You are on page 1of 89

PRELIMINARYOFFERINGCIRCULARDATEDJANUARY4,2016

VIRTUIXHOLDINGSINC.

1826KramerLane,SuiteH,Austin,TX78758
www.virtuix.com
upto
[XX,XXX,XXX]SHARESOFSERIESAPREFERREDSTOCKCONVERTIBLEINTOCOMMON
STOCK
TheSeriesAPreferredStockisconvertibleintoCommonStockeitheratthediscretionoftheinvestororautomaticallyuponeffectivenessofregistrationofthesecuritiesinan
InitialPublicOffering.ThetotalnumberofsharesoftheCommonStockintowhichtheSeriesAPreferredmaybeconvertedwillbedeterminedbydividingtheOriginalIssue
Pricepersharebytheconversionpricepershare.
SEESECURITIESBEINGOFFEREDATPAGE27

SeriesAPreferredStock

PricePerSharetothe
Public

TotalNumberof
SharesBeingOffered

Proceedstoissuer
beforeexpenses,
discountsand
commissions**

$_____*

_____

_____

*ThecompanywillprovidefinalpricinginformationinafinalorsupplementalOfferingCircular.
**SeethePlanofDistributionfordetailsregardingthecompensationpayabletoplacementagentsinconnectionwiththisoffering.ThecompanyhasengagedSISecurities,
LLCtoserveasitssoleandexclusiveplacementagenttoassistintheplacementofitssecurities.

Thecompanyexpectsthattheamountofexpensesoftheofferingthatitwillpaywillbeapproximately$80,000,notincludingstatefilingfees.
Theofferingwillterminateattheearlierof:(1)thedateatwhichthemaximumofferingamounthasbeensold,(2)thedatewhichisoneyearfromthisofferingbeingqualifiedby
theCommission,or(3)thedateatwhichtheofferingisearlierterminatedbythecompanyinitssolediscretion.Theofferingisbeingconductedonabesteffortsbasiswithout
anyminimumtarget.Thecompanymayundertakeoneormoreclosingsonarollingbasis.Aftereachclosing,fundstenderedbyinvestorswillbeavailabletothecompany.
THEUNITEDSTATESSECURITIESANDEXCHANGECOMMISSIONDOESNOTPASSUPONTHEMERITSORGIVEITSAPPROVALOFANYSECURITIES
OFFEREDORTHETERMSOFTHEOFFERING,NORDOESITPASSUPONTHEACCURACYORCOMPLETENESSOFANYOFFERINGCIRCULAROROTHER
SOLICITATIONMATERIALS.THESESECURITIESAREOFFEREDPURSUANTTOANEXEMPTIONFROMREGISTRATIONWITHTHECOMMISSION
HOWEVERTHECOMMISSIONHASNOTMADEANINDEPENDENTDETERMINATIONTHATTHESECURITIESOFFEREDAREEXEMPTFROM
REGISTRATION.
GENERALLYNOSALEMAYBEMADETOYOUINTHISOFFERINGIFTHEAGGREGATEPURCHASEPRICEYOUPAYISMORETHAN10%OFTHE
GREATEROFYOURANNUALINCOMEORNETWORTH.DIFFERENTRULESAPPLYTOACCREDITEDINVESTORSANDNONNATURALPERSONS.
BEFOREMAKINGANYREPRESENTATIONTHATYOURINVESTMENTDOESNOTEXCEEDAPPLICABLETHRESHOLDS,WEENCOURAGEYOUTO
REVIEWRULE251(d)(2)(i)(C)OFREGULATIONA.FORGENERALINFORMATIONONINVESTING,WEENCOURAGEYOUTOREFERTOwww.investor.gov.
Thisofferingisinherentlyrisky.SeeRiskFactorsonpage6.
Salesofthesesecuritieswillcommenceonapproximately[date].
ThecompanyisfollowingtheOfferingCircularformatofdisclosureunderRegulationA.

ANOFFERINGSTATEMENTPURSUANTTOREGULATIONARELATINGTOTHESESECURITIESHASBEENFILEDWITHTHESECURITIESAND
EXCHANGECOMMISSION.INFORMATIONCONTAINEDINTHISPRELIMINARYOFFERINGCIRCULARISSUBJECTTOCOMPLETIONORAMENDMENT.
THESESECURITIESMAYNOTBESOLDNORMAYOFFERSTOBUYBEACCEPTEDBEFORETHEOFFERINGSTATEMENTFILEDWITHTHECOMMISSION
ISQUALIFIED.THISPRELIMINARYOFFERINGCIRCULARSHALLNOTCONSTITUTEANOFFERTOSELLORTHESOLICITATIONOFANOFFERTOBUY
NORMAYTHEREBEANYSALESOFTHESESECURITIESINANYSTATEINWHICHSUCHOFFER,SOLICITATIONORSALEWOULDBEUNLAWFUL
BEFOREREGISTRATIONORQUALIFICATIONUNDERTHELAWSOFSUCHSTATE.WEMAYELECTTOSATISFYOUROBLIGATIONTODELIVERA
FINALOFFERINGCIRCULARBYSENDINGYOUANOTICEWITHINTWOBUSINESSDAYSAFTERTHECOMPLETIONOFOURSALETOYOUTHAT
CONTAINSTHEURLWHERETHEFINALOFFERINGCIRCULARORTHEOFFERINGSTATEMENTINWHICHSUCHFINALOFFERINGCIRCULARWAS
FILEDMAYBEOBTAINED.

TABLEOFCONTENTS
OFFERINGCIRCULARSUMMARY
RISKFACTORS
DILUTION
USEOFPROCEEDSTOISSUER
THECOMPANY'SBUSINESS
THECOMPANY'SPROPERTY
MANGEMENT'SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS
DIRECTORS,EXECUTIVEOFFICERSANDSIGNIFICANTEMPLOYEES
COMPENSATIONOFDIRECTORSANDEXECUTIVEOFFICERS
SECURITYOWNERSHIPOFMANAGEMENTANDCERTAINSECURITYHOLDERS
INTERESTOFMANGEMENTANDOTHERSINCERTAINTRANSACTIONS
SECURITIESBEINGOFFERED
PLANOFDISTRIBUTIONANDSELLINGSECURITYHOLDERS
INTERIMFINANCIALSTATEMENTSFORTHESIXMONTHSENDEDSEPTEMBER30,2015
FINANCIALSTATEMENTSFORTHEFISCALYEARSENDINGMARCH31,2015ANDMARCH31,2014
INDEXTOEXHIBITS
InthisOfferingCircular,thetermVirtuixorthecompanyreferstoVirtuixHoldingsInc.anditsoperatingsubsidiary,VirtuixInc.,onaconsolidatedbasis.

1
6
9
12
13
19
20
23
24
25
26
27
30
32
55
83

THISOFFERINGCIRCULARMAYCONTAINFORWARDLOOKINGSTATEMENTSANDINFORMATIONRELATINGTO,AMONGOTHERTHINGS,THE
COMPANY,ITSBUSINESSPLANANDSTRATEGY,ANDITSINDUSTRY.THESEFORWARDLOOKINGSTATEMENTSAREBASEDONTHEBELIEFSOF,
ASSUMPTIONSMADEBY,ANDINFORMATIONCURRENTLYAVAILABLETOTHECOMPANYSMANAGEMENT.WHENUSEDINTHEOFFERING
MATERIALS,THEWORDSESTIMATE,PROJECT,BELIEVE,ANTICIPATE,INTEND,EXPECTANDSIMILAREXPRESSIONSAREINTENDEDTO
IDENTIFYFORWARDLOOKINGSTATEMENTS.THESESTATEMENTSREFLECTMANAGEMENTSCURRENTVIEWSWITHRESPECTTOFUTURE
EVENTSANDARESUBJECTTORISKSANDUNCERTAINTIESTHATCOULDCAUSETHECOMPANYSACTUALRESULTSTODIFFERMATERIALLY
FROMTHOSECONTAINEDINTHEFORWARDLOOKINGSTATEMENTS.INVESTORSARECAUTIONEDNOTTOPLACEUNDUERELIANCEONTHESE
FORWARDLOOKINGSTATEMENTS,WHICHSPEAKONLYASOFTHEDATEONWHICHTHEYAREMADE.

OFFERINGCIRCULARSUMMARY
This Offering Circular Summary highlights information contained elsewhere and does not contain all of the information that you should consider in making your investment
decision.BeforeinvestinginthecompanysSeriesAPreferredStock,youshouldcarefullyreadthisentireOfferingCircular,including the companys financial statements and
relatednotes.Youshouldalsoconsider,amongotherinformation,themattersdescribedunderRiskFactorsandManagementsDiscussionandAnalysisofFinancialCondition
andResultsofOperations.
TheCompany
Virtuixisoneofthepioneersoftherecentrebirthofvirtualreality(VR)andaleaderintheemergingActiveVRspace,whichincludesanyVRapplicationthatrequiresfirst
person navigation ingame like walking or running. Examples of Active VR include firstperson shooters, firstperson adventure or exploration games, and any nongaming
applicationsthatrequirefirstpersonnavigationliketrainingsimulations,realestatewalkthroughs,orvirtualtourism.VirtuixsfirstproductistheOmni,thefirstvirtualreality
motionplatformformovingfreelyin360degreesinVRgamesorapplications.TheOmniallowsuserstowalk,run,orjumpinsidevirtualworlds.Thedevicehasnomovingparts
whichmakesitrobust,durable,compactandaffordable.TheOmniiscompatiblewithPCbasedandmobileheadmounteddisplaycurrentlyavailableorcomingtomarket(suchas
theOculusRift,HTCVive,andGoogleCardboard),andwithcontentthatusesstandardgamepadinputandisVRenabled.Thecompanyhasfiled12patentapplicationstodateto
protecttheOmnitechnology.
Thecompanycompletedasuccessful$1.1millionKickstartercampaigninJuly2013,receivingpledgesfromover3,000backers.SincetheKickstartercampaignwascompleted,the
company has continued to accept preorders. In total, Virtuix has received over 4,000 fully funded preorders for the Omni. Virtuix began delivering Omnis to its preorder
customersinDecember2015.
Thecompanyhasraisedapproximately$8millionincapitaltodatefromventurecapitalandprivateinvestorslocatedinSiliconValleyandaround the world. Virtuix has 31
employeesinAustin,TexasandZhuhai,China,andalsomaintainsanofficeinMenloPark,California.
OurMission
Thecompanybelievestruevirtualrealitycannotbeexperiencedsittingdown.ActiveVRapplicationslikefirstpersonshootersorexplorationgamesrequiremovementingame.
Thisdoesnottranslatewelltoatraditionalseatedorstandingplayersetupduetophysicalconstraints,safetyissues,andsimulatorsickness.Thepanoramicvisualsofferedbyhead
mounteddisplaysneedcorrespondingnaturalmovementtomaintaintheuserssenseoforientationandfeelingofimmersion.TheOmnienablespopularActiveVRexperiences
safely,comfortably,andwithoutcompromisingimmersion.VirtuixsmissionistobetheleadingplatformforActiveVRandenablethefun,addictive,andimmersiveentertainment
experiencesthatgamersandmainstreamconsumerslongfor.
1

Overview
ThecompanybelievesthattheearlyadoptersofvirtualrealityarePCandconsolegamers,giventhatthepopularheadsetspredominantlyrequireaPCorconsoletooperate.These
gamersenjoyfirstpersongamesandfirstpersonshootersinparticular.InSeptember2015,PCGamermagazinepublisheditstop100greatestgamesevermade.Ofthetop10,nine
werefirstpersonactiongames,ofwhichsevenwerefirstpersonshooters.
ThetopsellinggamingfranchisesincludeCallofDuty,Battlefield,GrandTheftAuto,andHalo,whichhavesoldmorethan500millioncopiesamongthem.Morethan100million
peoplehaveplayedaCallofDutygame.Allthosegamesrequirefirstpersonmovementingame,whichinthecontextofavirtualrealityexperienceiscalledActiveVR. The
companybelievesotherActiveVRexperiencesbesidesgamingmayinclude,forexample,walkingaroundinforeigncitieswithasignificantother,hikinginanaturereservewith
friends,orhavinganactiveadventurewithfamily.NoneoftheseActiveVRexperiencesareasenjoyablewithsolelyaheadmounteddisplayandhandcontrollersduetophysical
constraints, safety issues, and simulator sickness. A head mounted display by itself cannot safely and comfortably deliver the popular Active VR experiences that gamers or
consumersenjoy,particularlyfirstpersonactiongamesoradventures.
Thebiomechanicsoflocomotioninvirtualrealityareahardproblemtosolve.Ourbodiesaresensitivetophysicalmovementsandcomputerinteractionsthatfeelunnatural.Thisis
aspecialistareaofinterfacedesignthatiscurrentlynotaddressedbymostmajorelectronicsmanufacturers.VirtuixisthegloballeaderinlocomotiondesignforVRgamesand
applications.
IndustryBackgroundandTrends
Thecompanybelievesvirtualrealityisthenextphaseofhumancomputerinteraction.Onaverage150millionVRheadmounteddisplaysareprojectedtobesoldinthenext5years
accordingtoprojectionsbyPiperJaffray,Gartner,Kzero,andBusinessInsider.
TheVRexperience,however,islimiteduntiltheuserisabletomovearoundinsidethevirtualenvironment,whichisarequirementformanyofthe popular game genres and
envisionedVRapplicationsThecompanybelievesActiveVRispoisedtobeoneofthemostpopularandlargestsubcategoriesoftheemergingVRdomain.
ActiveVRhardwareliketheOmnidoesnotcompetewithotherplayerssuchasheadsetmakersandcontentcreators.Instead,theOmniactsasthecompatibleinterconnectbetween
otherVRdevicesandcontentcreators,providingthenecessaryinputsolutionthatenablespopularActiveVRexperiences.
OurCurrentProduct
TheOmniisthefirstofitskindomnidirectionaltreadmillthatenablesnaturalnavigationinVR.TheOmniwasdesignedtobeaffordableandcompact.WiththeOmni,Virtuix
aimstofreegamersfrompassive,seatedgameplay,unleashingthefullpotentialofvirtualrealitygamingwiththeOculusRiftandfutureheadmounteddisplays.Gamingona
keyboard,mouseorgamepadwhileseatedpalesincomparisontotheintenseexperienceandfunthatcomesfromactuallywalking,running,andjumpingingames.
2

Omniplayerscanwalkandrunin360degrees.TheusersmovementoutputistranslatedtostandardgamepadoutputthatworkswithVRgamesor applications that use such


standardgamepadinput.Walk,run,jump,strafe,orevensitmovementsmappedtothegamepadcanbemappedtonaturalmotionwiththeOmni.TheOmniworksindependently
fromtheVRheadmounteddisplayandthereforeiscompatiblewithbothPCbasedheadmounteddisplayandmobileVRdevicesthankstoitsintegratedBluetoothconnectivity.
HowItWorks
TheOmniistheresultoffouryearsofdesignandtesting.TheOmniusesaproprietary,lowfriction,concaveplatformthatenablesasmoothandnaturalgait.TheOmnifootwear
containsproprietarylowfrictionpadsthatallowforanimmersivewalkingandrunningmotionontheOmnibase.Arobustsupportringanduntetheredsupportharnessaimto
providebothsafetyandversatilityforrapid,unconstrainedmovement.UsersarekeptsafelyuprightontheOmnithankstothesupportringandharness.
OurPlansforNewProducts
VirtuixiscontinuouslyworkingonimprovingtheOmnisdesignandreducingtheproductscostandphysicalfootprint.ThecompanyaimstodevelopanextgenerationOmnithat
hasasizeandpricepointthatisinrangeforhouseholdconsumers.Ultimately,VirtuixsvisionistohaveanOmnibepartofeveryActiveVRsetupbothforhomeuseandfor
commercialapplicationsthatincludearcadesandoutofhomeentertainment,trainingandsimulation,education,virtualtourism,andhealthcareandfitness.
BeyondtheOmnihardware,VirtuixisalsodevelopingOmniConnectTMandOmniOnlineTM.OmniConnectisasoftwareapplicationthataimstotrackausersphysicalmetrics
andusagesuchasstepstaken,distancewalkedandcaloriesburned.OmniOnlinegovernstheproductssocialgamingfunctionality,includingonlinestorageofplayersprofilesand
gaming stats, and the presence of universal leader boards and league standings. Omni Online transforms the traditional solitary VR experience to a fun, addictive, and social
(multiplayer)ActiveVRexperiencewiththeOmni.
VirtuixiscurrentlydevelopingTRAVR,asuiteofinhousefirstpersonactiongamesthatdemonstratethecapabilitiesoftheOmni.VirtuixsTRAVRgamesaimtoprovidefun,
addictive,andrepeatablegamingexperiencesunavailablefromanyotherproduct.
Overtime,thecompanyplanstoexpanditsplatformandnetworkofActiveVRcontentandsocialfeatures.
ThefirstversionoftheOmnihardwarehasbeendesignedfordirecttoconsumeronlinesales.Thecompanyanticipatesthatfutureversionswillhavethemargin,scaleanddesignto
allowforwholesaleandretaildistribution.
3

OurGrowthStrategy
EarlymarketingeffortshavebeenfocusedonPCgamersasearlyadopters.Virtuixreachesthesegamerswithavarietyofonlineandofflinemarketingcampaignssuchasonline
gamevideosorlivedemosattradeshowsandevents.Themaingrowthdrivertodatehasbeenshowingtheproducttoinfluentialgamers,journalistsandbloggers,andlettingthem
demotheOmni,eitherateventsoratcertainlocations.Thecoverageandcontentthattheycreatedhasdrivencustomerstobuytheproductonline.Toaccelerategrowth,Virtuix
planstoincreaseitsonlineandofflinemarketingcampaigns,demosandmarketingevents,andcommunityengagement.
Besidestheconsumergamingmarket,thecompanybelievestheOmnihasapplicationsinseveralcommercialmarkets,includingthemilitaryindustryfortrainingandsimulation,the
gymindustryforexerciseandfitness,thearchitectureandrealestateindustriesforvirtualwalkthroughs,andthearcadeandoutofhomeentertainmentindustryforcommercialVR
entertainment.Virtuixbelievesthat,inabsenceofalargehomeconsumermarketforVRin2016,theOmnicangeneratemeaningfulrevenuesasacommercialproductsoldtoVR
arcades,gamingcenters,andothercommercialusersoftheOmni.
OurCompetitiveStrengths
Inthelastthreeyears,Virtuixhascreateddefensibleproductfeatures,tradesecrets,andintellectualproperty.TwelvepatentapplicationshavebeenfiledtodatetoprotecttheOmni
technology.
AkeystrengthofVirtuixisitsfirstmoveradvantageforfullyimmersiveomnidirectionaltreadmills,resultinginstrongandearlypartnershipswithheadsetmakers,contentcreators,
gamedevelopers,andthemakersofVRaccessoriesandcontrollers.ThistechnologyecosystemprovidesVirtuixwithadefensibleadvantageovernewcomersintheActiveVR
space.
VirtuixalsoinvestedheavilyinbuildingtheOmnibrandandreputationamongtheeSports,PCgamingandVRenthusiastcommunities.
VirtuixiscurrentlyleadingitscompetitionintheActiveVRspace.TheOmniisthefirstofitskindplatformforActiveVRatapricepointandphysicalsizethathasnotbeenmet
byanyothercompetingdeviceinthemarket.
Thecurrentoffering
Securitiesoffered

Maximumof[]sharesofSeriesAPreferredStock($15,000,000)

CommonStockoutstandingbeforetheoffering(1)

5,500,000shares

PreferredStockoutstandingbeforetheoffering(2)

7,351,709shares

PreferredStockoutstandingaftertheoffering

[]shares

Useofproceeds

Thenetproceedsofthisofferingwillbeusedprimarilytoexpandmarketingefforts,
expandtheengineeringteam,andcontinuethedevelopmentofinternallyproduced
gamecontentfortheOmni.

(1)
(2)

Doesnotincludesharesissuableupontheexerciseofoptionsissuedunderthe2014LongTermIncentivePlan.
IncludesissuedSeriesSeedPreferredStockandSeries2SeedPreferredStock.
5

RISKFACTORS
TheSECrequiresthecompanytoidentifyrisksthatarespecifictoitsbusinessanditsfinancialcondition.Thecompanyisstillsubjecttoallthesamerisksthatallcompaniesinits
industry,andallcompaniesintheeconomy,areexposedto.Theseincluderisksrelatingtoeconomicdownturns,politicalandeconomiceventsandtechnologicaldevelopments(such
ashackingandtheabilitytopreventhacking).Additionally,earlystagecompaniesareinherentlymoreriskythanmoredevelopedcompanies.Youshouldconsidergeneralrisksas
wellasspecificriskswhendecidingwhethertoinvest.
Thecompanyhasnotyetcommencedplannedprincipaloperations.
Virtuix was formed in 2013 (as Virtuix Technologies LLC) and made its first preorder sales in August 2013. Accordingly, the company has a limited history upon which an
evaluationofitsperformanceandfutureprospectscanbemade.Virtuix'scurrentandproposedoperationsaresubjecttoallthebusinessrisksassociatedwithnewenterprises.These
includelikelyfluctuationsinoperatingresultsasthecompanyreactstodevelopmentsinitsmarket,includingpurchasingpatternsofcustomersandtheentryofcompetitorsintothe
market.Virtuixwillonlybeabletopaydividendsonanysharesonceitsdirectorsdeterminethatitisfinanciallyabletodoso.
Thecompanydependsononeprimaryproduct.
ThecompanysprimaryproductistheOmni.Althoughitisdevelopingotherproducts,thecompanyssurvivalintheneartermdependsuponbeingabletoselltheOmnitosufficient
customerstomakeaprofit.Thecompanyscurrentcustomerbaseisstillsmallandthecompanywillonlysucceedifitcanattractmorecustomersforitsprimaryproduct.
Thedeliveryandqualityofthecompany'sprimaryproductisdependentonthirdpartymanufacturers.
ThecompanysprimaryproductismanufacturedbythirdpartiesinChina.Whilethecompanyprovidesthespecificationsfortheproduct,itreliesonthemanufacturertomeetthose
specifications.Difficultiesencounteredbythemanufacturermayresultinapoorqualityproductortheinabilitytodeliverproductinatimelymanner.Ifthecurrentmanufacturer
encountersdifficulties,thecompanymayberequiredtofindanothermanufacturer,resultingindelaysasthemanufacturerretoolsitsfacility.
Thecompanymaynotbeabletoprotectitsintellectualproperty.
Thecompany'ssuccesswilldependonitsabilitytosecurepatentprotectionforitscoretechnologiesandbeabletoenforcethosepatents.Thefiledpatentapplicationsmaynotresult
inissuedpatents.Ifanypatentapplicationresultsinanissuedpatent,thatpatentmaylaterbeinvalidatedorheldunenforceableaspatentlawchanges.Further,theoutsourcingofthe
manufactureofthecompany'sproductmayresultintheunauthorizedexposureoftheintellectualpropertyofthecompany.
Ifthecompanycannotraisesufficientfundsitwillnotsucceed.
VirtuixisofferingSeriesAPreferredStockintheamountofupto$15millioninthisofferingonabesteffortsbasisandmaynotraisethecompleteamount.Evenifthemaximum
amountisraised,thecompanyislikelytoneedadditionalfundsinthefutureinordertogrow,andifitcannotraisethosefundsforwhateverreason,includingreasonsrelatingtothe
companyitselfortothebroadereconomy,itmaynotsurvive.IfthecompanymanagestoraiseasubstantiallylesseramountthantheMaximumRaise,itwillhavetofindothersources
offundingforsomeoftheplansoutlinedinUseofProceeds.
6

Futurefundraisingmayaffecttherightsofinvestors.
Inordertoexpand,thecompanyislikelytoraisefundsagaininthefuture,eitherbyofferingsofsecuritiesorthroughborrowingfrombanksorothersources.Thetermsoffuture
capitalraising,suchasloanagreements,mayincludecovenantsthatgivecreditorsgreaterrightsoverthefinancialresourcesofthecompany.
Thecompanydependsonasmallmanagementteam.
Thecompanydependsontheskillandexperienceoftwoindividuals,JanGoetgelukandDavidAllan.Eachhasadifferentskillset.Ifthecompanyisnotabletocallupononeofthese
peopleforanyreason,itsoperationsanddevelopmentcouldbeharmed.
ThecompanyiscontrolledbyitsCEOandsoledirector.
VirtuixCEO,andsoledirector,JanGoetgelukcurrentlyholdsapproximately45percentoftheissuedsharesofthecompany.Nootherstockholderholdsmorethan3percentofthe
issuedshares.
Newcompetitorsmayenterthemarket.
Thecompanyoperatesinarelativelynewmarketandthecompetitivelandscapeisnotyetclear.Newcompetitorsmayenterthemarketwithanexpandedrangeofproductsatalower
cost,targetingthesamecustomerbase,whichmayforcethecompanytocutprices.
Competitorsmaybeabletocallonmoreresourcesthanthecompany.
WhilethecompanybelievesthattheOmniisunique,theremaybeotherwaystoprovidefor360degreemovementandinteractionforvirtualreality.Additionally,competitorsmay
replicateVirtuix'sbusinessideasandproducedirectlycompetingproducts,possiblywithouthavingtorelyonoutsourcedmanufacturing.Thesecompetitorsmaybebettercapitalized
thanVirtuix,whichwouldgivethemasignificantadvantage.Thiswouldparticularlybethecaseifmajortechnologycompaniesweretoenterthemarket.
Thereisnocurrentmarketforanysharesofthecompany'sstock.
ThereisnoformalmarketplacefortheresaleoftheSeriesAPreferredStockorofanysharesofCommonStockissuableuponconversionoftheSeriesAPreferredStock.SharesofSeries
APreferredStockmaybetradedontheoverthecountermarkettotheextentanydemandexists.Investorsshouldassumethattheymaynotbeabletoliquidatetheirinvestmentfor
sometime,orbeabletopledgetheirsharesascollateral.
Investorswillholdminorityinterestsinthecompany.
VirtuixHoldingsInc.hasalreadyissued3,750,000sharesofitsSeriesSeedPreferredStockand3,601,709sharesofitsSeries2SeedPreferredStock.Investorswillholdminority
interestsinthecompanyandwillnotbeabletodirectitsoperations.Therights,preferences,andprivilegesoftheSeriesAPreferredStockareidenticaltothoseoftheSeriesSeed
PreferredStockandSeries2SeedPreferredStock.
7

InvestorswillbesubjecttothetermsoftheSubscriptionAgreement.
Aspartofthisinvestment,eachinvestorwillberequiredtoagreetothetermsoftheSubscriptionAgreementincludedasExhibit4totheOfferingStatementofwhichthisOffering
Circularispart.TheSubscriptionAgreementrequiresinvestorstoindemnifythecompanyforanyclaimofbrokeragecommissions,findersfeesorsimilarcompensation.Alllegal
conflictsrelatingtotheSubscriptionAgreementwillbeheardinTexascourtsunderTexaslaw.
Thecompanyhaspreviouslyissuedsecureddebt.
Thecompanyreceiveda$1millionloanfromVentureLending&LeasingVII,Inc.securedbyapledgeof2,000,000sharesoftheCommonStockofVirtuixInc.andtheintellectual
propertyofthecompanyascollateralfortheloan.Intheeventofdefaultonrepaymentofthisloan,VentureLending&LeasingVII,Inc.maytakepossessionandsellthecollateralto
satisfythecompanysobligationsundertheloan.
8

DILUTION
Dilutionmeansareductioninvalue,controlorearningsofthesharestheinvestorowns.
Immediatedilution
Anearlystagecompanytypicallysellsitsshares(orgrantsoptionsoveritsshares)toitsfoundersandearlyemployeesataverylowcashcost,becausetheyare,ineffect,puttingtheir
sweatequityintothecompany.Whenthecompanyseekscashinvestmentsfromoutsideinvestors,likeyou,thenewinvestorstypicallypayamuchlargersumfortheirsharesthan
thefoundersorearlierinvestors,whichmeansthatthecashvalueofyourstakeisdilutedbecauseeachshareofthesametypeisworththesameamount,andyoupaidmoreforyour
sharesthanearlierinvestorsdidfortheirs.
Thefollowingtablecomparesthepricethatnewinvestorsarepayingfortheirshareswiththeeffectivecashpricepaidbyexistingshareholders,givingeffecttofullconversionofall
outstanding,vestedstockoptions,andassumingthatthesharesarepricedinthemidrangeoftheestimates.Itreflectsalltransactionssinceinception,whichgivesinvestorsabetter
pictureofwhattheywillpayfortheirinvestmentcomparedtothecompanysinsidersthanjustincludingsuchtransactionsforthelast12months,whichiswhattheSECrequires.

OutstandingCommonShares(Founder)
PreferredStockissuedinSeries1Seedoffering
PreferredStockissuedinSeries2Seedoffering
RelatedPartyNotesandConvertibleNotesissuedandconvertedtoPreferredStock
Warrants(ConverttoPF,thentoCS)
PreferredStock(Converted2015Notes)
VestedOptions
TotalPotentialCommonShares
Investorsinthisoffering,assuming$15MMraised
TotalAfterInclusionofthisOffering

SharesIssued

(AssumingFull

Conversion)

5,500,000 $
3,031,250
2,854,283
718,750
156,250
747,426
624,733
13,632,692
5,000,000
18,632,692 $

EffectivePrice
perSharePaid
0.03
0.80
1.05
0.80
0.80
1.20
0.11
0.53
3.00
1.20

ThefollowingtabledemonstratesthedilutionthatnewinvestorswillexperiencerelativetotheCompanysnettangiblebookvalueasofSeptember30,2015of$(23,650),adjustedfor
theassumptionofproceedsfromconversionallotherconvertibleequityanddebtinstrumentsoutstandingatcurrent,andassumingexerciseofallvestedoptionsoutstandingthrough
current,whichprovide$193,721ofproceedsfromconversionsresultingintheissuanceof8,132,692sharesofcommonstock,inadditiontothe5,500,000sharesofcommonstock
currentlyissuedandoutstanding.Issuedstockoptionsthathavenotyetvestedareexcludedfromtheshareconversionsandproceedsassumptionsusedinthesecalculations.Net
tangiblebookvalueistheaggregateamountoftheCompanystangibleassets,lessitstotalliabilities.Thetablepresentsthreescenarios:a$5millionraisefromthisoffering,a$10
millionraisefromthisoffering,andafullysubscribed$15millionraisefromthisoffering.
9


PriceperShare
SharesIssued
CapitalRaised
Less:OfferingCosts
NetOfferingProceeds
NetTangibleBookValuePreFinancing
NetTangibleBookValuePostFinancing

SharesIssuedandOutstandingPreFinancing
PostFinancingSharesIssuedandOutstanding

Nettangiblebookvaluepersharepriortooffering
Increase/(Decrease)pershareatributabletonewinvestors
Nettangiblebookvaluepershareafteroffering
DilutiontoNBVpersharetonewinvestors

$
$

$
$
$
$
$


$
$
$
$

5MMRaise
3.00
1,666,667
5,000,000
(455,000)
4,545,000
170,071
4,715,071

13,632,692
15,299,358

0.012
0.296
0.308
2.69

$
$

$
$
$
$
$


$
$
$
$

10MMRaise
3.00
3,333,333
10,000,000
(830,000)
9,170,000
170,071
9,340,071

13,632,692
16,966,025

0.012
0.538
0.551
2.449

$
$

$
$
$
$
$


$
$
$
$

15MMRaise
3.00
5,000,000
15,000,000
(1,205,000)
13,795,000
170,071
13,965,071

13,632,692
18,632,692

0.012
0.737
0.749
2.251

Thefollowingtablepresentsthestockoptionsissued,forfeited,outstanding,andvested,throughcurrent.Thedilutioncalculationsandtableshereinonlygiveeffecttothecurrently
vestedsharesoutstanding,andtherefore,furtherdilutionispossibleshouldsomeoralloftheunvestedoutstandingsharesultimatelyvestandbeexercised.Nooptionshavebeen
exercisedtodate.
Exercise
Price

$0.11
$0.32
TOTAL

Issued

1,732,030
349,690
2,081,720

Forfeited


Outstanding



(336,250)
1,395,780

349,690
(336,250)
1,745,470

Vested

624,733

624,733

Futuredilution
Another important way of looking at dilution is the dilution thathappensduetofutureactionsbythecompany.Theinvestorsstakeinacompany could be diluted due to the
companyissuingadditionalshares.Inotherwords,whenthecompanyissuesmoreshares,thepercentageofthecompanythatyouownwillgodown,eventhoughthevalueofthe
companymaygoup.Youwillownasmallerpieceofalargercompany.Thisincreaseinnumberofsharesoutstandingcouldresultfromastockoffering(suchasaninitialpublic
offering,anothercrowdfundinground,aventurecapitalround,oradditionalangelinvestment),employeesexercisingstockoptions,orbyconversionofcertaininstruments (e.g.
convertiblebonds,preferredsharesorwarrants)intostock.
10

Ifthecompanydecidestoissuemoreshares,aninvestorcouldexperiencevaluedilution,witheachsharebeingworthlessthanbefore,andcontroldilution,withthetotalpercentage
aninvestorownsbeinglessthanbefore.Theremayalsobeearningsdilution,withareductionintheamountearnedpershare(thoughthistypicallyoccursonlyifthecompanyoffers
dividends,andmostearlystagecompaniessuchasVirtuixdonotpaydividendsforsometime).
Thetypeofdilutionthathurtsearlystageinvestorsmostoccurswhenthecompanysellsmoresharesinadownround,meaningatalowervaluationthaninearlierofferings.An
exampleofhowthismightoccurisasfollows(numbersareforillustrativepurposesonly):

InJune2014Janeinvests$20,000forsharesthatrepresent2.0%ofacompanyvaluedat$1million.

InDecemberthecompanyisdoingverywellandsells$5millioninsharestoventurecapitalistsonavaluation(beforethenewinvestment)of$10million.Janenow
ownsonly1.3%ofthecompanybutherstakeisworth$200,000.

InJune2015thecompanyhasrunintoseriousproblemsandinordertostayafloatitraises$1millionatavaluationofonly$2million(thedownround).Jane
nowownsonly0.89%ofthecompanyandherstakeisworthonly$26,660.

Ifyouaremakinganinvestmentexpectingtoownacertainpercentageofthecompanyorexpectingeachsharetoholdacertainamountofvalue,itsimportanttorealizehowthe
valueofthosesharescandecreasebyactionstakenbythecompany.Dilutioncanmakedrasticchangestothevalueofeachshare,ownershippercentage,votingcontrol,andearnings
pershare.
11

USEOFPROCEEDSTOISSUER
Thenetproceedsofafullysubscribedofferingtotheissuer,aftertotalofferingexpensesandcommissionswillbeapproximately$13.9million,dependingonthefinalcommission
paidtoSISecurities.Virtuixplanstousetheseproceedsasfollows:

Approximately$1milliontopayoffthefollowingindebtedness:
o

$0.83millioninprincipalamountasofSeptember30,2015and$0.25millionininterestowed,paymentsof$38,255dueeachmonth through
September2017,underthetermsofaSecuredPromissoryNoteenteredintoonSeptember5,2014withVentureLending&LeasingVII,Inc.(the
"VLLNote").Themoniesborrowedwereusedforproductdevelopment,andtomeetpayrollandothercompanyexpenses.TheVLLNotecarries
aninterestrateof11.75%perannum.Inadditiontotheinterestrate,thecompanyissuedtoVentureLending&LeasingVII,Inc.awarrantthatis
currently exercisable for the purchase of 156,250 shares of the company's Series Seed Preferred Stock at an exercise price of $0.80 per share.
Further,theVLLNoteissecuredbyapledgeof2,000,000sharesoftheCommonStockofVirtuixInc.ascollateralandtheintellectualpropertyof
thecompany.

Approximately$12.675million,or91.3%ofthenetproceedsassumingthemaximumamountofferedisraised,hasnotbeenspecificallyallocated.Thosefundswillbeusedforthree
primarypurposesatthediscretionofthecompany:

Expandingmarketingeffortstoreachmorepotentialcustomers.

ExpandingtheengineeringteamtocontinueproductdesignandbuildoutOmniConnectandtheOmniOnlinesocialplatform.

ExpandthegamedevelopmentteamtobuildouttheTRAVRcontentuniverse.

Becausetheofferingisbeingmadeonabesteffortsbasis,withoutaminimumofferingamount,Virtuixmayclosetheofferingwithoutsufficientfundsforalltheintendedpurposes
setoutabove.Iftheofferingsizeis$5million,thenthecompanyestimatesthatitsnetproceedsfromthisofferingwillbeapproximately$4.5million.Insuchanevent,Virtuixwill
adjustitsuseofproceedsbyreducingplannedexpansionofmarketing,engineering,andgamedevelopment.Thecompanywillstillpayoffthefullamountofindebtednessspecified
above.
Thecompanyreservestherighttochangetheaboveuseofproceedsifmanagementbelievesitisinthebestinterestsofthecompany.
12

THECOMPANYSBUSINESS
BasicInformationabouttheCompanyandOverview
In 2011, prior to founding the company, Jan Goetgeluk began developing the product that would become the companys core product. Virtuix was first founded as Virtuix
TechnologiesLLCinApril2013.VirtuixTechnologiesLLCconvertedintoVirtuixInc.inNovember2013.InDecember2013,VirtuixHoldingsInc.wasincorporatedinDelawareto
actastheholdingcompanyforVirtuixInc.,VirtuixInteractiveILLC(asubsidiaryformedinJanuary2014),andVirtuixManufacturingLtd.(asubsidiaryorganizedinHongKong
formedinJanuary2015,andacquiredbyVirtuixHoldingsInc.onJune24,2015).
Virtuixisapioneerintherecentrebirthofvirtualreality(VR).Previously,VRtechnologywasexpensive,bulky,andoflowquality.Inrecentyears,VRtechnologyhasbecome
moreaffordableandofhigherqualitythankstotheavailabilityofhighresolutionscreens,inertialsensors,andgreaterprocessingpowerthatwasinitiallydemandedbytheconsumer
cellularphoneindustry.
VirtuixmissionistobetheleadingplatformforActiveVR,whichincludesanyVRapplicationthatrequiresfirstpersonnavigationingame,suchaswalkingorrunning.Examplesof
ActiveVRincludefirstpersonshooters,firstpersonadventureorexplorationgames,andanynongamingapplicationsthatrequirefirstpersonnavigationliketrainingsimulations,
realestatewalkthroughs,orvirtualtourism.Incomparisontothecurrentcompetitorsinthemarketspace,asofSeptember30,2015,Virtuixhascompletedthelargestdonation/reward
crowdfundingcampaignandhassoldthemostunitsthroughpreorders.
ProductionoftheOmnibeganinthefourthquarterof2015.Thecompanyiscurrentlydeliveringonpreordersitreceivedandistakingnewordersforitsproduct.
PrincipalProductsandServices
VirtuixbegandeliveringtheOmniinDecember2015.ThecompanysprimaryproductistheOmni.TheOmniisthefirstvirtualrealitymotionplatformformovingfreelyin360
degreesinVRgamesorapplications.TheOmnipermitsvideogameusers'ownmovementstocontrolthemovementofcharactersinavirtualrealitycontextusersmovefreelyand
naturallyonaphysicalplatformthatisintegratedintoavirtualrealitysystem.Thisallowsforuserstowalk,run,orjumpinsidevirtualworlds.Thedevicehasnomovingparts,which
makesitdurable,compact,andaffordable.TheOmniiscompatiblewithPCbasedandmobileVRheadmounteddisplaydevicescurrentlyavailableorcomingtomarket(suchasthe
OculusRift,HTCVive,SamsungGearVR,andGoogleCardboard),andwithcontentthatusesstandardgamepadinputandisVRenabled.
13

Thebiomechanicsoflocomotioninvirtualrealityareahardproblemtosolve.Humanbodiesaresensitivetophysicalmovementsandcomputerinteractionsthatfeelunnatural.This
isaspecialistareaofinterfacedesignthatiscurrentlynotaddressedbymostmajorelectronicsmanufacturers.TheOmniusesaproprietary,lowfriction,concaveplatformthatenables
asmoothandnaturalgait.TheOmnifootwearcontainsproprietarylowfrictionpadsthatallowforanimmersivewalkingandrunningmotionontheOmnibase.Asupportringand
untetheredsupportharnessaimtoprovidebothsafetyandversatilityforrapid,unconstrainedmovement.UsersarekeptsafelyuprightontheOmnithankstothesupportringand
harness.
Thecompanybelievestruevirtualrealitycannotbeexperiencedsittingdown.ActiveVRapplicationslikefirstpersonshootersorexplorationgamesrequiremovementingamethat
doesnottranslatewelltoaseatedorstandingplayersetupduetophysicalconstraints,safetyissues,andsimulatorsickness.Thepanoramicvisualsofferedbyheadmounteddisplays
needcorrespondingnaturalmovementtomaintaintheuserssenseoforientationandfeelingofimmersion.TheOmnienablespopularActiveVRexperiencessafely,comfortably,and
providesthefun,addictive,andimmersiveentertainmentexperiencesthatgamersandmainstreamconsumerslongfor.ThecompanybelievesthattheOmnicanbeusedincontexts
other than gaming, including: corporate training and simulations, exercise and fitness, architectural design/construction, entertainment, health care/physical therapy, virtual
workplacesandevents,andvirtualtourism.Ultimately,VirtuixsvisionistohaveanOmnibepartofeveryActiveVRsetupbothforhomeuseandcommercialapplications.
14

ThefirstversionoftheOmnihardwarehasbeendesignedfordirecttoconsumeronlinesales.Thecompanyanticipatesthatfutureversionswillhavethemargin,scale,anddesignto
allowforwholesaleandretaildistribution.
The company is also developing its Omni Pro, of which a prototype was revealed at the December 2014 Interservice/Industry Training, Simulation and Education Conference
("I/ITSEC")conferencesponsoredbytheNationalTrainingandSimulationAssociation.TheOmniProisalargersystemthantheVirtuixOmniandallowsforuserstocrouchin
additiontowalking,running,andjumping.
ToencouragecustomerengagementwiththeOmni,thecompanyisdevelopingsoftwareforuserstocreateprofiles,trackusage as well as its own Omni social platform Omni
ConnectTMandOmniOnlineTM,respectively.OmniConnectisasoftwareapplicationthataimstotrackausersphysicalmetricsandusage,suchasstepstaken,distancewalked,and
caloriesburned.OmniOnlineprovidestheproductssocialgamingfunctionality,includingonlinestorageofplayersprofilesandgamingstats,andthepresenceofuniversalleader
boardsandleaguestandings.ThecompanyintendstouseOmniOnlinetotransformthetraditionalsolitaryVRexperiencetoafun,addictive,andsocial(multiplayer)Active VR
experiencewiththeOmni.Thecurrentversionofthesocialplatformallowsuserstocreateaprofile,accessuniversalleaderboards,andmaintaindataonusageoftheOmni.Overtime,
thecompanyintendstobuildouttheOmnisocialplatformfunctionalitytodelivertheuserexperiencedescribedabove.
WhiletheOmniiscompatiblewithexistingvideogamesandvirtualrealitysystems,thecompanyisdevelopingitsowngamesundertheTRAVRcontentuniverse.TRAVRgamesare
firstpersonactiongamesthatdemonstratethecapabilitiesoftheOmniandaimtoprovidefun,addictive,andrepeatablegamingexperiencesunavailablefromanyotherproduct.
ThesegameswillbespecificallydesignedtoallowuserstoengagethefullfunctionalityoftheOmniintheirgameplay.
15

Market
Thecompanybelievesvirtualrealityisthenextphaseofhumancomputerinteraction.TheprincipalmarketfortheOmniareindividualconsumerswhoarecurrentlyusingvirtual
realityheadmounteddisplay("HMD")orplantousevirtualrealityHMDtoaugmenttheirgameplayingexperience.ThecompanyestimatesthatfromitsFiscalYear2016toitsFiscal
Year2019,theglobalmarketforHMDswillgrowfrom8,225,000to38,000,000unitssoldperyear.Thisestimateisderivedfromaveragingprojectionsmadeinindustry research
reportsofBusinessInsiderfromApril27,2015,PiperJaffrayfromMay2015,KZeroWorldwidefromJuly2014,andGartnerfromMay2015.Thesereportswerenotproducedforthe
companyorforthisoffering.
Marketing/DistributionChannels
ThecompanyiscurrentlytakingpreordersoftheOmnidirectlythroughitsownwebsite.ItpreviouslyacceptedpreordersinacrowdfundingcampaignthroughKickstarterthatended
inJuly2013.Thatcampaignresultedin$1.1millionofpreorders.MarketingeffortshavebeenfocusedonPCgamersasearlyadopters.Virtuixreachesthesegamerswithavarietyof
onlineandofflinemarketingcampaigns,suchasonlinegamevideosorlivedemosattradeshowsandevents.
AsofOctober30,2015,themaingrowthdriverhasbeenshowingtheproducttoinfluentialgamers,journalistsandbloggers,andlettingthemdemotheOmni.Thecoverageand
contentthattheycreatedhasdrivencustomerstobuytheproductonline.Thecompanyplanstoincreaseitsonlineandofflinemarketingcampaigns,demosandmarketingevents,and
communityengagement.
VirtuixmadesignificanteffortstobuildtheOmnibrandandreputationamongtheeSports,PCgaming,andVRenthusiastcommunities.
Thecompanyhasalsoreceivedinterestfromseveralcommercialmarkets,includingthemilitaryindustryfortrainingandsimulation,thegymindustryforexerciseandfitness,the
architectureandrealestateindustriesforvirtualwalkthroughs,andthearcadeindustryforcommercialoutofhomeentertainment.Thecompanywillcontinuetoexploredistribution
tothesemarkets.
Competition
Thecompanywillfacecompetitionfromotherequipmentmanufacturers,includingmanufacturersthathavenotbegundevelopingtheirownproducts.VirtuixbelievesthattheOmni
willhaveadvantagesoverothercompetitorscurrentlyinthemarketspace,including:

lowestpricepointof$699
defensibleproductfeatures,tradesecrets,andintellectualproperty
smallestphysicalfootprintand
firsttomarket.

ItsfirstmoveradvantageforfullyimmersiveomnidirectionaltreadmillshasbeenakeystrengthforVirtuix.Thecompanysearlyproductdemonstrationsandpreordervolumehave
resultedinstrongrelationshipswithheadsetmakers,contentcreators,gamedevelopers,andthemakersofVRaccessoriesandcontrollers.Thecompanyanticipatesbuildingonthese
relationshipsasOmnisaredeliveredtopreorderpurchasers.
16

The Omni does not compete with headset makers and contents creators. Instead, the Omni acts as the compatible interconnect between other VR devices and content creators,
providingthenecessaryinputsolutionthatenablespopularActiveVRexperiences.
ProductDelivery
ThecompanybegandeliveryoftheOmniinDecember2015.Productionwillincreaseastheassemblyprocessisfinetunedtoimprovequalityandefficiency.
Suppliers
ThecompanyhasenteredintoanOriginalEquipmentManufacturingAgreementwithanelectronicsmanufacturerinChina.Themanufacturingagreementprovidesanonexclusive
righttomanufacturetheOmniatthespecificationsprovidedbyVirtuix.Themanufacturerisresponsibleformakingtheplasticcomponentsandassemblingthefinalproductwith
materialsobtainedfromothersuppliers.AllmanufacturedproductswillberequiredtomeettheAcceptableQualityLeveloftheproductspecificationsprovidedbyVirtuix.Virtuix
ownstheplasticinjectionmoldsusedtoconstructtheOmniandcouldutilizeadditionalmanufacturersorchangemanufacturers.
ResearchandDevelopment
Sinceinception,thecompanyhasspentapproximately$1.5milliononresearchanddevelopmentofitsproducts.
Employees
Virtuixhas15employeesworkingfulltimeinAustin,TX,and12employeesworkingfulltimeinChina.Additionally,thecompanyhasengagedthreecontractorsatitsAustin,TX
location.Twoparttimerolesarefilledbycontactorsaswell.
IntellectualProperty
The company relies on its intellectual property. As of August 31, 2015, the company has filed two nonprovisional utility patent applications, nine provisional utility patent
applications,andonedesignpatentapplication.

Application
Number
61/757,986

Title

LocomotionSystemandApparatus

14/062,625

LocomotionSystemandApparatus

61/955,767

61/981,149

METHODANDSYSTEMOFDECOUPLINGALOCOMOTIONANDVIRTUALREALITY
SYSTEM
OMNIDIRECTIONALLOCOMOTIONSYSTEMFORMILITARYAPPLICATION

29/488,951

OmnidirectionalLocomotionPlatform

62/004,550

SupportTubeSystemForVerticalMovementofanOmnidirectionalLocomotionDevice

62/099,426

ANOMNIDIRECTIONALLOCOMOTIONSYSTEMANDAPPARATUS

62/127,261

ANOMNIDIRECTIONALLOCOMOTIONSYSTEMANDAPPARATUS

14/663,433

METHODGENERATINGANINPUTINANOMNIDIRECTIONALLOCOMOTIONSYSTEM

10

62/144,253

HAPTICGLOVEFORUSEINAVIRTUALENVIRONMENT

11

62/198,032

OMNIDIRECTIONALLOCOMOTIONSYSTEMANDAPPARATUS

12

62/253,317

METHODOFSOFTDECOUPLINGVIRTUALREALITYINPUTDATASYSTEMAND
METHODOFIDENTIFYINGASENSOR
17

Type

ProvisionalUtility
PatentApplication
NonprovisionalUtility
PatentApplication
ProvisionalUtility
PatentApplication
ProvisionalUtility
PatentApplication
DesignPatent
Application
ProvisionalUtility
PatentApplication
ProvisionalUtility
PatentApplication
ProvisionalUtility
PatentApplication
NonprovisionalUtility
PatentApplication
ProvisionalUtility
PatentApplication
ProvisionalUtility
PatentApplication
ProvisionalUtility
PatentApplication

Date
Filed
1/29/2013
10/24/2013
3/19/2014
4/17/2014
4/24/2014
5/29/2014
1/2/2015
3/2/2015
3/19/2015
4/7/2015
7/28/2015
11/10/2015

Theapplicationtitled"LocomotionSystemandApparatus"hasbeenfiledwithinternationalpatentregulatorsinEurope,China,Russia,India,Brazil,SouthKorea,andAustralia.
Additionally,VirtuixhasenteredintoaLicenseAgreementwithCloudNav,Inc.coveringthelicenseofCloudNav,Inc.'sSensorFusionLibraryandVirtualRealityMotionLibrary.
ThecompanyhasalsofiledfortrademarkprotectionforVirtuix,VirtuixOmni,andTRAVR.

SerialNumber

Mark

Class

DateFiled

85851171

VIRTUIX

009

2/15/2013

85851157

VIRTUIXOMNI

028

2/15/2013

85851157

VIRTUIXOMNI

025

6/6/2013

86156858

TRAVR

009

1/2/2014

The trademark applications for "Virtuix" and "Virtuix Omni" filed on February 15, 2013 have been filed with international trademark regulators in Argentina, Brazil, Canada,
EuropeanUnion,Taiwan,andtheWorldIntellectualPropertyOrganization.
ThecompanyiscurrentlyinvolvedinadisputeinChinaregardingthetrademark"VirtuixOmni".
Litigation
Thecompanyhasbeennamedadefendantinalegalproceedinginthe149thDistrictCourtoftheStateofTexasbyGlenJones.TheServiceofProcesswasmailedonJuly13,2015.
Thelawsuitallegesbreachofcontractandseeksmonetarydamagesandothercivilremedies,allofwhichthecompanyhasdeniedinitsfiledanswer.
18

THECOMPANYSPROPERTY
Thecompanyownsmanufacturingmoldsforitscurrentproducts.Virtuixcurrentlyleasesitspremises.
19

MANGEMENTSDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS
ResultsofOperations
AsofSeptember30,2015,thecompanyhasnotyetrecognizedsalesofitscoreproduct,theOmni.Throughonlinepreorders,thecompanyhasreceivedover$2millionincash,which
isrecordedasdeferredrevenue.Thoserevenueswillberecognizedoncethecompanybeginsdeliveringitsproduct.ThecompanybeganproductioninDecember2015anddelivered
itsfirstproductonDecember15,2015.
PreordersoftheOmnibeganinJune2013withthecompany'ssuccessfulKickstartercampaign.Withanoriginalgoalofraising$150,000byofferingrewardsandpreorders,the
companyraisedover$1.1million.CertainrevenuesfromtherewardsofferedintheKickstartercampaign(suchastshirtsandposters)otherthantheOmniwererecognizedupon
deliveryofthereward.TheapproximatetimeperiodtheserevenueswererecognizedwasfromSeptembertoDecember2014.
Althoughthecompanyhasnotundertakenanymajormarketingcampaign,preordersoftheOmnihavecontinued.Onaquarterlybasis,startingonApril1,2014andendingon
September30,2015,thecompanyaccruedapproximately$179,000,$95,000,$102,000,$238,000,$88,000,and$111,491indeferredrevenuefrompreordersoftheOmni.Forthe
FiscalYearendingMarch31,2015(Fiscal2015),thecompanyaccruedapproximately$615,000indeferredrevenue.AndinthesixmonthsendingonSeptember30,2015,the
companyaccruedanadditional$199,401indeferredrevenue.
Becausesalesofitsproductshavenotyetbeenrecognized,thecompanyhasnotyetdeterminedthecostofgoodssold.Costofgoodswillincludethecostofmaterialstoproduceeach
Omni,manufacturingcosts,shipmentcosts,licensingfeeswithCloudNav,Inc.,andothercostsassociateswiththesaleofthecompany'scoreproduct.AsofSeptember30,2015,the
companyhadacquired$68,671ininventoryassets,comprisingelectroniccomponentpartsforitsprimaryproduct.
The company's operating expenses consist of rent, payroll, professional services, selling expenses, and research and development. Operating expenses for Fiscal 2015 totaled
$3,449,829,a113%increasefrom$1,619,573forFiscal2014.Theprimarycomponentsoftheincreasefrom2014toFiscal2015were:

a137%increaseingeneralandadministrativeexpensescoveringpersonnelcosts,rent,insurance,professionalandlegalservices,andexpensesincurredotherthan
forsalesactivities.Theprincipaldriverofthisincreasewastheincreaseinpersonnelofthecompanyfromapproximately10personsto30and
a 105% increase in research and development expenses due do the availability of funds to engage in necessary research and development of the core product
followingcapitalraisingefforts.
20

ForthesixmonthsendedSeptember30,2015,thecompanyaccrued$2,044,976inoperatingexpenses,a26%increasefrom$1,619,652forthesixmonthsendedSeptember30,2014.
Theprimarycomponentsoftheincreaseinoperatingexpensesbetweenthesetwoperiodsincluded:

a72%increaseingeneralandadministrativeexpensescoveringpersonnelcosts,stockcompensationexpense,professionalandlegalservices,andoperating
expenses.

Asaresultoftheforegoingfactors,thecompany'snetlossforFiscal2015was$3,524,322,an120%increasefromthenetlossof$1,603,580inFiscal2014.Forthesixmonthsended
September30,2015,thecompanysnetlosswas$2,146,482.
LiquidityandCapitalResources
AsofOctober30,2015,thecompanyhasnotmadeanyprofitsandhadnotcommenceditsplannedprincipaloperations.Whilethecompanyhas,asofSeptember30,2015,$2,601,601
cashonhand,ithasnotrecognizedrevenuefromsalesofitsproducts.ThecompanyhasrecordedlossesfromthetimeofinceptiontoSeptember30,2015inthetotalamountof
$7,172,878.
Thecompanysoperationshavelargelybeenfinancedtodatefromitsfinancingactivities.Thecompanywasinitiallycapitalizedbythecompany'sfounderJanGoetgelukinthe
amountof$183,132.TheninJune2013,thecompanylaunchedaKickstartercampaign,whichgenerated$1.1millionincashforthecompany.FromAprilthroughMay2014,the
companywasfurthercapitalizedbyequityinvestmentsfromitsstockholdersintheamountof$3,000,000fromthreesources,including$175,000inrelatedpartynotessubsequently
converted into Series Seed Preferred Stock, $400,000 in convertible notes subsequently converted into Series Seed Preferred Stock, with the remainder being direct sales of the
companys Series Seed Preferred Stock. From December 2014 to February 2015, the company received an additional equity investment from its stockholders in the amount of
$2,997,000throughthesaleofitsSeries2SeedPreferredStock.FromMay2015toJuly2015,thecompanyreceived$879,701fromthesaleofconvertiblepromissorynotesthat
convertedintoSeries2SeedPreferredStockonSeptember30,2015.
Inadditiontoitssalesofequityandconvertiblenotes,thecompanyhasenteredintoaventureloanagreementwithVentureLending&LeasingVII,Inc.inSeptember2014.The
companyreceived$1,000,000fromthisloan.Thecompanyhastheabilitytorequestanadditionalloanof$250,000fromthelenderwhenproductionoftheOmnibegins.
ThecompanysoperationsaredependentonmakingcapitalexpenditurestoproducemanufacturingmoldsfortheOmni.Intheeventthatthecompanydoesnotraisesufficientfundsin
thisoffering,thecompanywillcontinuetomaketheplannedcapitalexpendituresoutofitsavailablecashonhandoritsavailableloanfacility.
PlanofOperations
Overthenext12months,thecompanyanticipatesthatitwillbeginproductionoftheOmni,startingwiththeunitsorderedthroughtheKickstartercampaignin2013.Thecompany
anticipatesaproductionscheduleasfollows:
21

10unitsinDecember,2015
50unitsinJanuary,2016.

Asthemanufacturingprocessisfinetunedduringthesefirstbatches,productionwillrampuptomeetthecompanysobligationstopurchasersofpreorderedproductsandfuture
purchasers.
OmniConnectandOmniOnlineareundercontinueddevelopment.ThecompanyanticipatesthatOmniConnectandOmniOnlinewillbereadyinthefirstquarterof2016.
ThecompanyanticipatesreleasingthreegamesfortheTRAVRcontentuniverseinJanuary,2016.
Thecompanywillbeabletobeginitsproductionwithitscashonhand.Withoutadditionalfinancingfromthisoffering,thecompanyanticipatesthatitwouldbeabletocontinueits
normaloperationsthroughtheendofMarch2016.
TrendInformation
Initially, the Omni was targeted to hardcore gamers who had already adopted virtual reality and desired to more fully immerse themselves in the experience. However, as the
applicationsofvirtualrealityhaveexpandedbeyondhardcoregaming,Virtuix'stargetmarketshaveexpandedaccordingly.Thecompany believes that Omni Connect and Omni
Online,byallowinguserstocreateprofiles,trackusage,andengagesocially,willappealtoalargeraudienceofusersinterestedinapplicationsotherthangaming.
Tomorecompletelyreachthismarket,thecompanyisactivelyconsideringwaystooffertheOmniatalowerprice,andfurtherreducethedevice'sphysicalsize.Thecompanybelieves
theseeffortswillenablethecompanytoreachalargermarket.
Thecompanycontinuestoexplorethemarketforprofessionalandmilitaryusers.ThecompanyrevealeditsOmniProprototypeattheDecember2014Interservice/IndustryTraining,
SimulationandEducationConference("I/ITSEC")conferencesponsoredbytheNationalTrainingandSimulationAssociation.Tobetterreachthismarket,thecompanyhasbrought
onaparttimeMilitaryBusinessDevelopmentspecialist.
Withthemanufacturingagreementinplace,thecompanybeganproductionoftheOmniinDecember2015anddelivereditsfirstunitonDecember15,2015.Futuredeliverydatesand
volumewilldependonthecapacityandperformanceofthemanufacturer.
22

DIRECTORS,EXECUTIVEOFFICERSANDSIGNIFICANTEMPLOYEES
Thefollowingtablesetsoutthecompanysofficersanddirectors.Allworkwiththecompanyonafulltimebasis.
Name

Position

Age

TermofOffice(ifindefinite,givedateappointed)

JanL.Goetgeluk

CEO

32

April15,2013

DavidRobertMalcolmAllan

Pres.

48

August12,2013

CEO

32

April15,2013

ExecutiveOfficers:

Directors:
JanL.Goetgeluk
JanGoetgeluk,CEOandSoleDirector
JanGoetgelukisthefounderandCEOofVirtuixsinceitsinceptioninFebruary2013.PriortofoundingVirtuix,Mr.GoetgelukwasanInvestmentBankingAssociatewithJPMorgan
ChaseinHoustonandNewYork.HeservedinthatrolefromMay2010toFebruary2013.Whileworkingasaninvestmentbanker,hestarteddevelopingtheOmniafterhours,often
workinguntillateinthemorning.InFebruary2013,aftertwoyearsofresearching,experimenting,andprototyping,Mr.Goetgelukdecidedtoleavehisfulltimejoband founded
VirtuixtobringtheOmnitomarket.Mr.GoetgelukholdsaBachelorofScienceandMasterofSciencedegreeinMechanicalEngineeringfromtheUniversityofGhentinBelgium,
andanMBAdegreefromRiceUniversityinHouston.
DavidAllan,COOandPresident
DavidAllaniscurrentlyPresidentandChiefOperatingOfficerofVirtuix.HehasservedasPresidentsinceDecember2013andasChiefOperatingOfficersinceAugust2013.Priorto
joiningthecompany,Mr.AllanwasVicePresidentofERPPowerLLC,aCaliforniaelectronicsstartup,fromJune2008toJanuary2012.Inthatpositionhewasresponsibleforsetting
upaChinamanufacturingsubsidiaryemploying200workers.FromJanuary2006toMay2008,Mr.AllanwasaseniormanageratFlextronics,aFortune500manufacturingcompany.
Other prior positions include twelve years as coowner of a Taiwanbased OEM hardware business. Mr. Allan holds a B.A.Sc. degree in Systems Design Engineering from the
UniversityofWaterloo.
23

COMPENSATIONOFDIRECTORSANDEXECUTIVEOFFICERS
ForthefiscalyearendedMarch31,2015thecompanyonlyhadtwoexecutiveofficersandonedirector.Thecompensationforitstwoexecutiveofficerswasasfollows:
Name

Capacitiesinwhichcompensationwasreceived Cashcompensation
($)

Othercompensation
($)

Totalcompensation
($)

JanGoetgeluk

ChiefExecutiveOfficer

$55,962

N/A

$55,962

DavidAllan

ChiefOperatingOfficer

$175,000

$3,000

$178,000

ForthefiscalyearendedMarch31,2015,JanGoetgeluk,thesoledirector,wasnotcompensatedforhisservicesasaDirector.
InJune2014,thecompanygrantedDavidAllanoptionstoacquire1,125,000sharesofCommonStockofVirtuixHoldings,Inc.Theoptionsweregrantedonathreeyearvesting
scheduleatanexercisepriceof$0.11pershare.
24

SECURITYOWNERSHIPOFMANAGEMENTANDCERTAINSECURITYHOLDERS
Thefollowingtablesetsout,asofAugust31,2015,thevotingsecuritiesofthecompanythatareownedbyexecutiveofficersanddirectors,andotherpersonsholdingmorethan10%
ofthecompanysvotingsecurities,orhavingtherighttoacquirethosesecurities.
Titleofclass Nameandaddressofbeneficialowner Amountandnatureofbeneficialownership Amountandnatureofbeneficialownershipacquirable Percentofclass
Common
Stock

JanGoetgeluk,8406HubCove,
Austin,TX78759

5,500,000sharesofcommonstock

100%

Common
Stock

DavidAllan,5F1,#273,Alley3,
Lane219,ChungShanN.Road,
Section7,Taipei,Taiwan11285

1,125,000sharesavailablefromissuedstockoptions
subjecttothreeyearvestingschedule

17%

Thefinalcolumn(PercentofClass)includesacalculationoftheamountthepersonownsnow,plustheamountthatpersonisentitledtoacquire.Thatamountisthenshownasa
percentageoftheoutstandingamountofsecuritiesinthatclassifnootherpeopleexercisedtheirrightstoacquirethosesecurities.Theresultisacalculationofthemaximumamount
thatpersoncouldeverownbasedontheircurrentandacquirableownership,whichiswhytheamountsinthiscolumnwillnotaddupto100%.
25

INTERESTOFMANGEMENTANDOTHERSINCERTAINTRANSACTIONS
Thecompanyhasnotenteredintoanytransactionsinwhichthemanagementorrelatedpersonshaveinterestinoutsideoftheordinarycourseofoperationsofthecompany.
26

SECURITIESBEINGOFFERED
General
ThecompanyisofferingSeriesAPreferredStocktoinvestorsinthisoffering.
Thefollowingdescriptionsummarizesimportanttermsofthecompany'scapitalstock.Thissummarydoesnotpurporttobecompleteandisqualifiedinitsentiretybytheprovisionsof
theThirdAmendedandRestatedCertificateofIncorporation(tobefiledinanamendmenttothisOfferingCircular)anditsBylaws,copiesofwhichhavebeenfiledasExhibitstothe
OfferingStatementofwhichthisOfferingCircularisapart.ForacompletedescriptionofVirtuixHoldingsInc.'scapitalstock,youshouldrefertoitsThirdAmendedandRestated
CertificateofIncorporation,andBylaws,andapplicableprovisionsoftheDelawareGeneralCorporationLaw.
Immediatelyfollowingthecompletionofthisoffering,VirtuixHoldingsInc.'sauthorizedcapitalstockwillconsistof[25,000,000]sharesofCommonStock,$0.001parvalueper
share,and[16,000,000]sharesofPreferredStock,$0.001parvaluepershare,ofwhich[7,700,000]ofthosesharesaredesignatedasSeriesAPreferredStock,4,300,000sharesare
designatedasSeries2SeedPreferredStock,and4,000,000designatedasSeriesSeedPreferredStock.
AsofOctober1,2015,theoutstandingsharesofVirtuixHoldingsInc.included:5,500,000sharesofCommonStock,3,750,000sharesofSeriesSeedPreferredStock,and3,601,709
sharesofSeries2SeedPreferredStock.
CommonStock
DividendRights
HoldersofCommonStockarenotentitledtoreceivedividends,asmaybedeclaredfromtimetotimebytheboardofdirectorsoutoflegallyavailablefunds,unlesssuchdividendsare
paidratablytotheholdersofCommonStockandPreferredStockbasedonthenumberofsharesofCommonStockwhichwouldbeheldbyeachstockholderifallofthePreferred
StockwasconvertedatthetheneffectiveconversionrateapplicabletosuchsharesofPreferredStock.Thecompanyhasneverdeclaredorpaidcashdividendsonanyofitscapital
stockandcurrentlydoesnotanticipatepayinganycashdividendsafterthisofferingorintheforeseeablefuture.
VotingRights
EachholderofCommonStockisentitledtoonevoteforeachshareonallmatterssubmittedtoavoteofthestockholders,includingtheelectionofdirectors,butexcludingmattersthat
relatesolelytothetermsofaseriesofPreferredStock.
RighttoReceiveLiquidationDistributions
Intheeventofthecompany'sliquidation,dissolution,orwindingup,holdersofitsCommonStockwillbeentitledtoshareratablyinthenetassetslegallyavailablefordistributionto
stockholdersafterthepaymentofallofthecompany'sdebtsandotherliabilitiesandthesatisfactionoftheliquidationpreferencesgrantedtotheholdersofallsharesoftheoutstanding
PreferredStock.
27

RightsandPreferences
Holdersofthecompany'sCommonStockhavenopreemptive,conversion,orotherrights,andtherearenoredemptiveorsinkingfundprovisionsapplicabletothecompany'sCommon
Stock.
PreferredStock
ThecompanyhasauthorizedtheissuanceofthreeseriesofPreferredStock.TheseriesaredesignatedSeriesSeedPreferredStock,Series2SeedPreferredStock,andSeriesAPreferred
Stock(togetherthe"DesignatedPreferredStock").EachseriesofDesignatedPreferredStockcontainssubstantiallysimilarrights,preferences,andprivileges.
DividendRights
HoldersofDesignatedPreferredStockareentitledtoreceivedividends,asmaybedeclaredfromtimetotimebytheboardofdirectorsoutoflegallyavailablefunds.Thosedividends
arepaidratablytotheholdersofCommonStockandPreferredStockbasedonthenumberofsharesofCommonStockwhichwouldbeheldbyeachstockholderifallofthePreferred
StockwasconvertedtoCommonStockunderthetermsofthecompany'sThirdAmendedandCertificateofIncorporation.Thecompanyhasneverdeclaredorpaidcashdividendson
anyofitscapitalstockandcurrentlydoesnotanticipatepayinganycashdividendsafterthisofferingorintheforeseeablefuture.
VotingRights
EachholderofDesignatedPreferredStockisentitledtoonevoteforeachshareofCommonStockwhichwouldbeheldbyeachstockholderifallofthePreferredStockwasconverted
intoCommonStock.Fractionalvotesarenotpermittedandiftheconversionresultsinafractionalshare,itwillberoundedtotheclosestwholenumber.HoldersofPreferredStockare
entitledto vote on all matters submitted to a vote of the stockholders, including the election of directors, as a single class with the holders of Common Stock. Specific matters
submittedtoavoteofthestockholdersrequiretheapprovalofamajorityoftheholdersofPreferredStockvotingasaseparateclass.Thesemattersincludeanyvoteto:

Amend or repeal of any provision of the Certificate of Incorporation or Bylaws if the action would alter, change or otherwise adversely affect the powers,
preferences,orprivileges,ofanyseriesoftheDesignatedPreferredStock
IncreaseordecreasetheauthorizednumberofsharesofDesignatedPreferredStockorCommonStock
Authorizeanynew,orreclassifyanyexistingclassorseriesofequitysecuritieswithrightssuperiortooronparwithanyseriesofDesignatedPreferredStock
Redeem,repurchase,orotherwiseacquireforvalueanysharesofCommonStockorDesignatedPreferredStockotherthancertainallowablerepurchases
DeclareadividendordistributecashorpropertytoholdersofCommonStockand
28

Liquidate,dissolve,orwindupthebusiness,oreffectanymergerorconsolidationofthecompany.

RighttoReceiveLiquidationDistributions
Intheeventofthecompany'sliquidation,dissolution,orwindingup,holdersofitsDesignatedPreferredStockareentitledtoaliquidationpreferencesuperiortotheCommonStock.
HoldersofDesignatedPreferredStockwillreceiveanamountforeachshareequaltotheoriginalpricepaidforthesharesplusanydeclaredbutunpaiddividendsthereon.If,uponsuch
liquidation,dissolutionorwindingup,theassetsandfundsthataredistributabletotheholdersofDesignatedPreferredStockareinsufficienttopermitthepaymenttosuchholdersof
thefullamountoftheirrespectiveliquidationpreference,thenallofsuchassetsandfundswillbedistributedratablyamongtheholdersoftheDesignatedPreferredStockinproportion
tothefullpreferentialamountstowhichtheywouldotherwisebeentitledtoreceive.
PreemptiveRights
Investorsthatacquireatleast62,500sharesofPreferredStockgenerallyareentitledtopreemptiverightstoacquiresharesinanynewofferingofequitysecuritiesbythecompany.
Holdersoflessthan62,500sharesdonothavepreemptiverights.Therearenoredemptiveorsinkingfundprovisionsapplicabletothecompany'sDesignatedPreferredStock.
TermsofConversion
The Designated Preferred Stock of Virtuix Holdings Inc. is convertible into the Common Stock of the company as provided by Section 4.3 of the Third Amended and Restated
CertificateofIncorporation.EachshareofDesignatedPreferredStockisconvertibleattheoptionoftheholderoftheshareasanytimeafterissuanceandpriortotheclosingofany
transactionthatconstitutesliquidationeventofthecompany.TheconversionpriceoftheDesignatedPreferredStockisequaltotheissuepricesubjecttoadjustmentasdiscussed
underAntiDilutionRightsbelow.
Additionally,eachshareoftheDesignatedPreferredStockwillautomaticallyconvertintotheCommonStockofthecompanyimmediatelypriortotheclosingofafirmcommitment
underwrittenpublicoffering,registeredundertheSecuritiesActof1933,inwhichtheaggregategrossproceedsraisedareatleast$40million.Theshareswillconvertinthesame
mannerasthevoluntaryconversion.
AntiDilutionRights
HoldersofVirtuixHoldingsInc.DesignatedPreferredStockwillreceivecertainantidilutionprotectiveprovisionsthatwillbeappliedtoadjustthenumberofsharesofCommon
StockissuableuponconversionofthesharesoftherespectiveseriesofDesignatedPreferredStock.Ifequitysecuritiesaresubsequentlyissuedbythecompanyatapricepershareless
thantheconversionpriceoftheDesignatedPreferredStockthenineffect,theconversionpriceoftheDesignatedPreferredStockwillbeadjustedusingabroadbased, weighted
averageadjustmentformulaasprovidedforintheThirdAmendedandRestatedCertificateofIncorporation.
29

PLANOFDISTRIBUTIONANDSELLINGSECURITYHOLDERS
PlanofDistribution
The company is offering up to _________shares of Series A Preferred Stock, as described in this Offering Circular. The company has engaged SI Securities, LLC as its sole and
exclusiveplacementagenttoassistintheplacementofitssecurities.SISecurities,LLCisundernoobligationtopurchaseanysecuritiesorarrangeforthesaleofanyspecificnumber
ordollaramountofsecurities.
CommissionsandDiscounts
Thefollowingtableshowsthetotaldiscountsandcommissionspayabletotheplacementagentsinconnectionwiththisoffering:
Per
Share
Publicofferingprice
PlacementAgentcommissions
Proceeds,beforeexpenses,tous

PlacementAgentWarrants
ThecompanyhasagreedtoissuetoSISecurities,LLC,fornominalconsideration,awarranttopurchaseuptoatotalof_______sharesofSeriesAPreferredStock.ThesharesofSeries
APreferredStockissuableuponexerciseofthiswarrantwillhaveidenticalrights,preferences,andprivilegestothosebeingofferedbythisOfferingCircular.Thiswarrantshall(i)be
exercisableat$______pershare(ii)beexercisableuntilthedatethatisfive(5)yearsfromthequalificationdateofthisoffering(iii)containautomaticcashlessexerciseprovisions
uponaliquidityeventorexpiration(iv)containcustomaryweightedaverageantidilutionpriceprotectionprovisionsandimmediatecashlessexerciseprovisionsandshallnotbe
callablebytheCompany(v)containcustomaryreclassification,exchange,combinationsorsubstitutionprovisions(includingwithrespecttoconvertibleindebtedness)and(vi)
containothercustomarytermsandprovisions.Theexercisepriceandnumberofsharesissuableuponexerciseofthewarrantmaybeadjustedincertaincircumstancesincludinginthe
eventofasharedividend,orthecompany'srecapitalization,reorganization,mergerorconsolidation.
ThiswarranthasbeendeemedcompensationbyFINRAandisthereforesubjecttoa180daylockuppursuanttoFINRARule5110(g)(1).InaccordancewithFINRARule5110(g)(1),
neitherthiswarrantnoranysecuritiesissuableuponexerciseofthiswarrantmaybesold,transferred,assigned,pledgedorhypothecated,orbethesubjectofanyhedging,shortsale,
derivative,put,orcalltransactionthatwouldresultinthequalificationeconomicdispositionofsuchsecuritiesbyanypersonforaperiodof180daysimmediatelyfollowingthe
qualificationdateorcommencementofsalesofthisoffering,excepttoanyplacementagentandselecteddealerparticipatingintheofferingandtheirbonafideofficersorpartnersand
exceptasotherwiseprovidedforinFINRARule5110(g)(2).Inaddition,thiswarrantgrantsitsholderspiggybackregistrationrightsforperiodsofsevenyearsfromthequalification
dateofthisoffering.
30

OtherTerms
ThecompanyisobligatedtoreimburseSISecurities,LLCforuptoamaximumamountof$25,000inactualaccountableoutofpocketexpenses.
Exceptassetforthabove,thecompanyisnotunderanycontractualobligationtoengageSISecurities,LLCtoprovideanyservicestothecompanyafterthisoffering,andhasno
presentintenttodoso.However,SISecurities,LLCmay,amongotherthings,introducethecompanytopotentialtargetbusinessesorassistthecompanyinraisingadditionalcapital,
asneedsmayariseinthefuture.IfSISecurities,LLCprovidesservicestothecompanyafterthisoffering,thecompanymaypaySISecurities,LLCfairandreasonablefeesthatwould
bedeterminedatthattimeinanarmslengthnegotiation.
SISecurities,LLCintendstouseanonlineplatformprovidedbySeedInvestTechnology,LLC,anaffiliateofSISecurities,LLC,atthedomainnamewww.seedinvest.com(theOnline
Platform)toprovidetechnologytoolstoallowforthesalesofsecuritiesinthisoffering.
SellingSecurityholders
Nosecuritiesarebeingsoldfortheaccountofsecurityholdersallnetproceedsofthisofferingwillgotothecompany.
InvestorsTenderofFunds
AftertheOfferingStatementhasbeenqualifiedbytheCommission,thecompanywillaccepttendersoffundstopurchasetheSeriesAPreferredStock.Thecompanymaycloseon
investmentsonarollingbasis(sonotallinvestorswillreceivetheirsharesonthesamedate).Uponclosing,fundstenderedbyinvestorswillbemadeavailabletothecompanyforits
use.
Intheeventthatittakessometimeforthecompanytoraisefundsinthisoffering,thecompanywillrelyonincomefromsalesandcashonhandof$2.6millionasofSeptember30,
2015.
Investorswillberequiredtoagreetothetermsofthesubscriptionagreementinordertoinvest(copiesofwhichhavebeenfiledasanExhibittotheOfferingStatementofwhichthis
OfferingCircularispart).Thesubscriptionagreementincludesarepresentationbytheinvestortotheeffectthat,ifyouarenotanaccreditedinvestorasdefinedundersecuritieslaw,
youareinvestinganamountthatdoesnotexceedthegreaterof10%ofyourannualincomeor10%ofyournetworth(excludingyourprincipalresidence).
31

INTERIMFINANCIALSTATEMENTSFORTHESIXMONTHSENDEDSEPTEMBER30,2015
InterimfinancialstatementsconsistingoftheconsolidatedbalancesheetsofVirtuixHoldings,Inc.andSubsidiariesforthesixmonthsendedSeptember30,2015,andtheconsolidated
statementsofoperations,changesinstockholders'equity,andcashflowsofVirtuixHoldings,Inc.andSubsidiariesforsuchperiodhavebeenincludedinthisOfferingCircular.
32

VIRTUIXHOLDINGS,INC.ANDSUBSIDIARIES
CONSOLIDATEDBALANCESHEETS
ASSETS

CURRENTASSETS
Cashandcashequivalents,includingrestrictedcashof$27,752atSeptember30,2015andMarch31,2015,respectively
Inventory
Prepaidsandothercurrentassets
TOTALCURRENTASSETS

NONCURRENTASSETS
Propertyandequipment
Less:accumulateddepreciation
Netpropertyandequipment

Intangibles
Less:accumulatedamortization
Netintangibles

Deferredtaxasset(netofvaluationallowanceof$2,204,267and$1,473,807atSeptember30,2015andMarch31,2015,
respectively)

Deferredloancosts
Less:accumulatedamortization
Netdeferredloancosts

TOTALNONCURRENTASSETS

TOTALASSETS
SeeAccompanyingNotes
33

September30,
2015




2,601,601 $
68,671
182,686
2,852,958


275,605
(23,600)
252,005

95,417
(21,621)
73,796

12,000
(4,329)
7,671

333,472

3,186,430

March31,
2015

3,876,657

47,498
3,924,155

124,962
(24,671)
100,291

77,696
(11,302)
66,394

12,000
(2,331)
9,669

176,354

4,100,509

VIRTUIXHOLDINGS,INC.ANDSUBSIDIARIES
CONSOLIDATEDBALANCESHEETS
LIABILITIESANDSTOCKHOLDERS'EQUITY

CURRENTLIABILITIES
Accountspayable
Accruedexpenses
Deferredrevenuecurrentportion
Duetorelatedparty
Currentportionofnotespayable
Less:discountonnotespayable
Currentportionofnotespayable,netofdiscount

TOTALCURRENTLIABILITIES

LONGTERMLIABILITIES
Notespayable,netofcurrentportion
Less:discountonnotespayable
Notespayable,netofdiscount

TOTALLONGTERMLIABILITIES

TOTALLIABILITIES

STOCKHOLDERS'EQUITY(DEFICIT)
Preferredstock,$.001parvalue,8,300,000sharesauthorized,
7,351,709and6,604,283sharesissuedandoutstanding
atSeptember30,2015andMarch31,2015,respectively
Additionalpaidincapitalpreferredstock
Commonstock,$.001parvalue,16,000,000sharesauthorized,
5,500,000sharesissuedandoutstandingatSeptember30,2015
andMarch31,2015
Additionalpaidincapitalcommonstock
AccumulatedDeficit
TOTALSTOCKHOLDERS'EQUITY(DEFICIT)

TOTALLIABILITIESANDSTOCKHOLDERS'EQUITY(DEFICIT
SeeAccompanyingNotes
34

September30,
2015




114,633 $
167,300
2,066,123

387,030
(17,102)
369,928

2,717,984


437,945
(19,645)
418,300

418,300

3,136,284

March31,
2015

28,501
76,274
1,866,722
60,000
365,328
(17,599)
347,729

2,379,226

634,672
(24,932)
609,740

609,740

2,988,966

7,351
6,858,619

6,604
5,962,456

5,500
460,754
(7,282,078)
50,146

3,186,430

5,500
272,579
(5,135,596)
1,111,543

4,100,509

VIRTUIXHOLDINGS,INC.ANDSUBSIDIARIES
CONSOLIDATEDSTATEMENTSOFOPERATIONS
FORTHESIXMONTHSENDEDSEPTEMBER30,2015AND2014

NETSALES

COSTOFGOODSSOLD

GROSSPROFIT

OPERATINGEXPENSES
Sellingexpenses
Generalandadministrativeexpenses
Researchanddevelopmentexpenses

TOTALOPERATINGEXPENSES

OTHERINCOME(EXPENSE)
Lossondisposalofassets
Interestincome
Interestexpense

TOTALOTHERINCOME(EXPENSE)

NETLOSS

Add:Netlossattributabletononcontrollinginterests,netoftax

NETLOSSATTRIBUTABLETOVIRTUIXHOLDINGS,INC.

Weightedaveragecommonsharesoutstanding:
BasicandDiluted
Netlosspershare:
BasicandDiluted

SeeAccompanyingNotes
35

2015



136,336
1,784,016
124,624

2,044,976


(32,717)
8,710
(77,499)

(101,506)

(2,146,482) $

306

(2,146,176) $


5,500,000

(0.39)

2014

122,371
1,038,104
459,177

1,619,652

963
(22,842)

(21,879)

(1,641,531)

368

(1,641,163)

5,500,000

(0.30)

VIRTUIXHOLDINGS,INC.ANDSUBSIDIARIES
STATEMENTSOFCHANGESINSTOCKHOLDERS'EQUITY
FORTHESIXMONTHSENDEDSEPTEMBER30,2015AND2014

CommonStock


PreferredStock

Additional

Additional
Accumulated

Shares Amount PaidInCapital Shares Amount PaidInCapital


Deficit

Balanceat
March31,
2015
5,500,000 $
5,500 $
272,579 6,604,283 $
6,604 $
5,962,456 $ (5,127,902)

Convertible
promissory
notes
convertedto
preferred
stock



747,426
747
896,163

Stockbased
compensation


188,175


Netloss







(2,146,176)

Balanceat
September
5,500,000 $
5,500 $
460,754 7,351,709 $
7,351 $
6,858,619 $ (7,274,078)
30,2015

CommonStock

Shares Amount
Balanceat
March31,
2014
5,500,000 $
5,500

Issuanceof
preferred
stock

Convertible
promissory
note
convertedto
preferred
stock

Related
partynotes
convertedto
preferred
stock

Preferred
stock
warrants

Stockbased
compensation

Netloss

Balanceat
September
5,500,000 $
5,500
30,2014

Deficit

Attributableto

NoncontrollingInterest
$

(7,694)

(306)

(8,000)

183,132

3,031,250

3,031

$ (1,603,580) $


2,341,231

896,910

188,175

(2,146,482)

50,146

Total

$ (1,421,790)

2,344,262

500,000

500

399,500

400,000

218,750

219

174,781

175,000



(1,641,163)

(368)

3,750

(7,210)

57,038

240,170

3,750,000

SeeAccompanyingNotes
36

52,798

2,968,310

(6,842)

$ 1,111,543


PreferredStock


Deficit

Additional

Additional
Accumulated
Attributableto

PaidInCapital Shares Amount PaidInCapital
Deficit
NoncontrollingInterest
$

Total

(3,244,743)

52,798

57,038

(1,641,531)

(34,223)

VIRTUIXHOLDINGS,INC.ANDSUBSIDIARIES
STATEMENTSOFCASHFLOWS
FORTHESIXMONTHSENDEDSEPTEMBER30,2015AND2014

CASHFLOWSFROMOPERATINGACTIVITIES

Netloss
Adjustmentstoreconcilenetlosstonetcashprovidedbyoperatingactivities:
Depreciationandamortizationexpense
Amortizationofdiscountonnotespayable
Stockbasedcompensation
Lossondisposalofassets
(Increase)decreaseinassets:
Prepaidexpensesandothercurrentassets
Inventory
Increase(decrease)inliabilities:
Accountspayable
Accruedexpenses
Deferredrevenue
Duefromrelatedparty
CASHUSEDINOPERATINGACTIVITIES

CASHFLOWSFROMINVESTINGACTIVITIES
Cashpaidforpurchasesoffixedassets,includingintangibles
CASHUSEDININVESTINGACTIVITIES

CASHFLOWSFROMFINANCINGACTIVITIES
Issuanceofpreferredstock
Proceedsfromconvertiblepromissorynotes
Proceedsfromlongtermnotespayable
Paymentsonlongtermnotespayable
Loancosts
CASHPROVIDEDBYFINANCINGACTIVITIES

NET(DECREASE)INCREASEINCASH

CASHATBEGINNINGOFPERIOD

CASHATENDOFPERIOD

SUPPLEMENTALDISCLOSUREOFCASHFLOWINFORMATION:
Interest

SUPPLEMENTALDISCLOSUREOFNONCASHFINANCINGACTIVITIES:
Convertiblepromissorynotesconvertedtopreferredstock
Conversionofrelatedpartynotetoconvertiblenote
Accruedinterestonconvertiblepromissorynotesconvertedtopreferredstock
Relatedpartynotesconvertedtopreferredstock


$

$


$


$
$
$
$

SeeAccompanyingNotes
37

2015

(2,146,482)

23,384
7,706
188,175
32,717

(135,188)
(68,671)

86,132
108,235
199,401
(60,000)
(1,764,591)

(213,219)
(213,219)

879,701

(176,947)

702,754

(1,275,056)

3,876,657

2,601,601

54,505

879,701
60,000
17,209


$


$


$
$
$
$

2014

(1,637,357)

13,518
2,594
57,038

(32,142)

36,711
2,000
274,574

(1,283,064)

(66,741)
(66,741)

2,344,262

1,000,000

(12,000)
3,332,262

1,982,457

388,627

2,371,084

20,248

400,000

175,000

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note1.NatureofOperations
VirtuixHoldingsInc.(VirtuixHoldingsortheCompany)wasformedinDecember20,2013asaDelawareCorporation.TheCompanyhasawhollyownedsubsidiary,Virtuix,
Inc.,aDelawarecorporationformedonApril15,2013.Virtuix,Inc.developsvirtualrealityhardwareandsoftware,anditsmainproductistheOmni,thefirstvirtualrealityinterfaceto
movefreelyandnaturallyinvideogamesandvirtualworlds.VirtuixInteractiveI,LLC(VII),aTexasLimitedLiabilityCompany,wasformedonJanuary6,2014,andonthatdate,
theCompanybecamethemajoritymember,with85%ofthecontrollingfinancialinterest.VIIwasformedtocreateinteractivevirtualrealitycontentforusewiththeOmni.
AsofSeptember30,2015,theCompanyhasnotcommencedplannedprincipaloperationsnorgeneratedsignificantearnedrevenue.TheCompanysactivitiessinceinceptionhave
consistedofresearchanddevelopmentofitsmainproduct,capitalraising,andsaleseffortstopresellitsmainproduct.OncetheCompanycommencesitsplannedprincipaloperations
ofproducingandsellingtheOmniandotherproductsitmaydevelop,itwillincursignificantadditionalexpensesinconjunctionwithproducingandsellingproductscommercially.
TheCompanyisdependentuponadditionalcapitalresourcesforthecommencementofitsplannedprincipaloperationsandissubjecttosignificantrisksanduncertaintiesincluding
failingtosecureadditionalfundingtooperationalizetheCompanysplannedoperationsorfailingtoprofitablyproduceandsellitsproducts.
Note2.SummaryofSignificantAccountingPolicies
PrinciplesofConsolidation
TheaccompanyingconsolidatedinterimfinancialstatementsincludetheaccountsofVirtuixHoldings,Inc.aswellasitssubsidiariesrequiredtobeconsolidatedunderaccounting
principlesgenerallyacceptedintheUnitedStatesofAmerica(GAAP).Significantintercompanyaccountsandtransactionshavebeeneliminateduponconsolidation.
BasisofPresentation
Theconsolidatedinterimfinancialstatementsarepresentedusingtheaccrualbasisofaccounting.Therefore,revenuesarerecognizedwhenearnedandexpensesarerecognizedwhen
incurred.Intheopinionofmanagementalladjustmentsnecessarytomaketheconsolidatedinterimfinancialstatementsnotmisleadinghavebeenincluded.
The Company has elected to adopt early application of Accounting Standards Update (ASU) No. 201410, Development Stage Entities (Topic915):Elimination of Certain
FinancialReportingRequirements.TheCompanydoesnotpresentordiscloseinceptiontodateinformationandotherremainingdisclosurerequirementsofTopic915.
Certainprioryearamountshavebeenreclassifiedtoconformtocurrentyearpresentation.
TheCompanyhasadoptedafiscalyearendingMarch31stofeachyear.
Management'sEstimates
PreparingtheCompanysconsolidatedfinancialstatementsinconformitywithGAAPrequiresmanagementtomakeestimatesandassumptionsthataffectreportedamountsofassets
andliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateoftheconsolidatedfinancialstatementsandthereportedamountsofrevenuesandexpensesduringthe
reportingperiod.Actualresultscoulddifferfromthoseestimates.
RevenueRecognition
TheCompanyrecognizesrevenuewhentheearningsprocessiscomplete.Thisgenerallyoccurswhenproductsareshippedtothecustomerinaccordancewiththesalesagreementor
purchaseorder,ownershipandriskoflosspasstothecustomer,collectabilityisreasonablyassured,andpricingisfixedordeterminable.TheCompanysshippingtermsaregenerally
F.O.B.shippingpoint,wheretitleistransferredandrevenueisrecognizedwhentheproductsareshippedtocustomers.
38

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note2.SummaryofSignificantAccountingPolicies(continued)
NoncontrollingInterests
InaccordancewiththeguidanceunderTopic810,NoncontrollingInterests,inconsolidatedfinancialstatements,referencestonetincomeandstockholdersequityattributabletothe
Companydonotincludenoncontrollinginterests,whicharereportedseparately.
CashandCashEquivalents
TheCompanyconsidersdepositsthatcanberedeemedondemandandinvestmentsthathaveoriginalmaturitiesoflessthanthreemonths,whenpurchased,tobecashequivalents.As
ofSeptember30,2015andMarch31,2015,theCompanyscashandcashequivalentsweredepositedprimarilyinthreeandtwo,financialinstitutions,respectively,whichattimes,
exceedthefederallyinsuredlimits.TheCompanyhas$27,752ofitscashbalancesrestrictedasofSeptember30,2015andMarch31,2015.
InventoryValuation
Inventoryisstatedatthelowerofcostornetrealizablevalue(market).Costiscomputedusingstandardcost,whichapproximatesactualcost.AsofSeptember30,2015,manufacturing
operationshavenotcommenced.Appropriateconsiderationwillbegiventoobsolescence,excessivelevels,deterioration,andotherfactorsinevaluatingnetrealizablevalue.
PropertyandEquipment
Propertyandequipmentarerecordedatcost,lessaccumulateddepreciation.Expendituresformajoradditionsandimprovementsarecapitalizedandminorreplacements,maintenance,
and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the
accountsandanyresultinggainorlossisincludedintheresultsofoperationsfortherespectiveperiod.Depreciationisprovidedovertheestimatedusefullivesoftherelatedassets
usingthestraightlinemethodforfinancialstatementpurposes.TheCompanyusesotherdepreciationmethods(generallyaccelerated)fortaxpurposeswhereappropriate.
Theestimatedusefullivesforsignificantpropertyandequipmentcategoriesareasfollows:
ComputerEquipment
FurnitureandFixtures
MachineryandEquipment
TradeShowEquipment

5years
7years
5years
57years

FairValueMeasurements
The Companys financial instruments consist primarily of cash, accounts payable, accrued expenses and notes payable. The carrying amounts of such financial instruments
approximatetheirrespectiveestimatedfairvalueduetotheshorttermmaturitiesandapproximatemarketinterestratesoftheseinstruments.Theestimatedfairvalueisnotnecessarily
indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows. The Company adopted Topic 82010, Fair Value
MeasurementsandDisclosures,whichdefines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard
providesaconsistentdefinitionoffairvaluewhichfocusesonanexitpricethatwouldbereceiveduponsaleofanassetorpaidtotransferaliabilityinanorderlytransactionbetween
marketparticipantsatthemeasurementdate.
Thestandardalsoprioritizes,withinthemeasurementoffairvalue,theuseofmarketbasedinformationoverentityspecificinformationandestablishesathreelevelhierarchyforfair
valuemeasurementsbasedonthenatureofinputsusedinthevaluationofanassetorliabilityasofthemeasurementdate.
39

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note2.SummaryofSignificantAccountingPolicies(continued)
Thethreelevelhierarchyforfairvaluemeasurementsisdefinedasfollows:
Level1inputstothevaluationmethodologyarequotedprices(unadjusted)foridenticalassetsorliabilitiesinactivemarkets
Level2inputstothevaluationmethodologyincludequotedpricesforsimilarassetsandliabilitiesinactivemarkets,andinputsthatareobservablefortheassetorliability
otherthanquotedprices,eitherdirectlyorindirectlyincludinginputsinmarketsthatarenotconsideredtobeactive
Level3inputstothevaluationmethodologyareunobservableandsignificanttothefairvaluemeasurement
Categorizationwithinthevaluationhierarchyisbaseduponthelowestlevelofinputthatissignificanttothefairvaluemeasurement.
Intangibles
TheCompanysintangibleassetsrepresentsoftware,trademarks,andawebsite,whichareamortizedonastraightlinebasisovertheyearsexpectedtobebenefited.Thecostsof
developinganyintangiblesforinternaluseareexpensedasincurred.
SoftwareDevelopmentCosts
TheCompanyaccountsforsoftwaredevelopmentcostsinaccordancewithseveralaccountingpronouncements,including Topic 730, ResearchandDevelopment, Topic 35040,
InternalUseSoftware,Topic98520,CostsofComputerSoftwaretobeSold,Leased,orMarketedandTopic35050,WebsiteDevelopmentCosts.
Costsincurredduringtheperiodofplanninganddesign,priortotheperioddeterminingtechnologicalfeasibility,forallsoftwaredevelopedforuseinternalandexternal,hasbeen
chargedtooperationsintheperiodincurredasresearchanddevelopmentcosts.Additionally,costsincurredafterdeterminationofreadinessformarkethavebeenexpensedasresearch
anddevelopment.
TheCompanycapitalizescertaincostsinthedevelopmentofitsproprietarysoftware(computersoftwaretobesold,leasedorlicensed)fortheperiodaftertechnologicalfeasibilitywas
determinedandpriortomarketingandinitialsales.Websitedevelopmentcostshavebeencapitalized,underthesamecriteriaasmarketedsoftware.
DeferredRevenue
DeferredrevenuerepresentsrevenuescollectedbutnotearnedasofSeptember30,2015andMarch31,2015.ThisisprimarilycomposedofrevenueforpreordersoftheOmnithat
havenotbeencompletedbytheendofthefinancialreportingperiod.
NetLossPerShare
Netlosspershareiscomputedbydividingnetlossbytheweightedaveragenumberofsharesofcommonstockoutstandingduringtheperiod,excludingsharessubjecttoredemption
orforfeiture. The Company presents basic and diluted earnings per share. Basic and diluted earnings per share reflect the actual weighted average of common shares issued and
outstandingduringtheperiod.NodilutiveeffectswereconsideredsincetheCompanyisinanetlosspositionasofSeptember30,2015and2014.Asaresult,dilutedlosspershareis
thesameasbasiclosspersharefortheperiodspresented.
40

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note2.SummaryofSignificantAccountingPolicies(continued)
FederalIncomeTaxes
Topic74010,AccountingforUncertaintyinIncomeTaxes,clarifiestheaccountingforincometaxesbyprescribingtheminimumrecognitionthresholdataxpositionisrequiredto
meetbeforebeingrecognizedinthefinancialstatements.Topic74010alsoprovidesguidanceonderecognition,measurement,classification,interestandpenalties,accounting in
interimperiods,disclosure,andtransition.ForthesixmonthsendedSeptember30,2015and2014,nouncertaintaxpositionswereidentified.TheCompanyrecognizestaxrelated
interestandpenalties,ifany,asacomponentofincometaxexpense.
ThefederaltaxreturnsaresubjecttoexaminationbytheInternalRevenueService,generallyforthreeyearsaftertheyarefiled.Statetaxreturnsaresubjecttoexaminationgenerallyfor
fiveyearsaftertheyarefiled.
TheCompanyslessthanwhollyownedsubsidiary,VIIisnotsubjecttofederalincometaxes,andsuchtaxesaretheresponsibilityoftherespectivemembers.
RecentAccountingPronouncements
In June 2014, the Financial Accounting Standards Board (FASB) issued ASU 201410, DevelopmentStage Entities, which eliminated the requirements for development stage
entitiesto(1)presentinceptiontodateinformationinthestatementsofincome,cashflows,andmembersequity,(2)labelthefinancialstatementsasthoseofadevelopmentstage
entity,(3)discloseadescriptionofthedevelopmentstageactivitiesinwhichtheentityisengaged,and(4)discloseinthefirstyearinwhichtheentityisnolongeradevelopment
stage entity that in prior years it had been in the development stage. This ASU is effective for annual reporting periods beginning after December 15, 2014, and interim periods
beginningafterDecember15,2015.Earlyapplicationispermittedforanyannualreportingperiodorinterimperiodforwhichtheentitysfinancialstatementshave not yet been
issued.Uponadoption,entitieswillnolongerpresentordiscloseanyinformationrequiredbyTopic915.TheCompanyhaselectedtoearlyadoptthisASUandtherefore,doesnot
presentordiscloseinceptiontodateinformationandotherremainingdisclosurerequirements.
InAugust2014,theFASBissuedASU201415,PresentationofFinancialStatementsGoingConcern(Subtopic20540)DisclosureofUncertaintiesaboutanEntitysAbilityto
ContinueasaGoingConcern.Currently,thereisnoguidanceinU.S.GAAPaboutmanagementsresponsibilitytoevaluatewhetherthereissubstantialdoubtaboutanentitysability
tocontinueasagoingconcernortoproviderelatedfootnotedisclosures.Theamendmentsinthisupdateprovidesuchguidance.Indoingso,theamendmentsareintendedtoreduce
diversityinthetimingandcontentoffootnotedisclosures.Theamendmentsrequiremanagementtoassessanentitysabilitytocontinueasagoingconcernbyincorporatingand
expandinguponcertainprinciplesthatarecurrentlyinU.S.auditingstandards.Specifically,theamendments(1)provideadefinitionofthetermsubstantialdoubt, (2) require an
evaluationeveryreportingperiodincludinginterimperiods,(3)provideprinciplesforconsideringthemitigatingeffectofmanagementsplans,(4)requirecertaindisclosureswhen
substantialdoubtisalleviatedasaresultofconsiderationofmanagementsplans,(5)requireanexpressstatementandotherdisclosureswhensubstantialdoubtisnotalleviated,and
(6)requireanassessmentforaperiodofoneyearafterthedatethatthefinancialstatementsareissued(oravailabletobeissued).Theamendmentsinthisupdateareeffectiveforpublic
andnonpublicentitiesforannualperiodsendingafterDecember15,2016.
41

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note2.SummaryofSignificantAccountingPolicies(continued)
Earlyadoptionispermitted.TheCompanyhaselectedtoearlyadoptthispronouncement,asdescribedinNote12.
Managementdoesnotbelievethatanyrecentlyissued,butnotyeteffective,accountingstandardscouldhaveamaterialeffectontheaccompanyingconsolidatedfinancialstatements.
Asnewaccountingpronouncementsareissued,theCompanywilladoptthosethatareapplicableunderthecircumstances.
ForeignCurrencyTranslation
AssetsandliabilitiesofthenonU.S.subsidiarythatoperatesinalocalcurrencyenvironment,wherethatlocalcurrencyisthefunctionalcurrency,aretranslatedtoU.S.dollarsat
exchangeratesineffectatthebalancesheetdate,withtheresultingtranslationadjustmentsdirectlyrecordedtoaseparatecomponentofAccumulatedOtherComprehensiveIncome.
Incomeandexpenseaccountsaretranslatedataverageexchangeratesduringtheyear.Remeasurementadjustmentsarerecordedinotherincomeorloss,netoftaxes.Theeffectof
foreigncurrencyexchangeratesonbalancesheetaccountswasnotmaterialforthesixmonthsendedSeptember30,2015.
Note3.PropertyandEquipment
Propertyandequipmentconsistofthefollowingasof:

ComputerEquipment
FurnitureandEquipment
MachineryandEquipment
OfficeEquipment
AssetsinProgress

LessAccumulatedDepreciation

September30,

2015

41,277
14,421
52,078
1,048
166,781
275,605
(23,600)
252,005

March31,

2015

27,444
13,060
83,410
1,048

124,962
(24,671)
100,291

For the six months ended September 30, 2015 and 2014, management has recorded depreciation expense in the consolidated statements of operations of $11,067 and $9,735,
respectively.
Note4.Intangibles
Intangibleassetsconsistofthefollowingasof:

Softwareandgamedesign
Trademarks
Website

LessAccumulatedAmortization

42

September30,

2015

25,704
24,526
45,187
95,417
(21,621)
73,796

March31,

2015

25,704
14,055
37,937
77,696
(11,302)
66,394

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note4.Intangibles(continued)
For the six months ended September 30, 2015 and 2014, management has recorded amortization expense in the consolidated statements of operations of $10,319 and $3,783,
respectively.
Note5.NotesPayable
OnApril1,2014,theCompanycarriedthreeconvertiblepromissorynotesamountingto$400,000.Interestwastobeaccruedat8%untilthenotesmaturedonSeptember30,2014.At
anytimebeforematurityofthenotes,theentireoutstandingprincipalplusaccruedandunpaidinterestcouldbeconvertedtosharesoftheCompanyscapitalstockwhentheCompany
issuedandsoldsharesofitscapitalstockandtheaggregateproceedswereequaltoorexceeded$750,000.
AlsoonApril1,2014,theCompanycarriedtwopromissorynotesintheamountof$100,000and$75,000witharelatedparty,payableinsemiannualinstallmentsat1%interest.The
notesweretomatureonDecember27,2014andJanuary28,2015,respectively.
AsdescribedinNote6,alltheaforementionednoteswereconvertedtosharesofSeriesSeedPreferredStockonApril22,2014.
EffectiveSeptember4,2014,theCompanyenteredintoanagreementtoobtainfinancingwithWesternTechnologyInvestment(WTI).Theinitialcommitmentof$1,000,000was
receivedonSeptember5,2014.Termsofthenoteareinterestonlypaymentsinsixmonthlyinstallmentsat.979%oftheamountborrowed,andthirtymonthsofprincipalandinterest
paymentsbeginningApril1,2015intheamountof$38,255,dueinSeptember2017.Thenotebearsafixedrateofinterestof11.75%andissecuredbyallassetsoftheCompany.
Inthetermsoftheagreement,theCompanygrantedawarranttoWTI,toacquiresharesinthemostrecentornextroundofpreferredstock,atWTIsoption,atthelowerof$0.80per
shareorthelowestpricepershareatwhichtheCompanyhassoldanysharesofitsSeriesSeedPreferredStock(asofanydeterminationdateandsubjecttoanyadjustmentsforsplits,
dividends,ordistributionssincethedateofsuchsale).Theaggregateexercisepricewillbe$125,000.ThewarrantwillbeexercisableuntilitsexpirationdateofDecember31,2024.
UponachangeofcontrolorinitialpublicofferingoftheCompanyscapitalstock,thewarrantshallautomaticallybeexchanged,fornoconsiderationfromWTI,forthemaximum
numberofsharesoftheCompanysstockforwhichthewarrantwouldhaveotherwisebeenexercisable.
AccordingtoguidanceofTopic47020,Debt,thewarrantisrecordedinequityasadditionalpaidincapitalpreferredstock,atfairvalueasofthedateofissuance,andinliabilities,
asacontraaccount,calleddiscountonnotepayable.Thefairvalueattheissuancedatewasdeterminedtobe$52,798usingtheBlackScholesmodelwiththefollowingassumptions.
Noadjustmenttothefairvaluewasmadetoaccountforthedownroundprotectionclauseintheagreementasmanagementdeterminedthisadjustmentwouldbedifficulttoestimate
andimmaterialtotheseconsolidatedfinancialstatements.
ExercisePrice
DividendYield
Volatility
RiskfreeRate
YearstoExpiration

$0.80
0.00%
32.40%
0.80%
10

Thediscountisamortizedoverthelifeofthenoteusingtheeffectiveinterestmethod.ThecarryingvalueofthenoteatSeptember30,2015was$788,228($824,975principal,less
discountof$36,747),and$5,785ofdiscountamortizationisincludedininterestexpense.
43

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note5.NotesPayable(continued)
FuturematuritiesoflongtermdebtareasfollowsasofSeptember30:

2016
2017

Principal
387,030
437,945
824,975

TheCompanyissuedsubordinatedunsecuredconvertiblepromissorynotesamountingto$879,701betweenMay2015andJuly2015.Interestwastobeaccruedat6%untilthenotes
maturedonSeptember30,2015.If,onorbeforethematuritydate,theCompanyissuedorsoldsharesofanypreferredstockoftheCompanyforcashinasingletransactionorseriesof
relatedtransactionsinwhichthegrossproceedstotheCompanywasatleast$1,500,000,theentireoutstandingprincipalplusaccruedandunpaidinterestofthenoteswould be
automaticallybeconvertedintoeither(i)thesameclassorseriesofpreferredstockasareissued,atthesamepricepershareatwhichsuchstockisissuedandsoldbytheCompanyor
(ii)sharesofpreferredstockoftheCompanyatapricepershareof$1.20.If,onorbeforethematuritydate,theCompanyconsummatedadeemedliquidation,theentireoutstanding
principalplusaccruedandunpaidinterestofthenoteswouldbeconvertedintosharesofpreferredstockatapricepershareequalto$1.20.Iftheabovedidnotoccur,thenonthe
maturitydate,theentireoutstandingprincipalplusaccruedandunpaidinterestofthenoteswouldbeconvertedintosharesofpreferredstockatapurchasepriceequalto$1.20per
share.Allofthenotes,plus$17,209ofaccruedunpaidinterest,wereconvertedintosharesofpreferredstockonSeptember30,2015.
Note6.CapitalStock
PriortoApril7,2014,theCompanyscapitalstockconsistedof10,000,000authorizedsharesof0.001parcommonstock,ofwhich5,500,000shareswereissuedandoutstanding.
EffectiveApril7,2014,theCompanyamendedits certificate of incorporation to include two classes of stock. The number of shares of common stock authorized increased from
10,000,000sharesto12,500,000sharesandtheCompanyalsoauthorized3,750,000sharesof$.001parvalueSeriesSeedPreferredStock(thePreferredStock).
AlloftheApril1,2014convertiblepromissorynotesmentionedinNote5wereconvertedtosharesofPreferredStockbydividingtheprincipalby$.80,resultinginanissuanceof
500,000sharesofPreferredStockonApril22,2014.Accruedinterestintheamountof$4,713waspaiddirectlytoinvestors.ThetwoApril1,2014promissorynotesmentionedin
Note5wereexchangedforconvertiblepromissorynotesthenconvertedinto218,750sharesofthePreferredStockonApril30,2014.Thisisarelatedpartytransaction.Theremaining
3,031,250sharesofthePreferredStockwereissuedat$.80persharetoinvestorsbetweenApril17,2014andMay19,2014.EachholderofthePreferredStockwillhavetherightto
convertthesharesatanytime,attheoptionoftheholder,intosharesofthecommonstockoftheCompanyataratedeterminedbydividingthenumberofsharesheldbythepricepaid
pershare.
EffectiveAugust7,2014,thenumberofsharesofcommonstockauthorizedincreasedfrom12,500,000sharesto12,750,000shares,andtheCompanyalsoincreaseditsauthorized
PreferredStockfrom3,750,000sharesto4,000,000shares.
EffectiveDecember4,2014,thenumberofsharesofcommonstockauthorizedincreasedfrom12,750,000sharesto15,000,000shares,andtheCompanyalsoincreaseditsauthorized
PreferredStockfrom4,000,000sharesto7,000,000shares.TheCompanyissued2,854,283sharesofPreferredStockat$1.05persharebetweenNovember24,2014andFebruary24,
2015.EachholderofthePreferredStockwillhavetherighttoconvertthesharesatanytime,attheoptionoftheholder,intosharesofthecommonstockoftheCompanyata1:1
conversionrate.
44

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note6.CapitalStock(continued)
EffectiveMay6,2015,thenumberofsharesofcommonstockauthorizedincreasedfrom15,000,000sharesto16,000,000shares,andtheCompany also increased its authorized
PreferredStockfrom7,000,000sharesto8,300,000shares.
AtSeptember30,2015,theCompanyhasreserved10,300,000sharesofitsauthorizedbutunissuedcommonstockforpossiblefutureissuanceinconnectionwiththefollowing:

LongTermIncentivePlan
Conversionofpreferredstock
Exerciseofstockwarrants

Shares
2,000,000
8,050,000
250,000

Note7.StockOptions
TheCompanyaccountsforstockbasedcompensationundertheprovisionsofTopic718,CompensationStockCompensation,whichrequiresthemeasurementandrecognitionof
compensationexpenseforallsharebasedpaymentawardsmadetoemployeesandnonemployeeofficersbasedonestimatedfairvaluesasofthedateofgrant.Compensationexpense
isrecognizedonastraightlinebasisovertherequisiteserviceperiod.
OnJune25,2014,theboardofdirectorsoftheCompanyapprovedastockbasedemployeecompensationplan,theLongTermIncentivePlan.AsofSeptember30,2015,Incentive
StockOptions(ISOs)havebeengrantedtocertainemployeesofVirtuix,Inc.asfollows:

GrantDate

June25,2014
July17,2014
September17,2014
July7,2015
July31,2015
August31,2015
September9,2015

Shares

375,625 $
22,500 $
95,625 $
301,916 $
14,258 $
14,258 $
19,258 $

Exercise
Price

0.11
0.11
0.11
0.32
0.32
0.32
0.32

AsofSeptember30,2015,336,250oftheseshareswereforfeitedasaresultofemployeeterminations,and7,969shareswerevested.
TheCompanyaccountsforsharebasedpaymentstononemployees,withguidanceprovidedbyTopic50550,EquityBasedPaymentstoNonEmployees.OnJune25,2014,the
boardofdirectorsoftheCompanygrantedtwononqualifiedstockoptions(NQSOs)foratotalof1,181,250shares,withanexercisepriceof$0.11pershare,tocertainindependent
contractorsofVirtuix,Inc.Noneoftheoptionshavevestedandtherefore,arenotexercisable.EffectiveOctober21,2014,theboardofdirectorsgrantedtwoNQSOsforatotalof
57,030shares,withanexercisepriceof$0.11pershare,tocertainadvisorsofVirtuix,Inc.AsofSeptember30,2015,616,764oftheseshareswerevested.
Compensation expense pertaining to ISOs of $1,239 and compensation expense of $186,936 pertaining to NQSOs was recorded as of September 30, 2015 in general and
administrativeexpensesintheconsolidatedstatementsofoperations.
45

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note8.ResearchandDevelopment
Expensesrelatingtoresearchanddevelopmentareexpensedasincurred.ForthesixmonthsendedSeptember30,2015and2014,researchanddevelopmentconsistedofthefollowing:

Designexpenses
Gameandsoftwaredevelopmentexpenses
Hardwaredevelopmentexpenses
Prototypes
Otherresearchanddevelopmentexpenses

2015
41,622
24,237

56,976
1,789
124,624

2014

265,431

1,607
12,303
179,836
459,177

Note9.RoyaltyCommitments
TheCompanyhascertainroyaltycommitmentsassociatedwiththeshipmentofitsproductsfortheuseoflicensedsoftwareandmodificationstogetherwiththeCompanyshardware
andothersoftware.Royaltyexpenseisgenerallybasedonadollaramountperunitshippedandcanrangefrom$1perunitto$8perunit.AsofSeptember30,2015and2014,no
royaltyexpensehasbeenrecognizedintheconsolidatedstatementsofoperations.
Note10.IncomeTaxes
Deferredtaxesarerecognizedfortemporarydifferencesbetweenthebasisofassetsandliabilitiesforfinancialstatementandincometaxpurposes.Thedifferencesrelateprimarilyto
depreciableassetsusingaccelerateddepreciationmethodsforincometaxpurposes,sharebasedcompensationexpense,andfornetoperatinglosscarryforwards.

Deferredtaxassets:
Sharebasedcompensationexpense
Netoperatinglosscarryforward
Longtermdeferredtaxliabilities:
Propertyandequipment
Netdeferredtaxassetsandliabilities

Valuationallowance

Netdeferredtaxasset

September30,
2015




63,558 $
2,151,027

(10,318)
2,204,267

(2,204,267)

$

March31,
2015

24,206
1,463,515

(13,914)
1,473,807

(1,473,807)

TheCompanyrecognizesdeferredtaxassetstotheextentthatitbelievesthattheseassetsaremorelikelythannottoberealized.Inmakingsuch a determination, the Company


considersallavailablepositiveandnegativeevidence,includingfuturereversalsofexistingtaxabletemporarydifferences,projectedfuturetaxableincome,taxplanningstrategies,
andresultsofrecentoperations.TheCompanyassessedtheneedforavaluationallowanceagainstitsnetdeferredtaxassetsanddeterminedafullvaluationallowanceisrequireddue
to net operating losses for the periods ended September 30, 2015 and March 31, 2015 and cumulative losses through September 30, 2015. Therefore, valuation allowances of
$2,204,267 and $1,473,807 were recorded for the periods ended September 30, 2015 and March 31, 2015, respectively. Accordingly, no provision for income taxes has been
recognizedforthesixmonthsendedSeptember30,2015.
46

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note10.IncomeTaxes(continued)
TheCompany'sabilitytoutilizenetoperatinglosscarryforwardswilldependonitsabilitytogenerateadequatefuturetaxableincome.AtSeptember30,2015,theCompanyhadnet
operatinglosscarryforwardsavailabletooffsetfuturetaxableincomeintheamountof$6,326,550,whichmaybecarriedforwardandwillexpireifnotusedbetween2034and2036in
varyingamounts.Suchamountshavebeenfullyreservedinthevaluationallowancediscussedabove.
Topic718providesthatincometaxeffectsofsharebasedpayments are recognized in the financial statements for those awards that will normally result in tax deductions under
existingtaxlaw.UndercurrentU.S.federaltaxlaw,theCompanyreceivesacompensationexpensedeductionrelatedtoNQSOsonlywhenthoseoptionsareexercised.Accordingly,
theconsolidatedfinancialstatementrecognitionofcompensationcostforNQSOscreatesadeductibletemporarydifference,whichresultsinadeferredtaxassetandacorresponding
deferredtaxbenefitintheconsolidatedstatementofoperations.TheCompanydoesnotrecognizeataxbenefitforcompensationexpenserelatedtoISOsunlesstheunderlyingshares
aredisposedofinadisqualifyingdisposition.Accordingly,compensationexpenserelatedtoISOsistreatedasapermanentdifferenceforincometaxpurposes.
Note11.RelatedPartyTransactions
Virtuix,Inc.paidcertainexpensesonbehalfofVirtuixHoldings.Anintercompanyreceivableandpayableisrecordedintheamountof$10,963oneachrespectivecompanysbooks,
andtheamounteliminatesinthefinancialstatementconsolidation.
Virtuix, Inc. paid certain expenses on behalf of VII, and an intercompany receivable and payable is recorded in the amount of $17,298. The amount eliminates in the financial
statementconsolidation.
As mentioned in Note 14, the Company acquired common stock of a foreign subsidiary, Virtuix Manufacturing, Limited (VML) in June 2015. The amount due to the foreign
subsidiary is $1,290, which is recorded as an intercompany receivable and payable on each respective companys books, and the amount eliminates in the financial statement
consolidation.
Virtuix, Inc. paid certain expenses on behalf of VML in the amount of $89,741, and Virtuix Holdings paid certain expenses on behalf of VML in the amount of $133,149.
Intercompanyreceivablesandpayablesarerecordedandtheamountseliminateinthefinancialstatementconsolidation.
Note12.GoingConcern
Theaccompanyingconsolidatedfinancialstatementshavebeenpreparedonagoingconcernbasis,whichcontemplatestherealizationofassetsandthesatisfactionofliabilitiesinthe
normalcourseofbusiness.AsdiscussedinNote2,theCompanyhaselectedtoearlyadoptASU201415andfollowedthisguidanceinassessingthegoingconcernassumption.
The Company is a business that has not commenced planned principal operations, has not generated meaningful revenues or profits since inception, has sustained net losses of
$2,146,482and$1,641,531fortheperiodsendedSeptember30,2015and2014,respectively,andhasnotbroughtitsprimaryproducttomarketasofSeptember30,2015or2014.
Thesefactors,amongothers,raisesubstantialdoubtabouttheabilityoftheCompanytocontinueasagoingconcernwithinoneyearafterthedatethattheconsolidatedfinancial
statementsareissued.
47

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note12.GoingConcern(continued)
Inmakingthisassessment,managementweighedthesignificanceofthefactors,conditions,andeventsconsidered.Managementprimarilybasedtheconclusionontheinceptionto
datecumulativelosses,lackofoperatinghistory,lackofmeaningfulrevenues,andthefactthattheproducthasnotcompleteddevelopmentandreadinessformarket.Thesefactors
weredeterminedtobetheprimarydriversoftheCompanysabilitytosustainitsoperatingcostsinthenearterm.Managementalsoperformedananalysisofinteriminformation
subsequenttoyearendandprojectionsoffutureoperatingresults,whichweregivenlessweightduetothesubjectivenatureofprojections.
Managementsplansrelevanttothegoingconcernassessmentincludedthefollowingconsiderations:

1.
2.
3.

The Company will continue to market its primary product and expects to continue to realize substantial cash flows from presales until the product is through
productionandreadyformarket.
The Company plans to complete production preparations and bring the product to market during the year ending March 31, 2016. The Company anticipates
significantrevenuesfromtheprimaryproductonceitisbroughttomarket.
TheCompanywillcontinuetoraisecapitalfromexistingshareholdersand3rdpartiesasnecessarytofunditsoperatingneeds.

ManagementconcludedthatitsplanssuccessfullyalleviatethesubstantialdoubttotheabilityoftheCompanytocontinueasagoingconcernwithinoneyearafterthedatethatthe
consolidatedfinancialstatementsareissued.NoassurancecanbegiventhattheCompanywillbesuccessfulintheseefforts.Theconsolidatedfinancialstatementsdonotincludeany
adjustmentsrelatingtotherecoverabilityandclassificationofrecordedassetamountsortheamountsandclassificationofliabilitiesthatmightbenecessaryshouldtheCompanybe
unabletocontinueasagoingconcern.
Note13.CommitmentsandContingencies
OnNovember20,2013,theCompanyenteredintoa24monthnoncancelableoperatingleaseagreementforofficespace.A$12,728depositwaspaidontheleaseandmonthlyrent
paymentsrangedfrom$2,734to$2,795overthelifeofthelease.TheleasecommencedonJanuary1,2014,butwasterminatedinAugust2015beforeitsexpirationdateofDecember
31,2015.
OnJune2,2014,theCompanyenteredintoa12monthrenewalonanoncancelableoperatingleaseagreementforofficespace.TheleaserenewalcommencedonSeptember1,2014
andexpiredonAugust31,2015.Monthlyrentpaymentsunderthisagreementwere$3,400.
OnJune25,2015,theCompanyenteredintoa39monthnoncancelableoperatingleaseagreementforofficespace.TheleasecommencedonJuly1,2015andexpiresonSeptember
30,2018,withanoptiontorenewtheleaseforanadditionalthreeyearperiod.A$48,000depositwaspaidontheleaseandmonthlyrentpaymentsrangefrom$6,750to$7,200over
thelifeofthelease.
FutureminimumleasepaymentsunderthisleaseagreementatSeptember30:

2016
2017
2018
Totalleasepayments

81,000
83,700
86,400
251,100

Rentexpensewas$74,085and$39,451forthesixmonthsendedSeptember30,2015and2014,respectively.
48

VirtuixHoldings,Inc.andSubsidiariesNotestoConsolidated
InterimFinancialStatements

Note14.ForeignSubsidiary
Asmentionedinnote11,onJune24,2015,theCompanyacquired10,000sharesofcommonstockofVML,awhollyownedsubsidiary.VMLisaHongKongcorporationthatwas
formedtoconductmanufacturingoperationsandtransactbusinesswithChinesesuppliers.
Note15.SubsequentEvents
OnOctober27,2015,14,258sharesofISOsweregrantedtoanemployeeofVirtuix,Inc.atanexercisepriceof$0.32.ManagementhasevaluatedsubsequenteventsthroughOctober
30,2015,thedatethefinancialstatementswereavailabletobeissued.Basedonthisevaluation,noadditionalmaterialeventswereidentifiedwhichrequireadjustmentordisclosure
intheconsolidatedfinancialstatements.
49

SUPPLEMENTARYINFORMATION
50

VIRTUIXHOLDINGS,INC.ANDSUBSIDIARIES
SCHEDULEICONSOLIDATINGINTERIMBALANCESHEET
September30,2015

ASSETS

CURRENTASSETS
Cashandcashequivalents
Duefromrelatedparties
Inventory
Prepaidsandothercurrentassets
TOTALCURRENTASSETS

NONCURRENTASSETS
Property,plantandequipment,net
Intangibles,net
Deferredloancosts,net
TOTALNONCURRENTASSETS

INVESTMENTINSUBSIDIARIES

TOTALASSETS

LIABILITIESANDSTOCKHOLDERS'EQUITY
CURRENTLIABILITIES
Accountspayable
Accruedexpenses
Deferredrevenue
Duetorelatedparty

Currentportionofnotespayable
Less:discountonnotespayable
Currentportionofnotespayable,netofdiscount
TOTALCURRENTLIABILITIES

LONGTERMLIABILITIES
Notespayable,netofcurrentportion
Less:discountonnotespayable
Notespayable,netofdiscount
TOTALLONGTERMLIABILITIES

TOTALLIABILITIES

STOCKHOLDERS'EQUITY(DEFICIT)

Preferredstock
Additionalpaidincapitalpreferredstock
Commonstock
Additionalpaidincapitalcommonstock
Accumulateddeficit
TOTALSTOCKHOLDERS'EQUITY(DEFICIT)

TOTALLIABILITIESANDSTOCKHOLDERS'
EQUITY

VirtuixHoldings,

Inc.

$
2,254,129

133,149

2,387,278

7,671

7,671

5,123,330

$
7,518,279

12,253

387,030

(17,102)

369,928

382,181

437,945

(19,645)

418,300

418,300

800,481

7,351


Virtuix

Virtuix

InteractiveI, Manufacturing

Virtuix,Inc.
LLC

Limited
Eliminations



$
335,562 $
$
11,910 $

118,002

1,290
(252,441)

68,671

162,156

20,530

684,391

33,730
(252,441)



61,754

190,251

59,813
13,983

121,567
13,983
190,251




(5,123,330)



$
805,958 $
13,983 $
223,981 $
(5,375,771)



$
114,633 $
$
$

167,300

2,066,123


17,298
222,890
(252,441)



2,348,056
17,298
222,890
(252,441)



2,348,056
17,298
222,890
(252,441)



Consolidated

Balance

$
2,601,601

68,671

182,686

2,852,958

252,005

73,796

7,671

333,472

$
3,186,430

$
114,633

167,300

2,066,123

387,030

(17,102)

369,928

2,717,984

437,945

(19,645)

418,300

418,300

3,136,284

7,351

6,858,619
5,500

(153,672)
6,717,798

7,518,279

2,000
5,530,782
(7,074,880)
(1,542,098)

805,958
51

50,012
(53,327)
(3,315)

13,983

1,290

(199)
1,091

223,981

(3,290)
(5,120,040)

(5,123,330)

6,858,619
5,500
460,754
(7,282,078)
50,146

(5,375,771)

3,186,430

VIRTUIXHOLDINGS,INC.ANDSUBSIDIARIES
SCHEDULEIICONSOLIDATINGINTERIMSTATEMENTOFOPERATIONS
ForTheSixMonthsEndedSeptember30,2015

Virtuix

Holdings,Inc.

REVENUES
$

COSTOFREVENUES

GROSSPROFIT

OPERATINGEXPENSES

Sellingexpense

Generalandadministrativeexpense

2,481
Researchanddevelopmentexpense

TOTALOPERATINGEXPENSES

2,481

LOSSFROMOPERATIONS

(2,481)

OTHERINCOME(EXPENSE)

Lossondisposalofassets

Interestincome

8,710
Interestexpense

(77,499)
TOTALOTHERINCOME(EXPENSE)

(68,789)

NETLOSS

(71,270)

Add:Netlossattributabletononcontrollinginterests,netoftax

(71,270)
NETLOSSATTRIBUTABLETOVIRTUIXHOLDINGS,INC.$

Virtuix,Inc.

136,336

1,779,298

124,624

2,040,258

(2,040,258)

(32,717)

(32,717)

(2,072,975)

$ (2,072,975)
52

Virtuix

InteractiveI,

LLC

2,038

2,038

(2,038)

(2,038)

306

$
(1,732)

Virtuix

Manufacturing

Limited

199

199

(199)

(199)

$
(199)

Consolidated
Eliminations
Balance

$
$


136,336


1,784,016


124,624


2,044,976


(2,044,976)


(32,717)


8,710


(77,499)


(101,506)


(2,146,482)


306

$
$ (2,146,176)

VIRTUIXHOLDINGS,INC.ANDSUBSIDIARIES
SCHEDULEIIICONSOLIDATINGINTERIMBALANCESHEET
March31,2015

ASSETS

CURRENTASSETS
Cashandcashequivalents
Duefromrelatedparty
Prepaidsandothercurrentassets
TOTALCURRENTASSETS

NONCURRENTASSETS
Property,plantandequipment,net
Intangibles,net
Deferredloancosts,net
TOTALNONCURRENTASSETS

INVESTMENTINSUBSIDIARIES

TOTALASSETS

LIABILITIESANDSTOCKHOLDERS'EQUITY

CURRENTLIABILITIES
Accountspayable
Accruedexpenses
Deferredrevenue
Duetorelatedparty

Currentportionofnotespayable
Less:discountonnotespayable
Currentportionofnotespayable,netofdiscount
TOTALCURRENTLIABILITIES

LONGTERMLIABILITIES
Notespayable,netofcurrentportion
Less:discountonnotespayable
Notespayable,netofdiscount
TOTALLONGTERMLIABILITIES

TOTALLIABILITIES

STOCKHOLDERS'EQUITY(DEFICIT)

Preferredstock
Additionalpaidincapitalpreferredstock
Commonstock
Additionalpaidincapitalcommonstock
Accumulateddeficit
TOTALSTOCKHOLDERS'EQUITY(DEFICIT)

TOTALLIABILITIESANDSTOCKHOLDERS'EQUITY

VirtuixHoldings,

Inc.

$
3,703,161

3,703,161

9,669

9,669

3,207,758

$
6,920,588

70,963

365,328

(17,599)

347,729

418,692

634,672

(24,932)

609,740

609,740

1,028,432

6,604

5,962,456

5,500

(82,404)

5,892,156

$
6,920,588
53

Virtuix,Inc.

$
173,496

28,261

47,498

249,255

100,291

50,373

150,664

$
399,919

$
28,501

76,274

1,866,722

1,971,497

1,971,497

2,000

3,428,325

(5,001,903)

(1,571,578)

$
399,919

InteractiveI,

LLC

16,021

16,021

$
16,021

17,298

17,298

17,298

50,012

(51,289)

(1,277)

$
16,021

Eliminations

(28,261)

(28,261)

(3,207,758)

$ (3,236,019)

(28,261)

(28,261)

(28,261)

(2,000)

(3,205,758)

(3,207,758)

$ (3,236,019)

Consolidated

Balance

$
3,876,657

47,498

3,924,155

100,291

66,394

9,669

176,354

$
4,100,509

$
28,501

76,274

1,866,722

60,000

365,328

(17,599)

347,729

2,379,226

634,672

(24,932)

609,740

609,740

2,988,966

6,604

5,962,456

5,500

272,579

(5,135,596)

1,111,543

$
4,100,509

VIRTUIXHOLDINGS,INC.ANDSUBSIDIARIES
SCHEDULEIVCONSOLIDATINGINTERIMSTATEMENTOFOPERATIONS
ForSixMonthsEndedSeptember30,2014

REVENUES

COSTOFREVENUES

GROSSPROFIT

OPERATINGEXPENSES
Sellingexpense
Generalandadministrativeexpense
Researchanddevelopmentexpense
TOTALOPERATINGEXPENSES

LOSSFROMOPERATIONS

OTHERINCOME(EXPENSE)
Interestincome
Interestexpense
TOTALOTHERINCOME(EXPENSE)

NETLOSS

Add:Netlossattributabletononcontrollinginterests,netoftax

NETLOSSATTRIBUTABLETOVIRTUIXHOLDINGS,INC.

Virtuix

Holdings,Inc.

502

502

(502)

963

(22,842)

(21,879)

(22,381)

$
(22,381)
54

Virtuix,Inc.

122,371

1,035,650

458,677

1,616,698

(1,616,698)

(1,616,698)

$ (1,616,698)

Virtuix

InteractiveI,

LLC

1,952

500

2,452

(2,452)

(2,452)

368

$
(2,084)

Consolidated
Eliminations
Balance

$
$


122,371


1,038,104


459,177


1,619,652


(1,619,652)


963


(22,842)


(21,879)


(1,641,531)


368

$
$ (1,641,163)

FINANCIALSTATEMENTSFORTHEFISCALYEARSENDINGMARCH31,2015ANDMARCH31,2014
TheconsolidatedbalancesheetsofVirtuixHoldings,Inc.andSubsidiariesforthefiscalyearendedMarch31,2015andfortheperiodfromApril15,2013(inception)toMarch31,
2014, and the consolidated statements of operations, changes in stockholders' equity, and cash flows of Virtuix Holdings, Inc. and Subsidiaries for each such period have been
includedinthisOfferingCircularwiththeIndependentAuditor'sReportofArtesianCPA,LLC,independentcertified public accountants, and upon the authority of said firm as
expertsinaccountingandauditing.
55

VirtuixHoldings,Inc.andSubsidiaries
ConsolidatedFinancialStatementsandIndependentAuditorsReport
March31,2015and2014

56

VirtuixHoldings,Inc.andSubsidiaries
TABLEOFCONTENTS

INDEPENDENTAUDITOR'SREPORT

CONSOLIDATEDFINANCIALSTATEMENTSASOFANDFORTHEPERIODSENDEDMARCH31,2015AND2014:
ConsolidatedBalanceSheets

ConsolidatedStatementsofOperations

ConsolidatedStatementsofChangesinStockholders'Equity

ConsolidatedStatementsofCashFlows

NotestotheConsolidatedFinancialStatements

SupplementaryInformation:

ConsolidatingBalanceSheetMarch31,2015

ConsolidatingStatementofOperationsMarch31,2015

ConsolidatingBalanceSheetMarch31,2014

ConsolidatingStatementofOperationsMarch31,2014
57

Page

5859

6061

62

63

64

6578

79

80

81

82

TotheStockholdersof:
VirtuixHoldings,Inc.andSubsidiaries
Austin,Texas
INDEPENDENTAUDITORSREPORT
ReportontheConsolidatedFinancialStatements
WehaveauditedtheaccompanyingconsolidatedfinancialstatementsofVirtuixHoldings,Inc.(acorporation)andSubsidiaries,whichcomprisetheconsolidatedbalancesheetsasof
March31,2015and2014,andtherelatedconsolidatedstatementsofoperations,changesinstockholdersequity,andcashflowsfortheyearendedMarch31,2015andtheperiod
fromApril15,2013(inception)toMarch31,2014,andtherelatednotestotheconsolidatedfinancialstatements.
ManagementsResponsibilityfortheConsolidatedFinancialStatements
Managementisresponsibleforthepreparationandfairpresentationoftheseconsolidatedfinancialstatementsinaccordancewithaccountingprinciplesgenerallyacceptedinthe
UnitedStatesofAmericathisincludesthedesign,implementation,andmaintenanceofinternalcontrolrelevanttothepreparationandfairpresentationofconsolidatedfinancial
statementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
AuditorsResponsibility
Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudit.Weconductedourauditinaccordancewithauditingstandardsgenerally
accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statementsarefreefrommaterialmisstatements.
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresintheconsolidatedfinancialstatements.Theproceduresselecteddependonthe
auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments,theauditorconsidersinternalcontrolrelevanttotheentityspreparationandfairpresentationoftheconsolidatedfinancialstatementsinordertodesignauditprocedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. Accordingly, we express no such
opinion.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofsignificantaccountingestimatesmadebymanagement,aswellas
evaluatingtheoverallpresentationoftheconsolidatedfinancialstatements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforour
auditopinion.
ArtesianCPA,LLC
303.823.3220
ArtesianCPA.com
58

Opinion
Inouropinion,theconsolidatedfinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,thefinancialpositionofVirtuixHoldings,Inc.andSubsidiaries,asof
March31,2015and2014,andtheresultsofitsoperationsanditscashflowsforyearendedMarch31,2015andtheperiodfromApril15,2013(inception)toMarch31,2014,in
accordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.
OtherMatters
Ourauditwasconductedforthepurposeofforminganopinionontheconsolidatedfinancialstatementsasawhole.Theaccompanyingsupplementaryinformation,comprisedofthe
consolidatingbalancesheetsasofMarch31,2015and2014andtheconsolidatingstatementsofoperationsfortheyearendedMarch31,2015andtheperiodfromApril15,2013
(inception) to March 31, 2014, are presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the
responsibilityofmanagementandwasderivedfromandrelatesdirectlytotheunderlyingaccountingandotherrecordsusedtopreparetheconsolidatedfinancialstatements.The
informationhasbeensubjectedtotheauditingproceduresappliedintheauditoftheconsolidatedfinancialstatementsandcertainadditionalprocedures,includingcomparingand
reconcilingsuchinformationdirectlytotheunderlyingaccountingandotherrecordsusedtopreparetheconsolidatedfinancialstatementsortotheconsolidatedfinancialstatements
themselves,andotheradditionalproceduresinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.Inouropinion,theinformationisfairlystatedin
allmaterialrespectsinrelationtotheconsolidatedfinancialstatementsasawhole.
/s/ArtesianCPA,LLC
Denver,Colorado
September15,2015
ArtesianCPA,LLC
303.823.3220
ArtesianCPA.com
59

VirtuixHoldings,Inc.andSubsidiaries
ConsolidatedBalanceSheets
AsofMarch31,2015and2014
ASSETS

CURRENTASSETS
Cashandcashequivalents,includingrestrictedcashof$27,752atMarch31,2015and2014

Prepaidsandothercurrentassets
TOTALCURRENTASSETS

NONCURRENTASSETS
Propertyandequipment
Less:accumulateddepreciation
Netpropertyandequipment

Intangibles
Less:accumulatedamortization
Netintangibles

Deferredtaxasset(netofvaluationallowanceof$1,473,807and$295,500,respectively)

Deferredloancosts
Less:accumulatedamortization
Netdeferredloancosts

TOTALNONCURRENTASSETS

TOTALASSETS

2015




3,876,657 $

47,498
3,924,155


124,962
(24,671)
100,291

77,696
(11,302)
66,394


12,000
(2,331)
9,669

176,354

4,100,509 $

SeeIndependentAuditorsReportandaccompanyingnotes,whichareanintegralpartoftheseconsolidatedfinancialstatements.
60

2014

388,627

15,228
403,855

61,021
(3,387)
57,634

12,118
(1,421)
10,697

68,331

472,186

VirtuixHoldings,Inc.andSubsidiaries
ConsolidatedBalanceSheets
AsofMarch31,2015and2014
LIABILITIESANDSTOCKHOLDERS'EQUITY

CURRENTLIABILITIES
Accountspayable
Accruedexpenses
Deferredrevenuecurrentportion
Duetorelatedparty
Convertiblepromissorynotes
Currentportionofnotespayable
Less:discountonnotespayable
Currentportionofnotespayable,netofdiscount

TOTALCURRENTLIABILITIES

LONGTERMLIABILITIES
Deferredrevenuelongtermportion
Notespayable,netofcurrentportion
Less:discountonnotespayable
Notespayable,netofdiscount

TOTALLONGTERMLIABILITIES

TOTALLIABILITIES

STOCKHOLDERS'EQUITY(DEFICIT)
Preferredstock,$.001parvalue,7,000,000sharesauthorized,6,604,283and0sharesissuedandoutstandingatMarch31,2015
and2014,respectively
Additionalpaidincapitalpreferredstock

Commonstock,$.001parvalue,15,000,000sharesauthorized,5,500,000sharesissuedandoutstandingatMarch31,2015and
2014
Additionalpaidincapitalcommonstock

AccumulatedDeficit

TOTALSTOCKHOLDERS'EQUITY(DEFICIT)

$
TOTALLIABILITIESANDSTOCKHOLDERS'EQUITY

2015



28,501 $
76,274
1,866,722
60,000

365,328
(17,599)
347,729

2,379,226



634,672
(24,932)
609,740

609,740

2,988,966

2014

67,122

175,000
400,000

642,122

1,251,854

1,251,854

1,893,976

6,604
5,962,456

5,500
272,579
(5,135,596)
1,111,543

4,100,509

5,500
183,132
(1,610,422)
(1,421,790)

472,186

SeeIndependentAuditorsReportandaccompanyingnotes,whichareanintegralpartoftheseconsolidatedfinancialstatements.
61

VirtuixHoldings,Inc.andSubsidiaries
ConsolidatedStatementsofOperations
FortheyearendedMarch31,2015andtheperiodfromApril15,2013(inception)
toMarch31,2014

NETSALES

COSTOFGOODSSOLD

GROSSPROFIT

OPERATINGEXPENSES
Sellingexpenses
Generalandadministrativeexpenses
Researchanddevelopmentexpenses

TOTALOPERATINGEXPENSES

OTHERINCOME(EXPENSE)
Interestincome
Interestexpense

TOTALOTHERINCOME(EXPENSE)

LOSSBEFOREINCOMETAXES

PROVISIONFORINCOMETAX
Statetaxexpense

TOTALPROVISIONFORINCOMETAX

NETLOSS

Add:Netlossattributabletononcontrollinginterests,netoftax

NETLOSSATTRIBUTABLETOVIRTUIXHOLDINGS,INC.

Weightedaveragecommonsharesoutstanding:
BasicandDiluted
Netlosspershare:
BasicandDiluted

YearEnded

March31,2015

301,820

2,221,986

926,023

3,449,829

6,791

(79,464)

(72,673)

(3,522,502)

2,672

2,672

$
(3,525,174)

852

$
(3,524,322)

5,500,000

$
(0.64)

PeriodEnded

March31,2014

$
80,026

67,071

12,955

230,634

936,613

452,326

1,619,573

(2,740)

(2,740)

(1,609,358)

1,064

1,064

$
(1,610,422)

6,842

$
(1,603,580)

916,667

$
(1.75)

SeeIndependentAuditorsReportandaccompanyingnotes,whichareanintegralpartoftheseconsolidatedfinancialstatements.
62

VirtuixHoldings,Inc.andSubsidiaries
ConsolidatedStatementsofChangesinStockholdersEquity
FortheyearendedMarch31,2015andtheperiodfromApril15,2013(inception)toMarch31,2014

BalanceatApril15,2013(inception)
Issuanceofcommonstock
Netloss
BalanceatMarch31,2014
Issuanceofpreferredstock
Convertiblepromissorynotes
convertedtopreferredstock
Relatedpartynotesconverted
topreferredstock
Preferredstockwarrants
Stockbasedcompensation
Netloss
BalanceatMarch31,2015

CommonStock

Shares
Amount

5,500,000

5,500

5,500,000

5,500

5,500,000

Additional
PaidIn
Capital
$

183,132

183,132

5,500

89,447

272,579

PreferredStock

Shares
Amount

5,885,533

5,885
500,000

218,750

6,604,283

Additional
PaidIn
Capital
$

5,335,377

500

219

6,604

Accumulated

Deficit
$

(1,603,580)

(1,603,580)

399,500

174,781
52,798

5,962,456

Deficit
Attributableto
Noncontrolling

Interest
$

(6,842)

(6,842)

(3,524,322)
(5,127,902)

SeeIndependentAuditorsReportandaccompanyingnotes,whichareanintegralpartoftheseconsolidatedfinancialstatements.
63

(852)
(7,694)

Total

188,632
(1,610,422)
(1,421,790)
5,341,262
400,000

175,000
52,798
89,447
(3,525,174)
1,111,543

VirtuixHoldings,Inc.andSubsidiaries
ConsolidatedStatementsofCashFlows
FortheyearendedMarch31,2015andtheperiodfromApril15,2013(inception)to
March31,2014

CASHFLOWSFROMOPERATINGACTIVITIES

Netloss
Adjustmentstoreconcilenetlosstonetcashusedinoperatingactivities:
Depreciationandamortizationexpense
Amortizationofdiscountonnotespayable
Stockbasedcompensation
(Increase)decreaseinassets:
Prepaidexpensesandothercurrentassets
Increase(decrease)inliabilities:
Accountspayable
Accruedexpenses
Deferredrevenue
CASHUSEDINOPERATINGACTIVITIES

CASHFLOWSFROMINVESTINGACTIVITIES
Cashpaidforpurchasesoffixedassets,includingintangibles
CASHUSEDININVESTINGACTIVITIES

CASHFLOWSFROMFINANCINGACTIVITIES
Issuanceofcommonstock
Issuanceofpreferredstock
Offeringcosts
Proceedsfromshorttermnoteswithrelatedparties
Proceedsfromconvertiblepromissorynotes
Proceedsfromlongtermnotespayable
Loancosts
CASHPROVIDEDBYFINANCINGACTIVITIES

NETINCREASEINCASH

CASHATBEGINNINGOFPERIOD

CASHATENDOFPERIOD

SUPPLEMENTALDISCLOSUREOFCASHFLOWINFORMATION:
Interest
Statetaxes

SUPPLEMENTALDISCLOSUREOFNONCASHFINANCINGACTIVITIES:
Convertiblepromissorynotesconvertedtopreferredstock
Relatedpartynotesconvertedtopreferredstock
Issuanceofpreferredstockwarrants

YearEnded

March31,2015

$
(3,525,174)

PeriodEnded

March31,2014

$
(1,610,422)


$


$
$

$
$

$
$
$

33,496
10,266
89,447

(32,270)

28,501
9,153
614,868
(2,771,713)

(129,519)
(129,519)

5,421,997
(80,735)
60,000

1,000,000
(12,000)
6,389,262

3,488,030

388,627

3,876,657

69,198
2,672

400,000
175,000
52,798

$
$
$

SeeIndependentAuditorsReportandaccompanyingnotes,whichareanintegralpartoftheseconsolidatedfinancialstatements.
64

4,808

(15,228)

67,122
1,251,854
(301,866)

(73,139)
(73,139)

188,632

175,000
400,000

763,632

388,627

388,627

1,064

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
Note1.NatureofOperations
VirtuixHoldingsInc.(VirtuixHoldingsortheCompany)wasformedinDecember20,2013asaDelawareCorporation.TheCompanyhasawhollyownedsubsidiary,Virtuix,Inc.,a
DelawarecorporationformedonApril15,2013asaTexasLimitedLiabilityCompanyandsubsequentlyconvertedtoaDelawarecorporationonNovember22,2013.Virtuix,Inc.
developsvirtualrealityhardwareandsoftware,anditsmainproductistheOmni,thefirstvirtualrealityinterfacetomovefreelyandnaturallyinvideogamesandvirtual worlds.
VirtuixInteractiveI,LLC(VII),aTexasLimitedLiabilityCompany,wasformedonJanuary6,2014,andonthatdate,theCompanybecamethemajoritymember,with85%ofthe
controllingfinancialinterest.VIIwasformedtocreateinteractivevirtualrealitycontentforusewiththeOmni.
AsofMarch31,2015and2014,theCompanyhasnotcommencedplannedprincipaloperationsnorgeneratedsignificantearnedrevenue.TheCompanysactivitiessinceinception
haveconsistedofresearchanddevelopmentofitsmainproduct,capitalraising,andsaleseffortstopresellitsmainproduct.OncetheCompanycommencesitsplannedprincipal
operationsofproducingandsellingtheOmniandotherproductsitmaydevelop,itwillincursignificantadditionalexpensesinconjunctionwithproducingandsellingproducts
commercially. The Company is dependent upon additional capital resources for the commencement of its planned principal operations and is subject to significant risks and
uncertaintiesincludingfailingtosecureadditionalfundingtooperationalizetheCompanysplannedoperationsorfailingtoprofitablyproduceandsellitsproducts.
Note2.SummaryofSignificantAccountingPolicies
BasisofPresentation
TheaccountingandreportingpoliciesoftheCompanyconformtoaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica(GAAP)andpresentationrequirements
underArticle8ofRegulationSXoftherulesandregulationsoftheSecuritiesandExchangeCommission(SEC).Theconsolidatedfinancialstatementsarepresentedusingtheaccrual
basisofaccounting.Therefore,revenuesarerecognizedwhenearnedandexpensesarerecognizedwhenincurred.
The Company has elected to adopt early application of Accounting Standards Update No. 201410, Development Stage Entities (Topic 915): Elimination of Certain Financial
ReportingRequirementstheCompanydoesnotpresentordiscloseinceptiontodateinformationandotherremainingdisclosurerequirementsofTopic915.
TheCompanyhasadoptedafiscalyearendingMarch31stofeachyear.
Management'sEstimates
PreparingtheCompanysconsolidatedfinancialstatementsinconformitywithGAAPrequiresmanagementtomakeestimatesandassumptionsthataffectreportedamountsofassets
andliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateoftheconsolidatedfinancialstatementsandthereportedamountsofrevenuesandexpensesduringthe
reportingperiod.Actualresultscoulddifferfromthoseestimates.
SeeaccompanyingIndependentAuditorsReport
65

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
PrinciplesofConsolidation
TheaccompanyingconsolidatedfinancialstatementsincludetheaccountsofVirtuixHoldings,Inc.aswellasitssubsidiariesrequiredtobeconsolidatedunderaccountingprinciples
generallyacceptedintheUnitedStatesofAmerica(GAAP).Significantintercompanyaccountsandtransactionshavebeeneliminateduponconsolidation.
RevenueRecognition
TheCompanyrecognizesrevenuewhentheearningsprocessiscomplete.Thisgenerallyoccurswhenproductsareshippedtothecustomerinaccordancewiththesalesagreementor
purchaseorder,ownershipandriskoflosspasstothecustomer,collectabilityisreasonablyassured,andpricingisfixedordeterminable.TheCompanysshippingtermsaregenerally
F.O.B.shippingpoint,wheretitleistransferredandrevenueisrecognizedwhentheproductsareshippedtocustomers.
NoncontrollingInterests
InaccordancewiththeguidanceunderFASBASC810,NoncontrollingInterests,inconsolidatedfinancialstatements,referencestonetincomeandstockholdersequityattributable
totheCompanydonotincludenoncontrollinginterests,whicharereportedseparately.
CashandCashEquivalents
TheCompanyconsidersdepositsthatcanberedeemedondemandandinvestmentsthathaveoriginalmaturitiesoflessthanthreemonths,whenpurchased,tobecashequivalents.As
ofMarch31,2015and2014,theCompanyscashandcashequivalentsweredepositedprimarilyintwoandthreefinancialinstitutions, respectively, which at times, exceed the
federallyinsuredlimits.TheCompanyhas$27,752ofitscashbalancesrestrictedasofMarch31,2015and2014.
PropertyandEquipment
Propertyandequipmentarerecordedatcost,lessaccumulateddepreciation.Expendituresformajoradditionsandimprovementsarecapitalizedandminorreplacements,maintenance,
and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the
accountsandanyresultinggainorlossisincludedintheresultsofoperationsfortherespectiveperiod.Depreciationisprovidedovertheestimatedusefullivesoftherelatedassets
usingthestraightlinemethodforfinancialstatementpurposes.TheCompanyusesotherdepreciationmethods(generallyaccelerated)fortaxpurposeswhereappropriate.
Theestimatedusefullivesforsignificantpropertyandequipmentcategoriesareasfollows:
ComputerEquipment
FurnitureandFixtures
MachineryandEquipment
TradeShowEquipment
SeeaccompanyingIndependentAuditorsReport
66

5years
7years
5years
57years

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
FairValueMeasurements
The Companys financial instruments consist primarily of cash, accounts payable, accrued expenses and notes payable. The carrying amounts of such financial instruments
approximatetheirrespectiveestimatedfairvalueduetotheshorttermmaturitiesandapproximatemarketinterestratesoftheseinstruments.Theestimatedfairvalueisnotnecessarily
indicativeoftheamountstheCompanywouldrealizeinacurrentmarketexchangeorfromfutureearningsorcashflows.TheCompanyadoptedFASBASC82010,Fair Value
MeasurementsandDisclosures, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard
providesaconsistentdefinitionoffairvaluewhichfocusesonanexitpricethatwouldbereceiveduponsaleofanassetorpaidtotransferaliabilityinanorderlytransactionbetween
marketparticipantsatthemeasurementdate.
Thestandardalsoprioritizes,withinthemeasurementoffairvalue,theuseofmarketbasedinformationoverentityspecificinformationandestablishesathreelevelhierarchyforfair
valuemeasurementsbasedonthenatureofinputsusedinthevaluationofanassetorliabilityasofthemeasurementdate.
Thethreelevelhierarchyforfairvaluemeasurementsisdefinedasfollows:
Level1inputstothevaluationmethodologyarequotedprices(unadjusted)foridenticalassetsorliabilitiesinactivemarkets
Level2inputstothevaluationmethodologyincludequotedpricesforsimilarassetsandliabilitiesinactivemarkets,andinputsthatareobservablefortheassetor
liabilityotherthanquotedprices,eitherdirectlyorindirectlyincludinginputsinmarketsthatarenotconsideredtobeactive
Level3inputstothevaluationmethodologyareunobservableandsignificanttothefairvaluemeasurement
Categorizationwithinthevaluationhierarchyisbaseduponthelowestlevelofinputthatissignificanttothefairvaluemeasurement.
Intangibles
TheCompanysintangibleassetsrepresentsoftware,trademarks,andawebsite,whichareamortizedonastraightlinebasisovertheyearsexpected to be benefited. The costs of
developinganyintangiblesforinternaluseareexpensedasincurred.
SoftwareDevelopmentCosts
TheCompanyaccountsforsoftwaredevelopmentcostsinaccordancewithseveralaccountingpronouncements,includingFASBASC730,ResearchandDevelopment,FASBASC
35040,InternalUseSoftware,FASB98520,CostsofComputerSoftwaretobeSold,Leased,orMarketedandFASBASC35050,WebsiteDevelopmentCosts.
SeeaccompanyingIndependentAuditorsReport
67

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
Costsincurredduringtheperiodofplanninganddesign,priortotheperioddeterminingtechnologicalfeasibility,forallsoftwaredevelopedforuseinternalandexternal,hasbeen
chargedtooperationsintheperiodincurredasresearchanddevelopmentcosts.Additionally,costsincurredafterdeterminationofreadinessformarkethavebeenexpensedasresearch
anddevelopment.
TheCompanycapitalizescertaincostsinthedevelopmentofitsproprietarysoftware(computersoftwaretobesold,leasedorlicensed)fortheperiodaftertechnologicalfeasibilitywas
determinedandpriortomarketingandinitialsales.Websitedevelopmentcostshavebeencapitalized,underthesamecriteriaasmarketedsoftware.
DeferredRevenue
DeferredrevenuerepresentsrevenuescollectedbutnotearnedasofMarch31,2015and2014.ThisisprimarilycomposedofrevenueforpreordersoftheOmnithathavenotbeen
completedbytheendofthefinancialreportingperiod.
NetLossPerShare
Netlosspershareiscomputedbydividingnetlossbytheweightedaveragenumberofsharesofcommonstockoutstandingduringtheperiod,excludingsharessubjecttoredemption
or forfeiture. The Company presents basic and diluted earnings per share. Basic and diluted earnings per share reflect the actual weighted average of common shares issued and
outstandingduringtheperiod.NodilutiveeffectswereconsideredsincetheCompanyisinanetlosspositionasofMarch31,2015and2014.Asaresult,dilutedlosspershareisthe
sameasbasiclosspersharefortheperiodspresented.
OfferingCosts
TheCompanycomplieswiththerequirementsofFASBASC34010S991withregardstoofferingcosts.Priortothecompletionofanoffering,offeringcostsarecapitalized.The
deferredofferingcostsarechargedtostockholdersequityuponthecompletionofanofferingortoexpenseiftheofferingisnotcompleted.TheCompanyanticipatessignificant
offeringcostsinconnectionwiththeProposedOfferingdiscussedinNote14.
FederalIncomeTaxes
FASBASC74010,AccountingforUncertaintyinIncomeTaxes,clarifiestheaccountingforincometaxesbyprescribingtheminimumrecognitionthresholdataxpositionisrequired
tomeetbeforebeingrecognizedinthefinancialstatements.ASC74010alsoprovidesguidanceonderecognition,measurement,classification,interestandpenalties,accountingin
interimperiods,disclosure,andtransition.FortheperiodsendedMarch31,2015and2014,nouncertaintaxpositionswereidentified.TheCompanyrecognizestaxrelatedinterestand
penalties,ifany,asacomponentofincometaxexpense.
ThefederaltaxreturnsaresubjecttoexaminationbytheInternalRevenueService,generallyforthreeyearsaftertheyarefiled.Statetaxreturnsaresubjecttoexaminationgenerallyfor
fiveyearsaftertheyarefiled.
SeeaccompanyingIndependentAuditorsReport
68

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
TheCompanyslessthanwhollyownedsubsidiary,VIIisnotsubjecttofederalincometaxes,andsuchtaxesaretheresponsibilityoftherespectivemembers.
RecentAccountingPronouncements
In June 2014, the FASB issued Accounting Standards Update (ASU) 201410 which eliminated the requirements for development stage entities to (1) present inceptiontodate
informationinthestatementsofincome,cashflows,andmembersequity,(2)labelthefinancialstatementsasthoseofadevelopmentstageentity,(3)discloseadescriptionofthe
developmentstageactivitiesinwhichtheentityisengaged,and(4)discloseinthefirstyearinwhichtheentityisnolongeradevelopmentstageentitythatinprioryearsithadbeen
in the development stage. This ASU is effective for annual reporting periods beginning after December 15, 2014, and interim periods beginning after December 15, 2015. Early
applicationispermittedforanyannualreportingperiodorinterimperiodforwhichtheentitysfinancialstatementshavenotyetbeenissued.Uponadoption,entitieswillnolonger
presentordiscloseanyinformationrequiredbyTopic915.TheCompanyhasearlyadoptedthenewstandardeffectiveasoftheinceptiondate.
InAugust2014,theFASBissuedASU201415onPresentationofFinancialStatementsGoingConcern(Subtopic20540)DisclosureofUncertaintiesaboutanEntitysAbilityto
ContinueasaGoingConcern.Currently,thereisnoguidanceinU.S.GAAPaboutmanagementsresponsibilitytoevaluatewhetherthereissubstantialdoubtaboutanentitys
abilitytocontinueasagoingconcernortoproviderelatedfootnotedisclosures.Theamendmentsinthisupdateprovidesuchguidance.Indoingso,theamendmentsareintendedto
reducediversityinthetimingandcontentoffootnotedisclosures.Theamendmentsrequiremanagementtoassessanentitysabilitytocontinueasagoingconcernbyincorporating
andexpandinguponcertainprinciplesthatarecurrentlyinU.S.auditingstandards.Specifically,theamendments(1)provideadefinitionofthetermsubstantialdoubt,(2)requirean
evaluationeveryreportingperiodincludinginterimperiods,(3)provideprinciplesforconsideringthemitigatingeffectofmanagementsplans,(4)requirecertaindisclosures when
substantialdoubtisalleviatedasaresultofconsiderationofmanagementsplans,(5)requireanexpressstatementandotherdisclosureswhensubstantialdoubtisnotalleviated,and
(6)requireanassessmentforaperiodofoneyearafterthedatethatthefinancialstatementsareissued(oravailabletobeissued).Theamendmentsinthisupdateareeffectiveforpublic
andnonpublicentitiesforannualperiodsendingafterDecember15,2016.Earlyadoptionispermitted.TheCompanyhaselectedtoearlyadoptthispronouncement,asdescribedin
Note12.
Managementdoesnotbelievethatanyrecentlyissued,butnotyeteffective,accountingstandardscouldhaveamaterialeffectontheaccompanyingconsolidatedfinancialstatements.
Asnewaccountingpronouncementsareissued,wewilladoptthosethatareapplicableunderthecircumstances.
SeeaccompanyingIndependentAuditorsReport
69

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
Note3.PropertyandEquipment
PropertyandequipmentconsistofthefollowingasofMarch31:

ComputerEquipment
FurnitureandEquipment
MachineryandEquipment
OfficeEquipment

LessAccumulatedDepreciation

2015

27,444
13,060
83,410
1,048
124,962
(24,671)
100,291

2014

9,495
13,060
37,418
1,048
61,021
(3,387)
57,634

Depreciationexpensewas$21,284and$3,387fortheperiodsendedMarch31,2015and2014,respectively.
Note4.Intangibles
IntangibleassetsconsistofthefollowingasofMarch31:

Softwareandgamedesign
Trademarks
Website

LessAccumulatedAmortization

2015

25,704
14,055
37,937
77,696
(11,302)
66,394

2014

5,704
3,055
3,359
12,118
(1,421)
10,697

Amortizationexpensewas$9,881and$1,421fortheperiodsendedMarch31,2015and2014,respectively.
Note5.NotesPayable
OnApril1,2014,theCompanycarriedthreeconvertiblepromissorynotesamountingto$400,000.Interestwastobeaccruedat8.00%untilthenotesmaturedonSeptember30,2014.
Atanytimebeforematurityofthenotes,theentireoutstandingprincipalplusaccruedandunpaidinterestcouldbeconvertedtosharesoftheCompanyscapitalstockwhenthe
Companyissuedandsoldsharesofitscapitalstockandtheaggregateproceedswereequaltoorexceeded$750,000.
SeeaccompanyingIndependentAuditorsReport
70

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
AlsoonApril1,2014,theCompanycarriedtwopromissorynotesintheamountof$100,000and$75,000witharelatedparty,payableinsemiannualinstallmentsat1.00%interest.
ThenotesweretomatureonDecember27,2014andJanuary28,2015,respectively.
AsdescribedinNote6,alltheaforementionednoteswereconvertedtosharesofSeriesSeedPreferredStockonApril22,2014.
EffectiveSeptember4,2014,theCompanyenteredintoanagreementtoobtainfinancingwithWesternTechnologyInvestment(WTI).Theinitialcommitmentof$1,000,000was
receivedonSeptember5,2014.Termsofthenoteareinterestonlypaymentsinsixmonthlyinstallmentsat.979%oftheamountborrowed,andthirtymonthsofprincipalandinterest
paymentsbeginningApril1,2015intheamountof$38,255,dueinSeptember2017.Thenotebearsafixedrateofinterestof11.75%andissecuredbyallassetsoftheCompany.
Inthetermsoftheagreement,theCompanygrantedawarranttoWTI,toacquiresharesinthemostrecentornextroundofpreferredstock,atWTIsoption,atthelowerof$0.80per
shareorthelowestpricepershareatwhichtheCompanyhassoldanysharesofitsSeriesSeedPreferredStock(asofanydeterminationdateandsubjecttoanyadjustmentsforsplits,
dividends,ordistributionssincethedateofsuchsale).Theaggregateexercisepricewillbe$125,000.ThewarrantwillbeexercisableuntilitsexpirationdateofDecember31,2024.
UponachangeofcontrolorinitialpublicofferingoftheCompanyscapitalstock,thewarrantshallautomaticallybeexchanged,fornoconsiderationfromWTI,forthemaximum
numberofsharesoftheCompanysstockforwhichthewarrantwouldhaveotherwisebeenexercisable.
AccordingtoguidanceofFASBASC47020,Debt,thewarrantisrecordedinequityasadditionalpaidincapitalpreferredstock,atfairvalueasofthedateofissuance,andin
liabilities,asacontraaccount,calleddiscountonnotepayable.Thefairvalueattheissuancedatewasdeterminedtobe$52,798usingtheBlackScholesmodelwiththefollowing
assumptions.Noadjustmenttothefairvaluewasmadetoaccountforthedownroundprotectionclauseintheagreementasmanagementdeterminedthisadjustmentwouldbedifficult
toestimateandimmaterialtotheseconsolidatedfinancialstatements.
ExercisePrice
DividendYield
Volatility
RiskfreeRate
YearstoExpiration

0.80
0.00%
32.40%
0.80%
10

Thediscountisamortizedoverthelifeofthenoteusingtheeffectiveinterestmethod.ThecarryingvalueofthenoteatMarch31,2015was$957,469($1,000,000principal,less
discountof$42,531),and$10,266ofdiscountamortizationwasincludedininterestexpense.
SeeaccompanyingIndependentAuditorsReport
71

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
FuturematuritiesoflongtermdebtareasfollowsasofMarch31:
2016
2017
Thereafter

$ 365,328
410,635
224,037

$ 1,000,000

Note6.CapitalStock
PriortoApril7,2014,theCompanyscapitalstockconsistedof10,000,000authorizedsharesof$0.001parcommonstock,ofwhich5,500,000shareswereissuedandoutstanding.
EffectiveApril7,2014,theCompanyamendedits certificate of incorporation to include two classes of stock. The number of shares of common stock authorized increased from
10,000,000sharesto12,500,000sharesandtheCompanyalsoauthorized3,750,000sharesof$.001parvalueSeriesSeedPreferredStock(the"PreferredStock").
AllconvertiblepromissorynotesmentionedinNote5wereconvertedtosharesofPreferredStockbydividingtheprincipalby$0.80,resultinginanissuanceof500,000sharesof
Preferred Stock on April 22, 2014. Accrued interest in the amount of $4,713 was paid directly to investors. The two promissory notes mentioned in Note 5 were exchanged for
convertiblepromissorynotesthenconvertedinto218,750sharesofthePreferredStockonApril30,2014.Thisisarelatedpartytransaction.Theremaining3,031,250sharesofthe
PreferredStockwereissuedat$0.80persharetoinvestorsbetweenApril17,2014andMay19,2014.EachholderofthePreferredStockwillhavetherighttoconvertthesharesatany
time,attheoptionoftheholder,intosharesofthecommonstockoftheCompanyataratedeterminedbydividingthenumberofsharesheldbythepricepaidpershare.
EffectiveAugust7,2014,thenumberofsharesofcommonstockauthorizedincreasedfrom12,500,000sharesto12,750,000shares,andtheCompanyalsoincreaseditsauthorized
PreferredStockfrom3,750,000sharesto4,000,000shares.
EffectiveDecember4,2014,thenumberofsharesofcommonstockauthorizedincreasedfrom12,750,000sharesto15,000,000shares,andtheCompanyalsoincreaseditsauthorized
PreferredStockfrom4,000,000sharesto7,000,000shares.TheCompanyissued2,854,283sharesofPreferredStockat$1.05persharebetweenNovember24,2014andFebruary24,
2015.
EachholderofthePreferredStockwillhavetherighttoconvertthesharesatanytime,attheoptionoftheholder,intosharesofthecommonstockoftheCompanyata1:1conversion
rate.
AtMarch31,2015,theCompanyhasreserved9,000,000sharesofitsauthorizedbutunissuedcommonstockforpossiblefutureissuanceinconnectionwiththefollowing:
SeeaccompanyingIndependentAuditorsReport
72

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
Shares
LongTermIncentivePlan
Conversionofpreferredstock
Exerciseofstockwarrants

2,000,000
6,750,000
250,000

Note7.StockOptions
TheCompanyaccountsforstockbasedcompensationundertheprovisionsofFASBASC718,CompensationStockCompensation,whichrequiresthemeasurementandrecognition
ofcompensationexpenseforallsharebasedpaymentawardsmadetoemployeesandnonemployeeofficersbasedonestimated fair values as of the date of grant. Compensation
expenseisrecognizedonastraightlinebasisovertherequisiteserviceperiod.
OnJune25,2014,theboardofdirectorsoftheCompanyapprovedastockbasedemployeecompensationplan,theLongTermIncentivePlan.IncentiveStockOptions(ISOs)were
grantedtocertainemployeesofVirtuix,Inc.asfollows:

GrantDate
June25,2014
July17,2014
September17,2014

Shares
375,625
22,500
95,625

Exercise
Price
$0.11
$0.11
$0.11

AsofMarch31,2015,111,250shareswereforfeitedasaresultofemployeeterminations,and56,250shareswerevested.
TheCompanyaccountsforsharebasedpaymentstononemployees,withguidanceprovidedbyFASBASC50550,EquityBasedPaymentstoNonEmployees.OnJune25,2014,the
boardofdirectorsoftheCompanygrantedtwononqualifiedstockoptions(NQSOs)foratotalof1,181,250shares,withanexercisepriceof$0.11pershare,tocertainindependent
contractorsofVirtuix,Inc.Noneoftheoptionswerevestedandtherefore,werenotexercisable.EffectiveOctober21,2014,theboardofdirectorsgrantedtwoNQSOsforatotalof
57,030shares,withanexercisepriceof$0.11pershare,tocertainadvisorsofVirtuix,Inc.AsofMarch31,2015,11,881oftheseshareswerevested.
CompensationexpensepertainingtoISOsof$18,252andcompensationexpenseof$71,195pertainingtoNQSOswasrecordedasofMarch31,2015ingeneralandadministrative
expensesintheconsolidatedstatementofoperations.
Note8.ResearchandDevelopment
Expensesrelatingtoresearchanddevelopmentareexpensedasincurred.FortheperiodsendedMarch31,2015and2014,researchanddevelopmentconsistedofthefollowing:
SeeaccompanyingIndependentAuditorsReport
73

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014

Designexpenses
Gameandsoftwaredevelopmentexpenses
Hardwaredevelopmentexpenses
Prototypes
Otherresearchanddevelopmentexpenses

2015

247,971 $
261,216
29,866
182,637
204,333
926,023 $

2014

164,494
103,412
17,758
114,714
51,948
452,326

Note9.RoyaltyCommitments
TheCompanyhascertainroyaltycommitmentsassociatedwiththeshipmentofitsproductsfortheuseoflicensedsoftwareandmodificationstogetherwiththeCompanyshardware
andothersoftware.Royaltyexpenseisgenerallybasedonadollaramountperunitshippedandcanrangefrom$1perunitto$8perunit.AsofMarch31,2015and2014,noroyalty
expensehasbeenrecognizedintheconsolidatedstatementofoperations.
Note10.IncomeTaxes
Deferredtaxesarerecognizedfortemporarydifferencesbetweenthebasisofassetsandliabilitiesforfinancialstatementandincometaxpurposes.Thedifferencesrelateprimarilyto
depreciableassetsusingaccelerateddepreciationmethodsforincometaxpurposes,sharebasedcompensationexpense,andfornetoperatinglosscarryforwards.
TheCompanyrecognizesdeferredtaxassetstotheextentthatitbelievesthattheseassetsaremorelikelythannottoberealized.Inmakingsuch a determination, the Company
considersallavailablepositiveandnegativeevidence,includingfuturereversalsofexistingtaxabletemporarydifferences,projectedfuturetaxableincome,taxplanningstrategies,
andresultsofrecentoperations.IfitisdeterminedthattheCompanywouldbeabletorealizeitsdeferredtaxassetsinthefutureinexcessofitsnetrecordedamount,anadjustmentto
thedeferredtaxassetvaluationallowancewouldberecorded,whichwouldreducetheprovisionforincometaxes.DeferredtaxassetsandliabilitiesasofMarch31,2015and2014are
asfollows:

Deferredtaxassets:
Sharebasedcompensationexpense
Netoperatinglosscarryforward
Longtermdeferredtaxliabilities:
Propertyandequipment
Netdeferredtaxassetsandliabilities
Valuationallowance
Netdeferredtaxasset
SeeaccompanyingIndependentAuditorsReport
74

2015

24,206
1,463,515

(13,914)
1,473,807
(1,473,807)

2014

298,485

(2,985)
295,500
(295,500)

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
TheCompanyassessedtheneedforavaluationallowanceagainstitsnetdeferredtaxassetsanddeterminedafullvaluationallowanceisrequiredduetonetoperatinglossesforthe
periodsendedMarch31,2015and2014andcumulativelossesfrominceptionthroughMarch31,2015.Therefore,valuationallowancesof$1,473,807and$295,500wererecorded
fortheperiodsendedMarch31,2015and2014,respectively.Accordingly,noprovisionforincometaxeshasbeenrecognizedfortheperiodsendedMarch31,2015and2014.
TheCompany'sabilitytoutilizenetoperatinglosscarryforwardswilldependonitsabilitytogenerateadequatefuturetaxableincome.AtMarch31,2015and2014,theCompanyhad
netoperatinglosscarryforwardsavailabletooffsetfuturetaxableincomeintheamountof$4,304,455and$849,145,respectively,whichmaybecarriedforwardandwillexpireifnot
usedbetween2034and2035invaryingamounts.Suchamountshavebeenfullyreservedinthevaluationallowancediscussedabove.
ASC718providesthatincometaxeffectsofsharebasedpaymentsarerecognizedinthefinancialstatementsforthoseawardsthatwillnormallyresultintaxdeductionsunderexisting
taxlaw.UndercurrentU.S.federaltaxlaw,theCompanyreceivesacompensationexpensedeductionrelatedtoNQSOsonlywhenthoseoptionsareexercised.Accordingly,the
consolidatedfinancialstatementrecognitionofcompensationcostforNQSOscreatesadeductibletemporarydifference,whichresultsinadeferredtaxasset.TheCompanydoesnot
recognizeataxbenefitforcompensationexpenserelatedtoISOsunlesstheunderlyingsharesaredisposedofinadisqualifyingdisposition. Accordingly, compensation expense
relatedtoISOsistreatedasapermanentdifferenceforincometaxpurposes.
Note11.RelatedPartyTransactions
Virtuix,Inc.paidcertainexpensesonbehalfofVirtuixHoldings.Anintercompanyreceivableandpayableisrecordedintheamountof$10,963oneachrespectivecompanysbooks
atMarch31,2015,andtheamounteliminatesinthefinancialstatementconsolidation.
Virtuix,Inc.paidcertainexpensesonbehalfofVII,andanintercompanyreceivableandpayableisrecordedintheamountof$17,298and$20,000oneachrespectivecompanys
booksatMarch31,2015and2014,respectively.Theamountseliminateinthefinancialstatementconsolidation.
DuringtheyearendedMarch31,2015,theCompanyreceivedcashadvancesfromarelatedpartytotaling$60,000.AsmentionedinNote5,duringtheperiodendedMarch31,2014,
theCompanyenteredintotwopromissorynotestotaling$175,000witharelatedparty.AmountsduetotherelatedpartyatMarch31,2015and2014,were$60,000and$175,000,
respectively.
Note12.GoingConcern
Theaccompanyingconsolidatedfinancialstatementshavebeenpreparedonagoingconcernbasis,whichcontemplatestherealizationofassetsandthesatisfactionofliabilitiesinthe
normalcourseofbusiness.AsdiscussedinNote2,theCompanyhaselectedtoearlyadoptASU201415andfollowedthisguidanceinassessingthegoingconcernassumption.
SeeaccompanyingIndependentAuditorsReport
75

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
The Company is a business that has not commenced planned principal operations, has not generated meaningful revenues or profits since inception, has sustained net losses of
$3,524,322and$1,603,580fortheperiodsendedMarch31,2015and2014,respectively,andhasnotbroughtitsprimaryproducttomarketasofMarch31,2015or2014.These
factors,amongothers,raisesubstantialdoubtabouttheabilityoftheCompanytocontinueasagoingconcernwithinoneyearafterthedatethattheconsolidatedfinancialstatements
areissued.
Inmakingthisassessment,managementweighedthesignificanceofthefactors,conditions,andeventsconsidered.Managementprimarilybasedtheconclusionontheinceptionto
datecumulativelosses,lackofoperatinghistory,lackofmeaningfulrevenues,andthefactthattheproducthasnotcompleteddevelopmentandreadinessformarket.Thesefactors
weredeterminedtobetheprimarydriversoftheCompanysabilitytosustainitsoperatingcostsinthenearterm.Managementalsoperformedananalysisofinteriminformation
subsequenttoyearendandprojectionsoffutureoperatingresults,whichweregivenlessweightduetothesubjectivenatureofprojections.
Managementsplansrelevanttothegoingconcernassessmentincludedthefollowingconsiderations:

1.
2.
3.

The Company will continue to market its primary product and expects to continue to realize substantial cash flows from presales until the product is through
productionandreadyformarket.
The Company plans to complete production preparations and bring the product to market during the year ending March 31, 2016. The Company anticipates
significantrevenuesfromtheprimaryproductonceitisbroughttomarket.
TheCompanywillcontinuetoraisecapitalfromexistingshareholdersand3rdpartiesasnecessarytofunditsoperatingneeds.TheCompanyhasraisedadditional
capitalsubsequenttoMarch31,2015andintendstoraiseadditionalfundsduringtheyearendingMarch31,2016,asdescribedinNote14.

ManagementconcludedthatitsplanssuccessfullyalleviatethesubstantialdoubttotheabilityoftheCompanytocontinueasagoingconcernwithinoneyearafterthedatethatthe
consolidatedfinancialstatementsareissued.NoassurancecanbegiventhattheCompanywillbesuccessfulintheseefforts.
Theconsolidatedfinancialstatementsdonotincludeanyadjustmentsrelatingtotherecoverabilityandclassificationofrecordedassetamountsortheamountsandclassificationof
liabilitiesthatmightbenecessaryshouldtheCompanybeunabletocontinueasagoingconcern.
Note13.CommitmentsandContingencies
OnNovember20,2013,theCompanyenteredintoa24monthnoncancelableoperatingleaseagreementforofficespace.TheleasecommencedonJanuary1,2014andexpireson
December31,2015.A$12,728depositwaspaidontheleaseandmonthlyrentpaymentsrangefrom$2,734to$2,795overthelifeofthelease.
OnJune2,2014,theCompanyenteredintoa12monthrenewalonanoncancelableoperatingleaseagreementforofficespace.TheleaserenewalcommencedonSeptember1,2014
andexpiresonAugust31,2015.Monthlyrentpaymentsunderthisagreementare$3,400.
SeeaccompanyingIndependentAuditorsReport
76

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
Rentexpensewas$88,363and$37,475fortheperiodsendedMarch31,2015and2014,respectively.FutureminimumleasepaymentsforoperatingleasesasofMarch31,2015were
$42,155,allduewithinoneyear.
Note14.SubsequentEvents
EffectiveMay6,2015,thenumberofsharesofcommonstockauthorizedincreasedfrom15,000,000sharesto16,000,000shares,andtheCompanyalso increased its authorized
PreferredStockfrom7,000,000sharesto8,300,000shares.
OnJune24,2015,theCompanyacquired10,000sharesofcommonstockofVirtuixManufacturingLimited(VML),awhollyownedsubsidiary.VMLisaHongKongcorporation
thatwasformedtoconductmanufacturingoperationsandtransactbusinesswithChinesesuppliers.
OnJune25,2015,theCompanyenteredintoa39monthnoncancelableoperatingleaseagreementforofficespace.TheleasecommencedonJuly1,2015andexpiresonSeptember
30,2018,withanoptiontorenewtheleaseforanadditionalthreeyearperiod.A$48,000depositwaspaidontheleaseandmonthlyrentpaymentsrangefrom$6,750to$7,200over
thelifeofthelease.Futureminimumleasepaymentsunderthisleaseagreementareasfollows:
YearEndedMarch31,
2016
2017
2018
2019
TotalLeasePayments

$ 60,750

82,350

85,050

43,200
$ 271,350

BetweenJuly7,2015,andSeptember9,2015,349,690sharesofISOsweregrantedtocertainemployeesofVirtuix,Inc.atanexercisepriceof$0.32.
TheCompanyissuedsubordinatedunsecuredconvertiblepromissorynotesamountingto$879,701betweenMay2015,andJuly2015.Interestistobeaccruedat6%untilthenotes
matureonSeptember30,2015.If,onorbeforethematuritydate,theCompanyissuesorsellssharesofanypreferredstockoftheCompanyforcashinasingletransactionorseriesof
related transactions in which the gross proceeds to the Company equal at least $1,500,000, the entire outstanding principal plus accrued and unpaid interest of the notes will
automaticallybeconvertedintoeither(i)thesameclassorseriesofpreferredstockasareissued,atthesamepricepershareatwhichsuchstockisissuedandsoldbytheCompanyor
(ii)sharesofpreferredstockoftheCompanyatapricepershareof$1.20.If,onorbeforethematuritydate,theCompanyconsummatesadeemedliquidation,theentireoutstanding
principalplusaccruedandunpaidinterestofthenotesmaybeconvertedintosharesofpreferredstockatapricepershareequalto$1.20.Iftheabovehavenotoccurred,thenonthe
maturitydate,theentireoutstandingprincipalplusaccruedandunpaidinterestofthenoteswillbeconvertedintosharesofpreferredstockatapurchasepriceequalto$1.20pershare.
SeeaccompanyingIndependentAuditorsReport
77

VirtuixHoldings,Inc.andSubsidiaries
NotestotheConsolidatedFinancialStatements
AsofMarch31,2015and2014andfortheyearendedMarch31,2015andperiodfromApril
15,2013(inception)toMarch31,2014
TheCompanyisintheprocessofpursuinganoffering(ProposedOffering).TheProposedOfferingcallsfortheCompanytoofferforsaleunderRegulationA$15,000,000ofits
SeriesAPreferredStockatatobedeterminedpricebetween$2.00and$4.00pershare.SalesofthesesecuritiesareexpectedtocommenceduringthefiscalyearendingMarch31,
2016.TheCompanyexpectstoincurcostsofapproximately$80,000relatedtotheProposedOffering.ThereispresentlynosecondarymarketforCompanysstockandthereforethe
Company cannot guarantee that its securities will ever be tradeableonanexchangeorhaveanyotherliquidity.Thisofferingisnotyetfinalized nor qualified by the Securities
ExchangeCommission(SEC)andissubjecttochanges.ThesefinancialstatementsshouldnotberelieduponasabasisfordeterminingthetermsoftheProposedOfferingasthis
informationmaynotbecurrentoraccuraterelativetothefinaltermsoftheProposedOffering.
ManagementhasevaluatedsubsequenteventsthroughSeptember15,2015,thedatetheconsolidatedfinancialstatementswereavailabletobeissued.Basedonthisevaluation,no
additionalmaterialeventswereidentifiedwhichrequireadjustmentordisclosureintheseconsolidatedfinancialstatements.
SeeaccompanyingIndependentAuditorsReport
78

SUPPLEMENTARYINFORMATION

VirtuixHoldings,Inc.andSubsidiaries
ConsolidatingBalanceSheet(SupplementaryInformation)
AsofMarch31,2015

ASSETS

CURRENTASSETS
Cashandcashequivalents
Duefromrelatedparties
Prepaidsandothercurrentassets
TOTALCURRENTASSETS

NONCURRENTASSETS
Property,plantandequipment,net
Intangibles,net
Deferredcosts,net
TOTALNONCURRENTASSETS

INVESTMENTINSUBSIDIARIES

TOTALASSETS

LIABILITIESANDSTOCKHOLDERS'EQUITY

CURRENTLIABILITIES
Accountspayable
Accruedexpenses
Deferredrevenue
Duetorelatedparty

Currentportionofnotespayable
Less:discountonnotespayable
Currentportionofnotespayable,netofdiscount

TOTALCURRENTLIABILITIES
LONGTERMLIABILITIES

Notespayable,netofcurrentportion
Less:discountonnotespayable
Notespayable,netofdiscount

TOTALLONGTERMLIABILITIES

TOTALLIABILITIES

STOCKHOLDERS'EQUITY(DEFICIT)

Preferredstock
Additionalpaidincapitalpreferredstock
Commonstock
Additionalpaidincapitalcommonstock
Accumulateddeficit
TOTALSTOCKHOLDERS'EQUITY(DEFICIT)

TOTALLIABILITIESANDSTOCKHOLDERS'EQUITY

Virtuix

Holdings,Inc.

$
3,703,161

3,703,161

9,669

9,669

3,207,758

$
6,920,588

70,963

365,328

(17,599)

347,729

418,692

634,672

(24,932)

609,740

609,740

1,028,432

6,604

5,962,456

5,500

(82,404)

5,892,156

$
6,920,588

Virtuix,Inc.

$
173,496

28,261

47,498

249,255

100,291

50,373

150,664

$
399,919

$
28,501

76,274

1,866,722

1,971,497

1,971,497

2,000

3,428,325

(5,001,903)

(1,571,578)

$
399,919

SeeaccompanyingIndependentAuditorsreport
79

Virtuix

InteractiveI,

LLC

16,021

16,021

$
16,021

17,298

17,298

17,298

50,012

(51,289)

(1,277)

$
16,021

Eliminations

(28,261)

(28,261)

(3,207,758)

$ (3,236,019)

(28,261)

(28,261)

(28,261)

(2,000)

(3,205,758)

(3,207,758)

$ (3,236,019)

Consolidated

Balance

$
3,876,657

47,498

3,924,155

100,291

66,394

9,669.000

176,354

$
4,100,509

$
28,501

76,274

1,866,722

60,000.000

365,328.000
(17,599.000)
347,729.000

2,379,226

634,672

(24,932)
609,740.000

609,740

2,988,966

6,604

5,962,456

5,500

272,579

(5,135,596)

1,111,543

$
4,100,509

VirtuixHoldings,Inc.andSubsidiaries
ConsolidatingStatementofOperations(SupplementaryInformation)
FortheyearendedMarch31,2015
COSTOFREVENUES

GROSSPROFIT

OPERATINGEXPENSES
Sellingexpense
Generalandadministrativeexpense
Researchanddevelopmentexpense
TOTALOPERATINGEXPENSES

LOSSFROMOPERATIONS

OTHERINCOME(EXPENSE)
Interestincome
Interestexpense
TOTALOTHERINCOME(EXPENSE)

LOSSBEFOREINCOMETAXES

PROVISIONFORINCOMETAX
Federaltaxbenefit
Statetaxexpense
TOTALPROVISIONFORINCOMETAX

NETLOSS

Add:Netlossattributabletononcontrollinginterests,netoftax

NETLOSSATTRIBUTABLETOVIRTUIXHOLDINGS,INC.

3,286

3,286

(3,286)

6,791
(79,464)
(72,673)

(75,959)

2,672
2,672

(78,631)

(78,631)

301,820
2,213,521
925,523
3,440,864

(3,440,864)

(3,440,864)

(3,440,864)

(3,440,864)

SeeaccompanyingIndependentAuditorsreport
80

5,179
500
5,679

(5,679)

(5,679)

(5,679)

852

(4,827)

301,820
2,221,986
926,023
3,449,829

(3,449,829)

6,791.000
(79,464.000)
(72,673)

(3,522,502)

2,672
2,672

(3,525,174)

852

(3,524,322)

VirtuixHoldings,Inc.andSubsidiaries
ConsolidatingBalanceSheet(SupplementaryInformation)
AsofMarch31,2014
NONCURRENTASSETS
Property,plantandequipment,net
Intangibles,net
TOTALNONCURRENTASSETS

INVESTMENTINSUBSIDIARIES

TOTALASSETS

LIABILITIESANDSTOCKHOLDERS'EQUITY

CURRENTLIABILITIES
Accruedexpenses

Duetorelatedparty
Convertiblepromissorynotes
TOTALCURRENTLIABILITIES

LONGTERMLIABILITIES
DeferredRevenues
TOTALLONGTERMLIABILITIES

TOTALLIABILITIES

STOCKHOLDERS'EQUITY(DEFICIT)

Commonstock
Additionalpaidincapital
Accumulateddeficit
TOTALSTOCKHOLDERS'EQUITY(DEFICIT)

TOTALLIABILITIESANDSTOCKHOLDERS'EQUITY


$





$

405,000

579,468

2,740

175,000
400,000
577,740

577,740

5,500

(3,772)
1,728

579,468


$





$

57,634
10,697
68,331

293,328

64,382

64,382

1,251,854
1,251,854

1,316,236

2,000
536,132
(1,561,040)
(1,022,908)

293,328

SeeaccompanyingIndependentAuditorsreport
81


$





$

24,390

20,000

20,000

20,000

50,000
(45,610)
4,390

24,390


$





$

(405,000)

(425,000)

(20,000)

(20,000)

(20,000)

(2,000)
(403,000)

(405,000)

(425,000)


$





$

57,634
10,697
68,331

472,186

67,122

175,000
400,000
642,122

1,251,854
1,251,854

1,893,976

5,500
183,132
(1,610,422)
(1,421,790)

472,186

VirtuixHoldings,Inc.andSubsidiaries
ConsolidatingStatementofOperations(SupplementaryInformation)
FortheyearendedMarch31,2014

REVENUES

COSTOFGOODSSOLD

GROSSPROFIT

OPERATINGEXPENSES
Sellingexpense
Generalandadministrativeexpense
Researchanddevelopmentexpense
TOTALOPERATINGEXPENSES

LOSSFROMOPERATIONS

OTHEREXPENSE
Interestexpense
TOTALOTHEREXPENSE

LOSSBEFOREINCOMETAXES

PROVISIONFORINCOMETAX
Statetaxexpense
TOTALPROVISIONFORINCOMETAX

NETLOSS

Add:Netlossattributabletononcontrollinginterests,netoftax

NETLOSSATTRIBUTABLETOVIRTUIXHOLDINGS,INC.

Virtuix

Holdings,Inc.
$

500

500

(500)

(2,740)

(2,740)

(3,240)

532

532

(3,772)

$
(3,772)

Virtuix,Inc.
$
80,026

67,071

12,955

230,634

936,113

406,716

1,573,463

(1,560,508)

(1,560,508)

532

532

(1,561,040)

$ (1,561,040)

SeeaccompanyingIndependentAuditorsreport
82

Virtuix

InteractiveI,

LLC

45,610

45,610

(45,610)

(45,610)

(45,610)

6,842

$
(38,768)

Consolidated
Eliminations
Balance

$
$
80,026


67,071


12,955


230,634


936,613


452,326


1,619,573


(1,606,618)


(2,740)


(2,740)


(1,609,358)


1,064


1,064


(1,610,422)


6,842

$
$ (1,603,580)

INDEXTOEXHIBITS
1.PlacementAgreementwithSISecurities,LLC*
2.1.ThirdAmendedandRestatedCertificateofIncorporation*
2.2.Bylaws
3.1.AmendedandRestatedInvestors'RightsAgreement*
3.2.AmendedandRestatedRightofFirstRefusalAgreement*
4.FormofSubscriptionAgreement
11.1ConsentofAuditingAccountant,Artesian,CPA,LLC
12.Attorneyopiniononlegalityoftheoffering*
13.Testingthewatersmaterials*
15.1.ImageOmniview1
15.2.ImageOmniview2
15.3.ImageOmniActionShot1
15.4DraftofferingstatementpreviouslysubmittedpursuanttoRule252(d)(incorporatedbyreference)
15.5DraftamendedofferingstatementpreviouslysubmittedpursuanttoRule252(d)(incorporatedbyreference)
15.6.DraftamendedofferingstatementpreviouslysubmittedpursuanttoRule252(d)(incorporatedbyreference)
15.7CorrespondencepreviouslysubmittedpursuanttoRule252(d)
15.8CorrespondencepreviouslysubmittedpursuanttoRule252(d)
*TobefiledbyamendmenttothisOfferingCircular.
83
SIGNATURES
PursuanttotherequirementsofRegulationA,theissuercertifiesthatithasreasonablegroundstobelievethatitmeetsalloftherequirementsforfilingonForm1Aandhasduly
causedthisOfferingStatementtobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized,intheCityofAustin,StateofTexas,onJanuary4,2016.
VirtuixHoldingsInc.
By

/s/JanGoetgeluk

JanGoetgeluk,ChiefExecutiveOfficerof
VirtuixHoldingsInc.

ThisOfferingStatementhasbeensignedbythefollowingpersonsinthecapacitiesandonthedatesindicated.
/s/JanGoetgeluk
JanGoetgeluk,ChiefExecutiveOfficerandSoleDirector
Date:January4,2016
84