[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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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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Proposed maximum aggregate value of transaction:
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Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] 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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October 11, 2006
Dear Fellow Shareholder:
We cordially invite you to attend a VirTra Systems’ Special Meeting of Shareholders, which will be held at 2500 CityWest Boulevard, Suite #300; Houston, Texas 77042; at 12:00 p.m. local time, Monday, November 27, 2006. The formal meeting notice and proxy statement are attached.
At this Special Shareholder Meeting, shareholders will be asked to amend the Articles of Incorporation to increase the number of shares we are authorized to issue.
Whether or not you plan to attend, it is important that your shares be represented and voted at the Special Meeting. Therefore, we urge you to vote promptly by mailing a completed proxy card in the enclosed postage-paid envelope, or by voting electronically over the Internet, or by telephone. If your shares are held in the name of a brokerage firm or bank, you will receive a voting instruction form in lieu of a proxy card and may also be eligible to vote electronically. Timely voting by any of these methods will ensure your representation at the Special Meeting.
We look forward to seeing you November 27.
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October 11, 2006
Dear Fellow Shareholder:
We are pleased to offer you the opportunity to receive future VirTra Systems investor communications, such as press releases and occasional updates from management, in electronic form over the Internet through our shareholder e-mail service. By using this service, you will improve the speed and efficiency by which you can access these materials.
To enroll online in our investor e-mail service, please fill out and submit the form at http://www.virtrasystems.com/iv_orderkit.cfm.
You can also vote your shares electronically over the Internet atwww.proxyvote.com, or by telephone. Please refer to the instructions on the enclosed proxy card or voting instruction form for further information regarding electronic voting. Regardless of the means by which you choose to vote, should you receive more than one proxy card or voting instruction form, please be sure to vote each one separately to ensure that all of your shares are voted.
If you have any questions regarding the online e-mail service, or electronic voting, please call our investor relations department for technical assistance using one of the following methods: from outside the United States call +1 (832) 242-1100, from within the United States (800) 455-8746,or by email atshaag@virtra.com.
Thank you for your interest in VirTra Systems.
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| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: | |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of |
| (4) | Proposed maximum aggregate value of transaction: | |
| (5) | Total fee paid: | |
| ☐ | Fee paid previously with preliminary materials. |
| ☐ | 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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VIRTRA SYSTEMS, INC.VirTra, Inc.
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS295 E. Corporate Place
TO BE HELD NOVEMBER 27, 2006Chandler, Arizona 85225
NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
NOTICE TO OUR SHAREHOLDERS:To Be Held on October 23, 2023
NOTICE IS HEREBY GIVEN that VirTra, Inc., a SpecialNevada corporation (the “Company”) will hold a Virtual Annual Meeting of ShareholdersStockholders (the “Special“Annual Meeting”) of VirTra Systems, Inc., a Texas corporation, will be heldon Monday, October 23, 2023, at 2500 CityWest Boulevard, Suite #300; Houston, Texas 77042; at 12:00 p.m.2:30 pm. local time Monday, November 27, 2006, to approve an amendment to(4:30 pm Eastern Time) for the Articles of Incorporation increasingfollowing purposes, which are described more fully in the aggregate number of authorized shares of common stock we are authorized to issue from 100,000,000 shares to 500,000,000 shares,accompanying Proxy Statement:
| 1. | To elect five directors to the Company’s Board to serve until the Company’s 2024 annual meeting of stockholders or until their successors are elected and qualified; | |
| 2. | To hold a non-binding advisory vote on executive compensation; | |
| 3. | To ratify the appointment of Haynie & Company as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023; and | |
| 4. | Such other business as may appropriately come before the Annual Meeting. |
All shareholdersholders of record of the Company’s common stock at the close of business October 10, 2006,on August 28, 2023 are entitled to notice of, and to vote at, the SpecialAnnual Meeting or any adjournment thereof. In an effort to save costs and help protect the environment, we are using the Notice and Access method of delivery. Instead of receiving paper copies of our proxy materials in the mail, many stockholders will receive a Notice of Internet Availability of Proxy Materials (“Notice”), which provides an internet website address where stockholders can access electronic copies of proxy materials and vote. This website also has instructions for voting by telephone and for requesting paper copies of the proxy materials and proxy card. The Company’s 2023 Proxy Statement and Annual Report on Form 10-K for fiscal year 2022 are available online at www.iproxydirect.com/VTSI. We encourage you to access and review such materials before voting.
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., 295 E. Corporate Place, Chandler, Arizona 85225 prior to the Annual Meeting, and, any adjournment(s) or postponement(s) thereof.if you virtually attend the Annual Meeting, you may revoke your proxy if previously submitted and vote at the Annual Meeting.
We cordially invite all shareholders to attend the Special Meeting in person.Your vote is very important. Whether or not you plan to virtually attend it is important thatthe Annual Meeting, we encourage you to read the Proxy Statement and submit your shares be represented and voted at the meeting.proxy as soon as possible. You can vote your shares by completing and returning the enclosed proxy card, by voting electronically over the Internet atwww.proxyvote.com, or by telephone. If your shares are held in “street name,” that is, your shares are held in the name of a brokerage firm, bank, or other nominee, in lieu of a proxy card, you should receive from that institution an instruction form for voting by mail and youmay also be eligible to vote your shares electronically.
Should you receive more than one proxy card or voting instruction form because your shares are held in multiple accounts or registered in different names or addresses, please sign, date, and returneachproxy card or voting instruction form you receive to ensure that all of your shares are voted. Shareholders who elect to vote over the Internet must followor by telephone as instructed on the voting instructions atwww.proxyvote.com,Notice or by mailing in your paper proxy card if you received one. If you did not receive a paper proxy card, you may call VirTra Systems’ investor relations department for technical assistance at (832) 242-1100. For information regarding voting in person at the Special Meeting, please see “Frequently Asked Questions: How Do I Vote” on page 4 of this document.request a paper proxy card to submit your vote by mail, if you prefer.
For admission to the Special Meeting, each shareholder may be asked to present valid picture identification, such as a driver’s license or passport, and proof of ownership of VirTra Systems’ common stock as of the record date, such as the enclosed proxy card or a brokerage statement reflecting stock ownership.
| Sincerely, | |
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| Executive Chairman | |
| September 8, 2023 |
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Houston, Texas
October 11, 2006
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, AND COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD OR VOTING INSTRUCTION FORM AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY ALSO BE ABLE TO VOTE YOUR SHARES ELECTRONICALLY OVER THE INTERNET OR BY TELEPHONE. FOR THAT PURPOSE, PLEASE REVIEW THE VOTING INSTRUCTIONS INCLUDED WITH THIS DOCUMENT.
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PROXY STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 27, 2006
VIRTRA, INC.
PROXY STATEMENT
FOR THE 2023 VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
Important Notice Regarding the Availability of Proxy Materials for the Virtual Annual Stockholders
Meeting to Be Held on October 23, 2023
The Proxy Statement and annual report to stockholders for the fiscal year ended December 31, 2022 are available at https://www.iproxydirect.com/vtsi.
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of VirTra, Systems, Inc., a TexasNevada corporation is soliciting the enclosed proxy for use(the “Company,” “VirTra,” “we,” “our” or “us”), of proxies to be voted at a Specialour 2023 Virtual Annual Meeting of ShareholdersStockholders (the “Special“Annual Meeting”) to be held Monday, November 27, 2006, and at any adjournment(s)adjournment or postponement(s) thereof.postponement of the Annual Meeting. The SpecialAnnual Meeting will be heldtake place on Monday, October 23, 2023 beginning at 12:002:30 p.m., local time (4:30 pm Eastern Time), at 2500 CityWest Boulevard, Suite #300; Houston, Texas 77042. We are mailing thesehttps://agm.issuerdirect.com/vtsi. You will need to provide your 12-digit control number that is on your proxy materials on or about October 27, 2006,card to all shareholders entitled to vote at the Special Meeting.
TABLE OF CONTENTS
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING:
Purpose of Authorizing Additional Common Stock
Effectiveness of Amendment to Articles
Recommendation of the Board of Directors
TEXT of the Proposed AMENDMENT Authorizing Additional Common Stock
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INFORMATION ABOUT THE SPECIAL MEETING AND VOTING
INTRODUCTORY STATEMENT
VirTra Systems, Inc. ("VirTra") is a Texas corporation with its principal executive offices located at 2500 CityWest Boulevard, Suite 300; Houston, Texas 77042. Our telephone number is (832) 242-1100. This proxy statement is being sent to shareholders by our Board of Directors to tell you about a Special Meeting of the Shareholders. At that meeting, we will ask you to approve an amendment to our Articles of Incorporation to increase the number of shares of common stock we are authorized to issue from 100,000,000 shares with par value of $0.005, to 500,000,000 shares with par value of $0.005. The increase will be effective when we file articles of amendment to our articles of incorporation with the State of Texas. We expect to file the articles of amendment immediately after the meeting.
Copies of this Proxy Statement are being mailed on or about October 27, 2006gain access to the holders of record on October 10, 2006, of the outstanding shares of our common stock.
BACKGROUND
It has become clear to the Board of Directors that some change in our authorized capital, and also in the number of shares outstanding, will be needed to fund the company’s growth. With our issued capital currently calculated approaching 92,000,000 shares, and the remaining balance reserved for unexercised options and warrants, at our current price-per-share levels we currently do not have enough shares to satisfy the requirements of our current debenture agreements and also honor those options and warrants if they should be exercised. On September 29, 2006, we received a notice of default for failing to issue the shares required for the most recent debenture conversion, and monetary penalties are accruing as a result of our inability to issue those shares. Since many of the options and warrants for which we had reserved shares are “out of the money” at the present time, we are issuing some of the shares that had been reserved for that purpose to satisfy our debenture obligations. This means that if those options or warrants were to be exercised, we would need to buy back shares on the open market or otherwise satisfy the options or warrants, requiring us to spend much-needed cash. In addition, failure to increase our authorized capital would inhibit our ability to secure the needed capital for anticipated large simulator product-order construction and our previously announced acquisition plans for an ISO 9000:2001 certified electronic manufactures services (EMS) provider.
In summary, without an immediate increase in authorized capital, we will incur additional financial penalties, the Board will not have access to capital, when needed, for vital company operations, and we will be unable to execute corporate growth initiatives including planned and future mergers and acquisitions.
Annual Meeting. The Board of Directors has recommended a proposal to increase the authorized shares to 500,000,000.
FREQUENTLY ASKED QUESTIONS
What is the purpose of the Special Meeting?
At this Special Meeting, shareholders will be askedCompany urges you to amend the Articles of Incorporation of the company to increase the number of shares the company is authorized to issue.
Why do we need more authorized shares?
As of September 30, 2006, we had issuedpromptly execute and outstanding 91,261,042 shares of common stock, 5,300,000 shares reserved for options, and 2,746,703 reserved for warrants, which, if exercised, would represent a total issued share count of 99,307,745 shares of the 100,000,000 we were authorized to issue. As of September 30, 2006, we had outstanding debentures which are convertible into 6,429,320 shares of common stock based on the market value of the common stock on that date. The increase in authorized capital stock will make additional unissued authorized shares available to honor present debenture commitments.
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Our board of directors believes that the increasereturn your proxy in the authorized number of shares of common stockenclosed envelope, even if you plan to virtually attend the Annual Meeting. This is necessarydesigned to provide enough available sharesauthenticate stockholders’ identities, to provide for our debenture commitments at current price-per-share levels, used in raisingallow stockholders to give their voting instructions and to confirm that stockholders’ instructions have been recorded properly. For additional capital when needed for, among other needs, mergers and acquisitions, and anticipated large simulator product-order financing.
The present lack of enough authorized but unissued shares also limits our abilityinformation on how to carry out mergers and acquisitions. In January 2006, we executed a definitive agreement with Virtra Merger Corporation (now ComCon Manufacturing Services, Inc). That contract has now expired by its terms. However, we intendobtain directions to seek a new agreement with that corporation upon successful increase in authorized capital, and we also intend to seek further complementary acquisitions in the future when advantageous. (Any such agreement with ComCon Manufacturing Services, Inc. will be submitted to shareholders for a vote separately in the future.)
The unissued and unreserved shares of our common stock will also be available for any proper corporate purpose, as authorized by the Board of Directors, without further approval by our shareholders, and we do not intend to solicit further authorization for the issuance of those shares prior to issuance except as otherwise required by law. Our shareholders do not have any preemptive or other rights to purchase additional shares of our common stock. Further issuances of additional shares of common stock or securities convertible into common stock, therefore, may dilute the existing holders of our common stock.
Who is entitled to vote?
To be able to virtually attend the Annual Meeting and vote you must have beenat the Annual Meeting, please write to the Company’s Secretary at VirTra, Inc., 295 E. Corporate Place, Chandler, Arizona 85225 or call (480) 968-1488.
Any stockholder submitting a shareholderproxy 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 October 10, 2006,August 23, 2023 (the “Record Date”), the record date for determinationthe Annual Meeting. Only stockholders of shareholdersrecord at the close of business on Record Date will be entitled to notice of, and to vote at, the SpecialAnnual Meeting or any adjournment thereof. At the close of business on the Record Date, the Company had 10,926,774 outstanding shares of common stock, $0.0001 par value per share (the “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. Therefore, holders of a majority of the votes of holders of the Common Stock voting for the election of directors can elect all of the directors.
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 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. 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.
VirTra, Inc. Proxy Statement – Page 1 |
TABLE OF CONTENTS
VirTra, Inc. Proxy Statement – Page 2 |
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:
| 1. | To elect five directors to the Company’s Board to serve until the Company’s 2024 annual meeting of stockholders or until their successors are elected and qualified; and | |
| 2. | To hold a non-binding advisory vote on executive compensation; | |
| 3. | To ratify the appointment of Haynie & Company as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022; and | |
| 4. | Such other business as may appropriately come before the Annual Meeting. |
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 as of the close of business on August 28, 2023, 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 date, 91,953,297book reflects that we had outstanding a total of 10,926,774 shares of our common stock par value $0.005 perCommon Stock outstanding. Each share were issued. No shares of our preferred stock par value $0.005 per share, were outstanding on the record date.
Our stock transfer books will remain open between the record date and the date of the Special Meeting. A list of shareholdersCommon Stock is entitled to vote at the Special Meeting will be available for inspection at our executive offices.one vote.
You have one vote for each share of our Common Stock that you owned 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 10,926,774 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 is no cumulative voting for the election of directors.
How many shares must be present to hold the Annual Meeting?
Holders of commonour Common Stock representing one-third of the voting power of our capital stock will vote at the Special Meeting as a single-class on all matters. Each holder of common stock isissued, outstanding and entitled to one vote per share held. As a result, a totalas of 91,953,297 votes may be cast on each matter at the Special Meeting.
What is a quorum?
For business to be conducted at the Special Meeting, a quorumRecord Date, represented in person (virtually) or by proxy, must be present eitherat the Annual Meeting in person or by proxy. Holders of a majority oforder to hold the outstanding shares of common stock representAnnual Meeting and conduct business. This is called a quorum. Abstentions and “broker non-votes” (i.e.,Your shares held by a broker or nominee that are representedcounted as present at the meeting, but with respect to which such broker or nominee is not instructed to vote on a particular proposal and does not have discretionary voting power) will be counted to determine whether a quorum is present for the transaction of business.Annual Meeting if:
| ● | You are present (virtually) and vote at the Annual Meeting; | |
| ● | You have properly and timely submitted your vote as described below under “How do I vote my shares?”; or | |
| ● | 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. |
If a quorum is not present weor represented at the Annual Meeting, the stockholders and proxies entitled to vote will have the power to adjourn the SpecialAnnual Meeting, without notice other than an announcement at that time, until a quorum is present or represented.
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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 John F. Givens II, have been designated as proxies for the Annual Meeting.
It is a document that we are able to obtain a quorum.
What vote is required to approve the increasegive you, in the number of authorized shares?
Approvalaccordance with regulations of the proposalSecurities and Exchange Commission (the “SEC”), when we ask you to increasedesignate proxies to vote your shares of our voting stock at an annual meeting of our stockholders. The proxy statement includes information regarding the number of shares we are authorizedmatters to issue requiresbe acted upon at the affirmative voteAnnual Meeting and certain other information required by the regulations of the holdersSecurities and Exchange Commission (“SEC”) and the rules of two-thirdsThe NASDAQ Stock Market (“NASDAQ”).
What is the difference between a “stockholder of the outstanding shares of common stock.Abstentions will count as votes AGAINST the proposal. Brokersrecord” and other nominees are generally empowered to vote on amendments to Articles of Incorporation and Bylaws, and therefore no broker non-votes will exist in connection with the proposal.a “street name” holder?
How do I vote?
You may vote by one of four ways: (i) over the Internet atwww.proxyvote.com, by (ii) telephone, (iii) by mail, or (vi) by ballot in person at the meeting.
If you are a “registered holder,” that is your shares are registered directly in your own name, through our transfer agent, you may vote by returning a completedproxy cardinare considered the enclosed postage-paid envelope.Instructions for voting over the Internet, or by telephone, are set forth on the proxy card.“stockholder of record” with respect to those shares. If your shares are held in “street name,”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 is,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 name of a brokerage firm,broker, bank, trust or other nominee in lieu of a proxy card you should receive avoting instruction formfrom that institution by mail.The voting instruction form should indicate whether the institution has a process for beneficial holdershow to vote over the Internet or by telephone. A large number of banks and brokerage firms participate in the ADP Investor Communication Services online program, which provides eligible shareholders who receive a paper copy of the proxy statement the opportunity to vote over the Inte rnet or by telephone.The Internet and telephone voting facilities will close at 11:59 p.m. Eastern Time, November 26, 2006.
If your voting instruction form does not reference Internet or telephone information, please complete and return the paper voting instruction form in the self-addressed, postage-paid envelope provided.
Shareholders who vote over the Internet or by telephone need not return a proxy card or voting instruction form by mail. When voting electronically, you may incur costs such as usage charges from telephone companies or Internet service providers. However, there is no extra cost to votetheir shares using the vote-by-phone service orwww.proxyvote.com website.method described below under “How do I vote my shares?”.
Stockholders of Record.If you are a registered holder,stockholder of record, you may alsovote in the following ways:
| ● | 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 22, 2023. | |
| ● | 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 22, 2023. | |
| ● | At the Annual Meeting. You can vote your shares during the virtual Annual Meeting. |
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 in person at the Special Meeting.If your shares are held in street nameshares.
Your vote is important, and we encourage you wish to vote in person at the meeting, you must obtain a proxy issued in your name from the record holder (e.g.promptly., your broker) and bring
What does it with you to the Special Meeting. We recommend that you vote your shares in advance, as described above, so that your vote will be counted if you later decide not to attend the Special Meeting.
Whatmean if I receive more than one proxy card or voting instruction form?card?
If you receive more than one proxy card or voting instruction form, because yourit means that you hold shares are held in multiple accounts or registered in different names or addresses, please be sure to complete, sign, date, and returneachproxy card or voting instruction form tomore than one account. To ensure that all of your shares are voted, you will need to be voted. Only proxy cards and voting instruction forms that have been properly signed, dated, and timely returned will be counted in the quorum and voted.sure to vote once for each account.
Who will count the votes and how will my vote(s) be counted?
VirTra, Inc. Proxy Statement – Page 4 |
All votes will be tabulated by the inspector of election appointed for the Special Meeting, who will separately tabulate affirmative and negative votes, and abstentions.
If the enclosed proxy card or voting instruction form is properly signed, dated, and returned, the shares represented by that proxy card will be voted at the Special Meeting in accordance with your instructions. If youWhat if I do not specify how theI want my shares represented byvoted?
If you submit a signed proxy card or submit your proxy cardby 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 voted, your“uninstructed.” If the broker, bank, trust or other nominee is not permitted to exercise discretion, the uninstructed shares will be votedFORthe increase in the number of shares we are authorizedreferred to issue. The enclosed proxy cardas “broker non-votes.”
Your vote is very important. We urge you to vote, or voting instruction form also grants the proxy holders discretionary authorityto instruct your broker, bank, trust or other nominee how to vote, on any other business that may properly come beforeall matters to be considered at the meeting as well as any procedural matters.Annual Meeting.
Can I revoke my proxy and change my vote after I have voted?vote?
If your shares are held in your name,Yes, you may revoke oryour proxy and change your vote at any time before your proxy is voted at the Special Meeting by filing a letter of revocationAnnual Meeting. You may revoke your proxy and another signed proxy card with a later date with our Secretary at VirTra Systems, Inc., 2500 CityWest Boulevard, Suite 300; Houston, Texas 77042. If you attend the Special Meeting andchange your vote by ballot, anyby:
| ● | 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; | |
| ● | Submitting a later-dated vote on the Internet, in a timely manner; | |
| ● | 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 | |
| ● | 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. |
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 submitted previouslyvote 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 2023 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.
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 sameCommon 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 revoked automaticallytreated as broker non-votes. Proposals 1 and only2 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 SpecialAnnual Meeting in relation to such proposals.
VirTra, Inc. Proxy Statement – Page 5 |
Our management believes that Proposal 3 (ratification of the appointment of Haynie & Company as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022) 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 counted. Ifpermitted to vote shares of Common Stock at the Annual Meeting in relation to Proposal 3. 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:
| ● | FOR Proposal 1 (election of directors proposal); | |
| ● | FOR Proposal 2 (non-binding advisory vote on executive compensation proposal); | |
| ● | FOR Proposal 3 (ratification of auditors). |
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, Proposal 2 (non-binding advisory vote on executive compensation proposal) is a non-binding advisory vote only and will not overrule any decision by the Board or require the Board to take any action. Also, if Proposal 3 (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, youname. 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.
VirTra, Inc. Proxy Statement – Page 6 |
PROPOSAL 1—ELECTION OF DIRECTORS
Five directors are to be elected at the Annual Meeting. Four of the director nominees, Messrs. Ferris, Givens, Brown and Johnson, were elected at the last annual meeting of shareholders held in November 2022. Mr. James Richardson, who was elected as a director in November 2022, departed the Company in December 2022, creating a vacancy on the Board. Mr. Jim McDonnell was elected by the remaining directors to fill the vacancy in January 2023. He was identified as a candidate for election as a director by the Board and the executive officers of the Company based on his previous experience working in law enforcement.
Each of the nominees, including Mr. McDonnell, was recommended for nomination for election by the Nominating and Corporate Governance Committee, which is comprised solely of independent directors. Each of the nominees has consented to serve as a director if elected. If, at the time of the Annual Meeting, any nominee should contactbe unable to serve, it is the record holderintention of the persons designated as proxies to obtain instructions if you wish to revoke or change your vote before the Special Meeting;please note that your vote, in persontheir discretion, for such other persons as may be designated as a nominee by the Board.
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 two meetings during the fiscal year ended December 31, 2022 at which all directors attended, and acted by unanimous written consent five times.
Board Recommendation
The Board recommends a vote FOR the election of each of Messrs. Ferris, Givens, Brown, Johnson, and McDonnell. 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, as well as our executive officers.
| Name | Age | Position/Title | ||
| Robert D. Ferris | 51 | President and Executive Chairman | ||
| John F. Givens II | 59 | Chief Executive Officer and Director | ||
| Alanna Boudreau | 43 | Chief Financial Officer | ||
| Jeffrey D. Brown | 60 | Director | ||
| Gregg C.E. Johnson | 58 | Director | ||
| James P. McDonnell | 63 | Director |
Biographical information concerning the director nominees listed above is set forth below:
Robert D. Ferris. Mr. Ferris has been our Chairman of the Board of Directors since 2008 and has been our President since founding Ferris Productions, Inc. (“Ferris Productions”) in 1993. He also served as our Chief Executive Officer since the Company’s founding until August 2023. Mr. Ferris has led VirTra in providing the market with revolutionary simulation training products that today impact millions worldwide. 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. He was selected for induction into the National Center for Simulation (NCS) Modeling and Simulation Hall of Fame in 2023. 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 Executive Chairman of our Board of Directors.
VirTra, Inc. Proxy Statement – Page 7 |
John F. Givens II. Mr. Givens was appointed as Co-Chief Executive Officer as of April 11, 2022, became the sole Chief Executive Officer in August 2023, and 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. In 2010, Mr. Givens established Bohemia Interactive Simulations Inc. (BISim), and as president, took military simulations products from inception to production. Mr. Givens has achieved numerous awards and honors, including appointment to the board of directors of the National Center for Simulation (NCS), an association of defense companies, and the “Pioneer Awards” for outstanding contributions and innovations to the training and effectiveness of US and overseas soldiers, sailors, and airmen. Mr. Givens graduated with a Bachelor of Science degree in Computer Science from the Florida Institute of Technology and proudly served in the United States Army. We believe Mr. Givens history as founder and president of BISim, and his business development expertise, technology background and extensive management experience provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors.
Alanna Boudreau. Ms. Boudreau was appointed as our Chief Financial Officer as of December 2022. She brings over 20 years of experience in managerial, financial and operating functions, most recently serving as group controller for the 600 Group PLC (AIM: SIXH), a publicly listed U.K.-based global industrial laser company. At The 600 Group, she oversaw all accounting activities for a business with over $30 million of revenues that included two manufacturing plants and offices in Orlando, Florida and United Kingdom. Prior to The 600 Group, Boudreau was an Accounting Manager at Advent Health, a leading U.S.-based nonprofit health care company, where she oversaw accounting functions for 12 locations. Boudreau graduated Summa Cum Laude from the New York Institute of Technology, receiving a Bachelor of Science in Business Administration. She received an MBA from the University of Phoenix.
Jeffrey D. Brown. Mr. Brown has served as a director of our company since 2011. Mr. Brown has been a Certified Public Accountant (“CPA”) since 1993 and a financial 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.
Gregg C.E. Johnson. Mr. Johnson has served as a director of our company since November 2022. He received his law degree in 1988 from Osgoode Hall Law School in Toronto, Canada, and was admitted as a lawyer in Alberta in 1989. He also has extensive experience in corporate compliance and senior management of high-growth entrepreneurial companies. Since October 2021, Mr. Johnson has been the chief executive officer of Serenus Global Inc., a privately held medical company based in Tempe, Arizona and Calgary, Alberta. From January 2017 to November 2021, he was the chief executive officer of Upeva, Inc., which provided business advisory services pertaining to capital markets, corporate finance, mergers and acquisitions, crowdfunding, and NASDAQ compliance. Mr. Johnson was the primary advisor to our board on our successful effort to list our stock on NASDAQ as well as a member of VirTra’s Advisory Board. He has served as corporate secretary and a director of Vivos Biotechnologies, Inc. (nka Vivos Therapeutics, Inc.), a company which focuses on the development and commercialization of innovative biomedical treatment alternatives for sleep apnea, from May 2016 to March 2018. His career has included experience in all stages of public company development and venture capital for emerging growth companies across Canada and the United States. We believe Mr. Johnson’s experience in law, business, corporate compliance and emerging companies provide the requisite qualifications, skills, perspectives, and experience that make him well qualified to serve on our Board of Directors.
James P. (Jim) McDonnell. Mr. McDonnell has served as a director of our company since January 2023. He is a recognized public safety executive and law enforcement leader. After a four-decade career in some of the most challenging areas and times in American policing, he has become a sought-after voice on public safety, security, and counterterrorism issues across the nation. He is well known for his experience serving as Sheriff of Los Angeles County (LASD), Chief of Police in Long Beach, California (LBPD), and First Assistant Chief of Police for the Los Angeles Police Department (LAPD). Mr. McDonnell serves as a strategic advisor to several major corporations, municipal government entities, a renowned university, and a non-profit global policy think tank, operating in a wide variety of technology, telecommunications, medical, and public safety specialties. He also sits on several non-profit boards, including the YMCA of Metropolitan Los Angeles, the Peace Officers Association of Los Angeles County, and the University of Southern California Price School of Public Policy’s Board of Councilors. Mr. McDonnell has a strong network of police executives across the nation at the Special Meeting will not be effective unless you have obtainedfederal, state, and presentlocal levels. He regularly participates in state and national police executive conferences, including those hosted by the U.S. Department of Justice, U.S. Department of State, Major County Sheriffs of America, Major Cities Chiefs Association, and the Police Executive Research Forum. Sheriff McDonnell is frequently requested as a proxy card issuedspeaker by media outlets, corporate clients, and academic institutions. He brings a tremendous level of knowledge and expertise in your name frompublic safety, tactical training, operational growth, and command accountability, as well as an expansive network within the record holder.nationwide policing community, which makes him well qualified to serve on our Board of Directors.
There are no family relationships between any of the executive officers and directors.
5
Involvement in Certain Legal Proceedings
How can I sign upNone 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.
VirTra, Inc. Proxy Statement – Page 8 |
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 access future press releasesour articles of incorporation and occasional letters from management electronically?our bylaws. Currently, our Board of Directors consists of four directors and has one vacancy.
All shareholders who have email accounts can now elect to access VirTra Systems’ press releases and occasional letters from management through our online investor e-mail service. By using this service, you will improve the future speed and efficiency by which you can access these materials.Director Independence
To enroll in our online investor e-mail service, please fill out and submit the form athttp://www.virtrasystems.com/iv_orderkit.cfm.
Who will bear the cost of soliciting proxies?
VirTra Systems will bear the entire cost of soliciting proxies for the Special Meeting, including the preparation, assembly, printing and distribution of this proxy statement, the proxy card and any additional soliciting materials we furnish to shareholders. We will furnish copies of solicitation materials to brokerage houses, fiduciaries and custodians holding shares in their names that are beneficially owned by others so that they may forward the soliciting materials to the beneficial owners. We may supplement the original solicitation of proxies by soliciting shareholders by personal contact, telephone, facsimile, email or any other means by directors, officers or employees of VirTra Systems. We will not pay any additional compensation to those individuals for those services.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING:
INCREASE AUTHORIZED CAPITAL
Our Board of Directors has unanimouslyundertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our Board of Directors has determined that: (i) Messrs. Brown, Johnson and McDonnell did not have a material relationship with us that could compromise their ability to exercise independent judgment in carrying out their responsibilities and that each of these directors was “independent” as that term is defined under the listing standards of NASDAQ, and (ii) Messrs. Ferris and Givens were not independent directors. Therefore, as of the date of the Proxy Statement, a majority of our Board of Directors consists of “independent directors” as defined under the listing standards of NASDAQ.
Board Diversity Matrix
On August 6, 2021, the SEC approved NASDAQ’s proposal, as amended, to implement diversity requirements for companies listed on the NASDAQ exchanges. NASDAQ stated that its goal was to “provide stakeholders with a better understanding of the company’s current board composition and recommendedenhance investor confidence that VirTra Systems’ shareholders approveall listed companies are considering diversity in the context of selecting directors.” Generally, the new rule requires any company listed on the NASDAQ exchanges to (a) have at least two diverse directors on its board or explain why it does not meet this objective and (b) provide standardized disclosures in the form of a Board Diversity Matrix, or similar format, on the composition of its board.
New Nasdaq Rule 5605(f)(2) requires each NASDAQ-listed company, other than a Smaller Reporting Company, such as the Company, or company with five or fewer members (“Smaller Board”), to have, or explain why it does not have, at least two members of its board of directors who are Diverse, including at least one Diverse director who self-identifies as Female and at least one Diverse director who self-identifies as an amendmentUnderrepresented Minority or LGBTQ+. “Diverse” is defined to mean an individual who self-identifies in one or more of the following categories: (i) Female, (ii) Underrepresented Minority, or (iii) LGBTQ+. Also pursuant to the Articlesnew Rule, “Female” would be defined to mean an individual who self-identifies her gender as a woman, without regard to the individual’s designated sex at birth. “Underrepresented Minority” is defined to mean an individual who self-identifies as one or more of Incorporationthe following: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or Two or More Races or Ethnicities; and “LGBTQ+” would be defined to mean an individual who self-identifies as any of the following: lesbian, gay, bisexual, transgender, or as a member of the queer community.
Companies with a Smaller Board, such as the Company, can meet the diversity objective by having at least one Diverse director. The Company presently does not meet the diversity objective, as it does not have any diverse directors. Nominees for director have been selected based on The Board initially evaluates a prospective nominee based on his or her resume and other background information that has been provided to the Board. As discussed below in “Procedures for Recommending, Nominating and Evaluating Director Candidates,” 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. In recent years, the Company has focused on identifying candidates that could assist the Company with its plan to grow the business in the military and law enforcement sectors. It was extremely difficult to identify diverse candidates having backgrounds in the military and law enforcement sectors.
VirTra, Inc. Proxy Statement – Page 9 |
The Board Diversity Matrix, which can also be found on the Company’s website, is set forth below and reports self-identified diversity statistics for the Board, as constituted prior to the Annual Meeting. Assuming the election of each of the director nominees under Proposal 1, the Matrix will remain the same.
| Board Diversity Matrix (Prior to and after completion of the Annual Meeting) | ||||||||
| Board Size: | ||||||||
| Total Number of Directors | 5 | |||||||
| Gender: | Female | Male | Non-Binary | Gender Undisclosed | ||||
| Number of Directors Based on Gender Identity | - | 5 | - | - | ||||
| Number of Directors Who Identify in Any of the Categories Below: | ||||||||
| African American or Black | - | - | - | - | ||||
| Alaskan Native or American Indian | - | - | - | - | ||||
| Asian | - | - | - | - | ||||
| Hispanic or Latinx | - | - | - | - | ||||
| Native Hawaiian or Pacific Islander | - | - | - | - | ||||
| White | - | 5 | - | - | ||||
| Two or More Races or Ethnicities | - | - | - | - | ||||
| LGBTQ+ | - | - | - | - | ||||
| Demographic Background Undisclosed | - | - | - | - | ||||
Board Leadership Structure and Board’s Role in Risk Oversight
Our Board of Directors has an Executive Chairman, Mr. Ferris. The Executive Chairman has authority, among other things, to preside over Board meetings and set the agenda for Board meetings. Accordingly, the Executive Chairman has substantial ability to shape the work of our Board of Directors. Mr. Givens serves as our Chief Executive Officer. We believe that we have appropriate oversight by the Board of Directors of our business and affairs as we have a majority of independent directors. 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.
| VirTra, Inc. Proxy Statement – Page 10 |
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, Johnson and McDonnell. 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. Johnson, Brown and McDonnell, to the compensation committee. Mr. Johnson serves as the chairman of 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 executive officers and to approve the compensation of all other executive officers. | |
| ● | To review, and approve and, when appropriate, recommend to the Board for approval, any employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, for the CEO and other executive officers, which includes the ability to adopt, amend and terminate such agreements, arrangements or plans. |
| VirTra, Inc. Proxy Statement – Page 11 |
| ● | 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. Johnson, Brown and McDonnell, to the nominating and corporate governance committee. Mr. Johnson serves as the chairman of the nominating and corporate governance committee.
Our nominating and corporate governance committee is responsible for, among other things:
| ● | To determine the qualifications, qualities, skills, and other expertise required to be a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director. | |
| ● | To select and approve the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders. | |
| ● | To review the Board’s committee structure and composition and to appoint directors to serve as members of each committee and committee chairmen. | |
| ● | To develop and recommend to the Board for approval standards for determining whether a director has a relationship with us that would impair its independence. | |
| ● | To review and discuss with management the disclosure regarding the operations of the nominating and corporate governance committee and director independence, and to recommend that this disclosure be included in our proxy statement or annual report on Form 10-K, as applicable. | |
| ● | To monitor compliance with our Code of Ethics and Business Conduct (the “Code of Ethics”), to investigate any alleged breach or violation of the Code of Ethics and to enforce the provisions of the Code of Ethics. | |
| ● | To meet at least two times a year. | |
| ● | To review the nominating and corporate governance committee charter at least annually and recommend any proposed changes to the Board for approval |
Code of Ethics and Business Conduct and Whistleblower Protection Policy
We have adopted a written Code of Ethics, which outlines the principles of legal and ethical business conduct under which we do business. In addition, we have adopted a written Whistleblower Protection Policy to prevent adverse employment action of any kind against any of our employees who lawfully report information about (i) fraudulent activities within our company (including wire fraud, mail fraud and bank fraud), (ii) violations of the Sarbanes-Oxley Act pertaining to fraud against stockholders of the Company, (iii) questionable accounting, internal accounting controls or auditing matters of the Company, and (iv) conduct by our executives that violate our Code of Ethics, or that cause reports and other public disclosures by us that are not full, fair and accurate. To advance this commitment, we have adopted this Whistleblower Protection Policy. The Code of Ethics and Whistleblower Protection Policy are applicable to all 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.
| VirTra, Inc. Proxy Statement – Page 12 |
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
295 E. Corporate Place
Chandler, Arizona 85225
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
295 E. Corporate Place
Chandler, Arizona 85225
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.
| VirTra, Inc. Proxy Statement – Page 13 |
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. |
| VirTra, Inc. Proxy Statement – Page 14 |
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, 2022 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
2022 Director Compensation Table
| Name | Fees earned or paid in cash | Stock Awards | Option Awards | Non-equity incentive plan compensation | Nonqualified deferred compensation earnings | All Other Compensation | Total | |||||||||||||||||||||
| Jeffrey D. Brown | $ | 24,000 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 24,000 | ||||||||||||||
| John F. Givens II (1) | $ | 8,000 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 8,000 | ||||||||||||||
| James Richardson | $ | 24,000 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 24,000 | ||||||||||||||
| Gregg C.E. Johnson (2) | $ | 3,600 | $ | $ | $ | $ | $ | $ | 3,600 | |||||||||||||||||||
| (1) | Mr. Givens became an officer of the Company in April 2022. Accordingly, he was paid fees as a director only for the first quarter of 2022. | |
| (2) | Mr. Johnson was elected to the Board of Directors in November 2022. |
We approved the payments of quarterly and annual cash retainers to each non-employee director (Messrs. Brown, Givens, Richardson and Johnson) 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.
| VirTra, Inc. Proxy Statement – Page 15 |
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, 2022; | |
| ● | Our three most highly compensated principal executive officers, other than our executives, who were serving as corporate officers at December 31, 2022 and whose compensation exceeds $100,000; and | |
| ● | Up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at December 31, 2022. |
For definitional purposes, these individuals are sometimes referred to as the “named executive officers.”
2022 Summary Compensation Table
| Fiscal | Stock | Option | All Other | |||||||||||||||||||||||
| Name and | Year | Salary | Bonus | Awards | Awards | Compensation | Total | |||||||||||||||||||
| Principal Position | Ended | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||
| Robert D. Ferris | 12/31/2022 | $ | 360,481 | $ | - | $ | 80,702 | $ | - | - | $ | 441,183 | ||||||||||||||
| Co-Chief Executive Officer | 12/31/2021 | $ | 298,226 | $ | 8,194 | $ | 160,000 | $ | - | - | $ | 466,420 | ||||||||||||||
| John F. Givens II (1) | 12/31/2022 | $ | 188,065 | $ | - | $ | 414,914 | $ | - | $ | 602,979 | |||||||||||||||
| Co-Chief Executive Officer | $ | |||||||||||||||||||||||||
| Matthew D. Burlend (2) | 12/31/2022 | $ | 343,224 | $ | - | $ | 20,550 | $ | - | - | $ | 363,774 | ||||||||||||||
| Chief Operating Officer | 12/31/2021 | $ | 237,299 | $ | 7,354 | $ | 120,000 | $ | - | - | $ | 364,653 | ||||||||||||||
| Marsha J. Foxx (3) | 12/31/2022 | $ | 156,827 | $ | - | $ | - | $ | - | - | $ | 156,827 | ||||||||||||||
| Chief Accounting Officer | 12/31/2021 | $ | 140,000 | $ | 266 | $ | - | $ | - | - | $ | 140,266 | ||||||||||||||
| (1) | Mr. Givens became the Co-Chief Executive Officer in April 2022. | |
| (2) | Mr. Burlend left the Company in August 2022. | |
| (3) | Ms. Foxx left the Company in August 2022. |
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, 2021, Messrs. Ferris’ and Burlend’s annual base salaries were $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.
| VirTra, Inc. Proxy Statement – Page 16 |
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.
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.
Beginning on the last business day of August 2022, a tranche of restricted stock units, having approximate values of $40,000 and $30,000 for the CEO and COO, respectively, based on current prices, may vest if the Company has achieved net profit for the twelve months ending June 30, 2022, of at least $2,500,000. For every $500,000 earned more than $2,500,000 another tranche will vest. If the maximum net profit of $7,000,000 is achieved, ten tranches would vest. Similarly, on the last business day of August 2023, a tranche of restricted stock units may vest if the Company has achieved a net profit of at least $3,000,000, with the potential to have additional tranches vest up to a maximum of $9,000,000 in net profit. This vesting arrangement continues with the last business day of August 2024, with the minimum net profit threshold being $3,500,000 and the maximum net profit being $11,000,000.
The vesting schedule notwithstanding, the Compensation Committee shall have the discretion to declare the vesting of any number of restricted stock units should the Company experience unusual results of operations, such as falling below the net profit threshold one year and exceeding the maximum net profit the following year, so long as the total number of restricted stock units declared to be vested does not exceed the amount awarded. Additionally, while a maximum net profit per year has been set for allocation of the available shares at this time, it is very possible that the Company will exceed these levels during the next 3 years and if such performance occurs, the Compensation Committee will meet to determine if additional compensation is in the best interests of the Company at that time.
During the year ended December 31, 2022, Matthew Burlend (the Company’s former Chief Operating Officer) redeemed 7,500 previously awarded options reaching expiration. The redemptions resulted in $20,550 of additional compensation expense.
During the year ended December 31, 2022, Bob Ferris (then the Co-Chief Executive Officer) redeemed 20,000 previously awarded options reaching expiration. The redemptions resulted in $54,051 of additional compensation expense.
| VirTra, Inc. Proxy Statement – Page 17 |
On April 11, 2022, John F. Givens II was appointed as the Co-Chief Executive Officer of the Company. VirTra has agreed to pay Mr. Givens an initial annual base salary of $298,990, subject to annual review. VirTra issued Mr. Givens a signing bonus of 64,815 shares of common stock which are restricted from transfer until the earlier of: i) 12 months of employment having lapsed or ii) the Company terminating employment with Mr. Givens without cause.
Mr. Givens was also granted 288,889 performance-based restricted stock units pursuant to the Company’s 2017 Equity Incentive Plan. Beginning on the last business day of August 2022, a tranche of restricted stock units, having an approximate value of $40,000, based on current prices, may vest if the Company has achieved net profit for the twelve months ending June 30, 2022, of at least $2,500,000. For every $500,000 earned more than $2,500,000 another tranche will vest. If the maximum net profit of $7,000,000 is achieved, ten tranches would vest. Similarly, on the last business day of August 2023, a tranche of restricted stock units may vest if the Company has achieved a net profit of at least $3,000,000, with the potential to have additional tranches vest up to a maximum of $9,000,000 in net profit. This vesting arrangement continues with the last business day of August 2024, with the minimum net profit threshold being $3,500,000 and the maximum net profit being $11,000,000.
The vesting schedule notwithstanding, the Compensation Committee shall have the discretion to declare the vesting of any number of restricted stock units should the Company experience unusual results of operations, such as falling below the net profit threshold one year and exceeding the maximum net profit the following year, so long as the total number of restricted stock units declared to be vested does not exceed the amount awarded. Additionally, while a maximum net profit per year has been set for allocation of the available shares at this time, it is very possible that the Company will exceed these levels during the next 3 years and if such performance occurs, the Compensation Committee will meet to determine if additional compensation is in the best interests of the Company at that time.
On August 31, 2022, the Company determined based on the vesting terms described above that the net profit (net income under GAAP) for the twelve months ending June 30, 2022, was $2,720,015 and therefore awarded 5,747 (prior to deduction of 1,840 shares to pay the tax withholding liability) and 7,407 shares of common stock to Messrs. Ferris and Givens, respectively. Mr. Burlend left the Company prior to his restricted stock units being settled.
Effective August 15, 2023, Mr. Givens assumed the role of sole Chief Executive Officer and entered into a three-year employment agreement with the Company. The agreement provides for an annual base salary of $349,859.90, subject to increases based on the cost of living at a minimum. The agreement automatically extends for additional periods of one year. The contract shall be renewed annually with upward adjustments each year applying the same percentage increase approved for Company-wide cost-of-living adjustments. The employment agreement entitles Mr. Givens to an annual cash bonus if so determined by our Board of Directors. In addition, the agreement entitles Mr. Givens to participate in any equity incentive plan adopted by the company.
The termination, non-compete, and indemnification provisions in Mr. Givens’ employment agreement are identical to those found in Mr. Ferris’ employment agreement.
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, 2022, there were 45,000 options outstanding and 45,000 options exercisable at a weighted exercise price of $4.26 and $4.26, 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 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.
| VirTra, Inc. Proxy Statement – Page 18 |
Profit Sharing
We have a discretionary profit-sharing program that pays out a percentage of our profits each year as a cash bonus to active and eligible employees. The cash payment is typically split into two equal payments and distributed pro-rata to employees in good standing at the time of distribution in April and October of the following year after the completion of the annual financial audit. For the years ending December 31, 2022, and 2021, the amount expensed to operations for this program was $294,705 and $139,682, 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 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 more than the fair market value of the underlying shares of Common Stock in exchange for new options or other equity awards with exercise prices equal to the fair market value of the underlying Common Stock or a cash payment.
The Equity Plan limits the grant date fair value of all equity awards and the amount of cash compensation that may be provided to a non-employee director in any fiscal year to an aggregate of $300,000.
Awards may be granted under the Equity Plan to our employees, including officers, directors or consultants or those of any present or future parent or subsidiary corporation or other affiliated entity. All awards will be evidenced by a written agreement between us and the holder of the award and may include any of the following:
| ● | Stock options. We may grant non-statutory stock options or incentive stock options (as described in Section 422 of the Internal Revenue Code of 1986, as amended), each of which gives its holder the right, during a specified term (not exceeding 10 years) and subject to any specified vesting or other conditions, to purchase a number of shares of our Common Stock at an exercise price per share determined by the administrator, which may not be less than the fair market value of a share of our Common Stock on the date of grant. |
| VirTra, Inc. Proxy Statement – Page 19 |
| ● | 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 on the shares and to receive any dividends paid, except that the dividends will be subject to the same vesting conditions as the related shares. | |
| ● | Restricted stock units. Restricted stock units represent the right to receive shares of our Common Stock (or their value in cash) at a future date without payment of a purchase price, subject to vesting or other conditions specified by the administrator. Holders of restricted stock units have no voting rights or rights to receive cash dividends unless and until shares of Common Stock are issued in settlement of such awards. However, the administrator may grant restricted stock units that entitle their holders to dividend equivalent rights subject to the same vesting conditions as the related units. | |
| ● | Performance shares and performance units. Performance shares and performance units are awards that will result in a payment to their holder only if specified performance goals are achieved during a specified performance period. Performance share awards are rights denominated in shares of our Common Stock, while performance unit awards are rights denominated in dollars. The administrator establishes the applicable performance goals based on one or more measures of business performance enumerated in the Equity Plan, such as revenue, gross margin, net income or total stockholder return. To the extent earned, performance share and unit awards may be settled in cash or in shares of our Common Stock. Holders of performance shares or performance units have no voting rights or rights to receive cash dividends unless and until shares of Common Stock are issued in settlement of such awards. However, the administrator may grant performance shares that entitle their holders to dividend equivalent rights subject to the same vesting conditions as the related units. | |
| ● | Cash-based awards and other stock-based awards. The administrator may grant cash-based awards that specify a monetary payment or range of payments or other stock-based awards that specify a number or range of shares or units that, in either case, are subject to vesting or other conditions specified by the administrator. Settlement of these awards may be in cash or shares of our Common Stock, as determined by the administrator. Their holder will have no voting rights or right to receive cash dividends unless and until shares of our Common Stock are issued pursuant to the award. The administrator may grant dividend equivalent rights with respect to other stock-based awards. |
In the event of a change in control as described in the Equity Plan, the acquiring or successor entity may assume or continue all or any awards outstanding under the Equity Plan or substitute substantially equivalent awards. Any awards which are not assumed or continued in connection with a change in control or are not exercised or settled prior to the change in control will terminate effective as of the time of the change in control. The compensation committee may provide for the acceleration of vesting of any or all outstanding awards upon such terms and to such extent as it determines, except that the vesting of all awards held by members of the Board of Directors who are not employees will automatically be accelerated in full. The Equity Plan also authorizes the compensation committee, in its discretion and without the consent of any participant, to cancel each or any outstanding award denominated in shares upon a change in control in exchange for a payment to the participant with respect to each share subject to the cancelled award of an amount equal to the excess of the consideration to be paid per share of Common Stock in the change in control transaction over the exercise price per share, if any, under the award.
The Equity Plan will continue in effect until it is terminated by the administrator, provided, however, that all awards will be granted, if at all, within 10 years of its effective date. The administrator may amend, suspend or terminate the Equity Plan at any time, provided that without stockholder approval, the plan cannot be amended to increase the number of shares authorized, change the class of commonpersons eligible to receive incentive stock options, or effect any other change that would require stockholder approval under any applicable law or listing rule.
| VirTra, Inc. Proxy Statement – Page 20 |
Outstanding Equity Awards at 2022 Fiscal Year-End
The following table provides information concerning unexercised options, stock that VirTra Systems is authorized to issue.has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, 2022:
| OPTION AWARDS | ||||||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Un exercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | ||||||||||||||
| Robert D. Ferris | 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 | 30,000 | |||||||||||||||||||
Securities Authorized for Issuance under Equity Compensation Plans
Under our present capital structure, we are authorized to issue 100,000,000 shares of common stock par value $0.005 per share. Preferred stock may also be issued from time-to-time in one or more series with such rights, preferences, and privileges including dividend rates, conversion, and redemption prices, and voting rights as may be determined by the Board.
The Board believes the number of authorized shares of common stock is inadequate for our present and future needs and therefore has unanimously approved an amendment to Article IV of VirTra Systems’ Articles of Incorporation, as previously amended, to increase the aggregate number of shares of common stockfollowing table sets forth securities authorized for issuance under any equity compensation plans approved by 400,000,000 shares,our stockholders as well as any equity compensation plans not approved by our stockholders as of December 31, 2022.
| 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. The terms of the options granted were at the discretion of the Board of Directors and were generally seven years in term prior to expiration.
| VirTra, Inc. Proxy Statement – Page 21 |
PROPOSAL 2—ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are asking our stockholders to provide advisory approval of the compensation of our named executive officers as disclosed in this Proxy Statement. We intend to maintain an aggregateexecutive compensation program that is consistent with our existing compensation policies and philosophies, which are designed to align compensation with our business objectives and the creation of 500,000,000 authorized shares.stockholder value, while enabling us to attract, motivate and retain individuals who contribute to VirTra’s long-term success.
Decisions on the executive compensation program will be made by the Compensation Committee. The Board believes this capital structure more appropriately reflectsdiscussion set forth in the Proxy Statement is based on the present expectations as to the executive compensation program to be adopted from time to time by the Compensation Committee. The executive compensation program actually adopted by the Compensation Committee at any given time will depend on the judgment of the members of the Compensation Committee and future needsmay differ from that set forth herein.
We anticipate that decisions regarding executive compensation will reflect our belief that the executive compensation program must be competitive in order to attract and retain our executive officers. We anticipate that the Compensation Committee will seek to implement our compensation policies and philosophies by linking a significant portion of our executive officers’ cash compensation to performance objectives and by providing a portion of their compensation as long-term incentive compensation in the form of equity awards. We anticipate that compensation for our executive officers will have three primary components: base salary, an annual cash incentive bonus and long-term incentive compensation in the form of share-based awards, if any.
Additional information about the compensation of our named executive officers is provided in the “Executive Compensation” section of this Proxy Statement, which includes compensation tables and narrative discussion. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders of VirTra, SystemsInc. approve, on an advisory basis, the compensation paid to the Named Executive Officers, as disclosed in the proxy statement for the 2023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and recommends that the shareholders approve such amendment.
On September 30, 2006, 91,261,042 shares of common stock were outstanding, and no shares of preferred stock were outstanding. On September 30, 2006, assuming the exercise of all outstanding stock options and all other shares subject to issuance,Exchange Commission, including the conversionExecutive Compensation section, compensation tables and narrative discussion, and other related disclosure.”
Vote Required
This is a non-binding advisory vote only. The affirmative vote of allthe majority of the shares ownedpresent and entitled to vote at the Annual Meeting is required to approve Proposal 2. 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. While this vote is advisory and not binding on us, it will provide information to our Compensation Committee regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will be able to consider when determining executive compensation in current financing agreementsthe future.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE SEC’S COMPENSATION DISCLOSURE RULES.
| VirTra, Inc. Proxy Statement – Page 22 |
PROPOSAL 3—RATIFICATION OF THE APPOINTMENT OF
THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Haynie & Company acted as our independent registered public accounting firm for the fiscal year ended December 31, 2022. The Audit Committee of has appointed Haynie & Company to act in that capacity for the fiscal year ending December 31, 2023. A representative of Haynie & Company is expected to be present at current price per share levels, 100,000,000 sharesthe 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 common stock would have been outstanding.
PURPOSE OF AUTHORIZING ADDITIONAL COMMON STOCK
The authorization of an additional 400,000,000 shares of common stock would give the Boardstockholders, the ability to issue shares of such common stock from time-to-time as it deems necessary. The BoardAudit Committee believes that it is advisableappropriate as a matter of policy to request that stockholders ratify Haynie & Company’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 Haynie & Company 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 companyCompany and its shareholders to havestockholders.
The following table shows the ability tofees that were billed for the audit and other services provided by Haynie & Company and MaloneBailey LLP for the fiscal years ended December 31, 2022 and 2021, respectively.
| 2022 | 2021 | |||||||
| Audit Fees | $ | 141,664 | $ | 61,500 | ||||
| Audit-Related Fees | - | - | ||||||
| Tax Fees | 55,500 | 14,000 | ||||||
| All Other Fees | 20,500 | |||||||
| Total (1) | $ | 197,164 | $ | 96,000 | ||||
·
| (1) | This amount does not include $106,567 paid to Eide Bailly LLP for their work on the 2021 audit. |
satisfyAudit Fees—This category includes the audit of our current debenture commitmentsannual 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 limit any additional penalties we may incurservices 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, being unablethe 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 issue the required shares,
·
execute future mergersperformance of the audit or acquisitions (subject to any required vote)
6
·
satisfyreview of our obligation on outstanding stock optionsfinancial statements and offer additional optionsare 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 equity grants, subjectaudit 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 shareholder approvalpre-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, 2022 and 2021 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, 2022, 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, 2022 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.
| VirTra, Inc. Proxy Statement – Page 23 |
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, 2022, 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 applicable lawthe Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Committee concerning independence, and stock exchange regulations, andhas discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence.
·
issue additional shares of common stock for any other proper corporate purpose.
To continue to attract, retain, and motivate our employees, we expect to continue to issue reasonable stock options and other equity awards. We may also issue stock to acquire complementary businesses, technologies, and/or products and may fund our acquisitions and other initiatives through several different means, including equity issuances.
The additional common stock authorized under the Articles would be available for issuance byAudit Committee recommended to the Board without any future action byof Directors that the shareholders, unless a shareholder vote were specifically required by our Bylaws, applicable law, or the rules of any stock exchange or quotation system on which our securities may thenaudited financials be listed. The additional shares of common stock would have rights identical to our outstanding shares of common stock.
The proposed increaseincluded in the authorized number of shares of common stock could have a number of effectsAnnual Report on Form 10-K for the fiscal year ended December 31, 2022. In reliance on the shareholders, depending uponreviews and discussions referred to above, the exact nature and circumstancesBoard of any actual issuancesDirectors approved the inclusion of the authorized shares. The increase could have an anti-takeover effect, since the Board could issue additional shares (within the limits imposed by applicable law) in one or more transactions that could make a change in control or takeover of VirTra Systems more difficult.For example, additional shares could be issued to dilute the stock ownership or voting rights of persons seeking to obtain control of VirTra Systems. Similarly, the Board could issue additional shares to people allied with VirTra Systems’ management, making it more difficult to remove or replace members of VirTra Systems’ then current Board. In addition, issuing additional shares would dilute the earnings per share and book value per share of all outstanding shares of our capital stock unless there were a proportionate increase in our earnings and book value. If those factors were reflectedaudited financial statements in the price-per-share of our common stock,Annual Report on Form 10-K for the potential realizable value of a shareholder’s investment could be reduced.
EFFECTIVENESS OF AMENDMENT TO ARTICLES
If the proposal to increase the number of shares of common stock we are authorized to issue is adopted, an amendment to VirTra Systems’ Articles will become effective whenfiscal year ended December 31, 2022, filed with the Secretary of State of the State of Texas. The proposed amendment to the Articles is attached as an Appendix to this proxy statement.
REQUIRED VOTE
SEC.
| Submitted by the Audit Committee of the Board of Directors, | |
| Jeffrey Brown, Chair | |
| Gregg C.E. Johnson | |
| James P. McDonnell |
Vote Required
The affirmative vote of two-thirds the total combined voting power ofshares present and entitled to vote at the outstanding shares of common stockAnnual Meeting is required to approveratify the amendment toappointment of Haynie & Company as our Articles.independent registered public accounting firm. You may vote “for,” “against” or “abstain” from voting on Proposal 3. Abstentions will count ashave the effect of a NO vote.vote “against” Proposal 3. Because broker non-votes are not considered present for the foregoing purpose, they will have no effect on the vote on Proposal 3.
Recommendation
RECOMMENDATION OF THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF HAYNIE & COMPANY AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
| VirTra, Inc. Proxy Statement – Page 24 |
The Board of Directors unanimously recommends a vote FOR the proposal to increase the number of shares we are authorized to issue. Unless otherwise instructed, the proxy holders named in each proxy will vote the shares represented thereby FOR this proposal.
7
OWNERSHIP OF SECURITIES
The following table sets forth certain information known to VirTra Systems about the beneficial ownership of our common stockCommon Stock as of September 30, 2006, by
·
all persons known to us to beneficially own five percent (5%) or more of either class of our common stock,
·
each director,
·
August 28, 2023, the executive officers named in theExecutive Compensation section of our most recent Form 10K,
·
one additional most highly paid executive officer having annual compensation in excess of $100,000; but, who was not serving as director as of the fiscal year ended December 31, 2005.
Beneficial Owner | Status | Shares1 | Percent |
L. Kelly Jones | Former CEO and Director | 6,953,4522 | 7.4% |
Bob Ferris | President and Director | 6,048,4143 | 6.6% |
L. Andrew Wells | Former Director | 3,524,205 | 3.9% |
Perry V. Dalby | CEO and Director | 307,334 | * |
Kimberly Biggs | Former Board Secretary | 42,460 | * |
Frank Stanley | Director | - | * |
David Rogers | Former Chief Financial Officer | - | * |
Michael Kitchen | Executive Vice-president and Director | 200,0004 | * |
Totals | 17,075,865 | 17.9% |
.
1* Less than 1%Record Date for:
The percentage
| ● | each person known to us to be the beneficial owner of more than 5% of our Common Stock; | |
| ● | each named executive officer; | |
| ● | each of our directors; and | |
| ● | all of our executive officers and directors as a group. |
Unless otherwise noted below, the address for each beneficial owner listed on the table is in care of shares beneficially owned is based on 91,261,042 shares of common stock outstanding as of September 30, 2006. BeneficialVirTra, Inc., 295 E. Corporate Place, Chandler, AZ 85225. We have determined beneficial ownership is determined in accordance with the rules and regulations of the SEC. SharesExcept 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 stockCommon Stock that they beneficially own, subject to applicable community property laws. We have based our calculation of the percentage of beneficial ownership on 10,926,774 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 after September 30, 2006 are deemed to beof the Record Date. We did not deem these shares outstanding, and beneficially owned by the person holding the options for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person, but are not deemed to be outstandinghowever, for the purpose of computing the percentage ownership of any other person.
2 Includes 3,953,452
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||
| Directors and Named Executive Officers: | ||||||||
| Robert D. Ferris (1) | 415,183 | 3.8 | % | |||||
| John F. Givens II | 84,772 | * | ||||||
| Jeffrey D. Brown (2) | 49,193 | * | ||||||
| Jim McDonnell | 10,684 | * | ||||||
| Alanna Boudreau | 4,000 | * | ||||||
| Gregg C.E. Johnson | 2,100 | - | ||||||
| All named executive officers and directors as a group (six persons) | 565,932 | 5.2 | % | |||||
* Represents less than 1%
| (1) | Includes (a) 400,183 shares of our Common Stock presently outstanding, and (b) options to purchase 15,000 shares of our Common Stock at prices ranging from $3.76 to $5.20. | |
| (2) | Includes (a) 39,193 shares of our Common Stock and (b) options to purchase 10,000 shares of our Common Stock at prices ranging from $3.76 to $5.88. | |
| (3) | The number of shares beneficially owned by the executive officers and directors as a group includes 540,932 shares of our Common Stock and options to purchase 25,000 shares of our Common Stock. |
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 2022 were satisfied, except for two late filings of reports by Mr. Jeffrey Brown. Both reports disclosed the exercise of a stock option.
| VirTra, Inc. Proxy Statement – Page 25 |
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 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, 2022 and each currently proposed transaction in which:
| ● | We have been or will be a participant; | |
| ● | the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years; and | |
| ● | any of our directors, executive officers or beneficial owners of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest. |
During the years ended December 31, 2022, and 2021, respectively, the Company did not issue stock options to the executive officers or the members of the Board of Directors. Restricted stock units were awarded to the Co-Chief Executive Officers and Chief Operating Officer in 2022 and 2021 as disclosed in Item 11 above.
During the year ended December 31, 2022, and 2021, the Company redeemed 27,500 and 35,000, respectively, previously awarded options reaching expiration from related parties, including the Company’s Co-Chief Executive Officer, Chief Operating Officer and one employee. These redemptions eliminated the stock options and resulted in a total of $74,368 and $168,575 in additional compensation expense in 2022 and 2021, respectively.
During the years ended December 31, 2022, and 2021, related parties exercised 17,500 and 7,500 previously awarded options for the exercise price of $40,845 and $11,320, respectively, resulting in purchase 3,000,000 sharesand issuance of Common Stock to the Co-Chief Executive Officer and one member of the Board of Directors.
Mr. Richardson, who was a member of our Board of Directors until December 2022, was acting CEO of Natural Point, Inc. until May 14, 2021, a vendor of the Company. In 2021, the Company purchased specialized equipment from Natural Point in the amount of $33,840. On December 31, 2021, the Company had an outstanding balance payable to Natural Point of $0.
| VirTra, Inc. Proxy Statement – Page 26 |
STOCKHOLDER PROPOSALS FOR THE 2024 ANNUAL MEETING
Stockholders intending to present a proposal at the 2024 Annual Meeting of Stockholders and have it included in our proxy statement for that are currently exercisablemeeting must submit the proposal in writing to VirTra, Inc., Attention: Corporate Secretary, 295 E. Corporate Place, Chandler, Arizona 85225. We must receive such proposals no sooner than June 25, 2024 and no later than July 25, 2024. It is suggested that proposals be submitted by certified mail, return receipt requested.
Stockholders intending to present a proposal at the 2024 Annual Meeting of Stockholders without inclusion of the proposal in our proxy statement, or will become exercisable within 60to 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 Septemberthe preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 2006.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.
3 Includes 5,048,414 shares and options
In order to purchase 1,000,000 shares that are currently exercisablebe 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 or proposal of other business 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; |
| VirTra, Inc. Proxy Statement – Page 27 |
| ● | As to any other business that the stockholder proposes to bring before the annual meeting: |
| ○ | A brief description of such business; | |
| ○ | 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 | |
| ○ | The reasons for conducting such business at the meeting; |
| ● | 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; | |
| ● | 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 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 | |
| ● | 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 will become exercisable within 60 daysconstrued to require the inclusion of September 30, 2006.information about any stockholder proposal in our Proxy Statement.
4 Consists of options to purchase 200,000 shares that are currently exercisable or will become exercisable within 60 days of September 30, 2006
| VirTra, Inc. Proxy Statement – Page 28 |
“HOUSEHOLDING” OF PROXY MATERIALS
8
APPENDIX
TEXT OF THE PROPOSED AMENDMENT AUTHORIZING ADDITIONAL COMMON STOCK
ARTICLES OF AMENDMENT OF ARTICLES OF INCORPORATION OF
VIRTRA SYSTEMS, INC.
The undersigned, chief executive officerSEC 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 or Notice of Virtra Systems, Inc.,Internet Availability of Proxy Materials 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 Texas Corporation, certifies as follows.single proxy statement and annual report or Notice of Internet Availability of Proxy Materials 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.
1.
The nameStockholders who currently receive multiple copies of the corporationproxy materials at their address and would like to request householding of their communications should contact their broker or, if a stockholder is Virtra Systems, Inc.
2.
Paragraph A of Article Four of the Articles of Incorporation, which paragraph sets forth the number of shares which the corporation is authorized to issue, is amended to read as follows:
a.
Authorized Capital Stock. The aggregate numbera direct holder of shares of all classes of stockour 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 shall have authorityat VirTra, Inc., Attention: Corporate Secretary, 295 E. Corporate Place, Chandler, Arizona 85225, or call (480) 968-1488. Upon written or oral request directed to issue is 502,000,000 consistingthe Company at the address or phone number listed above, we will deliver promptly a separate copy of and divided into:the proxy materials.
i.
We do not know of 500,000,000 shares of Common Stock, par value $0.005 per share (the 'Common Stock'); and
ii.
one class of 2,000,000 shares of Preferred Stock, par value $0.005 (the 'Preferred Stock'), whichany other matters that may be divided into and issuedpresented 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 one or more series, as hereinafter provided."our best interests.
3.
| By Order of the Board, | |
| Robert D. Ferris | |
| Executive Chairman |
The shareholders of the corporation adopted the amendment on November 27, 2006.September 8, 2023
4.
As of the date the amendment was adopted, the number of shares outstanding, and the number of shares entitled to vote on the amendment, was 91,953,297 shares of Common Stock, par value $0.005 per share.
5.
The number of shares voted for the amendment was _______, and the number of shares voted against the amendment was ________.
6.
The amendment does not effect any change in the corporation's stated capital.
Dated: November 27, 2006Chandler, Arizona
| VirTra, Inc. Proxy Statement – Page 29 |
Perry V. Dalby, chief executive officer
Endnotes
9