Annual Report for Fiscal Year Ending March 31, 2026 (Form 10-K)

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

Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Report including, without limitation, statements under this Item regarding our financial position, business strategy and the plans and objectives of Management for future operations, are forward-looking statements. When used in this Report, words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to us or our Management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our Management, as well as assumptions made by, and information currently available to, our Management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and the notes thereto included in this Report under "Item 8. Financial Statements and Supplementary Data".

Overview and History

Virtuix pioneers movement in AI-generated worlds, whether imaginary or real, through the development of omni-directional treadmills that enable natural locomotion within VR games, digital twins, and other applications. Since our founding in 2013, we have introduced three generations of products to market, generating over $20 million in cumulative sales. Our flagship product, Omni One, represents a breakthrough in home entertainment, combining full-body movement with immersive VR gaming and fitness. We operate a vertically integrated business across product design, game development, manufacturing, and distribution, with a focus on three key markets: consumer, enterprise, and defense.

Our earlier products, Omni Pro and Omni Arena, established our footprint in commercial VR. We've sold more than 4,000 Omni Pro systems for enterprise, installed 80 Omni Arena systems at entertainment venues in the U.S., and built an Omni Arena player base of over 500,000 players who signed up with an email address to play. Omni One, our most recent product, is designed for the home consumer and supports full freedom of movement, including crouching, kneeling, and jumping, within popular VR games. In addition, we sell a version of Omni One for enterprise markets and, in parallel, we are developing VTW, a multi-user mission planning system targeted at the defense market.

We derive revenue through a combination of hardware sales and recurring software and service income. These include:

●

Omni One hardware sales, with pricing ranging from $2,495 to $2,995.

●

Omni Online subscription service ($14/month or $140/year), offering multiplayer access, esports leaderboards, and free games.

●

Game sales via Omni One's proprietary game store.

●

Enterprise solutions, including Omni One Enterprise and Omni Arena systems.

●

Accessory and replacement parts sales for Omni One and Omni Arena systems.

●

Omni Care maintenance subscriptions for Omni Arena.

●

Omniverse Credits for Omni Pro and Omni Arena gameplay (per-minute usage fees).

We target a gross margin of up to 40% on hardware sales of Omni One, Omni One for Quest, Omni One Core, and second-hand Omni Arena systems, and 70% gross margin on Omni One Enterprise hardware sales. Recurring revenue from Omni Online, game sales, Omni Care, and Omniverse Credits provide high-margin, predictable cash flows that recur after initial hardware sales.

Since inception, we have operated at a loss, with revenues of $4,252,643 and $3,590,438 for the years ended March 31, 2026 and 2025, respectively. Our net losses were $(16,799,253) and $(14,648,792) for the years ended March 31, 2026 and 2025, respectively. We anticipate continued operating losses as we pursue market penetration and revenue growth in 2027.

Key milestones for achieving sustainable profitability include:

●

Scaling Omni One consumer sales through increased marketing and increased adoption as part of the Made for Meta program.

●

Supplementing potentially high-volume Omni One consumer sales with potentially high-value defense contracts. We believe a "dual-use" strategy of building consumer sales plus defense contracts can position us for achieving revenue growth and sustainable profitability.

VTW is still in development. We presented a proof-of-concept of VTW to potential customers at the I/ITSEC conference in Orlando, Florida, in December 2025, and we already sold Omni One test units to the U.S. Air Force Academy, YokoWERX (the innovation cell at Yokota Air Force Base), and the U.S. Military Academy at West Point. We also got selected for Phase 1 SBIR Funding by the U.S. Air Force to advance the development of VTW, and we got selected to be the lead integrator on the development of a VR infantry training system by the U.S. Marine Corps Training and Education Command (TECOM). However, we expect that meaningful sales in the defense sector may not materialize until fiscal year 2027 at the earliest. Despite the long sales cycle for penetrating the defense market, we believe that VTW will retain a strong competitive moat because of our expansive omni-directional treadmill patent portfolio, our position as a U.S. company, and the inherent barriers to entry for defense applications that competitors will face, including multi-year procurement cycles and high switching costs. To sell VTW, we will need to comply with certain requirements and regulations to qualify for government contracts or awards, depending on the type of contract or award, including but not limited to compliance with the FAR and DFARS, Export Administration Regulations, cybersecurity regulations, and requirements and restrictions related to the secure sourcing of components, including the Buy American Act and Berry Amendment. For additional information, see "Risk Factors - Our business with governmental entities will be subject to the policies, priorities, regulations, mandates and funding levels of such governmental entities and may be negatively or positively impacted by any change thereto" of our Prospectus dated January 26, 2026. The development of VTW is part of our already ongoing R&D efforts and expenditures, and we do not foresee a meaningful increase in operational costs resulting from VTW.

Following our shift in R&D and marketing efforts to Omni One, and the shift in demand for entertainment attractions from staffed VR attractions such as Omni Arena to unstaffed, lower-tech offerings, we consider the Omni Arena business to be in sustaining mode. We no longer produce new systems or invest in new games or software upgrades for the system, but we continue to support our existing Omni Arena operators and earn recurring revenues from Omni Care maintenance contracts, Omniverse Credits sales, and the sale of repair and replacement parts. We also facilitate secondary market sales of Omni Arena systems and earn a target gross margin of approximately 40% on revenues earned from reselling second-hand systems and disassembling, moving, and installing such systems.

Our path to profitability relies on scaling Omni One sales at an acceptable CAC and on gaining adoption of VTW for immersive mission planning in the defense sector. Although we believe that our plans are realistic, there is no guarantee that we will be able to scale Omni One sales or find product-market fit in the defense sector.

We believe Virtuix is well placed at the intersection of immersive gaming, fitness, and enterprise VR, and at the leading edge of the development of hyper-realistic digital twins of the real world through Gaussian splatting and other AI-driven 3D reconstruction technologies. In a world where AI is used to rapidly generate realistic virtual environments, whether imaginary game worlds or digital twins of the real world, we pioneer the technology and products for physically moving around in these virtual environments. We believe we are positioned to help define the next decade of VR advancements and be a leader in immersive gaming and simulation.

Factors Affecting our Business and Results of Operations

This section includes a summary of our historical results of operations, including detailed comparisons of our results for the years ended March 31, 2026 and 2025. We have derived the data from our financial statements included elsewhere in this Report.

Results of Operations

Fiscal Year 2026 Compared to Fiscal Year 2025

Net Revenues

Net sales for the year ended March 31, 2026, were $4,252,643, an 18% increase from sales of $3,590,438 for the year ended March 31, 2025. This increase is primarily attributable to new sales of Omni One, including resulting from a strong 2025 holiday season, whereas sales in the prior year primarily stem from fulfillment of legacy Omni One preorders that were placed during our preorder period that ended in September 2024. In the year ended March 31, 2026, net revenues of $405,656 were attributable to the fulfillment of outstanding Omni One preorders, with $264,990 of those net preorder revenues resulting from sales to investors who used an investor discount. In the year ended March 31, 2025, net revenues of $2,104,446 were attributable to the fulfillment of Omni One preorders placed prior to fiscal year 2025, with $1,391,201 of those net preorder revenues resulting from sales to investors who used an investor discount.

The following table summarizes our revenue by product line:

		Year Ended March 31, 2026				Year Ended March 31, 2025
SALES
Omni Pro units and accessories, net of discounts		$	162,592			$	60,041
Omniverse Credits			137,143				214,257
Omni Care program			175,333				130,990
Omni Arena			653,491				429,927
Omni One, net of discounts			2,732,009				2,755,223
Resale activity			392,075
TOTAL NET SALES		$	4,252,643			$	3,590,438

Cost of Goods Sold

Cost of goods sold primarily consists of material costs and shipping costs of Omni One and Omni Arena.

Cost of goods sold in the year ended March 31, 2026 was $3,206,021, a decrease of $611,794 from cost of goods sold of $3,817,815 in the year ended March 31, 2025. The decrease was primarily attributable to lower per-unit overhead costs recognized in the 2026 period compared to the 2025 period. Since shipments of Omni One only started ramping up in late 2024, manufacturing overhead incurred during the production ramp-up period in 2024 was absorbed into units shipped during the year ended March 31, 2025, resulting in a higher per-unit manufacturing cost. In contrast, manufacturing and shipment activity during the year ended March 31, 2026 period was consistently higher, resulting in lower manufacturing overhead applied per unit.

Gross profit in the year ended March 31, 2026 increased by $1,273,999 compared to gross loss in the year ended March 31, 2025, and gross margin as a percentage of revenues increased from -6% in the year ended March 31, 2025 to 25% in the year ended March 31, 2026. This increase in gross margin was the result of an increase in the selling price of the complete Omni One system from $2,595 to $3,495 plus shipping, effective since November 2024, a reduction in the per-unit manufacturing overhead cost, and the completion of the delivery of nearly all discounted units to equity crowdfunding investors. In the year ended March 31, 2026, net revenues of $1,352,982 resulted from the delivery of discounted units, and the aggregate value of all discounts totaled $256,491 for the same period.

Operating Expenses

Operating expenses consist of general and administrative expenses, which are primarily salaries, professional fees, and expenses related to the administrative functions of the Company, research and development expenses, which consist primarily of product development costs and salaries, and sales and marketing expenses, which represent advertising and other marketing costs, as well as the associated personnel costs.

		Year Ended March 31, 2026				Year Ended March 31, 2025
Selling Expenses		$	2,579,748			$	1,645,147
General & Administrative			7,940,232				10,129,112
Research & Development			845,994				2,185,133
Total Operating Expenses		$	11,365,974			$	13,959,392

Total operating expenses decreased to $11,365,974 in the year ended March 31, 2026 from $13,959,392 in the year ended March 31, 2025.

●

Selling Expenses: For the year ended March 31, 2026 compared to the same period in 2025, Selling Expenses increased to $2,579,748 from $1,645,147, with the increase in the 2026 period largely driven by the significant digital ad spend for our Regulation Crowdfunding ("Reg CF") investment campaign with StartEngine that ended around the end of June 2025, as well as increased ad spend for Omni One during the 2025 holiday season.

●

General and Administrative Expenses: For the year ended March 31, 2026 compared to the same period in 2025, General and Administrative Expenses decreased to $7,940,232 from $10,129,112, primarily because the expenses in the year ended March 31, 2025 included a one-time non-cash stock-based compensation expense of approximately $4.7 million for the issuance of an incentive stock award to an advisor and Board member. Additionally, during the year ended March 31, 2026, the Company experienced a decrease in salary expenditures and an increase in legal and professional fees, primarily attributable to costs associated with the Nasdaq uplisting process.

●

Research and Development: For the year ended March 31, 2026 compared to the same period in 2025, Research and Development expenses decreased to $845,994 from $2,185,133. This drop was due to a decrease in R&D spend and staffing following the completion of Omni One.

Other Expense

For the year ended March 31, 2026, Other Expense totaled $6,354,643, primarily driven by $2,694,722 of non-cash financing expenses recognized in connection with amendments to certain outstanding warrants, together with $2,821,899 of non-cash amortization of debt discounts associated with warrants issued in connection with debt financings and original issue discounts. For the year ended March 31, 2025, Other Expense totaled $368,120, primarily comprised of interest expense on debt.

Net Loss

As a result of the foregoing, net loss for the year ended March 31, 2026 was $(16,799,253) compared to $(14,648,792) for the year ended March 31, 2025, representing an increase in net loss of $2,150,461. The net loss for the year ended March 31, 2025 included a one-time non-cash stock-based compensation expense of approximately $4.7 million, and total non-cash stock compensation of $5.9 million, compared to non-cash stock-based employee compensation expense of approximately $441,000 for the year ended March 31, 2026. However, the net loss for the year ended March 31, 2026 included approximately $5.5 million of non-cash discount amortization and financing expenses associated with the Company's debt and warrant financing activities, compared to no similar expenses during the year ended March 31, 2025.

Non-GAAP Financial Measures

Management reviews a variety of operational and financial metrics to assess the Company's performance, allocate resources, and inform strategic decision-making. In addition to net sales, net loss, and other measures prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), this report includes certain operating metrics and non-GAAP financial measures that management considers meaningful in evaluating the Company's operating performance.

These measures are used by management and the Board of Directors to assess trends in the business, evaluate the effectiveness of operational initiatives, and support decisions regarding investment and cost management. Management believes that the presentation of these non-GAAP financial measures provides investors with additional insight into the Company's operating results and facilitates period-to-period comparisons.

Adjusted EBITDA

		For the Year Ended March 31,
		2026				2025
		(Unaudited)
Reconciliation of GAAP net loss to Adjusted EBITDA
NET LOSS		$	(16,799,253	)		$	(14,648,792	)
Plus:
Taxes			125,258				78,955
Interest expense(1)			3,543,037				369,420
Depreciation and amortization			625,987				482,389
EBITDA		$	(12,504,971	)		$	(13,718,028	)
Plus:
Stock-based compensation(2)			1,676,960				5,860,695
Financing Expense(3)			2,694,722				-
Loss on extinguishment of debt			122,864				-
ADJUSTED EBITDA		$	(8,010,425	)		$	(7,857,333	)

1.

Interest expense for the year ended March 31, 2026 includes $2,821,899 of non-cash amortization of debt discount related to secured promissory notes issued to Streeterville Capital, LLC (see Note 9 - Notes Payable to the Consolidated Financial Statements). The debt discount results from the issuance of warrants as well as original issue discount and related closing costs, which are being amortized to interest expense over the term of the notes.

2.	Stock-based compensation expense for the year ended March 31, 2026 consisted of $1,235,009 related to equity awards granted to vendors and service providers and $441,951 related to equity awards granted to employees, officers, and directors. Stock-based compensation expense for the year ended March 31, 2025 consisted entirely of employee, officer, and director awards, including a one-time non-cash charge of approximately $4.7 million.
3	Financing expense represents a one-time non-cash charge recognized in connection with amendments to certain outstanding warrants during the year ended March 31, 2026.

Adjusted EBITDA is a non-GAAP financial measure that we use to evaluate our operating performance. Adjusted EBITDA represents net income (loss), adjusted to exclude: (i) provision for (benefit from) income taxes, (ii) interest expense, net, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) non-recurring financing expense, and (vi) loss on extinguishment of debt.

We believe Adjusted EBITDA is useful to investors because it provides a supplemental measure of our operating cash flow by excluding non-cash expenses and other items that may not be indicative of our core operating results or that may vary significantly from period to period. For the periods presented, such non-cash items include amortization of debt discount, depreciation and amortization, and stock-based compensation expense, which can significantly impact reported net loss but does not impact our cash flow. However, Adjusted EBITDA has limitations and should not be considered in isolation or as a substitute for financial information prepared in accordance with GAAP. These limitations include the following:

●

Stock-based compensation has been, and is expected to continue to be, a significant recurring expense and an important component of our compensation strategy.

●

Depreciation and amortization relate to assets that may require replacement in the future, and Adjusted EBITDA does not reflect the cash requirements for capital expenditures.

●

Adjusted EBITDA does not reflect changes in working capital or the cash requirements necessary to service our debt.

●

Other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently, limiting their usefulness as comparative measures.

Accordingly, Adjusted EBITDA should be considered only as a supplement to, and not as a substitute for, net income (loss) and other measures prepared in accordance with GAAP.

Liquidity and Capital Resources

We continue to experience negative cash flows from operations as we expand our business. Our cash flows from operating activities are significantly affected by our cash investments to support the growth of our business in areas such as sales and marketing, product development, and general and administrative. Our operating cash flows are also affected by our working capital needs to support the scaling of manufacturing and inventories.

As of March 31, 2026 and March 31, 2025, the Company had cash on hand of $9,471,288 and $477,908, respectively. Since its inception, the Company has incurred net losses and funded its operations primarily through the issuance of equity securities. As of March 31, 2026, the Company had a total stockholders' equity of $3,048,103, and a stockholders' deficit of $(794,035) as of March 31, 2025. The Company has incurred recurring losses from operations, and as of March 31, 2026 and March 31, 2025, had an accumulated deficit of $(79,291,843) and $(62,492,590), respectively.

The Company's continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. The Company has developed plans to raise funds and continues to pursue sources of funding that management believes, if successful, would be sufficient to support the Company's operation and growth. As discussed in the Subsequent Events section of the Notes to the Consolidated Financial Statements, the Company has successfully executed sources of funding and debt conversions from April 2026 through June 2026. Streeterville has exercised 230,000 warrants during this period, resulting in proceeds to the Company of $1,380,000. Streeterville has also made partial redemptions in connection with the Exchange Agreement, resulting in principal debt reduction of $284,500. Additionally, we entered into an agreement with Streeterville in which the three outstanding secured convertible promissory notes converted fully into a second Pre-Paid Purchase, removing the upcoming maturity dates of the notes and terminating the secured notes' lien on our assets.

During the twelve months ended March 31, 2025, the Company raised the following proceeds from financing activities:

●

$3,598,805 through issuances of SAFE notes to accredited investors under Regulation D of the Securities Act.

●

$2,999,051 through issuances of Series B preferred stock pursuant to a Reg CF campaign with StartEngine, an online equity crowdfunding platform, and to accredited investors under Regulation D of the Securities Act.

●

$2,485,000 through issuances of unsecured promissory notes to accredited investors. Subsequently, outstanding notes with a principal amount of $117,500 were converted to Series B preferred stock during the fiscal year ended March 31, 2025, and outstanding notes with a principal amount of $400,000 were converted to Series B preferred stock during the fiscal year ended March 31, 2026.

During the twelve months ended March 31, 2026, the Company raised the following additional proceeds from financing activities:

●

$1,832,362 (net of investor and issuer fees) through issuances of Series B preferred stock pursuant to a Reg CF campaign with StartEngine, an online equity crowdfunding platform.

●

$112,990 through issuances of Series B preferred stock to accredited investors under Regulation D of the Securities Act.

●

$217,678 through issuances of unsecured promissory notes to two related parties, which was subsequently paid back in the same period. For additional information, see "Certain Relationships and Related-Party Transactions - Related-Party Promissory Notes."

●

$2,000,000 through the First Note Purchase Agreement with Streeterville, pursuant to which Virtuix issued the First Note in the principal amount of $2,220,000.

●

$500,000 through the Second Note Purchase Agreement with Streeterville, pursuant to which Virtuix issued the Second Note in the principal amount of $560,000.

●

$500,000 through the Third Note Purchase Agreement with Streeterville, pursuant to which Virtuix issued the Third Note in the principal amount of $560,000.

●

$1,500,000 through issuances of subordinated promissory notes (the "Second 2025 Notes"), pursuant to which Virtuix issued notes totaling $1,650,000.

●

$8,000,000 through the initial advance of the PPP Agreement with Streeterville, which, per the August 25, 2025 Securities Purchase Agreement, was funded at the closing of the Company's direct listing on January 27, 2026.

●

$24,978 through exercise of stock options by a certain holder, pursuant to which Virtuix issued 10,720 shares of Class A common stock.

●

$7,564,115 through the exercise of warrants, pursuant to which Virtuix issued 1,703,035 shares of Class A common stock.

As an additional inducement for certain investors to participate in our Series B preferred stock financing, we issued warrants to purchase shares of our common stock. At the time of issuance, these warrants were exercisable for an aggregate of 313,153 shares of common stock of Virtuix at an exercise price of $0.01 per share. As of March 31, 2026, all 313,153 common stock warrants had been exercised.

In association with various agreements to obtain financing with Western Technology Investment between September 2014 and April 2022, the Company has granted warrants to Western Technology Investment to purchase stock in Virtuix. These warrants were exercisable for an aggregate of 334,961 shares of common stock of Virtuix, of which 156,250 at an exercise price of $.80 per share, 128,646 at an exercise price of $2.332 per share, and 50,066 at an exercise price of $2.996 per share. As of March 31, 2026, all 334,961 common stock warrants had been exercised.

On August 25, 2025, we entered into a Securities Purchase Agreement with Streeterville, pursuant to which Virtuix issued the First Note in the principal amount of $2,220,000. The First Note includes an original issue discount of $200,000 and additional closing costs of $20,000. The First Note bears interest at a rate of 6% per annum, is secured by all assets of the Company, and matures nine months from the funding date. The Company received $2,000,000 in gross proceeds at closing. In addition, Streeterville received a common stock purchase warrant (the "Debt Financing Warrant") to purchase up to a number of shares of our Class A common stock equal to $4,000,000 divided by the reference price established in connection with our direct listing, exercisable at the reference price and expiring six months after the closing of the direct listing. On October 30, 2025, we entered into a Securities Purchase Agreement with Streeterville, pursuant to which we issued (i) the Second Note in the principal amount of $560,000, bearing interest at 6% per annum and secured by substantially all of our assets and (ii) a common stock purchase warrant to purchase a number of shares of our Class A common stock equal to $1,000,000 divided by the reference price established in connection with our direct listing. The Second Note includes an original issue discount of $50,000 and additional closing costs of $10,000. The Company received $500,000 in gross proceeds at closing of the Second Note. On December 19, 2025, we entered into a Securities Purchase Agreement with Streeterville, pursuant to which we issued (i) the Third Note in the principal amount of $560,000, bearing interest at 6% per annum and secured by substantially all of our assets and (ii) a common stock purchase warrant to purchase a number of shares of our Class A common stock equal to $1,000,000 divided by the reference price established in connection with our direct listing. The Third Note includes an original issue discount of $50,000 and additional closing costs of $10,000. The Company received $500,000 in gross proceeds at closing of the Third Note.

The Streeterville Notes are convertible into shares of common stock at a price equal to 85% of the reference price established in connection with the Company's direct listing. The Streeterville Notes are our only secured debt. They contain customary events of default, including failure to make payments or deliver shares, and provide for increased interest and penalties in the event of default. The Streeterville Notes may be prepaid at a premium, subject to certain conditions, and are subject to ownership and selling limitations. The shares underlying the Streeterville Notes and warrants will be registered for resale in connection with our direct listing. Ten days following the date on which the Resale Registration Statement providing for the registration of shares issuable pursuant to the Equity Purchase Agreement is declared effective, the Streeterville Notes will automatically be exchanged for and applied to the purchase price of a pre-paid purchase under the Equity Purchase Agreement in an aggregate principal amount equal to the outstanding balance then due under the Streeterville Notes.

Under applicable rules of the Nasdaq Stock Market, in no event may the Company issue more than the number of shares of its common stock which equals 19.99% of the pre-transaction common stock outstanding in a private transaction (the "Exchange Cap") at a price less than the "Minimum Price" (as defined in the Nasdaq 5600 Series listing rules), unless the Company first obtains stockholder approval to issue shares of common stock in excess of the Exchange Cap in accordance with applicable Nasdaq listing rules. Furthermore, pursuant to the Debt Financing transaction documents, the Company must seek stockholder approval to exceed the Exchange Cap at its next annual or special meeting of stockholders. Accordingly, on January 21, 2026, the Company obtained stockholder approval to issue common stock, including the issuance of common stock upon conversion, exercise, or settlement of warrants, in an amount that may exceed 19.99% of the Company's issued and outstanding common stock where the issue price is less than the Minimum Price.

Proceeds from the Debt Financing were used to pay off existing indebtedness, including but not limited to retiring the Company's only secured indebtedness outstanding prior to the Debt Financing, with the remaining proceeds used or to be used for working capital and general corporate purposes.

On August 25, 2025, we entered into the Equity Purchase Agreement with Streeterville, pursuant to which Streeterville committed to purchase up to $50,000,000 of Class A common stock through one or more prepaid advances over a 24-month period. The initial advance of $8,000,000 (net of original issue discount) was funded at the closing of our direct listing, with subsequent advances subject to certain conditions, including minimum market capitalization, trading volume, and compliance with Nasdaq listing standards. Each advance includes an 8% original issue discount and bears interest at 6% per annum. Streeterville also received the Equity Financing Warrant. The conversion price for the advances is set at 120% of the reference price, with, subject to certain triggers, an alternate conversion price based on 90% of the lowest volume-weighted average price during the ten trading days prior to conversion, subject to a $2.00 price floor. The Equity Purchase Agreement includes customary events of default, selling and ownership limitations, Company covenants, and a prepayment option for the Company. The shares underlying the advances will be registered for resale following our direct listing. The shares underlying the warrants will be registered for resale in connection with our direct listing.

We may request advances up to an aggregate of $50,000,000 over the term of the Equity Purchase Agreement; however, Streeterville's obligation to fund advances is not solely at the discretion of the Company. Each advance is subject to a number of conditions, including that our market capitalization is at least $95,000,000 and both our 20-day and 60-day median and average daily trading volumes are at least $350,000 at the time of any request for a subsequent advance. Additional requirements include compliance with continued listing standards and an effective registration statement for the resale of shares issuable pursuant to the outstanding advances. If we fail to meet any of these conditions at the time of a request, Streeterville may decline to provide the requested funds. As a result, there is no assurance that we will be able to access the full $50,000,000 or any specific amount under the Equity Purchase Agreement, and our ability to request subsequent advances may be limited by market conditions, our performance, or other factors outside our control.

In October and November 2025, we issued unsecured promissory notes (the "Second 2025 Notes") to investors in a transaction exempt from registration under Section 4(a)(2) of the Securities Act, and Rule 506(b) promulgated under Regulation D for total proceeds of $1,500,000. The Second 2025 Notes bear principal equal to 110% of each investor's cash investment, accrue simple interest at 6.0% per annum, and mature on March 31, 2026 (as extended by the Company, in its sole discretion, from December 31, 2025). At or before maturity, the Company may repay the full outstanding principal and interest in cash or convert that amount into Common Stock at a price equal to 85% of the Nasdaq valuation price of $8.75; beginning on the date of our direct listing and continuing until full repayment, the noteholder may likewise elect to convert outstanding indebtedness at the same conversion price. During January and March 2026, holders of certain 2025 Notes converted an aggregate of $797,500 in outstanding principal, $14,588 in accrued unpaid interest, and $25,000 of unamortized debt discount into an aggregate of 109,183 shares of the Company's Class A common stock pursuant to the terms of the applicable notes. Upon conversion, the corresponding debt obligations were extinguished and reclassified to stockholders' equity. No gain or loss was recognized in connection with the conversions. During the fiscal year ended March 31, 2026, the Company also repaid an aggregate of $852,500 in outstanding principal and $21,943 in accrued unpaid interest to holders of certain 2025 Notes. As of March 31, 2026, the notes had no remaining balance.

As of March 31, 2026, our obligations include the Exchange Note issued to Streeterville Capital, LLC, with a principal amount of $2,681,718 maturing in July 2027, an EIDL loan with a carrying amount of approximately $24,500 maturing in August 2050, secured promissory notes issued to Streeterville Capital, LLC, convertible into shares of our Class A common stock, with an outstanding principal balance of $3,340,000 and accrued interest of approximately $103,533, a PPP advance with Streeterville Capital, LLC, with an original principal balance of $8,640,000, accrued interest of $92,160, and no stated maturity date, operating lease obligations totaling approximately $779,514, and outstanding gift card liabilities of approximately $446,000.

We anticipate incurring additional losses for the foreseeable future, and we may never become profitable. Furthermore, while we have decreased our operating expenses by reducing our personnel following the launch of Omni One, we nevertheless expect expenses to increase in connection with scaling sales, marketing, and production of Omni One, and in connection with being a public company. As of the date of this filing, following proceeds of $1,380,000 from Streeterville warrant exercises, we estimate we will have the resources to conduct our planned operations for at least 9 months. To continue as a going concern and execute our operating plan for the next 12 months, we estimate we will require additional funding of approximately $2,500,000.

Our operating plan is predicated on a variety of assumptions including, but not limited to, the level of product demand, cost estimates, our ability to continue to raise additional financing and the state of the general economic environment in which we operate. There can be no assurance that these assumptions will prove accurate in all material respects, or that we will be able to successfully execute our operating plan. In the absence of additional appropriate financing, we may have to modify our plan or slow down the pace of development and commercialization.

The following table summarizes our cash flows from operating, investing, and financing activities for the fiscal years ended March 31, 2026 and March 31, 2025:

		Year Ended March 31, 2026				Year Ended March 31, 2025
Net cash used in operating activities		$	(9,504,380	)		$	(7,890,252	)
Net cash used by investing activities		$	(97,045	)		$	(467,189	)
Net cash provided by financing activities		$	18,594,805			$	8,565,320

Tariffs

Our products are currently manufactured primarily in China and imported into the United States. U.S. import tariff rates, which under the two Trump administrations fluctuated widely, have potential to materially impact our financial results by reducing our profit margins or forcing us to raise selling prices to the consumer, which could in turn depress demand. We consider the materiality threshold to be any tariff level that exceeds 30% and remains elevated for a sustained period. For additional information, see "Risk Factors - Unfavorable global economic and political conditions, including tariffs and trade barriers, could adversely affect our business, financial condition or results of operations" of our Prospectus dated January 26, 2026.

On February 20, 2026, the U.S. Supreme Court ruled against the tariffs the Trump administration had imposed under the International Emergency Economic Powers Act (IEEPA). In response, the Trump administration signaled its intention to seek alternative mechanisms for imposing tariffs. Although these developments may reduce the likelihood of tariffs being imposed under emergency authorities such as IEEPA, the Trump administration has signaled its intent to pursue alternative statutory mechanisms to impose or increase tariffs, and other tariffs (including those imposed under Sections 301 and 232) remain in effect. As a result, while these developments may exert some downward pressure on certain tariff rates, tariffs remain elevated relative to historical levels and continue to present material uncertainty and risk.

As we detailed in our Prospectus, we have mitigated the potential impact of high tariffs on China-made goods by developing Taiwan as an alternative manufacturing location. We expect Taiwan and the U.S. to maintain friendly trade relations. Taiwan has earned favorable tariff treatment by increasing purchases of U.S. commodities and scaling up investments in America's manufacturing sector. On January 15, 2026, the U.S. and Taiwan signed a new trade agreement lowering tariffs on Taiwan-made goods to 15%.

In January 2023, we opened a wholly owned Taiwan subsidiary named Virtuix Manufacturing Taiwan Ltd. and began outsourcing some Omni One materials to Taiwanese factories. If import tariffs on goods from China were to exceed the materiality threshold for a sustained period, we can expand our Taiwan manufacturing program by assembling the entire Omni One product in Taiwan.

Emerging Growth Company

We are an "emerging growth company," as defined in the Jump Start Our Business Startups Act of 2012 ("JOBS Act"). The status of "emerging growth company" enables us to invest more in research & development and customer acquisition rather than compliance overhead. As an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting and disclosure requirements that are applicable to public companies that are not emerging growth companies, and we have elected to take advantage of those exemptions. For so long as we remain an emerging growth company, we will not be required to:

●

have an auditor attestation report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act");

●

submit certain executive compensation matters to shareholder advisory votes pursuant to the "say on frequency" and "say on pay" provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the "say on golden parachute" provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; or

●

disclose certain executive compensation related items, such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to median employee compensation.

In addition, the JOBS Act provides that an emerging growth company may take advantage of an extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies. This means that an emerging growth company can delay adopting certain accounting standards until such standards are otherwise applicable to private companies. We have elected to take advantage of the extended transition period. Since we will not be required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies, our financial statements may not be comparable to the financial statements of companies that comply with public company effective dates. If we were to subsequently elect to comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act.

We will remain an emerging growth company for up to five years, or until the earliest of: (i) the last date of the fiscal year during which we had total annual gross revenues of $1.235 billion or more; (ii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iii) the date on which we are deemed to be a "large accelerated filer" as defined under Rule 12b-2 under the Exchange Act.

We do not believe that being an emerging growth company will have a significant impact on our business. Also, even once we are no longer an emerging growth company, we still may not be subject to auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act unless we meet the definition of a large accelerated filer.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions or conditions. While there are a number of significant accounting policies affecting our consolidated financial statements, management believes the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments.

Emerging Growth Company Status

We are an "emerging growth company," as defined in the Jump Start Our Business Startups Act of 2012 ("JOBS Act"). Under Section 107 of the JOBS Act, emerging growth companies are permitted to use an extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards that have different effective dates for public and private companies. We have elected to use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company, or (ii) affirmatively and irrevocably opt out of the extended transition period provided in Section 7(a)(2)(B). By electing to extend the transition period for complying with new or revised accounting standards, our financial statements may not be comparable to the financial statements of companies that comply with public company effective dates.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Virtuix Holdings Inc. as well as its subsidiaries required to be consolidated under accounting principles generally accepted in the United States of America ("GAAP"). Significant intercompany accounts and transactions have been eliminated upon consolidation.

Basis of Presentation

The consolidated financial statements are presented using the accrual basis of accounting, in U.S. dollars which is the Company's functional currency. Therefore, revenues are recognized when earned and expenses are recognized when incurred.

The Company has adopted a fiscal year ending March 31 of each year.

Management's Estimates

Preparing the Company's consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has not generated profits since inception and has incurred net losses of $16,799,253 and $14,648,792 for the years ended March 31, 2026 and 2025, respectively, and has accumulated deficits of $79,291,843 and $62,492,590 as of March 31, 2026 and March 31, 2025, respectively. These factors, when considered in conjunction with the Company's working capital and liquid assets as of March 31, 2026, raise substantial doubt about the Company's ability to continue as a going concern within one year after the date these financial statements are issued. Subsequent to March 31, 2026, the Company raised additional capital that has improved liquidity and is expected to mitigate the conditions that gave rise to this substantial doubt.

Management has taken several actions that it believes will ensure that the Company will continue as a going concern for the next twelve months from the date the consolidated financial statements are available to be issued:

1.

Continuing to ramp up marketing and sales of Omni One; with anticipated significant revenues from this product line; and

2.

Raising capital from existing and new shareholders as necessary to fund operations.

No assurance can be given that these efforts will be successful. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, which provides a five-step model to determine when and how revenue is recognized. Under this model, revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring control of goods or services to a customer.

The Company applies the following five steps to all revenue-generating arrangements:

1.

Identify the contract with a customer;

2.

Identify the performance obligations in the contract;

3.

Determine the transaction price;

4.

Allocate the transaction price to the performance obligations; and

5.

Recognize revenue when or as each performance obligation is satisfied.

The Company's contracts typically consist of product sales, installation services, support programs, or the sale of digital playtime credits. Each of these is evaluated to determine whether it represents a separate performance obligation.

The majority of revenue arrangements involve a single performance obligation to transfer or install physical goods. Revenue is recognized when control is transferred to the customer, which occurs as follows:

●

Omni Pro units and related accessories - Revenue is recognized upon shipment to the customer, which is when control transfers and title passes.

●

Omni One units - Revenue is recognized upon shipment, consistent with the Company's shipping terms.

●

Omni Arena systems - Revenue is recognized upon installation at the customer's location, which is when control transfers.

●

Omni Care service program - treated as a separate performance obligation included with each Omni Arena contract. The transaction price is allocated to this performance obligation on a relative standalone selling price basis, using observable standalone pricing of $2,000 per quarter. Accordingly, $8,000 associated with Omni Care is included in the initial contract transaction price and is recognized ratably over the first 12 months of the contract term, as the services are provided evenly over time. Following the initial 12-month period, customers are billed $2,000 per quarter for continued Omni Care services. Fees billed after the first year are recognized ratably over the applicable quarterly service period.

●

Omniverse Credits - These credits grant access to virtual content or gameplay tied to Omni Pro and Omni Arena units. Revenue is recognized over the period during which access is expected to be consumed, typically two months from purchase based on usage patterns.

●

Omni Online - Revenue is recognized over time, ratably over the subscription period.

●

Omni One extended warranty - Sold separately from the Omni One unit and represents a service-type warranty. The transaction price is allocated to the extended warranty on a relative standalone selling price basis, with an observable standalone selling price of $295. Revenue is recognized ratably over the 3-year warranty term.

Contracts may include multiple performance obligations. In such cases, the Company allocates the transaction price to each obligation based on relative standalone selling prices. Payment terms are generally fixed and do not include significant financing components.

Amounts received in advance of satisfying performance obligations are recorded as contract liabilities and recognized as revenue when the related obligation is fulfilled. The Company's contracts do not typically include variable consideration, material rights, or warranties that give rise to separate performance obligations. Additionally, the Company has evaluated its role in the sale of digital content and has concluded that it acts as the principal, as it controls the content prior to transfer to the customer.

Cash and Cash Equivalents

The Company considers deposits that can be redeemed on demand and investments with original maturities of three months or less, when purchased, to be cash equivalents. As of March 31, 2026 and March 31, 2025, the Company's cash and cash equivalents were deposited primarily in five financial institutions. Deposits with these institutions may exceed federally insured limits. Management believes that the financial institutions holding the Company's cash are financially sound and, accordingly, the Company does not believe it is exposed to any significant credit risk related to its cash and cash equivalents.

All of a depositor's accounts at an insured depository institution, including all non-interest bearing accounts, are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000 in total. Balances in excess of this coverage are uninsured and subject to loss should the institution fail, with a possible offset against outstanding loans. The Company has not experienced any losses in such accounts and management believes the Company is not exposed to any significant credit risk related to cash. Cash and cash equivalents in the amount of $226,309 and $196,962, representing foreign deposits at financial institutions, are not insured by the FDIC at March 31, 2026 and March 31, 2025, respectively.

Accounts Receivable

Terms of payment are generally thirty days from the invoice date. Receivables are recorded net of an allowance for credit losses, which is established based on management's best estimate of probable credit losses after considering factors such as previous loss history, customers' ability to pay their obligations, and the condition of the general economy and industry as a whole.

Inventory Valuation

Inventory is stated at the lower of cost (first-in, first-out) or net realizable value in accordance with Topic 330, Inventory. Cost is computed using weighted average cost at one subsidiary and specific identification cost at the remaining subsidiaries. There is no material impact on the comparability of the financial results as a result of these differing methods. The Company applies net realizable value and obsolescence to the gross value of the inventory.

The Company estimates net realizable value based on estimated selling price less further costs to completion and disposal. The Company impairs slow-moving products by comparing inventories on hand to projected demand. When impairments are established, a new cost basis of the inventory is created.

Property and Equipment

Property and equipment are recorded at cost, less accumulated depreciation. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. Leasehold improvements are amortized over the shorter of the term of the respective operating lease or the estimated economic life of the asset. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate.

The estimated useful lives for significant property and equipment categories are as follows:

Computer Equipment		5 years
Furniture and Fixtures		7 years
Machinery and Equipment		3 - 7 years
Office Equipment		5 - 7 years
Leasehold Improvements		3 - 5 years

Fair Value Measurements

The Company's financial instruments consist primarily of cash, accounts receivable, accounts payable, accrued expenses, notes payable, and lease liability. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

Financial Accounting Standards Board ("FASB") guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

●

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

●

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).

●

Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the consolidated balance sheets approximate their fair value.

Intangibles

The Company's intangible assets include software, trademarks, customer lists, and a website, which are amortized on a straight-line basis over their estimated useful lives. The costs of developing intangible assets for internal use are expensed as incurred.

The estimated useful lives for significant intangible asset categories are as follows:

Software		3 - 5 years
Trademarks		Indefinite
Customer Lists		3 years
Website		3 years

Software and Website Development Costs

The Company accounts for software development costs in accordance with several accounting pronouncements, including Topic 730, Research and Development, Topic 985-20, Costs of Computer Software to be Sold, Leased, or Marketed and Topic 330-10, Inventory.

Costs incurred during the period of planning and design, prior to the period determining technological feasibility, for all software developed for internal and external use, has been charged to operations in the period incurred as research and development costs. Additionally, costs incurred after determination of readiness for market have been expensed as research and development. The Company capitalizes certain costs in the development of its proprietary software (computer software to be sold, leased or licensed) for the period after technological feasibility was determined and prior to marketing and initial sales. Once technological feasibility is reached, and the software has been released for sale, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products. These capitalized costs are amortized over their estimated useful lives and reviewed for impairment in accordance with Topic 330 when indicators of impairment exist.

Website development costs are accounted for separately under Topic 350-50, Website Development Costs.

Deferred Revenue

Deferred revenue represents cash received from customers for which the related revenue has not yet been earned. This primarily includes unfilled orders of Omni One units and Omni Pro units that have not yet been delivered or refunded by the end of the reporting period. Deferred revenue also includes amounts billed but not yet recognized for Omni Arenas installations and parts, as well as deferred revenue related to Omniverse Credits and Omni Care subscriptions associated with installed Omni Arena units for which revenue recognition criteria have not been met.

Deferred revenue as of March 31, 2026 and March 31, 2025 consists of the following:

		March 31, 2026				March 31, 2025
Omni One		$	24,121			$	936,821
Omni One Extended Warranty			21,855				-
Omni Pro			450,732				451,545
Omni Arena			94,744				290,169
Omni Online			29,874				44,104
Omniverse Credits			27,001				37,584
Omni Care subscriptions			18,000				9,333
Total		$	666,327			$	1,769,556

Revenue recognized during the year ended March 31, 2026 and 2025 that was included in deferred revenue at the beginning of the respective periods was $3,571,140 and $3,100,627, respectively.

Payments received from customers during the year ended March 31, 2026 and 2025 that increased deferred revenue were $2,703,064 and $3,109,944, respectively.

Deferred revenue includes legacy preorders for Omni Pro units that we have not been able to refund to customers due to an inability to get in touch with these customers. We no longer produce or sell Omni Pro. As of March 31, 2026, the value of unrefunded Omni Pro preorders totaled $449,635. We plan to report these preorders as unclaimed (escheated) property to the State of Texas and submit these funds to the Texas Comptroller of Public Accounts. The related balance will be reclassified from deferred revenue to an escheatment liability account, both of which are presented within current liabilities. The liability will be relieved when the funds are remitted to the State. There will be no impact to the Company's Consolidated Statement of Operations because we will not recognize revenues or expenses on these preorders. Upon remittance, both cash and current liabilities will be decreased on the Consolidated Balance Sheet, and the remittance will be reflected as a cash outflow within cash used in operating activities in our Consolidated Statement of Cash Flows.

Deferred revenue previously included outstanding Omni One preorder deposits of $200 each from customers who placed a preorder for Omni One but have not yet completed their purchase. However, during the year ended March 31, 2026, the Company issued customers gift cards as a replacement for their preorder deposit, and thus, reclassified preorder purchases totaling $226,445 from Deferred Revenue to a separate liability account. We expect most of these gift cards to be applied by the customers to a future purchase of Omni One, or otherwise to expire unclaimed.

Advertising Costs

Advertising costs are expensed as incurred, and are included in selling expenses in the accompanying consolidated statements of operations. Total advertising expense for the year ended March 31, 2026 and 2025, was $1,317,794 and $347,429, respectively.

Federal Income Taxes

Topic 740, Income Taxes, clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. Topic 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure, and transition. No uncertain tax positions were identified. The Company recognizes tax related interest and penalties, if any, as a component of income tax expense. The Company has never incurred any federal income tax liability and has not paid any federal income taxes since its inception.

The U.S. federal tax returns are subject to examination by the Internal Revenue Service, generally for three years after they are filed. State tax returns are subject to examination generally for five years after they are filed.

Net Loss Per Share

Basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. The Company presents both basic and diluted net loss per share. Basic net loss per share includes only the weighted-average common shares outstanding during the period.

Potentially dilutive securities that were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive, include stock options, RSUs, warrants, and convertible preferred stock. The total number of potentially dilutive shares excluded from the computation was 5,790,884 and 24,336,200 at March 31, 2026 and 2025, respectively.

Foreign Currency Remeasurements

The Company's non-U.S. subsidiaries, VML and its wholly-owned subsidiary VML_ZH, along with VMT, operate using the U.S. dollar as the functional currency. The effect of foreign currency exchange rate fluctuations on consolidated balance sheet accounts were not material for the year ended March 31, 2026 and 2025.