VTIX

Good morning, welcome to the Virtuix Earnings Conference Call for the full fiscal year 2026, ending March 31, 2026. All lines have been placed on listen-only mode, the floor will be open for your questions following the presentation. During today's call, we may make statements relating to our goals and objectives for future operations, financial and business trends, business prospects, and management's expectations for future performance that constitute forward-looking statements under federal securities laws. Any such forward-looking statements reflect management's expectations based upon currently available information and are not guarantees of future performance, they involve certain risks and uncertainties that are more fully described in our SEC filings. Our actual results, performance or achievements may differ materially from those expressed in or implied by such forward-looking statements.

We undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this call. A press release detailing these results was issued this morning and is available on the company's investor relations website at invest.virtuix.com. Hosting today's call are Virtuix founder, Chief Executive Officer, and Chairman, Jan Goetgeluk, and Chief Financial Officer, Thomas McGinnis. They will provide a corporate overview, review key highlights, discuss strategic milestones, cover financial results, and outline the company's priorities and outlook. With that, I'd like to turn the call over to Mr. Goetgeluk.

Thank you, operator. Good morning, everyone. Thank you for joining us to review our results for the fiscal year 2026. Today, we'll walk you through a brief corporate overview, our key highlights for the year, our strategic milestones across consumer, defense, enterprise, and healthcare. Thomas will take you through detailed financial review. Let's get started. Virtuix, we are a leading developer of AI-driven full-body virtual reality systems, now trading on the Nasdaq Global Market under the ticker VTIX since our debut on January 27, 2026. We were honored to ring the Nasdaq opening bell on March 6, which was a nice experience. Our technology enables natural full-body movement in 360 degrees inside virtual worlds, bringing the physical act of walking and running into video games and other applications across enterprise and defense.

Our product portfolio includes five core offerings covered by 25 issued patents, with a 26th patent recently allowed. We have Omni One, Omni One for Quest, and Omni One Core. Those are our flagship consumer products. Omni One Enterprise for industrial training and other enterprise applications, and Virtual Terrain Walk, or VTW, which is our primary defense simulation system. We are hardware experts with a proven track record of execution. We're headquartered in Austin, Texas, with operations in Zhuhai, China, where our manufacturing facility is set up and ready to support up to 3,000 units per month, which would represent over $100 million in annual revenue potential at full utilization. We are ready to scale.

We pursue a multi-use revenue strategy that includes high-volume consumer gaming and fitness, supplemented by high-value defense and enterprise training, all with recurring revenues from software, games and subscriptions for consumers, and software licensing and custom simulation development for defense and enterprise customers. We're also at the leading edge of AI-driven 3D reconstruction with technologies like Gaussian splatting that transform 360-degree video footage into photorealistic, walkable 3D worlds in just hours. Previously, recreating a real-world environment as an explorable space in virtual reality, well, that could take weeks or several months. Very expensive, very time-consuming. Today, thanks to AI, we can do that in just a few hours. We're applying this technology to our VTW defense system, and it's also driving adoption of our technology in the enterprise space for training. Fiscal 2026 was a transformational year for Virtuix on every front, financial, strategic, and commercial.

Let me briefly walk you through the highlights before we take a deeper dive. Financially, we grew full-year revenue 18% year-over-year to $4.3 million, driven by strong demand for Omni One, including a robust 2025 holiday season. Keep in mind that revenues in fiscal year 2025 primarily stem from fulfilling a large backlog of nearly two years of pre-orders for Omni One. Fiscal year 2026, this most recent year, primarily reflects only new sales of Omni One. Even then, we grew revenues by double digits. If we compare new sales in December 2026, the key holiday month, versus new sales of units in December 2025, well, new sales in December 2026 were up 60% compared to the prior year's, reflecting a strong growth in our consumer segment. Gross margin turned sharply positive, coming in at 25% compared to a negative 6% in the prior year.

We reduced our operating expenses by 19%. We ended the year with $9.5 million in cash, up from just half a million a year ago. Strategically, we achieved a series of major milestones. We listed on Nasdaq under the ticker VTIX in January, validating our decade-long innovation in full-body XR, while also providing access to capital and the market visibility for us to scale aggressively. We also launched Omni One for Quest through our collaboration with Meta and Meta's Made for Meta program. We expanded globally across the European Union, the United Kingdom, and Canada. Most importantly, we're also seeing strong traction in our defense business with U.S. Air Force SBIR awards, our selection as a lead integrator for a U.S. Marine Corps training system, and a development agreement with U.S. Navy. Last, we also extended our platform into longer-term verticals like healthcare.

Let me turn to these strategic milestones in more detail. One of the most significant developments of the year is the launch of Omni One for Quest in collaboration with Meta. That happened just this past Tuesday. Through Meta's Made for Meta program, Omni One is now certified for the Meta Quest ecosystem and will be featured in the Meta store. More than 20 million Quest headsets have been sold with an estimated 6 million or so active users by recent estimates. For the first time, those users can pair Omni One with their existing Quest headset and game library, enabling them to walk, run, crouch, strafe, jump, all in 360 degrees through a plug-and-play experience. This meaningfully expands Omni One's addressable market and broadens our distribution. Omni One, which some called the Peloton for gamers, also earned meaningful consumer validation in the past year.

As you know, users can burn up to 700 calories per hour. In addition to being fun, it is also good for your health. Our product now holds a 4.8-star average rating. Omni One also won a 2025 Auggie Award, which is one of our industry's most prestigious awards. At $2,595, about $90 a month with Affirm, Omni One for Quest is also our most successful entry point into full-body VR. We view this as an important step forward for bringing physically active, engaging, full-body virtual reality to a much larger consumer audience. Our international growth is also well underway. Omni One for Quest and Omni One Core are now available across Germany, the U.K., France, and additional EU markets through dedicated storefronts. Most recently, we have also expanded its availability into Canada through our online store.

This adds a large, high-income, international consumer base for our products. We are also advancing into the medical vertical through university-led validations of our platform. We deployed Omni One at Rutgers University at WINLAB for research and development in AI-assisted neurodivergence therapy, as well as immersive behavior analytics, including autism therapy for children. Similarly, at the Florida Gulf Coast University, faculty there in the Marieb College of Health and Human Services are evaluating Omni One for physical and occupational therapy, neurorehabilitation, fall prevention, and clinical simulations. We believe that in the future, these collaborations can open up new large revenue opportunities within next-generation healthcare and specifically therapeutic applications. That is potentially a third big vertical for our product in addition to consumer and defense. Let us turn to defense.

A major component of our long-term growth strategy is the defense markets, where we now have active programs across all four branches of the U.S. military. Our vision there is to supplement our high-volume consumer sales with potentially high-value defense contracts. We are experiencing rapid traction for our technology in the defense training and simulation markets. With U.S. Air Force, we recently received an AFWERX SBIR Phase I award for VTW. We have also sold test units to the U.S. Air Force Academy and Yokota Air Force Base. For the U.S. Marine Corps, specifically their Training and Education Command, or TECOM, through their partnership with KBR, we were selected as a lead integrator for a multi-user virtual infantry training system featuring four Omni One treadmills. With U.S. Army, we sold Omni One to the U.S. Military Academy at West Point.

With U.S. Navy, we signed a cooperative research and development agreement with the Naval Postgraduate School to evaluate Omni One for training and simulation. To further accelerate our position in this market, we also formed a special board committee to evaluate strategic acquisitions in defense training and simulation. We are actively evaluating companies today that provide immediate access to government contract vehicles and recurring defense revenues in the $10 million-$50 million range. In addition to boosting revenues, we believe such an acquisition can provide several other key benefits. That includes positioning Virtuix to expand into larger multi-year contracts, acquiring valuable past performance credentials. Past performance is critical for winning large government contracts. We can acquire that. We also gain access, potentially, to established sales channels and contract vehicles across all branches of U.S. military.

Additionally, we believe there may be meaningful synergies between our 360-degree movement technology, the Omni, and the capabilities of potential acquisition targets, which would result in opportunities for cross-selling, enhanced training solutions, and making contract bids more competitive. We believe this initiative of pursuing M&A in the defense sector is very promising and a potentially major catalyst for our company going forward. Now, the center of defense offering is our Virtual Terrain Walk system with the slogan, "Walk the terrain before you fight on it." Most recently, we demonstrated VTW alongside our Forward Arming and Refueling Point trainer at TSIS, which is a Training and Simulation Industry Symposium, TSIS 2026. We also showed it at the VR/AR's fourth annual Immersive Technology Summit.

Now, VTW is powered by that AI-driven Gaussian splatting technology that I mentioned, which transforms 360-degree footage into photorealistic walkable 3D terrain in just hours. That enables terrain generation in just a few hours, thanks to the use of AI. That enables immersive mission planning, where users can walk geo-specific terrain in 360 degrees for reconnaissance, decision support, and leader rehearsals. This system supports 12 or more distributed stations, enabling multi-user planning across geographically separated sites. Essentially, for the first time here, warfighters can explore the battlefield before we put boots on the ground. We believe that is a revolutionary capability that our defense and our military did not have until now, thanks to our technology. Importantly, beyond the upfront system sale, VTW is designed to generate high-margin recurring revenue from software licensing and customized simulation development. All right.

With that, I'll hand the call over to Thomas to walk us through the financials.

Thank you, Jan, and good morning, everyone. Net sales for the full Fiscal Year 2026 were $4.3 million, an 18% increase from $3.6 million in the prior year. The increase was driven primarily by new sales of Omni One, including a strong 2025 holiday season, whereas prior year sales primarily reflected the fulfillment of legacy Omni One pre-orders placed during our pre-order period that ended in September 2024. Sales of new Omni One and Omni One Core systems were up 60% in December Fiscal Year 2026 compared to the prior year, reflecting strong growth in our consumer segment. The metric I'd like to emphasize most is gross margin. Gross profit improved by $1.3 million to $1 million compared to a gross loss of approximately $0.2 million in the prior year.

Gross margin turned positive, reaching 25% compared to negative 6% a year ago. That represents a 31 percentage point improvement and is a meaningful step forward for the business. This improvement was driven by the higher average selling price of the complete Omni One system, lower per-unit manufacturing overhead, and the completion of delivery of nearly all discounted units to our equity crowdfunding investors. Turning to full-year operating expenses. Total operating expenses decreased in fiscal year 2026 by $2.6 million, or 19%, to $11.4 million from $14 million in the prior year, reflecting meaningful cost discipline across the organization. General and administrative expenses declined by $2.2 million, and research and development expenses declined by $1.3 million, partially offset by a $0.9 million increase in selling expenses as we invested in commercial expansion.

As a result, loss from operations improved by approximately 27% to $10.3 million, compared to $14.2 million in the prior year. Net loss for the year was $16.8 million, compared to $14.6 million in the prior year. However, it is important to note that this increase was not driven by operating performance, which, again, improved materially year-over-year. Rather, the change was driven by approximately $6.4 million of non-operating costs, the majority of which were non-cash, including interest expense, amortization of debt discount on our convertible notes, and a one-time non-cash warrant modification expense, all related to capital raised during the year. These items sit below the operating line. Turning to our balance sheet liquidity position. We ended the year in a substantially stronger position.

Cash and cash equivalents totaled $9.5 million as of March 31st, 2026, compared to $0.5 million a year earlier, an increase of approximately $9 million. Total assets also increased to $14.8 million, compared to $5.8 million in the prior year. On the liability side, total liabilities were $11.7 million, compared to $6.6 million a year ago. Included in the fiscal year 2026 liabilities are $8.5 million of notes payable, net of debt discount. $6.1 million of these notes are convertible and structured to convert into equity rather than require cash repayment. The remainder, $2.4 million of notes, are straight promissory notes with a maturity date of July 1st, 2027, and they are intended to be repaid via 3(a)(9) exchanges into equity prior to their maturity date.

In other words, none of our year-end notes payable are intended to require a cash repayment. Importantly, stockholders' equity turned positive, reaching $3 million compared to stockholders' deficit of $0.8 million a year ago, representing a $3.8 million improvement. During the year, we strengthened the balance sheet through warrant exercises, convertible note issuances, and other financing activities. With that, I'll turn the call back over to Jan.

Thank you, Thomas. Looking ahead, our priorities are clear. First, we intend to scale Omni One consumer revenue primarily through the Omni One for Quest rollout, which opens a market of an estimated 6 million active users, while continuing to expand internationally across the EU, UK, Canada, and other markets. Second, we plan to grow the adoption of our technology in the defense sector by advancing VTW across all four branches of U.S. military, pursuing phase II and phase III opportunities, and targeting consistently larger, high-value contracts with recurring software revenue. Third, we plan to complete strategic acquisitions in the defense training and simulation space, targeting government contract vehicles and recurring defense revenue in a range of $10 million-$50 million.

Fourth, we will continue to advance our enterprise and AI initiatives by expanding Omni One Enterprise into the medical vertical and further the development of AI applications, building on our recent collaborations. We also remain focused on improving gross margins with targets of 40% or more in consumer and 70% or more in enterprise through volume price leverage and continued cost optimization. Above all, we remain focused on our path toward profitability, driven by the combination of revenue growth and operating expense discipline, and supplemented by high-value defense and enterprise contracts. Let me leave you with a few key takeaways. First, our commercial momentum is very real. I mean, for the full year, we grew revenue 18%, we turned gross margin positive, and we reduced operating expenses by 19%. Second, our strategic position has never been stronger.

We're now a Nasdaq-listed company with Omni One for Quest live through Meta, with international storefronts across the EU, U.K., and Canada, with active defense programs across all four U.S. military branches, and with a platform that is further expanding into enterprise AI and healthcare. Lastly, our manufacturing infrastructure is in place to support meaningful scale with capacity for up to 3,000 units per month and more than $100 million in annual revenue potential. We believe we are ready to take Virtuix to the next level to achieve continued growth and create long-term value for our shareholders. With that, we will now open up the call for questions. Operator?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from the line of Jack Codera with Maxim Group, LLC. Please proceed with your question.

Hi, this is Jack Codera calling in for Jack Vander Aarde. Thanks for taking my questions. It's nice to see the progress with all the different arms of the U.S. military. You kind of mentioned there what it would take to secure larger contracts. I'm kind of wondering, just big picture, what do you expect the total size of that opportunity to be? What sort of time horizon do you think it would take for some of those larger contracts to materialize?

Hey, good morning, Jack. Thanks for that question. It's a big opportunity. Just to give some numbers, for example, the U.S. Army alone has 117 battalions that could use a VTW system for mission planning and rehearsal. Sort like systems, a 10, 12-user system, simulation system, I mean, contract value probably anywhere from half a million to a million dollars per system. You can multiply that by the number of battalions. That's just the U.S. Army potential on the battalion level. Just one example, the U.S. Marine Corps TECOM project that we have, similar story. That is a system for the training of infantry, a fire team infantry training system that we are the lead integrator on. Sort like systems, if it gets expanded to a 10-person system, it could be, again, half a million, $2 million system over the life of the contract.

That could be expanded potentially to 20 training bases nationwide for the U.S. Marine Corps. That's just that one specific project we have with the Marine Corps. Those are just a few examples that we have announced today. If we look at everything else that we're working on, the defense market for us is such a big opportunity and could be a major catalyst for growth going forward. We add to that our M&A activity in the space, that will accelerate that momentum and that growth even more, because then we have even faster access to contract vehicles, get past performance on our books to bid on big contracts or win big contracts. Also then again, of course, the revenue side, where we can add to our revenues with a step change in a very meaningful way.

I think these activities in the defense space that we're pursuing can truly be a game changer for our company and a big catalyst for growth going forward. We're very excited about our traction in the space so far.

Okay. That's super helpful color. I have one more question, just a little bit. Speaking on geographic coverage, I am just wondering, overall, where are you selling now? In the near future, where do you expect to open any more online storefronts? Is there any areas that you expect to be these incremental additions to drive demand? Thank you.

Yep. Our biggest market is the U.S. That's always been our bread and butter. We recently expanded to Europe and the U.K. That's for Omni One Core and Omni One for Quest. We also recently expanded to Canada with our own online store for all our products. Those are our recent additions. Can we add additional international markets? Yes, we are looking at that. Nothing to announce just yet, but yeah, we will continue to expand our global footprint wherever it makes sense commercially in the future.

Awesome. Thank you for taking my questions.

Thanks, Jack.

Thank you. Our next question comes from the line of Gowshihan Sriharan with Singular Research. Please proceed with your question.

Good morning, gentlemen. Can you hear me?

Hey, Gowshihan, good morning.

Hey, good morning, Jan. My first question is on the Omni One for Quest, now that it's live, how are you guys thinking about any kind of cannibalization on the standalone system? When you think about the mix shift towards Quest as the dominant SKU, how are we supposed to think about the net margin effect? Is the volume gain from the Meta install base enough to offset any kind of margin compression? Any color on that?

Yeah, I think margin compression is muted. It's not much there. I think now we have three core offerings on our store. We have Omni One Core for $2,495, that's for PC VR. We have Omni One for Quest, which is $2,595, or with Affirm, that's about $90 a month with Affirm, buy now, pay later. That's really, I think, if you bundle a Quest with that, it would provide a complete system under $3,000 with the Quest library and the Quest name behind it. We find that to be an incredible offering that we believe is going to accelerate our growth on the consumer side. It's a big deal. It's a big milestone for us that we got this launched. We have the Omni One, kind of our complete system that we ship with our headsets, which is now $2,995.

That's for people that don't have a Quest yet, don't want to buy a Quest, they just want to buy the plug-and-play, everything works out of the box experience. We have that offering as well. Those are our three products now on our store. We do believe that Omni One for Quest will be our most valuable and our dominant offering. We'll see. We just launched it this week. It's been a great launch, and we'll see how we can really drive our sales going forward, and look forward to announcing results on that in the future.

On the Meta side, what kind of support is Meta providing? Are you in a curated catalog? Does Meta provide any kind of data on the impressions and click-throughs that you can track?

Yeah, we will be. We will be on the official Meta store with the Meta brand behind it. We have a close collaboration with Meta, with weekly or bi-weekly calls. Now that we launched the product, we're going to work even more closely together to really drive the product. We'll see what kind of data they can provide with us over time. That I don't quite know just yet. Yeah, it's been a great collaboration, and we were officially Meta certified and part of the Made for Meta program. It's an official collaboration, which I think from a visibility perspective and a branding perspective, will bring a lot of positives.

Yeah. Okay. On the Omni One side, I know there's a cohort now approaching kind of the second renewal cycle. Can you guys give us a sense of what that two-year renewal rates on those early cohorts are, even directionally? Is the subscription running better than anticipated? How is that performing?

Yeah, very well. I mean, we don't disclose it in our filings, but, as you can imagine, those are on automatic payments for most people and most of our customers. As you can imagine, the churn there is not that high. I don't think we disclose official numbers there. Those recurring revenues from Omni Online is very powerful for us. It really boosts our margins and juices up our revenues in addition to the upfront hardware sale of Omni One, so it's done very well for us.

Got it. I might have, apologize, missed the part where you were talking about the development with the military, but what is the typical timeline for phase I completion to phase II decision with the?

It depends. It really depends on the contracts, on the branch. We're pursuing various avenues with the Air Force. We have this first SBIR award, that's a three-month project that then very quickly can turn into a phase II. With other branches, the U.S. Marine Corps, for example, that can evolve into a bigger contract rather quickly, depending on what pot of money that will be used to pay for it. It always depends on what money is available, what contract vehicle will be used, what's the bidding process. It can go from a few months to one or two years or more. It really depends on the situation. We're pursuing, and we have programs with various branches and various contract vehicles, so there's not just one standard answer there.

Okay. Now that you're kind of deeply involved in the military bidding process, what is the competitive space in the military evaluation like? Who are your main competitors in the space?

Yeah, the benefit is that regarding movements in virtual environments, I mean, we're the only game in town. We have, of course, our core technology that is patent protected. We're by far the leader in this space. We have a Chinese competitor, a copycat, if you will. Of course, they have no play in the U.S. military space. In so far as adding physical movement to virtual training, we are it. It's really exciting because if you think of it, the military, they have simulators for aircraft, they have simulators for vehicles, tanks. They've never before had simulators for infantry, for ground troops, until today. Until with our technology now, for the first time, infantry, ground troops, war fighters can have this, basically a walking simulator with the Omni. They can walk around without boundaries inside virtual environments.

10-plus war fighters together can walk around inside virtual worlds for mission planning, mission rehearsal, virtually explore the battlefield before we put boots on the ground. We believe that's a revolutionary capability. I think the military is very excited about that. That's why we're seeing such rapid traction, more rapid than we expected, frankly, rapid traction and momentum for our technology in the defense training space.

Awesome. I'll make this my last question. I'll be remiss if I didn't ask whether, given your verbiage about the M&A, has the landscape broadened or is there something being announced before the end of the calendar year?

You broke up there for a second, Gowshihan. You're asking if the landscape of targets has broadened?

Yes. If there's a chance of something being announced before the end of the calendar year.

Oh, that is definitely the goal. Yes. That would be our goal and our aim, definitely. We are actively reviewing opportunities. We're very excited about that. We think that it's going to have a really positive impact on our top line, on our strategic position in the space, and on accelerating our growth in the defense markets. We are moving that forward at rapid speed as a key priority. We hope to announce something substantial there in the near future, yes.

Awesome. Thank you, guys, and good luck for your next year.

Thanks, Gowshihan.

Thank you. We have reached the end of the question and answer session. I would now like to turn the call back over to Mr. Jan Goetgeluk for his closing remarks.

Thank you, operator, and thank you all for joining us today. Fiscal 2026 was truly a defining year for us. We became a public company, we launched OmniOne for Quest with Meta, we expanded internationally, and we built a meaningful momentum across consumer defense, enterprise, and also healthcare. I want to thank our team, our partners, our shareholders for your continued support, and we're proud of what we accomplished this year, and we're confident, and I can say this, our team, we are more excited than ever before about the opportunities we have ahead. Thank you for joining. If we were unable to address your question today, please reach out to our investor relations team at MZ Group, and they'll be happy to assist. Thank you again for joining us, and have a great day.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.

Good morning, welcome to the Virtuix Earnings Conference Call for fiscal year 2026, nine months ended December 31st, 2025. All lines have been placed on a listen-only mode, the floor will open for your questions following the presentation. During today's call, we may make statements relating to our goals and objectives for future operations, financial and business trends, business prospects, and management's expectations for future performance that constitute forward-looking statements under federal securities laws. Any such forward-looking statements reflect management expectations based upon currently available information and are not guarantees of future performance and involve certain risks and uncertainties that are more fully described in our SEC filings. Our actual results, performance, or achievements may differ materially from those expressed or implied by such forward-looking statements.

We undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this call. A press release detailing these results was issued this morning and is available in the investor relations section of the company's website at investors.virtuix.com. Hosting today's call will be Virtuix Founder, Chief Executive Officer, and Chairman, Jan Goetgeluk, and Chief Financial Officer, Thomas McGinnis. I'll turn the call over to Mr. Goetgeluk. Please begin, sir.

Thank you, operator. Good morning, everyone. Welcome to our first earnings call as a publicly traded company. Today we'll walk through a corporate overview, our Q3 and nine month highlights, strategic milestones, and a financial review from Thomas. Let's get started. Virtuix is a leading developer of full-body virtual reality systems, and we're now trading on the Nasdaq Global Market under the ticker VTIX since our debut on January 27th, 2026. Our technology enables natural full-body movement in 360 degrees in virtual worlds. We're bringing the physical act of walking and running into VR games or other applications, including enterprise and defense. Our product portfolio includes 4 core offerings that are covered by 25 patents. Omni One and Omni One Core, that's our flagship consumer product line. Omni One Enterprise, designated for industrial training and other enterprise applications.

Our Virtual Terrain Walk, VTW, defense simulation system. We are hardware experts with a proven track record of execution. We are headquartered in Austin, Texas, and we have operations in Zhuhai, China, Hong Kong, and Taiwan. Our manufacturing facility is scaled and ready to support up to 3,000 units per month, which represents over $100 million in annual revenue potential at full utilization. We are ready to scale. We have a multi-use revenue strategy that includes high-volume consumer gaming supplemented by high-value defense and enterprise training, all with recurring revenues from software, games and subscriptions for consumers and software licenses and custom simulation development for defense and enterprise customers. We're also at the leading edge of AI-driven 360 reconstruction technologies like Gaussian splatting that transform 360-degree video footage into photorealistic walkable 360 worlds in just hours.

Previously, recreating a real-world environment into an explorable space in virtual reality, that could take weeks, even months, in a very expensive, very time-consuming. Today, we can do that in just a few hours. We're applying this technology to our VTW system for defense, and it's also driving adoption of our technology into the enterprise space. Think, for example, about industrial training or safety training. The nine months ended December 31st, 2025, were transformative for Virtuix on every front, financial, strategic, and commercial. Let me briefly walk you through the highlights before we take a deeper dive. Financially, we delivered 41% revenue growth year-over-year for the nine months ended December 31st, 2025, reaching $3 million in sales.

That's primarily driven by strong demand for Omni One, including an increase in orders from a strong 2025 holiday season. New orders for Omni One and Omni One Core increased 60% in December 2025 compared to unit orders placed in December 2024. Our gross margin turned sharply positive, coming in at 29% compared to a -17% in the prior year period. Operating expenses declined 45%, and our net loss improved 43%, to a loss of $6.9 million from a loss of $12 million. I'll note that the prior year period included a one-time non-cash stock-based compensation expense of approximately $4.7 million. Strategically, we achieved several major milestones. We listed on Nasdaq under the ticker symbol VTIX in January.

This was a milestone moment for our company, validating our decade-long investment in full-body VR technology and really providing us with access to capital and the market visibility to scale aggressively in 2026 and beyond. We also joined the Made for Meta program. We launched Omni One Core sales in Europe across the U.K., Germany, France, and all other E.U. countries. We demonstrated humanoid robot teleoperation with University of Central Florida. We integrated AI-powered Gaussian splatting into our VTW defense system. We saw some early defense adoption at Yokota Air Force Base, U.S. Air Force Academy, and the U.S. Military Academy at West Point. Now let me turn to our strategic milestones in more detail. First, the Made for Meta partnership, I mean, it's one of the most strategically significant developments in our company's history.

Omni One has joined the Meta certified ecosystem for Quest headsets and games. That's an exclusive program that puts our hardware in front of the world's largest XR user base. Over 20 million Quest headsets have been sold, and by recent estimates, there are about six million active Quest users within that ecosystem. For the first time, these six million Quest users will be able to use our product directly with their existing VR headsets and games. A certified integration with Meta Quest headsets and games also broadens our distribution reach. Omni One will be promoted on Meta's Made for Meta website. This positions us as the premier full-body movement solution for the platform. Now we'll share specific product updates and timelines at a later date.

You know, this is a foundational step toward bringing full-body, physically engaging VR to a mass audience. This differentiates Omni One as the go-to hardware companion to Meta's growing VR ecosystem. Our international growth is also well underway, and we have launched Omni One Core across Europe, with dedicated storefronts now live for the U.K., Germany, France, and all other E.U. markets. That's supported by a regional partnership with Unbound XR, which is Europe's leading online retailer of extended reality XR equipment. Initial shipments are scheduled to begin next month, between April 13th and 24th. This European launch marks a significant milestone in our international growth plans and opens up a large high-income consumer base for our products. At CES earlier this year in January, we exhibited in partnership with Pimax.

Pimax is one of the world's premier VR headset manufacturers. We showcased Omni One with Pimax's new Dream Air headset, demonstrating Omni One's seamless compatibility with PCVR and CBR games. This collaboration reinforces our platform's, our technology's platform-agnostic nature. We also announced that Omni One is now eligible for purchase through health saving accounts and flexible spending accounts, HSA and FSA accounts, through our partner Truemed. This allows eligible buyers to save approximately 30% on their purchase using pre-tax dollars. This wellness component broadens our consumer appeal and supports Omni One's position as both a gaming system and a health device. In our testing, we measured that users can burn up to 700 calories per hour by playing an action game on Omni One.

Actually, one of our users reported to have lost 40 pounds in four months from playing on Omni One. Those health benefits of Omni One, we believe are appealing to a wide audience. Now a major component of our long-term growth strategy is our entry in the defense market with our Virtual Terrain Walker, VTW system with the slogan, "Walk the terrain before you fight on it." Our vision is to supplement high-volume consumer sales with potentially high-value defense contracts. We demonstrated the integration of AI-driven Gaussian splatting into VTW, which we believe is a true breakthrough.

Gaussian splatting is an AI-driven 3D reconstruction technology that transforms real-world environments that we capture with a 360-degree camera or a drone into photorealistic navigable 3D worlds in just hours, reducing the time required to create realistic virtual terrain from weeks or months down to hours. That's a dramatic reduction in the cost and the turnaround time for creating immersive training simulations. We've already seen some early adoption. Test units have been purchased by Yokota Air Force Base, by the U.S. Air Force Academy, and by the U.S. Military Academy at West Point. The VTW system can support 12 or more soldiers simultaneously, specifically for immersive mission planning, terrain reconnaissance, leader rehearsals.

We're in the process of pursuing defense contracts for VTW that in addition to the upfront system sale, will also add high-margin recurring revenues from software licensing and customized simulation development. Beyond the VTW system for defense, our enterprise technology roadmap took another exciting step forward this quarter. In collaboration with University of Central Florida's Institute for Simulation and Training, or IST, we demonstrated a humanoid robot controlled in real time using Omni One Enterprise. Translating natural 360-degree walking into intuitive robot teleoperation. This cannot be achieved using a controller while seated or standing in place. This highlights the value of Omni One in this fast-growing field of embodied AI, both for the teleoperation of robots and the collection of movement data that is needed to train robots.

In that same vein, we also announced a partnership with 1HMX on the production of the Nexus NX1, and that's a full-body system designed for, again, humanoid robot teleoperation and physical AI training. The NX1 integrates our Omni One Enterprise treadmill with the HaptX Gloves G1. Those are haptic gloves that deliver lifelike tactile and force feedback. Together, I think the VTW AI integration and the UCF and the 1HMX robotics collaboration, that fully demonstrates the breadth of Omni's potential. From defense simulation to the frontier of embodied AI. In a world, we can rapidly create photorealistic virtual environments. How are we going to walk around in those environments with the Omni, with our technology? With that, I'll hand the call over to Thomas to walk us through the financials.

Thank you, Jan. Good morning, everyone. It's a privilege to speak with you today as Virtuix CFO and to present our first earnings results as a public company. Net sales for the nine months were $30 million, a 41% increase from the $2.1 million in the prior year period. The increase was primarily driven by new sales of Omni One, including from a strong 2025 holiday season, the fulfillment of legacy pre-orders that were placed during the pre-order period that ended in September of 2024, as well as the pricing increase that took effect in November of 2024. I wanna highlight what I believe is one of the most significant metrics this quarter.

Gross profit improved by $1.2 million to $876,000 compared to a gross loss of $352,000 in the prior year period. We improved gross margin from -17% to 29%, an improvement of 46 percentage points, reflecting a higher average selling price and the completion of delivery of nearly all discounted units to equity crowdfunding investors, which weighed on margins in the prior period. Going forward, we will continue to realize the benefits of higher average selling prices. Turning to operating expenses for the nine month period. Total operating expenses decreased by $5.1 million or 45% to $6.3 million from $11.4 million in the prior year period. This reflects significant cost discipline across the organization.

General and administrative expenses declined by $4.7 million, primarily because the expenses in the prior year period included a one-time non-cash stock-based compensation expense of approximately $4.7 million. Research and development expenses declined by $1.4 million due to a decrease in R&D spend and staffing following the completion of Omni One. These reductions were partially offset by a one million dollar increase in selling expenses, largely driven by significant digital ad spend for our Regulation Crowdfunding investment campaign with StartEngine that ended around June of 2025, as well as an increased ad spend for Omni One during the 2025 holiday season. Net loss decreased to $6.9 million compared to $12 million in the prior year period, an improvement of 43%. Turning to our Q3 results, our three months ended December 31st, 2025.

Net sales for Q3 were $960,000, a 24% decrease from $1.2 million in the prior-year Q3 period. I wanna be clear about the context for this decline. The prior-year period, the prior-year Q3 included shipments of a large backlog of Omni One pre-orders that had accumulated since the start of our pre-order period back in August of 2023. In contrast, Q3 of fiscal year 2026, revenues reflected sales to newly acquired customers, including strong orders driven by the 2025 holiday season. Importantly, new orders for Omni One and Omni One Core systems increased by 60% in December of 2025 compared to December of 2024, which is a strong leading indicator of demand growth and highlights our successful 2025 holiday season. Despite lower Q3 revenues, gross profit improved significantly.

Q3 gross profit was $289,000 compared to a gross loss of $19,000 in Q3 of the prior year. Gross margin expanded to 30% from -2%, driven primarily by the increase in our selling price for the complete Omni One system from $2,595 to $3,495 effective November 2024, and lower per unit manufacturing overhead due to consistently higher production levels in 2025. For Q3, total operating expenses were $2.1 million compared to $1.8 million in the prior year period. G&A expenses decreased to $1.2 million from $1.3 million. Primarily due to lower overhead costs associated with our overseas operations. R&D expenses also decreased to $227,000 from $307,000 following completion of Omni One development.

The reductions were offset by higher selling expenses, $734,000 versus $246,000, primarily attributable to increased advertising spend during the 2025 holiday season. Q3 net loss was $2.7 million compared to $2 million in Q3 of the prior year. Gross profit improved significantly during Q3, the improvement was offset by higher interest expenses and amortization of debt discount associated with the Streeterville notes and by higher selling expenses. Let me turn to our balance sheet and liquidity positions. As of December 31st, 2025, the company had cash on hand of $1.1 million compared to $478,000 as of March 31st, 2025. Following the period end, our liquidity position has improved substantially.

On January 27th, 2026, in connection with our direct listing, we received the initial advance of $8 million per our equity purchase agreement with Streeterville Capital. Additionally, Streeterville has exercised 405,000 warrants, resulting in proceeds to the company of an additional $3.2 million. Western Technology Investment has exercised 334,961 warrants, generating proceeds of $300,000. These post-period events have significantly improved our liquidity. Total assets were $6.4 million at December 31st, 2025, up from $5.8 million at March 31st, 2025, driven primarily by the increase in cash and other current assets. On the liability side, total liabilities were $9.3 million at December 31st, 2025, compared to $6.6 million at March 31st, 2025.

This increase was driven primarily by additional notes payable that were issued to Streeterville Capital and to other investors, and an increase in deferred revenue, partially offset by lower accounts payable and accrued expenses. As of December 31st, 2025, our principal debt obligations consist of secured convertible promissory notes to Streeterville Capital with a principal balance of $3.3 million convertible into shares of our Class A common stock, subordinated convertible unsecured notes, the second 2025 notes with a principal balance of $1.65 million due March 31st, 2026, and the unsecured 2024 notes with an outstanding principal balance of approximately $2 million due March 31st, 2026. Our Streeterville notes are our only secured indebtedness and bear interest at 6% per annum.

Regarding our plans to manage the outstanding debt, the Streeterville notes are structured to automatically convert into equity, these will not result in a cash outlet of the company. The second 2025 notes are also convertible into common stock at a price equal to 85% of the Nasdaq valuation reference price of $8.75. Certain holders have already exercised their conversion rights, resulting in a principal reduction of approximately $715,000 subsequent to December 31st. The remaining balance of the 2025 notes today is approximately $950,000. We aim to get more of these notes converted prior to their maturity date of March 31st, otherwise, we plan to repay the outstanding balance and interest by March 31st.

For the 2024 unsecured notes, we are evaluating financing alternatives, which may include exchanges of the outstanding notes for equity or equity-linked securities. Before I hand it back to Jan, I want to briefly highlight our production and revenue scale potential. Our manufacturing facility is ready to support up to 3,000 units per month, representing over $100 million in annual revenue potential at full utilization. Our revenues scale rapidly with unit shipments, as illustrated by this graph. Going forward, our multi-use strategy aims to diversify revenues across three markets: consumer gaming and fitness in the U.S. and now Europe, with Meta Quest compatibility on the way, enterprise training boosted by AI-driven 3D reconstruction, targeting 70% gross margins and defense training and simulation via high-value VTW contracts and software licensing. We believe this diversified model positions Virtuix to build a growing, lasting revenue base. With that, I'll turn the call back over to Jan.

Thank you, Thomas. Looking ahead, you know, our priorities are clear. First, we intend to continue to grow our consumer revenues. We're ready to scale. Our expansion into Europe is underway, with access to the Meta ecosystem, you know, we're expanding our addressable market to an estimated six million active Quest users. We're also growing our defense pipeline by expanding sales to additional military bases and departments, mostly focused on the U.S. Army and the Marine Corps. We have quite a few initiatives in the works as we pursue high-value defense contracts.

With that, the software licensing and custom simulation work is expected to add recurring high-margin revenues. Consumer and defense are our two key target markets, but in parallel, we'll continue to expand our enterprise sales in the U.S., Europe, and Asia, primarily focused there on embodied AI and industrial training. In industrial training, our adoption there is boosted by that AI-driven 3D reconstruction, like Gaussian splatting, that I believe truly deliver on the full promise of VR. You know, the ability to be fully immersed inside virtual environments that are exact photorealistic replicas of the real world. With our technology, you can walk around inside those environments in 360 degrees without boundaries. We continually target to improve our gross margins in consumer and enterprise sales through volume leverage and continued cost optimization.

We plan to scale our international operations following our European launch, and we're evaluating the entry in additional consumer markets. In parallel, we aim to expand our enterprise sales in Asia, where there is a big market for robotics and industrial training with 3D Gaussian splatting. Finally, we're focused on achieving profitability. Our path towards profitability, we believe is driven by combining revenue growth and operating expense discipline. We believe we can reach profitability through our multi-use strategy that supplements high volume consumer sales with high value defense and enterprise contracts. Let me leave you with a few key takeaways. Our commercial momentum is real and accelerating. You know, we delivered 41% revenue growth in the first nine months here of fiscal 2026. We turned gross margins positive, and we reduced our net loss by 43%.

The financial trajectory is trending in the right direction and improving. Our strategic position has never been stronger. We are a Nasdaq-listed company, with a Made for Meta partnership, a live European storefront, early defense adoption, at West Point and the Air Force Academy, and a proven technology platform protected by 25 patents. Our manufacturing scale is ready. You know, we have the ability to produce up to 3,000 units per month, representing over $100 million in annual revenue potential. We have the infrastructure in place to convert our commercial momentum into meaningful revenue growth. You know, we believe we are well-positioned here to achieve continued growth and create long-term value for our shareholders. We look forward to updating you on our progress. With that, we'll now open up the call for questions. Operator.

Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star one to ask a question at this time. One moment while we poll for the first question. The first question comes from Gowshi Sri with Singular Research. Please proceed.

Good morning, gentlemen. Can you hear me?

Hey, Gautam. Good morning.

Good morning. Now, first off, congratulations to you and your team on getting the company public and on the progress you've laid out in your press release, especially on the profitability level and the traction you're seeing on Omni One and Meta. With that, I've got a handful of questions that kind of builds on your comments today. You've highlighted kind of year-on-year increase in the December orders of Omni One and Omni One Core was largely from newly acquired customers rather than backlog. Can you help us understand how the kind of into January and February and whether that strong December order momentum is carrying forward into the next quarter?

Hey, Gautam. Yeah, good question. You broke up there for a second, but I think you're asking whether the strong holiday demand we've seen carries through in the current quarter. Yeah, it was great to see that holiday demand, 60% growth compared to the prior year periods. It's a strong signal. You know, I can't comment on the results of this quarter. You know, in general, look, what we're seeing is people are loving our products, excitement for our products. Look, we're driving our growth forwards on the consumer side in parallel with kind of more high value sales in defense and enterprise. Driving our consumer growth is a key focus of our company.

Got you. Thanks for that. Now that you have this $3,495 price in place, where you're seeing gross margins on a fully loaded basis for a typical Omni One system today, how much more improvement do you think is realistic from scale and cost optimization, especially for those of us kind of modeling into forward next year?

Yeah,

Sorry. Or is there a further price increase possible?

Yeah, it's a good question. It's a continual focus of ours to keep improving margins. It's a continuous process where we try to take costs out of the product or get better pricing based on volume. It's hard to predict to what extent further margin improvements are possible, but we're certainly continually focused on that. You know with volume and scale, there may be opportunity there for sure.

Okay. Gotcha. This quarter we saw some selling expenses kind of step up to about just short of $1 million in Q3. At a high level, how has your kind of CAC trended as you've ramped marketing? Are there any early learnings on which channels are proving most efficient in terms of payback and long-term value?

Yeah. Our two key pillars there are, one, paid social media and the best channels for us there are Facebook, and Instagram, followed somewhat by YouTube.

Okay

Because with our product, visuals and video, work really well.

Mm-hmm.

Second, we pair that with an influencer program where we actively work with gaming influencers and streamers to promote our product. Those are the two key pillars of our marketing strategy in our direct to consumer, you know, consumer business.

Hello, can you hear me?

Hey, Gautam. Yep. Did you hear my answer?

Yeah, I think I got it. Yeah.

Mm-hmm.

Can you, on your early cohort insights from Omni One buyers, for example, what are you seeing in terms of Omni Online subscription retention and additional game purchases over six to twelve months, whether those patterns are improving as the product and content library kind of mature?

Yeah. It's Our online subscription, Omni Online, which provides access to online gameplay, to multiplayer gaming, you know, and that together with game sales, it really juices our margins. What we do is when people buy the product at checkout, you know, we ask them if they want to add a 12-month Omni Online subscription or add a few games. Approximately 50% of our customers buy the annual Omni Online subscription for $140. About 40% of our customers, approximately, add two games or so on average while they check out. It's a great way to increase our margin, our revenues at the initial purchase.

Many customers also just sign up afterwards and have the annual monthly subscription for Omni Online at $14 a month or continue to buy games every month. The recurring revenues from software, both the subscription and the games, is a nice addition to the upfront hardware purchase. That kind of model, upfront hardware plus recurring revenues from software, is our model on the consumer side, and we also aim to extend that to our enterprise and defense contracts as well.

Gotcha. I know we're being remiss if I didn't ask. With the Made for Meta collaboration, with Omni One compatibility with Meta Quest, as a foundational step, as you look ahead, can you give us a sense of how the Quest compatible SKU economics will differ from your current standalone in terms of hardware margin, expected software monetization, and how you're thinking about managing that mix shift over the next couple of years?

Yeah. Yeah, it's a big step for us. I mean, it really expands our addressable markets to an immediate, estimated six million users or so that can buy our product and have it work with their existing hardware and games. Economics, I don't expect them to be very different from our current economics.

Mm-hmm.

We'll make further announcements around specific product updates and a timeline in the near future, so stay tuned there.

On the E.U. and U.K. Storefront for Omni One with the first shipments planned in April, what would be a successful first year in Europe look revenue perspective?

It's hard. I mean, it's a big step for us. I see it as a step-by-step approach. Right now we just started with Omni One Core, which is our SKU specifically for PC VRs. It's not a complete Omni One system with the customized headset. The next step would be to add our Omni One compatibility for Quest to the European market as well. It's an expansion of our markets. Especially in, for example, Germany is one of the biggest PC gaming markets in the world.

Mm-hmm.

It's a great new market for us. It's a step-by-step approach, and so we'll see in the next few quarters how that adds to our revenues. It feeds into our overall objective, which is to keep growing and scaling our consumer business.

Gotcha. I'll make this my last question, and I'll jump back in the queue. On the VTW, you placed test units in West Point, Air Force, Air Force Academy, Yokota Air Base, and you're integrating the AI-driven terrain construction. What are the specific milestones are you working towards with these early adapters over the next 12-24 months? What's a successful path for these pilots to a larger program look like in your view?

Yeah. Yeah, we're doing basically three main components that make up our strategy of entering a defense market. One is increasing the adoption and early collaborations, as we're seeing with West Point, for example, with U.S. Air Force Academy. We have other collaboration initiatives in the works where we basically get units in the hands of these departments and units for testing, and also for the creation of some research, some papers that underscore the effect and the effectiveness of our technology to increase cognitive awareness, spatial awareness, with war fighters as they train for missions and explore the terrain, preparing for missions or mission planning as well.

Getting a body of knowledge created, for example, is one of the key areas that we're focused on and the key results that can come out of these initial collaborations. That's one pillar. In parallel to that, we're pursuing those longer-term, bigger contracts. There, the sales cycle and the process is a bit longer. Ultimately, it requires a department writing up requirements for our technology as part of a request for proposal or an award, and then getting awarded that contract. We're pursuing that both as a standalone effort with our VTW system or potentially also being part of or collaborating with partners who already have contracts, and they can tag on our capability onto their existing contracts.

Those are some of the various avenues we're pursuing on the defense side. And we have a lot of projects in the works that we hope to announce soon that is really driving forward our adoption in the defense sector. I mean, the initial traction, the excitement of the military has been fantastic. They don't have this capability today to be able to walk around inside a virtual environment, not just see a replica of the VR world, but having a photo-realistic replica and then being able to physically move in that space for training, for simulation, mission planning, mission rehearsal. It's a revolutionary capability they don't have today. We're, you know, full speed ahead on driving adoption there and going towards bigger contracts in that space.

Awesome. Thanks for the color. It looks very exciting. Congratulations and good luck for the next quarter.

Thank you, Gowshi Sri.

Once again, to ask a question, please press star one on your telephone keypad. The next question comes from Andrew White with Emerging Growth Research. Please proceed.

Good morning. Yeah, I had two revenue-oriented questions. I was wondering, is it possible to compare fiscal third quarter 2025 to fiscal third quarter 2026 without the backlog from the prior year? What would be the % increase in revenue if you strip that out?

Yep. Hey, hey, Andy. I think that's actually broken up in our queue. I don't quite have it here in front of me, but in the filing, I think you'll see that broken out.

Okay, great. I'll take a look. Thank you. The second question I had was related to the HSA FSA eligibility through Truemed. I wonder if you could elaborate more on that, and in particular, if you think that's going to have a notable impact on revenue growth.

Yeah, it certainly has an impact. Yeah, there's a meaningful number of customers use their HSA or FSA funds to purchase our product. It results in about a 30% cost saving, you know, depending on eligibility and their income level. It's a meaningful avenue, and it also reinforces our positioning for Omni One being healthy, being good for health and fitness, in addition to just being a gaming system. Yeah, we set up that partnership earlier this fiscal year. I think it's like 10%-20% or so of our customers use it as a way to purchase the product. It's meaningful.

Okay. That's good to know. Thank you again.

Thank you. There are no further questions in queue at this time. I would like to turn the call back over to Mr. Goetgeluk for closing comments.

Thank you, operator. Yeah, thank you all for joining us today, for our first earnings call. You know, we're building something that we believe the world generally needs. You know, natural, full-body VR movement, that brings gaming and training and enterprise simulations to life. We already achieved some great commercial wins and strategic milestones in fiscal 2026, and that gives me great confidence in what the remainder of this year will bring. We look forward to sharing more on our developing story. We'll also be showcasing Omni One at the upcoming 38th ROTH Conference on March 22nd through the 24th in Dana Point, California. Hope to see you there if you are there. If we were unable to address any of your questions today, please reach out to our IR firm, MZ Group, and they'll be happy to help. Thank you all, and have a great day.

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.