VirTra, Inc
For the period ended Dec 31, 2025. Filed Mar 26, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 26, 2026
VTSI$2.67-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-27.
0001641172-25-000951
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-26.
0001493152-26-012903
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 58 previous paragraphs and 57 current paragraphs.
40 unchanged; 13 reworded; 4 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
***Revenues.***Revenues were $22,402,188 for the year ended December 31, 2025, compared to $26,350,819 for the same period in 2024, representing a decrease of $3,948,631 or 15%. The decrease was primarily attributable to a particularly challenging sales year in which VirTra faced significant external headwinds, including government shutdowns and a transition in federal leadership that resulted in notable reductions to Department of Defense related program funding. These factors were further compounded by the composition of our 2025 bookings, the majority of which originated from international customers operating under extended 6 to 12-month delivery timelines, thereby delaying revenue recognition and contributing to an increase in backlog and a year-over-year decline in revenue. Additionally, widespread delays in federal funding and grant disbursements affected numerous domestic departments, limiting their ability to initiate or complete purchases and reducing our opportunity to close and convert local sales during the period.
Current report
***Cost of Sales.***Cost of sales were $7,199,562 for the year ended December 31, 2025, compared to $6,938,304 for the same period in 2024, representing an increase of $261,258 or 4%. The year-over-year increase was primarily attributable to the completion of several content creation and engineering enhancement projects for existing products. This increase reflects the Company’s continued focus on delivering new content to customers on a recurring basis. These costs were not offset in the current period by expenditures related to the development of new projects, as they were in the prior year for the VXR, SVT, and VAMIS products, which would otherwise have been captured as work in progress.
Current report
***Operating Expenses.***Net operating expense was $14,765,131 for the year ended December 31, 2025, compared to $17,416,184 for the same period in 2024, representing a decrease of $2,651,053 or 15%, with general and administrative expenses decreasing by $2,031,346 or 14% and research and development expenses decreasing by $619,707 or 21%. The decrease in operating and general and administrative expenses reflects management’s continued efforts to appropriately align overhead costs with current revenue levels. The decrease in research and development costs in 2025 was primarily attributable to the capitalization of certain significant development initiatives rather than expensing those costs as incurred. The Company continues to invest in new product offerings and innovative ideas to enhance and expand its product portfolio.
Current report
***Other Income (Expense).***Other net expense was $290,307 for the year ended December 31, 2025, compared to other income of $254,636 for the same period in 2024, representing a decrease of $544,943. This decrease is due to large foreign exchange expenses related to 2023 contracts that finalized, where the payment ended up being significantly lower due to the major shift in exchange rate.
Removed paragraphs (5)
Previous report
***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.
Previous report
***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.
Previous report
***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.
Previous report
***Other Income.***Other net income was $254,636 for the 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.
Previous report
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.
Reworded paragraphs (13)
Previous wording
***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.
Current wording
***Gross Profit.***Gross profit was $15,202,626 for the year ended December 31, 2025, compared to $19,412,515 for the same period in 2024, representing a decrease of $4,209,889 or 22%. The gross profit margin was 68% for the year ended December 31, 2025, and 74% for the same period in 2024. The gross profit decrease was mainly due to the decrease in revenue and the increase in cost of sale described above.
Previous wording
**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%.
Current wording
Income Tax Expense (Benefit). Income tax benefit was $111,258 for the year ended December 31, 2025, compared to an expense of $887,286 for the same period in 2024, representing a decrease in expense of $998,544 or 113%.
Previous wording
***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.
Current wording
***Net Income.***Net income was $258,446 for the year ended December 31, 2025, compared to net income of $1,363,681 for the same period in 2024, representing a decrease of $1,105,235 or 81%. All the factors discussed above played a role in the net result, with our main issue being the year-over-year decrease in revenue. We continue to decrease our operating expenses, which offset some of the decrease in revenues.
Previous wording
***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.
Current wording
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 $18,594,598 and $18,040,827 of cash and cash equivalents as of December 31, 2025 and 2024, respectively. Working capital was $30,793,890 and $34,328,543 as of December 31, 2025 and 2024, respectively.
Previous wording
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.
Current wording
Net cash provided by operating activities was $4,587,967 for the year ended December 31, 2025, as compared to $1,257,266 of cash provided by operating activities for the year ended December 31, 2024. The increase in cash provided was primarily driven by efforts made by the team to collect accounts receivable and lowering our on-hand inventory and work-in-process accounts.
Previous wording
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.
Current wording
Net cash used in investing activities was $3,780,744 for the year ended December 31, 2025, and net cash used in investing activities was $1,845,572 for the year ended December 31, 2024. The cash used in 2025 was driven by the creation of an intangible asset for our VXR product and purchase of additional property and equipment in 2025.
Previous wording
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.
Current wording
Net cash used in financing activities was $253,452 for the year ended December 31, 2025, as compared to $220,709 used in financing activities for the year ended December 31, 2024. This cash was used primarily to fund our mortgage payments.
Previous wording
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.
Current wording
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 $7.3 million for the three months ended December 31, 2025. This brings the total bookings for the year ended 2025 to $26.7 million. The Company has made one change to the booking qualifications. As previously disclosed, in 2024 we strengthened the language in the STEP contract Terms and Conditions to guarantee the agreement for the full three-year term. This change was done to secure future revenue and lower our risk of unsigned or cancelled contracts. Therefore, with this change, we believe there are $2.5 million in renewable STEP contract options still outstanding, and based on current renewal rates, the Company believes 95% of those options will be exercised.
Previous wording
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.
Current wording
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, respectively, that are deferred revenue recognized on a straight-line basis over the life of each respective agreement. As of December 31, 2025, the Company’s backlog was $13.8 million in Capital, $5.1 million in Service and $6.7 million in STEP, for a total of $25.6 million.
Previous wording
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.
Current wording
Management estimates the majority of the new bookings received in the fourth quarter of 2025 will be converted to revenue in 2026. Management’s estimate for the conversion of backlog is based on current contract delivery dates; however, contract terms and installation dates are subject to modification and are routinely changed at the request of the customer or due to factors outside the Company’s control.
Previous wording
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.
Current wording
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 accounts receivable and updating the reserve quarterly based on the age of the accounts receivable.
Previous wording
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.
Current wording
Revenues include sales of products and services and are 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.
Previous wording
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.
Current wording
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 considers control of the performance obligation transferred once the customer has the right and ability to direct the use of the product or service and the customer obtains substantially all the remaining benefit from the products and services.