Virtuix Holdings Inc.

As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. For additional risks relating to our operations carefully consider the factors discussed in “Risk Factors” of our Prospectus dated January 26, 2026, which could materially affect our business, financial condition or future results. Other than as set forth below, we have identified no material changes from the risk factors previously disclosed in the Prospectus.

We have identified a material weakness in our internal control over financial reporting related to the accounting for complex financing transactions, and our failure to remediate this material weakness or otherwise maintain effective internal controls could adversely affect our financial reporting and investor confidence.

During the preparation of our condensed consolidated financial statements for the three months ended June 30, 2026, management identified a material weakness in our internal control over financial reporting related to the accounting for complex financing transactions. Specifically, the Company did not maintain effective controls designed to identify, evaluate, and document the application of U.S. GAAP to debt and other financing arrangements containing potentially complex terms and embedded features. As a result, management did not perform a timely technical accounting assessment of certain debt instruments to determine whether embedded features required bifurcation and separate accounting as derivative liabilities. This control deficiency resulted in errors in the Company's accounting for certain financing arrangements and required adjustments and revision to prior period financial information to record embedded derivative liabilities and related accounting impacts.

This material weakness existed as of March 31, 2026 and continued to exist as of June 30, 2026, and resulted in errors in the accounting for certain financing arrangements that required revisions to previously reported financial information.

We have begun implementing remediation measures designed to strengthen our controls over complex and non-routine financing transactions, including enhanced procedures for identifying transactions requiring technical accounting analysis, documented review of significant contractual terms and embedded features, and the use of qualified technical accounting and valuation resources, including third-party specialists when appropriate. However, we cannot provide assurance that these measures will successfully remediate the material weakness or that additional material weaknesses or significant deficiencies will not be identified in the future. Management, under the oversight of the Audit Committee, is monitoring the implementation and effectiveness of these remediation measures.

Until this material weakness is remediated, there is a reasonable possibility that a material misstatement of our annual or interim financial statements may not be prevented or detected on a timely basis. If we are unable to remediate this material weakness or otherwise maintain effective internal control over financial reporting and disclosure controls and procedures, we could experience additional errors in our financial reporting, be required to revise or restate our financial statements, experience delays in meeting our reporting obligations, incur additional costs associated with remediation and compliance efforts, and experience reduced investor confidence in our financial reporting, any of which could adversely affect the market price of our Class A common stock.

Our pre-paid purchase arrangements with Streeterville may result in substantial dilution and, if our stock price is below the $2.00 Floor Price for six consecutive months, could require cash payments that adversely affect our liquidity.

As previously disclosed, we entered into an Equity Purchase Agreement with Streeterville Capital, LLC (“Streeterville”) under which Streeterville committed to purchase up to $50,000,000 of our Class A common stock through one or more pre-paid advances. On May 22, 2026, we entered into a second pre-paid purchase with Streeterville in exchange for our outstanding secured convertible promissory notes held by Streeterville. Under the pre-paid purchases, if specified trigger events occur, the share purchase price may be based on a market-price formula tied to 90% of the lowest volume-weighted average price of our Class A common stock during the applicable ten-trading-day measurement period. Because our Class A common stock has recently traded below $2.00 per share, issuances under this formula could require us to issue a substantially greater number of shares to satisfy a given portion of the outstanding pre-paid purchase balance, which could result in substantial dilution to existing stockholders and place downward pressure on the market price of our Class A common stock.

The pre-paid purchases also define a $2.00 floor price (the “Floor Price”). The Floor Price does not operate as a fixed minimum price at which shares may be issued in all circumstances. However, if the applicable share purchase price remains below the Floor Price for at least six consecutive months, Streeterville may elect to have the applicable purchase amount paid in cash rather than shares of Class A common stock. Any such cash payment requirement, or any default arising from our inability to deliver shares or comply with the pre-paid purchase documents, could materially and adversely affect our liquidity, financial condition and ability to continue executing our business strategy.