Okay, we are ready to begin with our next presentation, so please give a warm welcome to the stage, CEO of Virtuix, Jan Goetgeluk.
Thanks so much.
You are so welcome.
Thank you. Morning, everyone. Thanks for being here. My name is Jan Goetgeluk. I am the Founder and CEO of Virtuix, and we are in the field of full-body simulation, and we do that with our core technology, which is called the Omni. The Omni is an omnidirectional treadmill that lets you walk and run around in 360 degrees inside virtual worlds. We do that for gaming and entertainment on the consumer side, as well as for defense, training and simulation, and other markets. Let me start with showing you a quick video of our core technology and our latest treadmill, the Omni One, and this specific demo is geared towards gaming. Let us take a look.
[Presentation].
All right. That is Omni One. That is our latest treadmill. Full freedom of movement, crouching, kneeling, jumping, going sideways, backwards, all in 360 degrees. Just a couple of highlights about us. We are based in Austin, Texas. I am personally not from Texas. I am from Belgium originally. Came to the U.S. for my first job out of college. Decided to stay. I think the U.S. is still the best country in the world for entrepreneurship, for building a company. Out of business school, I worked at J.P. Morgan for a few years as an investment banker. I thought virtual reality was going to be the next big thing, and I thought the biggest problem that had not been solved yet was how to move around inside the virtual world.
I thought you need something like a treadmill, but in 360 degrees, an omnidirectional treadmill, and there was nothing that existed, so I started working on that. Eventually, I left my job at J.P. Morgan to bring the Omni to market and to start Virtuix. Here we are today. We are public now. We went public on Nasdaq in January with a direct listing with Maxim. Our share price has come down quite a bit since then, I got to say. Probably a couple of reasons for that. One, sort of a natural recalibration between our private company valuation and public company valuation.
As a private company, we raised about $50 million from investors, including big names like Mark Cuban, who invested 3x over various rounds, several venture funds, family offices, you name it. Our lock-ups came off in July, 15 million shares added to our float. Anyways, that all resulted in a lot of pressure on our stock price, but I think that is all behind us now. Look, we are at a bottom price now. Could be a good entry point for people to get into our stock and join us. Our technology has three core markets. One is the consumer market with our Meta product, and I will talk about that.
One is defense, training and simulation. We already work with all four major branches of the U.S. military: Navy, Marine Corps, Air Force, and the Army. We use AI to very quickly create virtual worlds based on camera footage and AI-driven 3D reconstruction, and I will show a video about that. Then we have a very strong IP portfolio. Just yesterday, we got a notice for our 27th patent that got allowed, and we keep adding to our IP portfolio. Three core markets, as I mentioned, consumer defense and then enterprise. If you think about industrial training, safety training. We sold units to Tesla, NASA, and so forth. All markets, we approach it with, okay, hardware first, an upfront purchase price for the hardware, but recurring revenues from software.
Software licenses, content, simulation work, and so forth. I will talk about the consumer market first. We just launched a product with Meta, Omni One for Meta Quest headsets. Off to a great start. We have been reporting 3x order growth. Our orders are up threefold since launching that product with Meta, so strong growth there on the consumer side. Meta has sold about 20 million or so Quest headsets, and by recent estimates, they have about 6 million active users, who now for the first time can use our product, the Omni, directly with their existing headset and games. Strong growth there. Great start to our partnership with Meta, and there is still so much more we can do with them from a marketing perspective. We are only scratching the surface. It is gaming for consumers, but it has that fitness element.
I want to stress that. It's gaming with fitness and exercise benefits. You're running, you're active, you're burning calories. One of our users lost 40 lbs in four months using our product every day. If you like gaming and you'd like to be more fit, but you don't like to exercise, this is a product for you. We work with all the big games, all the big VR titles, or at least almost all of them are compatible with our product. On the consumer side, it's a DTC model, direct-to-consumer model. It is an upfront purchase price for about $2,500 per system, more or less, depending on the SKU. Not for everybody, but it's the price of a gaming PC. It's the price of high-end connected exercise equipment. It's that type of product. With Affirm, it becomes a monthly payment, about $90 a month or so.
On that upfront purchase price, we make a target gross margin of about 40%. In addition to the hardware, we make recurring revenues from software, especially with our complete system. You make money from selling games, from selling subscriptions, and that adds to the margin. Defense is a major opportunity for us, a major market. We already work with all four branches of the U.S. Department of War. If you think about it, the military, for the longest time, they've had simulators for aircraft, flying planes. They have simulators for vehicles, driving tanks. Never before have they had a simulator for ground troops, for infantry, where soldiers can physically move around without limits in a virtual environment and get a sense of space, of distance, familiarize themselves with the battlefield before we put boots on the ground.
As I mentioned, we have a project with the Marine Corps, for example. They're coming to our office next week to check out our latest infantry fire team trainer. We're the lead systems integrator on that project for the Marine Corps. We also have a first contract with the Air Force for a Virtual Terrain Walk system. I'll show a video about that. We've sold units to the U.S. Army, to West Point, to the Navy. We have a development agreement with the Navy. So, lots of initial traction in the defense space for our technology. Also, another point I'll make here is that we announced that we're also working on an acquisition in the defense space, and we're looking at targets with revenues from $10 million- $50 million or so.
We announced that we were in advanced negotiations with one acquisition target with revenues at the top end of that range. So, it'll take our revenues in a step change to the $50 million-$60 million range, if completed, at a valuation and a financing structure that, again, if completed, we believe will create a lot of value for us and our shareholders. We hope to announce something there soon, but doing an acquisition in the defense space accelerates the momentum in that space even more. It's not just the revenues. We get access to contract vehicles, past performance, sales channels, and really advance our own technology towards bigger contracts, bigger awards in an accelerated way.
Here's that infantry fire team trainer I talked about. That's what we're showing to TECOM, to the Marine Corps next week, and I will take it to Quantico later this year. We also have a counter drone, counter UAS training system that we're working on also for the Marine Corps. Drones has been the biggest evolution here in warfare in the last five years or so. It's changing the battlefield, and so counter drone training is a top priority of Western militaries.
I'll show a quick video of our system here.
[Presentation].
Now, you're not just sitting down or standing still, you're physically moving inside that drill. You can do that with not just one soldier, but we can put 10 of these in a room and a whole team, a whole squad can train together.
You're telling me that whatever somebody can construct in the software to do, [audio distortion] that you guys can just implement it and do right there with the--
Yeah, right. It's very easy to integrate our movement component in existing software or existing content developers that have an application. We can add the movement to that, or we can make bespoke training simulations as well. This is another example, is our Virtual Terrain Walk system. This is the system for which we got an award, it's a contract with the U.S. Air Force, and that's more for mission planning. That's the one that uses AI-driven 3D reconstruction, to very quickly create a photorealistic replica of the battlefield based on camera footage.
Well, this is the last video I'll show you. Take a look.
[Presentation].
All right. That is a Virtual Terrain Walk system. Go ahead, Blair. There is nothing like it.
That is very impressive.
Thank you.
Let me say just a quick broader question. Have you ever spoken to Peloton about this? A, okay. If you wanted to do a hike, could you hike up a hill? Do you feel the uphill hike? If you are on a[audio distortion] Peloton that shows you the road you are going on or whatever, but it is not interactive like this. The other question, I do not know if you have it yet, can I have to jump over a rock or something, or step down, step up?
Yeah, the simulations will handle that. If you go up or down, your brain kind of fills in the gaps. Sure, we have an application called Treks. We can hike the Grand Canyon and other photorealistic environments, which is really neat. So on the consumer side, some people do call it a Peloton for gamers because you are active, you are moving, but you do not even think you are exercising. You are playing video games. You are having fun. So that is the big benefit.
[audio distortion] There is Pilates, too.
Right. Let me finish my presentation, then I will take questions at the end. To go back to the military side of things, look, it is revolutionary. There is nothing like it, and it is creating a lot of excitement in the U.S. military. If you think about the potential scale, a system like this, if we put 10 Omnis in one room, does not take up much space. A whole squad can train. That kind of simulation typically goes for $1 million, $1.5 million for the system, typically over the life of a five-year contract. The U.S. Army alone has 117 battalions that could use a system like that. So that gives you a sense of the potential scale here, and that is just the U.S. Army . Then we have the Marine Corps, the Air Force, Allied forces, NATO.
The defense space for us with our technology is a massive opportunity that we are focused on. With the acquisition that I talked about, it can really accelerate that even more. We have also an enterprise business. We have sold units to Tesla, to Figure AI on the robotics side, kind of teleoperation of humanoid robots. Quite neat. NASA, think about industrial training, safety training. Strong margins there, 70% margin on the enterprise side. Healthcare is another potential big market that is emerging, specifically cognitive therapy and autism therapy for children. A company like Floreo and others already use VR for autism therapy, teaching children life skills, passing the street, going to the supermarket. Adding the Omni to that, adding the movement component, the theory is that that makes it even more engaging, more effective.
There is a pilot that we will do in January around that with Rutgers University, and then expanding that to different therapy centers as part of the pilot. That could be another big market for us. The U.S. alone has 12,000 ABA therapy centers that could buy systems like this. We also sold systems to the VA, the Department of Veterans Affairs, for their VA Immersive program, which again, already uses VR for PTSD, pain management, cognitive therapy. So potentially a big market for us beyond consumer and defense. Financially, last year, our revenues were still modest, but growing quickly. Last year, $4.2 million in revenues, but now we are growing fast. As I mentioned, we reported 3x order growth on the consumer side, and then getting a lot of traction on the defense side. Not profitable yet.
We are investing in our growth, investing in scaling our business, but we aim to reach profitability here in the near future. How do we get there? I think it is by scaling our business, by building on our 30% or so gross margin that we have today. One, scaling our consumer business with Meta, driving that growth even further. As I mentioned, 3x growth, but we can push that and then continue that growth. Two, advancing our traction in the defense space and our initial pilots and initial contracts to the bigger programs, bigger awards, and we are making a lot of progress in that regard. Three, another big catalyst for our investors is that pending acquisition I mentioned. If it gets completed, I think it is going to be a big deal for us, a game changer. We will keep everybody posted on that.
In addition to that, our enterprise business, high margin sales, healthcare potentially is another big market coming behind consumer and defense. In a nutshell, look, we have a great technology, a great platform with several high growth markets that we are pursuing, most notably consumer and defense. Look, we have an exciting journey ahead of us. Follow our stock price. As I mentioned in the beginning, our stock has been under a lot of pressure. I think it is a great entry point for people that want to start following us. So come aboard and join us on our journey ahead. Thank you.
Any questions? Yes, sir.
You do not have any government contracts yet. You are meeting with the Marine Corps, so we can expect an answer from them in what?
No, we do have initial contracts. We had a first phase I SBIR with the Air Force, for example. The Marine Corps project is a pilot project. Look, the sales cycle to get to big programs, to big contracts, is typically a two- to three-year sales cycle. I would say we are about a year in, and probably ahead of schedule with all the traction we are having. It is a cycle. You go from pilot projects, initial systems, demonstrations, some paid work, paid phase I SBIRs, then you go to a phase II, which is a $2 million contract and so forth. We are going down that path, and the acquisition could accelerate that even more, because then we get immediate access to some of the contract vehicles that you can use to sell systems to the government, GSA, OASIS+, past performance metrics, and all that.
[audio distortion] How much cash do you have, and what is the burn?
Last quarter we reported $8.5 million in the bank pro forma, for some warrants that got exercised after the quarter. Our burn, if you look at our latest quarters, it is around $800,000 to $1 million a month or so, give or take. It is going down, I would say, as our revenues start to scale. We have runway until sometime next year. What we probably plan to do is we will get to S-3 eligibility in February and then looking to probably do a financing around that time. With the acquisition, we could do potentially a bridge sooner that will also be used partly to pay for some cash in the acquisition. Yes, sir.
What is the relationship with Meta exactly? Are they distributor, reseller? Do you buy their products? Do they buy yours?
Yeah, we're officially part of the Made for Meta program. We are an official reseller, retailer of Meta products. We have our bundle with Meta. We can use the Meta brands. We're listed on the Meta website as a partner, and so it's a collaboration with our product, Omni One for Quest with Meta. There's so much more we can do there. There's so much more we can do in so far as cross-marketing, more collaboration coming. It's been a great partnership and collaboration so far. It's driving a lot of growth for us on the consumer side.
[audio distortion] I have three questions. One is a business question, two are technical questions. Is that too many?
No, go for it. I'll answer quickly.
[audio distortion] Okay. You mentioned earlier in the presentation that you're thinking about a merger. Is it a merger, partnership?
Acquisition.
Okay. In the current state of the cash flow in the business, I understand the value of the partner that you described, what they bring to the party. What is the cash outlay for that acquisition?
Yeah. The question is about our pending acquisition. Details haven't been announced yet, other than that we've said publicly that in the way currently the proposed structure is looking, it would be, we believe, highly accretive to our shareholders the way it's laid out, and then could create a lot of value for us and our shareholders.
What's the accretion timing to get to the value gains that you make?
Yeah. We haven't detailed out the specifics just yet, but if you think about just from a broad perspective, we want to make a big splash in the defense space, as we have been doing. But the bigger vision there is around Virtuix Defense, around our core technology, but supplementing that with services, training, immersive training, and first acquisition can accelerate the momentum there. But the bigger vision is there's a lot of companies in the defense training space that have done well, $20 million-$30 million in revenues. They're family-owned, mom and pop shops. They don't really have an exit.
They're getting tired. They're too small to be bought by a Lockheed Martin. So that industry is ripe for a roll-up. Can we, as a public company, start rolling up some of these smaller mom and pop services and training companies? I think that's our vision, becoming that next big defense consortium around the theme of immersive training and services.
What time frame?
The first one, we will announce something here, hopefully, again, with all the necessary disclaimers, but soon and hopefully this year.
Sorry, I had a technical question. I agree that the military market is fantastic. I saw the motion capture, that you are capturing stuff real-time using real troops. Are you capturing real-time data from the drone strikes that are happening in the world?
Some of that data is classified, so we, as a private company, it is not always going to be our data. Sometimes, especially for sensitive missions and areas, it is the military themselves that will control the data and the capture, and we will just provide the movement piece.
One of the things that might be interesting is when you protect your licensing and that sort of thing, is to see if you can gain access to that data, because if you integrate that with the simulational data, it will be very valuable.
Yeah. I agree.
Thank you.
Yeah. No, thank you. Good questions.
[audio distortion] Unfortunately, that is all the time we have for today. Any additional questions can be addressed outside.
All right. Thank you. Thanks everyone.