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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended December 31, 2024

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from            to           

 

Commission File Number: 001-40556

 

THE GLIMPSE GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   81-2958271

(State or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification No.)

     

15 West 38th St., 12th Fl

New York, NY

   10018
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (917) 292-2685

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol   Name of each exchange on which registered
Common Stock, par value $0.001 per share   VRAR   The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
    Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of February 10, 2025, the registrant had 21,043,756 shares of common stock, par value $0.001 per share, outstanding.

 

 

 

 

 

 

THE GLIMPSE GROUP, INC.

TABLE OF CONTENTS

 

    Page No.
PART I FINANCIAL INFORMATION  
ITEM 1. FINANCIAL STATEMENTS (Unaudited) 3
  Condensed Consolidated Balance Sheets 4
  Condensed Consolidated Statements of Operations 5
  Condensed Consolidated Statements of Stockholders’ Equity 6
  Condensed Consolidated Statements of Cash Flows 8
  Notes to Condensed Consolidated Financial Statements 9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 25
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 32
ITEM 4. CONTROLS AND PROCEDURES 32
PART II OTHER INFORMATION  
ITEM 1. LEGAL PROCEEDINGS 33
ITEM 1A. RISK FACTORS 33
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 33
ITEM 6. EXHIBITS 34
SIGNATURES 35

 

2

 

 

THE GLIMPSE GROUP, INC.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

  Page
Index to Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Operations 5
Condensed Consolidated Statements of Stockholders’ Equity 6
Condensed Consolidated Statements of Cash Flows 8
Notes to Condensed Consolidated Financial Statements 9-24

 

3

 

 

THE GLIMPSE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   As of
December 31, 2024		   As of
June 30, 2024		 
   (Unaudited)   (Audited) 
ASSETS          
Cash and cash equivalents  $8,445,288   $1,848,295 
Accounts receivable   1,391,879    723,032 
Deferred costs/contract assets   222,784    170,781 
Notes receivable   124,900    - 
Prepaid expenses and other current assets   678,424    778,181 
Total current assets   10,863,275    3,520,289 
           
Equipment and leasehold improvements, net   73,244    167,325 
Right-of-use assets, net   187,688    452,808 
Intangible assets, net   261,789    487,867 
Goodwill   10,857,600    10,857,600 
Other assets   11,100    72,714 
Total assets  $22,254,696   $15,558,603 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Accounts payable  $295,776   $181,668 
Accrued liabilities   633,355    340,979 
Deferred revenue/contract liabilities   263,347    72,788 
Lease liabilities, current portion   143,929    364,688 
Contingent consideration for acquisitions, current portion   2,942,651    1,467,475 
Total current liabilities   4,279,058    2,427,598 
           
Long term liabilities          
 Contingent consideration for acquisitions, net of current portion   -    1,413,696 
Lease liabilities, net of current portion   57,690    178,824 
Total liabilities   4,336,748    4,020,118 
Commitments and contingencies   -    - 
Stockholders’ Equity          
Preferred Stock, par value $0.001 per share, 20 million shares authorized; 0 shares issued and outstanding   -    - 
Common Stock, par value $0.001 per share, 300 million shares authorized; 20,272,006 and 18,158,217 issued and outstanding, respectively   20,272    18,158 
Additional paid-in capital   81,925,269    74,559,600 
Accumulated deficit   (64,027,593)   (63,039,273)
Total stockholders’ equity   17,917,948    11,538,485 
Total liabilities and stockholders’ equity  $22,254,696   $15,558,603 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4

 

 

THE GLIMPSE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   2024   2023   2024   2023 
   For the Three Months Ended   For the Six Months Ended 
   December 31   December 31 
   2024   2023   2024   2023 
Revenue                    
Software services  $3,129,108   $2,032,272   $5,358,365   $5,044,343 
Software license/software as a service   39,826    44,153    248,938    136,962 
Total Revenue   3,168,934    2,076,425    5,607,303    5,181,305 
Cost of goods sold   1,144,007    655,509    1,659,310    1,837,018 
Gross Profit   2,024,927    1,420,916    3,947,993    3,344,287 
Operating expenses:                    
Research and development expenses   659,699    1,391,883    1,780,222    3,072,670 
General and administrative expenses   845,381    1,045,085    1,782,660    2,141,236 
Sales and marketing expenses   384,223    765,116    1,123,098    1,578,858 
Amortization of acquisition intangible assets   100,536    291,036    226,077    659,156 
Goodwill impairment   -    -    -    379,038 
Intangible asset impairment   -    8,275    -    522,166 
Change in fair value of acquisition contingent consideration   28,161    (1,268,014)   61,480    (4,025,544)
Total operating expenses   2,018,000    2,233,381    4,973,537    4,327,580 
Income (loss) from operations before other income   6,927    (812,465)   (1,025,544)   (983,293)
                     
Other income                    
Interest income   18,945    74,098    37,224    125,483 
Net Income (loss)  $25,872   $(738,367)  $(988,320)  $(857,810)
                     
Basic net income (loss) per share  $0.00   $(0.04)  $(0.05)  $(0.05)
Diluted net income (loss) per share  $0.00   $(0.04)  $(0.05)  $(0.05)
                     
Weighted-average shares used to compute basic net income (loss) per share   18,361,274    16,668,740    18,262,745    15,699,563 
Weighted-average shares used to compute diluted net income (loss) per share   24,521,976    16,668,740    18,262,745    15,699,563 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5

 

 

THE GLIMPSE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED DECEMBER 31, 2024

(Unaudited)

 

   Shares   Amount   Paid-In Capital   Deficit   Total 
   Common Stock   Additional   Accumulated     
   Shares   Amount   Paid-In Capital   Deficit   Total 
Balance as of October 1, 2024   18,166,217   $18,166   $     74,926,319   $(64,053,465)  $10,891,020 
Common stock and stock option based compensation expense   8,000    8    28,037    -    28,045 
Stock option-based board of directors expense   -    -    12,459    -    12,459 
Common stock issued for exercise of options   7,789    8    (8)   -    - 
Common stock issued in Securities Purchase Agreement and prefunded warrants, net   1,990,000    1,990    6,783,562    -    6,785,552 
Common stock issued for exercise of warrants   100,000    100    174,900    -    175,000 
Net income   -    -    -    25,872    25,872 
Balance as of December 31, 2024   20,272,006   $20,272   $81,925,269   $(64,027,593)  $17,917,948 

 

THE GLIMPSE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED DECEMBER 31, 2024

(Unaudited)

 

   Shares   Amount   Paid-In Capital   Deficit   Total 
   Common Stock   Additional   Accumulated     
   Shares   Amount   Paid-In Capital   Deficit   Total 
Balance as of July 1, 2024   18,158,217   $18,158   $     74,559,600   $(63,039,273)  $11,538,485 
Common stock and stock option based compensation expense   16,000    16    382,296    -    382,312 
Stock option-based board of directors expense   -    -    24,919    -    24,919 
Common stock issued for exercise of options   7,789    8    (8)   -    - 
Common stock issued in Securities Purchase Agreement and prefunded warrants, net   1,990,000    1,990    6,783,562    -    6,785,552 
Common stock issued for exercise of warrants   100,000    100    174,900    -    175,000 
Net loss   -    -    -    (988,320)   (988,320)
Balance as of December 31, 2024   20,272,006   $20,272   $81,925,269   $(64,027,593)  $17,917,948 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6

 

 

THE GLIMPSE GROUP, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED DECEMBER 31, 2023

(Unaudited)

 

   Shares   Amount   Paid-In Capital   Deficit   Total 
   Common Stock   Additional   Accumulated     
   Shares   Amount   Paid-In Capital   Deficit   Total 
Balance as of October 1, 2023   14,812,518   $14,813   $      68,801,845   $(56,764,421)  $12,052,237 
Common stock issued in Securities Purchase Agreement, net   1,885,715    1,886    2,966,615    -    2,968,501 
Common stock issued to vendors for compensation   17,671    18    46,328    -    46,346 
Stock based compensation expense   6,242    6    399,248    -    399,254 
Stock option-based board of directors expense   -    -    69,174    -    69,174 
Net loss   -    -    -    (738,367)   (738,367)
Balance as of December 31, 2023   16,722,146   $16,723   $72,283,210   $(57,502,788)  $14,797,145 

 

THE GLIMPSE GROUP, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED DECEMBER 31, 2023

(Unaudited)

 

   Shares   Amount   Paid-In Capital   Deficit   Total 
   Common Stock   Additional   Accumulated     
   Shares   Amount   Paid-In Capital   Deficit   Total 
Balance as of July 1, 2023   14,701,929   $14,702   $      67,854,108   $(56,644,978)  $11,223,832 
Common stock issued in Securities Purchase Agreement, net   1,885,715    1,886    2,966,615    -    2,968,501 
Common stock issued to vendors for compensation   28,571    29    73,253    -    73,282 
Common stock issued for exercise of options   8,819    9    (9)   -    - 
Common stock issued to satisfy contingent acquisition obligations   35,714    36    127,109    -    127,145 
Stock based compensation expense   61,398    61    1,118,859    -    1,118,920 
Stock option-based board of directors expense   -    -    143,275    -    143,275 
Net loss   -    -    -    (857,810)   (857,810)
Balance as of December 31, 2023   16,722,146   $16,723   $72,283,210   $(57,502,788)  $14,797,145 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

7

 

 

THE GLIMPSE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   2024   2023 
   For the Six Months Ended December 31, 
   2024   2023 
Cash flows from operating activities:          
Net loss  $(988,320)  $(857,810)
Adjustments to reconcile net loss to net cash used in operating activities:          
Amortization and depreciation   272,615    720,458 
Common stock and stock option based compensation for employees and board of directors   407,231    1,135,048 
Net gain on divestiture of subsidiaries   (1,397,066)   (1,000,000)
Reserve on note received in connection with divestiture of subsidiaries   1,500,000    1,000,000 
Gain on office lease termination   (34,660)   - 
Accrued non cash performance bonus fair value adjustment   -    (551,234)
Acquisition contingent consideration fair value adjustment   61,480    (4,025,544)
Impairment of intangible assets   -    901,204 
Issuance of common stock to vendors   -    73,282 
Adjustment to operating lease right-of-use assets and liabilities   (41,787)   (89,376)
           
Changes in operating assets and liabilities:          
Accounts receivable   (668,847)   208,052 
Deferred costs/contract assets   (52,003)   81,560 
Loans receivable   (40,900)   - 
Prepaid expenses and other current assets   99,757    (99,231)
Other assets   5,349    (1,507)
Accounts payable   114,108    (180,077)
Accrued liabilities   295,521    (343,474)
Deferred revenue/contract liabilities   214,369    (329,531)
Net cash used in operating activities   (253,153)   (3,358,180)
Cash flow from investing activities:          
Purchase of leasehold improvements and equipment   (26,406)   (8,751)
Net cash used in investing activities   (26,406)   (8,751)
Cash flows provided by financing activities:          
Proceeds from securities purchase agreement, net   6,785,552    2,968,501 
Proceeds from exercise of warrants   175,000    - 
Issuance of note receivable   (84,000)   - 
Cash provided by financing activities   6,876,552    2,968,501 
           
Net change in cash and cash equivalents   6,596,993    (398,430)
Cash and cash equivalents, beginning of year   1,848,295    5,619,083 
Cash and cash equivalents, end of period  $8,445,288   $5,220,653 
           
Non-cash Investing and Financing activities:          
           
Issuance of common stock for satisfaction of contingent liability  $-   $127,145 
Issuance of common stock for non cash performance bonus  $-   $127,145 
Lease liabilities arising from right-of-use assets  $20,344   $113,182 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

8

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1. DESCRIPTION OF BUSINESS

 

The Glimpse Group, Inc. (“Glimpse”, the “Company”) is an Immersive technology company, providing Virtual Reality (“VR”), Augmented Reality(“AR”) and Spatial Computing software and services. Glimpse’s operating entities are located in the United States. The Company was incorporated in the State of Nevada in June 2016.

 

Glimpse’s unique business model builds scale and a robust ecosystem, while simultaneously providing investors an opportunity to invest directly into this emerging industry via a diversified platform.

 

The Company completed an initial public offering (“IPO”) of its common stock on the Nasdaq Capital Market Exchange on July 1, 2021, under the ticker VRAR.

 

NOTE 2. LIQUIDITY AND CAPITAL RESOURCES

 

In December 2024, the Company completed a Securities Purchase Agreement (“SPA”) with an institutional investor selling 1.99 million shares of common stock and prefunded warrants to purchase up to 0.76 million shares of common stock that resulted in total net cash proceeds to the Company of $6.79 million. See Note 10.

 

As of the date that this financial statement was issued, the Company’s cash position was approximately $8.6 million, accounts receivable was approximately $0.80 million, contracted revenue backlog to be collected within one year was approximately $4.5 million, and the only non-operational liability is the potential $3.0 million cash payment of contingent consideration related to the Brightline Interactive, LLC (“BLI”) acquisition. As part of its previously announced strategic realignment around Spatial Computing and divestiture of non-core assets, net cash provided by operating activities was approximately $0.17 million for the three months ended December 31, 2024 and is expected to continue to be positive over the next twelve months. As such, the Company believes that it is sufficiently funded to meet its operational plan and future obligations beyond the 12-month period from the date that these financial statements were issued.

 

Given the above, doubt about the Company’s ability to continue as a going concern was alleviated and the accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.

 

NOTE 3. NASDAQ LISTING NOTIFICATION

 

On December 24, 2024, the Company received written notice from the Nasdaq Stock Market LLC (“Nasdaq”) informing the Company that it had regained compliance with Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share. This closes the matter that originated on September 3, 2024.

 

9

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the SEC. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of December 31, 2024, the results of operations for the three and six months ended December 31, 2024 and 2023, and cash flows for the six months ended December 31, 2024 and 2023. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three and six months ended December 31, 2024 are not necessarily indicative of the results to be expected for the entire year ending June 30, 2025 or for any subsequent periods. The consolidated balance sheet at June 30, 2024 has been derived from the audited consolidated financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended June 30, 2024.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the balances of Glimpse and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Use of Accounting Estimates

 

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the accompanying consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

The principal estimates relate to the valuation of allowance for doubtful accounts, stock options, warrants, revenue recognition, allocation of the purchase price of assets relating to business combinations, calculation of contingent consideration for acquisitions, fair value of intangible assets and goodwill impairment.

 

Cash and Cash Equivalents

 

Cash and equivalents represent cash and short-term, highly liquid investments, that are both readily convertible to known amounts of cash and so near their maturity they present insignificant risk of changes in value because of changes in interest rates, with maturities three months or less at the date of purchase.

 

Accounts Receivable

 

Accounts receivable consists primarily of amounts due from customers under normal trade terms. We recognize accounts receivable at the amount we expect to collect from our customers. We provide an allowance for credit losses to reflect the estimated amount of accounts receivable that may not be collectible. We determine the allowance for credit losses through a combination of specific identification of troubled accounts, historical loss experience, industry trends, current market conditions, and customer creditworthiness. The allowance for credit losses is adjusted periodically to reflect changes in these factors. As of December 31 and June 30, 2024 no allowance for doubtful accounts was recorded as all amounts were considered collectible.

 

10

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Customer Concentration and Credit Risk

 

Three customers accounted for approximately 80% (56%, 14% and 10%, respectively) of the Company’s total gross revenues during the three months ended December 31, 2024. Two of the same customers accounted for approximately 65% (44% and 21%, respectively) of the Company’s total gross revenues during the six months ended December 31, 2024. One customer accounted for approximately 28% of the Company’s total gross revenues during the three months ended December 31, 2023. No other customer accounted for 10% or greater of gross revenue during the period. The same customer and another customer accounted for approximately 44% (22% and 22%, respectively) of the Company’s total gross revenues during the six months ended December 31, 2023.

 

Five customers accounted for approximately 89% (30%, 25%, 12%, 11% and 11%, respectively) of the Company’s accounts receivable at December 31, 2024. Two of the same customers and a different customer accounted for approximately 50% (22%, 16% and 12%, respectively) of the Company’s accounts receivable at June 30, 2024.

 

The Company maintains cash in accounts that, at times, may be in excess of the Federal Deposit Insurance Corporation limit. The Company has not experienced any losses on such accounts.

 

Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the acquisition method. Goodwill is not amortized but instead is tested at least annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired.

 

Fair Value of Financial Instruments

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy, which is based on three levels of inputs, the first two of which are considered observable and the last unobservable, that may be used to measure fair value, is as follows:

 

● Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

● Level 2 — inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

 

● Level 3 — unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The Company classifies its cash equivalents within Level 1 of the fair value hierarchy on the basis of valuations based on quoted prices for the specific securities in an active market.

 

The Company’s contingent consideration is categorized as Level 3 within the fair value hierarchy. Contingent consideration is recorded within contingent consideration, current, and contingent consideration, non-current, in the Company’s consolidated balance sheets as of December 31 and June 30, 2024. Contingent consideration has been recorded at its fair values using unobservable inputs and have included using the Monte Carlo simulation option pricing framework, incorporating contractual terms and assumptions regarding financial forecasts, discount rates, and volatility of forecasted revenue. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with, at times, the assistance of a third-party valuation specialist.

 

11

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The Company’s other financial instruments consist primarily of accounts receivable, accounts payable, and other liabilities, and approximate fair value due to the short-term nature of these instruments.

 

Revenue Recognition

 

Nature of Revenues

 

The Company reports its revenues in two categories:

  

  ● Software Services: VR, AR and Spatial Computing projects, solutions and consulting services.
  ● Software License and Software-as-a-Service (“SaaS”): VR, AR or Spatial Computing software that is sold either as a license or as a SaaS subscription.

 

The Company applies the following steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

 

● identify the contract with a customer;

● identify the performance obligations in the contract;

● determine the transaction price;

● allocate the transaction price to performance obligations in the contract;

● recognize revenue as the performance obligation is satisfied;

● determine that collection is reasonably assured.

 

Revenue is recognized when the Company satisfies its performance obligation under the contract by transferring the promised product to its customer or service is performed and collection is reasonably assured. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A portion of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct. Other contracts can include various services and products which are at times capable of being distinct, and therefore may be accounted for as separate performance obligations.

 

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. As such, revenue is recorded net of returns, allowances, customer discounts, and incentives. Sales taxes and other taxes are excluded from revenues.

 

For distinct performance obligations recognized at a point in time, any unrecognized portion of revenue and any corresponding unrecognized expenses are presented as deferred revenue/contract liability and deferred costs/contract asset, respectively, in the accompanying condensed consolidated balance sheets. Contract assets include cash and equity based payroll costs, and may include payments to consultants and vendors.

 

For distinct performance obligations recognized over time, the Company records a contract asset (costs in excess of billings) when revenue is recognized prior to invoicing, or a contract liability (billings in excess of costs) when revenue is recognized subsequent to invoicing.

 

Significant Judgments

 

The Company’s contracts with customers may include promises to transfer multiple products/services. Determining whether products/services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Further, judgment may be required to determine the standalone selling price for each distinct performance obligation.

 

12

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Disaggregation of Revenue

 

The Company generated revenue for the three and six months ended December 31, 2024 and 2023 by delivering: (i) Software Services, consisting primarily of VR/AR/Spatial Computing software projects, solutions and consulting services, and (ii) Software Licenses & SaaS, consisting primarily of VR, AR and Spatial Computing software licenses or SaaS. The Company currently generates its revenues primarily from customers in the United States.

 

Revenue for a significant portion of Software Services projects and solutions (projects whereby, the development of the project leads to an identifiable asset with an alternative use to the Company) is recognized at the point of time in which the customer obtains control of the project, customer accepts delivery and confirms completion of the project. Certain other Software Services revenues are custom project solutions (projects whereby, the development of the custom project leads to an identifiable asset with no alternative use to the Company, and, in which, the Company also has an enforceable right to payment under the contract) and are therefore recognized based on the percentage of completion using an input model with a master budget. The budget is reviewed periodically and percentage of completion adjusted accordingly.

 

Revenue for Software Services consulting services and website maintenance is recognized when the Company performs the services, typically on a monthly retainer basis.

 

Revenue for Software Licenses is recognized at the point of time in which the Company delivers the software and customer accepts delivery. Software Licenses often include third party components that are a fully integrated part of the Software License stack and are therefore considered as one deliverable and performance obligation. If there are significant contractually stated ongoing service obligations to be performed during the term of the Software License or SaaS contract, then revenues are recognized ratably over the term of the contract.

 

Timing of Revenue

 

The timing of revenue recognition for the three and six months ended December 31, 2024 and 2023 was as follows:

 

   2024   2023   2024   2023 
   For the Three Months Ended   For the Six Months Ended 
   December 31,   December 31, 
   2024   2023   2024   2023 
Products and services transferred at a point in time  $3,080,816   $1,601,684   $5,264,646   $4,077,287 
Products and services transferred/recognized over time   88,118    474,741    342,657    1,104,018 
Total Revenue  $3,168,934   $2,076,425   $5,607,303   $5,181,305 

 

Remaining Performance Obligations

 

Timing of revenue recognition may differ from the timing of invoicing to customers. The Company generally records a receivable/contract asset when revenue is recognized prior to invoicing, or deferred revenue/contract liability when revenue is recognized subsequent to invoicing.

 

For certain Software Services project contracts the Company invoices customers after the project has been delivered and accepted by the customer. Software Service project contracts typically consist of designing and programming software for the customer. In most cases, there is only one distinct performance obligation, and revenue is recognized upon completion, delivery and customer acceptance. Contracts may include multiple distinct projects that can each be implemented and operated independently of subsequent projects in the contract. In such cases, the Company accounts for these projects as separate distinct performance obligations and recognizes revenue upon the completion of each project or obligation, its delivery and customer acceptance.

 

For contracts recognized over time, contract liabilities include billings invoiced for software projects for which the contract’s performance obligations are not complete.

 

13

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For certain other Software Services project contracts, the Company invoices customers for a substantial portion of the project upon entering into the contract due to their custom nature and revenue is recognized based upon percentage of completion. Revenue recognized subsequent to invoicing is recorded as a deferred revenue/contract liability (billings in excess of cost) and revenue recognized prior to invoicing is recorded as a deferred cost/contract asset (cost in excess of billings).

 

For Software Services consulting or retainer contracts, the Company generally invoices customers monthly at the beginning of each month in advance for services to be performed in the following month. The sole performance obligation is satisfied when the services are performed. Software Services consulting or retainer contracts typically consist of ongoing support for a customer’s software or specified business practices.

 

For Software License contracts, the Company generally invoices customers when the software has been delivered to and accepted by the customer, which is also when the performance obligation is satisfied. For SaaS contracts, the Company generally invoices customers in advance at the beginning of the service term.

 

For multi-period Software License contracts, the Company generally invoices customers annually at the beginning of each annual coverage period. Software License contracts consist of providing clients with software designed by the Company. For Software License contracts, there are generally no ongoing support obligations unless specified in the contract (becoming a Software Service).

 

Unfulfilled performance obligations represent amounts expected to be earned by the Company on executed contracts. As of December 31, 2024 and 2023, the Company had approximately $4.56 million and $1.06 million, respectively, in unfulfilled performance obligations.

 

Research and Development Costs

 

Research and development expenses are expensed as incurred, and include payroll, employee benefits and stock-based compensation expense. Research and development expenses also include third-party development and programming costs. Given the emerging industry and uncertain market environment the Company operates in, research and development costs are not capitalized.

 

Other Significant Accounting Policies

 

There have been no material changes to other significant accounting policies from those detailed in audited consolidated financial statements and notes thereto for the fiscal year ended June 30, 2024.

 

Reclassifications

 

Certain accounts in the prior period financial statements have been reclassified for comparative purposes to conform with the presentation in the current period financial statements.

 

Recent Accounting Pronouncements

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning July 1, 2025. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.

 

14

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 5. QREAL AND GLIMPSE TURKEY DIVESTITURE

 

As part of its previously announced strategic realignment around Spatial Core and divestiture of non-core assets, effective October 1, 2024, the Company divested the business of its wholly owned subsidiary company QReal, LLC (“QReal”) and its related operating entity GLIMPSE GROUP YAZILIM VE ARGE TICARET ANONIM SIRKET (“Glimpse Turkey”) in a management buyout by the General Manager of QReal.

 

The Company does not expect material changes to its expected revenues for years ended June 30, 2025 and 2026. The Company retains the revenues from QReal’s largest customer in full, until such time that the Company has collected and retained $1.35 million net cash in the aggregate, after taking into account all related operating expenses and fees (the “Milestone”). After satisfaction of the Milestone, the Company will receive a monthly cash revenue share for a period of 18 months in relation to any revenues generated from this same customer.

 

The assets, as defined, of Qreal/Glimpse Turkey, were sold in return for a $1.56 million senior secured convertible note from the purchasing (“New”) entity and a 10% equity stake in New entity. Principal payback of the note is tied directly to revenue collected by New entity (separate from the Milestone). The note converts to New entity equity upon certain equity capital raising of New entity, as defined. The Company accounts for the investment in New entity at cost ($100) because the Company does not control or have significant influence over the investment.

 

The Company recorded a non cash gain on the divestiture of approximately $1.40 million which is included in general and administrative expenses on the condensed consolidated statement of operations for the three and six months ended December 31, 2024. The Company has also fully reserved against the note as collectability is considered remote and recorded a loan loss reserve of $1.50 million in general and administrative expenses on the condensed statement of operations for the three and six months ended December 31, 2024. The note reserve fully offsets the gain on divestiture detailed above.

 

Revenue from the divested business that is not being retained going forward was approximately $0.07 million and $0.13 million for the three and six months ended December 31, 2024, and approximately $0.07 million and $0.16 million for the three and six months ended December 31, 2023. The Company anticipates operational cost savings from the divestiture after only retaining direct expenses related to the retained QReal largest customer.

 

Pursuant to the original acquisition of QReal by the Company in 2016, upon sale of the entity the original sellers are due 8% (“economic interest”) of the Milestone proceeds. As the achievement of the Milestone is uncertain, liability for these payments will be recorded as actual Milestone proceeds occur. The Company recorded an expense of approximately $0.01 million related to the economic interest in general and administrative expense on the condensed consolidated statement of operations for the three and six months ended December 31, 2024.

 

NOTE 6. IMPAIRMENT OF GOODWILL AND LONG-LIVED ASSETS

 

PulpoAR, LLC (“Pulpo”)

 

During the six months ended December 31, 2023 the Company divested the operations of its wholly owned subsidiary Pulpo due to poor revenue performance and non-strategic alignment.

 

Accordingly, the fair value of intangible assets, including goodwill, originally recorded at the time of the purchase, were determined to be to be zero. The net assets of $0.90 million (consisting of intangible assets - technology with net book value of $0.52 million and goodwill of $0.38 million) were written-off and were included in goodwill impairment and intangible asset impairment on the condensed consolidated statement of operations for the six months year ended December 31, 2023.

 

The assets, as defined, of Pulpo, were sold to an independent entity in return for a 10% interest in said entity and a $1.0 million note. The Company recorded a non cash $1.0 million gain on divestiture, which is included in general and administrative expenses on the condensed consolidated statement of operations for the three and six months ended December 31, 2023. The Company has fully reserved against the Note as collectability is considered remote and recorded a loan loss reserve against the note in general and administrative expenses on the condensed statement of operations for the three and six months ended December 31, 2023. This fully offsets the gain on divestiture detailed above.

 

15

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended December 31, 2023, Pulpo had revenue of $0 and $0.07 million, respectively, and net losses of $0.17 million and $0.43 million, respectively (exclusive of the goodwill and intangible asset impairment write-off), reported in the condensed consolidated statements of operations.

 

NOTE 7. GOODWILL AND INTANGIBLE ASSETS

 

The composition of goodwill at December 31 and June 30, 2024 is as follows:

 

   At December 31 and June 30, 2024 
   XRT   BLI   Total 
Goodwill  $300,000   $10,557,600   $10,857,600 

 

Intangible assets, their respective amortization period, and accumulated amortization at December 31 and June 30, 2024 are as follows:

  

   XR Terra   BLI   Glimpse Learning   Total     
   At December 31, 2024 
   Value ($)   Amortization Period (Years) 
   XR Terra   BLI   Glimpse Learning   Total     
Intangible Assets                         
Technology   300,000    880,000    326,435    1,506,435    3 
Less: Accumulated Amortization   (300,000)   (708,878)   (235,768)   (1,244,646)     
Intangible Assets, net  $-   $171,122   $90,667   $261,789      

 

   XR Terra   BLI   Glimpse Learning   Total     
   As of June 30, 2024 
   Value ($)   Amortization Period (Years) 
   XR Terra   BLI   Glimpse Learning   Total     
Intangible Assets                         
Technology   300,000    880,000    326,435    1,506,435    3 
Less: Accumulated Amortization   (274,995)   (562,214)   (181,359)   (1,018,568)     
Intangible Assets, net  $25,005   $317,786   $145,076   $487,867      

 

Intangible asset amortization expense for the three and six months ended December 31, 2024 was approximately $0.10 million and $0.23 million, respectively. Intangible asset amortization expense for the three and six months ended December 31, 2023 was approximately $0.29 million and $0.66 million, respectively.

 

Estimated intangible asset amortization expense as of December 31, 2024 for the remaining lives are as follows:

  

Years Ended June 30,    
2025 (remaining 6 months)  $201,570 
2026  $60,219 

 

16

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 8. FINANCIAL INSTRUMENTS

 

Cash and Cash Equivalents

 

The Company’s money market funds are categorized as Level 1 within the fair value hierarchy. As of December 31, and June 30, 2024, the Company’s cash and cash equivalents were as follows:

 

   As of December 31, 2024 
   Cost   Unrealized Gain (Loss)   Fair Value   Cash and Cash Equivalents 
Cash  $208,030   $-    -     $208,030 
Level 1:                           
Money market funds   8,237,258    -   $8,237,258    8,237,258 
Total cash and cash equivalents  $8,445,288   $-   $8,237,258   $8,445,288 

 

   As of June 30, 2024 
   Cost   Unrealized Gain (Loss)   Fair Value   Cash and Cash Equivalents 
Cash  $109,659   $-    -    $109,659 
Level 1:                           
Money market funds   1,738,636    -   $1,738,636    1,738,636 
Total cash and cash equivalents  $1,848,295   $-   $1,738,636   $1,848,295 

 

Contingent Consideration

 

As of December 31, and June 30, 2024, the Company’s contingent consideration liabilities related to acquisitions are categorized as Level 3 within the fair value hierarchy. Contingent consideration was valued at December 31, and June 30, 2024 using unobservable inputs, primarily internal revenue forecasts. Contingent consideration was valued at the time of acquisitions using unobservable inputs and have included using the Monte Carlo simulation model. This model incorporated revenue volatility, internal rate of return, and a risk-free rate. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance, at times, of a third-party valuation specialist.

 

As of December 31, 2024, the Company’s contingent consideration liabilities, current and non-current balances were as follows:

 

   Contingent Consideration at Purchase Date   Consideration Paid   Changes in Fair Value   Fair Value   Contingent Consideration 
   As of December 31, 2024 
   Contingent Consideration at Purchase Date   Consideration Paid   Changes in Fair Value   Fair Value   Contingent Consideration 
Level 3:                         
Contingent consideration, current - BLI   1,264,200    -    1,678,451    2,942,651    2,942,651 
Contingent consideration, current - XRT   -    (499,288)   499,288    -    - 
Total contingent consideration, current portion  $1,264,200   $-   $1,678,451   $2,942,651   $2,942,651 
                          
Level 3:                         
Contingent consideration, non-current - BLI   6,060,700    (1,497,894)   (4,562,806)   -    - 
Total contingent consideration, net of current portion  $6,060,700   $(1,497,894)  $(4,562,806)  $-   $- 

 

17

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Revenue projections for BLI are expected to trigger potential additional gross consideration of $3.0 million over the remainder of the contingent consideration payout period ending on July 31, 2025, payable in cash. The possibility of achieving any remaining revenue targets to trigger additional consideration is remote. Accordingly, contingent consideration remaining for the BLI acquisition at December 31, 2024 is calculated at the present value of the estimated remaining $3.0 million cash discounted at risk-free interest rates from the estimated payment dates. The range of potential additional contingent consideration related to BLI in excess of the amounts reflected on the balance sheet at December 31, 2024 is zero to $10.0 million (which is considered remote and no provision is made for it), of which up to $7.5 million is in cash and the remainder in the form of Company common stock (with share conversion at a $7.00 per share floor price).

 

The change in fair value of contingent consideration for BLI for the three and six months ended December 31, 2024 was a non-cash expense of approximately $0.03 million and $0.10 million, respectively, included as change in fair value of acquisition contingent consideration in the condensed consolidated statements of operations. This reflects the change in the time value of money related to the present value of payment calculation dates.

 

The change in fair value of contingent consideration for XR Terra, LLC (“XRT”) for the six months ended December 31, 2024 was a non-cash gain of approximately $0.04 million included as change in fair value of acquisition contingent consideration in the condensed consolidated statements of operations. This reflects the reversal of the estimated final consideration payment related to the acquisition of XRT. The contingent consideration payout period ended September 2024.

 

As of June 30, 2024, the Company’s contingent consideration liabilities current and non-current balances were as follows:

 

   Contingent Consideration at Purchase Date   Consideration Paid   Changes in Fair Value   Fair Value   Contingent Consideration 
   As of June 30, 2024 
   Contingent Consideration at Purchase Date   Consideration Paid   Changes in Fair Value   Fair Value   Contingent Consideration 
Level 3:                         
Contingent consideration, current - BLI  $1,264,200   $-   $167,561   $1,431,761   $1,431,761 
Contingent consideration, current - XRT   -    (499,288)   535,002    35,714    35,714 
Total contingent consideration, current portion  $1,264,200   $(499,288)  $702,563   $1,467,475   $1,467,475 
                          
Level 3:                         
Contingent consideration, non-current - BLI  $6,060,700   $(1,497,894)  $(3,149,110)  $1,413,696   $1,413,696 
Total contingent consideration, net of current portion  $6,060,700   $1,497,894   $3,149,110   $1,413,696   $1,413,696 

 

Revenue projections for BLI are expected to trigger potential additional gross consideration of $3.0 million over the remainder of the contingent consideration payout period ending in July 31, 2025, payable in cash. The possibility of achieving any remaining revenue targets to trigger additional consideration is remote. Accordingly, contingent consideration remaining for the BLI acquisition at June 30, 204 is calculated at the present value of the estimated remaining $3.0 million cash discounted at risk-free interest rates from the estimated payment dates.

 

The contingent consideration related to XRT at June 30, 2024 represents an accrual for anticipated achievement of an additional revenue threshold though the end of the contingent consideration period September 2024.

 

The change in fair value of contingent consideration for the three and six months ended December, 2023 was a non-cash gain of approximately $1.27 million and $4.03 million, respectively, included as change in fair value of acquisition contingent consideration in the condensed consolidated statements of operations. This was primarily driven by changes in the Company’s common stock price between the measurement dates and revisions to revenue projections for BLI and Sector 5 Digital, LLC (“S5D”).

 

18

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 9. DEFERRED COSTS/CONTRACT ASSETS AND DEFERRED REVENUE/CONTRACT LIABILITIES

 

As of December 31 and June 30, 2024, deferred costs/contract assets totaling $222,784 and $170,781, respectively, consists of costs deferred under contracts not completed and recognized at a point in time ($222,784 and $135,057, respectively), and costs in excess of billings under contracts not completed and recognized over time ($0 and $35,724, respectively). As of December 31 and June 30, 2024, deferred revenue/contract liabilities, totaling $263,347 and $72,788, respectively, consists of revenue deferred under contracts not completed and recognized at a point in time ($263,347 and $72,788, respectively), and billings in excess of costs under contracts not completed and recognized over time ($0 and $0 respectively).

 

The following table shows the reconciliation of the costs in excess of billings and billings in excess of costs for contracts recognized over time:

   

   As of
December 31, 2024		   As of
June 30, 2024		 
         
Cost incurred on uncompleted contracts  $  -   $106,035 
Estimated earnings   -    105,689 
Earned revenue   -    211,724 
Less: billings to date   -    176,000 
Billings in excess of costs, net  $-   $35,724 
           
Balance Sheet Classification          
Contract assets includes, costs and estimated earnings in excess of billings on uncompleted contracts  $-   $35,724 
Contract liabilities includes, billings in excess of costs and estimated earnings on uncompleted contracts   -    - 
Billings in excess of costs, net  $-   $35,724 

 

NOTE 10. EQUITY

 

Securities Purchase Agreements (“SPA”)

 

SPA 2024

 

On December 23, 2024, the Company completed a SPA with an institutional investor selling 1,990,000 shares of common stock at $2.65 per share and prefunded warrants to purchase up to 760,000 shares of common stock at $2.649 per warrant (which is convertible to one share of common stock on a one for one basis). The prefunded warrants have an exercise price of $0.001 per share of common stock, are immediately exercisable and may be exercised at any time until exercised in full (see Note 13).

 

The Company realized total net proceeds (after underwriting and professional fees) of $6.79 million from the SPA 2024.

 

19

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

SPA 2023

 

On October 2023, the Company completed a SPA with certain institutional investors selling 1,885,715 shares of common stock for approximately $3.30 million (at $1.75 per share). The Company realized net proceeds (after underwriting, professional fees and listing expenses) of $2.97 million.

 

Simultaneously, the exercise price on warrants to purchase 750,000 shares of common stock originally issued pursuant to a SPA entered into in November 2021 were repriced from $14.63 per share to $1.75 per share.

 

Common Stock Issued

 

Exercise of Warrants

 

On December 19, 2024, an institutional investor exercised warrants (issued in connection with a November 2021 SPA) convertible into 100,000 shares of common stock. The Company realized proceeds of $0.18 million ($1.75 per share).

 

Common stock issued to Employees as Compensation

 

During the six months ended December 31, 2024, the Company issued 16,000 unrestricted shares of common stock to an employee as compensation and recorded share-based compensation of approximately $0.01 million in sales and marketing expenses on the condensed consolidated statement of operations.

 

During the six months ended December 31, 2023, the Company issued approximately 61,000 unrestricted shares of common stock to various employees as compensation and recorded share-based compensation of approximately $0.21 million in general and administrative and sales and marketing expenses on the condensed consolidated statement of operations.

 

Common stock issued to Vendors

 

During the six months ended December 31, 2023, the Company issued approximately 29,000 unrestricted shares of common stock to various vendors for services performed and recorded share-based compensation of approximately $0.07 million, primarily in sales and marketing expenses on the condensed consolidated statement of operations.

 

Common stock issued for Exercise of Stock Options

 

During the six months ended December 31, 2024, the Company issued approximately 8,000 shares of common stock in cashless transactions upon exercise of the respective option grants and realized cash proceeds of zero.

 

During the six months ended December 31, 2023, the Company issued approximately 9,000 shares of common stock in cashless transactions upon exercise of the respective option grants and realized cash proceeds of zero.

 

Common stock issued to satisfy Contingent Acquisition Obligations

 

During the six months ended December 31, 2024, the Company issued approximately 36,000 unrestricted shares of common stock, with a fair value of approximately $0.13 million, to satisfy a contingent acquisition obligation for the achievement of a revenue performance milestone by XR Terra.

 

Warrants

 

In connection with the July 2021 IPO, the November 2021 SPA and the December 2024 SPA, the Company issued warrants, which are exercisable into Company common shares on a one-for-one basis, as detailed below. The warrants are not publicly traded.

 

20

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The only warrants exercised since issuance are 100,000 warrants from the November 2021 SPA exercised in December 2024.

 

The remaining outstanding warrants as of December 31, 2024 are (see Note 13):

  

   Warrants Outstanding   Exercise
Price		   Expiration
Date
            
July 2021 IPO   87,500   $7.00   June 2026
November 2021 SPA   481,000   $1.75   November 2026
November 2021 SPA   169,000   $1.75   May 2027
December 2024 SPA   760,000   $0.001   None
Total   1,497,500         

 

Employee Stock-Based Compensation

 

Stock Option issuance to Executives

 

In February 2023, pursuant to the Equity Incentive Plan, the Company granted certain executive officers 2.20 million stock options as a long-term incentive. The options have an exercise price of $7.00 per share. 0.22 million of these options vest ratably over four years (“Initial Options”). The remainder (“Target Options”) vest in fixed amounts based on achieving various revenue or common stock prices within seven years of grant date. Given the Company’s current stock price and revenue, the Company views the achievement of the milestones that would trigger vesting of the Target Options as remote.

 

Equity Incentive Plan

 

The Company’s 2016 Equity Incentive Plan (the “Plan”), as amended, has approximately 12.2 million common shares reserved for issuance. As of December 31, 2024, there were approximately 6.1 million shares available for issuance under the Plan. The shares available are after the granting of 1.98 million shares of executive Target Options.

 

The Company recognizes compensation expense relating to awards ratably over the requisite period, which is generally the vesting period.

 

Stock options have been recorded at their fair value. The Black-Scholes option-pricing model assumptions used to value the issuance of stock options under the Plan for the specific periods below are noted in the following table:

    

             
   For the Three Months Ended
December 31,		   For the Six Months Ended
December 31,		 
   2024   2023   2024   2023 
Weighted average expected terms (in years)   6.0    5.0    6.0    6.5 
Weighted average expected volatility   81.5%   101.3%   87.4%   97.8%
Weighted average risk-free interest rate   3.6%   4.1%   3.8%   4.6%
Expected dividend yield   0.0%   0.0%   0.0%   0.0%

 

The grant date fair value for options granted during the six months ended December 31, 2024 and 2023 was approximately $0.11 million and $0.41 million, respectively.

 

21

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The following is a summary of the Company’s stock option activity for the six months ended December 31, 2024 and 2023, excluding the executive Target Options:

    

       Weighted Average     
           Remaining     
       Exercise   Contractual   Intrinsic 
   Options   Price   Term (Yrs)   Value 
Outstanding at July 1, 2024   3,643,880   $3.95    6.5   $- 
Options Granted   196,301    2.50    9.6    - 
Options Exercised   (35,600)   2.50    2.3    - 
Options Forfeited / Cancelled   (760,304)   4.54    7.5    2,886 
Outstanding at December 31, 2024   3,044,277   $3.73    5.9   $528,944 
Exercisable at December 31, 2024   1,751,773   $3.93    4.6   $252,829 

 

The above table excludes executive Target Options: 1,980,000 granted, $7.00 exercise price, 8.12 remaining term in years, no intrinsic value. Vesting of these is considered remote.

 

       Weighted Average     
           Remaining     
       Exercise   Contractual   Intrinsic 
   Options   Price   Term (Yrs)   Value 
Outstanding at July 1, 2023   6,128,381   $4.84    7.0   $1,676,966 
Options Granted   259,847    2.57    9.7    - 
Options Exercised   (25,000)   2.00    2.9    5,474 
Options Forfeited / Cancelled   (1,662,564)   4.76    6.5    2,515 
Outstanding at December 31, 2023   4,700,664   $4.77    6.8   $- 
Exercisable at December 31, 2023   2,903,668   $4.19    5.4   $- 

 

The above table excludes executive Target Options: 2,100,000 granted (includes 120,000 attributable to an executive who resigned in July 2024), $7.00 exercise price, 9.1 remaining term in years, no intrinsic value. Vesting of these is considered remote.

 

The intrinsic value of stock options at December 31, 2024 and 2023 was computed using a fair market value of the common stock of $2.47 per share and $1.13 per share, respectively.

 

The Company’s stock option-based expense for the three months ended December 31, 2024 and 2023 consisted of the following:

    

             
   For the Three Months Ended   For the Six Months Ended 
   December 31   December 31 
   2024   2023   2024   2023 
Stock option-based expense :                    
Research and development expenses  $(17,580)  $177,728   $121,610   $448,857 
General and administrative expenses   108,835    75,817    221,843    173,543 
Sales and marketing expenses   (27,533)   134,223    66,535    287,647 
Board option expense   12,459    69,174    24,919    143,275 
Total  $76,182   $456,942   $434,908   $1,053,322 

 

There is no expense included for the executive officers’ Target Options.

 

At December 31, 2024 total unrecognized compensation expense to employees, board members and vendors related to stock options was approximately $1.39 million (excluding executive Target Options vested value of $8.53 million, which vesting is considered remote) and is expected to be recognized over a weighted average period of 1.70 years (which excludes the executive Target Options).

 

22

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11. EARNINGS PER SHARE

 

The following table presents the computation of basic and diluted net loss per common share:

   

             
   For the Three Months Ended  For the Six Months Ended
   December 31,  December 31,
Numerator:  2024  2023  2024  2023
Net income (loss)  $25,872   $(738,367)  $(988,320)  $(857,810)
Denominator:                    
Weighted-average common shares outstanding
for basic net income (loss) per share		   18,361,274    16,668,740    18,262,745    15,699,563 
                     
Weighted-average common shares outstanding
for diluted net income (loss) per share		   24,521,976    16,668,740    18,262,745    15,699,563 
                     
Basic net income (loss) per share  $0.00   $(0.04)  $(0.05)  $(0.05)
Diluted net income (loss) per share  $0.00   $(0.04)  $(0.05)  $(0.05)

 

Potentially dilutive securities, on a weighted average basis, that were not included in the calculation of diluted net loss per share attributable to common stockholders for the six months ended December 31, 2024 and for the three and six months ended December 31, 2023 because their effect would be anti-dilutive are as follows (in common equivalent shares):

   

        
   For the Three Months Ended  For the Six Months Ended
   December 31  December 31
   2024  2023  2024  2023
Options   5,262,985    5,387,729    7,330,558    7,518,548 
Warrants   897,717    837,500    867,609    837,500 
Total   6,160,702    6,225,229    8,198,167    8,356,048 

 

Stock options include 1,980,000 and 2,100,000 executive Target Options at December 31, 2024 and 2023, respectively. Vesting of these is considered remote.

 

NOTE 12. COMMITMENTS AND CONTINGENCIES

 

Lease Costs

 

The Company made cash payments for all operating leases for the six months ended December 31, 2024 and 2023, of approximately $0.11 million and $0.19 million, respectively, which were included in cash flows from operating activities within the consolidated statements of cash flows. As of December 31, 2024, the Company’s operating leases have a weighted average remaining lease term of 0.89 years and weighted average discount rate of 8.10%.

 

The total rent expense for all operating leases for the three months ended December 31, 2024 and 2023, was approximately $0.09 million and $0.12 million, respectively, with short-term leases making up an immaterial portion of such expenses.

 

The total rent expense for all operating leases for the six months ended December 31, 2024 and 2023, was approximately $0.20 million and $0.14 million, respectively, with short-term leases making up an immaterial portion of such expenses.

 

23

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Lease Commitments

 

The Company has various operating leases for its offices. These existing leases have remaining lease terms ranging from approximately 0 to 2 years. Certain lease agreements contain options to renew, with renewal terms that generally extend the lease terms by 1 to 3 years for each option. The Company determined that none of its current leases are reasonably certain to renew.

 

Future approximate undiscounted lease payments for the Company’s operating lease liabilities and a reconciliation of these payments to its operating lease liabilities as of December 31, 2024 are as follows:

    

Years Ended June 30,   
2025 (6 remaining months)   128,791 
2026   183,882 
2027   4,776 
Total future minimum lease commitments, including short-term leases   317,449 
Less: future minimum lease payments of short -term leases   (105,000)
Less: imputed interest   (10,830)
Present value of future minimum lease payments, excluding short term leases  $201,619 
      
Current portion of operating lease liabilities  $(143,929)
Non-current portion of operating lease liabilities   (57,690)
Total operating lease liability  $(201,619)

 

Contingent Consideration for Acquisitions

 

Contingent consideration for acquisitions consists of the following as of December 31 and June 30, 2024, respectively (see Note 8):

    

   As of December 31,  As of June 30,
   2024  2024
BLI, current portion  $2,942,651   $1,431,761 
XRT   -    35,714 
Subtotal current portion   2,942,651    1,467,475 
BLI, net of current portion   -    1,413,696 
Total contingent consideration for acquisitions  $2,942,651   $2,881,171 

 

In addition, S5D has significantly underperformed revenue expectations that were employed to determine fair value at acquisition. The possibility of achieving any remaining revenue targets to trigger additional consideration is remote and all earned consideration has been paid. Accordingly, there is no future contingent consideration recorded related to the S5D acquisition as of December 31 and June 30, 2024. The range of potential additional contingent consideration related to S5D in excess of the amounts reflected on the balance sheet as of December 31, 2024 is zero to $10.0 million (which is considered remote and no provision is made for it) in the form of Company common stock (with share conversion at a $7.00 per share floor price). The contingent consideration payout period ends January 31, 2025.

 

Potential Future Distributions Upon Divestiture or Sale

 

In some instances, upon a divestiture or sale of a subsidiary company or capital raise into subsidiary company, the Company is contractually obligated to distribute a portion of the net proceeds or capital raise to the senior management team of the divested subsidiary company. No material distribution payments are currently owed. See Note 5.

 

NOTE 13. SUBSEQUENT EVENTS

 

In January 2025, the warrants issued in connection with the SPA 2024 were exercised in full, resulting in the issuance of 760,000 shares of common stock. The Company realized proceeds of $760 ($0.001 per share). See Note 10.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto, and related disclosures, as of and for the fiscal year ended June 30, 2024, which are included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 filed with the Securities and Exchange Commission (the “SEC”). Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” “our” or “the Company,” refer to The Glimpse Group, Inc., a Nevada corporation and its entities.

 

Cautionary Statement Regarding Forward-Looking Statements

 

The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 filed with the SEC and in our other filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.

 

Overview

 

We are an Immersive technology company, providing enterprise focused Virtual Reality (VR), Augmented Reality (AR) and Spatial Computing software and services (Immersive technologies). Glimpse’s operating entities are located primarily in the United States. We believe that we offer significant exposure to the rapidly growing and potentially transformative Immersive technology markets, while mitigating downside risk via our diversified model and ecosystem.

 

Our ecosystem of Immersive technology entities, collaborative environment and diversified business model aims to simplify the challenges faced by companies in the emerging Immersive technology industry, create scale, build operational efficiencies, reduce time to market and enhance go-to-market synergies, while simultaneously providing investors an opportunity to invest directly via a diversified infrastructure.

 

The Immersive technology industry is an early-stage technology industry with nascent markets. We believe that this industry has significant growth potential across verticals, may be transformative, and that our diversified ecosystem create important competitive advantages. We currently target a wide array of industry verticals, including but not limited to: Corporate Training, Education, Healthcare, Government & Defense, Branding/Marketing/Advertising, Retail, Media & Entertainment, Corporate Events and Social VR support groups and therapy. We focus primarily on the business-to-business (B2B) and business-to-business-to-consumer (B2B2C) segments, and we are hardware agnostic.

 

In fiscal year 2024, we shifted our businesses focus to providing immersive technology solutions software and services (the “Strategic Shift”) that are primarily driven by Spatial Computing, Cloud and Artificial Intelligence (AI), which we refer to as “Spatial Core.” We believe that Spatial Core is a key differentiator, growth driver and competitive advantage for us.

 

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At the time of this filing, we have approximately 45 full time employees, primarily software developers, engineers and 3D artists.

 

The Glimpse Group, Inc. was incorporated in June 2016 under the laws of the State of Nevada, and is headquartered in New York, New York.

 

Business Organization Chart (as of December 31, 2024):

 

 

Significant Transactions

 

Divestiture

 

As part of our strategic realignment around Spatial Core and divestiture of non-core assets, effective October 1, 2024 we divested the business of our then wholly owned entities QReal, LLC (“QReal”) and its related operating entity GLIMPSE GROUP YAZILIM VE ARGE TİCARET ANONİM ŞİRKET (“Turkey”) in a management buyout by the general manager of QReal (the “Divestiture”).

 

Pursuant to the Divestiture, we retain the contract and resulting revenues from QReal’s largest customer in full until such time that we have collected and retained $1.35 million net cash in the aggregate, after taking into account all related operating expenses and fees (the “Milestone”). After satisfaction of the Milestone, we will receive a monthly cash revenue share for a period of 18 months in relation to any revenues generated from this same customer. In connection with the Divestiture, we were also issued (i) a $1.56 million senior secured convertible note in the new independent entity and (ii) a minority equity stake in the new independent entity. Principal payback on the senior secured convertible note is currently considered remote and is tied directly to revenue collected by the new entity (separate from the Milestone).

 

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Securities Purchase Agreement

 

On December 23, 2024, we closed a registered direct offering pursuant to a securities purchase agreement to which we sold to an institutional investor 1,990,000 shares of our common stock and prefunded warrants to purchase up to 760,000 shares of our common stock. The purchase price for each share of common stock was $2.65 and the purchase price for each prefunded warrant was $2.649 (which was equal to the purchase price per share of common stock, less $0.001).

 

The prefunded warrants had an exercise price of $0.001 per share of common stock, became immediately exercisable upon issuance, and were fully exercised in January 2025.

 

We realized net proceeds (after placement agent fees and other offering expenses) of $6.79 million from the offering.

 

Financial Highlights for the three and six months ended December 31, 2024 compared to the three and six months ended December 31, 2023.

 

Results of Operations

 

The following table sets forth our results of operations for the three months and six months ended December 31, 2024 and 2023:

 

Summary P&L

 

   For the Three Months Ended       For the Six Months Ended     
   December 31,   Change   December 31,   Change 
   2024   2023   $   %   2024   2023   $   % 
   (in millions)      (in millions)    
Revenue  $3.17   $2.08   $1.09    52%  $5.61   $5.18   $0.43    8%
Cost of Goods Sold   1.14    0.66    0.48    73%   1.66    1.84    (0.18)   -10%
Gross Profit   2.03    1.42    0.61    43%   3.95    3.34    0.61    18%
Total Operating Expenses   2.02    2.23    (0.21)   -9%   4.97    4.33    0.64    15%
Income (Loss) from Operations before Other Income   0.01    (0.81)   0.82    101%   (1.02)   (0.99)   (0.03)   -3%
Other Income   0.01    0.07    (0.06)   86%   0.04    0.13    (0.09)   69%
Net Income (Loss)  $0.02   $(0.74)  $0.76    103%  $(0.98)  $(0.86)  $(0.12)   -14%

 

Revenue

 

   For the Three Months Ended       For the Six Months Ended     
   December 31,   Change   December 31,   Change 
   2024   2023   $   %   2024   2023   $   % 
   (in millions)       (in millions)     
Software Services  $3.13   $2.03   $1.10    54%  $5.36   $5.04   $0.32    6%
Software License/Software as a Service   0.04    0.05    (0.01)   -20%   0.25    0.14    0.11    79%
Total Revenue  $3.17   $2.08   $1.09    52%  $5.61   $5.18   $0.43    8%

 

Total revenue for the three months ended December 31, 2024 was approximately $3.17 million compared to approximately $2.08 million for the three months ended December 31, 2023, an increase of 52%. Total revenue for the six months ended December 31, 2024 was approximately $5.61 million compared to approximately $5.18 million for the six months ended December 31, 2023, an increase of 8%. The increase for both periods reflects a new Spatial Core customer, with the six month 2023 period also including revenue of certain legacy non-Spatial core customers.

 

We break out our revenues into two main categories - Software Services and Software License.

 

●Software Services revenues are primarily comprised of Immersive technology projects, services related to our software licenses and consulting retainers.
   
 ●Software License revenues are comprised of the sale of our internally developed Immersive technology software as licenses or as software-as-a-service (SaaS).

 

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For the three months ended December 31, 2024, Software Services revenue was approximately $3.13 million compared to approximately $2.03 million for the three months ended December 31, 2023, an increase of approximately 54%. For the six months ended December 31, 2024, Software Services revenue was approximately $5.36 million compared to approximately $5.04 million for the six months ended December 31, 2023, an increase of approximately 6%. The increase for both periods reflects a new Spatial Core customer, with the six month 2023 period also including revenue of certain legacy non-Spatial core customers.

 

For the three months ended December 31, 2024, Software License revenue was approximately $0.04 million compared to approximately $0.05 million for the three months ended December 31, 2023, essentially flat period over period. For the six months ended December 31, 2024, Software License revenue was approximately $0.25 million compared to approximately $0.14 million for the six months ended December 31, 2023, an increase of 79%. The increase reflects the addition of a new customer.

 

Customer Concentration

 

Three customers accounted for approximately 80% (56%, 14% and10%, respectively) of the Company’s total gross revenues during the three months ended December 31, 2024. One of the same customers accounted for approximately 28% of the Company’s total gross revenues during the three months ended December 31, 2023. Two customers accounted for approximately 65% (44% and 21%, respectively) of the Company’s total gross revenues during the six months ended December 31, 2024.One of the same customers and another customer accounted for approximately 44% (22% and 22%, respectively) of the Company’s total gross revenues during the six months ended December 31, 2023.

 

Gross Profit

 

   For the Three Months Ended       For the Six Months Ended     
   December 31,   Change   December 31,   Change 
   2024   2023   $   %   2024   2023   $   % 
   (in millions)       (in millions)     
Revenue  $3.17   $2.08   $1.09    52%  $5.61   $5.18   $0.43    8%
Cost of Goods Sold   1.14    0.66    0.48    73%  $1.66    1.84    (0.18)   -10%
Gross Profit  $2.03   $1.42   $0.61    43%  $3.95   $3.34   $0.61    18%
Gross Profit Margin   64%   68%            70%   64%          

 

Gross profit margin was approximately 64% for the three months ended December 31, 2024, compared to approximately 68% for the three months ended December 31, 2023. This decrease reflects a change in revenue mix where project related comparatively lower margin revenue represented a greater portion of total revenue than higher margin recurring revenue. Gross profit margin was approximately 70% for the six months ended December 31, 2024 compared to approximately 64% for the six months ended December 31, 2023. The increase reflects higher project margin in the current period reflecting greater use of internal staffing.

 

For the three months ended December 31, 2024 and 2023, internal staffing was approximately $0.86 million (75% of total cost of revenue) and approximately $0.44 million (67% of total cost of revenue), respectively. For the six months ended December 31, 2024 and 2023, internal staffing was approximately $1.28 million (77% of total cost of revenue) and approximately $1.10 million (60% of total cost of revenue), respectively. The percentage increase reflects our strategic shift to Spatial Core and less reliance on third party, higher cost suppliers.

 

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Operating Expenses

 

   For the Three Months Ended       For the Six Months Ended     
   December 31,   Change   December 31,   Change 
   2024   2023   $   %   2024   2023   $   % 
   (in millions)       (in millions)     
Research and development expenses  $0.66   $1.39   $(0.73)   -53%  $1.78   $3.07   $(1.29)   -42%
General and administrative expenses   0.85    1.05    (0.20)   -19%   1.78    2.14    (0.36)   -17%
Sales and marketing expenses   0.38    0.77    (0.39)   -51%   1.12    1.57    (0.45)   -29%
Amortization of acquisition intangible assets   0.10    0.29    (0.19)   -66%   0.23    0.66    (0.43)   -65%
Subtotal  $1.99   $3.50   $(1.51)   -43%  $4.91   $7.44   $(2.53)   -34%
                                         
Intangible asset impairment   -    0.01    (0.01)   -100%   -    0.90    (0.90)   -100%
Change in fair value of acquisition contingent consideration   0.03    (1.28)   1.31    -102%   0.06    (4.01)   4.07    -101%
Total Operating Expenses  $2.02   $2.23   $(0.21)   -9%  $4.97   $4.33   $0.64    15%

 

Operating expenses for the three months ended December 31, 2024 were approximately $2.02 million compared to approximately $2.23 million for the three months ended December 31, 2023, a decrease of approximately 9%. Operating expenses for the six months ended December 31, 2024 were approximately $4.97 million compared to approximately $4.33 million for the six months ended December 31, 2023, an increase of approximately 15%. Excluding the change in fair value of acquisition contingent consideration and intangible asset impairment, operating expenses decreased 43% and 34% for the three and six months ended December 31, 2024 compared to the comparable periods in 2023. The decrease reflects our Strategic Shift and reduction in non core businesses.

 

Research and Development

 

Research and development expenses for the three months ended December 31, 2024 were approximately $0.66 million compared to $1.39 million for the three months ended December 31, 2023, a decrease of approximately 53%. Research and development expenses for the six months ended December 31, 2024 were approximately $1.78 million compared to $3.07 million for the six months ended December 31, 2023, a decrease of approximately 42%.The decreases for both periods reflect the divestiture of QReal/Turkey, more efficient use of headcount (portion that is allocated to cost of goods sold) and other headcount reductions as part of our Strategic Shift.

 

General and Administrative

 

General and administrative expenses for the three months ended December 31, 2024 were approximately $0.85 million compared to approximately $1.05 million for the three months ended December 31, 2023, a decrease of approximately 19%. General and administrative expenses for the six months ended December 31, 2024 were approximately $1.78 million compared to approximately $2.14 million for the six months ended December 31, 2023, a decrease of approximately 17%. The decreases for both periods reflect the divestiture of QReal/Turkey, headcount reductions as part of our Strategic Shift, and certain corporate administrative cost reductions.

 

Sales and Marketing

 

Sales and marketing expenses for the three months ended December 31, 2024 were approximately $0.38 million compared to approximately $0.77 million for the three months ended December 31, 2023, a decrease of approximately 51%. Sales and marketing expenses for the six months ended December 31, 2024 were approximately $1.12 million compared to approximately $1.57 million for the six months ended December 31, 2023, a decrease of approximately 29%. The decrease for both periods reflect the divestiture of Qreal/Turkey, partially offset by an increase in incentive pay related to the increase in revenue.

 

Amortization of Acquisition Intangible Assets

 

Amortization of acquisition intangible assets expense for the three months ended December 31, 2024 was approximately $0.10 million compared to approximately $0.29 million for the three months ended December, 2023, a decrease of approximately 66%. Amortization of acquisition intangible assets expense for the six months ended December 31, 2024 was approximately $0.23 million compared to approximately $0.66 million for the six months ended December, 2023, a decrease of approximately 65%. The decrease for both periods is attributable to the write off of BLI intangible assets – legacy customer relationships in June 2024.

 

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Intangible Asset Impairment

 

The $0.01 million and $0.90 million impairment for the three and six months ended December 31, 2023 represents the write-off of goodwill and the net intangible asset - technology attributable to the divestiture of PulpoAR, LLC.

 

Change in Fair Value of Acquisition Contingent Consideration

 

Change in fair value of acquisition contingent consideration for the three months ended December 31, 2024 was an expense of approximately $0.03 million compared to a gain of $1.28 million for the three months ended December 31, 2023. Change in fair value of acquisition contingent consideration for the six months ended December 31, 2024 was an expense of approximately $0.06 million compared to a gain of $4.01 million for the six months ended December 31, 2023. The expense in 2024 represents the change in the time value of money related to the present value of future consideration payments related to the BLI acquisition. The gain in 2023 was driven by revisions to revenue forecasts and a decrease in the common stock price of Glimpse between measurement dates.

 

Other Income

 

Other income was approximately $0.01 million and $0.07 million, respectively, for the three months ended December 31, 2024 and 2023. Other income was approximately $0.04 million and $0.13 million, respectively, for the six months ended December 31, 2024 and 2023. This income represents interest income and the decreases in 2024 reflect reduced cash balances.

 

Net Loss

 

Net income for the three months ended December 31, 2024 was approximately $0.02 million compared to a loss of approximately $0.74 million for the comparable 2023 period. This improvement reflects our Strategic Shift and reduction in non core businesses. Net loss for the six months ended December 31, 2024 and 2023 was approximately $0.98 million and $0.86 million, respectively. Excluding the gain from change in fair value of acquisition contingent consideration and intangible asset impairment in 2023 (see Operating Expenses section above), the loss in 2023 was approximately $3.97 million, and the reduction in loss based on this comparison reflects our Strategic Shift and reduction in non core businesses.

 

Non-GAAP Financial Measures

 

The following discussion and analysis includes both financial measures in accordance with Generally Accepted Accounting Principles (“GAAP”), as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, net income (loss), operating income (loss), cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. Our management uses and relies on EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the aforementioned non-GAAP financial measures in planning, forecasting and analyzing future periods.

 

Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the described excluded items.

 

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The Company defines Adjusted EBITDA as income (or loss) from continuing operations before the items in the table below. Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing the impact of items of a non-operational nature that affect comparability.

 

We have included a reconciliation of our financial measures calculated in accordance with GAAP to the most comparable non-GAAP financial measures. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between the Company and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.

 

The following table presents a reconciliation of net loss to Adjusted EBITDA for the three and six months ended December 31, 2024 and 2023:

 

   For the Three Months Ended   For the Six Months Ended 
   December 31,   December 31, 
   2024   2023   2024   2023 
   (in millions)   (in millions) 
Net income (loss )  $0.02   $(0.74)  $(0.98)  $(0.86)
Depreciation and amortization   0.12    0.32    0.27    0.72 
EBITDA income (loss)   0.14    (0.42)   (0.71)   (0.14)
Stock based compensation expenses   0.04    0.51    0.41    1.21 
Loss on subsidiary divestiture   0.10    -    0.10    - 
Gain on office lease termination   (0.03)   -    (0.03)   - 
Intangible asset impairment   -    0.01    -    0.90 
Non cash change in fair value of accrued performance bonus   -    (0.16)   0.06    (0.55)
Non cash change in fair value of acquisition contingent consideration   0.03    (1.27)   -    (4.03)
Adjusted EBITDA income (loss)  $0.28   $(1.33)  $(0.17)  $(2.61)

 

Adjusted EBITDA income was $0.28 million for the three months ended December 31, 2024 compared to a $1.33 million loss for the three months ended December 31, 2023. Adjusted EBITDA loss was $0.17 million for the six months ended December 31, 2024 compared to a $2.61 million loss for the six months ended December 31, 2023. The improvement in both periods reflects our Strategic Shift and reduction in non core businesses.

 

Liquidity and Capital Resources

 

   For the Six Months Ended     
   December 31,   Change 
   2024   2023   $   % 
   (in millions) 
Net cash used in operating activities  $(0.25)  $(3.36)  $3.11    93%
Net cash used in investing activities   (0.03)   (0.01)   (0.02)   -200%
Net cash provided by financing activities   6.87    2.97    3.90    -131%
Net decrease in cash, cash equivalents and restricted cash   6.59    (0.40)   6.99    N/A 
Cash, cash equivalents and restricted cash, beginning of year   1.85    5.62    (3.77)   -67%
Cash, cash equivalents and restricted cash, end of period  $8.44   $5.22   $3.22    62%

 

Operating Activities

 

Net cash used in operating activities was approximately $0.25 million for the six months ended December 31, 2024, compared to approximately $3.36 million during the six months ended December 31, 2023, an improvement of approximately $3.11 million. This was driven primarily driven by improved profit margins and expenses reductions reflective of our Strategic Shift and reduction in non core businesses.

 

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Investing Activities

 

Net cash used in investing activities for the six months ended December 31, 2024 was approximately $0.03 compared to a $0.01 million during the comparable 2023 period. Both periods represent minimal fixed asset additions.

 

Financing Activities

 

Net cash provided by financing activities during the six months ended December 31, 2024 was approximately $6.87 million compared to approximately $2.97 million during the six months ended December 31, 2023. Both periods represent proceeds of securities purchase agreements entered into with institutional investors.

 

Capital Resources

 

As of December 31, 2024, the Company had cash and cash equivalents of $8.45 million.

 

As of December 31, 2024, the Company had no outstanding debt obligations.

 

As of December 31, 2024, the Company had no issued and outstanding preferred stock.

 

As of December 31, 2024, contingent consideration for acquisition liabilities contains cash components ranging up to $3.0 million, potentially payable through September 2025 contingent on BLI achieving certain revenue milestones.

 

Recently Adopted Accounting Pronouncements

 

Please see Note 4 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q that describes the impact, if any, from the adoption of recent accounting pronouncements.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not required for smaller reporting companies.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of such period.

 

In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, we are required to apply judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

During the period ended December 31, 2024, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 1A. Risk Factors

 

Our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 contains a discussion of the material risks associated with our business. There have been no material changes to the risks described in such Annual Report on Form 10-K.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Recent Sale of Unregistered Equity Securities

 

During the three months ended December 31, 2024, the Company issued 15,789 shares of common stock for:

 

   Number of Shares   Cash Proceeds   Value of Shares 
Compensation expense   8,000   $       -   $19,473 
Exercise of options   7,789         6,056 
Total   15,789   $-   $25,529 

 

Please refer to Note 10 of the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

 

The foregoing transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof.

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

None

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

33

 

 

Item 6. Exhibits

 

The following exhibits are filed as part of this Quarterly Report on Form 10-Q.

 

Exhibit

Number

   Description of Exhibit
     
31.1   Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.
     
31.2   Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.
     
32.1   Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(b) or 15d-14(b) of the Exchange Act and 18 U.S.C. Section 1350.
     
101.INS   Inline XBRL Instance Document.
     
101.SCH   Inline XBRL Taxonomy Extension Schema Document.
     
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document.
     
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document.
     
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document.
     
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document.
     
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

34

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on this 13th day of February, 2025.

 

  THE GLIMPSE GROUP, INC.
   
  /s/ Lyron Bentovim
  Lyron Bentovim
  Chief Executive Officer
  (Principal Executive Officer)
   
  /s/ Maydan Rothblum
  Maydan Rothblum
  Chief Financial Officer
  (Principal Financial Officer)

 

35