Financial Analysis

Note 12. Commitments and Contingencies The Company has certain royalty commitments associated with the shipment of its products for the use of licensed software and modifications together with the Companys hardware and other software. Royalty expense is generally based on a dollar amount per unit shipped and can range from $1 per unit to $8 per unit. For the years ended March 31, 2026 and 2025, management has recorded royalty expense in the consolidated statements of operations of $0 and $68, respectively. In February 2024, the Company was named a co-defendant and served a citation by a customer related to alleged injuries obtained when attempting to use the Omni Arena attraction at an entertainment venue. The Companys attorneys, retained by the Companys insurance provider, filed a general denial and alleged contributory negligence against the plaintiff. Subsequent to March 31, 2026, the parties signed a final settlement agreement and release, resolving the matter. All legal costs and settlement fees are covered by the Companys insurance provider. …

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Note 9. Notes Payable Convertible Notes Effective August 25, 2025, the Company issued a secured convertible promissory note to Streeterville Capital, LLC in the amount of $2,220,000. The note is convertible into shares of Class A common stock calculated as the converting balance divided by 85% of the NASDAQ valuation price. The note provides for payment of principal and accrued interest at maturity, nine months after the purchase price date. The note has a fixed rate of interest of 6% and is secured by all assets of the Company. The note includes an original issue discount of $200,000 plus additional closing costs of $20,000, which are amortized over the life of the note. The Company granted warrants associated with this note to acquire shares of Class A common stock. In accordance with ASC 470-20, the warrants are recorded at fair value of $1,427,653 in equity as additional paid-in capital (APIC) warrants, and as a contra-liability (discount on note payable) that is amortized over the life of the note. Effective February 9, 2026, as a result of an amendment to the warrants, the Company determined that the fair value of the warrants increased to $1,570,797, and recorded the incremental fair value as a financing expense. During the fourth quarter of the fiscal year ended March 31, 2026, Streeterville Capital, LLC exercised all 457,143 outstanding debt warrants granted with the August 25, 2025 secured convertible promissory note, which had an aggregate fair value of $1,570,797, …

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Revenue streams from performance obligations included in net sales as of March 31, 2026 and 2025, in the consolidated statements of operations are as follows: March 31, 2026 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 2,732,009 2,755,223 Resale activity 392,075 - NET SALES $ 4,252,643 $ 3,590,438

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Note 14. Stock Compensation Expense The Company accounts for stock-based compensation under the provisions of Topic 718, Compensation Stock Compensation , which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and non-employee officers based on estimated fair values as of the date of grant. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period. As mentioned in Note 13, the Company has a stock-based employee compensation plan, the Long Term Incentive Plan (the Plan), for which 2,500,000 shares of common stock were reserved for issuance under the Plan. Awards granted under the Plan typically expire ten years after the grant date. The Plan expired on April 6, 2024. During the fiscal year ended March 31, 2026, 10,720 options were exercised (See Note 13), and 19,258 option awards expired. As such, 553,750 issued awards remained outstanding as of March 31, 2026. On January 22, 2025, the Company adopted a new Long Term Incentive Plan (the 2025 Plan), providing for the issuance of up to 1,850,000 shares of Common Stock of the Company upon the exercise of options or the issuance of restricted stock awards under the 2025 Plan. The Company approved the issuance of option grants to employees of the Company under the 2025 Plan totaling 1,635,000 optioned shares as of March 31, 2025. During the fiscal year ended March 31, 2026, the Company did not grant any options under …

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Note 15. Income Taxes Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to depreciable assets using accelerated depreciation methods for income tax purposes, share-based compensation expense, and for net operating loss carryforwards. Deferred tax assets consisted of the following at March 31, 2026 and 2025: March 31, 2026 March 31, 2025 Deferred tax assets: Share-based compensation expense $ 2,280,810 $ 1,051,968 Net operating loss carryforward 11,548,234 6,969,218 Long-term deferred tax liabilities: Property and equipment (1,007,178 ) (353,148 ) Net deferred tax assets and liabilities 12,821,866 7,668,038 Valuation allowance (12,821,866 ) (7,668,038 ) Net deferred tax asset $ - $ - The Company recognizes deferred tax assets to the extent that it believes these assets are more likely than not to be realized. In making this determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and recent operating results. The federal tax rate in effect affecting future tax benefits at March 31, 2026 and 2025 was 21%. The Company assessed the need for a valuation allowance against its net deferred tax assets and determined that a full valuation allowance is required due to cumulative losses through March 31, 2 …

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Note 10. Leases The Company accounts for leases in accordance with ASC 842, Leases . The Company has elected the package of practical expedients permitted under the transition guidance within ASC 842, which allows the Company to (i) not reassess whether any expired or existing contracts contain leases, (ii) not reassess the lease classification of any expired or existing leases, and (iii) not reassess initial direct costs for any existing leases. The Company has also elected the short-term lease exemption for certain leases with a term of 12 months or less. Right-of-use (ROU) assets are presented in non-current assets on the consolidated balance sheets, while the corresponding lease liabilities are split between current and non-current liabilities. Because the Company does not have access to the rate implicit in its leases, it applies an incremental borrowing rate based on the information available at lease commencement to determine the present value of future lease payments. Nature of Leases The Company leases office, warehouse, and apartment space in the United States, China, and Hong Kong under various operating lease agreements. The U.S. headquarters lease, originally entered into in 2015, has been extended multiple times and currently expires November 30, 2029, with monthly base rent of $14,960, escalating annually to $18,204. The Company leases office, warehouse, and storage space in China which expired as of September 2025, and continued as a month-to-month lease until …

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Recent Accounting Pronouncements In August 2023, the FASB issued ASU 2023-05, Business CombinationsJoint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement . This ASU provides guidance requiring a joint venture (or corporate joint venture) to recognize and initially measure its assets and liabilities at fair value upon formation. ASU 2023-05 is effective for joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. The amendments are to be applied prospectively. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , requiring public entities to disclose information about their reportable segments significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. The Company adopted ASU 2023-07 on April 1, 2024. See Note 18 for further detail. On December 14, 2023, the FASB issued ASU 2023-09, I ncome Taxes (Topic 740) Improvements to Income Tax Disclosures , which enhances transparency regarding reconciling items and income taxes paid by jurisdiction. Key new disclosure r …

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Note 18. Segment Reporting The Company operates in a single operating segment: the design, development, marketing, and sale of omni-directional treadmills, accessories, and related services to consumer and commercial customers. This single operating segment has been identified based on internal management structure and reporting to the Companys Chief Operating Decision Maker (CODM), the Companys Chief Executive Officer . The Companys CODM evaluates segment performance based on the revenues, gross profit and operating loss of the segment and uses internal financial statements to make decisions regarding resource allocation. Revenues, gross profit and operating loss used by the CODM are presented on the accompanying consolidated statements of operations. The measure of segment assets is represented as total assets presented on the accompanying consolidated balance sheets. While there are intercompany transactions between consolidated entities, these are eliminated in consolidation and do not impact the Companys single segment presentation. The Company has not identified any reportable segments other than the single operating segment discussed. …

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Note 3. Summary of Significant Accounting Policies 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 Companys functional currency. Therefore, revenues are recognized when earned and expenses are recognized when incurred. The Company has adopted a fiscal year ending March 31 st of each year. Managements Estimates Preparing the Companys 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. 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 co …

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Note 13. Capital Stock Authorized Capital Stock On August 6, 2025, stockholders approved, and on August 7, 2025, the Company filed with the Secretary of State of the State of Delaware, the Sixth Amended and Restated Certificate of Incorporation (the Certificate). Pursuant to the Certificate, the Company reclassified and converted each share of its previously outstanding capital stock into shares of Class A common stock, effective immediately upon the acceptance of the Certificate for filing by the Secretary of State of Delaware. As a result of the reclassification and conversion, all outstanding shares of the Companys capital stock, including all series of preferred stock and any previously outstanding common stock, were automatically reclassified and converted on a one-for-one basis into shares of Class A common stock. Following the effectiveness of the Certificate, only Class A common stock, Class B common stock, and undesignated and unissued Preferred Stock are authorized. As of March 31, 2026, the Company is authorized to issue 300,000,000 shares of Class A common stock, 50,000,000 shares of Class B common stock, and 50,000,000 shares of Preferred Stock. Capital Stock Rights Holders of Class A common stock, Class B common stock, and future holders of Preferred Stock are entitled to dividends, voting rights, liquidation preferences, conversion rights, and anti-dilution protections as described in the Companys Sixth Amended and Restated Certificate of Incorporation. Common …

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Note 20. Subsequent Events Management has evaluated subsequent events through June 25, 2026, the date the consolidated financial statements were available to be issued. Between April and June 2026, the Company issued an aggregate of 12,000 shares of Class A common stock to FMW Media Works LLC (New To The Street) pursuant to that certain agreement entered into in connection with a 12-month marketing and media services engagement. These shares were issued as restricted securities in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, as a transaction not involving a public offering to an accredited investor. Between April 6, 2026 and May 6, 2026, Jan Goetgeluk, the Companys Chief Executive Officer (CEO), Chairman and founder, sold an aggregate of 500,000 shares of the Companys Class A common stock pursuant to a Rule 10b5-1 trading arrangement that was effective January 6, 2026. Mr. Goetgeluk has informed the Company that he does not currently intend to adopt a new Rule 10b5-1 trading arrangement or sell additional shares of the Companys Class A common stock. Between April 10, 2026, and April 22, 2026, Streeterville Capital, LLC exercised portions of its Equity Financing Warrant to purchase an aggregate of 230,000 shares of Class A common stock at an exercise price of $6.00 per share, for aggregate proceeds to the Company of $1,380,000. Between May 1, 2026 and May 27, 2026, Streeterville Capita …

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