v3.26.1
Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Mar. 31, 2026
Summary of Significant Accounting Policies [Abstract]  
Principles of Consolidation

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Virtuix Holdings Inc. as well as its subsidiaries required to be consolidated under accounting principles generally accepted in the United States of America (“GAAP”). Significant intercompany accounts and transactions have been eliminated upon consolidation.
Basis of Presentation

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. Therefore, revenues are recognized when earned and expenses are recognized when incurred.

 

The Company has adopted a fiscal year ending March 31st of each year.
Management’s Estimates

Management’s Estimates

 

Preparing the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition

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 to determine when and how revenue is recognized. Under this model, revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring control of goods or services to a customer.

 

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

 

1. Identify the contract with a customer;

 

2. Identify the performance obligations in the contract;

 

3. Determine the transaction price;

 

4. Allocate the transaction price to the performance obligations; and

 

5. Recognize revenue when or as each performance obligation is satisfied.

 

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 on 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:

 

● Omni Pro units and related accessories – Revenue is recognized upon shipment, when control and title pass.

 

● Omni One units – Revenue is recognized upon shipment, consistent with the Company’s shipping terms.

 

● Omni Arena systems – Revenue is recognized upon installation at the customer’s location, when control transfers.

 

● Omniverse credits – Revenue is recognized over the estimated consumption period, typically two months from purchase based on usage patterns.

 

● Omni Online – Revenue is recognized ratably over the subscription period.

 

● Omni Care service program – Treated as a separate performance obligation included with each Omni Arena contract. The transaction price is allocated to this performance obligation on a relative standalone selling price basis, using observable standalone pricing of $2,000 per quarter. Accordingly, $8,000 associated with Omni Care is included in the initial contract transaction price and is recognized ratably over the first 12 months of the contract term, as the services are provided evenly over time. Following the initial 12-month period, customers are billed $2,000 per quarter for continued Omni Care services. Fees billed after the first year are recognized ratably over the applicable quarterly service period.

 

● Omni One extended warranty - Sold separately from the Omni One unit and represents a service-type warranty. The transaction price is allocated on a relative standalone selling price basis, with observable standalone pricing of $295 per warranty. Revenue is recognized ratably over the 3 year warranty term.

 

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 as revenue when the related obligation is fulfilled.

 

The Company’s contracts do not typically 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

Cash and Cash Equivalents

 

The Company considers deposits that can be redeemed on demand and investments that have original maturities of less than three months, when purchased, to be cash equivalents. As of March 31, 2026 and 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.

 

All of a depositor’s accounts at an insured depository institution, including all non-interest bearing accounts, are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 in total. Balances in excess of this coverage are uninsured and subject to loss should the institution fail, with a possible offset against outstanding loans. The Company has not experienced any losses in such accounts and management believes the Company is not exposed to any significant credit risk related to cash. Cash and cash equivalents in the amount of $226,309 and $196,962, representing foreign deposits at financial institutions, are not insured by the FDIC at March 31, 2026 and 2025, respectively.

Accounts Receivable

Accounts Receivable

 

Terms of payment are generally thirty days from the invoice date. Receivables are recorded net of an allowance for credit losses, which is established based on management’s best estimate of probable credit losses after considering factors such as previous loss history, customers’ ability to pay their obligations, and the condition of the general economy and industry as a whole.
Inventory Valuation

Inventory Valuation

 

Inventory is stated at the 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. There is no material impact on the comparability of the financial results as a result of these differing methods. The Company applies net realizable value and obsolescence to the gross value of the inventory. The Company estimates net realizable value based on estimated selling price less further costs to completion and disposal. The Company impairs slow-moving products by comparing inventories on hand to projected demand. When impairments are established, a new cost basis of the inventory is created. Net realizable value is estimated based on projected demand; slow-moving products are impaired accordingly.
Property and Equipment

Property and Equipment

 

Property and equipment are recorded at cost, less accumulated depreciation. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. Leasehold improvements are amortized over the shorter of the term of the respective operating lease or the estimated economic life of the asset.

 

When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate.

 

The estimated useful lives for significant property and equipment categories are as follows:

 

Computer Equipment   5 years
Furniture and Fixtures   7 years
Machinery and Equipment   3 – 7 years
Office Equipment   5 – 7 years
Leasehold Improvements   3 – 5 years
Fair Value Measurements

Fair Value Measurements

 

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

Intangibles

 

The Company’s intangible assets include software, trademarks, customer lists, and a website, which are amortized on a straight-line basis over their estimated useful lives. The costs of developing intangible assets for internal use are expensed as incurred.

 

The estimated useful lives for significant intangible asset categories are as follows:

 

Software   3 - 5 years
Trademarks   Indefinite
Customer Lists   3 years
Website   3 years
Software and Website Development Costs

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

 

Deferred revenue represents cash received from customers for which the related revenue has not yet been earned as of March 31, 2026 and 2025. 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.

 

For the years ended March 31, 2026 and 2025, changes in deferred revenue were due to the following:

 

    March 31,     March 31,  
    2026     2025  
Beginning deferred revenue   $ 1,769,556     $ 1,850,342  
Amounts deferred during the year     2,703,064       3,109,944  
Less refunds     (8,708 )     (90,103 )
Less reclass to gift card liability     (226,445 )     -  
Less revenue recognized     (3,571,140 )     (3,100,627 )
Ending deferred revenue   $ 666,327     $ 1,769,556  

 

Deferred revenue as of March 31, 2026 and 2025 consists of the following:

 

    March 31,     March 31,  
    2026     2025  
Omni One   $ 24,121     $ 936,821  
Omni One extended warranty     21,855       -  
Omni Pro     450,732       451,545  
Omni Arena     94,744       290,169  
Omni Online     29,874       44,104  
Omniverse credits     27,001       37,584  
Omni Care subscriptions     18,000       9,333  
Total deferred revenue   $ 666,327     $ 1,769,556  
Gift Card Liability

Gift Card Liability

 

During the fiscal year ended March 31, 2026, the Company converted outstanding customer Omni One preorder deposits to gift cards and reclassed them from deferred revenue. The total amount reclassed from deferred revenue was $226,445. 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 March 31, 2026. Total gift card liabilities at March 31, 2026, were $446,252.

 

Consistent with ASC 606, the gift card liability will be recognized as revenue when the cards are redeemed or expire.
Advertising Costs

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 years ended March 31, 2026 and 2025, was $1,317,794 and $347,429, respectively.

Federal Income Taxes

Federal Income Taxes

 

Topic 740, Income Taxes, clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. Topic 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure, and transition. For the years ended March 31, 2026 and 2025, no uncertain tax positions were identified. The Company recognizes tax related interest and penalties, if any, as a component of 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

Net Loss Per Share

 

Basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. The Company presents both basic and diluted net loss per share. Basic net loss per share includes only the weighted-average common shares outstanding during the period. Diluted net loss per share is the same as basic net loss per share for the years ended March 31, 2026 and 2025, because the inclusion of potentially dilutive securities would be anti-dilutive.

 

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, warrants, and convertible preferred stock. The total number of potentially dilutive shares excluded from the computation was 5,790,884 and 24,336,200 at March 31, 2026 and 2025, respectively.

Recent Accounting Pronouncements

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 does not expect the adoption of this guidance to have a material impact 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 18 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 will have on its consolidated financial statements and related disclosures.

 

Management has reviewed other recently issued but not yet effective accounting standards and believes they will not have a material impact on the Company’s consolidated financial statements. The Company will adopt applicable standards as required.
Foreign Currency Remeasurements

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 years ended March 31, 2026 and 2025.