Note 6. Leases

On June 1, 2022, we entered into a new lease of approximately 9,350 square feet located at 12301 Challenger Parkway, Orlando, Florida, from an unaffiliated third party through May 2027.

The Company’s lease agreements do not contain any residual value guarantees, restrictive covenants, or variable lease payments. The Company has not entered into any financing leases.

In addition to base rent, the Company’s lease generally provides for additional payments for other charges, such as rental tax. The lease includes fixed rent escalations. The Company’s lease does not include an option to renew.

The Company determines if an arrangement is a lease at inception. Operating leases are recorded in operating lease right of use assets, net, operating lease liability – short-term, and operating lease liability – long-term on its balance sheets.

Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate used at adoption was 4.5%. Significant judgment is required when determining the Company’s incremental borrowing rate. The Company uses the implicit rate when readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

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

VirTra completed the purchase of the Orlando property on May 22, 2026. As a result, the related right-of-use (ROU) asset and lease liability associated with the property were derecognized and removed from the balance sheet. Accordingly, these lease-related balances have been fully written off and no longer appear in the Company's financial position as of the purchase date. As on June 30, 2026 the company wrote off the 196,099 lease asset and 209,372 in combined short and long term lease liabilities along with the security deposit which resulted in a 2,706 loss on disposal. 

The balance sheet classification of lease assets and liabilities as of   June 30, 2026 are as follows:

There are no future minimum lease payments as of  June 30, 2026

Rent expenses for the six months ended June 30, 2026 and 2025 were $76,675 and $93,624, respectively.