{"url_path":"/sec/vtix/10-k/2026/item-1","section_key":"item-1","section_title":"Item 1 Business.","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-25","source_url":"https://www.sec.gov/Archives/edgar/data/1606242/0001213900-26-072079-index.html","accession_number":"0001213900-26-072079","cik":"0001606242","ticker":"VTIX","issuer_name":"Virtuix Holdings Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1606242/0001213900-26-072079-index.html","primary_entity_key":"0001606242","primary_entity_name":"Virtuix Holdings Inc."},"word_count":2776,"has_tables":true,"body_markdown":"Item 1. Business.\n\n \n\nIntroduction\n\n \n\nVirtuix Holdings Inc. pioneers movement in AI-generated\nworlds, both imaginary and real. We are the creator of “Omni,” the premier brand of omni-directional treadmills that enable\nusers to walk and run in 360 degrees inside virtual reality (“VR”) games, digital twins, and other applications. Our technology\npositions us at the intersection of gaming, fitness, and enterprise VR.\n\n \n\nVirtuix was formed under the laws of the State of Delaware on December\n20, 2013. Our Class A common stock commenced trading on the Nasdaq Global Market on January 27, 2026, in connection with our direct listing.\nSince our founding, we have introduced three generations of products to market. Our flagship product, Omni One, represents a breakthrough\nin home entertainment, combining full-body movement with immersive VR gaming and fitness. We operate a vertically integrated business\nacross product design, game development, manufacturing, and distribution, with a focus on three key markets: consumer, enterprise, and\ndefense. We target a gross margin of 40% on our hardware products, supplemented by recurring revenues from software sales and subscriptions.\n\n \n\nWe operate through four wholly owned subsidiaries:\nVirtuix Inc., a Delaware corporation formed on April 15, 2013, for the purpose of developing VR hardware and software; Virtuix Manufacturing\nLtd. (“VML”), a subsidiary organized in Hong Kong and formed on January 29, 2015; Virtuix Manufacturing (Zhuhai) Co., Ltd.\n(“VML_ZH”), a subsidiary of VML organized in China and formed on July 28, 2016; and Virtuix Manufacturing Taiwan Ltd. (“VMT”),\na subsidiary organized in Taiwan and formed on January 17, 2023. We also own a 57.5% equity stake in Virtuix Arabia LLC, a subsidiary\norganized in the Kingdom of Saudi Arabia and formed on June 13, 2024, which has not yet begun operations.\n\n \n\nIn July 2016, the Company formed a joint venture\nwith Hero Entertainment, a Chinese game publisher and esports operator, to develop active VR content and product bundles for the Chinese\nand U.S. markets. The joint venture, named Heroix VR (Shanghai) Co., Ltd. (“Heroix”), is a Sino-foreign equity joint venture\ncompany established under the laws of the People’s Republic of China and registered in Shanghai. Virtuix Manufacturing Ltd. has\n49% ownership and does not have control over the joint venture; therefore, the investment is accounted for using the equity method. In\nOctober 2016, the Joint Venture began operations. To service the Chinese market most efficiently, Hero Entertainment’s management\nproposed in mid-2025 that Virtuix’s China subsidiary take over the China sales channel from the Joint Venture. As a result of these\ndiscussions, Hero Entertainment and Virtuix began taking steps in late 2025 to close the Joint Venture entity, and we expect the closure\nprocess to be completed in the quarter ending September 30, 2026.\n\n \n\nOur Products\n\n \n\nOur “Omni” line of omni-directional\ntreadmills consists of various products that target a variety of industries:\n\n \n\nOmni Pro, the original Omni, is our commercial-grade\ntreadmill launched in 2016 for enterprise use in arcades, VR centers, corporations, and research institutions. We have shipped over 4,000\nOmni Pro units to more than 45 countries worldwide. Following the launch of Omni One in 2024, we stopped production and sales of Omni\nPro.\n\n \n\nOmni Arena launched\nin 2019 as a turnkey attraction for the out-of-home entertainment industry. The attraction comprises four Omni Pro treadmills for multiplayer\ngaming and features weekly esports prize contests. We’ve installed 80 Omni Arena systems at entertainment centers in the United\nStates (“U.S.”) and built a player base of over 500,000 players who signed up with an email address to play. Several players\nhave paid to play the attraction more than 300 times each. Following our shift in research and development (“R&D”) and\nmarketing efforts to Omni One, we stopped producing and selling new Omni Arena systems in 2025, but we continue to service existing customers\nand earn recurring revenues through the sale of Omni Care maintenance services, Omniverse game credits, and replacement parts. We also\nfacilitate and earn profits on secondary sales of Omni Arena systems.\n\n \n\n1\n\n \n\nOmni One is our latest product and our\nmost advanced treadmill yet, supporting full freedom of movement including crouching, kneeling, and jumping. It’s a compact device\nthat is easy to assemble and disassemble, and it can be moved around using its wheels. We sell Omni One in three different versions:\nthe complete Omni One system, Omni One Core, and Omni One Enterprise. We officially launched Omni One in September 2024, and by September\n2025, we shipped the first 1,800 units to customers, resulting in revenues of over $4,000,000. In addition to hardware sales, we earn\nrecurring revenues from the sale of Omni One games and from monthly subscriptions to Omni Online (priced at $14/month), Omni One’s\nservice that allows customers to play online multiplayer games. During checkout, approximately 50% of Omni One customers purchase an\nannual subscription to Omni Online.\n\n \n\nVirtual Terrain Walk (“VTW”)\nis our multi-user system for next-generation mission planning in the defense industry. VTW lets soldiers move physically in 360 degrees\ninside geo-specific virtual environments, without boundaries, for ground combat planning and leader rehearsals. The geo-specific virtual\nenvironments are digital twins of real-world environments, created by converting drone and other camera footage into photorealistic 3D\nscenes via Gaussian splatting and other AI-driven 3D reconstruction techniques. VTW is currently in development. We presented a proof-of-concept\nof VTW to potential customers at the I/ITSEC conference in Orlando, Florida, in December 2025. We already sold Omni One test units to\nthe U.S. Air Force Academy, YokoWERX (the innovation cell at Yokota Air Force Base), the U.S. Military Academy at West Point, the U.S.\nMarine Corps, and we signed a development agreement with the U.S. Navy. We also got selected for Phase 1 SBIR Funding by the U.S. Air\nForce to advance the development of VTW, and we got selected to be the lead integrator on the development of a VR infantry training system\nby the U.S. Marine Corps Training and Education Command (TECOM). However, we expect that meaningful sales in the defense sector may not\nmaterialize until fiscal year 2027, at the earliest. Despite the long sales cycle for penetrating the defense market, we believe that\nVTW will retain a strong competitive moat because of our expansive omni-directional treadmill patent portfolio, our position as a U.S.\ncompany, and the inherent barriers to entry for defense applications that competitors will face, including multi-year procurement cycles\nand high switching costs.\n\n \n\nCompany Developments\n\n \n\nDuring the fiscal year ended March 31, 2026,\nwe focused on (i) scaling consumer shipments of Omni One; (ii) simplifying our capital structure and completing a direct listing on the\nNasdaq Global Market; (iii) securing growth capital through debt and equity financing arrangements; (iv) advancing our VTW defense product\ntoward commercialization; and (v) transitioning the legacy Omni Arena business to sustaining mode to concentrate resources on Omni One\nand VTW.\n\n \n\nWe continued to scale shipments of Omni One throughout\nthe fiscal year. By September 2025, we had shipped the first 1,800 Omni One units to customers, resulting in cumulative Omni One revenues\nof over $4 million. Concurrently, we completed the transition of our Omni Arena business to sustaining mode, ceasing production of new\nsystems and shifting research and development and marketing resources to Omni One. We continue to support existing Omni Arena operators\nand earn recurring revenues from Omni Care maintenance contracts, Omniverse Credits sales, and the sale of repair and replacement parts.\nAt the 2025 Augmented World Expo (“AWE”), the AR/VR industry’s largest tradeshow, Omni One was awarded the 2025 Auggie\nAward for Best Interaction Product.\n\n \n\nOn August 6, 2025, our stockholders approved\nthe Sixth Amended and Restated Certificate of Incorporation (the “Reclassification”), which the Company filed with the Secretary\nof State of the State of Delaware on August 7, 2025.  Pursuant to this certificate, all outstanding shares of the Company’s\ncapital stock, including all series of preferred stock and any previously outstanding common stock, were reclassified and converted on\na one-for-one basis into shares of Class A common stock.  On January 22, 2026, our Registration Statement on Form S-1 was declared\neffective by the Securities and Exchange Commission, and trading of our Class A common stock on the Nasdaq Global Market commenced on\nJanuary 27, 2026 (the “Direct Listing”).\n\n \n\nWe deployed multiple financing instruments to\nfund operations and growth during the fiscal year. On August 25, 2025, we entered into a Securities Purchase Agreement with Streeterville\nCapital, LLC (“Streeterville”), issuing a secured note in the principal amount of $2,220,000 (with $2,000,000 in gross proceeds\nat closing). On October 30, 2025, we entered into a second Securities Purchase Agreement with Streeterville, resulting in an additional\n$500,000 in gross proceeds. On December 19, 2025, we entered into a third Securities Purchase Agreement with Streeterville, resulting\nin an additional $500,000 in gross proceeds. In connection with the Direct Listing, Streeterville funded an initial advance of $8,000,000\n(net of original issue discount) under an Equity Purchase Agreement, with subsequent advances subject to conditions including minimum\nmarket capitalization, trading volume, and compliance with Nasdaq listing standards. Each advance includes an 8% original issue discount\nand bears interest at 6% per annum. Separately, in January and February 2026, warrants for 128,645 shares were exercised at $2.332 per\nshare, yielding approximately $300,000 of proceeds, and warrants for 206,316 shares were exercised on a cashless basis, resulting in\nthe issuance of 178,739 shares.\n\n \n\n2\n\n \n\nWe made significant progress advancing VTW toward\ncommercialization in the defense sector. In December 2025, we presented a proof-of-concept of VTW at the I/ITSEC conference in Orlando,\nFlorida, the defense simulation industry’s premier event. During the fiscal year, we sold Omni One test units to the U.S. Air Force\nAcademy, YokoWERX (the innovation cell at Yokota Air Force Base), the U.S. Military Academy at West Point, and the U.S. Marine Corps,\nand we signed a development agreement with the U.S. Navy. We also got selected for Phase 1 SBIR Funding by the U.S. Air Force to advance\nthe development of VTW, and we got selected to be the lead integrator on the development of a VR infantry training system by the U.S.\nMarine Corps Training and Education Command (TECOM).\n\n \n\nBusiness Strategy\n\n \n\nOur business integrates (i) a consumer and enterprise\nVR hardware platform anchored by our flagship Omni One product with (ii) a defense-oriented simulation system, Virtual Terrain Walk (“VTW”),\ntargeting next-generation immersive mission planning. We seek to scale Omni One sales in the U.S. consumer market, expand internationally,\nbuild recurring software and subscription revenues, and gain adoption of VTW in the defense sector. We target a gross margin of approximately\n40% on our hardware products and supplement hardware revenues with recurring income from Omni Online subscriptions, game sales, and Omni\nCare maintenance contracts. We prioritize a vertically integrated operating model spanning product design, game development, manufacturing,\nand distribution, and we evaluate opportunities in adjacent markets, including defense simulation and international expansion, consistent\nwith disciplined capital allocation.\n\n \n\nThe principal components of our strategy are:\n\n \n\n*Scale Omni One*\n\n \n\nWe sell Omni One in several configurations: (i)\nthe complete system, (ii) Omni One for Quest, (iii) Omni One Core, and (iv) Omni One Enterprise, and drive consumer adoption through\ndigital advertising, influencer partnerships, live demos, and tradeshows. We sell directly through our website and authorized retail\npartners, with third-party financing available. We initially sold Omni One to consumers in the United States only and have recently expanded\nsales to Europe and Canada. Omni One Enterprise units are sold directly by Virtuix in the U.S. and through distributors internationally.\n\n \n\n*Build Recurring Revenue*\n\n* *\n\nIn addition to hardware sales, we earn recurring\nrevenues from Omni Online subscriptions ($14/month or $140/year), game sales, and Omni Care maintenance contracts. During checkout, approximately\n50% of Omni One customers purchase an annual Omni Online subscription.\n\n \n\n*Penetrate the Defense Market*\n\n* *\n\nVTW is our multi-user system that allows soldiers\nto move physically in 360 degrees inside geo-specific digital twins of real-world environments for ground combat planning and leader\nrehearsals. VTW is currently in development, and we expect that meaningful sales may not materialize until fiscal year 2027, at the earliest.\n\n \n\n3\n\n \n\n*Advance Product Development*\n\n* *\n\nFurther development efforts will focus on expanding\nOmni One’s game library and PC connectivity, and developing applications leveraging Gaussian splatting and other AI-driven 3D reconstruction\ntechnologies.\n\n \n\nOur path to profitability relies on scaling Omni\nOne sales at an acceptable customer acquisition cost and on gaining adoption of VTW in the defense sector. Although we believe that our\nplans are realistic, there is no guarantee that we will be able to scale Omni One sales sufficiently or find product-market fit in the\ndefense sector to achieve profitability.\n\n \n\nCompetition\n\n \n\nOur main direct competitors offering omni-directional\ntreadmill systems are KAT VR, Infinadeck, and Cyberith. KAT VR offers consumer and commercial treadmill products featuring a low-friction\nconcave base and harness support structure, similar to designs that we believe are protected by our robust patent portfolio, with pricing\nstarting in the $1,000 to $2,000 range. KAT VR’s products are sold as peripherals rather than complete systems. Infinadeck produces\na fully motorized treadmill using an X/Y belt system aimed at professional simulation use-cases, with pricing starting in the $50,000\nto $60,000 range, limiting its accessibility for mainstream consumers and enterprise customers. Cyberith offers a low-friction flat platform\nwith an optional tilting base, focused on commercial customers in research, enterprise, and defense, with pricing starting in the $8,000\nto $10,000 range.\n\n \n\nBeyond these direct competitors, we compete more\nbroadly with other recreational and entertainment activities for consumer attention and discretionary spending. The worldwide VR market\nis increasingly competitive, and some of our competitors have substantially greater financial and other resources, larger research and\ndevelopment staff, and more experience in developing, marketing, and distributing products. New competing products and services could\nbe introduced at any time that could result in reduced profit margins and loss of market share.\n\n \n\nWe believe Omni One stands out from competitors\nby offering a fully integrated, consumer-ready VR treadmill system that combines what we believe to be superior quality and design, ease\nof use, portability, and affordability, backed by a proven track record of over $20 million in cumulative product sales, a robust intellectual\nproperty portfolio of 25 issued patents and 14 registered trademarks, native game integration through our proprietary software ecosystem,\nU.S.-based customer support, and early mover advantage in the defense sector through VTW. We believe we offer the only omni-directional\ntreadmill solution currently positioned for scalable consumer and enterprise adoption. However, there can be no assurance that our competitive\nstrengths will be sufficient to maintain our market position. See “Risk Factors” for a discussion of the competitive risks\nfacing our business.\n\n \n\nEmployees\n\n \n\nAs of March 31, 2026, we had 39 full-time employees,\n14 of whom are based in the United States, with the remainder based in Asia. We also employ three full-time contractors, two based in\nthe U.S. and one based in the United Kingdom, and four part-time contractors based in the U.S. Our management team and advisory board\ninclude professionals from notable organizations including Flex, Corsair, and the U.S. Army. They bring to the Company strong expertise\nin the gaming, defense, and manufacturing fields, including experience scaling hardware businesses to multimillion-dollar operations.\nNone of our employees are represented by a labor union or are party to a collective bargaining agreement.\n\n \n\nPeriodic Reporting and Financial Information\n\n \n\nWe have registered our Class A common stock under\nSection 12(b) of the Exchange Act in connection with its listing on the Nasdaq Global Market. We are subject to the reporting requirements\nof the Exchange Act, including the requirements to file annual, quarterly and current reports with the SEC.\n\n \n\nWe will remain an emerging growth company until the earlier of (1)\nthe last day of the fiscal year (a) following the fifth anniversary of the effectiveness of our initial registration statement under the\nSecurities Act, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large\naccelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of\nthe last business day of our most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion\nin non-convertible debt securities during the prior three-year period.\n\n \n\n4\n\n \n\nIn addition, Section 107 of the JOBS Act also\nprovides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B)\nof the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”\ncan delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to\ntake advantage of the benefits of this extended transition period."}