NASDAQ: VTIX

In July 2016, the Company formed a joint venture
with Hero Entertainment, a Chinese game publisher and esports operator, to develop active VR content and product bundles for the Chinese
and U.S. markets. The joint venture, named Heroix VR (Shanghai) Co., Ltd. (“Heroix”), is a Sino-foreign equity joint venture
company established under the laws of the People’s Republic of China and registered in Shanghai. Virtuix Manufacturing Ltd. 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 we expect the closure
process to be completed in the quarter ending September 30, 2026.

Our Products

Our “Omni” line of omni-directional
treadmills consists of various products that target a variety of industries:

Omni Pro, the original Omni, is our commercial-grade
treadmill launched in 2016 for enterprise use in arcades, VR centers, corporations, and research institutions. We have shipped over 4,000
Omni Pro units to more than 45 countries worldwide. Following the launch of Omni One in 2024, we stopped production and sales of Omni
Pro.

Omni Arena launched
in 2019 as a turnkey attraction for the out-of-home entertainment industry. The attraction comprises four Omni Pro treadmills for multiplayer
gaming and features weekly esports prize contests. We’ve installed 80 Omni Arena systems at entertainment centers in the United
States (“U.S.”) and built a player base of over 500,000 players who signed up with an email address to play. Several players
have paid to play the attraction more than 300 times each. Following our shift in research and development (“R&D”) and
marketing efforts to Omni One, we stopped producing and selling new Omni Arena systems in 2025, but we continue to service existing customers
and earn recurring revenues through the sale of Omni Care maintenance services, Omniverse game credits, and replacement parts. We also
facilitate and earn profits on secondary sales of Omni Arena systems.

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Omni One is our latest product and our
most advanced treadmill yet, supporting full freedom of movement including crouching, kneeling, and jumping. It’s a compact device
that is easy to assemble and disassemble, and it can be moved around using its wheels. We sell Omni One in three different versions:
the complete Omni One system, Omni One Core, and Omni One Enterprise. We officially launched Omni One in September 2024, and by September
2025, we shipped the first 1,800 units to customers, resulting in revenues of over $4,000,000. In addition to hardware sales, we earn
recurring revenues from the sale of Omni One games and from monthly subscriptions to Omni Online (priced at $14/month), Omni One’s
service that allows customers to play online multiplayer games. During checkout, approximately 50% of Omni One customers purchase an
annual subscription to Omni Online.

Virtual Terrain Walk (“VTW”)
is our multi-user system for next-generation mission planning in the defense industry. VTW lets soldiers move physically in 360 degrees
inside geo-specific virtual environments, without boundaries, for ground combat planning and leader rehearsals. The geo-specific virtual
environments are digital twins of real-world environments, created by converting drone and other camera footage into photorealistic 3D
scenes via Gaussian splatting and other AI-driven 3D reconstruction techniques. VTW is currently in development. We presented a proof-of-concept
of VTW to potential customers at the I/ITSEC conference in Orlando, Florida, in December 2025. We already sold Omni One test units to
the 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.
Marine 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
Force to advance the development of VTW, and we got selected to be the lead integrator on the development of a VR infantry training system
by the U.S. Marine Corps Training and Education Command (TECOM). However, we expect that meaningful sales in the defense sector may not
materialize until fiscal year 2027, at the earliest. Despite the long sales cycle for penetrating the defense market, we believe that
VTW will retain a strong competitive moat because of our expansive omni-directional treadmill patent portfolio, our position as a U.S.
company, and the inherent barriers to entry for defense applications that competitors will face, including multi-year procurement cycles
and high switching costs.

Company Developments

During the fiscal year ended March 31, 2026,
we focused on (i) scaling consumer shipments of Omni One; (ii) simplifying our capital structure and completing a direct listing on the
Nasdaq Global Market; (iii) securing growth capital through debt and equity financing arrangements; (iv) advancing our VTW defense product
toward commercialization; and (v) transitioning the legacy Omni Arena business to sustaining mode to concentrate resources on Omni One
and VTW.

We continued to scale shipments of Omni One throughout
the fiscal year. By September 2025, we had shipped the first 1,800 Omni One units to customers, resulting in cumulative Omni One revenues
of over $4 million. Concurrently, we completed the transition of our Omni Arena business to sustaining mode, ceasing production of new
systems and shifting research and development and marketing resources to Omni One. We continue to support existing Omni Arena operators
and earn recurring revenues from Omni Care maintenance contracts, Omniverse Credits sales, and the sale of repair and replacement parts.
At the 2025 Augmented World Expo (“AWE”), the AR/VR industry’s largest tradeshow, Omni One was awarded the 2025 Auggie
Award for Best Interaction Product.

On August 6, 2025, our stockholders approved
the Sixth Amended and Restated Certificate of Incorporation (the “Reclassification”), which the Company filed with the Secretary
of State of the State of Delaware on August 7, 2025. Pursuant to this certificate, all outstanding shares of the Company’s
capital stock, including all series of preferred stock and any previously outstanding common stock, were reclassified and converted on
a one-for-one basis into shares of Class A common stock. On January 22, 2026, our Registration Statement on Form S-1 was declared
effective by the Securities and Exchange Commission, and trading of our Class A common stock on the Nasdaq Global Market commenced on
January 27, 2026 (the “Direct Listing”).

We deployed multiple financing instruments to
fund operations and growth during the fiscal year. On August 25, 2025, we entered into a Securities Purchase Agreement with Streeterville
Capital, LLC (“Streeterville”), issuing a secured note in the principal amount of $2,220,000 (with $2,000,000 in gross proceeds
at closing). On October 30, 2025, we entered into a second Securities Purchase Agreement with Streeterville, resulting in an additional
$500,000 in gross proceeds. On December 19, 2025, we entered into a third Securities Purchase Agreement with Streeterville, resulting
in an additional $500,000 in gross proceeds. In connection with the Direct Listing, Streeterville funded an initial advance of $8,000,000
(net of original issue discount) under an Equity Purchase Agreement, with subsequent advances subject to conditions including minimum
market capitalization, trading volume, and compliance with Nasdaq listing standards. Each advance includes an 8% original issue discount
and bears interest at 6% per annum. Separately, in January and February 2026, warrants for 128,645 shares were exercised at $2.332 per
share, yielding approximately $300,000 of proceeds, and warrants for 206,316 shares were exercised on a cashless basis, resulting in
the issuance of 178,739 shares.

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We made significant progress advancing VTW toward
commercialization in the defense sector. In December 2025, we presented a proof-of-concept of VTW at the I/ITSEC conference in Orlando,
Florida, the defense simulation industry’s premier event. During the fiscal year, we sold Omni One test units to the U.S. Air Force
Academy, YokoWERX (the innovation cell at Yokota Air Force Base), the U.S. Military Academy at West Point, and the U.S. Marine 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 Force to advance
the development of VTW, and we got selected to be the lead integrator on the development of a VR infantry training system by the U.S.
Marine Corps Training and Education Command (TECOM).

Business Strategy

Our business integrates (i) a consumer and enterprise
VR hardware platform anchored by our flagship Omni One product with (ii) a defense-oriented simulation system, Virtual Terrain Walk (“VTW”),
targeting next-generation immersive mission planning. We seek to scale Omni One sales in the U.S. consumer market, expand internationally,
build recurring software and subscription revenues, and gain adoption of VTW in the defense sector. We target a gross margin of approximately
40% on our hardware products and supplement hardware revenues with recurring income from Omni Online subscriptions, game sales, and Omni
Care maintenance contracts. We prioritize a vertically integrated operating model spanning product design, game development, manufacturing,
and distribution, and we evaluate opportunities in adjacent markets, including defense simulation and international expansion, consistent
with disciplined capital allocation.

The principal components of our strategy are:

Scale Omni One

We sell Omni One in several configurations: (i)
the complete system, (ii) Omni One for Quest, (iii) Omni One Core, and (iv) Omni One Enterprise, and drive consumer adoption through
digital advertising, influencer partnerships, live demos, and tradeshows. We sell directly through our website and authorized retail
partners, with third-party financing available. We initially sold Omni One to consumers in the United States only and have recently expanded
sales to Europe and Canada. Omni One Enterprise units are sold directly by Virtuix in the U.S. and through distributors internationally.

Build Recurring Revenue

In addition to hardware sales, we earn recurring
revenues from Omni Online subscriptions ($14/month or $140/year), game sales, and Omni Care maintenance contracts. During checkout, approximately
50% of Omni One customers purchase an annual Omni Online subscription.

Penetrate the Defense Market

VTW is our multi-user system that allows soldiers
to move physically in 360 degrees inside geo-specific digital twins of real-world environments for ground combat planning and leader
rehearsals. VTW is currently in development, and we expect that meaningful sales may not materialize until fiscal year 2027, at the earliest.

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Advance Product Development

Further development efforts will focus on expanding
Omni One’s game library and PC connectivity, and developing applications leveraging Gaussian splatting and other AI-driven 3D reconstruction
technologies.

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

Competition

Our main direct competitors offering omni-directional
treadmill systems are KAT VR, Infinadeck, and Cyberith. KAT VR offers consumer and commercial treadmill products featuring a low-friction
concave base and harness support structure, similar to designs that we believe are protected by our robust patent portfolio, with pricing
starting in the $1,000 to $2,000 range. KAT VR’s products are sold as peripherals rather than complete systems. Infinadeck produces
a fully motorized treadmill using an X/Y belt system aimed at professional simulation use-cases, with pricing starting in the $50,000
to $60,000 range, limiting its accessibility for mainstream consumers and enterprise customers. Cyberith offers a low-friction flat platform
with an optional tilting base, focused on commercial customers in research, enterprise, and defense, with pricing starting in the $8,000
to $10,000 range.

Beyond these direct competitors, we compete more
broadly with other recreational and entertainment activities for consumer attention and discretionary spending. The worldwide VR market
is increasingly competitive, and some of our competitors have substantially greater financial and other resources, larger research and
development staff, and more experience in developing, marketing, and distributing products. New competing products and services could
be introduced at any time that could result in reduced profit margins and loss of market share.

We believe Omni One stands out from competitors
by offering a fully integrated, consumer-ready VR treadmill system that combines what we believe to be superior quality and design, ease
of use, portability, and affordability, backed by a proven track record of over $20 million in cumulative product sales, a robust intellectual
property portfolio of 25 issued patents and 14 registered trademarks, native game integration through our proprietary software ecosystem,
U.S.-based customer support, and early mover advantage in the defense sector through VTW. We believe we offer the only omni-directional
treadmill solution currently positioned for scalable consumer and enterprise adoption. However, there can be no assurance that our competitive
strengths will be sufficient to maintain our market position. See “Risk Factors” for a discussion of the competitive risks
facing our business.

Employees

As of March 31, 2026, we had 39 full-time employees,
14 of whom are based in the United States, with the remainder based in Asia. We also employ three full-time contractors, two based in
the 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
include professionals from notable organizations including Flex, Corsair, and the U.S. Army. They bring to the Company strong expertise
in the gaming, defense, and manufacturing fields, including experience scaling hardware businesses to multimillion-dollar operations.
None of our employees are represented by a labor union or are party to a collective bargaining agreement.

Periodic Reporting and Financial Information

We have registered our Class A common stock under
Section 12(b) of the Exchange Act in connection with its listing on the Nasdaq Global Market. We are subject to the reporting requirements
of the Exchange Act, including the requirements to file annual, quarterly and current reports with the SEC.

We will remain an emerging growth company until the earlier of (1)
the last day of the fiscal year (a) following the fifth anniversary of the effectiveness of our initial registration statement under the
Securities 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
accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of
the 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
in non-convertible debt securities during the prior three-year period.

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In addition, Section 107 of the JOBS Act also
provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to
take advantage of the benefits of this extended transition period.