UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No. )
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐ Preliminary Proxy Statement
☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒
Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material under §240.14a-12
VIRTRA,
INC.
(Name
of Registrant as Specified In Its Charter)
N/A
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
☒
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No
fee required.
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☐
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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☐
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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Filing
Party:
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VirTra,
Inc.
7970
S. Kyrene Road
Tempe,
Arizona 85284
NOTICE
OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
To
Be Held on October 25, 2021
NOTICE
IS HEREBY GIVEN that VirTra, Inc., a Nevada corporation (the “Company”) will hold a Virtual Annual Meeting of Stockholders
(the “Annual Meeting”) on Monday, October 25, 2021, at 1:30 pm. local time (4:30 pm Eastern Time)
for the following purposes, which are described more fully in the accompanying Proxy Statement:
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1.
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To
elect five directors to the Company’s Board to serve until the Company’s 2022 annual meeting of stockholders or until
their successors are elected and qualified; and
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2.
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To
ratify the appointment of MaloneBailey, LLP as the Company’s independent registered public accounting firm for the fiscal year
ending December 31, 2021; and
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3.
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Such
other business as may appropriately come before the Annual Meeting.
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All
holders of record of the Company’s common stock and the Company’s Class A common stock at the close of business on September
2, 2021 are entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof.
The
Board of Directors of the Company has authorized the solicitation of proxies. Unless otherwise directed, the proxies will be voted FOR
the election of the nominees listed in the attached Proxy Statement to be members of the Board of Directors and on other business
that may properly come before the Annual Meeting, as the named proxies in their best judgment shall decide.
If
you submit a proxy, you may revoke such proxy at any time prior to its exercise by notifying the Secretary of the Company in writing
at c/o VirTra, Inc., 7970 S. Kyrene Road, Tempe, Arizona 85284 prior to the Annual Meeting, and, if you virtually attend the Annual Meeting,
you may revoke your proxy if previously submitted and vote at the Annual Meeting.
Your
vote is very important. Whether or not you plan to virtually attend the Annual Meeting, we encourage you to read the Proxy Statement
and submit your proxy as soon as possible. You may submit your proxy for the Annual Meeting by completing, signing, dating and returning
your proxy in the pre-addressed envelope provided.
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Sincerely,
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Robert
D. Ferris
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Chief
Executive Officer
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September
13, 2021
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VIRTRA,
INC.
PROXY
STATEMENT
FOR
THE 2021 VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
Important
Notice Regarding the Availability of Proxy Materials for the Virtual Annual Stockholders
Meeting to Be Held on October 25, 2021
The
Proxy Statement and annual report to stockholders for the fiscal year ended December 31, 2020 are available at https://www.iproxydirect.com/vtsi.
GENERAL
INFORMATION
This
Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of VirTra,
Inc., a Nevada corporation (the “Company,” “VirTra,” “we,” “our” or
“us”), of proxies to be voted at our 2021 Virtual Annual Meeting of Stockholders (the “Annual Meeting”) and
at any adjournment or postponement of the Annual Meeting. The Annual Meeting will take place on Thursday, October 25, 2021,
beginning at 1:30 p.m., local time (4:30 pm Eastern Time), at https://agm.issuerdirect.com/vtsi.
You will need to provide your 12-digit control number that is on your proxy card to gain access to the Annual Meeting. The Board of
Directors of the Company urges you to promptly execute and return your proxy in the enclosed envelope, even if you plan to virtually
attend the Annual Meeting. This is designed to authenticate stockholders’ identities, to allow stockholders to give their
voting instructions and to confirm that stockholders’ instructions have been recorded properly. For additional information on
how to obtain directions to be able to virtually attend the Annual Meeting and vote at the Annual Meeting, please write to the
Company’s Secretary at VirTra, Inc., 7970 S. Kyrene Road, Tempe, Arizona 85284 or call (480) 968-1488.
Any
stockholder submitting a proxy may revoke such proxy at any time prior to its exercise by notifying the Secretary of the Company, in
writing, prior to the Annual Meeting. Any stockholder virtually attending the Annual Meeting may revoke his or her proxy and vote personally
by notifying the Secretary of the Company at the Annual Meeting.
This
Proxy Statement, the Notice of Annual Meeting, and accompanying proxy are being furnished to record holders at the close of business
on September 2, 2021 (the “Record Date”), the record date for the Annual Meeting. Only stockholders of record at the close
of business on Record Date will be entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. At the close
of business on the Record Date, the Company had 10,804,630 outstanding shares of common stock, $0.0001 par value per share (the “Common
Stock”), outstanding, and no shares of Class A common stock, $0.0001 par value per share (the “Class A Common Stock”),
outstanding. Web links and addresses contained in this Proxy Statement are provided for convenience only, and the content on the referenced
websites does not constitute a part of this Proxy Statement.
Holders
of our Common Stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of our Class A Common
Stock are entitled to 10 votes for each share on all matters submitted to a stockholder vote, voting together with the Common Stock as
a single class. Holders of our Class B common stock are not 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 Company’s 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. Holders
of Common Stock and Class A Common Stock do not have cumulative voting rights. Therefore, holders of a majority of the votes of holders
of the Common Stock and Class A Common Stock voting for the election of directors can elect all of the directors. As of the Record Date,
there were no shares of Class A Common Stock issued and outstanding.
If
you are a beneficial holder and do not provide specific voting instructions to your broker, the organization that holds your shares will
not be authorized to vote on the election of directors. Accordingly, we encourage you to vote promptly, even if you plan to virtually
attend the Annual Meeting.
If
the accompanying proxy card is signed and returned, the shares represented thereby will be voted in accordance with the directions on
the proxy card. Unless a stockholder specifies otherwise therein, the proxy will be voted in accordance with the recommendations of the
Board of Directors on all proposals.
Holders
of our Common Stock and Class A Common Stock representing one-third of the voting power of our capital stock issued, outstanding and
entitled to vote, represented in person (virtually, in the case of this Annual Meeting) or by proxy, are necessary to constitute a quorum
at any meeting of stockholders. As of the Record Date, there were no shares of Class A Common Stock issued and outstanding. If a quorum
is present, the affirmative vote of a majority of the shares entitled to vote which are present in person (virtually in the case of this
Annual Meeting) or represented by proxy at the Annual Meeting is required to elect directors and to approve each other proposal to be
voted upon at the Annual Meeting. Shares represented by proxies which are marked or voted (i) “abstain” with respect to the
election of the director nominees and remaining proposals to be voted upon at the Annual Meeting, or (ii) to deny discretionary authority
on other matters will be counted for the purpose of determining the number of shares represented by proxy at the Annual Meeting. Such
proxies will thus have the same effect as if the shares represented thereby were voted against such nominee or nominees and against the
remaining proposals. Shares held by brokers that do not have discretionary authority to vote on a proposal and have not received voting
instructions from their clients are considered “broker non-votes.” Broker non-votes are considered present or represented
for purposes of determining a quorum but will not be considered in determining the number of votes necessary for approval and will have
no effect on the outcome of the vote for directors or the remaining proposals. As such, for your vote to be counted if you are the beneficial
owner of shares held by your broker, you must submit your voting instruction form to your broker.
TABLE
OF CONTENTS
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
What
is the purpose of the Annual Meeting?
At
our Annual Meeting, holders of our voting stock will be asked to vote on the following proposals:
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1.
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To
elect five directors to the Company’s Board to serve until the Company’s 2022 annual meeting of stockholders or until
their successors are elected and qualified; and
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2.
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To
ratify the appointment of MaloneBailey, LLP as the Company’s independent registered public accounting firm for the fiscal year
ending December 31, 2021; and
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3.
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Such
other business as may appropriately come before the Annual Meeting.
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Will
any other business be considered at the Annual Meeting?
Our
bylaws provide that a stockholder may present a proposal at the Annual Meeting that is not included in this proxy statement only if proper
written notice was received by us. No stockholder has given the timely notice required by our bylaws in order to present a proposal at
the Annual Meeting. Our Board does not intend to present any other matters for a vote at the Annual Meeting.
Who
is entitled to attend and vote at the Annual Meeting?
You
may vote if you owned shares of our Common Stock or Class A Common Stock as of the close of business on September 2, 2021, the Record
Date for determining who is eligible to attend and vote (virtually or by proxy) at the Annual Meeting or any adjournments or postponements
thereof, and your stock ownership is reflected in our record books. As of the close of business on the Record Date, our record book reflects
that we had outstanding a total of 10,804,630 shares of Common Stock, and no shares of Class A Common Stock outstanding.
Each
share of our Common Stock is entitled to one vote. Each share of our Class A Common Stock, of which none were outstanding on the Record
Date, is entitled to 10 votes.
How
many votes do I have?
You
have one vote for each share of our Common Stock that you owned on the Record Date. If there were any shares of Class A Common Stock
outstanding on the Record Date, each share would have 10 votes. No shares of Class A Common Stock were issued and outstanding on the
Record Date.
How
many votes may be cast by all stockholders entitled to notice of, and to vote at, the Annual Meeting?
A
total of 10,804,630 votes may be cast at the Annual Meeting with respect to each proposal, consisting of one vote for each share of our
Common Stock outstanding as of the Record Date. There were no shares of our Class A Common Stock outstanding as of the Record Date. There
is no cumulative voting for the election of directors.
How
many shares must be present to hold the Annual Meeting?
Holders
of our Common Stock and Class A Common Stock representing one-third of the voting power of our capital stock issued, outstanding and
entitled to vote as of the Record Date, represented in person (virtually) or by proxy, must be present at the Annual Meeting in order
to hold the Annual Meeting and conduct business. This is called a quorum. There were no shares of our Class A Common Stock outstanding
as of the Record Date. Your shares are counted as present at the Annual Meeting if:
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You
are present (virtually) and vote at the Annual Meeting;
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You
have properly and timely submitted your vote as described below under “How do I vote my shares?”; or
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You
hold your shares in street name, as described below, and you do not provide voting instructions and your broker, bank, trust or other
nominee uses its discretion to vote your shares.
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If
a quorum is not present or represented at the Annual Meeting, the stockholders and proxies entitled to vote will have the power to adjourn
the Annual Meeting, without notice other than an announcement at that time, until a quorum is present or represented.
What
is a proxy?
It
is your designation of another person to vote stock you own. That other person is called a proxy. If you designate someone as your proxy
in a written document, that document also is called a proxy or a proxy card. When you designate a proxy, you also may direct the proxy
how to vote your shares. We refer to this as your “proxy vote.” Two of our executive officers, Robert D. Ferris and Matthew
D. Burlend, have been designated as proxies for the Annual Meeting.
What
is a proxy statement?
It
is a document that we are required to give you, in accordance with regulations of the Securities and Exchange Commission (the “SEC”),
when we ask you to designate proxies to vote your shares of our voting stock at an annual meeting of our stockholders. The proxy statement
includes information regarding the matters to be acted upon at the Annual Meeting and certain other information required by the regulations
of the SEC and the rules of The NASDAQ Stock Market (“NASDAQ”).
What
is the difference between a “stockholder of record” and a “street name” holder?
If
your shares are registered directly in your name, you are considered the “stockholder of record” with respect to those shares.
If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee
is considered to be the stockholder of record with respect to those shares, while you are considered the beneficial owner of those shares.
In that case, your shares are said to be held in “street name.” Street name holders generally cannot vote their shares directly
and must instead instruct the broker, bank, trust or other nominee how to vote their shares using the method described below under “How
do I vote my shares?”.
How
do I vote my shares?
Stockholders
of Record. If you are a stockholder of record, you may vote in the following ways:
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By
Internet before the Annual Meeting. If you have received a printed copy of the proxy materials from us by mail, you may
vote electronically via the Internet at www.issuerdirect.com/virtual-event/vtsi. To be valid, your vote must be received by
us by 11:59 p.m., Eastern Time, on October 24, 2021.
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By
Mail. If you have received a printed copy of the proxy materials from us by mail, you may vote by completing, signing and
dating the enclosed proxy card where indicated and by mailing or otherwise returning the proxy card in the envelope provided to us.
To be valid, your vote by mail must be received by us by 11:59 p.m., Eastern Time, on October 24, 2021.
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At
the Annual Meeting. You can vote your shares during the virtual Annual Meeting.
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Beneficial
Owners. If you are a beneficial owner, you may vote by submitting voting instructions to your broker or other nominee holding your
shares. You should follow the voting instructions provided by your broker or nominee in order to instruct your broker or nominee on how
to vote your shares.
Your
vote is important, and we encourage you to vote promptly.
What
does it mean if I receive more than one proxy card?
If
you receive more than one proxy card or voting instruction form, it means that you hold shares registered in more than one account. To
ensure that all of your shares are voted, you will need to be sure to vote once for each account.
What
if I do not specify how I want my shares voted?
If
you submit a signed proxy card or submit your proxy by Internet and do not specify how you want to vote your shares, we will vote your
shares FOR the election of each of the five nominees to the Board.
Note:
If you are a street name holder and fail to instruct your broker, bank, trust or other nominee how you want to vote your shares on
a particular matter, those shares are considered to be “uninstructed.” If the broker, bank, trust or other nominee is not
permitted to exercise discretion, the uninstructed shares will be referred to as “broker non-votes.”
Your
vote is very important. We urge you to vote, or to instruct your broker, bank, trust or other nominee how to vote, on all matters to
be considered at the Annual Meeting.
Can
I revoke my proxy and change my vote?
Yes,
you may revoke your proxy and change your vote at any time before your proxy is voted at the Annual Meeting. You may revoke your proxy
and change your vote by:
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Submitting
a later-dated and properly executed proxy card to our Corporate Secretary at the Company’s address listed above, which must
be received by us before the time of the Annual Meeting;
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Submitting
a later-dated vote on the Internet, in a timely manner;
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Delivering
a written notice of revocation to our Corporate Secretary at the Company’s address listed above, which must be received by
us before the time of the Annual Meeting; or
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Attending
the Annual Meeting and voting. Your attendance (virtually) at the Annual Meeting will not by itself revoke a proxy that you have
previously submitted.
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What
vote is required to approve each item of business included in the Proxy?
Except
as provided by law, according to the Company’s bylaws, if a quorum exists, action on a matter by the shareholders (including the
election of Directors) is approved if a majority of the stock having voting power present during the virtual annual meeting or represented
by proxy votes in favor of such matter (with “abstentions” and “broker non-votes” not counted as a vote cast
with respect to that matter). This means that the number of shares voted FOR an action or matter must exceed the number of shares
voted “Against” that action or matter.
How
does the Board of Directors recommend that I vote?
Our
Board of Directors recommends that you vote FOR each of the nominees to the Board of Directors. We are not aware of any other
matters that will be voted on at the 2021 Annual Meeting. If any other business properly comes before the Annual Meeting, however, the
persons named as proxies for stockholders will vote on those matters in a manner they consider appropriate.
What
are broker non-votes?
Generally,
a broker non-vote occurs when a bank, broker or other nominee that holds shares of Common Stock in “street name” for customers
is precluded from exercising voting discretion on a particular proposal because (i) the beneficial owner has not instructed the bank,
broker or other nominee how to vote, and (ii) the bank, broker or other nominee lacks discretionary voting power to vote the Common Stock.
A bank, broker or other nominee does not have discretionary voting power with respect to the approval of “non-routine” matters
absent specific voting instructions from the beneficial owners of the Common Stock.
On
non-routine items for which you do not give your broker instructions, the shares will be treated as broker non-votes. Proposals 1 and
3 are non-routine items. If you do not give your broker instructions with regard to each of these proposals, brokers will not be permitted
to vote your shares of Common Stock at the Annual Meeting in relation to such proposals.
Our
management believes that Proposal 2 (ratification of the appointment of MaloneBailey as the Company’s independent registered public
accounting firm for the fiscal year ending December 31, 2021) is a “routine” matter for which brokers will have authority
to vote your shares of Common Stock at the Annual Meeting if you do not give instruction on how to vote your shares. Consequently, if
customers do not give any direction, brokers will be permitted to vote shares of Common Stock at the Annual Meeting in relation to Proposal
2. Nevertheless, we encourage you to submit your voting instructions to your broker to ensure your shares of Common Stock are voted at
the Annual Meeting.
How
will my shares be voted at the Annual Meeting?
At
the Annual Meeting, the Board (the persons named in the proxy card or, if applicable, their substitutes) will vote your shares of Common
Stock as you instruct. If you submit a proxy but do not indicate how you would like to vote your Common Stock, your shares will be voted
as the Board recommends, which is as follows:
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FOR
Proposal 1 (election of directors proposal);
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FOR
Proposal 2 (ratification of auditors).
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Where
can I find the voting results of the Annual Meeting?
We
expect to announce preliminary voting results at the Annual Meeting. We plan to publish the final voting results in a Current Report
on Form 8-K (“Form 8-K”) filed within four business days of the Annual Meeting. If final voting results are not available
within the four business day timeframe, we plan to file a Form 8-K disclosing preliminary voting results within the required four business
days, to be followed as soon as practicable by an amendment to the Form 8-K containing the final voting results.
What
happens if the Annual Meeting is postponed or adjourned?
If
the Annual Meeting is postponed or adjourned, your proxy will remain valid and may be voted when the Annual Meeting is convened or reconvened.
You may change or revoke your proxy until it is voted.
Are
members of the Board required to attend the Annual Meeting?
Directors
are encouraged, but not required, to attend the Annual Meeting.
What
happens if stockholders approve one or more proposals but not others?
Approval
of any one proposal is not dependent on stockholders approving any other proposal. Therefore, if stockholders approve one proposal, but
not others, the approved proposal would still take effect. For example, if stockholders approve the election of all directors, but do
not approve the ratification of auditors, the directors would still be deemed elected by stockholders. Note, however, if Proposal 2 (ratification
of auditors) is not approved, the Audit Committee will consider whether it is appropriate to select another independent registered public
accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered
public accounting firm at any time during the fiscal year if it determines that such a change would be in the best interests of the Company
and its stockholders.
Who
pays for the cost of proxy preparation and solicitation?
We
pay for the cost of proxy preparation and solicitation, including the charges and expenses of brokerage firms or other nominees for forwarding
proxy materials to beneficial owners of shares held in street name. We also will reimburse banks, brokerage houses and other custodians,
nominees and certain fiduciaries for their reasonable expenses incurred in mailing proxy materials to their principals.
PROPOSAL
1—ELECTION OF DIRECTORS
Our
Board of Directors currently has five members. All of the current directors’ terms expire as of the Annual Meeting. All of the
current members of the Board (Messrs. Ferris, Brown, Burlend, Givens and Richardson) have been nominated by the Board to serve until
the 2022 Annual Meeting of Stockholders or until their successors are duly elected and qualified.
Each
of the nominees has agreed to serve as a director if elected. If, for any reason, any nominee becomes unable to serve before the election,
the persons named as proxies will vote your shares for a substitute nominee if one is selected by the Board. Alternatively, the Board,
at its option, may reduce the number of directors that are nominated for election.
The
Company’s bylaws require directors to be elected by a majority of the votes cast by the shares entitled to vote in the election
at a meeting at which a quorum is present (with “abstentions” and “broker non-votes” not counted as a vote cast
with respect to that director).
All
of our directors and director nominees are encouraged to attend the annual meetings of our stockholders.
The
Board of Directors held one meeting during the fiscal year ended December 31, 2020, and acted by unanimous written consent four times.
Board
Recommendation
The
Board recommends a vote FOR the election of each of Messrs. Ferris, Brown, Burlend, Givens and Richardson. Proxies will be voted FOR
the election of the five nominees, unless otherwise specified.
Director
Nominees
The
following table sets forth the names, positions and ages of our director nominees, each of whom currently serves as a member of our Board
of Directors.
Name
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Age
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Position/Title
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Robert
D. Ferris
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49
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Chief
Executive Officer, President and Chairman of the Board
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Matthew
D. Burlend
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47
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Chief
Operating Officer, Vice President and Director
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Jeffrey
D. Brown
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58
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Director
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James
Richardson
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45
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Director
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John
Givens
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57
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Director
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Biographical
information concerning the director nominees listed above is set forth below:
Robert
D. Ferris. Mr. Ferris has been our Chief Executive Officer and Chairman of the Board of Directors since 2008 and has been our
President since founding Ferris Productions, Inc. (“Ferris Productions”) in 1993. Mr. Ferris has led VirTra in providing
the market with revolutionary simulation training products that today impact millions of people in 32 counties. He has been awarded multiple
patents, spoken at various trade shows, and has written or assisted with various ground-breaking articles and studies in the fields of
virtual reality and simulation technology. Mr. Ferris is considered one of the top experts in the world at applying virtual reality and
simulation technology to solve real world problems. Mr. Ferris attended the U.S. Air Force Academy and received a bachelor’s degree
in Systems Engineering from the University of Arizona. We believe Mr. Ferris’ history as a founder, officer and director of our
company, and his management experience and industry knowledge, provide the requisite qualifications, skills, perspectives and experience
that make him well qualified to serve as Chairman of our Board of Directors.
Matthew
D. Burlend. Mr. Burlend has been our Chief Operating Officer and a director since 2008 and has been our Vice President since
October 9, 2017. From 2001 to October 8, 2017, Mr. Burlend had also served in the capacity as our Secretary. Prior to joining Ferris
Productions, Inc. in 1999, Matt was a mechanical engineer focused on the design of automated production equipment for Panduit, a $1+
billion per year global manufacturing company. In his role with our company, Mr. Burlend has contributed significantly to managing the
design, production and support of our simulator products and has achieved a highly successful track record in the daily operations of
our core business. At VirTra, Matt worked his way up from engineer to becoming COO in 2011. In addition, he was instrumental in managing
the company from a debt position of over $4 million, to becoming debt-free in less than three years at the height of the Great Recession,
to then achieving record profits. Matt graduated from Olivet Nazarene University with a Mechanical Engineering Degree.
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 planning service provider for over 12 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.
James
Richardson. Mr. Richardson has served as a director of our company since October 9, 2017. Mr. Richardson is the co-founder and
has been the chief executive officer of NaturalPoint Inc. since 1996. NaturalPoint is a world leader in simulation/VR/AR tracking and
sells optical motion capture hardware and software, head tracking for PC’s and hands-free ergonomic mouse alternative for assistive
technology. Mr. Richardson has had an integral role at NaturalPoint since its formation and is responsible for devising its high-level
strategy and the engineering, marketing and sales efforts. Through Mr. Richardson’s efforts, he led to profitable revenue growth,
enabling it to gain significant market share culminating in its sale to Planar Systems, Inc., a developer, manufacturer and marketer
of electronic display products and systems for $125 million in cash. Mr. Richardson studied Mechanical Engineering at the University
of California at Berkeley. We believe Mr. Richardson’s history as a founder and officer of NaturalPoint, and his technology background
and management experience provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to
serve on our Board of Directors.
John
Givens. Mr. Givens has served as a director of our company since November 2, 2020. 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.
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.
Director
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, Richardson, and Givens
do not have a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out
his or responsibilities and that each of these directors is “independent” as that term is defined under the listing standards
of NASDAQ, and (ii) Messrs. Ferris and Burlend are not independent directors. Therefore, a majority of our Board of Directors 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. Ferris. The Chairman has authority, among other things, to preside over 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 is 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 operate under a charter that has been approved by our Board of Directors. We have appointed
persons to the Board of Directors and committees of the Board as required meeting the corporate governance requirements of the NASDAQ
Listing Rules.
Audit
Committee
We
have appointed three members of our Board of Directors to the audit committee, Messrs. Brown, Richardson, and Givens. 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 will be 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 auditors.
|
|
●
|
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 Financial Officer,
or such person as may, from time to time, be delegated such 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. Givens, Brown, and Richardson, to the compensation 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 Officer 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 director 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. Givens Brown, and Richardson, to the nominating and corporate governance
committee. Mr. Richardson 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 of 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.
Procedures
for Contacting the Board
The
Board has established a process for stockholders and other interested parties to send written communications to the Board, the non-management
directors, a particular committee or to individual directors, as applicable. Such communications should be sent by U.S. mail addressed
to:
VirTra,
Inc. Board of Directors
c/o
VirTra, Inc.
Attention:
Corporate Secretary
7970
S. Kyrene Road
Tempe,
Arizona 85284
The
Board has instructed the Corporate Secretary to promptly forward all communications so received to the full Board, the non-management
directors or the individual Board member(s) specifically addressed in the communication. Comments or questions regarding our accounting,
internal controls or auditing matters, our compensation and benefit programs, or the nomination of directors and other corporate governance
matters will remain with the full Board.
Depending
on the subject matter, the Company’s Corporate Secretary will:
|
●
|
Forward
the communication to the director or directors to whom it is addressed;
|
|
|
|
|
●
|
Attempt
to handle the inquiry directly, for example, where it is a request for information about our Company or if it is a stock-related
matter; or
|
|
|
|
|
●
|
Not
forward the communication if it is primarily commercial in nature or if it relates to a topic that is not relevant to the Board or
a particular committee or is otherwise improper.
|
Procedures
for Recommending, Nominating and Evaluating Director Candidates
Recommending
Director Candidates for Nomination by the Board
The
Board will consider director candidates recommended by stockholders. A stockholder who wishes to recommend a director candidate for nomination
by the Board at an annual meeting of stockholders or for vacancies of the Board that arise between annual meetings must provide the Board
with sufficient written documentation to permit a determination by the Board whether such candidate meets the required and desired director
selection criteria set forth in our by-laws and our corporate governance guidelines described below. Such documentation and the name
of the director candidate should be sent by U.S. mail to:
VirTra,
Inc. Board of Directors
c/o
VirTra, Inc.
Attention:
Corporate Secretary
7970
S. Kyrene Road
Tempe,
Arizona 85284
Nominating
Director Candidates
For
director nominations to be properly brought before an annual meeting of stockholders by a stockholder, the stockholder must give timely
notice in proper written form to the Secretary. To be timely, a stockholder’s notice must be delivered to the Secretary at the
principal executive offices of the Company not less than 90 days, nor more than 120 days, prior to the first anniversary of the preceding
year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than
30 days, or delayed by more than 90 days, from such anniversary date, or if no annual meeting was held in the preceding year, to be timely,
the stockholder’s notice must be so delivered not earlier than the 120th day prior to such annual meeting and not later
than the close of business on the later of (i) the 90th day prior to such annual meeting, and (ii) the 10th day
following the day on which the Company publicly announces the annual meeting date.
In
order to be in proper written form, the stockholder’s notice must include the following:
|
●
|
Stockholder’s
name and address, as they appear on the Company’s books;
|
|
|
|
|
●
|
Name
and address of the beneficial owner of stock, if any, on whose behalf such nomination is made (such beneficial owner, the “Beneficial
Owner”);
|
|
|
|
|
●
|
Representations
that, as of the date of delivery of the notice, the stockholder is a holder of record of the Company’s stock and is entitled
to vote at such meeting and intends to appear at the virtual annual meeting or by proxy at such meeting to propose and vote for such
nomination and any such other business;
|
|
|
|
|
●
|
As
to each person whom the stockholder proposes to nominate for election or re-election as a director:
|
|
|
○
|
All
information relating to the nominee that is required to be disclosed in the Company’s proxy statement, including the nominee’s
written consent to being named in the proxy statement as a nominee and to serving as a director if elected and to being named in
the Company’s proxy statement and form of proxy if the Company so determines;
|
|
|
|
|
|
|
○
|
A
statement whether the nominee, if elected, intends to tender, promptly following the nominee’s election or re-election, an
irrevocable offer of resignation effective upon the nominee’s failure to receive the required vote for re-election at the next
meeting at which the nominee would face re-election and upon acceptance of such resignation by the Board in accordance with the Company’s
board practice on director elections; and
|
|
|
|
|
|
|
○
|
Such
other information as may be reasonably requested by the Company;
|
|
●
|
Name
of each party with whom the stockholder, any Beneficial Owner, any stockholder nominee and the respective affiliates and associates
of such stockholder, Beneficial Owner and/or stockholder nominee (each of the foregoing, a “Stockholder Group Member”)
either is acting in concert with respect to the Company or has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy given to such party in response to a public proxy solicitation made generally
by such party to all holders of common stock of the Company) or disposing of any capital stock of the Company or to cooperate in
obtaining, changing or influencing the control of the Company (except independent financial, legal and other advisors acting in the
ordinary course of their respective businesses) (each party described in this bullet point, including each Stockholder Group Member,
a “Covered Person”), and a description, and, if in writing, a copy, of each such agreement, arrangement or understanding;
|
|
|
|
|
●
|
List
of the class, series and number of shares of capital stock of the Company that are beneficially owned or owned of record by each
Covered Person, together with documentary evidence of such record or beneficial ownership;
|
|
|
|
|
●
|
List
of all derivative securities and other derivatives or similar arrangements to which any Covered Person is a counterparty and relating
to any shares of capital stock of the Company, a description of all economic terms of all such derivative securities and other derivatives
or similar arrangements and copies of all agreements and other documents relating to each of such derivative securities and other
derivatives or similar arrangements;
|
|
|
|
|
●
|
List
of all transactions by any Covered Person involving any shares of capital stock of the Company or any derivative securities or other
derivatives or similar arrangements related to any shares of capital stock of the Company entered into or consummated within 60 days
prior to the date of such notice;
|
|
|
|
|
●
|
Details
of all other material interests of each Covered Person in such nomination or shares of capital stock of the Company (including any
rights to dividends or performance-related fees based on any increase or decrease in the value of such shares of capital stock);
and
|
|
|
|
|
●
|
Representation
as to whether any Covered Person intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to
at least the percentage of the Company’s outstanding capital stock reasonably believed by the Covered Person to be sufficient
to elect the nominee or nominees proposed to be nominated by the stockholder.
|
Evaluating
Director Candidates
The
Board has no formal guidelines or policy with regard to the consideration of any director candidates recommended by shareholders. Unless
and until a nominating and corporate governance committee is established, as well as a formal charter and corporate governance guidelines,
the Board (in the absence of a nominating and corporate governance committee) will consider several factors when evaluating the appropriate
characteristics of candidates for service as a director. The Board initially evaluates a prospective nominee based on his or her resume
and other background information that has been provided to the Board. At a minimum, director candidates must demonstrate high standards
of ethics, integrity, independence, sound judgment, strength of character, and meaningful experience and skills in business or other
appropriate endeavors. In addition to these minimum qualifications, the Board considers other factors it deems appropriate based on the
current needs and desires of the Board, including specific business and professional experience that is relevant to the Board’s
needs, including, but not limited to, Board diversity. A member of the Board will contact, for further review, those candidates who the
Board believes are qualified, who may fulfill a specific Board need and who would otherwise best make a contribution to the Board. The
Board is responsible for conducting, with the assistance of the Corporate Secretary, and subject to applicable law, any inquiries into
the background and qualifications of the candidate. Based on the information the Board learns during this process, it determines which
nominee(s) to submit for election. The Board uses a comparable process for evaluating all director candidates, regardless of the source
of the recommendation.
The
Board is authorized to use, as it deems appropriate or necessary, an outside consultant to identify and screen potential director candidates.
No outside consultants were used during the fiscal year ended December 31, 2020 to identify or screen potential director candidates.
The Board will reassess the qualifications of a current director, including the director’s attendance and contributions at Board
and committee meetings, prior to recommending a director for reelection.
Director
Compensation
2020
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
($)
|
|
|
Total
($)
|
|
Mitchell A. Saltz (1)
|
|
$
|
18,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
18,000
|
|
Jeffrey D. Brown
|
|
$
|
24,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
24,000
|
|
James Richardson
|
|
$
|
24,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
24,000
|
|
John Givens (2)
|
|
$
|
6,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,000
|
|
|
(1)
|
Mr.
Saltz served as a member of our Board of Directors until his passing on October 11, 2020.
|
|
|
|
|
(2)
|
Mr.
Givens was appointed as a member of our Board of Directors on November 2, 2020.
|
We
approved the payments of quarterly and annual cash retainers to each non-employee director (Messrs. Saltz, Brown, Richardson and Givens)
to cover all Board and committee meetings, actions by written consent, and attendance fees. The cash retainers are in lieu of previously
Board-approved awards of stock options and any other compensation to non-employee directors for serving on the Board of directors and
committees. We reimburse our non-employee directors for reasonable travel expenses incurred in attending Board and committee meetings.
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.
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, 2020;
|
|
●
|
Our
three most highly compensated principal executive officers, other than our executives, who were serving as corporate officers at
December 31, 2020 and whose compensation exceeds $100,000; and
|
|
●
|
Up
to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as
an executive officer at December 31, 2020.
|
For
definitional purposes, these individuals are sometimes referred to as the “named executive officers.”
2020
Summary Compensation Table
Name and
Principal Position
|
|
Fiscal Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Robert D. Ferris,
|
|
|
2020
|
|
|
$
|
239,222
|
|
|
$
|
8,910
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
248,132
|
|
Chief Executive Officer
|
|
|
2019
|
|
|
$
|
241,545
|
|
|
$
|
31,750
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
273,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthew D. Burlend,
|
|
|
2020
|
|
|
$
|
223,274
|
|
|
$
|
34,615
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
257,889
|
|
Chief Operating Officer
|
|
|
2019
|
|
|
$
|
216,771
|
|
|
$
|
40,602
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
257,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Judy A. Henry,
|
|
|
2020
|
|
|
$
|
171,733
|
|
|
$
|
6,271
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
178,004
|
|
Former Chief Financial Officer (1)
|
|
|
2019
|
|
|
$
|
170,001
|
|
|
$
|
4,160
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
174,161
|
|
|
(1)
|
Ms.
Henry retired on December 11, 2020.
|
Executive
Employment Agreements
On
April 2, 2012, we entered into three-year Employment Agreements with each of Messrs. Ferris and Burlend that call for base annual salaries
of $195,000 and $175,000, respectively, subject to increases based on the cost of living at a minimum. The agreements automatically extend
for additional periods of one year. These contracts have been renewed annually with upward adjustments each year applying the same percentage
increase approved for Company-wide cost-of-living adjustments. On January 1, 2020, Messrs. Ferris’ and Burlend’s annual base
salary was $248,791 and $223,274, respectively. The employment agreements entitle these executives to an annual cash bonus determined
by our Board of Directors based on our performance. In addition, the agreements entitle these executives to participate in any stock
option or restricted stock plan adopted by our Board of Directors. The amount of an award under any such plan and the vesting terms shall
be as determined by the Board. In addition, we provide the executives with family medical insurance, $15,000 in life insurance, and participation
in a 401(k) retirement plan.
On
August 26, 2021, the Compensation Committee of the Board of Directors, relying upon third-party studies and recommendations, took several
actions to bring the compensation of the Company’s Chief Executive Officer (CEO) and Chief Operating Officer (COO) up to industry
standards and provide meaningful incentive for future performance. The Committee (1) approved grants of 224,133 and 168,090 performance-based
restricted stock units pursuant to the Company’s 2017 Equity Incentive Plan to the Company’s CEO and COO, respectively; (2)
approved grants of 14,057 and 10,543 restricted shares to the CEO and COO, respectively, based on the Company’s performance for
the twelve months ended June 30, 2021; and (3) increased the annual base salaries effective August 15, 2021 to $349,860 and $251,140
for the CEO and COO, respectively. While their salaries have been annually increased with Company-wide cost-of-living adjustments, this
was the first comprehensive review and adjustment undertaken since 2012.
Pursuant
to the terms of the employment agreements, we may terminate an executive’s employment for cause as defined in the employment agreement
and such cause is deemed to exist as determined by our Board of Directors at a Board meeting at which the executive and his counsel are
first given the opportunity to address the Board with respect to such determination. If Messrs. Ferris or Burlend is terminated by us
for any reason other than for cause, or if either of them voluntarily terminate their own respective employment for good reason but not
including a change in control, then we shall, subject to the terms of the respective employment agreements, be obligated to pay the executive
who terminated his employment an amount equal to the greater of (a) the executive’s annual base salary in effect on the day preceding
the date of such termination or (b) the executive’s annual base salary during the twelve full calendar months preceding the date
of such termination, times three. If a change of control of our company occurs while the executive is our employee and within 36 months
from the date of such change in control we terminate the executive’s employment for any reason (except for the death or disability
of the executive or for Cause) or the executive terminates his employment for any reason, then we shall, subject to certain limitations,
pay the executive any earned and accrued but unpaid base salary through the date of termination plus an amount of severance pay equal
to the greater of (a) the executive’s annual base salary in effect on the day preceding the date on which the change of control
occurred or (b) the executive’s annual base salary during the twelve full calendar months preceding the date on which the change
of control occurred, times four. In addition, any stock options awarded to the executives shall immediately vest and become exercisable
upon a change of control. If the executive is terminated for any reason other than the executive’s voluntary termination for good
reason as defined in the employment agreement, the executive whose employment has been terminated is prohibited for a period of two years
from the date of termination of the employment agreement from direct competition with us, and shall not solicit any of our employees
or customers. The employment agreements require us to indemnify each of the respective executives to the fullest extent permitted under
Nevada law, our articles of incorporation and bylaws, which ever affords the greater protection to the executive.
During
the year ended December 31, 2020, the Company’s Chief Operating Officer redeemed 15,000 previously awarded options reaching expiration.
The redemptions resulted in $15,083 of additional compensation expense.
During
the year ended December 31, 2020, the Chief Executive Officer exercised 20,000 previously awarded options for an aggregate exercise price
of $20,110, resulting in the issuance by the Company of 20,000 shares of Common Stock.
Employee
Benefit and Equity Incentive Plans
Stock
Options
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 are at the discretion of the Board of Directors and are generally
seven years. These awards were suspended as of October 1, 2017. As of December 31, 2020, there were 164,167 options outstanding and 164,167
options exercisable at a weighted exercise price of $3.13 and $3.13, respectively.
On
March 9, 2016, our Board of Directors approved a program under which we may repurchase outstanding vested Company stock options on an
exception basis. Under the terms of the program, our Chief Executive Officer or Chief Operating Officer may 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 must be approved by our independent directors. We retain
the right to reject any redemption request that is 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 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, 2020 and 2019, the amount expensed to operations for this program was $206,869 and $93,160, respectively.
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 to attract, retain and motivate 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-based 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 on January 1, 2019 and will automatically increase 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 in excess of 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 nonstatutory 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.
|
|
|
|
|
●
|
Restricted
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 the shares and to receive any dividends paid, except that the
dividends will be subject to the same vesting conditions as the related shares.
|
|
|
|
|
●
|
Restricted
stock units. Restricted stock units represent rights 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 2020 Fiscal Year-End
The
following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each
named executive officer outstanding as of December 31, 2020:
OPTION AWARDS
|
Name
|
|
Grant
Date
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
Robert D. Ferris
|
|
4/1/2014
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.45
|
|
|
4/1/2021
|
|
|
7/1/2014
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.98
|
|
|
7/1/2021
|
|
|
10/1/2014
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.10
|
|
|
10/1/2021
|
|
|
1/2/2015
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.88
|
|
|
1/2/2022
|
|
|
4/1/2015
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.19
|
|
|
4/1/2022
|
|
|
7/1/2015
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.90
|
|
|
7/1/2022
|
|
|
10/1/2015
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.70
|
|
|
10/1/2022
|
|
|
1/4/2016
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.80
|
|
|
1/2/2023
|
|
|
4/1/2016
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.23
|
|
|
4/1/2023
|
|
|
7/1/2016
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
4.19
|
|
|
7/1/2023
|
|
|
10/1/2016
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
5.88
|
|
|
10/1/2023
|
|
|
1/1/2017
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
5.20
|
|
|
1/1/2024
|
|
|
4/1/2017
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
4.30
|
|
|
4/1/2024
|
|
|
7/1/2017
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.76
|
|
|
7/1/2024
|
Total
|
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthew D. Burlend
|
|
4/1/2014
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.45
|
|
|
4/1/2021
|
|
|
7/1/2014
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.98
|
|
|
7/1/2021
|
|
|
10/1/2014
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.10
|
|
|
10/1/2021
|
|
|
1/2/2015
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.88
|
|
|
1/2/2022
|
|
|
4/1/2015
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.19
|
|
|
4/1/2022
|
|
|
7/1/2015
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.90
|
|
|
7/1/2022
|
|
|
10/1/2015
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.70
|
|
|
10/1/2022
|
|
|
1/4/2016
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.80
|
|
|
1/2/2023
|
|
|
4/1/2016
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.23
|
|
|
4/1/2023
|
|
|
7/1/2016
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
4.19
|
|
|
7/1/2023
|
|
|
10/1/2016
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
5.88
|
|
|
10/1/2023
|
|
|
1/1/2017
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
5.20
|
|
|
1/1/2024
|
|
|
4/1/2017
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
4.30
|
|
|
4/1/2024
|
|
|
7/1/2017
|
|
|
3,750
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.76
|
|
|
7/1/2024
|
Total
|
|
|
|
|
52,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2020.
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights (a)
|
|
|
Weighted
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
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,259,819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plans not approved by stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Option Plan (1)
|
|
|
234,167
|
|
|
$
|
2.47
|
|
|
|
-
|
|
(1)
Prior to the approval of the VirTra, Inc. 2017 Equity Incentive Plan, we periodically issued non-qualified stock options to key employees,
officers and directors under a stock option compensation plan approved solely by the Board of Directors since 2009. Terms of the option
granted were at the discretion of the Board of Directors and were generally seven years in term prior to expiration.
PROPOSAL
2—RATIFICATION OF THE APPOINTMENT OF
THE
COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
MaloneBailey
acted as our independent registered public accounting firm for the fiscal year ended December 31, 2020. The Audit Committee of has appointed
MaloneBailey to act in that capacity for the fiscal year ending December 31, 2021. A representative of MaloneBailey is expected to be
present at the Annual Meeting with the opportunity to make a statement if he or she desires to do so and to be available to respond to
appropriate questions from stockholders.
Although
the Company is not required to submit this appointment to a vote of the stockholders, the Audit Committee believes that it is appropriate
as a matter of policy to request that stockholders ratify MaloneBailey’s appointment as principal independent registered public
accounting firm. If the stockholders do not ratify the appointment, the Audit Committee will investigate the reasons for stockholder
rejection and consider whether to retain MaloneBailey or will appoint another independent registered public accounting firm. Even if
the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public
accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its
stockholders.
The
following table shows the fees that were billed for the audit and other services provided by MaloneBailey for the fiscal years ended
December 31, 2020 and 2019.
|
|
2020
|
|
|
2019
|
|
Audit Fees
|
|
$
|
74,305
|
|
|
$
|
68,016
|
|
Audit-Related Fees
|
|
|
-
|
|
|
|
-
|
|
Tax Fees
|
|
|
14,900
|
|
|
|
5,000
|
|
All Other Fees
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
89,205
|
|
|
$
|
73,016
|
|
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 as a result 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 particular 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, 2020 and
2019 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, 2020, 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, 2020 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.
REPORT
OF THE AUDIT COMMITTEE
Our
Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary
responsibility for the financial statements and the reporting process, including internal control systems. The Company’s independent
registered public accounting firm is responsible for expressing an opinion on the conformity of the Company’s audited financial
statements with U.S. generally accepted accounting principles.
In
fulfilling its oversight responsibilities, the Board of Directors reviewed and discussed with management the audited financial statements
in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020, including a discussion of the accounting principles, the
reasonableness of significant judgments and the clarity of disclosures in the financial statements.
In
addition, the Board of Directors discussed with the independent registered public accounting firm the matters required to be discussed
by the Public Company Accounting Oversight Board’s Auditing Standard No. 16 “Communications with Audit Committees.”
The Board of Directors met with the independent registered public accounting firm, with and without management present, to discuss the
results of their examinations and the overall quality of the Company’s financial reporting.
The
Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable
requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications
with the Committee concerning independence, and has discussed with the independent registered public accounting firm the independent
registered public accounting firm’s independence.
The
Audit Committee recommended to the Board of Directors that the audited financials be included in the Annual Report on Form 10-K for the
fiscal year ended December 31, 2020. In reliance on the reviews and discussions referred to above, the Board of Directors approved the
inclusion of the audited financial statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with
the SEC.
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Submitted
by the Audit Committee of the Board of Directors,
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Jeffrey
Brown, Chair
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John
Givens
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Jim
Richardson
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Vote
Required
The
affirmative vote of the shares present and entitled to vote at the Annual Meeting is required to ratify the appointment of MaloneBailey
as our independent registered public accounting firm. You may vote “for,” “against” or “abstain”
from voting on Proposal 2. Abstentions will have the effect of a vote “against” Proposal 2. Because broker non-votes are
not considered present for the foregoing purpose, they will have no effect on the vote on Proposal 2.
Recommendation
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF MALONEBAILEY AS OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM.
SECURITY
OWNERSHIP
The
following table sets forth information about the beneficial ownership of our Common Stock as of September 2, 2021, the Record Date for:
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●
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each
person known to us to be the beneficial owner of more than 5% of our Common Stock;
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●
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each
named executive officer;
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●
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each
of our directors; and
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●
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all
of our executive officers and directors as a group.
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Unless
otherwise noted below, the address for each beneficial owner listed on the table is in care of VirTra, Inc., 7970 S. Kyrene Road, Tempe,
AZ 85284. 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 10,804,630 shares of our Common Stock outstanding as of the Record Date.
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 the Record Date. We did not deem these shares outstanding, however, for the purpose of computing
the percentage ownership of any other person.
Name of Beneficial Owner
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Amount and
Nature of
Beneficial
Ownership
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Percent of Class
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Directors and Named Executive Officers:
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Robert D. Ferris (1)
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451,276
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4.2
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%
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Matthew D. Burlend (2)
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55,543
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0.5
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%
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Jeffrey D. Brown (3)
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46,693
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0.4
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%
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James Richardson
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—
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—
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John Givens
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—
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—
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Marsha J. Foxx
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—
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—
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All executive officers and directors as a group (six persons) (4)
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553,512
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5.1
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%
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Empery Asset Management, LP (5)
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1,000,000
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9.3
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%
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Sabby Volatility Warrant Master Fund, Ltd. (6)
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1,000,000
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9.3
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%
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(1)
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Includes
(a) 391,276 shares of our Common Stock presently outstanding, and (b) options to purchase 60,000 shares of our Common Stock at prices
ranging from $1.70 to $5.88.
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(2)
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Includes
(i) 10,543 shares of our Common Stock presently outstanding, and (ii) options to purchase 45,000 shares of our Common Stock at prices
ranging from $1.70 to $5.88.
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|
(3)
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Includes
(a) 19,193 shares of our Common Stock and (b) options to purchase 27,500 shares of our Common Stock at prices ranging from $1.70
to $5.88.
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(4)
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The
number of shares beneficially owned by the executive officers and directors as a group includes 421,012 shares of our Common Stock
and options to purchase 132,500 shares of our Common Stock.
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(5)
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The
address of Empery Asset Management, LP is 1 Rockefeller Plaza, Suite 1205, New York, New York 10020. Empery Asset Management, LP
is the investment manager to various funds which hold the shares. Voting and dispositive power is shared with Ryan M. Lane and Martin
D. Hoe, who are managing members of Empery AM GP, LLC, the general partner of the Empery Asset Management, LP.
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(6)
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The
address of Sabby Volatility Warrant Master Fund, Ltd. is c/o Ogier Fiduciary Services (Cayman) Limited, 89 Nexus Way, Camana Bay,
Grand Cayman KY1-9007, Cayman Islands. Voting and dispositive power with respect to these shares is shared with Sabby Management,
LLC, the investment manager of the fund and Hal Mintz, the manager of Sabby Management, LLC.
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DELINQUENT
SECTION 16(a) REPORTS
Section
16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file
reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with
copies of those filings. To our knowledge, based solely upon a review of copies of reports received by us pursuant to Section 16(a) of
the Exchange Act and written representations that no other reports were required to be filed, we believe that all filing requirements
applicable to our executive officers, directors and 10% stockholders under Section 16(a) with respect to 2020 were satisfied.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We
have a written policy for the review, approval or ratification of transactions with related parties or conflicted transactions. When
such transactions arise, they are referred to the CEO, CFO, and COO for consideration for referral to our audit committee or board of
directors for its consideration.
In
addition to the compensation arrangements, including employment, termination of employment and change in control arrangements and indemnification
arrangements, discussed in “Executive Compensation” above, the following is a description of each transaction since January
1, 2019 and each currently proposed transaction in which:
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●
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We
have been or will be a participant;
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●
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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
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●
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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.
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On
January 16, 2015, we entered into a Co-Venture Agreement with Modern Round, Inc. (formerly, Modern Round, LLC) (“Modern Round”).
Modern Round is a wholly-owned subsidiary of TEC (formerly known as Modern Round Entertainment Corporation), a developer and operator
of a combined dining and entertainment concept centered on an indoor virtual shooting entertainment concept. Mitchell Salta, who was
a member of our Board of Directors until his passing in October 2020, was the former Chairman of the Board and majority stockholder of
TEC. Accordingly, until October 2020, Modern Round and TEC were related parties. In connection with this Co-Venture Agreement we agreed
to develop interactive games, skills drills, and advanced training simulation content for Modern Round and license VirTra Technology
to Modern Round for a portion of its total revenue, acquired rights to purchase TEC common stock and issued to affiliates of TEC that
included Mr. Saltz, who was then a member of our Board of Directors, warrants to purchase an aggregate of 919,382 shares of our Common
Stock at a price of $2.72 per share. Pursuant to our rights to acquire shares of TEC common stock pursuant to this agreement, we acquired
560,000 shares of TEC common stock representing approximately 4.8% of its issued and outstanding common stock.
Through
the terms of the Co-Venture Agreement, the Company acquired 560,000 shares of TEC common stock representing approximately 4.8% of the
issued and outstanding shares of TEC common stock. In addition, TEC paid the Company for license fees (royalties) pursuant to the terms
of the Co-Venture Agreement of $45,247 and $130,625 for the years ended December 31, 2020 and 2019, respectively. TEC ceased to be a
related party on October 11, 2020.
During
the years ended December 31, 2020 and 2019, respectively, the Company did not issue stock options to the Chief Executive Officer, Chief
Operating Officer or the members of the Board of Directors.
During
the years ended December 31, 2020 and 2019, the Company redeemed 15,000 and 34,225, respectively, previously awarded options reaching
expiration from related parties, including the Company’s Chief Executive Officer, Chief Operating Officer and one member of the
Board of Directors. These redemptions eliminated the stock options and resulted in a total of $15,083 and $38,353 in additional compensation
expense in 2020 and 2019, respectively.
During
the years ended December 31, 2020 and 2019, related parties exercised 30,000 and 5,000 previously awarded options for the exercise price
of $30,162 and $5,650, respectively, resulting in purchase and issuance of Common Stock to the Chief Executive Officer and one member
of the Board of Directors.
Mr.
Richardson, who is a member of our Board of Directors, is also acting CEO of Natural Point, Inc. (“Natural Point”), a vendor
of the Company. In 2020 and 2019, the Company purchased specialized equipment from Natural Point in the amount of $232,218 and $167,302,
respectively. As of December 31, 2020 and 2019, the Company had outstanding balances due to Natural Point of $0 and $34,865, respectively.
STOCKHOLDER
PROPOSALS FOR THE 2022 ANNUAL MEETING
Stockholders
intending to present a proposal at the 2022 Annual Meeting of Stockholders and have it included in our proxy statement for that meeting
must submit the proposal in writing to VirTra, Inc., Attention: Corporate Secretary, 7970 S. Kyrene Road, Tempe, Arizona 85284. We must
receive such proposals no later than July 23, 2022. It is suggested that proposals be submitted by certified mail, return receipt requested.
Stockholders
intending to present a proposal at the 2022 Annual Meeting of Stockholders without inclusion of the proposal in our proxy statement,
or to nominate a person for election as a director, must comply with the requirements set forth in our bylaws.
For
director nominations or other business to be properly brought before an annual meeting of stockholders by a stockholder, the stockholder
must comply with our bylaws, including the requirements set forth herein. The stockholder must give timely notice in proper written form
to the Secretary. To be timely, a stockholder’s notice must be delivered to the Secretary at the principal executive offices of
the Company not less than 90 days, nor more than 120 days, prior to the first anniversary of the preceding year’s annual meeting;
provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days, or delayed by more
than 90 days, from such anniversary date, or if no annual meeting was held in the preceding year, to be timely, the stockholder’s
notice must be so delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business
on the later of (i) the 90th day prior to such annual meeting, and (ii) the 10th day following the day on which
the Company publicly announces the annual meeting date.
In
order to be in proper written form, the stockholder’s notice must include the following:
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Stockholder’s
name and address, as they appear on the Company’s books;
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●
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Name
and address of the beneficial owner of stock, if any, on whose behalf such nomination or proposal of other business is made (such
beneficial owner, the “Beneficial Owner”);
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●
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Representations
that, as of the date of delivery of the notice, the stockholder is a holder of record of the Company’s stock and is entitled
to vote at such meeting and intends to appear at the virtual annual meeting or by proxy at such meeting to propose and vote for such
nomination and any such other business;
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●
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As
to each person whom the stockholder proposes to nominate for election or re-election as a director:
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○
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All
information relating to the nominee that is required to be disclosed in the Company’s proxy statement, including the nominee’s
written consent to being named in the proxy statement as a nominee and to serving as a director if elected and to being named in
the Company’s proxy statement and form of proxy if the Company so determines;
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○
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A
statement whether the nominee, if elected, intends to tender, promptly following the nominee’s election or re-election, an
irrevocable offer of resignation effective upon the nominee’s failure to receive the required vote for re-election at the next
meeting at which the nominee would face re-election and upon acceptance of such resignation by the Board in accordance with the Company’s
board practice on director elections; and
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○
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Such
other information as may be reasonably requested by the Company;
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●
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As
to any other business that the stockholder proposes to bring before the annual meeting:
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○
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A
brief description of such business;
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○
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The
text of the proposal (including the text of any resolutions proposed for consideration and, if such business includes a proposal
to amend the bylaws, the text of the proposed amendment); and
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○
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The
reasons for conducting such business at the meeting;
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●
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Name
of each party with whom the Stockholder Group Members either are acting in concert with respect to the Company or has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy given to such party
in response to a public proxy solicitation made generally by such party to all holders of common stock of the Company) or disposing
of any capital stock of the Company or to cooperate in obtaining, changing or influencing the control of the Company (except independent
financial, legal and other advisors acting in the ordinary course of their respective businesses), and a description, and, if in
writing, a copy, of each such agreement, arrangement or understanding;
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●
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List
of the class, series and number of shares of capital stock of the Company that are beneficially owned or owned of record by each
Covered Person, together with documentary evidence of such record or beneficial ownership;
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●
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List
of all derivative securities and other derivatives or similar arrangements to which any Covered Person is a counterparty and relating
to any shares of capital stock of the Company, a description of all economic terms of all such derivative securities and other derivatives
or similar arrangements and copies of all agreements and other documents relating to each of such derivative securities and other
derivatives or similar arrangements;
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●
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List
of all transactions by any Covered Person involving any shares of capital stock of the Company or any derivative securities or other
derivatives or similar arrangements related to any shares of capital stock of the Company entered into or consummated within 60 days
prior to the date of such notice;
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●
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Details
of all other material interests of each Covered Person in such nomination or proposal or shares of capital stock of the Company (including
any rights to dividends or performance-related fees based on any increase or decrease in the value of such shares of capital stock);
and
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●
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Representation
as to whether any Covered Person intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to
at least the percentage of the Company’s outstanding capital stock reasonably believed by the Covered Person to be sufficient
to elect the nominee or nominees proposed to be nominated by the stockholder.
|
Nothing
in this section shall be interpreted or construed to require the inclusion of information about any stockholder proposal in our Proxy
Statement.
ANNUAL
REPORT ON FORM 10-K
Along
with mailing the proxy materials, we have included a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
We will provide stockholders with additional copies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, without
charge, upon written request to VirTra, Inc., Attention: Corporate Secretary, 7970 S. Kyrene Road, Tempe, Arizona 85284.
“HOUSEHOLDING”
OF PROXY MATERIALS
The
SEC has adopted rules that permit companies and intermediaries (e.g. brokers) to satisfy the delivery requirements for proxy statements
and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual
report addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means
extra convenience for stockholders and cost savings for companies.
A
number of brokers with accountholders who are stockholders will be householding our proxy materials. As indicated in the notice previously
provided by these brokers to stockholders, a single proxy statement and annual report will be delivered to multiple stockholders sharing
an address unless contrary instructions have been received from an affected stockholder. Once you have received notice from your broker
or us that they will be householding communications to your address, householding will continue until you are notified otherwise.
Stockholders
who currently receive multiple copies of the proxy materials at their address and would like to request householding of their communications
should contact their broker or, if a stockholder is a direct holder of shares of our Common Stock, they should submit a written request
to our transfer agent, Continental Stock Transfer & Trust Company, located at 17 Battery Place, New York, NY 10004. The transfer
agent’s telephone number is (212) 509-4000.
To
delist yourself from householding in the future you may write the Company at VirTra, Inc., Attention: Corporate Secretary, 7970 S. Kyrene
Road, Tempe, Arizona 85284, or call (480) 968-1488. Upon written or oral request directed to the Company at the address or phone number
listed above, we will deliver promptly a separate copy of the proxy materials.
OTHER
MATTERS
We
do not know of any other matters that may be presented for consideration at the Annual Meeting. If any other business does properly come
before the Annual Meeting, the persons named as proxies will vote as they deem in our best interests.
|
By
Order of the Board,
|
|
|
|
Robert
D. Ferris
|
|
Chief
Executive Officer
|
September
13, 2021
Tempe,
Arizona
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