376,375

 Prepaid expenses and other current assets

 ( 366,313
)

 ( 375,753
)

 Other assets

 53,493

 174,791

 Accounts payable and other accrued expenses

 ( 5,606,536
)

 3,810,157

 Operating lease right of use

 ( 292,495
)

 ( 527,690
)

 Deferred revenue

 ( 1,110,069
)

 3,839,920

 Net cash provided by operating activities

 1,257,266

 6,682,616

 Cash flows from investing activities:

 Purchase of intangible assets

 -

 -

 Purchase of property and equipment

 ( 1,845,572
)

 ( 1,128,187
)

 Net cash used in investing activities

 ( 1,845,572
)

 ( 1,128,187
)

 Cash flows from financing activities:

 Principal payments of debt

 ( 240,862
)

 ( 243,084
)

 Stock issued for options exercised

 20,153

 54,900

 Net cash used in financing activities

 ( 220,709
)

 ( 188,184
)

 Net increase (decrease) in cash

 ( 809,015
)

 5,366,245

 Cash and restricted cash, beginning of period

 18,849,842

 13,483,597

 Cash and restricted cash, end of period

 $
 18,040,827

 $
 18,849,842

 Supplemental disclosure of cash flow information:

 Income taxes paid (refunded)

 $
 5,505,793

 $
 -

 Interest paid

 $
 241,838

 $
 248,653

 See
accompanying notes to financial statements.

 F- 5

 VirTra,
Inc.

 Notes
to 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, firearms training simulators and driving 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
Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America ("GAAP").

 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.

 Restatement
of year over year revenue numbers

the audit of the 2024 financial statements, it was discovered that due to issues in the implementation of new accounting
software, a revenue line was missing in 2023. This occurred when a deposit from a 2021 customer was not accurately entered into the
2021 initial launch of Epicor. $ 747,977 of revenue was recorded in the
first quarter of 2024 instead of in 2023. Had this been properly recorded, revenue would have been 2% higher and net income would
have been 9% higher in 2023. Cost of goods related to this unrecorded revenue had already been recorded in 2023; accordingly, all of
the unrecorded revenue increased net income. We do not believe this would have made a significant impact to investment decisions
with respect to our stock as we already had a significant increase in revenues and net income over 2022. This 9% increase in net
income would not have made a material impact. We also believe that because this is a year over year issue and does not change the
2024 fiscal year ending stockholders' equity, it does not warrant a full restatement and reissuance of the prior period financial statements. See topside adjustments below:

INC.

OF OPERATIONS

 Schedule
of Prior Period Adjustement

 prior to adjustment

 Topside
 adjustment

 after adjustment

 Revenues:

 Net
 sales

 $
 27,098,796

)

 $

 Total
 revenue

 27,098,796

)

 Cost
 of sales

 6,938,304

 -

 6,938,304

 Gross
 profit

 20,160,492

)

 19,412,515

 Operating expenses:

 General
 and administrative

 14,412,882

 -

 14,412,882

 Research
 and development

 3,003,302

 -

 3,003,302

 Net
 operating expense

 17,416,184

 -

 17,416,184

 Income
 from operations

 2,744,308

)

 1,996,331

 Other income:

 Other
 income

 829,618

 -

 829,618

 Other
 (expense)

 ( 574,982
)

 -

 ( 574,982

)

 Net
 other income

 254,636

 -

 254,636

 Income
 before provision for income taxes

 2,998,944

)

 2,250,967

 Provision
 for income taxes

 -

 Net
 income

 $
 2,111,658

 $
)

 $

 F- 6

INC.

OF OPERATIONS

 12/31/2023 as reported

 Topside adjustment

 12/31/2023
 as restated

 Revenues:

 Net sales

 $
 38,043,360

 $

 Total revenue

 38,043,360

 Cost of sales

 11,378,264

 -

 11,378,264

 Gross profit

 26,665,096

 27,413,073

 Operating expenses:

 General and administrative

 14,235,194

 -

 14,235,194

 Research and development

 2,794,314

 -

 2,794,314

 Net operating expense

 17,029,508

 -

 17,029,508

 Income from operations

 9,635,588

 10,383,565

 Other income (expense):

 Other income/Expense

 888,464

 -

 888,464

 Other (expense) income

 ( 302,382
)

 -

 ( 302,382
)

 Net other income

 586,082

 -

 586,082

 Income before provision for income taxes

 10,221,670

 10,969,647

 Provision for income taxes

 -

 $
 8,402,858

 $

 $

 Revenue
Recognition

 The
Company adopted the Financial Accounting Standards Board's (the "FASB") Accounting Standards Codification ("ASC")
606, Revenue from Contracts with Customer (Topic 606) ("ASC 606") on January 1, 2018, and the Company elected to use the
modified retrospective transition method which requires application of ASC 606 to uncompleted contracts at the date of adoption. The
adoption of ASC 606 did not have a material impact on the financial statements.

 Under
ASC 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the
transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as)
the Company satisfies a performance obligation. Significant judgment is necessary when making these determinations.

 F- 7

 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

 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

 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

 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 noncash
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.

 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.

 Schedule of Disaggregation of Revenue

 International

 Total

 International

 Total

 Twelve Months Ended December 31

 2024

 2023 (Restated)

 International

 Total

 International

 Total

 $
 237,761

 $
 11,154,431

 $
 2,534,788

 $
 13,926,980

 $
 746,071

 $
 15,340,857

 $
 5,709,317

 $
 21,796,245

 115,192

 3,988,953

 51,404

 4,155,549

 196,951

 3,575,733

 124,895

 3,897,579

 15,420

 436,737

 256,216

 708,373

 195,175

 820,570

 229,804

 1,245,549

 7,683

 797,344

 118,909

 923,936

 99,639

 775,479

 341,189

 1,216,307

 -

 2,823,453

 -

 2,823,453

 -

 7,109,784

 -

 7,109,784

 STEP

 -

 3,650,579

 161,949

 3,812,528

 -

 3,425,165

 100,708

 3,525,873

 Total Revenue

 $
 376,056

 $
 22,851,500

 $
 3,123,266

 $

 $
 1,237,836

 $
 31,047,588

 $
 6,505,913

 $

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 year ended December 31, 2024, governmental customers comprised
$ 22,851,500, or 87 %
of total net sales, commercial customers comprised $ 376,056
or 1 %
of total net sales and international customers comprised $ 3,123,266
or 12 %
of total net sales. By comparison, for the year ended December 31, 2023, governmental customers comprised $ 31,047,588,
or 80 %
of total net sales, commercial customers comprised $ 1,237,836
or 3 %
of total net sales and international customers comprised $ 6,505,913,
or 17 %
of total net sales. For the years ended December 31, 2024, and 2023, the Company recorded $ 3,812,528
and $ 3,525,873,
respectively, in STEP revenue, or 14 %
and 9 %,
respectively, of total net sales.

 F- 8

 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 segment.

 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 ask for content related directly to their situations that
 we design and film or specific software request for there 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.

 Schedule
of Segment

 Sale of product

 2024

 2023

 $
 13,926,980

 $
 21,796,245

 4,155,550

 3,897,580

 708,373

 1,245,548

 923,936

 1,216,306

 2,823,453

 7,109,784

 STEP

 3,812,528

 3,525,873

 Total consolidated

 $
 26,350,820

 $
 38,791,336

 Depreciation and amortization

 2024

 2023

 $
 376,835

 $
 296,299

 35,681

 22,733

 7,079

 8,262

 7,933

 7,094

 100,727

 66,243

 STEP

 481,184

 431,998

 Corporate

 135,683

 86,652

 Total consolidated

 $
 1,145,122.00

 $
 919,281

 Segment income (loss)

 2024

 2023

 $
 8,446,181

 $
 12,071,146

 4,598,386

 3,978,990

 708,373

 1,092,348

 106,095

 67,847

 2,189,402

 7,088,300

 STEP

 3,364,079

 3,114,440

 Corporate

 - 18,048,834

 - 18,262,238

 Total

 $
 1,363,682

 $
 9,150,833

 Expenditures for segment assets

 2024

 2023

 $
 1,165,526

 $
 76,211

 -

 -

 -

 -

 -

 -

 338,212

 -

 STEP

 320,484

 286,861

 Corporate purchases

 21,349

 765,117

 Expenditures
 for segment assets

 $
 1,845,571

 $
 1,128,189

 Segment assets

 2024

 2023

 $
 26,578,251

 $
 29,893,606

 -

 -

 281,303

 155,025

 -

 -

 1,121,225

 884,905

 STEP

 939,330

 1,067,295

 Corporate Assets

 36,532,975

 37,633,210

 Segment
 assets

 $
 65,453,084

 $
 69,634,041

 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 under deferred revenue on the
accompanying balance sheet and totaled $ 3,755,187
and $ 4,047,269
on December 31, 2024, and 2023 respectively. Changes in deferred revenue amounts related to customer deposits will fluctuate from
year to year based upon the mix of customers required to prepay deposits under the Company's credit policy.

 F- 9

 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
$ 2,600,129 and $ 2,627,763 on December 31, 2024, and 2023, respectively. Deferred revenue for separately priced extended warranties longer
than one year totaled $ 2,207,950 and $ 2,974,710 on December 31, 2024, and 2023, respectively. The accrual for the one-year manufacturer's
warranty liability totaled $ 212,000 and $ 354,000 on December 31, 2024, and 2023, respectively. During the years ended December 31, 2024,
and 2023, the Company recognized revenue of $ 4,155,550 and $ 3,897,578, respectively, related to the extended service-type warranties
that were amortized from the deferred revenue balance at the beginning of each period. Changes in deferred revenue amounts related to
extended service-type warranties will fluctuate from year to year based upon the average remaining life of the warranties at the beginning
of the period and new extended service-type warranties sold during the period.

 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. Each STEP agreement comes with full customer support
and stand-ready advance replacement parts to maintain each system for the duration of the lease. The amount that the Company expects
to derive from the STEP equipment following the end of the agreement term is dependent upon the number of agreement terms renewed. The
agreements do not include a residual value guarantee. Management notes with 4-year history of providing this service and additional revenue
stream, the Company has only had cancellation of a total of 8 STEP agreements before the
5-year end date of the contract this equates to less than 5% of all agreements.

 Fair
Value Measurements

 ASC
Topic 820, Fair Value Measurements, defines fair value as the price that would be received in the sale of an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also specifies a fair value
hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring
fair value. The standard describes three levels of inputs that may be used to measure fair value as follows:

 Level
1: Quoted prices in active markets for identical assets or liabilities;

 Level
2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term
of the assets or liabilities; and

 Level
3: Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable
assumptions reflect our own estimate of assumptions that market participants would use in pricing the asset or liability.

 F- 10

 Fair
Value of Financial Instruments

 The
Company's financial instruments consist of cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable,
notes payable and accrued liabilities. The carrying amount of cash and cash equivalents, receivable, payables and accruals approximates
fair value die to the short-term nature of these items. The notes payable also approximate fair value based on evaluations of market
interest notes.

 Cash
and Cash Equivalents

 The
Company considers all highly liquid investments with a maturity of 90 days or less at the time of purchase to be cash equivalents.

 Certificates
of Deposit and Mutual Funds

 The
Company invests its excess cash in certificates of deposit and money market mutual funds issued by financial institutions with high credit
ratings. The certificates of deposit generally have an average maturity of approximately six months and are subject to penalties for
early withdrawal. The money market mutual funds are open-ended and can be withdrawn at any time without penalty.

 Accounts
and Allowance for Credit Losses

 The
Company recognizes an allowance for losses on accounts receivable based on an analysis of historical bad debt experience, current receivables
aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible.
Accounts receivable does not bear interest and are charged off after all reasonable collection efforts have been taken. The Company maintained
an allowance for credit losses of $ 177,056 and $ 343,695 on December 31, 2024, and 2023, respectively.

is stated at the lower of cost or net realizable value with cost being determined on the average cost method. Work in progress and finished
goods inventory includes an allocation for capitalized labor and overhead. The Company routinely evaluates the carrying value of inventory
for slow moving and potentially obsolete inventory and, when appropriate, will record an adjustment to reduce inventory to its estimated
net realizable value. Inventory reserves were $ 487,371 and $ 429,488 on December 31, 2024, and 2023, respectively.

and Equipment

and equipment are carried at cost, net of depreciation. Gains or losses related to retirements or disposition of fixed assets are recognized
in operations in the period incurred. Costs of normal repairs and maintenance are charged to expense as incurred, while betterments or
renewals are capitalized. Depreciation commences at the time the assets are placed in service or for STEP equipment under agreements,
when the equipment is made available for use by the customer. Depreciation is provided using the straight-line method over the estimated
economic lives of the assets or for leasehold improvements, over the shorter of the estimated useful life or the remaining lease term.
For STEP equipment under agreements, depreciation is provided using the straight-line method over the sixty-month maximum useful life
instead of the remaining agreement term. Estimated useful lives are summarized as follows:

 Schedule of Property and Equipment Estimated Useful Lives

 Computer
 equipment

 3 - 5
 years

 Furniture
 and office equipment

 5 - 7
 years

 Leased
 STEP equipment

 years

 Leasehold
 improvements

 years

 Building

 39.5
 years

 Building
 Improvements

 years

 F- 11

 Intangible
Assets

 Intangible
assets on December 31, 2024 and 2023 are comprised of various patents. We compute amortization expense on the patents using the straight-line
method over the estimated remaining useful lives of 16 years. We compute amortization expense on media content using the straight-line
method over the weighted average remaining period which is 15 years.

 Cost
of Products Sold

 Cost
of products sold represents manufacturing costs, consisting of materials, labor, travel and overhead related to finished goods, components
and install and service trips. Cost of products sold includes depreciation of STEP contract fixed assets. Shipping costs incurred related
to product delivery are included in the cost of products sold.

 Advertising
Costs

 Costs
associated with advertising are expensed as incurred. Advertising expenses were $ 239,285 and $ 156,010 for the years ended December 31,
2024 and 2023, respectively. These costs include domestic and international trade shows, websites, and sales promotional materials.

 Research
and Development Costs

 Research
and development costs are expensed as incurred. Research and development costs primarily include expenses, including labor, directly
related to research and development support. Research and development expenses were $ 3,003,302 and $ 2,794,314 for the years ended December
31, 2024 and 2023, respectively.

 Legal
Costs

 Legal
costs relating to loss contingencies are expensed as incurred. See Note 9. Commitments and Contingencies.

 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 $ 250,000 per depositor, per FDIC-insured bank, per ownership category.
The Company had uninsured cash and cash equivalents of $ 17,540,827 and $ 18,349,842 on December 31, 2024 and 2023, respectively.

 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 December 31, 2024, the Company had two customers that accounted for 28 % and 13 % of gross accounts receivable. As of December 31, 2023,
the Company had two customers that accounted for 28 % and 14 % of total accounts receivable.

 As
of December 31, 2024, the Company had one customer that accounted for 11 %
of the total revenue. As of December 31, 2023, the Company had one customer that accounted for 19 %
of the total revenue

 Income
Taxes

tax assets and liabilities are recorded based on the difference between the financial statement and the tax basis of assets and liabilities
using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company calculates a provision for
income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the
temporary differences arising from the different treatment of items for tax and accounting purposes. In determining the future tax consequences
of events that have been recognized in financial statements or tax returns, judgment and interpretation of statutes are required.

 F- 12

 In
assessing realizable deferred tax assets, management assesses the likelihood that deferred tax assets will be recovered from future taxable
income, and to the extent that recovery is not likely or there is insufficient operating history, a valuation allowance is established.
The Company adjusts the valuation allowance in the period management determines it is more likely than not that net deferred tax assets
will or will not be realized. After review of the deferred tax asset and valuation allowance in accordance with ASC 740, management determined
that it is more likely than not that the Company will fully realize all its deferred tax asset and no valuation allowance was recorded
on December 31, 2024 and 2023.

 The
Company did not recognize any assets or liabilities relative to uncertain tax positions on December 31, 2024 and 2023. Interest or penalties,
if any, will be recognized in income tax expense. Since there are no significant unrecognized tax benefits because of tax positions taken,
there are no accrued penalties or interest. Tax positions are positions taken in a previously filed tax return or positions expected
to be taken in a future tax return that are reflected in measuring current or deferred income tax assets and liabilities reported in
the financial statements.

 The
Company receives tax benefits, only if it is more likely than not that the Company will be able to sustain the tax return position,
based on its technical merits. If a tax benefit meets this criterion, it is measured and recognized 84 based on the largest amount
of benefit that is cumulatively greater than 50% likely to be realized. Management does not believe that there are any uncertain tax
positions on December 31, 2024 or 2023.

 The
Company is potentially subject to tax audits for its United States federal and various state income and excise tax returns for tax years
between 2017 and 2024; however, earlier years may be subject to audit under certain circumstances. Tax audits by their very nature are
often complex and can require several years to complete.

 Impairment
of Long-Lived Assets

 Long
lived assets, such as equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying
amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount
of the asset exceeds the fair value of the asset. Fair value is determined based on discounted cash flows or appraised values, depending
on the nature of the asset. On December 31, 2024 and 2023, the Company concluded that there has been no indication of impairment to the
carrying value of its long-lived assets. As such, no impairment has been recorded.

 Stock
Based Compensation

 The
Company measures the cost of awards of equity instruments based on the grant date fair value of the awards. The Company calculates the
fair value of stock-based awards using the Black-Scholes-Merton option pricing valuation model, which incorporates various assumptions
including volatility, expected term and risk-free interest rates. See Note 9. Commitments and Contingencies and Note 11. Stockholders'
Equity regarding stock-based awards made during the year ended December 31, 2024 and 2023.

 The
expected term of the options is the estimated period of time until exercise and was determined using an average of vesting and contractual
terms, as we did not have sufficient historical experience of similar awards. The risk-free interest rate is based on the implied yield
available on United States Treasury zero-coupon issues with an equivalent remaining term. The Company has not paid dividends in the past
and does not plan to pay any dividends in the near future. The estimated fair value of stock-based compensation awards and other options
is amortized to expense on a straight-line basis over the relevant vesting period. The Company has elected to recognize forfeitures as
they occur rather than estimating them at the time of grant.

 F- 13

 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:

 Schedule of Earnings Per Share

 2024

 2023

 Twelve Months Ended December 31

 2024

 2023

 Net Income

 $

 $

 Weighted average common stock outstanding

 11,162,917

 10,958,448

 Incremental shares from stock options

 -

 5,029

 Weighted average common stock outstanding, diluted

 11,162,917

 10,963,477

 Net Income (Loss) per common share and common equivalent share

 Basic

 $
 0.12

 $
 0.85

 Diluted

 $
 0.12

 $
 0.85

 Note
2. Inventory

consisted of the following as of:

 Schedule of Inventory

 Raw materials, WIP, finished goods and Materials being inspected

 $
 15,070,771

 $
 12,834,368

 Reserve

 ( 487,371
)

 ( 429,488
)

 Total Inventory

 $
 14,583,400

 $
 12,404,880

 Note
3. Property and Equipment

and equipment consisted of the following as of:

 Schedule of Property and Equipment

 Land

 $
 1,778,987

 $
 1,778,987

 Building & Building Improvements

 11,523,813

 9,146,556

 Computer equipment

 1,301,700

 1,233,989

 Furniture and office equipment

 349,669

 295,208

 Machinery and equipment

 4,368,752

 2,865,014

 STEP equipment

 2,561,775

 2,241,291

 Leasehold improvements

 336,763

 358,584

 Construction in Progress

 -

 2,456,259

 Total property and equipment

 22,221,459

 20,375,888

 Less: Accumulated depreciation and amortization

 ( 6,016,796
)

 ( 4,888,875
)

 Property and equipment, net

 $
 16,204,663

 $
 15,487,013

 Depreciation
expenses, including STEP depreciation, were $ 1,127,921 and $ 908,308 for the years ended December 31, 2024 and 2023, respectively.

 F- 14

 On
August 25, 2021, the Company completed the purchase of real property located in Chandler, Arizona (the "Property") for $ 10,800,000,
paid with cash and proceeds from a mortgage loan from Arizona Bank & Trust in the amount of $ 8,600,000 (Note 7). The Property consists
of approximately 4.3 acres and an industrial building of approximately 76,650 square feet. The Company moved all of its operations and
headquarters to the Property during 2022.

 Under
the provision of ASC 805, the Company determined this acquisition was an asset acquisition. This determination was based on substantially
all of the fair value of the gross assets acquired was concentrated in the similarly identifiable assets of the Property. The fair value
was allocated to the land, building, and acquired leases based upon their relative fair values at the date of acquisition in accordance
with ASC 805-50-30-3.

 The
fair value of the in-place leases is the estimated cost to replace the leases (including loss of rent, estimated commissions and legal
fees paid in similar leases). The capitalized in-place leases are amortized over the remaining term of the leases as amortization expense.
The fair value of the above or below market lease is the present value of the difference between the contractual amount to be paid pursuant
to the in-place lease and the estimated current market lease rate expected over the remaining non-cancellable life of the lease. The capitalized
above or below market lease values are amortized as a decrease or increase to the rental income over the remaining term of the lease.

 Schedule of Purchase Price Allocation

 December 31, 2021

 Land

 $
 1,778,987

 Building and building improvements

 8,937,050

 Acquired Lease Intangible Assets

 83,963

 Total Purchase Price

 $
 10,800,000

 Note
4. Intangible Assets

 Intangible
assets consisted of the following as of:

 Schedule of Intangible Assets

 Patents

 $
 160,000

 $
 160,000

 Capitalized media content

 451,244

 451,244

 Acquired lease intangible assets

 -

 83,963

 Total intangible assets

 611,244

 695,207

 Less accumulated amortization

 ( 52,593
)

 ( 127,667
)

 Intangible assets, net

 $
 558,651

 $
 567,540

 Amortization
expense was $ 8,891 and $ 20,237 for the years ended December 31, 2024 and 2023, respectively. The weighted average remaining period is
7 years.

 Note
5. Leases

 From
2016 through March 2019, the Company leased approximately 4,529 rentable square feet of office and industrial space from an unaffiliated
third party for our machine shop at 2169 East 5th St., Tempe, Arizona 85284. In April 2019, the Company relocated the machine shop from
the 5th St. location to 7910 South Kyrene Road, located within the same business complex as its main office. The Company executed a
lease amendment to add an additional 5,131 rentable square feet for the machine shop and extended its existing office lease through April
30, 2024. On June 1, 2022, we entered into a new lease of approximately 9,350 square feet located at 12301 Challenger Parkway, Orlando,
Florida, from an unaffiliate third party through May 2027.

 F- 15

 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 4.5 %. Significant judgement is required when determining the Company's
incremental borrowing rate. The Company uses the implicit rate when readily determinable. Lease expense for lease payments is recognized
on a straight-line basis over the lease term.

 Effective
June 1, 2022, the Company obtained a right-of-use asset in exchange for a new operating lease liability in the amount of $ 840,855. Effective
January 1, 2019, the Company obtained a right-of-use asset in exchange for a new operating lease liability in the amount of $ 1,721,380
and derecognized $ 46,523 deferred rent for an adjusted operating lease right-of-use asset in the net amount of $ 1,674,857.

 Schedule of Balance Sheet Classification of Lease Assets and Liabilities

 Balance Sheet Classification

 Assets

 Operating lease right-of-use assets, beginning of period

 $
 716,687

 $
 1,212,814

 Amortization for the year ended

 ( 279,592
)

 ( 496,127
)

 Total operating lease right-of-use asset

 $
 437,095

 $
 716,687

 Liabilities

 Current

 Operating lease liability, short-term

 $
 192,410

 $
 317,840

 Non-current

 Operating lease liability, long-term

 265,111

 432,176

 Total lease liabilities

 $
 457,521

 $
 750,016

 Future
minimum lease payments as of December 31, 2024, under non-cancellable operating leases are as follows:

 Schedule of Future Minimum Lease Payments

 2025

 $
 192,196

 2026

 196,311

 2027

 99,381

 Total lease payments

 487,888

 Less: imputed interest

 ( 30,367
)

 Operating lease liability

 $
 457,521

 The
Company had a deferred rent liability of $ 0
on December 31, 2024, and 2023, relative to the increasing future minimum lease payments. Rent expenses for the years ended December
31, 2024, and 2023 were $ 497,393
and $ 551,412,
respectively. As VirTra only has one lease agreement the weighted average remaining lease term ins 2.5 years and the average discount
rate of that lease is 4.5 %

 F- 16

 Note
6. Accrued Expenses

 Accrued
compensation and related costs consisted of the following as of:

 Schedule of Accrued Compensation and Related Costs

 Salaries and wages payable

 $
 545,592

 $
 457,565

 Employee benefits payable

 34,125

 54,811

 Accrued paid time off (PTO)

 322,406

 361,418

 Profit sharing payable

 351,421

 1,347,622

 Total accrued compensation and related costs

 $
 1,253,544

 $
 2,221,416

 Accrued
expenses and other current liabilities consisted of the following as of:

 Schedule of Accrued Expenses and Other Current Liabilities

 Manufacturer's warranties

 $
 212,000

 $
 354,000

 Taxes payable

 -

 3,411,669

 Miscellaneous payable

 445,114

 204,890

 Total accrued expenses and other current liabilities

 $
 657,114

 $
 3,970,559

 Included
in the miscellaneous payable is an accrual for $ 275,000 due to the leaseholder of the Kyrene property. See Note 12. Subsequent Events for further
information

 Note
7. Note Payable

 On
August 25, 2021, the Company completed the purchase of real property located in Chandler, Arizona (the "Property") for $ 10,800,000,
paid with cash and proceeds from a mortgage loan from Arizona Bank & Trust in the amount of $ 8,600,000. The loan terms include interest
to be accrued at a fixed rate of 3 % per year, 119 regular monthly payments of $ 40,978, and one irregular payment of $ 5,956,538 due on
the maturity date of August 23, 2031. The Company began making monthly payments on September 23, 2021. The payment and performance of
the loan is secured by a security interest in the property acquired.

 F- 17

 The
note payable amounts consist of the following:

 Schedule of Notes Payable

 December
 31, 2024

 December
 31, 2023

 Short-term
 liabilities

 Notes
 payable, principal

 218,890

 222,320

 Accrued
 interest to date

 11,897

 4,035

 Note
 Payable, short-term

 230,787

 226,355

 Long-term
 liabilities

 Note
 payable, principal

 7,567,536

 7,813,021

 Note
 payable, long term

 7,567,536

 7,813,021

 Future
minimum Note payments as of December 31, 2024, are as follows:

 Schedule
of Future Minimum Lease Payments

 2025

 $
 258,290

 2026

 266,256

 2027

 274,469

 2028

 282,343

 2029

 291,644

 Future

 6,425,321

 Total

 7,798,323

 Note
8. Related Party Transactions

the years ended December 31, 2024 and 2023, related parties exercised 5,000
 and 15,000
 previously awarded options for the exercise price
of $ 20,153
 and $ 54,900,
respectively, resulting in issuance of common stock to the Executive Chairman and one member of the Board of Directors.

 Note
9. Commitments and Contingencies

 Litigation

 From
time to time, the Company is notified of litigation or that a claim is being made against it. The Company evaluates contingencies on
an on-going basis and has established loss provisions for matters in which losses are probable and the amount of loss can be reasonably
estimated. There is no pending litigation at this time. The Company did settle a minor claim in 2025 in relation to our legacy lease agreement please see Note 12 subsequent
events

 Employment
Agreements

 On
April 2, 2012, the Company entered into three-year Employment Agreements with its (now former) Chief Executive Officer and Chief
Operating Officer that called for base annual salaries of $ 195,000
and $ 175,000,
respectively, subject to cost-of-living adjustments, and containing automatic one-year extension provisions. These contracts were
renewed annually and were adjusted based on the same percentage increase approved for Company-wide cost-of-living adjustments. As of
December 31, 2023, the former's Chief Executive Officer's base annual salary was $ 349,860. He resigned effective July 12, 2024.

 On
May 2, 2022, VirTra, Inc. announced the appointment of John F. Givens II as its co-Chief Executive Officer, effective April 11, 2022.
Mr. Givens has been serving as a director of VirTra since November 2020. VirTra agreed to pay Mr. Givens an initial annual base salary
of $ 298,990, subject to annual review. VirTra issued Mr. Givens a signing bonus of 64,815 shares of common stock which were restricted
from transfer until the earlier of: i) 12 months of employment having lapsed or ii) the Company terminating employment with Mr. Givens
without cause. Mr. Givens was granted 288,889 Restricted Stock Units, to be awarded based on the achievement of certain performance goals
over the next three years.

 The
Company entered into a three-year employment agreement with Mr. Givens effective August 15, 2023 that provides for an annual base salary
of $ 349,860, subject to increases based on the cost of living at a minimum. The agreement automatically extends for additional periods
of one year. The contract shall be renewed annually with upward adjustments each year applying the same percentage increase approved
for Company-wide cost-of-living adjustments. The employment agreement entitles Mr. Givens to an annual cash bonus if so determined by
VirTra's Board of Directors. In addition, the agreement entitles Mr. Givens to participate in any equity incentive plan adopted
by the Company.

 F- 18

Stock Units

 Beginning
on the last business day of August 2022, with respect to the then Co-Chief Executive Officers and Chief Operating Officer, a tranche
of restricted stock units could vest if the Company had achieved net profit (net income under GAAP) for the twelve months ending
June 30, 2022, of at least $2,500,000. For every $500,000 earned more than $2,500,000 another tranche would vest. If the maximum net
profits (net income under GAAP) of $7,000,000 was achieved, ten tranches would vest. Similarly, on the last business day of August
2023, a tranche of restricted stock units could vest if the Company had achieved a net profit (net income under GAAP) of at least
$3,000,000, with the potential to have additional tranches vest up to a maximum of $9,000,000 in net profit (net income under GAAP).
This vesting arrangement continued with the last business day of August 2024, with the minimum net profit (net income under GAAP)
threshold being $3,500,000 and the maximum net profit (net income under GAAP) being $11,000,000.

 It
is the Company's policy to estimate the fair value of the RSU's on the date of the grant and evaluate the probability of
achieving the net profit (net income under GAAP) tranches quarterly. If the target is deemed probable, the expense is amortized on a
straight-line basis over the remaining time period.

 The
Company determined based on the vesting terms described above that the net profit (net income under GAAP) for the twelve months ending
June 30, 2023, of $ 3,000,000 was probable and recorded an expense of $ 105,405 related to the RSUs for the period ending December 31, 2022.
The Company determined that the net profit (net income under GAAP) over $ 4,500,000 would be probable and recorded an expense of $ 199,477
for the six months ended June 30, 2023. The Company determined that the net profit (net income under GAAP) for the
twelve months ended June 30, 2023 was at least $ 4,500,000 and therefore awarded 22,988 (prior to deduction of 9,142 shares to pay the
tax withholding liability) and 29,360 (prior to deduction of 11,394 shares to pay the tax withholding liability) shares of common stock
to its Executive Chairman and Chief Executive Officer, respectively.

 The
Company determined based on vesting terms described above that the net profit (net income under GAAP) for the twelve months ending
June 30, 2024 of $ 4,500,000 was
probable and recorded an expense of $ 207,995 related
to the RSU expense for the six months ended December 31, 2023.

 In
October 2023, the Chief Executive Officer was issued 133,333
 shares upon settlement of restricted stock units.

 In
July 2024, the Executive Chairman was issued 100,000 (prior to the deduction of 41,457 shares to pay tax withholding) for a total issuance
of 58,543 shares upon settlement of restricted stock units.

 In
October 2024, a single employee was granted 2,500 shares of common stock upon settlement of restricted stock units as a one-time compensation
payment

 In
October 2024, the Chief Executive Officer was issued 118,519 (prior to the deduction of 46,367 shares to pay tax withholding) for a total
issuance of 72,152 shares upon settlement of restricted stock units.

 In
December 2024, the Chief Financial Officer was awarded 10,000 (prior to deduction of 3,716 shares to pay tax withholding) for a
total of 6,284 shares of common stock upon settlement of restricted stock units.

 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 only
to active employees. For the years ended December 31, 2024 and 2023, the amount expensed to operations was $ 216,255
 and $ 1,260,431,
respectively.

 F- 19

 Note
10. Income Taxes

 The
Company accounts for its deferred tax assets and liabilities, including excess tax benefits of share-based payments, based on the tax
ordering of deductions to be used on its tax returns. The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and deferred tax liabilities for the years ended December 31 is as follows:

 Schedule of Deferred Tax Assets and Liabilities

 2024

 2023

 Years ending December 31,

 2024

 2023

 Deferred Tax Assets:

 Net Operating Loss Carry Forwards

 $
 -

 $
 -

 Tax Credits

 729,111

 560,971

 Deferred Revenue

 1,488,641

 1,525,489

 Stock Compensation

 230,617

 395,485

 Reserves, Accruals, Other

 281,995

 356,689

 Intangibles

 1,726,212

 1,420,445

 Right of Use Liability

 112,567

 189,289

 Total Deferred Tax Assets

 $
 4,569,143

 $
 4,448,368

 Deferred Tax Liabilities:

 Fixed Assets

 $
 ( 641,880
)

 $
 ( 637,337
)

 Right of Use Asset

 ( 107,543
)

 ( 180,877
)

 Inventory Capitalization

 ( 224,146
)

 -

 Total Deferred Tax Liabilities

 $
 ( 973,569
)

 $
 ( 818,214
)

 Valuation Allowance

 -

 -

 Net Deferred Taxes

 $
 3,595,574

 $
 3,630,154

 Internal
Revenue Code Section 382 limits the ability to utilize net operating losses if a 50% change in ownership occurs over a three-year period.
The Company does not believe that such a limitation of the net operating losses has occurred.

 Significant
components of the provision (benefit) for income tax for the years ended December 31 are as follows:

 Schedule of Significant Components of Income Tax Provision

 2024

 2023

 Current

 $
 853,256

 $
 4,924,686

 34,030

 ( 3,105,874
)

 Change in valuation allowance

 -

 -

 Provision (benefit) for income taxes

 $

 $

 The
Company is subject to federal and state taxes. Reconciliations of the Company's effective income tax rate to the federal statutory
rate for the years ended December 31 are as follows:

 Schedule of Reconciliation of Income Tax Rate

 2024

 2023

 Federal income tax expense at the statutory rate

 21.
 %

 21.0
 %

 State income taxes, net of federal benefit

.2
 %

.12
 %

 Research credits

 ( 11.4
)%

 ( 4.85
)%

 Permanent differences

 ( 5.6
)%

 0.38
 %

 Prior period revenue adjustment

 5.9
 %

 0.0
 %

 Other

 3.2
 %

 (.14
)%

 Expiration of stock option compensation

 10.7
 %

 0.0
 %

 Inventory tax capitalization method change

 9.8
 %

 0.0
 %

 Change in valuation allowance

 0.0
 %

 0.0
 %

 Provision (benefit) for income taxes

 34.1
 %

 16.51
 %

 F- 20

 Note
11. Stockholders' Equity

 Authorized

 Common
Stock.

 Authorized
Shares. The Company is authorized to issue 60,000,000 shares of common stock, par value $ 0.0001 per share, of which (a) 50,000,000
shares shall be common stock, par value $ 0.0001, (b) 2,500,000 shares shall be Class A common stock, par value $ 0.0001 per share (the
"Class A Common Stock"), and (c) 7,500,000 shares shall be Class B common stock, par value $ 0.0001 per share (the "Class
B Common Stock"). No shares of Class A Common Stock or Class B Common Stock have been issued.

 Rights
and Preferences. Voting Rights. Except as otherwise required by the Nevada Revised Statues or as provided by or pursuant to the provisions
of the Company's articles of incorporation:

 (i)
 Each holder of common stock shall be entitled to one (1) vote for each share of common stock held of record by such holder. The holders
of shares of common stock shall not have cumulative voting rights.

 (ii)
 Each holder of Class A Common Stock shall be entitled to ten (10) votes for each share of Class A Common Stock held of record by such
holder. The holders of shares of Class A Common Stock shall not have cumulative voting rights.

 (iii)
The holders of common stock and Class A Common Stock shall vote together as a single class on all matters on which stockholders are generally
entitled to vote.

 (iv)
 The holders of Class B Common Stock shall not be entitled to vote on any matter, except that the holders of Class B Common Stock shall
be entitled to vote separately as a class with respect to amendments to the Articles of Incorporation that increase or decrease the aggregate
number of authorized shares of such class, increase or decrease the par value of the shares of such class, or alter or change the powers,
preferences, or special rights of the shares of such class so as to affect them adversely.

 Preferred
Stock

 Authorized
Shares. The Company is authorized to issue 2,500,000 shares of preferred stock, par value $ 0.0001 per share (the "Preferred
Stock").

 Rights
and Preferences. The Board of Directors is authorized at any time, and from time to time, to provide for the issuance of shares of
Preferred Stock in one or more series, and to determine the designations, preferences, limitations and relative or other rights of the
Preferred Stock or any series thereof.

 Treasury
Stock

the years ended December 31, 2024 and 2023, the Company purchased no treasury shares.

 Non-qualified
Stock Options

 The
Company has periodically issued non-qualified stock options to key employees, officers and directors under a stock option compensation
plan approved by the Board of Directors in 2009. Terms of option grants are at the discretion of the Board of Directors and are generally
seven years. Upon the exercise of these options, the Company expects to issue new authorized shares of its common stock. The following
table summarizes all non-qualified stock options as of:

 Schedule of Non-qualified Stock Options

 Number of

 Number of

 Stock Options

 Stock Options

 Options outstanding, beginning of year

 $
 4.03

 45000

 $
 4.26

 Granted

 -

 -

 -

 -

 Redeemed

 ( 10,000
)

 3.76

 ( 15,000
)

 5.09

 Exercised

 ( 5,000
)

 3.76

 ( 15,000
)

 3.66

 Expired / terminated

 -

 -

 -

 -

 Options outstanding, end of year

 -

 $
 -

 $
 4.03

 Options exercisable, end of year

 -

 $
 -

 $
 4.03

 F- 21

 The
Company did not have any non-vested stock options outstanding as of December 31, 2024. The weighted average contractual term for options
outstanding and exercisable on December 31, 2024, and 2023 was 7 years. The aggregate intrinsic value of the options outstanding and exercisable
on December 31, 2024, and 2023 was $ 0 and $ 81,600, respectively. The aggregate intrinsic value is calculated as the difference between
the exercise price of the underlying options and the fair value of the Company's common stock for those stock options that have
an exercise price lower than the fair value of the Company's common stock. Options with an exercise price above the fair value
of the Company's common stock are considered to have no intrinsic value. For the years ended December 31, 2024 and 2023, the Company
received payments related to the exercise of options in the amount of $ 20,153 and $ 54,900, respectively. The total fair value of shares
vested during the years ended December 31, 2024 and 2023 is $ 0.

 The
following table summarizes information about stock options outstanding and exercisable as of December 31, 2024:

 Schedule of Stock Options Outstanding and Exercisable

 Range
 of

 Number
 of

 Outstanding

 Average

 Number
 of

 Exercisable

 Average

 $ 1.00
 - $ 1.99

 -

 $

 -

 -

 $

 -

 $ 2.00
 - $ 2.99

 -

 $

 -

 -

 $

 -

 $ 3.00
 - $ 3.99

 -

 $

 -

 -

 $

 -

 $ 4.00
 - $ 4.99

 -

 $

 -

 -

 $

 -

 $ 5.00
 - $ 5.99

 -

 $

 -

 -

 $

 -

 -

 $

 -

 -

 $

 -

 The
following table summarizes information about stock options outstanding and exercisable as of December 31, 2023:

 Range
 of

 Number
 of

 Outstanding

 Average

 Number
 of

 Exercisable

 Average

 $ 1.00
 - $ 1.99

 -

 $

 -

 -

 $

 -

 $ 2.00
 - $ 2.99

 -

 $

 -

 -

 $

 -

 $ 3.00
 - $ 3.99

 7,500

 $

 3.76

 7,500

 $

 3.76

 $ 4.00
 - $ 4.99

 7,500

 $

 4.24

 7,500

 $

 4.24

 $ 5.00
 - $ 5.99

 -

 $

 -

 -

 $

 -

 $

 4.26

 $

 4.26

 2017
Equity Incentive Plan

 On
August 23, 2017, our Board approved, subject to stockholder approval at the annual meeting of stockholders on October 6, 2017, the VirTra,
Inc. 2017 Equity Incentive Plan (the "Equity Plan"). The Equity Plan is intended to make available incentives that will assist
us in attracting, retaining and motivating employees, including officers, consultants and directors. We may provide these incentives
through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units
and other cash or stock -based awards.

 F- 22

 A
total of 1,187,500 shares of our common stock was initially authorized and reserved for issuance under the Equity Plan. This reserve
automatically increased on January 1, 2019, and each subsequent anniversary through 2027, by an amount equal to the smaller of (a) 3 %
of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined
by the Board.

 Awards
may be granted under the Equity Plan to our employees, including officers, directors or consultants or those of any present or future
parent or subsidiary corporation or other affiliated entity. All awards will be evidenced by a written agreement between us and the holder
of the award and may include any of the following: stock options, stock appreciation rights, restricted stock, restricted stock units,
performance shares and performance units and cash-based awards and other stock-based awards.

 For
the years ended December 31, 2024 and 2023, there were no options issued under the Equity Plan.

 Common
stock activity

 In
December 2024, the Chief Financial Officer was awarded 10,000 (prior to deduction of 3,716 shares to pay tax withholding) for a
total of 6,284 shares of common stock upon settlement of restricted stock units

 In
October 2024, a single employee was granted 2,500 shares of common stock upon settlement of restricted stock units as a one-time compensation
payment

 In
October 2024, the Chief Executive Officer was issued 118,519 (prior to the deduction of 46,367 shares to pay tax withholding) for a total
issuance of 72,152 shares upon settlement of restricted stock units.

 In
July 2024, the Executive Chairman was issued 100,000
(prior to the deduction of 41,457
shares to pay tax withholding) for a total issuance of 58,543
shares upon settlement of restricted stock units.

 In
December 2023, the Chief Financial Officer and the Company's general counsel were awarded 5,000
 (prior to deduction of 1,709
 share to pay tax withholding to equal 3,291)
and 10,438
 (prior to deduction of 3,688
 shares to pay tax withholding to equal 6,750)
shares of common stock upon settlement of restricted stock units.

 In
October 2023, the Chief Executive Officer was issued 133,333 shares upon settlement of restricted stock units.

 On
September 1, 2023, the Company awarded 22,988 (prior to deduction of 9,142 shares to pay the tax withholding liability) and 29,360 (prior
to deduction of 11,394 shares to pay the tax withholding liability) shares of common stock to its Executive Chairman and Chief Executive
Officer, respectively, in settlement of RSUs, based on the Company's performance for the twelve months ended June 30, 2023.

the year ended December 31, 2024, a total of 15,000 shares of common stock were issued
pursuant to the exercise and redemption of stock options.

 The
Board of Directors appointed Jim McDonnell as an independent member to the Board effective January 1, 2023 and granted him 10,684 restricted
shares of the Company's common stock which were subject to vesting requirements and 42,735 restricted stock units which vest only
upon the sale of the Company.

 Also
on January 1, 2023, 5,331 shares were issued to an employee as a signing bonus.

 Note
12. Subsequent Events

 VirTra
settled a lease dispute on the Kyrene property (signed in 2018) in February 2025. Since we had the full settlement amount
of $ 275,000
before the financials were closed and the lease agreement ended in 2024, we recorded the entire expense in the 2024 financial
statements under Other Expense and accrued the amount as a miscellaneous payable on the balance sheet.

 F- 23

 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 None.

 ITEM
9A. CONTROLS AND PROCEDURES.

 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 annual report on Form 10-K. Based on this evaluation,
our principal executive officers and principal financial officer concluded that as of December 31, 2024, 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.

 Internal
control over financial reporting

 Management's
annual report on internal control over financial reporting

 Our
management, including our principal executive officers and principal financial officer, is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management, with the participation
of our principal executive officers and principal financial officer, evaluated the effectiveness of our internal control over financial
reporting as of December 31, 2024. Our management's evaluation of our internal control over financial reporting was based on the
2013 framework in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, our management concluded that as of December 31, 2024, our internal control over financial reporting was not
effective. This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm
pursuant to the rules of the SEC for emerging growth companies.

 The
ineffectiveness of our internal control over financial reporting was due to the following material weaknesses which we identified in
our internal control over financial reporting: (i) the lack of multiple levels of management review on complex business, accounting and
financial reporting issues, and (ii) we had not implemented adequate system and manual controls. Until such time as we expand our staff
to include additional accounting and executive personnel and accounting systems and procedures, it is likely we will continue to report
material weaknesses in our internal control over financial reporting.

 A
material weakness is a deficiency or a combination of control deficiencies in internal control over financial reporting such that there
is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected
on a timely basis.

 Limitations
on Effectiveness of Controls

 Our
principal executive officers and principal financial officer do not expect that our disclosure controls or our internal control over
financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect
the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls
is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 Changes
in Internal Controls over Financial Reporting

 There
was no change in our internal control over financial reporting that occurred during the year ended December 31, 2024, that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, subsequent to December
31, 2024, we implemented more formal review and documentation of workflow processes, and increased ERP training.

 ITEM
9B. OTHER INFORMATION.

 None.

 ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION.

 None.

 PART
III

 ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 Board
of Directors and Executive Officers

 The
following table sets forth the names, positions and ages of our current directors and executive officers. Each director is elected at
our annual meeting of stockholders and holds office for one year, or until his successor is elected and qualified. Officers are elected
by our Board of Directors and their terms of office are at the discretion of our Board.

 Name

 Age

 Position/Title

 John
 F. Givens II

 Board
 Chair and Chief Executive Officer and Director

 Alanna
 Boudreau

 Chief
 Financial Officer

 Jeffrey
 D. Brown

 Gregg
 C.E. Johnson

 Michael
 T. Ayers

 Lt.
 Gen.(R) Maria R. Gervais

 Biographical
information concerning the directors and executive officers listed above is set forth below:

 John
F. Givens II. Mr. Givens was initially appointed as Co-Chief Executive Officer as of April 11, 2022, and has served as a director
of our Company since November 2, 2020. Mr. Givens was appointed to the role of Chief Executive Office in August of 2023 and became Board
Chair in July 2024. Mr. Givens has over 20 years' experience as a board member, entrepreneur, and corporate executive. He currently
serves as a military board advisor to Bohemia Interactive Simulations (BISim), a global developer of advanced military simulation and
training software. In 2010, Mr. Givens established the US company of BISim, and as president, took military simulations products from
inception to production. Mr. Givens has achieved numerous awards and honors, including appointment to the board of directors of the National
Center for Simulation (NCS), an association of defense companies, and the "Pioneer Awards" for outstanding contributions
and innovations to the training and effectiveness of US and overseas soldiers, sailors, and airmen. Mr. Givens graduated with a Bachelor
of Science degree in Computer Science from the Florida Institute of Technology and proudly served in the United States Army. We believe
Mr. Givens history as founder and president of BISim, and his business development expertise, technology background and extensive management
experience provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board
of Directors.

 Alanna
Boudreau. Ms. Boudreau was appointed as our Chief Financial Officer as of December 2022. She brings over 20 years of experience
in managerial, financial and operating functions, most recently serving as group controller for the 600 Group PLC (AIM: SIXH), a publicly
listed U.K.-based global industrial laser company. At The 600 Group, she oversaw all accounting activities for a business with over $30
million of revenues that included two manufacturing plants and offices in Orlando, Florida and United Kingdom. Prior to The 600 Group,
Boudreau was an Accounting Manager at Advent Health, a leading U.S.-based nonprofit health care company, where she oversaw accounting
functions for 12 locations. Boudreau graduated Summa Cum Laude from the New York Institute of Technology, receiving a Bachelor of Science
in Business Administration. She received an MBA from the University of Phoenix.

 Jeffrey
D. Brown. Mr. Brown has served as a director of our Company since 2011. Mr. Brown has been a Certified Public Accountant ("CPA")
since 1993 and a Financial Advisor for over 20 years, performing financial services for a wide range of companies.
From 2002 to 2004, Mr. Brown was the Chief Financial Officer for Gold Canyon Candles, a provider of fragranced candles and accessories
during a period of rapid growth in revenues. From 1990 to 1994, Mr. Brown was an auditor at Ernst & Young performing audits for a
variety of organizations. Mr. Brown received a Bachelor of Science in Accounting from California State University, San Bernardino and
his CPA designation in 1993. We believe Mr. Brown's history as a financial and accounting services professional, and a former auditor
and management experience provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to
serve on our Board of Directors.

 Gregg
C.E. Johnson. Mr. Johnson has served as a director of our Company since November 2022. He received his law degree in 1988 from
Osgoode Hall Law School in Toronto, Canada, and was admitted as a lawyer in Alberta in 1989. He also has extensive experience in corporate
compliance and senior management of high-growth entrepreneurial companies. Since October 2021, Mr. Johnson has been the chief executive
officer of Serenus Global Inc., a privately held fast growing medical company based in Tempe, Arizona and Calgary, Alberta. From January
2017 to November 2021, he was the chief executive officer of Upeva, Inc., which provided business advisory services pertaining to capital
markets, corporate finance, mergers and acquisitions, crowdfunding, and NASDAQ compliance. Mr. Johnson was the primary advisor to our
board on our successful effort to list our stock on NASDAQ as well as a member of VirTra's Advisory Board. He has served as corporate
secretary and a director of Vivos Biotechnologies, Inc. (aka Vivos Therapeutics, Inc.), a company which focuses on the development and
commercialization of innovative biomedical treatment alternatives, from May 2016 to March 2018. His career has included experience in
all stages of public company development and venture capital for emerging growth companies across Canada and the United States. We believe
Mr. Johnson's experience in law, business, corporate compliance and emerging companies provide the requisite qualifications, skills,
perspectives, and experience that make him well qualified to serve on our Board of Directors.

 Michael
T. Ayers. Mr. Ayers has had over 35 years in law enforcement. Since January 2019, Mr. Ayers has been the Executive Director of
the Georgia Peace Officer Standards and Training Council, which is a state agency consisting of 39 staff members with oversight of approximately
59,000 peace officers, correctional officers, jailors and communication officers' training and certification. He spent 29 years
(January 1990 to January 2019) with the Georgia Bureau of Investigation. In his last position as special agent in charge, he managed
investigative activities in an area covering over 30 counties and directly supervised, trained, and developed special agents for the
Bureau. We believe that his experience in law enforcement, from patrol officer to senior policy roles, will contribute to the Company
being able to produce and deliver better training products and make him well qualified to serve on our Board of Directors.

 Lt.
Gen.(R) Maria R. Gervais. Lt. Gen.(R) Gervais retired from the U.S. Army in August 2024 after having served in various capacities
for over 37 years. In her last position (May 2021 to August 2024), she served as the Deputy Commanding General at the U.S. Army Training
and Doctrine Command, with responsibility for leading the talent acquisition, workforce development, and strategic communication for
a 1.2 million member organization with a program budget of $5.1 billion. She directed the recruitment, on-boarding, and training of 100,000
employees and workforce development of over 800,000 employees each year. From October 2017 to May 2021, she served as the first Synthetic
Training Environment Cross Functional Team Director, where she led the effort to streamline the Army's acquisition process to accelerate
modernization of the Army's training enterprise. Her efforts resulted in the then existing process being reduced from 7 years to
2 years, the accelerated delivery (by 10+ years) of a new training methodology that improved workforce performance, and paving the way
for adoption of 3D terrain with the Army. We believe that her extensive career and experience in the U.S. Army, in the U.S. Army, specifically as a thought leader and subject matter expert
in the modeling, simulation, virtual/ gaming, and training domains, which uniquely positions her to provide the depth and breadth of knowledge necessary to help the Company make informed decisions
related to the military sales expansion initiatives currently being undertaken and make her well qualified to serve on our Board of Directors.

 There
are no family relationships between any of the executive officers and directors.

 Involvement
in Certain Legal Proceedings

 None
of our directors, executive officers, significant employees or control persons has been involved in any legal proceeding listed in Item
401(f) of Regulation S-K in the past 10 years.

 Board
Composition

 Our
business and affairs are managed under the direction of our Board of Directors. The number of directors is fixed by our Board of Directors,
subject to our articles of incorporation and our bylaws. Currently, our Board of Directors consists of five directors.

Independence

 Our
Board of Directors has undertaken a review of the independence of each director. Based on information provided by each director concerning
his or her background, employment and affiliations, our Board of Directors has determined that: (i) Messrs. Brown, Johnson and Ayers
and Lt. Gen.(R) Gervais did not have a material relationship with us that could compromise their ability to exercise independent judgment
in carrying out their responsibilities and that each of these directors was "independent" as that term is defined under the
listing standards of NASDAQ and (ii) Mr. Givens was a non-independent director. Therefore, as of the date of this report, a majority
of our Board of Directors do not consist of "independent directors" as defined under the listing standards of NASDAQ.

 Board
Leadership Structure and Board's Role in Risk Oversight

 Our
Board of Directors has a Chairman, Mr. Givens. The Chairman has authority, among other things, to preside over the Board meetings and
set the agenda for Board meetings. Accordingly, the Chairman has substantial ability to shape the work of our Board of Directors. Because
a majority of our Board of Directors will be independent, we believe that separation of the roles of Chairman and Chief Executive Officer
is not necessary at this time to ensure appropriate oversight by the Board of Directors of our business and affairs. However, no single
leadership model is right for all companies and at all times. The Board of Directors recognizes that depending on the circumstances,
other leadership models, such as the appointment of a lead independent director, might be appropriate. Accordingly, the Board of Directors
may periodically review its leadership structure. In addition, the Board of Directors will hold executive sessions in which only independent
directors are present.

 Our
Board of Directors is generally responsible for the oversight of corporate risk in its review and deliberations relating to our activities.
Our principal source of risk falls into two categories, financial and product commercialization. The audit committee will oversee management
of financial risks; our Board of Directors regularly reviews information regarding our cash position, liquidity and operations, as well
as the risks associated with each. The Board of Directors regularly reviews plans, results and potential risks related to our product
development and commercialization efforts. Our compensation committee is expected to oversee risk management as it relates to our compensation
plans, policies and practices for all employees including executives and directors, particularly whether our compensation programs may
create incentives for our employees to take excessive or inappropriate risks which could have a material adverse effect on us.

 Board
Committees

 Our
Board of Directors has established three standing committees—the audit committee, compensation committee, and nominating and corporate
governance committee—each of which operates under a charter that has been approved by our Board of Directors. We have appointed
people to the Board of Directors and committees of the Board as required to meet the corporate governance requirements of the NASDAQ
Listing Rules.

 Audit
Committee

 We
have appointed four members of our Board of Directors to the audit committee, Messrs. Brown, Johnson and Ayers and Lt. Gen.(R) Gervais.
Mr. Brown serves as the chairman of the audit committee and satisfies the definition of "audit committee financial expert"
within the meaning of SEC regulations and the NASDAQ Listing Rules. In making a determination on which member will qualify as a financial
expert, our Board of Directors considered the formal education and nature and scope of such members' previous experience.

 Our
audit committee is responsible for, among other things:

 To
 oversee our accounting and financial reporting and disclosure processes and the audit of our financial statements.

 To
 select and retain an independent registered public accounting firm to act as our independent auditor.

 To
 review with management, the internal audit department and our independent auditors the adequacy and effectiveness of our financial
 reporting processes, internal control over financial reporting and disclosure controls and procedures, including any significant
 deficiencies or material weaknesses.

 To
 review and discuss with our independent auditors and management our annual audited financial statements (including the related notes),
 the form of audit opinion to be issued by the auditors on the financial statements and the disclosure under "Management's
 Discussion and Analysis of Financial Condition and Results of Operations" to be included in our annual report on Form 10-K.

 To
 review and approve the functions of our accounting department and approve the hiring or dismissal of the Chief Accounting Officer,
 or such person as may, from time to time, be delegated such an internal audit function by the Board.

 To
 review and discuss with management policies and guidelines to govern the process by which management assesses and manages our risks.

 To
 establish and oversee procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal
 accounting controls or auditing matters and the confidential, anonymous submission by Company employees of concerns regarding questionable
 accounting or auditing matters.

 To
 review, approve and oversee any transaction between us and any related person and any other potential conflict of interest situations.

 To
 meet at least four times a year to fulfill its responsibilities.

 To
 review the audit committee charter at least annually and recommend any proposed changes to the Board for approval.

 Compensation
Committee

 We
have appointed three members of our Board of Directors, Messrs. Ayers, Johnson and Brown, to the compensation committee. Mr. Ayers serves
as chairman of this committee. Our compensation committee will assist our Board of Directors in the discharge of its responsibilities
relating to the compensation of our executive officers.

 Our
compensation committee is responsible for, among other things:

 To
 review and approve the compensation of the Chief Executive Officers and to approve the compensation of all other executive officers.

 To
 review, and approve and, when appropriate, recommend to the Board for approval, any employment agreements and any severance arrangements
 or plans, including any benefits to be provided in connection with a change in control, for the CEO and other executive officers,
 which includes the ability to adopt, amend and terminate such agreements, arrangements or plans.

 To
 review our incentive compensation arrangements.

 To
 review and recommend to the Board for approval the frequency with which we will conduct Say on Pay Votes.

 To
 review the director's compensation for service on the Board and Board committees at least once a year and to recommend any
 changes to the Board.

 To
 meet at least two times a year.

 To
 review the compensation committee charter at least annually and recommend any proposed changes to the Board for approval.

 Nominating
and Corporate Governance Committee

 We
have appointed three members of our Board of Directors, Messrs. Johnson and Brown and Lt. Gen.(R) Gervais, to the nominating and corporate
governance committee. Mr. Johnson serves as the chairman of the nominating and corporate governance committee.

 Our
nominating and corporate governance committee is responsible for, among other things:

 To
 determine the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommend to the
 Board for its approval, criteria to be considered in selecting nominees for director.

 To
 select and approve the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders.

 To
 review the Board's committee structure and composition and to appoint directors to serve as members of each committee and committee
 chairmen.

 To
 develop and recommend to the Board for approval standards for determining whether a director has a relationship with us that would
 impair its independence.

 To
 review and discuss with management the disclosure regarding the operations of the nominating and corporate governance committee and
 director independence, and to recommend that this disclosure be included in our proxy statement or annual report on Form 10-K, as
 applicable.

 To
 monitor compliance with our Code of Ethics and Business Conduct (the "Code of Ethics"), to investigate any alleged breach
 or violation of the Code of Ethics and to enforce the provisions of the Code of Ethics.

 To
 meet at least two times a year.

 To
 review the nominating and corporate governance committee charter at least annually and recommend any proposed changes to the Board
 for approval

 Code
of Ethics and Business Conduct and Whistleblower Protection Policy

 We
have adopted a written Code of Ethics, which outlines the principles of legal and ethical business conduct under which we do business.
In addition, we have adopted a written Whistleblower Protection Policy to prevent adverse employment action of any kind against any of
our employees who lawfully report information about (i) fraudulent activities within our Company (including wire fraud, mail fraud and
bank fraud), (ii) violations of the Sarbanes-Oxley Act pertaining to fraud against stockholders of the Company, (iii) questionable accounting,
internal accounting controls or auditing matters of the Company, and (iv) conduct by our executives that violate our Code of Ethics,
or that cause reports and other public disclosures by us that are not full, fair and accurate. To advance this commitment, we have adopted
this Whistleblower Protection Policy. The Code of Ethics and Whistleblower Protection Policy are applicable to all our directors, officers
and employees and are available on our corporate website, www.virtra.com. We intend to disclose any amendments to our Code of Ethics,
or waivers of its requirements, on our website or in filings under the Exchange Act to the extent required by applicable rules and exchange
requirements.

Compensation

 2024
Director Compensation Table

 Name

 Fees earned or paid in cash

 Stock Awards

 Option Awards

 Non-equity incentive plan compensation

 Nonqualified deferred compensation earnings

 All Other Compensation

 Total

 Jeffrey D. Brown

 $
 25,500

 $
 26,080

 $
 21,050

 $
 -

 $
 -

 $
 -

 $
 72,630

 Gregg C.E. Johnson

 $
 25,500

 $
 29,340

 $
 -

 $
 -

 $
 -

 $
 -

 $
 54,840

 James McDonnell (1)

 $
 18,000

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 $
 18,000

 Michael T. Ayers (2)

 $
 5,887

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 $
 5,887

 Lt. Gen.(R) Maria Gervais (2)

 $
 5,887

 $
 -

 $
 -

 $
 -

 $
 -

 $
 -

 $
 5,887

 (1)
 Mr.
 McDonnell served until October 21, 2024.

 (2)
 Mr.
 Ayers and Lt. Gen.(R) Gervais commenced serving on the board beginning October 21, 2024.

 Beginning
July 1, 2024, each non-employee director (Messrs. Brown, Johnson, and Ayers and Lt. Gen.(R) Gervais) are paid $2,500 per month quarterly
in arrears to cover all Board and committee meetings, actions by written consent, and attendance fees. We reimburse our non-employee
directors for reasonable travel expenses incurred in attending Board and committee meetings. In addition, on the last business day immediately
prior to the annual stockholders meeting, each non-employee director is to receive 2,000 restricted stock units plus 500 restricted stock
units for each committee on which he/she serves. The 500 restricted stock unit grant is increased to 1,000 for committees on which the
director serves as chair. We also may allow our non-employee directors to participate in any equity compensation plans that we have adopted
or may adopt in the future. Historically, our directors that are our employees, have not received compensation for their service as directors.

 ITEM
11. EXECUTIVE COMPENSATION

 The
following table summarizes all compensation recorded by us in the past two fiscal years for:

 our
 principal executive officer or other individual acting in a similar capacity during the fiscal year ended December 31, 2024,

 our
 two most highly compensated executive officers, other than our principal executive officers, who were serving as executive officers
 on December 31, 2024, and

 up
 to two additional individuals for whom disclosure would have been provided but for the fact that the individual was not serving as
 an executive officer on December 31, 2024.

 For
definitional purposes, these individuals are sometimes referred to as the "named executive officers."

 2024
Summary Compensation Table

 Fiscal

 Stock

 Option

 All Other

 Name and

 Year

 Salary

 Bonus

 Awards

 Awards

 Compensation

 Total

 Principal Position

 Ended

 ($)

 ($)

 ($)

 ($)

 ($)

 ($)

 Robert D. Ferris (1)

 $
 201,842

 $
 13,322

 $
 833,000

 $
 59,600

 $
 105,369

 $
 1,213,133

 Executive Chairman

 12/31/2023

 $
 349,860

 $
 12,334

 $
 -

 $
 47,850

 $
 -

 $
 410,044

 John F. Givens II (1)

 $
 354,361

 $
 53,286

 $
 796,448

 $
 -

 $
 -

 $
 1,204,095

 Chief Executive Officer

 12/31/2023

 $
 349,860

 $
 6,943

 $
 617,332

 $
 -

 $
 -

 $
 974,135

 Alanna Boudreau

 $
 201,385

 $
 28,236

 $
 78,300

 $
 -

 $
 -

 $
 307,921

 Chief Financial Officer

 12/31/2023

 $
 185,385

 $

 $
 36,800

 $
 -

 $
 -

 $
 222,492

 (1)

 Messrs.
 Ferris and Givens served as Co-Chief Executive Officers from April 2022 until August 15, 2023, when Mr. Ferris became the Executive
 Chairman and Mr. Givens became the Chief Executive Officer. Mr. Ferris resigned as Executive Chairman effective July
 12, 2024.

 (2)

 Mr. Ferris' compensation includes the first portion of a
 separation agreement payment which is $175,000 per year starting July 15, 2024 through July 15, 2029.

 Executive
Employment Agreements

the years ended December 31, 2024 and 2023, Bob Ferris redeemed 10,000 and 15,000 previously awarded options reaching expiration. The
redemptions resulted in $59,600 and $29,251 of additional compensation expense, respectively.

 On
April 11, 2022, Mr. Givens was granted 288,889 performance-based restricted stock units pursuant to the Company's 2017 Equity Incentive
Plan. Beginning on the last business day of August 2022, a tranche of restricted stock units, having an approximate value of $40,000,
based on current prices, could vest if the Company achieved net profit for the twelve months ending June 30, 2022, of at least $2,500,000.
For every $500,000 earned more than $2,500,000 another tranche would vest. If the maximum net profit of $7,000,000 was achieved, ten
tranches would vest. Similarly, on the last business day of August 2023, a tranche of restricted stock units could vest if the Company
achieved a net profit of at least $3,000,000, with the potential to have additional tranches vest up to a maximum of $9,000,000 in net
profit. This vesting arrangement continued with the last business day of August 2024, with the minimum net profit threshold being $3,500,000
and the maximum net profit being $11,000,000.

 The
vesting schedule notwithstanding, the Compensation Committee had the discretion to declare the vesting of any number of restricted stock
units should the Company experience unusual results of operations, such as falling below the net profit threshold one year and exceeding
the maximum net profit the following year, so long as the total number of restricted stock units declared to be vested did not exceed
the amount awarded. Additionally, while a maximum net profit per year had been set for allocation of the available shares, the Compensation
Committee had the authority to determine if additional compensation was in the best interests of the Company at that time.

 In
2023, the Company determined that the net profit (net income under GAAP) for the twelve months ended June 30, 2023 was at least $4,500,000
and therefore awarded 29,360 shares of common stock to Mr. Givens (prior to deduction of 11,394 shares to pay the tax withholding liability).

 The
Company entered into a three-year employment agreement with Mr. Givens effective August 15, 2023 that provides for an annual base salary
of $349,860, subject to increases based on the cost of living at a minimum. The agreement automatically extends for additional periods
of one year. The contract shall be renewed annually with upward adjustments each year applying the same percentage increase approved
for Company-wide cost-of-living adjustments. The employment agreement entitles Mr. Givens to an annual cash bonus if so determined by
VirTra's Board of Directors. In addition, the agreement entitles Mr. Givens to participate in any equity incentive plan adopted
by the Company.

 In
October 2023, Mr. Givens was issued 133,333 shares upon settlement of restricted stock units, and in 2024, the Company awarded 118,519
shares of common stock to Mr. Givens (prior to deduction of 46,367 shares to pay the tax withholding liability) in light of the performance
of his duties as CEO of the Company.

 Employee
Benefit and Equity Incentive Plans

 Stock

 Prior
to October 2017, we periodically issued non-qualified incentive stock options to the directors under a stock option compensation plan
approved by the Board of Directors in 2009. Terms of option grants were at the discretion of the Board of Directors and were generally
seven years. These awards were suspended as of October 1, 2017. As of December 31, 2024, there were no options outstanding or exercisable.

 On
March 9, 2016, our Board of Directors approved a program under which we could repurchase outstanding vested Company stock options on an
exception basis. Under the terms of the program, our Chief Executive Officer could cause us to redeem for cash any positive stock options
for the net value of the stock option (stock price on the redemption date minus strike price). The cash redemption of stock options held
by the Chief Executive Officer or Chief Operating Officer were to be approved by our independent directors. We retained the right to
reject any redemption request that was not in the best interest of our Company.

 Profit
Sharing

 We
have a discretionary profit-sharing program that pays out a percentage of our profits each year as a cash bonus to active and eligible
employees. The cash payment is typically split into two equal payments and distributed pro-rata to employees in good standing at the
time of distribution in April and October of the following year after the completion of the annual financial audit. For the years ending
December 31, 2024, and 2023, the amount expensed to operations for this program was $216,255 and $1,260,431, respectively.

 2017
Equity Incentive Plan

 On
October 6, 2017, the VirTra, Inc. 2017 Equity Incentive Plan (the "Equity Plan") was approved by our stockholders. The Equity
Plan is intended to make available incentives that will assist us in attracting, retaining and motivating employees, including officers,
consultants and directors. We may provide these incentives through the grant of stock options, stock appreciation rights, restricted
stock, restricted stock units, performance shares and units and other cash or stock-based awards.

 A
total of 1,187,500 shares of our Common Stock were initially authorized and reserved for issuance under the Equity Plan. This reserve
automatically increased beginning on January 1, 2018, and automatically increases each subsequent anniversary through 2027, by an amount
equal to the smaller of (a) 3% of the number of shares of Common Stock issued and outstanding on the immediately preceding December 31,
or (b) an amount determined by the Board.

 Appropriate
adjustments will be made in the number of authorized shares and other numerical limits in the Equity Plan and in outstanding awards to
prevent dilution or enlargement of participants' rights in the event of a stock split or other change in our capital structure.
Shares subject to awards which expire or are cancelled or forfeited will again become available for issuance under the Equity Plan. The
shares available will not be reduced by awards settled in cash or by shares withheld to satisfy tax withholding obligations. Only the
net number of shares issued upon the exercise of stock appreciation rights or options exercised by means of a net exercise or by tender
of previously owned shares will be deducted from the shares available under the Equity Plan.

 The
Equity Plan will be generally administered by the compensation committee of our Board of Directors. Subject to the provisions of the
Equity Plan, the compensation committee will determine in its discretion the persons to whom and the times at which awards are granted,
the sizes of such awards and all of their terms and conditions. However, the compensation committee may delegate to one or more of our
officers the authority to grant awards to persons who are not officers or directors, subject to certain limitations contained in the
Equity Plan and award guidelines established by the committee. The compensation committee will have the authority to construe and interpret
the terms of the Equity Plan and awards granted under it. The Equity Plan provides, subject to certain limitations, for indemnification
by us of any director, officer or employee against all reasonable expenses, including attorneys' fees, incurred in connection with
any legal action arising from such person's action or failure to act in administering the Equity Plan.

 The
Equity Plan authorized the compensation committee, without further stockholder approval, to provide for the cancellation of stock options
or stock appreciation rights with exercise prices more than the fair market value of the underlying shares of Common Stock in exchange
for new options or other equity awards with exercise prices equal to the fair market value of the underlying Common Stock or a cash payment.

 The
Equity Plan limits the grant date fair value of all equity awards and the amount of cash compensation that may be provided to a non-employee
director in any fiscal year to an aggregate of $300,000.

 Awards
may be granted under the Equity Plan to our employees, including officers, directors or consultants or those of any present or future
parent or subsidiary corporation or other affiliated entity. All awards will be evidenced by a written agreement between us and the holder
of the award and may include any of the following:

 Stock
 options. We may grant non-statutory stock options or incentive stock options (as described in Section 422 of the Internal Revenue
 Code of 1986, as amended), each of which gives its holder the right, during a specified term (not exceeding 10 years) and subject
 to any specified vesting or other conditions, to purchase a number of shares of our Common Stock at an exercise price per share determined
 by the administrator, which may not be less than the fair market value of a share of our Common Stock on the date of grant.

 Stock
 appreciation rights. A stock appreciation right gives its holder the right, during a specified term (not exceeding 10 years)
 and subject to any specified vesting or other conditions, to receive the appreciation in the fair market value of our Common Stock
 between the date of grant of the award and the date of its exercise. We may pay the appreciation in shares of our Common Stock or
 in cash.

 stock. The administrator may grant restricted stock awards either as a bonus or as a purchase right at such price as the administrator
 determines. Shares of restricted stock remain subject to forfeiture until vested, based on such terms and conditions as the administrator
 specifies. Holders of restricted stock will have the right to vote on the shares and to receive any dividends paid, except that the
 dividends will be subject to the same vesting conditions as the related shares.

 stock units. Restricted stock units represent the right to receive shares of our Common Stock (or their value in cash) at a future
 date without payment of a purchase price, subject to vesting or other conditions specified by the administrator. Holders of restricted
 stock units have no voting rights or rights to receive cash dividends unless and until shares of Common Stock are issued in settlement
 of such awards. However, the administrator may grant restricted stock units that entitle their holders to dividend equivalent rights
 subject to the same vesting conditions as the related units.

 Performance
 shares and performance units. Performance shares and performance units are awards that will result in a payment to their holder
 only if specified performance goals are achieved during a specified performance period. Performance share awards are rights denominated
 in shares of our Common Stock, while performance unit awards are rights denominated in dollars. The administrator establishes the
 applicable performance goals based on one or more measures of business performance enumerated in the Equity Plan, such as revenue,
 gross margin, net income or total stockholder return. To the extent earned, performance share and unit awards may be settled in cash
 or in shares of our Common Stock. Holders of performance shares or performance units have no voting rights or rights to receive cash
 dividends unless and until shares of Common Stock are issued in settlement of such awards. However, the administrator may grant performance
 shares that entitle their holders to dividend equivalent rights subject to the same vesting conditions as the related units.

 Cash-based
 awards and other stock-based awards. The administrator may grant cash-based awards that specify a monetary payment or range of
 payments or other stock-based awards that specify a number or range of shares or units that, in either case, are subject to vesting
 or other conditions specified by the administrator. Settlement of these awards may be in cash or shares of our Common Stock, as determined
 by the administrator. Their holder will have no voting rights or right to receive cash dividends unless and until shares of our Common
 Stock are issued pursuant to the award. The administrator may grant dividend equivalent rights with respect to other stock-based
 awards.

 In
the event of a change in control as described in the Equity Plan, the acquiring or successor entity may assume or continue all or any
awards outstanding under the Equity Plan or substitute substantially equivalent awards. Any awards which are not assumed or continued
in connection with a change in control or are not exercised or settled prior to the change in control will terminate effective as of
the time of the change in control. The compensation committee may provide for the acceleration of vesting of any or all outstanding awards
upon such terms and to such extent as it determines, except that the vesting of all awards held by members of the Board of Directors
who are not employees will automatically be accelerated in full. The Equity Plan also authorizes the compensation committee, in its discretion
and without the consent of any participant, to cancel each or any outstanding award denominated in shares upon a change in control in
exchange for a payment to the participant with respect to each share subject to the cancelled award of an amount equal to the excess
of the consideration to be paid per share of Common Stock in the change in control transaction over the exercise price per share, if
any, under the award.

 The
Equity Plan will continue in effect until it is terminated by the administrator, provided, however, that all awards will be granted,
if at all, within 10 years of its effective date. The administrator may amend, suspend or terminate the Equity Plan at any time, provided
that without stockholder approval, the plan cannot be amended to increase the number of shares authorized, change the class of persons
eligible to receive incentive stock options, or effect any other change that would require stockholder approval under any applicable
law or listing rule.

 Outstanding
Equity Awards at 2024 Fiscal Year-End

 No
stock options were outstanding as of December 31, 2024.

 Securities
Authorized for Issuance under Equity Compensation Plans

 The
following table sets forth securities authorized for issuance under any equity compensation plans approved by our stockholders as well
as any equity compensation plans not approved by our stockholders as of December 31, 2024.

 Number of
 securities to be
 issued upon
 exercise of
 outstanding
 options,
 warrants and
 rights (a)

 average exercise
 price of
 outstanding
 options,
 warrants and
 rights (b)

 Number of
 securities
 remaining
 available for
 future issuance
 under equity
 compensation
 plans (excluding
 securities
 reflected in
 column (a) (c)

 Plan category

 Plans approved by our stockholders:

 VirTra, Inc. 2017 Equity Incentive Plan

 -

 $
 -

 2,672,449

 Plans not approved by stockholders:

 None

 -

 $
 -

 -

 ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 The
following table sets forth information about the beneficial ownership of our Common Stock on March 24, 2025, for:

 each
 person known to us to be the beneficial owner of more than 5% of our Common Stock;

 each
 named executive officer;

 each
 of our directors; and

 all
 of our executive officers and directors as a group.

 Unless
otherwise noted below, the address for each beneficial owner listed on the table is in the care of VirTra, Inc., 295 E. Corporate Place,
Chandler AZ 85225. We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes
below, we believe, based on the information furnished to us, that the persons and entities named in the tables below have sole voting
and investment power with respect to all shares of Common Stock that they beneficially own, subject to applicable community property
laws. We have based our calculation of the percentage of beneficial ownership on 11,260,209 shares of our Common Stock outstanding as
of March 24, 2025.

 In
computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, we deemed
outstanding shares of Common Stock subject to options or issuable upon conversion of preferred stock held by that person that are currently
exercisable or exercisable within 60 days of March 24, 2025. We did not deem these shares
outstanding, however, for the purpose of computing the percentage ownership of any other person.

 Name of Beneficial Owner

 Amount and Nature
 of Beneficial
 Ownership

 Percent of Class

 Directors and Named Executive Officers:

 John F. Givens II

 308,493

 2.7
 %

 Jeffrey D. Brown

 53,193

 0.5
 %

 Alanna Boudreau (1)

 13,575

 0.1
 %

 Gregg C.E. Johnson

 6,600

 *

 Michael T. Ayers

 *

 Lt. Gen.(R) Maria Gervais

 -

 -

 All named executive officers and directors as a group (six persons)

 381,871

 3.4
 %

 Beneficial Owners of more than 5% of our Common Stock

 BlackRock, Inc. (3)

 688,945

 6.1
 %

 The Vanguard Group (4)

 590,402

 5.2
 %

 *
Represents less than 0.1%

 (1)

 Includes
 4,000 shares owned by her spouse.

 (2)

 The
 address for this owner as reported on its Schedule 13G filing is 50 Hudson Yards, New York, NY 10001

 (3)

 The
 address for this owner as reported on tis Schedule 13G filing is 100 Vanguard Blvd., Malvern, PA 19355.

 ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 In
addition to the compensation arrangements, including employment, termination of employment and change in control arrangements and indemnification
arrangements, discussed in Item 10. "Directors, Executive Officers and Corporate Governance" and Item 11. "Executive
Compensation" above, the following is a description of each transaction since January 1, 2024, and each currently proposed transaction
in which:

 We
 have been or will be a participant;

 the
 amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed
 fiscal years; and

 any
 of our directors, executive officers or beneficial owners of more than 5% of our capital stock, or any immediate family member of,
 or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.

the years ended December 31, 2024 and 2023, respectively, the Company did not issue stock options to its executive officers or the members
of the Board of Directors. Restricted stock units were awarded to its executive officers in 2024 and 2023 as disclosed in Item 11 above.

the years ended December 31, 2024 and 2023, the Company redeemed 10,000 and 15,000, respectively, previously awarded options reaching
expiration from the Company's former Executive Chairman. These redemptions eliminated the stock options and resulted in a total
 of $59,600 and $29,251 in additional compensation expense in 2024 and 2023, respectively.

the years ended December 31, 2024 and 2023, related parties exercised 5,000 and 15,000 previously awarded options for the exercise price
of $20,150 and $54,900, respectively, resulting in purchase and issuance of Common Stock to the former Executive Chair and one member
of the Board of Directors.

 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 The
following table shows the fees that were billed for the audit and other services provided by Haynie & Company, our independent registered
public accounting firm, for the fiscal years ended December 31, 2024, and 2023.

 2024

 2023

 Audit Fees

 $
 127,012

 $
 111,204

 Audit-Related Fees

 -

 -

 Tax Fees

 All Other Fees

 Total

 $
 127,012

 $
 111,204

 Audit
Fees - This category includes the audit of our annual financial statements included in our Annual Report on Form 10-K, review of
financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered
public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting
matters that arose during, or because of, the audit or the review of interim financial statements.

 Audit-Related
Fees - This category consists of assurance and related services by the independent registered public accounting firm that are reasonably
related to the performance of the audit or review of our financial statements and are not reported above under "Audit Fees."
The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC, other accounting
consulting and other audit services.

 Tax
Fees - This category consists of professional services rendered by our independent registered public accounting firm for tax compliance
and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.

 All
Other Fees - This category consists of fees for other miscellaneous items.

 Pursuant
to the audit committee's charter, all audit and permissible non-audit services provided by the independent registered public accounting
firm must be pre-approved. These services may include audit services, audit-related services, tax services and other services. Pre-approval
is generally provided for up to one year and any pre-approval is detailed as to the service or category of service. The independent registered
public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided
by the independent registered public accounting firm. Consistent with the audit committee's policy, all audit and permissible non-audit
services provided by our independent registered public accounting firm during the fiscal years ended December 31, 2024, and 2023 were
pre-approved by the audit committee.

 In
considering the nature of the services provided by the independent registered public accounting firms for the fiscal year ended December
31, 2024, the audit committee determined that such services were compatible with the provision of independent audit services. The audit
committee discussed these services with the independent registered public accounting firms and management for the fiscal year ended December
31, 2024, to determine that they were permitted under the rules and regulations concerning auditors' independence promulgated by
the SEC to implement the Sarbanes-Oxley Act, as well as rules of the American Institute of Certified Public Accountants.

 PART
IV

 ITEM
15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES.

 (a)(1)
Financial Statements

 The
consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the Index to Financial Statements
on page F-1 and included beginning on page F-2.

 (2)
Financial Statement Schedules

 All
schedules for which provision is made in the applicable accounting regulations of the SEC are either not required under the related instructions,
are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included
herein.

 (3)
Exhibits.

 Exhibit

 No.

 Exhibit
 Description

 3.1

 Articles
 of Incorporation of VirTra, Inc. filed September 22, 2016 (incorporated by reference to Exhibit 2.1 to the registrant's Offering
 Circular on Form 1-A (File No. 024-10739) filed with the Commission on September 11, 2017).

 3.2

 Certificate
 of Change of VirTra, Inc. filed on October 7, 2016 (incorporated by reference to Exhibit 2.2 to the registrant's Offering Circular
 on Form 1-A (File No. 024-10739) filed with the Commission on September 11, 2017).

 3.3

 Certificate
 of Change of VirTra, Inc. filed on February 12, 2018 (incorporated by reference to Exhibit 2.3 to the registrant's Post-Qualification
 Offering Circular Amendment No. 1 to Form 1-A (File No. 024-10739) filed with the Commission on February 21, 2018).

 3.4

 Bylaws
 of VirTra, Inc. (incorporated by reference to Exhibit 2.4 to the registrant's Offering Circular on Form 1-A (File No. 024-10739)
 filed with the Commission on September 11, 2017).

 10.1

 Employment
 Agreement dated April 2, 2012 between VirTra Systems, Inc. and Robert Ferris (incorporated by reference to Exhibit 6.2 to the registrant's
 Offering Circular on Form 1-A (File No. 024-10739) filed with the Commission on September 11, 2017).

 10.2

 2017
 Equity Incentive Plan (incorporated by reference to Exhibit 6.6 to the registrant's Offering Circular on Form 1-A (File No.
 024-10739) filed with the Commission on September 11, 2017).

 10.3

 Form
 of Stock Option Agreement for 2017 Equity Incentive Plan (incorporated by reference to Exhibit 6.6 to the registrant's Offering
 Circular on Form 1-A (File No. 024-10739) filed with the Commission on September 11, 2017).

 10.4

 Form
 of Notice of Grant of Stock Option for 2017 Equity Incentive Plan (incorporated by reference to Exhibit 6.7 to the registrant's
 Offering Circular on Form 1-A (File No. 024-10739) filed with the Commission on September 11, 2017).

 10.5

 Stock Unit Agreement – Robert D. Ferris (incorporated by reference to Exhibit 10.1 to the registrant's current report
 on Form 8-K (File No. 001-38420) filed August 27, 2021).

 10.6

 Promissory
 Note to Arizona Bank & Trust dated August 25, 2021 (incorporated by reference to Exhibit 10.1 to the registrant's current
 report on Form 8-K (File No. 001-38420) filed August 30, 2021).

 10.7

 Deed
 of Trust in favor of Arizona Bank & Trust dated August 25, 2021 (incorporated by reference to Exhibit 10.2 to the registrant's
 current report on Form 8-K (File No. 001-38420) filed August 30, 2021).

 10.8

 Assignment
 of Rents granted to Arizona Bank & Trust dated August 25, 2021 (incorporated by reference to Exhibit 10.3 to the registrant's
 current report on Form 8-K (File No. 001-38420) filed August 30, 2021).

 10.9

 Stock Unit Agreement – John F. Givens II (incorporated by reference to Exhibit 10.14 to the registrant's annual report
 on Form 10-K (File No. 001-38420) filed August 2, 2022).

 10.10

 Employment
 Agreement with John F. Givens II dated August 15, 2023 (incorporated by reference to Exhibit 10.1 to the registrant's current
 report on Form 8-K (File No. 001-38420) filed August 15, 2023).

 10.11

 Stock Unit Agreement – Alanna Boudreau (incorporated by reference to Exhibit 10.7 to the registrant's registration statement
 on Form S-3 (File No. 333-283846).

 10.12

 Employment
 Agreement with John F. Givens II dated September 6, 2024 (incorporated by reference to Exhibit 10.8 to the registrant's registration
 statement on Form S-3 (File No. 333-283846).

 21.1

 List
 of Subsidiaries.

 23.1

 Consent
 of Independent Registered Public Accounting Firm

 24.1

 Power
 of Attorney (set forth on signature page hereto).

 31.1

 Certification
 of Principal Executive Officer.

 31.2

 Certification
 of Principal Financial Officer.

 32.1

 Certification
 of Principal Executive Officers and Principal Financial Officer

 97.1

 Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 to the registrant's annual report on Form 10-K (File No. 001-38420) filed April 1, 2024).

 101.INS

 Instance

 101.SCH

 Taxonomy Extension Schema

 101.CAL

 Taxonomy Extension Calculation

 101.DEF

 Taxonomy Extension Definition

 101.LAB

 Taxonomy Extension Labels

 101.PRE

 Taxonomy Extension Presentation

 Cover

Management contract, compensation plan or arrangement.

 ITEM
16. FORM 10-K SUMMARY

 None.

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) 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.

 INC.

 Date:

 March
 27, 2025

 By:

 /s/
 John F. Givens II

 John
 F. Givens II

 Chief
 Executive Officer

 Date:

 March
 27, 2025

 By:

 /s/
 Alanna Boudreau

 Alanna
 Boudreau

 Chief
 Financial Officer

 POWER
OF ATTORNEY

 The
registrant and each person whose signature appears below hereby appoint John F. Givens II and Alanna Boudreau, and each of them, as attorneys-in-fact
with full power of substitution, severally, to execute in the name and on behalf of the registrant and each such person, individually
and in each capacity stated below, one or more amendments to the annual report on Form 10-K, which amendments may make such changes in
the report as the attorney-in-fact acting deems appropriate and to file any such amendment to the report with the Securities and Exchange
Commission.

 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on March 27, 2025.

 Name

 Title

 /s/
 John F. Givens II

 Chief
 Executive Officer and Board Chair

 (Principal
 Executive Officer)

 Robert
 D. Ferris

 Chief
 Financial Officer

 /s/
 Alanna Boudreau

 (Principal
 Financial Officer)

 Alanna
 Boudreau

 /s/
 Jeffrey D. Brown

 Jeffrey
 D. Brown

 /s/
 Gregg C.E. Johnson

 Gregg
 C.E. Johnson

 /s/
 Michael T. Ayers

 Michael
 T. Ayers

 /s/
 Maria R. Gervais

 Maria
 R. Gervais