Virtuix Holdings Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective. Management’s Report on Internal Controls Over Financial Reporting This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies. Changes in Internal Control over Financial Reporting As previously disclosed, in preparation for our direct listing, management identified material weaknesses in our internal control over financial reporting related to: (i) insufficient written policies and procedures to ensure the correct application of accounting and financial reporting requirements under GAAP and SEC disclosure requirements; (ii) limitations in segregation of duties due to the Company’s size and nature; and (iii) controls related to the identification, approval, and reporting of material related-party transactions and developments. During the quarter ended March 31, 2026, management completed the implementation of remediation measures designed to address these previously identified material weaknesses. These remediation measures included formalizing and documenting accounting and financial reporting policies and procedures, implementing appropriate segregation of duties where possible and enhanced compensating controls where full segregation is not economically feasible, enhancing controls and procedures related to the identification, approval, and reporting of material related-party transactions and developments, expanding accounting and finance resources, and implementing new financial reporting processes. Based on the design and operation of these remediation measures, management concluded that the previously identified material weaknesses had been remediated as of March 31, 2026. Other than the remediation measures described above, there were no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. A portion of our directors’ and officers’ compensation is in the form of equity awards and, from time to time, they may engage in open-market transactions with respect to our securities for diversification or other personal reasons. All such transactions in our securities by directors and officers must comply with our Insider Trading Policy, which requires that transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables directors and officers to prearrange transactions in the Company’s securities in a manner that avoids concerns about initiating transactions while in possession of material nonpublic information. The following table describes the contracts, instructions or written plans for the purchase or sale of securities adopted by our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) during the three months ended March 31, 2026, that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). No other Rule 10b5-1 trading arrangements or “non-Rule 10b5-1 trading arrangements” (as defined by S-K Item 408(c)) were entered into or terminated by our directors or officers during such period. Name Title Action Date Adopted Termination Date Aggregate Number of Securities to Be Sold Jan Goetgeluk CEO and Director Adoption of Rule 10b5-1 Plan January 6, 2026 May 6, 2026 Up to 500,000 shares of Class A common stock David Allan President, COO and Director Adoption of Rule 10b5-1 Plan March 31, 2026 January 28, 2027 Up to 500,000 shares of Class A common stock Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 26 PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2026 Annual Meeting of Stockholders. Code of Business Conduct and Ethics We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code is posted on our website at www.Virtuix.com . If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a Current Report on Form 8-K. Insider Trading Policy We have adopted insider trading policies and procedures governing the purchase, sale and other dispositions of our securities by our directors, officers and employees, and the Company itself, that are reasonably designed to promote compliance with insider trading laws, rules and regulations and applicable listing standards. A copy of our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K. 27 Item 11. Executive Compensation. The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2026 Annual Meeting of Stockholders. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2026 Annual Meeting of Stockholders. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2026 Annual Meeting of Stockholders. Item 14. Principal Accountant Fees and Services. The information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act for our 2026 Annual Meeting of Stockholders. 28 PART IV Item 15. Exhibit and Financial Statement Schedules. (a) The following documents are filed as part of this Form 10-K: (1) Financial Statements: Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 2738) F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Operations F-6 Consolidated Statements of Changes in Stockholders’ Equity (Deficit) F-7 Consolidated Statements of Cash Flows F-8 Notes to the Consolidated Financial Statements F-10 (2) Financial Statement Schedules: All schedules are omitted for the reason that the information is included in the financial statements or the notes thereto or that they are not required or are not applicable. (3) Exhibits The exhibits listed in the Exhibit Index below are filed or incorporated by reference as part of this Annual Report on Form 10-K. EXHIBIT INDEX Exhibit No. Exhibit Title 3.1 Sixth Amended and Restated Certificate of Incorporation (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 3.2 Second Amended and Restated Bylaws (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 4.1* Description of Securities 10.1 Form of 2024 Note Purchase Agreement, dated July 15, 2024, by and between the Company and its various lenders (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.2 Form of 2024 Subordinated Note by and between the Company and its various lenders (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.3 Subordination Agreement, dated July 15, 2024, by and between the various lenders, Venture Lending & Leasing IX, Inc. and WTI Fund X, Inc. (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.4 Form of 2025 Note Purchase Agreement, dated May 15, 2025, by and between the Company and its various lenders (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.5 Form of 2025 Subordinated Promissory Note, by and between the Company and its various lenders (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.6 Loan Authorization and Agreement, dated August 29, 2020, by and between the U.S. Small Business Administration and the Company (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.7 Securities Purchase Agreement, dated August 25, 2025, by and between the Company and Streeterville Capital, LLC (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.8 Secured Convertible Promissory Note, in favor of Streeterville Capital, LLC, dated August 25, 2025 (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.9 Lease Agreement, dated June 25, 2015, by and between the Company and Braker Flex LLC (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.10 Third Amendment to Lease Agreement, dated April 30, 2024, by and between the Company and Braker Metric Business Parks, LLC (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 29 10.11 Investor Rights Agreement, dated March 10, 2016 (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.12 Amendment No. 1 to Investor Rights Agreement, dated September 30, 2020 (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.13 Amendment No. 2 to Investor Rights Agreement, dated January 31, 2023 (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.14 2025 Omnibus Incentive Plan (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.15 Form of Stock Option Award Agreement (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487) . 10.16 Form of RSU Award Agreement (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.17 2025 Long-Term Incentive Plan, dated January 25, 2025 (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.18 Nonqualified Stock Option Agreement, dated January 25, 2025, by and between the Company and David Allan (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.19 Incentive Stock Option Agreement, dated January 25, 2025, by and between the Company and Lauren Premo (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.20 Employment Agreement, dated September 17, 2025, by and between the Company and Jan Goetgeluk (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.21 Employment Agreement, dated September 17, 2025, by and between the Company and David Allan (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.22 Form of Indemnification Agreement (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.23 2014 Long-Term Incentive Plan, dated April 7, 2014 (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.24 Securities Purchase Agreement, dated October 30, 2025, by and between the Company and Streeterville Capital, LLC (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.25 Secured Convertible Promissory Note, in favor of Streeterville Capital, LLC, dated October 30, 2025 (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.26 Form of Second 2025 Note Purchase Agreement, by and between the Company and its various lenders (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.27 Form of Second 2025 Promissory Note, by and between the Company and its various lenders (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.28 Securities Purchase Agreement, dated December 19, 2025, by and between the Company and Streeterville Capital, LLC (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 10.29 Secured Convertible Promissory Note, in favor of Streeterville Capital, LLC, dated December 19, 2025 (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 14.1 Code of Ethics (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 19.1 * Insider Trading Policy and Dissemination of Inside Information 21.1 List of Subsidiaries (incorporated by reference from the Registration Statement on Form S-1, as amended (File No. 333-292487). 23.1* Consent of Independent Registered Public Accounting Firm 24.1 Power of Attorney (included on signature page hereto). 31.1* Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). 31.2* Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). 32.1* Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. 32.2* Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. 97.1* Clawback Policy 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File. (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith 30 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Virtuix Holdings Inc. By: /s/ Jan Goetgeluk Chief Executive Officer June 25, 2026 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jan Goetgeluk as true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute, each acting alone, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons in the capacities and on the dates indicated. Name Position Date /s/ Jan Goetgeluk Chief Executive Officer, Director June 25, 2026 Jan Goetgeluk (principal executive officer) /s/ Thomas McGinnis Chief Financial Officer June 25, 2026 Thomas McGinnis (principal financial and accounting officer) /s/ David Allan President, Chief Operating Officer, Director June 25, 2026 David Allan /s/ Ugo de Charette Director June 25, 2026 Ugo de Charette /s/ John Cunningham Director June 25, 2026 John Cunningham /s/ Parth Jani Director June 25, 2026 Parth Jani /s/ Brett Moyer Director June 25, 2026 Brett Moyer /s/ Randolph Read Director June 25, 2026 Randolph Read 31 VIRTUIX HOLDINGS INC. INDEX TO FINANCIAL STATEMENTS Page Financial Statements: Report of Independent Registered Public Accounting Firm (PCAOB ID: 2738 ) F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Operations F-6 Consolidated Statements of Changes in Stockholders’ Equity (Deficit) F-7 Consolidated Statements of Cash Flows F-8 Notes to the Consolidated Financial Statements F-10 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Virtuix Holdings Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Virtuix Holdings, Inc. and subsidiaries (the Company) as of March 31, 2026, and 2025, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the two years in the period ended March 31, 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2026, and 2025 and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2026, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. F- 2 Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition As discussed in Note 3, the Company recognizes revenue upon transfer of control of promised goods and services, such as the delivery of product and installation to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. Auditing management’s evaluation of delivery of product and installation with customers involves significant judgment, given the fact that some agreements require management’s evaluation and confirmation of completion of the performance obligations. Given these factors and due to the volume of transactions, the related audit effort in evaluating management’s judgments in determining revenue recognition for these customer agreements was extensive and required a high degree of auditor judgement. To evaluate the appropriateness and accuracy of the assessment by management, we evaluated management’s assessment in relationship to the relevant agreements. /s/ M&K CPAS, PLLC We have served as the Company’s auditor since 2025. The Woodlands, TX June 25, 2026 F- 3 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 2026 AND 2025 ASSETS March 31, 2026 March 31, 2025 CURRENT ASSETS Cash and cash equivalents $ 9,471,288 $ 477,908 Receivables, net of allowance for credit losses 379,289 125,672 Inventory 1,188,623 1,456,249 Prepaids and other current assets 897,109 306,153 TOTAL CURRENT ASSETS 11,936,309 2,365,982 NONCURRENT ASSETS Property and equipment 1,413,294 1,321,931 Less: accumulated depreciation ( 1,034,984 ) ( 857,028 ) Net property and equipment 378,310 464,903 Intangibles 2,797,741 2,792,059 Less: accumulated amortization ( 1,258,387 ) ( 810,356 ) Net intangibles 1,539,354 1,981,703 Investment in joint venture 40,619 40,689 Other assets 87,264 86,258 Right-of-use asset - operating 779,514 835,488 TOTAL NONCURRENT ASSETS 2,825,061 3,409,041 TOTAL ASSETS $ 14,761,370 $ 5,775,023 The accompanying notes are an integral part of these consolidated financial statements. F- 4 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 2026 AND 2025 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) March 31 2026 March 31 2025 CURRENT LIABILITIES Accounts payable $ 721,792 $ 807,401 Accrued expenses 559,517 502,001 Deferred revenue 666,327 1,769,556 Gift card liability 446,252 - Due to related party - 40,000 Current portion of notes payable, net of discount and unamortized deferred loan costs 6,086,943 2,589,976 Current portion of EIDL loan 570 549 Lease liability - operating 286,702 204,051 TOTAL CURRENT LIABILITIES 8,768,103 5,913,534 LONG-TERM LIABILITIES Notes payable, net of discount and unamortized deferred loan costs 2,428,835 - EIDL loan 23,517 24,087 Lease liability, net of current portion - operating 492,812 631,437 TOTAL LONG-TERM LIABILITIES 2,945,164 655,524 TOTAL LIABILITIES 11,713,267 6,569,058 STOCKHOLDERS’ EQUITY (DEFICIT) Preferred stock, $ .001 par value, 50,000,000 and 29,300,000 shares authorized at March 31, 2026 and March 31, 2025, and 0 and 21,688,242 shares issued and outstanding at March 31, 2026 and March 31, 2025, respectively, with liquidation preferences respectively of $ 0 and $ 55,536,941 at March 31, 2026 and March 31, 2025 - 21,688 Class A common stock, $ .001 par value, 300,000,000 and 37,000,000 shares authorized at March 31, 2026 and March 31, 2025 and 28,562,693 and 8,259,644 shares issued and outstanding at March 31, 2026 and March 31, 2025, respectively 28,562 8,259 Class B common stock, $ .001 par value, 50,000,000 and 0 shares authorized at March 31, 2026 and March 31, 2025 and 4,000,000 and 0 shares issued and outstanding at March 31, 2026 and March 31, 2025, respectively 4,000 - Additional paid-in capital 82,307,384 61,668,608 Accumulated deficit ( 79,291,843 ) ( 62,492,590 ) TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) 3,048,103 ( 794,035 ) TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 14,761,370 $ 5,775,023 The accompanying notes are an integral part of these consolidated financial statements. F- 5 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, 2026 AND 2025 2026 2025 NET SALES $ 4,252,643 $ 3,590,438 COST OF GOODS SOLD 3,206,021 3,817,815 GROSS PROFIT (LOSS) 1,046,622 ( 227,377 ) OPERATING EXPENSES Selling expenses 2,579,748 1,645,147 General and administrative expenses 7,940,232 10,129,112 Research and development expenses 845,994 2,185,133 TOTAL OPERATING EXPENSES 11,365,974 13,959,392 LOSS FROM OPERATIONS ( 10,319,352 ) ( 14,186,769 ) OTHER INCOME (EXPENSE) Interest income 605 1,372 Other income 5,445 - Loss on extinguishment of debt ( 122,864 ) - Other expense ( 70 ) ( 72 ) Interest expense ( 3,543,037 ) ( 369,420 ) Financing expense ( 2,694,722 ) - TOTAL OTHER INCOME (EXPENSE) ( 6,354,643 ) ( 368,120 ) PROVISION FOR INCOME TAX Enterprise income tax expense 1,700 2,353 Delaware franchise tax 123,558 76,602 TOTAL PROVISION FOR INCOME TAX 125,258 78,955 SHARE OF LOSS IN JOINT VENTURE - ( 14,948 ) NET LOSS $ ( 16,799,253 ) $ ( 14,648,792 ) Weighted average common shares outstanding: Basic and Diluted 23,046,654 8,224,645 Net loss per share: Basic and Diluted $ ( 0.73 ) $ ( 1.78 ) The accompanying notes are an integral part of these consolidated financial statements. F- 6 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEARS ENDED MARCH 31, 2026 AND 2025 Preferred Stock Class A Common Stock Class B Common Stock Treasury Treasury Additional Paid-In SAFE Accumulated Shares Amount Shares Amount Shares Amount Shares Stock Capital Notes Deficit Total Balance at March 31, 2024 20,226,564 $ 20,226 8,250,000 $ 8,250 - $ - - $ - $ 48,218,665 $ 995,518 $ ( 47,843,798 ) $ 1,398,861 Stock-based compensation - - - - - - - - 1,213,195 - - 1,213,195 Exercise of common stock warrants - - 9,644 9 - - - - 86 - - 95 Issuance of preferred stock 538,692 539 - - - - - - 2,998,512 - - 2,999,051 Repurchase of common stock - - - - - - ( 2,750,000 ) ( 2,750 ) - - - ( 2,750 ) Issuance of common stock for services - - - - - - 2,750,000 2,750 4,644,750 - - 4,647,500 Issuance of SAFE Notes - - - - - - - - - 3,598,805 - 3,598,805 Conversion of SAFE notes 922,986 923 - - - - - - 4,593,400 ( 4,594,323 ) - - Net loss - - - - - - - - - - ( 14,648,792 ) ( 14,648,792 ) Balance at March 31, 2025 21,688,242 $ 21,688 8,259,644 $ 8,259 - $ - $ - $ - $ 61,668,608 $ - $ ( 62,492,590 ) $ ( 794,035 ) Stock-based compensation - - - - - - - - 441,951 - - 441,951 Exercise of common stock warrants - - 1,703,035 1,702 - - - - 7,562,413 - - 7,564,115 Issuance of preferred stock 390,494 391 - - - - - - 1,944,961 - - 1,945,352 Issuance of preferred stock for debt extinguishment 74,430 74 - - - - - - 462,881 - - 462,975 Issuance of warrants for debt extinguishment - - - - - - - - 122,884 - - 122,864 Fair value of common stock warrants - - - - - - - - 7,755,891 - - 7,755,891 Issuance of common stock for services - - 328,833 329 - - - - 1,234,680 - - 1,235,009 Conversion of promissory notes - - 109,183 109 - - - - 787,787 - - 787,896 Preferred stock reclass ( 22,153,166 ) ( 22,153 ) 22,153,166 22,153 - - - - - - - - Investor incentive - - - - - - - - ( 214,906 ) - - ( 214,906 ) Fractional Share Rounding - - ( 1,888 ) ( 1 ) - - - - - - - ( 1 ) Class A to Class B share conversion - - ( 4,000,000 ) ( 4,000 ) 4,000,000 4,000 - - - - - - Exercise of employee stock options - - 10,720 11 - - - - 24,967 - - 24,978 Equity issuance costs - - - - - - - - ( 2,179,455 ) - - ( 2,179,455 ) Warrant modification (financing expense) - - - - - - - - 2,694,722 - - 2,694,722 Net loss - - - - - - - - - - ( 16,799,253 ) ( 16,799,253 ) Balance at March 31, 2026 - $ - 28,562,693 $ 28,562 4,000,000 $ 4,000 - $ - $ 82,307,384 $ - $ ( 79,291,843 ) $ 3,048,103 The accompanying notes are an integral part of these consolidated financial statements. F- 7 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 2026 AND 2025 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 16,799,253 ) $ ( 14,648,792 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 625,987 482,389 Amortization of discount on notes payable 2,923,059 13,727 Amortization of loan cost 26,871 - Credit loss (recovery) expense 73,151 ( 17,912 ) Stock-based compensation 441,951 5,860,695 Share of loss in joint venture 70 14,948 Warrant modification expense 2,694,722 - Loss on extinguishment of debt 122,864 - Stock issuance in exchange for services 1,235,009 - (Increase) decrease in assets: Prepaid expenses and other current assets ( 590,956 ) 372,489 Accounts receivable ( 326,768 ) ( 78,093 ) Other assets ( 1,006 ) ( 6,654 ) Inventory 267,626 ( 485,759 ) Operating lease right-of-use assets ( 260,867 ) 282,593 Increase (decrease) in liabilities: Accounts payable ( 85,609 ) 410,623 Accrued expenses 544,879 272,873 Gift card liability 446,252 - Operating lease liabilities 260,867 ( 282,593 ) Deferred revenue ( 1,103,229 ) ( 80,786 ) CASH USED IN OPERATING ACTIVITIES ( 9,504,380 ) ( 7,890,252 ) CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for purchases of property and equipment, including intangibles ( 97,045 ) ( 467,189 ) CASH USED IN INVESTING ACTIVITIES ( 97,045 ) ( 467,189 ) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of preferred stock 1,945,352 2,999,051 Proceeds from SAFE notes - 3,598,805 Payments on short-term notes payable ( 1,454,263 ) ( 411,247 ) Payments on long-term notes payable ( 549 ) ( 364 ) Proceeds from short-term notes payable 1,734,627 2,367,500 Payment for equity repurchase - ( 2,750 ) Proceeds from warrants exercised, net of issuance costs 6,985,847 95 Proceeds from convertible notes, net of issuance costs 9,398,813 - Proceeds from exercise of stock option 24,978 - Due (to) from related parties ( 40,000 ) 14,230 CASH PROVIDED BY FINANCING ACTIVITIES 18,594,805 8,565,320 NET INCREASE (DECREASE) IN CASH 8,993,380 207,879 CASH AT BEGINNING OF YEAR 477,908 270,029 CASH AT END OF YEAR $ 9,471,288 $ 477,908 The accompanying notes are an integral part of these consolidated financial statements. F- 8 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 2026 AND 2025 2026 2025 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 9,209 $ 56,824 Enterprise income taxes paid to People’s Republic of China $ 1,700 $ 2,353 Delaware franchise tax paid $ 123,558 $ 55,258 SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: SAFE notes converted to preferred stock $ - $ 4,594,323 Fair value of warrants issued with SAFE Notes $ - $ 394,132 Conversion of Class A common stock to Class B common Stock $ 4,000 $ - Debt and accrued interest extinguished for issuance of preferred stock $ 462,975 $ - Conversion of preferred stock to common stock $ 22,153 $ - Investor incentive $ 214,906 $ - Fair value of warrants issued with convertible note $ 7,755,891 $ - Promissory notes converted to common stock $ 787,896 $ - Recognition of right-of-use assets - operating $ 204,893 $ 821,644 The accompanying notes are an integral part of these consolidated financial statements. F- 9 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 1. Nature of Operations Virtuix Holdings Inc. (“Virtuix Holdings” or the “Company”) was formed on December 20, 2013, as a Delaware Corporation. The Company has a wholly-owned subsidiary, Virtuix Inc., a Delaware corporation formed on April 15, 2013. Virtuix Inc. develops virtual reality hardware and software, originally the Omni Pro, the first omni-directional treadmill that lets players walk and run freely in 360 degrees inside video games and other virtual worlds. In February 2019, the Company began to offer Omni Arena, a four-player esports attraction that includes four Omni Pro motion platforms. In January 2023, the Company began to offer Omni One, the first Omni entertainment system designed for the home. On June 24, 2015, the Company acquired 10,000 shares of common stock of Virtuix Manufacturing, Limited (“VML”), a wholly-owned subsidiary. VML is a Hong Kong corporation that was formed to conduct manufacturing operations and transact USD-denominated business with suppliers. Virtuix Manufacturing (Zhuhai) Co., Ltd. (“VML_ZH”) was formed on July 28, 2016, and is a wholly-owned subsidiary of VML. VML_ZH is a Wholly Foreign-Owned Enterprise (“WFOE”) registered in Zhuhai, Guangdong, China that was formed to sell products to Chinese customers and transact CNY-denominated business with Chinese suppliers. Virtuix Manufacturing Taiwan Ltd. (“VMT”) was formed on January 17, 2023, and is a wholly-owned foreign subsidiary of VHI. VMT is a Taiwan corporation that was formed to employ staff in Taiwan and conduct manufacturing operations. Virtuix Arabia LLC (“VA”) was formed in June 2024, and is a 57.5 % owned foreign subsidiary of VHI. VA has not yet begun operations. In July 2016, the Company formed a joint venture with Hero Entertainment, a Chinese game publisher and esports operator, to develop active virtual reality content and product bundles for the Chinese and U.S. markets. The joint venture, named Heroix VR (Shanghai) Co., Ltd. (the “Joint Venture” or “Heroix”), is a Sino-foreign equity joint venture company established under the laws of the People’s Republic of China and registered in Shanghai. VML has 49 % ownership and does not have control over the Joint Venture, therefore, the investment is accounted for using the equity method. In October 2016, the Joint Venture began operations. To service the Chinese market most efficiently, Hero Entertainment’s management proposed in mid-2025 that Virtuix’s China subsidiary take over the China sales channel from the Joint Venture. As a result of these discussions, Hero Entertainment and Virtuix began taking steps in late 2025 to close the Joint Venture entity, and the Company expects the closure process to be completed in the quarter ending September 30, 2026. Note 2. 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, has negative cash flows from operations, has sustained net losses of $ 16,799,253 and $ 14,648,792 for the years ended March 31, 2026 and 2025, respectively, and has an accumulated deficit of $ 79,291,843 and $ 62,492,590 as of March 31, 2026 and 2025, respectively. The Company has limited working capital and liquid assets as of March 31, 2026, relative to its operating cash flow needs. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern within one year after the date that the consolidated financial statements are available to be issued . Management has taken several actions to 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 the Company will be successful in these efforts. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 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 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 st 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. F- 10 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 3. Summary of Significant Accounting Policies (continued) 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 include product sales, installation services, support programs, or the sale of digital playtime credits. Each arrangement is evaluated to determine whether it contains on or more performance obligations. The majority of contracts involve a single performance obligation to transfer or install physical goods. Revenue is recognized when control transfers to the customer, which occurs as follows: ● Omni Pro units and related accessories – Revenue is recognized upon shipment, when control and title pass. ● 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, when control transfers. ● Omniverse credits – Revenue is recognized over the estimated consumption period, typically two months from purchase based on usage patterns. ● Omni Online – Revenue is recognized ratably over the subscription period. ● 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. ● Omni One extended warranty - Sold separately from the Omni One unit and represents a service-type warranty. The transaction price is allocated on a relative standalone selling price basis, with observable standalone pricing of $ 295 per warranty. Revenue is recognized ratably over the 3 year warranty term. Contracts with multiple performance obligations are allocated 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. The Company has also concluded it acts as the principal in the sale of digital content, as it controls the content before transfer to the customer. F- 11 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 3. Summary of Significant Accounting Policies (continued) Cash and Cash Equivalents The Company considers deposits that can be redeemed on demand and investments that have original maturities of less than three months, when purchased, to be cash equivalents. As of March 31, 2026 and 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 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 or net realizable value. 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. Net realizable value is estimated based on projected demand; slow-moving products are impaired accordingly. 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 Financial instruments primarily include cash, accounts receivables, accounts payables, accrued expenses, notes payable, and lease liabilities. Carrying amounts approximate fair value. F- 12 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 3. Summary of Significant Accounting Policies (continued) 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 as of March 31, 2026 and 2025. Deferred revenue primarily consists of (i) orders of Omni One units and extended warranties, (ii) unfilled orders of Omni Pro systems, (iii) amounts billed but not yet recognized for Omni Arena installations, (iv) unearned subscription revenue related to Omni Online, (v) unredeemed Omniverse game credits, and (vi) unearned subscription revenue related to Omni Care. For the years ended March 31, 2026 and 2025, changes in deferred revenue were due to the following: March 31, March 31, 2026 2025 Beginning deferred revenue $ 1,769,556 $ 1,850,342 Amounts deferred during the year 2,703,064 3,109,944 Less refunds ( 8,708 ) ( 90,103 ) Less reclass to gift card liability ( 226,445 ) - Less revenue recognized ( 3,571,140 ) ( 3,100,627 ) Ending deferred revenue $ 666,327 $ 1,769,556 F- 13 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 3. Summary of Significant Accounting Policies (continued) Deferred revenue as of March 31, 2026 and 2025 consists of the following: March 31, March 31, 2026 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 deferred revenue $ 666,327 $ 1,769,556 Gift Card Liability During the fiscal year ended March 31, 2026, the Company converted outstanding customer Omni One preorder deposits to gift cards and reclassed them from deferred revenue. The total amount reclassed from deferred revenue was $ 226,445 . Additionally, the Company issued store credits (subsequently converted to gift cards) to certain investors as an incentive for purchasing shares. The total amount issued in connection with equity transactions was $ 214,906 . These gift cards are redeemable for Company products and represent an obligation to deliver goods in the future. They have been recorded as a gift card liability, included in current liabilities on the consolidated balance sheet as of March 31, 2026. Total gift card liabilities at March 31, 2026, were $ 446,252 . Consistent with ASC 606, the gift card liability will be recognized as revenue when the cards are redeemed or expire. 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 years 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. For the years ended March 31, 2026 and 2025, no uncertain tax positions were identified. The Company recognizes tax related interest and penalties, if any, as a component of income tax expense. 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. Diluted net loss per share is the same as basic net loss per share for the years ended March 31, 2026 and 2025, because the inclusion of potentially dilutive securities would be anti-dilutive. 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, 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. F- 14 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 3. Summary of Significant Accounting Policies (continued) Recent Accounting Pronouncements In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint 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 requirements include qualitative disclosures about reconciling items, disaggregated income (loss) and income tax expense by jurisdiction, and income taxes paid disaggregated by federal, state, and foreign jurisdictions where taxes paid exceed 5% of total. The ASU is effective for fiscal years beginning after December 15, 2025, and interim periods therein, with early adoption permitted. For the Company, the earliest fiscal year affected will begin April 1, 2026. The amendments require a cumulative-effect adjustment to retained earnings at the adoption date. The Company is currently evaluating the impact of ASU 2023-09. In March 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40): Expense Disaggregation Disclosures . The ASU requires public business entities to disclose in a tabular format significant expense categories that are included in each relevant income statement line item. The standard is effective for fiscal years beginning after December 15, 2026, including interim periods within those years. Early adoption is permitted. The Company is currently evaluating the impact that this standard will have on its consolidated financial statements and related disclosures. Management has reviewed other recently issued but not yet effective accounting standards and believes they will not have a material impact on the Company’s consolidated financial statements. The Company will adopt applicable standards as required. 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 years ended March 31, 2026 and 2025. Note 4. Receivables Receivables consist of the following at March 31: March 31, March 31, 2026 2025 Accounts receivable, trade 372,436 $ 35,197 Other receivables 18,249 91,302 Allowance for credit losses ( 11,396 ) ( 827 ) Receivables, net $ 379,289 $ 125,672 F- 15 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 4. Receivables (continued) Changes in the allowance for credit losses account is as follows: March 31, March 31, 2026 2025 Beginning balance $ 827 $ 34,571 Credit loss (recovery) expense 73,151 ( 17,912 ) Write-offs charged against the allowance ( 48,133 ) ( 13,500 ) Recoveries of amounts written off ( 14,449 ) ( 2,332 ) Ending balance $ 11,396 $ 827 The Company recognizes an allowance for credit losses for accounts receivable and other receivables to present the net amount expected to be collected as of the balance sheet date. Such allowance is based on the credit losses expected to arise over the life of the asset (contractual term) which includes consideration of prepayments and based on the Company’s expectations as of the balance sheet date. The Company generally does not carry accounts receivable beyond thirty to sixty days for its U.S. operations, and beyond one year for its foreign subsidiaries, which mostly consist of customer-supplier relationships. Receivables are written off when the Company determines that such receivables are deemed uncollectible, in accordance with its policy. Write-offs are recognized as a deduction from the allowance for credit losses. Expected recoveries of amounts previously written off, not to exceed the aggregate of the amount previously written off, are included in determining the necessary reserve at the balance sheet date. The Company’s policy for recording the allowance for credit losses for trade receivables involves pooling its receivables based on similar risk characteristics in estimating expected credit losses. In situations where a receivable does not share the same risk characteristics with other receivables, the Company measures those individually. The Company also continuously evaluates such pooling decisions and adjusts as needed from period to period as risk characteristics change. In estimating expected credit losses, the Company considers historical loss experience, current market conditions, and forward-looking macroeconomic trends relevant to its customers’ ability to pay. Note 5. Prepaids and Other Current Assets Prepaids and other current assets consisted of the following as of: March 31, March 31, 2026 2025 Security deposits $ 188,375 $ 205,666 Recoverable VAT 132,234 58,873 Prepaid insurance 554,240 22,111 Other prepaid expenses 22,260 19,503 $ 897,109 $ 306,153 Note 6. Inventory Inventory consisted of the following as of: March 31, March 31, 2026 2025 Raw materials $ 848,601 $ 1,321,224 Work in process 11,111 11,111 Finished goods 328,911 123,914 $ 1,188,623 $ 1,456,249 F- 16 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 7. Property and Equipment Property and equipment consist of the following as of: March 31, March 31, 2026 2025 Computer equipment $ 49,469 $ 46,946 Furniture and equipment 73,865 46,146 Machinery and equipment 1,197,854 1,136,733 Leasehold improvements 92,106 92,106 1,413,294 1,321,931 Less: accumulated depreciation ( 1,034,984 ) ( 857,028 ) $ 378,310 $ 464,903 For the fiscal years ended March 31, 2026 and 2025, the Company has recorded depreciation expense in the consolidated statements of operations of $ 177,956 and $ 170,369 , respectively. Note 8. Intangibles Intangible assets consist of the following as of: March 31, March 31, 2026 2025 Software and game design 2,578,050 2,578,050 Trademarks 82,621 76,939 Website 137,070 137,070 2,797,741 2,792,059 Less: accumulated amortization ( 1,258,387 ) ( 810,356 ) $ 1,539,354 $ 1,981,703 For the years ended March 31, 2026 and 2025, the Company recorded amortization expense in the consolidated statements of operations of $ 448,031 and $ 312,020 , respectively. The carrying value of capitalized software costs is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized when the unamortized capitalized costs exceed the net realizable value of the software, which is defined as the estimated future gross revenue from the product less the estimated future costs of completing and disposing of that product. Based on management’s evaluation, certain indicators of impairment were identified; however, the Company performed the required impairment tests and concluded that no impairment charges were necessary. Accordingly, no impairment charges were recorded during the years ended March 31, 2026 and 2025. 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. F- 17 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 9. Notes Payable (continued) 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 , through a series of separate cash exercise transactions. In connection with such exercises, the Company received cash proceeds and issued shares of Class A common stock pursuant to the terms of the applicable warrant agreements. See Note 13 for additional information regarding the warrant exercises and related equity activity. The carrying value of the note at March 31, 2026, was $ 1,890,469 (principal of $ 2,220,000 , less unamortized deferred loan costs of $ 4,000 and discount of $ 325,531 ). Discount amortization and amortization of loan costs included in interest expense was $ 1,318,122 for the fiscal year ended March 31, 2026. Interest expense on the note was $ 79,920 for the fiscal year ended March 31, 2026. Effective October 30, 2025, the Company issued a secured convertible promissory note to Streeterville Capital, LLC in the amount of $ 560,000 . 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 $ 50,000 plus additional closing costs of $ 10,000 , 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 $ 358,974 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 and March 11, 2026, as a result of amendments to the warrants, the Company determined that the fair value of the warrants increased to $ 471,923 , and recorded the incremental fair value as a financing expense. As of the fiscal year ended March 31, 2026, all 114,286 debt warrants granted with the October 30, 2025 secured convertible promissory note are still outstanding. The carrying value of the note at March 31, 2026, was $ 375,342 (principal of $ 560,000 less unamortized deferred loan costs of $ 4,407 and discount of $ 180,251 ). Discount amortization and amortization of loan costs included in interest expense was $ 234,316 for the fiscal year ended March 31, 2026. Interest expense on the note was $ 14,093 for the fiscal year ended March 31, 2026. Effective December 19, 2025, the Company issued a secured convertible promissory note to Streeterville Capital, LLC in the amount of $ 560,000 . 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 $ 50,000 plus additional closing costs of $ 10,000 , 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 $ 358,974 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 and March 11, 2026, as a result of amendments to the warrants, the Company determined that the fair value of the warrants increased to $ 502,746 , and recorded the incremental fair value as a financing expense. As of the fiscal year ended March 31, 2026, all 114,286 debt warrants granted with the December 19, 2025 secured convertible promissory note are still outstanding. The carrying value of the note at March 31, 2026, was $ 299,306 (principal of $ 560,000 less unamortized deferred loan costs of $ 6,222 and discount of $ 254,472 ). Discount amortization and amortization of loan costs included in interest expense was $ 158,280 for the fiscal year ended March 31, 2026. Interest expense on the note was $ 9,520 for the fiscal year ended March 31, 2026. F- 18 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 9. Notes Payable (continued) Effective August 25, 2025, the Company entered into a Securities Purchase Agreement with Streeterville Capital, LLC pursuant to which Streeterville Capital, LLC committed to provide up to $ 50.0 million through one or more prepaid equity advances (each, an “Advance”). Following the Company’s direct listing on January 27, 2026, the Company entered into a Prepaid Purchase Agreement (the “PPP Agreement”) with Streeterville Capital, LLC and received an initial advance with an original principal amount of $ 8,640,000 . Subsequent advances may be requested by the Company, subject to specified conditions, including minimum market capitalization, trading volume, Nasdaq compliance, and other customary conditions. The Advances do not have a stated maturity date and bear interest at a rate of 6 % per annum. The Advances are convertible into shares of the Company’s Class A common stock at conversion prices determined in accordance with the terms of the PPP Agreement. Under certain circumstances, including specified trigger events, the conversion price may be adjusted based on the market price of the Company’s common stock, subject to a minimum floor price of $ 2.00 per share. The PPP Agreement includes an original issue discount of $ 640,000 , that is amortized over 12 months. The Company granted warrants associated with this PPP Agreement to acquire shares of Class A common stock. In accordance with ASC 470-20, the warrants are recorded at fair value of $ 5,610,390 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 and March 11, 2026, as a result of amendments to the warrants, the Company determined that the fair value of the warrants increased to $ 7,905,247 , and recorded the incremental fair value as a financing expense. The warrants expire six months following the Company’s Nasdaq listing date and are exercisable on a cash-only basis. During the fourth quarter of the fiscal year ended March 31, 2026, Streeterville Capital, LLC exercised 635,000 outstanding debt warrants associated with the PPP Agreement, which had an aggregate fair value of $ 2,745,221 , through a series of separate cash exercise transactions. In connection with such exercises, the Company received cash proceeds and issued shares of Class A common stock pursuant to the terms of the applicable warrant agreements. See Note 13 for additional information regarding the warrant exercises and related equity activity. The carrying value of the PPP Agreement at March 31, 2026, was $ 3,500,791 (principal of $ 8,640,000 less discount of $ 5,139,209 ). Discount amortization included in interest expense was $ 1,111,181 for the fiscal year ended March 31, 2026. Interest expense on the note was $ 92,160 for the fiscal year ended March 31, 2026. Effective March 31, 2026, the Company entered into an exchange agreement with Streeterville Capital, LLC (the “Exchange Agreement”) pursuant to which certain previously issued 2024 subordinated promissory notes (see below “2024 Notes”) originally issued to various investors between July 15, 2024 and December 10, 2024 were exchanged for a secured convertible promissory note (the “Exchange Note”) in the aggregate principal amount of $ 2,681,718 . The Exchange Note matures on July 1, 2027, and bears interest at a fixed rate of 6 % per annum, compounded daily based on a 360-day year. The Exchange Note includes an original issue discount of $ 242,883 which is amortized over the life of the note. Pursuant to the Exchange Agreement, Streeterville Capital, LLC acquired the 2024 Notes from the original holders and surrendered the 2024 Notes to the Company in exchange for the Exchange Note. Streeterville did not acquire the 2024 Note held by Ugo de Charette. Instead, on March 30, 2026, the Company repaid the note in full through a cash payment of $ 130,723 . Upon surrender, the 2024 Notes were cancelled and the Company’s remaining obligations under the 2024 Notes became evidenced solely by the Exchange Note. No additional cash consideration was received by the Company in connection with the transaction. The carrying value of the Exchange Note at March 31, 2026, was $ 2,438,835 (principal of $ 2,681,718 less unamortized discount of $ 242,883 ). Discount amortization included in interest expense was $ 0 for the fiscal year ended March 31, 2026. Interest expense on the note was $ 0 for the fiscal year ended March 31, 2026. The Exchange Note matures in July 2027 and is classified as long-term debt on the Company’s consolidated balance sheet. F- 19 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 9. Notes Payable (continued) Subordinated Promissory Notes On July 10, 2024, the Company received Board approval to raise $ 1,500,000 of subordinated promissory notes (the “2024 Notes”). This authorization was later increased to $ 2,500,000 on August 8, 2024. Between July and December 2024, the Company raised $ 2,485,000 through various investors, with an interest rate of 18 %. The 2024 Notes provided for payment of principal and accrued interest at maturity, originally set for December 31, 2024. The Company exercised its option to extend the maturity date to June 30, 2025 , then December 31, 2025 , and subsequently further extended it to March 31, 2026 , per its terms. In December 2024, in connection with the investors’ purchases of Series B Preferred Stock and Warrants (the “Securities”), the Company and certain noteholders entered into Instruments of Cancellation, under which $ 117,500 of the principal amount and all accrued but unpaid interest of $ 7,991 was applied toward the purchase of the Securities. The Company derecognized the extinguished principal and accrued interest and recorded the issuance of Series B Preferred Stock and Warrants as a capital transaction. No gain or loss on extinguishment was recognized. Simultaneously, the Company issued a new subordinated promissory note dated December 10, 2024, for the remaining $ 17,500 principal balance of one investor’s note, with terms consistent with the original 2024 Notes. Extinguishment of Certain 2024 Notes In June 2025, the Company and certain investors amended the terms of the 2024 Notes to allow cancellation in exchange for Series B Preferred Stock and warrants. Under ASC 470, this amendment represented a debt extinguishment. At that time, the Company extinguished $ 400,000 of principal and $ 62,975 of accrued interest. In connection with the extinguishment, the Company issued 74,430 shares of Series B Preferred Stock, valued at $ 462,955 based on the Series B subscription price, and warrants to purchase common stock valued at $ 122,884 using a Black-Scholes model. As the total fair value of the equity instruments issued exceeded the carrying amount of the debt, the Company recorded a loss on debt extinguishment of $ 122,864 . Cancellation of Certain 2024 Notes On June 30, 2025, the amended notes were cancelled in exchange for the issuance of 74,430 shares of Series B Preferred Stock and 74,430 warrants. This exchange was treated as a conversion within the amended terms of the notes, and therefore no additional gain or loss was recognized. Exchange of 2024 Notes Effective March 31, 2026, the remaining outstanding 2024 Notes, which had an aggregate principal balance of $ 1,867,500 and accrued unpaid interest of $ 561,335 , were exchanged for the Exchange Note in the aggregate principal amount of $ 2,681,718 issued to Streeterville Capital, LLC. The Exchange Note matures on July 1, 2027, and bears interest at a fixed rate of 6 % per annum, compounded daily based on a 360-day year. The Exchange Note includes an original issue discount of $ 242,883 which is amortized over the life of the note. Streeterville did not acquire the 2024 Note held by Ugo de Charette. Instead, on March 30, 2026, the Company repaid the note in full through a cash payment of $ 130,723 . Upon surrender, the 2024 Notes were cancelled and the Company’s remaining obligations under the 2024 Notes became evidenced solely by the Exchange Note. No additional cash consideration was received by the Company in connection with the transaction. Refer to “Exchange Note” above for additional information regarding the exchange transaction and related terms. Related Parties In July 2024, as part of the 2024 Notes, the Company issued a subordinated promissory note to Ugo de Charette, a member of the Company’s board of directors, in the original principal amount of $ 100,000 . The note is a non-convertible, subordinated promissory note that bears interest and does not include a conversion feature. As of March 30, 2026, the outstanding balance of the note, including all accrued and unpaid interest, was $ 130,723 . The principal and accrued interest on the note were paid back in full on March 30, 2026. On May 7, 2025, the Company received Board approval to borrow $ 500,000 through the issuance of subordinated promissory notes (the “2025 Notes”). In May 2025, the Company raised $ 217,678 through two related party investors, with an interest rate of 18 %. The 2025 Notes provided for payment of principal and accrued interest at maturity of September 30, 2025 . On September 15, 2025, the Company repaid the 2025 Notes including $ 217,678 of outstanding principal and $ 12,873 of accrued interest. F- 20 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 9. Notes Payable (continued) On October 9, 2025, the Company received Board approval to borrow $ 1,500,000 through the issuance of subordinated promissory notes (the “Second 2025 Notes”). In October and November 2025, the Company raised $ 225,000 through two related party investors, with an interest rate of 6 %. The notes include an original issue discount of 10 %. The Second 2025 Notes provided for payment of principal and accrued interest at maturity, originally set for December 31, 2025. The Company exercised its option to extend the maturity date to March 31, 2026. On March 30, 2026, the Company repaid the related party Second 2025 Notes including $ 247,500 of outstanding principal and $ 5,488 of accrued interest. 2025 Notes On October 9, 2025, the Company received Board approval to borrow $ 1,500,000 through the issuance of subordinated promissory notes (the “Second 2025 Notes”). In October and November 2025, the Company raised $ 1,500,000 through various investors, with an interest rate of 6 %. The Notes provided for payment of principal and accrued interest at maturity, originally set for December 31, 2025. The Company exercised its option to extend the maturity date to March 31, 2026 . The notes include an original issue discount of 10 %, or $ 150,000 , which is amortized over the life of the notes. The notes are convertible into shares of Class A common stock calculated as the converting balance divided by 85 % of the NASDAQ valuation 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. No prepayment penalties or fees were incurred in connection with such repayments. As of March 31, 2026, the notes had no remaining balance. Interest expense related to the 2024 Notes and 2025 Notes was $ 414,309 and $ 298,927 for the fiscal years ended March 31, 2026 and 2025, respectively. Western Technology Investment Note Effective April 27, 2022, the Company entered into an agreement to obtain financing with Western Technology Investment. The initial commitment of $ 1,000,000 was received on April 29, 2022. The terms of the note provide for interest-only payments through February 28, 2023, followed by thirty months of principal and interest payments, which began on March 1, 2023 , in monthly installments in the amount of $ 38,967 , with a maturity date of September 1, 2025 . The note has a fixed rate of interest of 12.25 % and is secured by all assets of the Company. The Company has granted warrants associated with this note to acquire shares of Series A-2 Preferred Stock, which according to Topic 470-20, Debt , are recorded in equity as additional paid-in capital - preferred stock warrants, at fair value as of the date of issuance, and in liabilities, as a contra account, called discount on note payable, which is amortized over the life of the note. The discount is being amortized over the life of the note using the effective interest method starting in June 2022. All outstanding obligations under the note were repaid in full on August 22, 2025. The carrying value of the note at March 31, 2026, was $ 0 . The carrying value of the note at March 31, 2025, was $ 222,476 ($ 225,508 principal, less unamortized deferred loan costs of $ 1,500 and discount of $ 1,532 ). Discount amortization and amortization of loan costs included in interest expense was $ 3,032 and $ 13,727 for the years ended March 31, 2026 and 2025, respectively. Interest expense on the note was $ 8,295 and $ 56,359 for the years ended March 31, 2026 and 2025, respectively. F- 21 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 9. Notes Payable (continued) EIDL Loan On August 29, 2020, the Company received a loan from the U.S. Small Business Administration under its Economic Injury Disaster Loan assistance program (the “EIDL Loan”). The principal amount was $ 25,000 , with proceeds used for working capital. The EIDL Loan matures in August 2050, bears interest at 3.75 % per year, with accrued interest payable monthly beginning in March 2023, and principal payments were due beginning in September 2024. The carrying amount of the EIDL Loan was $ 24,087 and $ 24,636 as of March 31, 2026 and 2025, respectively. Interest expense on the EIDL Loan was $ 915 and $ 804 for the fiscal years ended March 31, 2026 and 2025, respectively. Future Maturities of Notes Payable Future maturities of notes payable are as follows as of March 31: March 31, 2027 $ 11,991,608 2028 2,682,310 2029 615 2030 638 2031 663 Thereafter 21,009 Total 14,696,843 Less: unamortized discount ( 6,156,978 ) $ 8,539,865 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 January 1, 2026, at which point a new lease agreement with a 12-month term began. The Company maintains a month-to-month apartment lease in China. In July 2025, the Company entered into office and apartment space leases in Hong Kong with monthly base rent of $ 897 and $ 1,987 , respectively, that expire in June 2027 and July 2027. As of March 31, 2026, ROU assets totaled $ 779,514 , with current lease liabilities of $ 286,702 and non-current lease liabilities of $ 492,812 . As of March 31, 2025, ROU assets totaled $ 835,488 , with current lease liabilities of $ 204,051 and non-current lease liabilities of $ 631,438 . F- 22 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 10. Leases (continued) Lease expense recognized in the consolidated statements of operations for the fiscal years ended March 31, 2026 and 2025, was $ 390,933 and $ 334,767 , respectively. The following future payments due under operating leases as of March 31: 2027 $ 332,814 2028 207,635 2029 205,999 2030 141,427 Thereafter - Total lease payments 887,875 Imputed Interest ( 108,361 ) $ 779,514 As of March 31, 2026, the weighted-average remaining lease term for the operating leases is 3.88 years. The weighted-average discount rate for the operating leases is 7.04 % as of March 31, 2026. As of March 31, 2025, the weighted-average remaining lease term for the operating leases is 4.22 years. The weighted-average discount rate for the operating leases is 7.26 % as of March 31, 2025. Note 11. Research and Development Expenses relating to research and development are expensed as incurred. Research and development includes costs such as design expenses, game and software development expenses, salaries, prototypes, and various other research and development expenses. Research and Development expense for the fiscal years ended March 31, 2026 and 2025, was $ 845,994 and $ 2,185,133 , respectively. 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 Company’s 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 Company’s attorneys, retained by the Company’s 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 Company’s insurance provider. 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. F- 23 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 13. Capital Stock (continued) As a result of the reclassification and conversion, all outstanding shares of the Company’s 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 Company’s Sixth Amended and Restated Certificate of Incorporation. Common Stock Voting Rights Holders of Class A common stock and Class B common stock generally vote together as a single class on all matters submitted to a vote of stockholders, except as otherwise required by Delaware law or the Company’s Certificate of Incorporation. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to twenty votes per share. The holders of Class B common stock will have the ability to control the outcome of matters submitted to stockholders for approval, including the election of directors and the approval of any change in control transaction, for so long as they hold a majority of the voting power of the outstanding capital stock. Under the Company’s Certificate of Incorporation, the number of authorized shares of either class of common stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock entitled to vote, without a separate class vote, except as otherwise required by law or the Certificate of Incorporation. Dividend Rights Subject to preferences that may apply to any shares of preferred stock outstanding at the time, holders of Class A common stock and Class B common stock are entitled to receive dividends and other distributions as may be declared from time to time by the board of directors out of funds legally available therefor. Dividends and distributions must be paid equally, identically, and ratably on a per-share basis to holders of Class A common stock and Class B common stock, unless different treatment is approved by a majority of each class, voting separately as a class. In the event a dividend is paid in the form of shares of common stock, holders of Class A common stock will receive Class A common stock and holders of Class B common stock will receive Class B common stock. Subdivisions and Combinations If the Company subdivides or combines the outstanding shares of either class of common stock, the outstanding shares of the other class will be subdivided or combined in the same proportion and manner, unless different treatment is approved by a majority of each class, voting separately as a class. Conversion Rights Each share of Class B common stock is convertible at any time at the option of the holder into one (1) share of Class A common stock. Shares of Class B common stock will automatically convert into an equal number of shares of Class A common stock upon (i) any transfer of such shares, except for certain permitted transfers to affiliates or family members as described in the Certificate, or (ii) the date specified by written notice and certification request from the Company if the holder fails to provide satisfactory certification of continued ownership, subject to certain exceptions. In addition, all outstanding shares of Class B common stock will automatically convert into Class A common stock upon the affirmative vote of the holders of at least two-thirds of the outstanding shares of Class B common stock, voting as a single class. Once converted, shares of Class B Common Stock may not be reissued. F- 24 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 13. Capital Stock (continued) Other Rights Holders of Class A common stock and Class B common stock have no preemptive or subscription rights, and there are no redemption or sinking fund provisions applicable to either class. Upon liquidation, dissolution, or winding up of the Company, holders of Class A common stock and Class B common stock are entitled to share ratably in all assets remaining after payment of liabilities and any preferential rights of any outstanding preferred stock. Common Stock Equity Transactions On August 6, 2025, the Company adopted the 2025 Omnibus Incentive Plan and authorized 4,000,000 shares of Common Stock under the plan. On August 8, 2025, the Company entered into an exchange agreement with Jan Goetgeluk, the Company’s Chief Executive Officer (“CEO”), Chairman and founder. Pursuant to the agreement, Mr. Goetgeluk exchanged 5,500,000 shares of his Class A common stock of the Company for 5,500,000 shares of Class B common stock (with 20-to-1 voting rights) on a one-for-one basis. On September 1, 2025, the Company issued 115,169 shares of Class A common stock totaling $ 194,635 to Maxim Partners LLC as part of their compensation as an advisor to the Company. On November 6, 2025, the Company issued 22,857 shares of Class A common stock totaling $ 37,943 to MZHCI, LLC, as part of their compensation as investor relations consultants. During November 2025, the CEO transferred 1,000,000 shares of Class B common stock, which automatically converted into 1,000,000 shares of Class A common stock upon the transfer, to a family member, bringing his total held to 4,500,000 shares. This transaction resulted in no impact to the Company’s consolidated financial statements and did not change the number of shares outstanding. The Company issued store credits totaling $ 214,906 (subsequently converted to gift cards) to certain investors as an incentive for purchasing shares (see Note 3). In accordance with ASC 505-10, the issuance of store credit is treated as non-cash consideration provided as part of the equity transaction and is recorded as a reduction to equity. On January 27, 2026, the Company’s Class A common stock commenced trading on the Nasdaq Global Market under the symbol “VTIX.” In connection with the listing, the Company incurred $ 2,179,455 of direct and incremental issuance costs, which were capitalized and recorded as a reduction to equity. Effective January 27, 2026, in connection with the consummation of the Company’s direct listing of its Class A common stock on a major U.S. exchange, the Company issued 171,807 shares of Class A common stock totaling $ 888,242 to Maxim Partners LLC pursuant to the terms of a Financial Advisory and Investment Banking Engagement Letter dated May 21, 2025. The shares were issued as a success fee equal to 0.5 % of the Company’s outstanding common stock on a fully diluted basis as of the date of the direct listing. The shares are subject to customary lock-up provisions for a period of six months following the direct listing. Effective January 29, 2026, the Company entered into a consulting agreement with FMW Media Works LLC (“New To The Street”), pursuant to which New to The Street will provide certain services to the Company over a twelve-month period. As compensation for such services, the Company agreed to issue an aggregate of 59,000 shares of its restricted Class A common stock, consisting of 15,000 shares issued upon execution of the agreement and 4,000 shares to be issued at the beginning of each month for the following eleven months commencing March 1, 2026. As of March 31, 2026, the Company issued 19,000 shares totaling $ 114,190 . The shares issued pursuant to the agreement are subject to a six-month lock-up restriction. During January and March 2026, the Company issued an aggregate of 109,183 shares of Class A common stock totaling $ 787,896 in connection with the conversion of certain Second 2025 Notes (see Note 9). During March 2026, a holder exercised stock options to purchase an aggregate of 10,720 shares of the Company’s Class A common stock at an exercise price of $ 2.33 per share. In connection with the exercise, the Company received aggregate cash proceeds of $ 24,978 and issued the corresponding shares of Class A common stock. F- 25 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 13. Capital Stock (continued) Effective March 6, 2026 the CEO converted 500,000 shares of Class B common stock into the same number of Class A common stock, bringing his total held to 4,000,000 shares. This transaction resulted in no impact to the Company’s consolidated financial statements and did not change the number of shares outstanding. As of March 31, 2026, the Company has reserved 90,947,356 shares of its authorized but unissued Common Stock for possible future issuance as follows: Reserve Name Amount of Common Stock Class A Common LTIP 2014 564,470 Class A Common LTIP 2025 1,635,000 Class A Common Omnibus 2025 4,000,000 Class B Common Outstanding 4,000,000 Irrevocable Transfer Agent Reserve (PPA) 54,000,000 Registered Shares Underlying CVP PPP 25,555,742 Registered Shares Underlying CVP Warrants 1,192,144 TOTAL 90,947,356 Preferred Stock Equity Transactions As mentioned in Note 9, from April to June 2025, the Company issued 74,430 shares of Series B preferred stock to accredited investors under Regulation D (“Accredited Investors”) in exchange for $ 462,975 of extinguished principal and accrued interest on the 2024 Notes as part of the 2025 Subscription Agreement. Also from April to July 2025, the Company issued 23,060 shares of Series B preferred stock to Accredited Investors in exchange for cash investments totaling $ 112,990 . From April to August 2025, the Company issued 367,434 shares of Series B preferred stock to investors participating in a StartEngine investment campaign under Regulation CF, in exchange for cash investments totaling $ 1,832,362 ($ 1,939,004 net of issuer fees of $ 106,642 ). Effective June 2025, the Company reserved 500,000 shares of Series B preferred stock and 500,000 shares of Common Stock for any future 2024 Note extinguishments and Series B preferred stock and Common Stock warrant issuances under the 2025 Subscription Agreements (see Note 9). From September 2024 through March 2025, the Company issued 333,580 shares of Series B preferred stock to accredited investors under Regulation D in exchange for cash investments totaling $ 1,934,496 and the tender of unsecured subordinated notes with a principal and accrued interest amount totaling $ 124,492 . The Company also issued warrants to purchase 238,723 shares of Common Stock of the Company. As of March 31, 2026, all warrants had been exercised. From December 2024 through March 2025, the Company issued 205,112 shares of Series B preferred stock to investors participating in a StartEngine investment campaign under Regulation CF, in exchange for cash investments totaling $ 1,009,593 (net of investor fees). Effective June 2025, the Company amended the 2024 Notes to allow for cancellation of 2024 Notes for current investors and subsequent issuance of Series B preferred stock through the 2025 Subscription Agreement. As a result, 2024 Notes principal and accrued interest of $ 462,975 were cancelled and 74,430 shares of Series B preferred stock and warrants to purchase 74,430 shares of Common Stock of the Company were issued under the 2025 Subscription Agreements, resulting in remaining 2024 Notes principal amount of $ 1,967,500 as of July 31, 2025. In August 2025, pursuant to the Certificate, the Company reclassified and converted all 22,153,166 outstanding shares of its previously outstanding preferred stock into shares of Class A common stock. F- 26 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 13. Capital Stock (continued) Treasury Stock Transaction On November 29, 2023, the Company awarded 2,750,000 shares of Common Stock to an advisor. In April 2024, the Company repurchased these shares at par value in the amount of $ 2,750 in accordance with the award agreement and recorded them as Treasury Stock. On April 5, 2024, the Company reissued the 2,750,000 shares from Treasury Stock to a different advisor and Board member. See Note 14 for additional discussion of the related stock compensation expense. SAFE Notes During the year ended March 31, 2023, the Company’s board of directors approved the issuance of simple agreements for future equity (“SAFE Notes”). Portions of the capital raised from the sale of SAFE Notes were exempt from the registration requirements of the Securities Act of 1933, as amended (“Securities Act”) under Regulation CF and Rule 506(c) of Regulation D of the Securities and Exchange Commission. SAFE Notes with a carrying amount of $ 995,518 converted into 199,758 shares of preferred stock on April 21, 2024. In April 2024, additional SAFE Notes were issued for cash proceeds of $ 3,598,805 and converted into 723,228 shares of preferred stock on April 30, 2024. A reconciliation of the beginning and ending balances of each class of the Company’s equity, including share issuances, repurchases, conversions, and warrant exercises, is presented in the consolidated statements of stockholders’ deficit. Warrants Warrants are issued in connection with debt (see Note 9) and equity from time to time at the Company’s discretion. During the fiscal year ended March 31, 2026, the Company issued 74,430 warrants with a seven-year term in connection with the extinguishment of debt (see Note 9). The warrants had a fair value of $ 122,864 , determined using a Black-Scholes model with the following assumptions: stock price of $ 1.65 , exercise price of $ 0.01 , volatility rate of 80 %, risk-free rate of 3.71 %, and an expected maturity of 3.5 years. The Company also issued 2,514,285 warrants with a term of six months from listing date in connection with the convertible notes (see Note 9). The warrants had a combined fair value of $ 7,755,891 , determined by allocating the proceeds of the note based on the relative fair values of the convertible note and the warrants, in accordance with ASC 470-20. The Company also recognized 156,250 warrants that had previously been issued in connection with debt, for a total of 2,744,965 warrants issued during the fiscal year ended March 31, 2026. Effective February 9, 2026 and March 11, 2026, the Company entered into amendments to certain outstanding common stock purchase warrants previously issued pursuant to the Streeterville Capital, LLC Securities Purchase Agreements. The amendments modified the exercise price provisions of the warrants to provide for a temporary reduced exercise price of $ 6.00 per warrant share during a specified exercise period ending June 10, 2026, subject to the Company’s right to terminate the reduced exercise price period upon prior written notice. Following the expiration or earlier termination of the reduced exercise price period, the exercise price reverts to the NASDAQ Valuation Price as defined in the applicable warrant agreements. F- 27 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 13. Capital Stock (continued) As a result of the warrant amendments, the Company recorded an incremental fair value adjustment of approximately $ 2,694,722 , which was recognized as a financing expense with a corresponding increase to additional paid-in capital during the fiscal year ended March 31, 2026. During the fiscal year ended March 31, 2026, 303,509 Common Stock warrants were exercised for 303,509 shares of Class A common stock at an exercise price of $ .01 per share. During the fiscal year ended March 31, 2026, Streeterville exercised a total of 1,092,142 warrants with an average exercise price of $ 6.65 in a series of separate transactions. Additionally, during the fiscal year ended March 31, 2026, Western Technology Investments, under various funds and in a series of separate transactions, exercised a total of 128,645 warrants with an average exercise price of $ 2.332 , and exercised 206,316 warrants on a cashless basis, resulting in issuance of 178,739 shares. Upon exercise, the Company issued shares of its common stock in accordance with the terms of the respective warrant agreements. Aggregate gross cash proceeds received from the exercise of warrants during fiscal year ended March 31, 2026 totaled $ 7,564,115 and 1,703,035 Class A common shares were issued. The exercises were accounted for as equity-classified warrant exercises under applicable accounting guidance, and no gain or loss was recognized upon settlement. During the year ended March 31, 2026, 21,440 warrants expired. During the year ended March 31, 2025, 156,250 warrants for Series Seed Preferred Stock expired and 238,723 warrants for Common Stock were issued. The warrants had a fair value of $ 394,132 , determined using a Black-Scholes model with the following assumptions: stock price of $ 1.66 , exercise price of $ 0.01 , volatility rate of 80 %, risk-free rate of 3.89 - 4.30 %, and an expected maturity of 3.5 years. During the year ended March 31, 2025, Common Stock warrants were exercised for 9,644 shares of Common Stock at an exercise price of $ .01 per share. The warrants are all exercisable as of both March 31, 2026 and 2025. The warrants have a weighted average exercise price of $ 8.75 and $ 1.26 per share as of March 31, 2026 and 2025, respectively, with a weighted average remaining term to expiration of 3.9 months (see Note 9 for more discussion on warrants). The following is a rollforward of warrants for the years ended March 31, 2026 and 2025: 2026 2025 Shares Price Shares Price Beginning balance 429,230 $ 1.260 356,401 $ 1.570 Issued 2,744,965 8.199 238,723 0.010 Exercised ( 1,730,613 ) ( 4.371 ) ( 9,644 ) 0.010 Expired ( 21,440 ) ( 2.332 ) ( 156,250 ) 0.800 Ending balance 1,422,142 $ 8.750 429,230 $ 1.260 According to guidance of Topic 470-20, these warrants are recorded in equity as additional paid-in capital – preferred stock warrants or additional paid-in capital – common stock warrants, at fair value as of the date of issuance, and as a reduction of additional paid in capital - preferred stock or additional paid in capital - common stock for the related stock purchased. Warrants are recorded in equity at fair value at the date of issuance. F- 28 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 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 the 2025 Plan, and there were no exercises, forfeitures, or expirations. On August 6, 2025, the Company adopted the 2025 Omnibus Incentive Plan. The 2025 Omnibus Plan initially reserved 4,000,000 shares of the Company’s common stock for issuance, subject to adjustment for stock splits, recapitalizations and similar events. During the year ended March 31, 2026, the Company issued 2,179,992 restricted stock units to employees, executives, and directors under the plan. The Company accounts for restricted stock units under ASC 718. Stock-based compensation expense related to shares issued under this plan for the years ended March 31, 2026 and 2025, was $ 400,456 and $ 0 , respectively. As of March 31, 2026 the restricted stock units have an unrecognized expense totaling $ 3,434,603 , and a weighted average period remaining of 38 months. The Company expects this expense to be included in the Consolidated Statement of Operations over the four years following the Listing Date. Incentive Stock Options (“ISOs”) are granted to certain employees of Virtuix, Inc. from time to time. As of March 31, 2026 and 2025, 1,590,823 ISO options were granted since inception. As of March 31, 2026 and 2025, respectively, 227,500 and 159,258 ISO options were vested. As of March 31, 2026 and 2025, 1,255,940 ISO options were forfeited. As of March 31, 2026 and 2025, respectively, 1,296,913 and 95,625 ISO options were expired. From time to time, the Company grants NQSOs to various other non-employees with exercise prices based on current stock valuations. As of March 31, 2026 and 2025, 3,254,000 total NQSO options had been granted since inception, and 1,805,625 and 1,910,303 , respectively, NQSO options were vested. As of March 31, 2026 and 2025, 112,500 NQSO options were forfeited. As of March 31, 2026 and 2025, 1,182,030 NQSO options were expired. Compensation expense pertaining to ISOs of $ 26,016 and $ 24,545 , and compensation expense pertaining to NQSOs of $ 15,480 and $ 1,188,650 was recorded for the years ended March 31, 2026 and 2025, respectively, in general and administrative expenses in the consolidated statements of operations. Total compensation cost related to non-vested awards not yet recognized as of March 31, 2026 and 2025, was $ 24,405 and $ 65,902 , respectively, and will be recognized over a weighted-average period of approximately 12 months. The amount of future stock option compensation expense could be affected by any future option grants or by option holders leaving the Company before their grants are fully vested or exercised. F- 29 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 14. Stock Compensation Expense (continued) Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including the fair value of the Company’s common stock, and for stock options, the expected life of the option, and expected stock price volatility. The Company used the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. The expected life of stock options was estimated using the “simplified method,” which is the midpoint between the vesting date and the end of the contractual term, as the Company has limited historical information to develop reasonable expectations about future exercise patterns and employment duration for its stock options grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of options grants. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option. The estimation of the number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts are recognized as an adjustment in the period in which estimates are revised. The assumptions utilized in determining the fair value of option grants during the years ended March 31, 2026 and 2025, are as follows: 2026 2025 Exercise Price - ISOs n/a 1.66 Exercise Price - NQSOs n/a 1.66 Dividend Yield n/a 0 % Volatility n/a 80 % Risk-free Rate - ISOs n/a 4.36 % Risk-free Rate - NQSOs n/a 4.36 % Years to Expiration - ISOs n/a 5 Years to Expiration - NQSOs n/a 5 Vesting generally occurs over a period of three to four years for employees and two to three years for non-employee consultants. A summary of information related to stock options for the years ended March 31, 2026 and 2025, is as follows: 2026 2025 Shares Price Shares Price Outstanding - Beginning of Period 2,218,728 $ 1.40 2,232,008 $ 0.33 Granted - 1.66 1,635,000 1.66 Exercised ( 10,720 ) - - - Forfeited - 0.55 ( 370,625 ) 0.55 Expired ( 19,258 ) 0.11 ( 1,277,655 ) 0.11 Outstanding - End of Period 2,188,750 $ 1.40 2,218,728 $ 1.40 Exercisable at End of Period 2,033,125 $ 1.42 2,069,561 $ 1.42 Weighted average duration to expiration of outstanding options at period-end (years) 7.4 8.3 Weighted average grant date fair value n/a $ 0.76 The total intrinsic value of the stock options at March 31, 2026 and 2025, respectively, is $ 11,791,550 and $ 580,843 . On April 5, 2024, the Company reissued shares held in Treasury Stock to an advisor under an award agreement. Stock compensation expense related to this new award was $ 4,647,500 for the year ended March 31, 2025. The Company relieved Treasury Stock of $ 2,750 , recording the remaining $ 4,644,750 to additional paid-in capital. The advisor receiving the award was appointed to the Company’s Board of Directors on the same date. F- 30 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 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, 2026 and continued net operating losses for the years ended March 31, 2026 and 2025. Accordingly, no provision for deferred income taxes has been recognized for the years ended March 31, 2026 and 2025. The Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income. As of March 31, 2026, NOL carryforwards available to offset future taxable income totaled $ 54,991,590 . Of this amount, $ 12,561,963 relates to tax years prior to 2018 and will expire between 2034 and 2038 . The remaining $ 42,429,627 relates to tax years beginning after December 31, 2017, and may be carried forward indefinitely but is limited to offsetting 80 % of taxable income in future years under current federal tax law. Although the CARES Act (enacted in March 2020) temporarily permitted NOL carrybacks for certain tax years and suspended the 80 % limitation, the Company did not generate taxable income in prior years and therefore has not benefited from carryback provisions. The entire balance has been fully reserved in the valuation allowance discussed above. The Company’s effective tax rate for the years ended March 31, 2026 and 2025 was 0 % due to the full valuation allowance on the net deferred tax assets. Topic 718 provides that income tax effects of share-based payments are recognized in the financial statements for those awards that will normally result in tax deductions under existing tax law. Under current U.S. federal tax law, the Company receives a compensation expense deduction related to NQSOs only when those options are exercised. Accordingly, the consolidated financial statement recognition of compensation cost for NQSOs creates a deductible temporary difference, which results in a deferred tax asset and a corresponding deferred tax benefit in the consolidated statement of operations. The Company does not recognize a tax benefit for compensation expense related to ISOs unless the underlying shares are disposed of in a disqualifying disposition. Accordingly, compensation expense related to ISOs is treated as a permanent difference for income tax purposes. Under the People’s Republic of China Enterprise Income Tax Law, enterprise income tax is collected from companies on a quarterly basis, and is based on the net income companies obtain while exercising their business activity, normally during one business year. The standard tax rate is 25 %. For VML_ZH, taxes attributable to the years ended March 31, 2026 and 2025, was $ 1,700 and $ 2,353 , respectively. F- 31 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 Note 16. Investment in Joint Venture As mentioned in Note 1, the Company has an investment in a Joint Venture. VML has 49 % ownership and does not have control over the Joint Venture, therefore, the investment has been accounted for using the equity method. As of March 31, 2026, the Joint Venture had total assets of $ 291,064 , total liabilities of $ 344,488 , and total deficit of $ (53,424) . As of March 31, 2025, the Joint Venture had total assets of $ 287,330 , total liabilities of $ 344,488 , and total deficit of $ (57,158) . For the fiscal year ended March 31, 2026, the Joint Venture had operating revenue of $ 0 , cost of goods sold of $ 0 , operating costs of $ 143 , and net loss of $ 143 . Under the equity method, net loss attributable to the Company was $ 0 , resulting in a share of loss in joint venture of $ 70 in the consolidated statement of operations for the fiscal year ended March 31, 2026. For the fiscal year ended March 31, 2025, the Joint Venture had operating revenue of $ 54,027 , cost of goods sold of $ 36,801 , operating costs of $ 47,732 , and net loss of $ 30,506 . Under the equity method, net loss attributable to the Company was $ 14,948 , resulting in a share of loss in joint venture of $ 14,948 in the consolidated statement of operations for the fiscal year ended March 31, 2025. During the years ended March 31, 2026 and 2025, the following related party transaction occurred: the Company’s China subsidiary had sales to Heroix of $ 0 and $ 42,754 , respectively. As of March 31, 2026 and 2025, respectively, the Company’s China subsidiary had no accounts receivable from Heroix and had no accounts payable to Heroix, and held prepayments from Heroix for unshipped orders of $ 0 and $ 7,293 . Note 17. Disaggregation of Revenue 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 F- 32 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 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 Company’s Chief Operating Decision Maker (“CODM”), the Company’s Chief Executive Officer . The Company’s 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 Company’s single segment presentation. The Company has not identified any reportable segments other than the single operating segment discussed. Note 19. Patents As of March 31, 2026, the Company owns fifteen issued utility patents and ten issued design patents, and five additional applications are still pending. Four of the patents are also issued internationally in one or more countries, including Australia, Brazil, China, South Korea, Russia, Europe, and India. F- 33 VIRTUIX HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2026 AND 2025 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 Company’s Chief Executive Officer (“CEO”), Chairman and founder, sold an aggregate of 500,000 shares of the Company’s 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 Company’s 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 Capital, LLC made partial redemptions in connection with the Exchange Agreement pursuant to which new promissory notes in the principal amount of $ 284,500 were partitioned from the Exchange Note and exchanged for 93,333 shares of Class A common stock issued free of any restrictive securities legend pursuant to Rule 144, reducing the outstanding balance of the Exchange Note by $ 284,500 . On May 22, 2026, the Company entered into an agreement with Streeterville Capital, LLC in which the three outstanding secured convertible promissory notes converted fully into a second Pre-Paid Purchase (the “PPP #2”). The terms of PPP #2 are identical to that of the original PPP funded on January 27, 2026. After the conversion, the three secured convertible promissory notes had no remaining outstanding balance, while PPP #2 had an outstanding balance totaling $ 3,471,923 . In connection with conversion into the second Pre-Paid Purchase, all existing liens on the Company’s assets were released, and the second Pre-Paid Purchase is unsecured. On June 1, 2026, the Company entered into amendments to the Equity Financing Warrant, the Second Debt Financing Warrant, and the Third Debt Financing Warrant to purchase shares of Class A common stock (collectively, the “Warrant Amendments”) with Streeterville Capital, LLC amending the exercise price and extending the Reduced Exercise Price Period to each such warrant. Each of the warrants listed above was previously amended to establish a reduced exercise price period (the “Reduced Exercise Price Period”) during which the exercise price was amended to $ 6.00 per Warrant share. The Warrant Amendments further reduced the exercise price to $ 4.00 per Warrant share and extended the Reduced Exercise Price Period to the expiration date of the warrants of July 27, 2026 . As a result of the Warrant Amendments, the Company recognized an incremental fair value adjustment of approximately $ 424,403 as financing expense, with a corresponding increase to additional paid-in capital, subsequent to the fiscal year ended March 31, 2026. No additional material events were identified which require adjustment or disclosure in the consolidated financial statements. F- 34