Virtuix Holdings Inc.

Note 1. Nature of Operations

Virtuix Holdings Inc. (“Virtuix Holdings” or “VHI” 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 started shipping beta units of Omni One, the first Omni entertainment system designed for the home. Virtuix Manufacturing, Limited (“VML”), a wholly-owned subsidiary, 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 we expect the closure process to be completed in the quarter ending June 30, 2026.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Virtuix Holdings Inc. and its subsidiaries required to be consolidated under U.S. 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. Revenues are recognized when earned and expenses are recognized when incurred.

The Company’s fiscal year ends March 31.

Management’s Estimates and Adjustments

Preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions affecting reported amounts of assets, liabilities, revenues, and expenses, as well as disclosures of contingent items. Actual results could differ from these estimates.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the Company’s financial position as of December 31, 2025, have been included. Interim results are not necessarily indicative of results for the full fiscal year or any future period. Operating results for the three-month period ended December 31, 2025, are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2026 or any future period.

Going Concern

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

The Company has not generated profits since inception and has incurred net losses of $6,892,302 and $12,024,068 for the nine months ended December 31, 2025 and 2024, respectively, and has accumulated deficits of $69,384,892 and $62,492,590 as of December 31, 2025 and March 31, 2025, respectively. These factors, when considered in conjunction with the Company’s working capital and liquid assets as of December 31, 2025, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued. Subsequent to December 31, 2025, the Company raised additional capital that has improved liquidity and is expected to mitigate the conditions that gave rise to this substantial doubt.

Management has taken several actions to support the Company’s ability to continue as a going concern, including:

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

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606,Revenue from Contracts with Customers, which provides a five-step model for recognizing revenue in an amount that reflects the consideration expected in exchange for transferring control of goods or services.

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

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 one 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:

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 when the related obligation is fulfilled.

The Company’s contracts generally do not 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.

Cash and Cash Equivalents

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

Accounts Receivable

Trade receivables are generally due within thirty days. Receivables are presented net of an allowance for credit losses, which is estimated based on historical loss experience, current economic conditions, and customers’ ability to pay.

Inventory

Inventory is stated at 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.

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. Depreciation is straight-line over the following estimated useful lives:

Fair Value Measurements

Financial instruments primarily include cash, receivables, payables, accrued expenses, notes payable, and lease liabilities. Carrying amounts approximate fair value.

Intangibles

Intangible assets include software, trademarks, customer lists, and a website. Amortization is straight-line over the following estimated useful lives:

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, are charged to

operations in the period incurred as research and development costs. Additionally, costs incurred after determination of readiness for market are 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 has been 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. 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.

The following table summarizes deferred revenue balances:

Revenue recognized during the nine months ended December 31, 2025 and 2024, that was included in deferred revenue at the beginning of the respective periods, was $2,517,806 and $1,617,995, respectively. Revenue recognized during the three months ended December 31, 2025 and 2024, that was included in deferred revenue at the beginning of the respective periods, was $822,244 and $1,032,232, respectively. During the nine months ended December 31, 2025, the Company converted outstanding Omni One preorder deposits to gift cards and reclassed them from deferred revenue. These gift cards are redeemable for Company products and represent an obligation to deliver goods in the future. The total amount reclassed is $241,646, which has been recorded as a contract liability, included in current liabilities on the consolidated balance sheet as of December 31, 2025.

Payments received from customers during the nine months ended December 31, 2025 and 2024, that increased deferred revenue were $1,705,810 and $2,608,257, respectively. Payments received from customers during the three months ended December 31, 2025 and 2024, that increased deferred revenue were $759,159 and $857,655, respectively.

Gift Card Liability

During the nine months ended December 31, 2025, the Company converted outstanding Omni One preorder deposits to gift cards and reclassed them from deferred revenue. The total amount reclassed from deferred revenue was $241,646. 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 December 31, 2025. Total gift card liabilities at December 31, 2025 were $448,087.

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 three months ended December 31, 2025 and 2024, was $377,739 and $23,844, respectively. Total advertising expense for the nine months ended December 31, 2025 and 2024, was $1,270,723 and $130,170, respectively.

Federal Income Taxes

No uncertain tax positions were identified. Tax-related interest and penalties, if any, are included in 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 computed by dividing net loss by weighted-average shares outstanding. Potentially dilutive securities that were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive include stock options, RSUs, warrants, and convertible preferred stock. The total number of potentially dilutive shares excluded from the computation was 5,210,145 and 22,815,211 at December 31, 2025 and 2024, respectively.

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 is currently evaluating the impact of this guidance 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 17 for further detail.

On December 14, 2023, the FASB issued ASU 2023-09,Income 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 may have on its consolidated financial statements and related disclosures.

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 three and nine months ended December 31, 2025 and 2024.

Note 3. Receivables

Receivables, net of allowance for credit losses consisted of the following at:

Changes in the allowance for credit losses account for the nine months ended December 31, 2025, and the year ended March 31, 2025, is as follows:

Note 4. Prepaids and Other Current Assets

Prepaids and other current assets consisted of the following at:

Note 5. Inventory

Inventory consisted of the following at:

Note 6. Property and Equipment

Property and equipment, net include the following at:

Depreciation expense for the nine months ended December 31, 2025 and 2024, was $131,323 and $124,287, respectively. Depreciation expense for the three months ended December 31, 2025 and 2024, was $45,189 and $21,123, respectively.

Note 7. Intangibles

Intangibles, net include the following at:

Amortization expense for the nine months ended December 31, 2025 and 2024, was $335,764 and $205,553, respectively. Amortization expense for the three months ended December 31, 2025 and 2024, was $106,116 and $125,554, respectively.

Note 8. 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 of $8.75. The note provides for payment of principal and accrued interest at maturity, nine months after the purchase price date. The note has a fixed rate of interest of 6% and is secured by all assets of the Company. The note includes an original issue discount of $200,000 plus additional closing costs of $20,000, which are amortized over the life of the note.

The Company granted warrants associated with this note to acquire shares of Class A common stock. In accordance with ASC 470-20, the warrants are recorded at fair value of $1,427,653 in equity as additional paid-in capital (“APIC”) – warrants, and as a contra-liability (discount on note payable) that is amortized over the life of the note.

The carrying value of the note at December 31, 2025 was $1,341,251 (principal of $2,220,000, less unamortized deferred loan costs of $10,667 and discount of $868,082). Discount amortization and amortization of loan costs included in interest expense was $768,905 for the nine months ended December 31, 2025, and $549,217 for the three months ended December 31, 2025. Interest expense on the note was $46,620 for the nine months ended December 31, 2025, and $33,300 for the three months ended December 31, 2025.

The shares underlying the note and warrants will be registered for resale in connection with the Company’s direct listing. Ten days following the date on which the resale registration statement is declared effective, the note will automatically be exchanged for and applied to the purchase price of a pre-paid purchase under an Equity Purchase Agreement between the Company and Streeterville Capital, LLC in aggregate principal amount equal to the outstanding balance then due under the note.

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 of $8.75. 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.

The carrying value of the note at December 31, 2025 was $235,683 (principal of $560,000 less unamortized deferred loan costs of $7,741 and discount of $316,576). Discount amortization and amortization of loan costs included in interest expense was $94,657 for the three and nine months ended December 31, 2025. Interest expense on the note was $5,693 for the three and nine months ended December 31, 2025.

The shares underlying the note and warrants will be registered for resale in connection with the Company’s direct listing. Ten days following the date on which the resale registration statement is declared effective, the note will automatically be exchanged for and applied to the purchase price of a pre-paid purchase under an Equity Purchase Agreement between the Company and Streeterville Capital, LLC in aggregate principal amount equal to the outstanding balance then due under the note.

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 of $8.75. 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.

The carrying value of the note at December 31, 2025 was $159,647 (principal of $560,000 less unamortized deferred loan costs of $9,555 and discount of $390,798). Discount amortization and amortization of loan costs included in interest expense was $18,620 for the three and nine months ended December 31, 2025. Interest expense on the note was $1,120 for the three and nine months ended December 31, 2025.

The shares underlying the note and warrants will be registered for resale in connection with the Company’s direct listing. Ten days following the date on which the resale registration statement is declared effective, the note will automatically be exchanged for and applied to the purchase price of a pre-paid purchase under an Equity Purchase Agreement between the Company and Streeterville Capital, LLC in aggregate principal amount equal to the outstanding balance then due under the note.

Subordinated Promissory Notes

On July 10, 2024, the Company received Board approval to borrow $1,500,000 through the issuance 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 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 accrued but unpaid interest of $7,991 were applied toward the purchase of 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. This note remains outstanding as of December 31, 2025.

Extinguishment of 2024 Notes

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. 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 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.

Related Parties

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.

Second 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”). Between October and December 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 of $8.75, at the option of either the noteholder or the Company. Of these promissory notes, a total of $225,000 was borrowed from two separate related parties, Jan Goetgeluk, who serves as our Chief Executive Officer and Chairman, and Mieke Criel, the mother of Jan Goetgeluk.

The carrying value of the Second 2025 Notes at December 31, 2025, was $1,567,485 (principal of $1,650,000 less unamortized discount of $82,515). Discount amortization included in interest expense was $67,485 for the three and nine months ended December 31, 2025.

Interest expense related to the 2024 Notes and Second 2025 Notes was $302,717 and $188,033 for the nine months ended December 31, 2025 and 2024, respectively. Interest expense related to the 2024 Notes and Second 2025 Notes was $108,600 and $111,519 for the three months ended December 31, 2025 and 2024, 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 provided 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 of $38,967, with a maturity date of September 1, 2025. The note had a fixed rate of interest of 12.25% and was secured by all assets of the Company.

The Company granted warrants associated with this note to acquire shares of Series A-2 Preferred Stock. In accordance with ASC 470-20, the warrants were recorded in equity as APIC – preferred stock warrants, and as a contra-liability (discount on note payable) that was amortized over the life of the note.

The carrying value of the note at December 31, 2025 was $0. The carrying value of the note at March 31, 2025 was $222,476 (principal of $225,508, 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 $11,095 for the nine months ended December 31, 2025 and 2024, respectively. Discount amortization and amortization of loan costs included in interest expense was $0 and $3,181 for the three months ended December 31, 2025 and 2024, respectively. Interest expense on the note was $8,295 and $47,207 for the nine months ended December 31, 2025 and 2024, respectively. Interest expense on the note was $0 and $12,482 for the three months ended December 31, 2025 and 2024, respectively.

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 $24,226 and $24,636 as of December 31, 2025 and March 31, 2025, respectively. Interest expense was $688 and $869 for the nine months ended December 31, 2025 and 2024, respectively. Interest expense was $228 and $287 for the three months ended December 31, 2025 and 2024, respectively.

Future Maturities of Notes Payable

Future maturities of notes payable are as follows for the twelve months ended:

Note 9. 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.

Note 9. Leases (continued)

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 continues as a month-to-month lease. 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 December 31, 2025, ROU assets totaled $715,603, with current lease liabilities of $175,420 and non-current lease liabilities of $540,183. As of March 31, 2025, ROU assets totaled $835,488, with current lease liabilities of $204,051 and non-current lease liabilities of $631,437.

Lease expense recognized in the consolidated statements of operations for the nine months ended December 31, 2025 and 2024, was $280,581 and $196,805, respectively. Lease expense recognized in the consolidated statements of operations for the three months ended December 31, 2025 and 2024, was $74,039 and $33,678, respectively.

As of December 31, 2025, the weighted-average remaining lease term for the operating leases is 3.64 years, and the weighted-average discount rate is 6.98%. As of March 31, 2025, the weighted-average remaining lease term was 4.30 years, and the weighted-average discount rate was 7.26%.

Note 10. Research and Development

Research and Development expense for the nine months ended December 31, 2025 and 2024, was $624,759 and $2,006,822, respectively. Research and Development expense for the three months ended December 31, 2025 and 2024, was $226,574 and $306,738, respectively.

Note 11. Commitments and Contingencies

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 case remains in the discovery phase, and no settlement range has been determined at this time. The Company’s attorneys, retained by the Company’s insurance provider, have filed a general denial and alleged contributory negligence against the plaintiff. Based on current information, the Company believes this matter will not have a material adverse effect on its consolidated financial condition, results of operations, or cash flows. Except for a deductible of $2,500, all legal costs and any potential settlement are expected to be covered by the Company’s insurance provider.

Note 12. Capital Stock

Authorized Capital Stock

On August 6, 2025, stockholders approved, and on August 7, 2025, the Company filed with the Secretary of State of the State of Delaware, the Sixth Amended and Restated Certificate of Incorporation (the “Certificate”). Pursuant to the Certificate, the Company reclassified and converted each share of its previously outstanding capital stock into shares of Class A common stock, effective immediately upon the acceptance of the Certificate for filing by the Secretary of State of Delaware.

As a result of the reclassification and conversion, all outstanding shares of the 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 December 31, 2025, 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 toone vote per share. Each share of Class B common stock is entitled totwenty 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.

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.

Outstanding Stock and Equity Transactions

As mentioned in Note 8, from April to June 2025, the Company issued 74,430 shares of Series B preferred stock and 74,430 warrants 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 8).

On August 6, 2025, the Company adopted the 2025 Omnibus Incentive Plan. The 2025 Omnibus Plan initially reserves 4,000,000 shares of the Company’s common stock for issuance, subject to adjustment for stock splits, recapitalizations and similar events. Beginning January 1, 2026 and on the first trading day of each calendar year thereafter, the share reserve will automatically increase by a number of shares equal to three (3) percent of the total outstanding shares of our common stock on the last day of the immediately preceding calendar year, unless the board of directors determines prior to the date of increase that no such increase (or a lesser increase) will occur.

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. 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 the CEO’s total shares 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.

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 $37,942 to MZHCI, LLC, as part of their compensation as investor relations consultants.

During the nine months ended December 31, 2025, the Company incurred direct costs related to its upcoming exchange listing totaling $381,173. These costs primarily consisted of exchange listing and placement agent fees and were directly attributable to the listing. In accordance with ASC 505-10, these costs were recorded as a deferred asset until the listing is complete.

During the nine months ended December 31, 2025, the Company issued store credits totaling $214,906 (subsequently converted to gift cards) to certain investors as an incentive for purchasing shares (see Note 2). 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.

Warrants

Warrants are issued in connection with debt (see Note 8) and equity from time to time at the Company’s discretion.

During the nine months ended December 31, 2025,303,509 warrants were exercised for 303,509 shares of Class A common stock at an exercise price of $.01 per share, and 21,440 warrants expired.

During the nine months ended December 31, 2025, the Company issued 74,430 warrants with a seven-year term in connection with the extinguishment of debt (see Note 8). 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 685,714 warrants with a term of six months from listing date in connection with the secured convertible promissory notes to Streeterville Capital, LLC (see Note 8). The warrants had a combined fair value of $2,145,601, 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 following is a roll forward of warrants for the nine months ended December 31, 2025:

Warrants are recorded in equity at fair value at the date of issuance.

Note 13. Stock Compensation Expense

The Company accounts for stock-based compensation under ASC 718. Stock-based compensation expense for the nine months ended December 31, 2025 and 2024, was $36,015 and $36,469, respectively, related to stock options and other awards. Stock-based compensation expense for the three months ended December 31, 2025 and 2024, was $14,164 and $9,714, respectively.

During the nine months ended December 31, 2025, the Company didnot grant any options under the 2025 Long Term Incentive Plan. No other material grants, exercises, or forfeitures occurred in this period.

As of December 31, 2025, total unrecognized compensation cost for non-vested stock options was $34,558, expected to be recognized over a weighted-average period of 13 months.

Between October 9, 2025 and December 15, 2025, the Company issued 2,146,250 restricted stock units to employees, executives, and directors under the 2025 Omnibus Incentive Plan. The Company accounts for restricted stock units under ASC 718. Stock-based compensation expense related to shares issued under this plan for the three and nine months ended December 31, 2025 and 2024, was $3,210 and $0, respectively. As of December 31, 2025 the restricted stock units have an unrecognized expense totaling $3,559,565, and a weighted average period remaining of 40 months. The Company expects this expense to be included in the Consolidated Statement of Operations over the four years following the Listing Date.

Note 14. 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 December 31, 2025, and March 31, 2025:

Note 14. Income Taxes (continued)

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 December 31, 2025 and 2024 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 December 31, 2025. Accordingly, no provision for deferred income taxes has been recognized.

As of December 31, 2025, NOL carryforwards available to offset future taxable income totaled $47,162,735. Of this amount, $12,561,963 relates to tax years prior to 2018 and will expire between 2034 and 2038. The remaining $34,600,772 relates to tax years beginning after 2018, and may be carried forward indefinitely but is limited to offsetting 80% of taxable income in future years under current federal tax law.

Note 15. 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.

For the nine months ended December 31, 2025, 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 $70, resulting in a share of loss in joint venture of $70 in the consolidated statement of operations for the nine months ended December 31, 2025.

For the three months ended December 31, 2025, the Joint Venture hadno activity.

For the nine months ended December 31, 2024, the Joint Venture had operating revenue of $45,436, cost of goods sold of $36,801, operating costs of $47,604, and net loss of $38,971. Under the equity method, net loss attributable to the Company was $19,096, resulting in a share of loss in joint venture of $19,096 in the consolidated statement of operations for the nine months ended December 31, 2024.

For the three months ended December 31, 2024, the Joint Venture had operating revenue of $39,272, cost of goods sold of $25,379, operating costs of $10,400, and net gain of $3,493. Under the equity method, net gain attributable to the Company was $1,711, resulting in a share of gain in joint venture of $1,711 in the consolidated statement of operations for the three months ended December 31, 2024.

Note 16. Revenue Disaggregation

Revenue streams from performance obligations included in net sales for the three and nine months ended December 31, 2025 and 2024, in the consolidated statements of operations are as follows:

Note 17. Segment Reporting

The Company operates in asingle 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 18. Patents

As of December 31, 2025, the Company owns fifteen issued utility patents and nine issued design patents, and six 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.

Note 19. Subsequent Events

Subsequent events are evaluated through the date the consolidated financial statements were issued.

In January 2026, we agreed to issue an aggregate of 59,000 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, with 15,000 shares to be issued upon execution of the agreement and 4,000 shares to be issued each month for the 11 months thereafter, subject to a six-month lock-up period.15,000 shares were issued on February 9, with the next issuance of 4,000 shares to be issued after the date of this filing. These shares will be 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.

On January 22, 2026, the Company’s Registration Statement was declared effective by the Securities and Exchange Commission in connection with its direct listing on Nasdaq. Trading of the Company’s Class A common stock commenced on January 27, 2026, and on that date, in connection with the August 25, 2025 Securities Purchase Agreement with Streeterville, the initial advance of $8,000,000 (net of original issue discount) was funded at the closing of our direct listing, with subsequent advances subject to certain conditions, including minimum market capitalization, trading volume, and compliance with Nasdaq listing standards. Each advance includes an 8% original issue discount and bears interest at 6% per annum. In addition, in connection with the closing, we issued to Streeterville the Equity Financing Warrant to purchase a number of shares of Class A common stock equal to $16,000,000 divided by the Nasdaq valuation price of $8.75, exercisable at the Nasdaq valuation price of $8.75 and expiring six months after the closing of the Company’s direct listing. The conversion price for the advances is set at 120% of the reference price, with, subject to certain triggers, an alternate conversion price based on 90% of the lowest volume-weighted average price during theten trading days prior to conversion, subject to a $2.00 price floor.

Note 19. Subsequent Events (continued)

On January 28 and January 29, 2026, certain holders of the Second 2025 Notes exercised their conversion rights and converted all outstanding indebtedness under their respective notes into an aggregate of 97,799 shares of Class A common stock at a conversion price of $7.44 per share (representing 85% of the $8.75 Nasdaq listing price). As a result of these conversions, the outstanding principal amount of the Second 2025 Notes was reduced from $1,650,000 to approximately $935,000 as of the date of this filing.

On January 29, 2026, Streeterville exercised a portion of the Equity Financing Warrant to purchase 57,500 shares of Class A common stock at an exercise price of $8.75 per share, for aggregate proceeds to the Company of $503,125. Separately, on January 29, 2026, the Company issued 200,000 shares of Class A common stock to Streeterville at an exercise price of $8.75 per share, for aggregate proceeds to the Company of $1,750,000. Between February 27, 2026, and March 5, 2026, Streeterville exercised further portions of the Equity Financing Warrant to purchase an aggregate of 147,500 shares of Class A common stock at an exercise price of $6.00 per share, for aggregate proceeds to the Company of $885,000.

From January to February 2026, Western Technologies Investments, under various funds, exercised 334,961 warrants for 307,384 shares of Class A common stock, resulting in cash proceeds to the Company of $300,002. Of these exercises,96,484 warrants were issued in relation to the WTI 2016 Debt and exercised at the cash exercise price of $2.332/warrant,32,161 warrants were issued in relation to the WTI 2018 Debt and exercised at the cash exercise price of $2.332/warrant,50,066 warrants were issued in relation to the WTI April 2022 Debt and exercised as a cashless exercise, calculated using the warrant exercise price of $.2996 and the closing share price on the day of exercise, resulting in the issuance of 42,584 shares, and 156,250 warrants were issued in relation to the WTI 2014 Debt and exercised as a cashless exercise, calculated using the warrant exercise price of $.80 and the closing share price on the day of exercise, resulting in the issuance of 136,154 shares.

On February 9, 2026, the Company entered into Amendment No. 1 to each of the Equity Financing Warrant, the Debt Financing Warrant, and the common stock purchase warrants issued in connection with the Second Note and the Third Note, respectively, with Streeterville. The amendments modified the exercise price of each warrant to provide that, for any exercise occurring during the period commencing on February 9, 2026 and ending on March 11, 2026, the exercise price will be $6.00 per share, reduced from the NASDAQ valuation price of $8.75 per share. For any exercise occurring after March 11, 2026, the exercise price will revert to the reference price established in connection with our direct listing.

On February 10, 2026, the Company issued 171,807 shares of Class A common stock to Maxim Partners LLC (“Maxim”) and its designees in partial consideration for financial advisory and investment banking services provided in connection with the Company’s direct listing on Nasdaq, pursuant to an engagement letter originally entered into on May 21, 2025 (the “Engagement Letter”). The shares represented approximately one half of one percent (0.5%) of the Company’s outstanding common stock as of the date of the direct listing (the “Success Fee Stock”) and are subject to standard lock-up provisions for a period of six (6) months from the consummation of the direct listing. Maxim and its designees are entitled to unlimited piggyback registration rights consistent with those granted to other holders of the Company’s common stock.

No additional material events were identified which require adjustment or disclosure in the consolidated financial statements.