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What changed in Glimpse Group, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Glimpse Group, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+233 added−244 removedSource: 10-K (2023-09-28) vs 10-K (2022-09-28)

Top changes in Glimpse Group, Inc.'s 2023 10-K

233 paragraphs added · 244 removed · 162 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

49 edited+4 added−33 removed32 unchanged
Biggest changeAs of the date of this disclosure and summarized in the table below, we have been issued 10 patents by the United States Patent and Trademark Office (the “USPTO”) and have an additional 4 filed patent applications in process. 10 Title of Invention Subsidiary Initial Filing Date Issuance Date Patent Number Issued Patents: Pagoni VR 06-21-2018 Oct ‘19 10445941 Interactive Mixed Reality System for a Real World Event Immersive Display System with Adjustable Perspective Pagoni VR 11-27-2018 Sept ‘20 10764553 Augmented Reality Geolocation Using Image Matching Post Reality 08-22-2018 March ‘21 10949669 System for Sharing User-Generated Content Pagoni VR 06-12-2019 Aug ‘21 11095947 Presenting a Simulated Reality Experience in a Preset Location Post Reality 06-14-2019 Nov ‘21 11189097 Virtual Reality System Cross Platform Foretell Reality 04-23-2019 April ‘22 11294453 Simulated Reality Adaptive User Space Foretell Reality 07-26-2019 April ‘22 11288868 Marker-Based Positioning of Simulated Reality KreatAR 04-23-2019 July ‘22 11380011 System and Method for Generating an Augmented Reality Experience Brightline 11-19-2020 April ‘22 11302038 Immersive Ecosystem Brightline 08-05-2020 June ‘22 11373383 Filed Patents: Presentation Interface and Immersion Platform Pagoni VR 04-30-2019 Simulated Reality Risks Mitigation System IHG 07-19-2019 Real-Time Visualization of Head Mounted Display User Reactions D6 04-06-2022 Audio Processing In a Virtual Environment Adept Reality 06-22-2022 We may continue to file for patents regarding various aspects of our products, services and technologies at a later date depending on the costs and timing associated with such filings.
Biggest changeTitle of Invention Subsidiary Initial Filing Date Issuance Date Patent Number Issued Patents: Pagoni VR 06-21-2018 Oct ‘19 10445941 Interactive Mixed Reality System for a Real World Event Immersive Display System with Adjustable Perspective Pagoni VR 11-27-2018 Sept ‘20 10764553 Augmented Reality Geolocation Using Image Matching KreatAR 08-22-2018 March ‘21 10949669 System for Sharing User-Generated Content Pagoni VR 06-12-2019 Aug ‘21 11095947 Presenting a Simulated Reality Experience in a Preset Location Post Reality 06-14-2019 Nov ‘21 11189097 Virtual Reality System Cross Platform Foretell Reality 04-23-2019 April ‘22 11294453 Simulated Reality Adaptive User Space Foretell Reality 07-26-2019 April ‘22 11288868 Marker-Based Positioning of Simulated Reality KreatAR 04-23-2019 July ‘22 11380011 System and Method for Generating an Augmented Reality Experience Brightline 11-19-2020 April ‘22 11302038 Immersive Ecosystem Brightline 08-05-2020 June ‘22 11373383 Filed Patents: Real-Time Visualization of Head Mounted Display User Reactions Foretell Reality 04-06-2022 Audio Processing In a Virtual Environment Adept Reality 06-22-2022 AI Controlled Non-Human Conversation Flow in VR Foretell Reality 06-12-2023 Dispositional Affect for Virtual Character Interactions in VR Applications Foretell Reality 12-13-2022 Large Language Model Artificial Intelligence Spatial Core: A Collaborative Spatial Computing Platform Brightline 06-01-2023 10 We may continue to file for patents regarding various aspects of our products, services and technologies at a later date depending on the costs and timing associated with such filings.
Our subsidiary companies currently target a wide array of industry verticals, including but not limited to: Corporate Training, Education, Healthcare, Branding/Marketing/Advertising, Retail, Financial Services, Food & Hospitality, Media & Entertainment, Architecture/Engineering/Construction (“AEC”), Corporate Events and Presentations, Beauty and Cosmetics, Government & Defense and Social VR support groups and therapy.
Our subsidiary companies currently target a wide array of industry verticals, including but not limited to: Corporate Training, Education, Healthcare, Government & Defense, Branding/Marketing/Advertising, Retail, Financial Services, Food & Hospitality, Media & Entertainment, Architecture/Engineering/Construction (“AEC”), Corporate Events and Presentations, Beauty and Cosmetics, and Social VR support groups and therapy.
In particular: ARCore from Google and ARKit from Apple, which enable AR functionality on smartphones and tablets; and Unity and Epic Unreal, which enable software languages used in VR and AR programing. We do not view these larger companies as competition, but rather as complementary to our business (indeed, some of these are customers of ours).
In particular: ARCore from Google and ARKit from Apple, which enable AR functionality on smartphones and tablets; and Unity and Unreal from Epic, which enable software languages used in VR and AR programing. We do not view these larger companies as competition, but rather as complementary to our business (indeed, some of these are customers of ours).
Any failure by us to adequately protect our intellectual property could have a material adverse effect on our business, operating results and financial condition. See “Risk Factors—Risks Related to our Business.” 11 Business Cycles Based on our history and information available to date, we have not been able to identify any seasonality of cycles within our business.
Any failure by us to adequately protect our intellectual property could have a material adverse effect on our business, operating results and financial condition. See “Risk Factors—Risks Related to our Business.” Business Cycles Based on our history and information available to date, we have not been able to identify any seasonality of cycles within our business.
Although the purpose of our platform is to grow and develop the ecosystem on which each of our subsidiaries can mature by benefitting from collaboration, each subsidiary company targets a specific industry vertical (i.e. Healthcare, Education, Corporate Training, etc.) and as such has a distinct set of potential acquirers or investors.
Although the purpose of our platform is to grow and develop the ecosystem on which each of our subsidiaries can mature by benefitting from collaboration, each subsidiary company targets a specific industry vertical (e.g., Healthcare, Education, Corporate Training, etc.) and as such has a distinct set of potential acquirers or investors.
Subject to operational, market and financial developments and conditions, we intend to carefully add to our current portfolio of subsidiary companies via a combination of organic expansion and/or outside acquisition. The VR/AR immersive technology industry is an early-stage technology industry with nascent markets.
Subject to operational, market and financial developments and conditions, we intend to carefully add to our current portfolio of subsidiary companies via a combination of organic expansion and/or outside acquisition. The Immersive technology industry is an early-stage technology industry with nascent markets.
This is created through: (a) ownership of numerous wholly-owned subsidiary companies operating in different industry segments; (b) targeting large industries with clear VR/AR use-cases; (c) developing and utilizing various technologies and IP; (d) expanding to different geographic technology centers in a hub model under our umbrella; and (e) across industries, having a wide array of customers and potential acquirers/investors.
This is created through: (a) ownership of numerous wholly-owned subsidiary companies operating in different industry segments; (b) targeting large industries with clear Immersive technology use-cases; (c) developing and utilizing various technologies and IP; (d) expanding to different geographic technology centers in a hub model under our umbrella; and (e) across industries, having a wide array of customers and potential acquirers/investors.
Leading technology companies such as Meta/Facebook, Apple, Microsoft, Google, Samsung, Sony and HP have been at the forefront of VR/AR hardware development and software infrastructure, while also increasing integration of their products with AR and VR capabilities.
Leading technology companies such as Meta/Facebook, Apple, Microsoft, Google, ByteDance (Pico), Samsung, Sony and HP have been at the forefront of VR/AR hardware development and software infrastructure, while also increasing integration of their products with AR and VR capabilities.
As such, there are relatively few participants on the Hardware side, some very large (for example: Meta/Facebook, Microsoft, Samsung, Google, Apple, HTC, HP, Lenovo, Sony and Epson) and some much smaller (for example: Magic Leap, Pico, Valve, Varjo and Vuzix). In general, Hardware cycles have been accelerating and performance improving, with simplified usability and reduced end-user costs.
As such, there are relatively few participants on the Hardware side, some very large (for example: Meta/Facebook, Microsoft, Samsung, Google, Apple, ByteDance (Pico), HTC, HP, Lenovo, Sony and Epson) and some much smaller (for example: Magic Leap, XREAL, Varjo and Vuzix). In general, Hardware cycles have been accelerating and performance improving, with simplified usability and reduced end-user costs.
We currently have multiple locations in the US, offices in several locations in Turkey and an international presence in the UK, Australia and Israel. Strategic Divestitures Each one of our subsidiary companies has the potential to be divested or spun off.
We currently have multiple locations in the US, offices in several locations in Turkey and an international presence in the UK and Israel. 9 Strategic Divestitures Each one of our subsidiary companies has the potential to be divested or spun off.
Many are consumer oriented, whereas we are entirely enterprise focused (B2B, B2B2C). We believe that the AR/VR Software segment is currently far less competitive than traditional software markets, as most companies in the space tend to be early stage and often underfunded. While competition is evolving and increasing, there is currently no dominant player in any particular VR/AR Software segment.
Many are consumer oriented, whereas we are entirely enterprise focused (B2B, B2B2C). We believe that the Immersive Technology Software segment is currently far less competitive than traditional software markets, as most companies in the space tend to be early stage and often underfunded. While competition is evolving, there is currently no dominant player in any particular VR/AR Software segment.
By offering technologies and solutions in various industry segments, we aim to reduce dependency on any one single subsidiary company, technology or industry segment. We believe that three core tenets enhance our probability of success: (1) our ecosystem of VR/AR companies, (2) diversification and (3) profitable growth.
By offering technologies and solutions in various industry segments, we aim to reduce dependency on any one single subsidiary company, technology or industry segment. We believe that three core tenets enhance our probability of success: (1) our ecosystem of Immersive technology companies, (2) diversification and (3) profitable growth.
We believe that we offer significant exposure to the rapidly growing and potentially transformative VR, AR and immersive technology markets, while mitigating downside risk via our diversified model and ecosystem.
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.
Each of our subsidiary companies share operational, financial and IP infrastructure, facilitating shorter time-to-market, higher quality products, reduced development costs, fewer redundancies, significant go-to-market synergies and, ultimately, a higher potential for success for each subsidiary company. We believe that our collaborative platform is unique and necessary, especially given the early nature of the VR/AR industry.
Each of our subsidiary companies share operational, financial and IP infrastructure, facilitating shorter time-to-market, higher quality products, reduced development costs, fewer redundancies, significant go-to-market synergies and, ultimately, a higher potential for success for each subsidiary company. We believe that our collaborative platform is unique and necessary, especially given the early nature of the Immersive technology industry.
We believe that there are a select number of earlier stage companies of approximately our size that provide VR/AR Software and could be viewed as potential competitors. In addition, several of the larger technology players provide general infrastructure VR/AR Software.
We believe that there are a select number of earlier stage companies of approximately our size that provide Immersive Technology and could be viewed as potential competitors. In addition, several of the larger technology players provide general infrastructure Immersive Technology Software.
By leveraging our platform, we strive to cultivate and manage the business operations of our VR/AR subsidiary companies, with the goal of allowing each underlying company to better focus on mission-critical endeavors, collaborate with the other subsidiary companies, reduce time to market, optimize costs, improve product quality and leverage joint go-to-market strategies.
By leveraging our platform, we strive to cultivate and manage the business operations of our Immersive technology subsidiary companies, with the goal of allowing each underlying company to better focus on mission-critical endeavors, collaborate with the other subsidiary companies, reduce time to market, optimize costs, improve product quality and leverage joint go-to-market strategies.
Our platform is currently comprised of numerous active wholly-owned subsidiary companies, each targeting different industry segments in a non-competitive, collaborative manner. Our experienced management and dynamic VR/AR entrepreneurs have deep domain expertise, providing the foundation for value-add-collaborations throughout our ecosystem.
Our platform is currently comprised of numerous active wholly-owned subsidiary companies, each targeting different industry segments in a non-competitive, collaborative manner. Our experienced management and dynamic Immersive technology entrepreneurs have deep domain expertise, providing the foundation for value-add-collaborations throughout our ecosystem.
We do not currently target direct-to-consumer (“B2C’) customers, we focus primarily on the business-to-business (“B2B”) and business-to-business-to-consumer (“B2B2C”) segments. In addition, we are hardware agnostic. 3 The Glimpse Platform We develop, commercialize and market innovative and proprietary VR/AR immersive technology software products, solutions and intellectual property (“IP”).
We do not currently target direct-to-consumer (“B2C’) customers, we focus primarily on the business-to-business (“B2B”) and business-to-business-to-consumer (“B2B2C”) segments. In addition, we are hardware agnostic. 4 The Glimpse Platform We develop, commercialize and market innovative and proprietary Immersive technology software products, solutions and intellectual property (“IP”).
Since VR/AR is an emerging industry, market and customer education are material and therefore the length of the typical sales cycle can be between 3 and 18 months, depending on the size and complexity of the proposed solution and the customer’s level of understanding of the VR/AR space and prior experience.
Since Immersive technology is an emerging industry, market and customer education are material and therefore the length of the typical sales cycle can be between 3 and 18 months, depending on the size and complexity of the proposed solution and the customer’s level of understanding of the Immersive technology space and prior experience.
We believe infrastructure software benefits us, and the industry at large, as they are not industry specific and enable companies like us to more effectively build industry specific solutions, thereby saving significant costs and development efforts. 9 Platform Expansion and Diversification Strategy As described above in “Competitive Environment,” the VR/AR software and services industries are highly fragmented.
We believe infrastructure software benefits us, and the industry at large, as they are not industry specific and enable companies like us to more effectively build industry specific solutions, thereby saving significant costs and development efforts. Platform Expansion and Diversification Strategy As described above in “Competitive Environment,” the Immersive Technology Software and services industries are highly fragmented.
PulpoAR, LLC (PulpoAR): AR try-on technologies, targeting the Beauty and Cosmetics industry; a subsidiary company of QReal 14.
PulpoAR, LLC (PulpoAR): AR try-on technologies, targeting the Beauty and Cosmetics industry; a subsidiary company of QReal 8.
The more advanced, easier to use and cheaper the Hardware becomes, the higher the potential for the development of robust software applications and increased market adoption of VR/AR solutions. VR/AR Software (“Software”): In contrast to VR/AR Hardware, Software is highly fragmented with hundreds of VR/AR Software companies targeting different segments and solutions.
The more advanced, easier to use and cheaper the Hardware becomes, the higher the potential for the development of robust software applications and increased market adoption of Immersive technology solutions. Immersive Technology Software (“Software”): In contrast to Immersive Technology Hardware, Software is highly fragmented with hundreds of Immersive Technology Software companies targeting different segments and solutions.
By owning and operating a diverse set of VR/AR companies, we believe that we significantly improve each of our subsidiary company’s ability to succeed by addressing many of the challenges early stage companies face and expanding each’s opportunity set and capabilities.
By owning and operating a diverse set of Immersive technology companies, we believe that we significantly improve each of our subsidiary company’s ability to succeed by addressing many of the challenges early stage companies face and expanding each’s opportunity set and capabilities.
Our platform of VR/AR subsidiary companies, collaborative environment and diversified business model aims to simplify the challenges faced by companies in the emerging VR/AR industry, potentially improving each subsidiary company’s ability to succeed, while simultaneously providing investors an opportunity to invest directly into the emerging VR/AR industry via a diversified infrastructure.
Our platform of Immersive technology subsidiary companies, collaborative environment and diversified business model aims to simplify the challenges faced by companies in the emerging Immersive technology industry, potentially improving each subsidiary company’s ability to succeed, while simultaneously providing investors an opportunity to invest directly via a diversified infrastructure.
Glimpse Group Yazilim ve ARGE Ticaret Anonim Sirketi (Glimpse Turkey): a development center in Turkey, primarily developing and creating 3D models for QReal 11. XR Terra, LLC (dba XR Terra) : Immersive technologies teaching courses and training 12. Sector 5 Digital, LLC (S5D) : Corporate immersive experiences and events 13.
Glimpse Group Yazilim ve ARGE Ticaret Anonim Sirketi (Glimpse Turkey): a development center in Turkey, primarily developing and creating 3D models for QReal 5. XR Terra, LLC (dba XR Terra) : Immersive technologies teaching courses and training 6. Sector 5 Digital, LLC (S5D) : Corporate immersive experiences and events 7.
As previously described, we believe that our structure, ecosystem and integrated capabilities create significant competitive advantages for each of our subsidiary companies, not available to other Software companies in the VR/AR space.
As previously described, we believe that our structure, ecosystem and integrated capabilities create significant competitive advantages for each of our subsidiary companies, not available to other Software companies in the Immersive technology space.
We believe that XR technologies and solutions have the potential to fundamentally transform how people and businesses interact, further enabling remote work, education and commerce. XR is also expected to increasingly interconnect with other emerging technologies such as artificial intelligence, computer vision, big data, NFT and crypto currencies.
We believe that Immersive technologies and solutions have the potential to fundamentally transform how people and businesses interact, further enabling remote work, education and commerce. Immersive technologies are also expected to increasingly interconnect with other emerging technologies such as artificial intelligence, spatial computing, computer vision, big data, NFT and crypto currencies.
Since Facebook released its first VR headset as a consumer product in 2016 (after its $2B+ acquisition of Oculus), successive iterations of it, as well as others, have become significantly lighter, more comfortable, lower priced, with higher resolution and increasingly wireless/mobile.
Since Facebook released its first VR headset as a consumer product in 2016 (after its $2B+ acquisition of Oculus), successive iterations of it, as well as others, such as the recently announced Apple Vision Pro, have become significantly lighter, more comfortable, lower priced, with higher resolution and increasingly wireless/mobile.
(1) Our ecosystem of VR/AR software and service companies provides significant benefits to each subsidiary company and our group as a whole.
(1) Our ecosystem of Immersive technology software and service companies provides significant benefits to each subsidiary company and our group as a whole.
COMPANY OVERVIEW We are a Virtual (“VR”) and Augmented (“AR”) Reality platform company, comprised of a diversified group of wholly-owned and operated VR and AR companies, providing enterprise-focused software, services and solutions.
COMPANY OVERVIEW We are an Immersive technology (Virtual Reality (“VR”), Augmented Reality (“AR”), Spatial Computing, Artificial Intelligence (“AI”)) platform company, comprised of a diversified group of wholly-owned and operated Immersive technology companies, providing enterprise-focused software, services and solutions.
The $19.0 million is based and payable on S5D and the Company’s achievement of certain revenue growth milestones during the three years post-Closing, the payment of which shall be made up to $2.0 million in cash and the remainder in common stock of the Company, priced at the dates of the future potential share issuance subject to a common stock price floor of $7.00/share.
The $24,500,000 is based and payable on BLI’s achievement of certain revenue growth milestones at points in time and cumulatively during the three years post-Closing Date, the payment of which shall be made up to $12,000,000 in cash and the remainder in common shares of the Company, priced at the dates of the future potential share issuance subject to a common stock price floor of $7.00 per share.
ITEM 1. BUSINESS History The Glimpse Group, Inc. was incorporated on June 15, 2016, under the laws of the State of Nevada and is headquartered in New York, New York. On July 6, 2021, the Company completed its initial public offering (“IPO”).
ITEM 1. BUSINESS History The Glimpse Group, Inc. was incorporated on June 15, 2016, under the laws of the State of Nevada and is headquartered in New York, New York.
We believe that Hardware development, commercialization and distribution are highly capital intensive and there is not yet large enough scale or mass adoption in the VR/AR industry to justify such expenditures for a smaller company.
Immersive Technology Hardware (Headsets) (“Hardware”): We do not develop any Hardware, and our software and service solutions are mostly compatible with any Hardware. We believe that Hardware development, commercialization and distribution are highly capital intensive and there is not yet large enough scale or mass adoption in the Immersive technology industry to justify such expenditures for a smaller company.
This economic interest is negotiated with lead management of a subsidiary company upon their joining our Company, and typically takes form in either: i) a 5-10% economic interest in the total net sale proceeds of the subsidiary upon a divestiture event or ii) additional Glimpse equity issuances based on revenue milestones achieved by the subsidiary company over a period of several years (typically three years).
The leadership team of each subsidiary company, in addition to their initial equity ownership in Glimpse, may also have an economic interest that typically takes form in either: i) a 5-10% economic interest in the total net sale proceeds of the subsidiary upon a divestiture event or ii) additional Glimpse equity issuances based on revenue milestones achieved by the subsidiary company over a period of several years (typically three years).
In addition, there will be perpetual licensing agreements between our subsidiary companies, so that if a subsidiary company is divested, then the remaining subsidiaries, if utilizing the IP of a divested subsidiary company, will continue to retain usage rights post-divestiture. 4 Active Glimpse Subsidiary Companies 1.
In addition, there will be perpetual licensing agreements between our subsidiary companies, so that if a subsidiary company is divested, then the remaining subsidiaries, if utilizing the IP of a divested subsidiary company, will continue to retain usage rights post-divestiture. 5 We currently own and operate numerous subsidiary companies (“Subsidiary Companies”, “Subsidiaries”) operating under the following business names as represented in the organizational chart below: Active Glimpse Subsidiary Companies 1.
No liabilities were assumed as part of the acquisition and the primary assets acquired included employees and technology. 7 Brightline Interactive, LLC Acquisition In May 2022, the Company entered into an Agreement and Plan of Merger (the “BLI Agreement”) to purchase all of the membership interests of Brightline Interactive, LLC (“BLI”), an immersive technology company that provides VR and AR based training scenarios and simulations for commercial and government customers.
Brightline Interactive, LLC (BLI): Immersive and interactive experiences, training scenarios, and simulations for both government and commercial customers. 6 Key Business Developments During Fiscal Year 2023 Brightline Interactive, LLC Acquisition In May 2022, the Company entered into an Agreement and Plan of Merger (the “BLI Agreement”) to purchase all of the membership interests of Brightline Interactive, LLC (“BLI”), an immersive technology company that provides VR and AR based training scenarios and simulations for commercial and government customers.
Economic Dependence For the year ended June 30, 2022, one customer accounted for approximately 40% of our revenues and another for approximately 14% of our revenues. These same customers accounted for approximately 26% and 0% of revenues, respectively, for the year ended June 30, 2021.
One of these same customers and a different customer accounted for approximately 40% and 14% of revenues, respectively, for the year ended June 30, 2022. For the fiscal year ended June 30, 2022, no other customer accounted for 10% or more of our revenues.
With the recent addition of S5D and subsequent addition of Brightline Interactive, we have significantly increased our scale and are approaching a point with less variability in customer concentration and less dependency on any one customer in the aggregate. That being said, we continue to have a handful of customers that comprise the majority of our revenues.
A customer that may account for a higher concentration of revenue in one period may not account for any revenue in subsequent periods. 11 With the additions of S5D and Brightline Interactive, we have significantly increased our scale and are approaching a point with less variability in customer concentration and less dependency on any one customer in the aggregate.
There are numerous potential acquisition targets that, while having established a niche market position, product or technology, have limited resources and ability to pursue growth initiatives.
There are numerous potential acquisition targets that, while having established a niche market position, product or technology, have limited resources and ability to pursue growth initiatives. We may continue to add to our platform both companies, technologies and other appropriate targets, subject to the availability of capital, at attractive deal terms.
QReal, LLC (dba QReal) : Creation of lifelike photorealistic 3D interactive digital models and experiences in AR 2. Adept Reality, LLC (dba Adept XR Learning) : VR/AR solutions for higher education learning and corporate training 3. KreatAR, LLC (dba PostReality): AR presentation tools for design, creation and collaboration 4.
QReal, LLC (dba QReal) : Creation of lifelike photorealistic 3D interactive digital models and experiences in AR 2. Immersive Health Group, LLC (IHG) : VR/AR platform for evidence-based and outcome driven healthcare solutions 3. Foretell Studios, LLC (dba Foretell Reality) : Customizable social VR platform for behavioral health, support groups, collaboration, corporate training, soft skills training, higher education 4.
As such, there has been a high degree of variance on our source of revenues while customers are on-boarded and our software product and solutions are integrated, measured and digested. A customer that may account for a higher concentration of revenue in one period may not account for any revenue in subsequent periods.
We operate in an early stage industry, and customers are exploring various options for Immersive technology solutions and acting as early adopters of these solutions. As such, there has been a high degree of variance on our source of revenues while customers are on-boarded and our software product and solutions are integrated, measured and digested.
While it does happen on occasion, it is rare that a signed contract is canceled. 12 Facilities We are based in New York, New York, with a lease through 2024. We have a lease in Fort Worth, Texas for the operations of S5D, and with the subsequent acquisition of Brightline Digital, we have a lease in Ashburn, VA.
For most customers we charge 25-50% of the contract value upfront and the amounts are usually not refundable, mitigating some of the contract cancellation risk. While it does happen on occasion, it is rare that a signed contract is canceled. Facilities We are based in New York, New York, with a lease through 2024.
A significant reduction in revenue from our larger customers could have a material negative impact on our operations. Typically, customer contracts can be canceled at any time by the customer upon 30-90 day written notice (depending on the size and complexity of the contract).
Typically, customer contracts can be canceled at any time by the customer upon 30-90 day written notice (depending on the size and complexity of the contract). In such an event, the customer would owe the Company unpaid amounts up until the point of cancelation.
Our current facilities are leased and adequate to meet our ongoing needs. If we require additional space or expand geographically, we may seek additional facilities on commercially reasonable terms at such time. We also lease four offices in Turkey, for the operations of Glimpse Turkey and PulpoAR.
We have a lease in Fort Worth, Texas for the operations of S5D, and a lease in Ashburn, Virginia for the operations of Brightline Digital. We also lease four offices in Turkey, for the operations of Glimpse Turkey and PulpoAR. Our current facilities are leased and adequate to meet our ongoing needs.
We believe our customers often view us as a “one-stop-shop” for all their VR/AR needs and an expert in the emerging VR/AR space. We and our subsidiary companies continue to develop a shared partner ecosystem to further scale business and expand our solutions into new and existing target markets.
We believe our customers often view us as a “one-stop-shop” for all their Immersive technology needs and an expert in this emerging space.
Human Capital We currently have approximately 200 full time employees, primarily software developers, engineers and 3D artists. Of these, approximately 100 are based in the US and 100 internationally (primarily in Turkey).
If we require additional space or expand geographically, we may seek additional facilities on commercially reasonable terms at such time. Human Capital At June 30, 2023, we had 186 full time employees, primarily software developers, engineers and 3D artists. Of these, 86 are based in the US and 100 internationally in Turkey.
Competitive Environment We believe that our competitors in the VR/AR industry are focused on two primary segments: VR/AR Hardware (headsets) and Software. VR/AR Hardware (Headsets) (“Hardware”): We do not develop any Hardware, and our software and service solutions are mostly compatible with any Hardware.
We and our subsidiary companies continue to develop a shared partner ecosystem to further scale business and expand our solutions into new and existing target markets. 8 Competitive Environment We believe that our competitors in the Immersive technology industry are focused on two primary segments: VR/AR Hardware (headsets) and Software.
No other customer accounted for more than 10% of our revenues for the year ended June 30, 2022. A customer that did not account for material revenues in the year ended June 30, 2022, accounted for 23% of our revenues for the fiscal year ended June 30, 2021.
Economic Dependence For the year ended June 30, 2023, one customer accounted for approximately 26% of our revenues and another for approximately 21% of our revenues. No other customer accounted for more than 10% of our revenues for the year ended June 30, 2023.
The aggregate consideration consisted of: (a) $4.0 million cash paid at the February 1, 2022 closing (the “Closing”); (b) 277,201 shares of the Company’s common stock valued at the date of acquisition, valued at $4.0 million at the time the Agreement was entered and released from escrow to the Members at Closing; and (c) future purchase price considerations (“contingent consideration”) payable to the Members, up to a residual of $19.0 million ($2.0 million in cash which was escrowed at Closing).
The aggregate consideration to the members of BLI per the Agreement consisted of: (a) $568,046 cash paid (net of working capital adjustments, as defined, of $505,787) at the August 1, 2022 closing (the “Closing”); (b) $1,926,167 of cash paid at the Closing to extinguish BLI’s outstanding debt and pay down other obligations; (c) 714,286 shares of the Company’s common stock fair valued at the Closing; and (d) future purchase price considerations payable to the members of BLI, up to a residual of $24,500,000.
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In connection with the IPO, the Company’s common stock began trading on the Nasdaq Capital Market on and as of July 1, 2021. In conjunction with its IPO, the Company sold approximately 1.91 million shares of its common stock at $7.00 per share, raising approximately $11.82 million in net proceeds after fees and expenses.
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The fair value allocation for the purchase price consideration paid at Closing was recorded as follows: Purchase price consideration: Cash paid to members at Closing $ 2,494,213 Company common stock fair value at Closing 2,846,144 Fair value of contingent consideration to be achieved 7,325,000 Total purchase price $ 12,665,357 Fair value allocation of purchase price: Cash and cash equivalents $ 15,560 Accounts receivable 253,041 Deferred costs/contract assets 552,625 Other assets 10,000 Equipment, net 55,580 Accounts payable and accrued expenses (848,079 ) Deferred revenue/contract liabilities (2,037,070 ) Intangible assets - customer relationships 3,310,000 Intangible assets - technology 880,000 Goodwill 10,473,700 Total fair value allocation of purchase price $ 12,665,357 For more details please refer to Note 4 of the Company’s enclosed Financial Statements. 7 The Immersive Technology Markets Virtual Reality (VR) fully immerses the user in a digital environment via a head mounted display (“HMD”), where the user is blocked out of their immediate physical environment.
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The leadership team of each subsidiary company, in addition to their equity ownership in Glimpse, often also have an economic interest in their particular subsidiary company.
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Bain & Company, Citibank and Goldman Sachs research have recently estimated the potential market size of commercial Immersive technology in excess of $1 trillion by 2023. Business Development and Sales We utilize a hybrid approach to the sales and distribution of our software products and services.
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D6 VR, LLC : VR/AR data visualization and data-analysis tools and collaboration for Financial Services and other data intensive industries 5. Immersive Health Group, LLC (IHG) : VR/AR platform for evidence-based and outcome driven healthcare solutions 6. Foretell Studios, LLC (dba Foretell Reality) : Customizable social VR platform for behavioral health, support groups, collaboration and soft skills training 7.
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As of the date of this disclosure and summarized in the table below, we have been issued 10 patents by the United States Patent and Trademark Office (the “USPTO”) and have an additional 5 filed patent applications in process.
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Number 9, LLC (dba Pagoni VR) : VR broadcasting solutions and environments for events, education, media & entertainment 8. Early Adopter, LLC (EA) : AR/VR solutions for K-12 education 9. MotionZone, LLC (dba AUGGD): AR software and solutions for the Architecture, Engineering and Construction (AEC) segments 10.
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That being said, we continue to have a handful of customers that comprise the majority of our revenues. A significant reduction in revenue from our larger customers could have a material negative impact on our operations.
Removed
Brightline Interactive, LLC (BLI): Immersive and interactive experiences, training scenarios, and simulations for both government and commercial customers. 5 Key Business Developments During Fiscal Year 2022 Initial Public Offering (“IPO”) On July 1, 2021, the Company completed an IPO of common stock on the NASDAQ under the symbol “VRAR”, at a price of $7.00 per share.
Removed
The Company sold approximately 1.91 million shares of common stock and realized net proceeds (after underwriting, professional fees and listing expenses) of $11.82 million. In connection with the IPO, the underwriter was issued a warrant to purchase 87,500 shares of common stock at $7.00 per share.
Removed
The warrant cannot be exercised prior to December 30, 2021, and expires in June 2026. In conjunction with the IPO, the outstanding convertible promissory notes (the “March 2021 Notes” and the “December 2019 Notes”) were converted and satisfied in full through issuance of 0.324 million shares of common stock.
Removed
The Company has no other convertible promissory notes outstanding after the IPO. Securities Purchase Agreement (“SPA”) In November 2021, the Company sold $15.0 million worth of its common stock and warrants to certain institutional investors in a private placement pursuant to a SPA. The Company realized net proceeds (after underwriting, professional fees and listing expenses) of $13.58 million.
Removed
Under the terms of the SPA, the Company sold 1.50 million shares of its common stock and warrants to purchase 0.75 million shares of common stock. The purchase price for one share of common stock and half a corresponding warrant was $10.00. The warrants have an exercise price of $14.63 per share.
Removed
Warrants to purchase 0.56 million shares could be exercised immediately and expire in November 2026, and warrants to purchase 0.19 million shares were not exercisable prior to May 2022 and expire in May 2027.
Removed
AUGGD Asset Acquisition In August 2021, the Company, through its wholly owned subsidiary company, MotionZone, LLC (dba AUGGD), completed an acquisition of certain assets, as defined, from Augmented Reality Investments Pty Ltd (“ARI”), an Australia based company providing augmented reality software and services. AUGGD targets the Architecture, Engineering and Construction market segments.
Removed
In conjunction with this acquisition, the Company established a new legal entity - “Glimpse Australia” - which may, in time, become a fully operational subsidiary company focused on facilitating the potential introduction of our products and services to the Australian markets and, in addition to AUGGD, potentially adding other Australian VR/AR companies to Glimpse Australia over time.
Removed
Initial consideration for the asset purchase was $0.75 million payable in Company common stock. In August 2021, the Company issued 77,264 shares of common stock to satisfy the purchase price.
Removed
The acquisition agreement provides for additional contingent consideration in the form of Company common stock if certain future revenue targets are achieved through June 2024, priced at the time of issuance and with a floor issuance price of $7.00 per share.
Removed
No liabilities were assumed as part of the acquisition and the primary assets acquired included employees, customer relationships and technology.
Removed
In June 2022, AUGGD achieved its initial Year 1 revenue milestone, and in July 2022 ARI was issued common shares of Company equating to approximately $0.57 million. 6 XR Terra Asset Acquisition In October 2021, the Company, through its wholly owned subsidiary company, XR Terra, LLC, completed an acquisition of certain assets from XR Terra, Inc., a developer of teaching platforms utilized in coding software used in VR and AR programming.
Removed
Initial consideration for the purchase was $0.60 million payable 50% in Company common stock and 50% in cash. In October 2021, the Company paid $0.30 million cash and issued 33,877 shares of common stock to satisfy the purchase price.
Removed
The acquisition agreement provides for additional contingent consideration in the form of Company common stock if certain future revenue targets are achieved through September 2024, priced at the time of issuance and with a floor issuance price of $7.00 per share. No liabilities were assumed as part of the acquisition and the primary assets acquired included employees and technology.
Removed
Sector 5 Digital Acquisition On December 2, 2021, the Company entered into a Membership Interest Sale Agreement (the “Agreement”), with Sector 5 Digital (S5D) and each of the equity holders of S5D named therein (collectively, the “Members”). S5D is an enterprise focused, immersive technology company that combines innovative storytelling with emerging technologies for industry leading organizations.
Removed
On February 1, 2022, the Company consummated the transaction and S5D became a wholly-owned subsidiary of the Company.
Removed
S5D had revenue for calendar year 2021 (prior to acquisition) of approximately $4 million.
Removed
PulpoAR Asset Acquisition In May 2022, the Company, through its wholly owned subsidiary companies, QReal, LLC and PulpoAR, LLC, completed an acquisition of certain assets, as defined, from PulpoAR Pulpoar Bilisim Anonim Sirketi, a Turkey based AR technology e-commerce company providing virtual try-on solutions primarily for the Beauty and Retail markets.
Removed
Initial consideration for the purchase was $2.0 million, payable 75% in shares of the Company’s common stock (subject to a common stock floor price of $7.00/share) and 25% in cash. In May and June 2022, the Company collectively paid $0.50 million cash and will issue in September 2022 214,286 shares of common stock to satisfy the purchase price.
Removed
The asset acquisition agreement provides for additional contingent consideration in the form of Company common stock and cash if certain future revenue targets are achieved through December 2024, priced at the time of issuance and with a floor issuance price of $7.00 per share.
Removed
In August 2022, the BLI transaction closed and BLI became a wholly-owned subsidiary of the Company. $3 million in cash was paid and approximately 0.71 million shares of Company stock was issued to the sellers.
Removed
The Company is currently determining its potential contingent liability for the purchase, as well as allocation of the purchase price amongst the assets purchased, intangible assets, goodwill and liabilities assumed. BLI had revenue for calendar year 2021 of approximately $5 million.
Removed
The VR and AR (XR) Markets Virtual Reality (VR) fully immerses the user in a digital environment via a head mounted display (“HMD”), where the user is blocked out of their immediate physical environment.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+22 added−18 removed122 unchanged
Biggest changeWhile the spread and impact of COVID-19 has stabilized, there is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or that the global economy will recover, either of which could harm our business. 13 We have incurred significant net losses since inception and anticipate that we will continue to incur net losses for the foreseeable future and may never achieve or maintain profitability.
Biggest changeWe have incurred significant net losses since inception and anticipate that we will continue to incur net losses for the foreseeable future and may never achieve or maintain profitability. There is doubt about our ability to continue as a going concern. Since inception, we have incurred significant net losses.
Factors that could cause fluctuations in the trading price of our common stock include the following: ● actual or anticipated fluctuations in our financial condition or results of operations; ● variance in our financial performance from expectations of securities analysts; ● changes in the pricing of the solutions on our platforms; ● changes in our projected operating and financial results; ● changes in laws or regulations applicable to our platforms; 24 ● announcements by us or our competitors of significant business developments, acquisitions or new offerings; ● sales of shares of our common stock by us or our shareholders; ● significant data breaches, disruptions to or other incidents involving our platforms; ● our involvement in litigation; ● conditions or developments affecting the AR and VR industries; ● future sales of our common stock by us or our stockholders, as well as the anticipation of lock-up releases; ● changes in senior management or key personnel; ● the trading volume of our common stock; ● changes in the anticipated future size and growth rate of our market; ● general economic and market conditions; and ● other events or factors, including those resulting from war, incidents of terrorism, global pandemics or responses to these events.
Factors that could cause fluctuations in the trading price of our common stock include the following: ● actual or anticipated fluctuations in our financial condition or results of operations; ● variance in our financial performance from expectations of securities analysts; ● changes in the pricing of the solutions on our platforms; ● changes in our projected operating and financial results; ● changes in laws or regulations applicable to our platforms; ● announcements by us or our competitors of significant business developments, acquisitions or new offerings; ● sales of shares of our common stock by us or our shareholders; ● significant data breaches, disruptions to or other incidents involving our platforms; ● our involvement in litigation; ● conditions or developments affecting the AR and VR industries; ● future sales of our common stock by us or our stockholders, as well as the anticipation of lock-up releases; ● changes in senior management or key personnel; ● the trading volume of our common stock; ● changes in the anticipated future size and growth rate of our market; ● general economic and market conditions; and ● other events or factors, including those resulting from war, incidents of terrorism, global pandemics or responses to these events.
Our management and other personnel devotes a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. 25 An active trading market for our securities may not exist, which would adversely affect the liquidity and price of our securities.
Our management and other personnel devotes a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. An active trading market for our securities may not exist, which would adversely affect the liquidity and price of our securities.
We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention. If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, the market price and trading volume of our common stock could decline.
We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention. 23 If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, the market price and trading volume of our common stock could decline.
Health epidemics, including the current COVID-19 pandemic, have had, and could in the future have, an adverse impact on our business, operations, and the markets and communities in which we, our partners and customers operate. For example, sales cycles have generally lengthened and some customers have delayed purchase decisions.
Health epidemics, including the COVID-19 pandemic, have had, and could in the future have, an adverse impact on our business, operations, and the markets and communities in which we, our partners and customers operate. For example, sales cycles had generally lengthened and some customers delayed purchase decisions.
Our inability to develop products and services that are competitive in technology and price and that meet end-user needs could have a material adverse effect on our business, financial condition or results of operations. Development schedules for technology products and services are inherently uncertain.
Our inability to develop products and services that are competitive in technology and price and that meet end-user needs could have a material adverse effect on our business, financial condition or results of operations. 14 Development schedules for technology products and services are inherently uncertain.
If we require additional capital and are unsuccessful in raising that capital, we may not be able to continue our business operations and advance our growth initiatives, which could adversely impact our business, financial condition and results of operations. 14 Our market is competitive and dynamic.
If we require additional capital and are unsuccessful in raising that capital, we may not be able to continue our business operations and advance our growth initiatives, which could adversely impact our business, financial condition and results of operations. Our market is competitive and dynamic.
We will remain an emerging growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of our initial public offering; (2) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more; (3) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (4) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates.
We will remain an emerging growth company until the earliest of: (1) the last day of the fiscal year following the fifth anniversary of our initial public offering; (2) the last day of the first fiscal year in which our annual gross revenue is $1.235 billion or more; (3) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (4) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates.
Therefore, if we don’t allocate resources effectively, our business, financial condition or result of operations could be harmed. Competitive pricing pressure may reduce our gross profits and adversely affect our financial results.
Therefore, if we don’t allocate resources effectively, our business, financial condition or result of operations could be harmed. 16 Competitive pricing pressure may reduce our gross profits and adversely affect our financial results.
These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our results of operations, financial condition or business.
These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our results of operations, financial condition or business. 24
The price of our securities may vary significantly due to results of operation, general market or economic conditions. Furthermore, an active trading market for our securities may not exist or be sustained. You may be unable to sell your securities unless a market can be established and sustained.
The price of our securities may vary significantly due to results of operations, general market or economic conditions. Furthermore, an active trading market for our securities may not exist or be sustained. You may be unable to sell your securities unless a market can be established and sustained.
New competing products and services could be introduced at any time that could result in reduced profit margins and loss of market share. The AR and VR industries are very dynamic, with new technology and services being introduced by a range of players, from larger established companies to start-ups, on a frequent basis.
New competing products and services could be introduced at any time that could result in reduced profit margins and loss of market share. The Immersive technology industries are very dynamic, with new technology and services being introduced by a range of players, from larger established companies to start-ups, on a frequent basis.
Increased competition may cause price reductions, reduced gross margins and loss of market share, any of which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, the worldwide AR and VR markets are increasingly competitive. A number of companies developing AR and VR products and services compete for a limited number of customers.
Increased competition may cause price reductions, reduced gross margins and loss of market share, any of which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, the worldwide Immersive technology markets are increasingly competitive. A number of companies developing Immersive technology products and services compete for a limited number of customers.
Our inability to achieve any of these objectives could harm our business, financial condition and results of operations. We have material customer concentration, with a limited number of customers accounting for a material portion of our 2022 revenues.
Our inability to achieve any of these objectives could harm our business, financial condition and results of operations. 13 We have material customer concentration, with a limited number of customers accounting for a material portion of our 2023 revenues.
Our business depends on the performance and reliability of the Internet, mobile networks, and other infrastructure that is not under our control.
The continued operation of our business depends on the performance and reliability of the Internet, mobile networks, and other infrastructure that is not under our control. Our business depends on the performance and reliability of the Internet, mobile networks, and other infrastructure that is not under our control.
Our business and operations could be adversely affected by health epidemics, including the current COVID-19 pandemic, impacting the markets and communities in which we, our partners and customers operate.
Our business and operations could be adversely affected by health epidemics, including reemergence of the COVID-19 pandemic, impacting the markets and communities in which we, our partners and customers operate.
In the past, the combination of operating losses, cash expected to be used to continue operating activities and uncertain conditions relating to additional capital raises and continued revenue growth created an uncertainty about the Company’s ability to continue as a going concern.
The combination of operating losses, cash expected to be used to continue operating activities and uncertain conditions relating to additional capital raises and continued revenue growth creates an uncertainty about the Company’s ability to continue as a going concern.
For the years ended June 30, 2022 and 2021, our five largest customers, accounted for approximately 66% and 64% of our revenues, respectively. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers.
For the years ended June 30, 2023 and 2022, our five largest customers, accounted for approximately 59% and 66% of our revenues, respectively. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers.
Our primary business strategy is to: 1) generate and increase revenues of existing subsidiary companies and 2) to further enhance our presence in the VR/AR market through the acquisition of additional VR/AR companies, technologies, or intellectual property.
Our primary business strategy is to: 1) generate and increase revenues of existing subsidiary companies and 2) to further enhance our presence in the Immersive technology market through the acquisition of additional companies, technologies, or intellectual property.
Any of the foregoing could adversely affect our business, financial condition or results of operations. 21 We have made a number of acquisitions in the past and we intend to make more acquisitions in the future. Our ability to identify complementary assets, products or businesses for acquisition and successfully integrate them could affect our business, financial condition and operating results.
We have made a number of acquisitions in the past and we intend to make more acquisitions in the future. Our ability to identify complementary assets, products or businesses for acquisition and successfully integrate them could affect our business, financial condition and operating results.
Our revenues and operating results may fluctuate from quarter to quarter and from year to year due to a combination of factors, including, but not limited to: ● varying size, timing and contractual terms of orders for our products and services, which may delay the recognition of revenue; ● competitive conditions in the industry, including strategic initiatives by us or our competitors, new products or services, product or service announcements and changes in pricing policy by us or our competitors; ● market acceptance of our products and services; ● our ability to maintain existing relationships and to create new relationships with customers and business partners; ● the discretionary nature of purchase and budget cycles of our customers and end-users; ● the length and variability of the sales cycles for our products; ● general weakening of the economy resulting in a decrease in the overall demand for our products and services or otherwise affecting the capital investment levels of businesses with respect to our products or services; ● timing of product development and new product initiatives; ● changes in customer mix; ● increases in the cost of, or limitations on, the availability of materials; ● changes in product mix; and ● increases in costs and expenses associated with the introduction of new products. 17 Further, the markets that we serve are volatile and subject to market shifts that we may be unable to anticipate.
Our revenues and operating results may fluctuate from quarter to quarter and from year to year due to a combination of factors, including, but not limited to: ● varying size, timing and contractual terms of orders for our products and services, which may delay the recognition of revenue; ● competitive conditions in the industry, including strategic initiatives by us or our competitors, new products or services, product or service announcements and changes in pricing policy by us or our competitors; ● market acceptance of our products and services; 15 ● our ability to maintain existing relationships and to create new relationships with customers and business partners; ● the discretionary nature of purchase and budget cycles of our customers and end-users; ● the length and variability of the sales cycles for our products; ● general weakening of the economy resulting in a decrease in the overall demand for our products and services or otherwise affecting the capital investment levels of businesses with respect to our products or services; ● timing of product development and new product initiatives; ● changes in customer mix; ● increases in the cost of, or limitations on, the availability of materials; ● changes in product mix; and ● increases in costs and expenses associated with the introduction of new products.
Some of these risks are out of our control. Successfully integrating any acquired subsidiary may be more difficult, costly or time-consuming than we anticipate, or we may not otherwise realize any of the anticipated benefits of such acquisition.
Some of these risks are out of our control. Successfully integrating any acquired subsidiary may be more difficult, costly or time-consuming than we anticipate, or we may not otherwise realize any of the anticipated benefits of such acquisition. Any of the foregoing could adversely affect our business, financial condition or results of operations.
Our ability to derive sales from products or technologies covered by these patents could be adversely affected. 23 Whether we are defending the assertion of third party intellectual property rights against our business as a result of the use of our technology, or we are asserting our own intellectual property rights against others, such litigation can be complex, costly, protracted and highly disruptive to our business operations by diverting the attention and energies of management and key technical personnel.
Whether we are defending the assertion of third party intellectual property rights against our business as a result of the use of our technology, or we are asserting our own intellectual property rights against others, such litigation can be complex, costly, protracted and highly disruptive to our business operations by diverting the attention and energies of management and key technical personnel.
If we fail to deliver timely releases of our products that are ready for commercial use, release a new version, service, tool or update with material errors, or are unable to enhance our platforms to keep pace with rapid technological and regulatory changes or respond to new offerings by our competitors, or if new technologies emerge that are able to deliver competitive solutions at lower prices, more efficiently, more conveniently or more securely than our solutions, or if new operating systems, gaming platforms or devices are developed and we are unable to support our customers’ deployment of games and other applications onto those systems, platforms or devices, our business, financial condition and results of operations could be adversely affected.
If we fail to deliver timely releases of our products that are ready for commercial use, release a new version, service, tool or update with material errors, or are unable to enhance our platforms to keep pace with rapid technological and regulatory changes or respond to new offerings by our competitors, or if new technologies emerge that are able to deliver competitive solutions at lower prices, more efficiently, more conveniently or more securely than our solutions, or if new operating systems, gaming platforms or devices are developed and we are unable to support our customers’ deployment of games and other applications onto those systems, platforms or devices, our business, financial condition and results of operations could be adversely affected. 18 We are an “emerging growth company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
To date, we have devoted our efforts towards securing financing, building and evolving our technology platform and creating an infrastructure that allows for the growth of such technology platform.
To date, we have devoted our efforts towards securing financing, building and evolving our technology platform and creating an infrastructure that allows for the growth of such technology platform. We expect to continue to incur significant expenses and potential operating losses for the foreseeable future.
We have experienced, and may in the future experience, disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints due to an overwhelming number of customers accessing our platforms simultaneously, denial of service attacks or other security-related incidents.
We have experienced, and may in the future experience, disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints due to an overwhelming number of customers accessing our platforms simultaneously, denial of service attacks or other security-related incidents. 17 It may become increasingly difficult to maintain and improve our performance, especially during peak usage times and as our customer base grows and our platforms becomes more complex.
Our customers can generally decide to cease using our solutions at any time. While we have experienced customer growth, this growth may not continue at the same pace in the future or at all. In addition, it is possible that the ongoing effects of COVID-19 may have a deleterious effect on our customer growth in the future.
Our customers can generally decide to cease using our solutions at any time. While we have experienced customer growth, this growth may not continue at the same pace in the future or at all.
Moreover, the harm to our reputation and legal liability related to such defects or errors may be substantial and could similarly harm our business. 19 If we fail to timely release updates and new features to our platforms and adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, or changing customer needs, requirements or preferences, our platforms may become less competitive.
If we fail to timely release updates and new features to our platforms and adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, or changing customer needs, requirements or preferences, our platforms may become less competitive.
RISKS RELATED TO OUR SECURITIES AND OTHER RISKS Our stock price may be volatile, and the value of our common stock may decline. We cannot predict the prices at which our common stock will trade.
In that case, our ability to effectively market and sell our products and services could suffer, which could harm our business. RISKS RELATED TO OUR SECURITIES AND OTHER RISKS Our stock price may be volatile, and the value of our common stock may decline. We cannot predict the prices at which our common stock will trade.
RISKS RELATED TO OUR INTELLECTUAL PROPERTY If we cannot obtain and maintain appropriate patent and other intellectual property rights protection for our technology, our business will suffer. The value of our software and services is dependent on our ability to secure and maintain appropriate patent and other intellectual property rights protection.
The value of our software and services is dependent on our ability to secure and maintain appropriate patent and other intellectual property rights protection. We intend to continue to pursue additional patent protection for our new software and technology.
In addition, if we proceed with an acquisition, our available cash may be used to complete the transaction, diminishing our liquidity and capital resources, or shares may be issued which could cause significant dilution to existing shareholders.
In addition, if we proceed with an acquisition, our available cash may be used to complete the transaction, diminishing our liquidity and capital resources, or shares may be issued which could cause significant dilution to existing shareholders. 20 RISKS RELATED TO OUR INTELLECTUAL PROPERTY If we cannot obtain and maintain appropriate patent and other intellectual property rights protection for our technology, our business will suffer.
In the event that our intellectual property protection is insufficient to protect our intellectual property rights, we could face increased competition in the market for our products and technologies, which could have a material adverse effect on our business, financial condition and results of operations. 22 We may become engaged in litigation to protect or enforce our patent and other intellectual property rights or in International Trade Commission proceedings to abate the importation of goods that would compete unfairly with our products.
In the event that our intellectual property protection is insufficient to protect our intellectual property rights, we could face increased competition in the market for our products and technologies, which could have a material adverse effect on our business, financial condition and results of operations.
If a third party succeeds in invalidating one or more of our patents, we may experience greater competition from such party and from others.
If a third party succeeds in invalidating one or more of our patents, we may experience greater competition from such party and from others. Our ability to derive sales from products or technologies covered by these patents could be adversely affected.
Any necessity to procure rights to the third party technology might cause us to negotiate the royalty terms of the third party license which could increase our cost of production or, in certain cases, terminate our ability to build some of our products entirely.
Any necessity to procure rights to the third party technology might cause us to negotiate the royalty terms of the third party license which could increase our cost of production or, in certain cases, terminate our ability to build some of our products entirely. 22 Our failure to renew, register or otherwise protect our trademarks could have a negative impact on the value of our brand names and our ability to use those names in certain geographical areas.
We may not be successful in raising additional capital necessary to meet expected increases in working capital needs. If we need additional funding for operations and we are unable to raise it, we may not be able to continue our business operations.
If we need additional funding for operations and we are unable to raise it, we may not be able to continue our business operations. We expect our capital needs to increase in the future as we continue to expand and enhance our operations.
Since inception, we have incurred significant net losses. As of June 30, 2022 and June 30, 2021, we had an accumulated deficit of approximately $28 million and $22 million respectively. The net loss for the fiscal year ended June 30, 2022 was approximately $5.97 million and fiscal year ended June 30, 2021 was approximately $6.09 million.
As of June 30, 2023 and June 30, 2022, we had an accumulated deficit of approximately $56.6 million and $28.1 million respectively. The net loss for the fiscal year ended June 30, 2023 was approximately $28.6 million and fiscal year ended June 30, 2022 was approximately $6.0 million.
Any such development could have an adverse effect on our margins and financial position, and would negatively affect our revenues and results of operations and/or trading price of our common stock. 15 We anticipate our products and technologies will require ongoing research and development (“R&D”) and we may experience technical problems or delays and may not have the funds necessary to continue their development, which could lead our business to fail.
We anticipate our products and technologies will require ongoing research and development (“R&D”) and we may experience technical problems or delays and may not have the funds necessary to continue their development, which could lead our business to fail.
The COVID-19 pandemic has caused significant business and financial markets disruption worldwide and there remains uncertainty around the duration of this disruption on both a nationwide and global level, as well as the ongoing effects on our business.
The COVID-19 pandemic caused significant business and financial markets disruption worldwide and, if there is a reemergence of it or other epidemics they could cause disruptions on both a nationwide and global level, as well as the ongoing effects on our business.
A slowdown in the demand for AR or VR products and services can have a significant adverse effect on the demand for our products and services in any given period.
Further, the markets that we serve are volatile and subject to market shifts that we may be unable to anticipate. A slowdown in the demand for AR or VR products and services can have a significant adverse effect on the demand for our products and services in any given period.
Our success depends on the retention and maintenance of key personnel, including members of senior management and our technical, sales and marketing teams.
The failure to attract, hire, retain and motivate key personnel could have a significant adverse impact on our operations. Our success depends on the retention and maintenance of key personnel, including members of senior management and our technical, sales and marketing teams.
Litigation of this type could result in substantial costs and diversion of resources, may result in counterclaims or other claims against us and could significantly harm our results of operations. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as do the laws of the United States.
Litigation of this type could result in substantial costs and diversion of resources, may result in counterclaims or other claims against us and could significantly harm our results of operations.
Inconsistent implementation of corporate strategy and policies at the subsidiary level could materially and adversely affect our financial position, results of operations and cash flows and prospects. 16 The operating results of an individual subsidiary may differ from those of another subsidiary for a variety of reasons, including market size, customer base, competitive landscape, regulatory requirements and economic conditions affecting a particular industry vertical.
The operating results of an individual subsidiary may differ from those of another subsidiary for a variety of reasons, including market size, customer base, competitive landscape, regulatory requirements and economic conditions affecting a particular industry vertical. As a result, certain of our subsidiaries may experience higher or lower levels of profitability and growth than other subsidiaries.
If we fail to attract new users or fail to maintain or expand existing relationships in a cost-effective manner, our business and future prospects may be materially and adversely impacted. 18 The continued operation of our business depends on the performance and reliability of the Internet, mobile networks, and other infrastructure that is not under our control.
We may also need to modify our pricing model to attract and retain such customers. If we fail to attract new customers or fail to maintain or expand existing relationships in a cost-effective manner, our business and future prospects may be materially and adversely impacted.
Our failure to renew, register or otherwise protect our trademarks could have a negative impact on the value of our brand names and our ability to use those names in certain geographical areas. We believe our copyrights and trademarks are integral to our success. We rely on trademark, copyright and other intellectual property laws to protect our proprietary rights.
We believe our copyrights and trademarks are integral to our success. We rely on trademark, copyright and other intellectual property laws to protect our proprietary rights. If we fail to properly register and otherwise protect our trademarks, service marks and copyrights, we may lose our rights, or our exclusive rights, to them.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile. 20 RISKS RELATED TO OUR ACQUISITION STRATEGY We may be unable to obtain additional financing, if required, to fund the existing operations of the business, complete future acquisitions or to fund the development and commercialization of the companies, technologies, or intellectual property.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.
Achieving growth in our customer base may require us to engage in increasingly sophisticated and costly sales and marketing efforts that may not result in additional customers. We may also need to modify our pricing model to attract and retain such customers.
In addition, it is possible that a recurrence of COVID-19 or a like kind pandemic occurrence may have a deleterious effect on our customer growth in the future. Achieving growth in our customer base may require us to engage in increasingly sophisticated and costly sales and marketing efforts that may not result in additional customers.
As is commonplace in technology companies, we employ individuals who were previously employed at other technology companies.
In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as do the laws of the United States. 21 As is commonplace in technology companies, we employ individuals who were previously employed at other technology companies.
The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are uncertain and unpredictable. As a result of the COVID-19 pandemic, we have seen the length of our sale cycles generally increase and some of our customers have delayed purchase decisions.
For example, as a result of the COVID-19 pandemic, we saw the length of our sale cycles generally increase and some of our customers delayed purchase decisions. A decline in revenue or the collectability of our receivables could harm our business.
Removed
A decline in revenue or the collectability of our receivables could harm our business. We continue to monitor the COVID-19 situation and the potential effects on our business and operations.
Added
We believe that the cash and cash equivalents balance of $5.6 million at June 30, 2023 may not be sufficient to fund our operating expenses and capital requirements for one year after the date this filing is made.
Removed
Doubt about the Company’s ability to continue as a going concern was alleviated on our financial statements for the year ended June 30, 2022 and for the year ended June 30, 2021. We expect to continue to incur significant expenses and potential operating losses for the foreseeable future.
Added
If we cannot continue as a going concern, our stockholders would likely lose most or all of their investment in us. 12 We may not be successful in raising additional capital necessary to meet expected funding needs.
Removed
While our cash balance is currently well above our annual net cash expenses, we do anticipate that our expenses will increase if, and as, we continue to: ● hire and retain additional sales, accounting and finance, marketing and engineering personnel; ● build out our product pipeline; ● add operational, financial and management information systems and personnel; and ● maintain, expand, protect and enforce our intellectual property portfolio.
Added
Any such development could have an adverse effect on our margins and financial position, and would negatively affect our revenues and results of operations and/or trading price of our common stock.
Removed
To become profitable, we must continue to grow our revenue base and control expenditures. This will require us to be successful in a range of challenging activities, and our expenses will increase as we continue to develop and bring our current products, as well as new ones, to market.
Added
Inconsistent implementation of corporate strategy and policies at the subsidiary level could materially and adversely affect our financial position, results of operations and cash flows and prospects.
Removed
We may never succeed in any or all of these activities and, even if we do, we may never generate revenue that is significant or sufficient to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
Added
Moreover, the harm to our reputation and legal liability related to such defects or errors may be substantial and could similarly harm our business.
Removed
Our failure to become and remain profitable or to sufficiently fund our operations through financing activity could potentially, again, create an uncertainty about the Company’s ability to continue as a going concern.
Added
A failure in our information technology, or IT, systems could cause interruptions in our services, undermine the responsiveness of our services, disrupt our business, damage our reputation and cause losses. Our IT systems support all phases of our operations, including finance, marketing, customer development and the business of customer support services.
Removed
Based on our recent financing activity we believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for more than one year.
Added
If our systems fail to perform, we could experience disruptions in operations, slower response time or decreased customer satisfaction. System interruptions, errors or downtime can result from a variety of causes, including changes in customer usage patterns, technological failures, changes to our systems, linkages with third-party systems and power failures.
Removed
Based on our financing activities in fiscal year 2022, which included our IPO and a private placement, and revenue growth during the fiscal year, we believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for more than one year.
Added
Our systems may be vulnerable to disruptions from human error, execution errors, errors in models, employee misconduct, unauthorized trading, external fraud, computer viruses, distributed denial of service attacks, computer viruses or cyberattacks, terrorist attacks, natural disaster, power outage, capacity constraints, software flaws, events impacting key business partners and vendors, and similar events.
Removed
Consequently, our financial statements have been prepared under the assumption that we will continue as a going concern. However, we have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
Added
It could take an extended period of time to restore full functionality to our technology or other operating systems in the event of an unforeseen occurrence. Instances of fraud or other misconduct might also negatively impact our reputation and customer confidence in us, in addition to any direct losses that might result from such instances.
Removed
In the future, if we are unable to obtain sufficient funding to support our operations, we could be forced to delay, reduce or eliminate some or all of our development and growth initiatives, and our financial condition and results of operations will be materially and adversely affected and we may be unable to continue as a going concern.
Added
Despite our efforts to identify areas of risk, oversee operational areas involving risks, and implement policies and procedures designed to manage these risks, there can be no assurance that we will not suffer unexpected losses, reputational damage or regulatory actions due to technology or other operational failures or errors, including those of our vendors or other third parties.
Removed
In the future, reports from our independent registered public accounting firm may also contain statements expressing substantial doubt about our ability to continue as a going concern.
Added
If we fail to prevent security breaches, improper access to or disclosure of our data or user data, or other hacking and attacks, we may lose users, and our business, reputation, financial condition and results of operations may be materially and adversely affected. Our business can include the hosting and/or transmission of proprietary information and sensitive or confidential data.
Removed
If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all.
Added
In connection with our services business, some of our employees also have access to its customers’ confidential data and other information, which could be compromised, whether intentionally or unintentionally, by our employees, consultants or vendors.
Removed
We expect our working capital needs to increase in the future as we continue to expand and enhance our operations.
Added
We have privacy and data security policies in place that are designed to prevent security breaches and we have employed significant resources to develop our security measures against breaches.
Removed
As a result, certain of our subsidiaries may experience higher or lower levels of profitability and growth than other subsidiaries. The failure to attract, hire, retain and motivate key personnel could have a significant adverse impact on our operations.
Added
However, as technologies evolve, and the portfolio of the service providers with which the Company shares confidential information with grows, we could be exposed to increased risk of breaches in security and other illegal or fraudulent acts, including cyberattacks.
Removed
It may become increasingly difficult to maintain and improve our performance, especially during peak usage times and as our customer base grows and our platforms becomes more complex.
Added
The evolving nature of such threats, in light of new and sophisticated methods used by criminals and cyberterrorists, including computer viruses, malware, phishing, misrepresentation, social engineering and forgery, is making it increasingly challenging to anticipate and adequately mitigate these risks. We may be subject to these types of attacks.
Removed
We are an “emerging growth company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
Added
If we are unable to avert these attacks and security breaches, we could be subject to significant legal and financial liabilities, our reputation would be harmed and we could sustain substantial revenue loss from lost sales and customer dissatisfaction. We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES We are based in New York, New York. Our current facilities are leased and adequate to meet our ongoing needs. If we require additional space or expand geographically, we may seek additional facilities on commercially reasonable terms at such time.
Biggest changeITEM 2. PROPERTIES We are based in New York, New York. Our current facilities are leased and adequate to meet our ongoing needs. If we require additional space or expand geographically, we may seek additional facilities on commercially reasonable terms at such time. We lease other office space in Fort Worth, Texas, and Ashburn, Virginia.
We also lease an office in Fort Wort, Texas and several small offices in Turkey for the operations of Glimpse Turkey.
We also lease several small offices in Turkey for the operations of Glimpse Turkey.
Removed
Due to Covid-19 constraints, in March 2020 our personnel began working primarily on a remote basis, without detrimental effects. We returned to partial in person work in July 2021 and expect to continue as such for the foreseeable future, subject to Covid-19 developments.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Record As of September 20, 2022, we had approximately 7,700 shareholders of record. Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Dividends We have never declared or paid cash dividends on our capital stock.
Biggest changeRecent Sales of Unregistered Securities For the period April 1 to June 30, 2023: Number of Shares Cash Proceeds Value of Shares Exercise of options 345 $ - $ 1,553 Contingent acquisition obligation 285,714 - 1,184,285 Compensation and vendor expense 75,738 - 307,835 Total 361,797 $ - $ 1,493,673 Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 26 Dividends We have never declared or paid cash dividends on our capital stock.
However, such distribution shall be subject to a determination by our Board of Directors that there exist no special circumstances that would prevent it from approving such distribution or the extent thereof.
However, such distribution shall be subject to a determination by our Board of Directors that there exist no special circumstances that would prevent it from approving such distribution or the extent thereof.
In addition, our ability to pay dividends may be restricted by any agreements we may enter into in the future. 27
In addition, our ability to pay dividends may be restricted by any agreements we may enter into in the future.
Added
Holders of Record Our common stock is listed on the NASDAQ under the ticker symbol “VRAR.” As of September 22, 2023, we had 122 holders of record of our common stock based upon the records of our transfer agent, which do not include beneficial owners of common stock whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThis reflects operating expenses outpacing revenue and gross profit driven by the four acquisitions made in fiscal year 2022, associated infrastructure to support a greater revenue base and the increased expenses attributable to operations of a public company commencing July 1, 2021. 37 Liquidity and Capital Resources For the Year Ended June 30, Change 2022 2021 $ % (in millions) Net cash used in operating activities $ (4.94 ) $ (1.21 ) $ (3.73 ) -308 % Net cash used in investing activities (5.06 ) (0.03 ) (5.03 ) 16800 % Net cash provided by financing activities 26.48 1.97 24.51 1244 % Net increase (decrease) in cash and cash equivalents 16.48 0.73 15.75 -2158 % Cash, cash equivalents and restricted cash, beginning of year 1.77 1.04 0.73 70 % Cash, cash equivalents and restricted cash, end of period $ 18.25 $ 1.77 $ 16.48 931 % Operating activities Net cash used in operating activities for the year ended June 30, 2022 was approximately $4.94 million, compared to approximately $1.21 million for the year ended June 30, 2021, reflecting operating expenses outpacing revenue and gross profit driven by the four acquisitions made in fiscal year 2022, associated infrastructure to support a greater revenue base and the increased expenses attributable to operations of a public company commencing July 1, 2021.
Biggest changeLiquidity and Capital Resources For the Years Ended June 30, Change 2023 2022 $ % (in millions) Net cash used in operating activities $ (9.16 ) $ (4.94 ) $ (4.22 ) -85 % Net cash used in investing activities (3.53 ) (5.06 ) 1.53 30 % Net cash provided by financing activities 0.06 26.48 (26.42 ) -100 % Net increase (decrease) in cash, cash equivalents and restricted cash (12.63 ) 16.48 (29.11 ) -177 % Cash, cash equivalents and restricted cash, beginning of year 18.25 1.77 16.48 931 % Cash, cash equivalents and restricted cash, end of year $ 5.62 $ 18.25 $ (12.63 ) -69 % Operating activities Net cash used in operating activities for the year ended June 30, 2023 was approximately $9.16 million, compared to approximately $4.94 million for the year ended June 30, 2022.
We have included a reconciliation of our non-GAAP financial measures to the most comparable financial measures calculated in accordance with GAAP. 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.
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.
The Company will be required to use a forward-looking expected credit loss model for accounts receivable, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities, if any, will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.
The Company will be required to use a forward-looking expected credit loss model for accounts receivable, notes receivable, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities, if any, will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.
Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. 36 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 following non-GAAP financial measures in planning, forecasting and analyzing future periods.
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 following non-GAAP financial measures in planning, forecasting and analyzing future periods.
Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, net income, operating income, and 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.
Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, net income (loss), operating income (loss), and 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.
We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of our initial public offering; (ii) the first fiscal year after our annual gross revenues are $1.07 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.
We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of our initial public offering; (ii) the first fiscal year after our annual gross revenues are $1.235 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.
The following discussion and analysis of the results of operations and financial condition of The Glimpse Group, Inc. and its wholly owned subsidiaries (collectively referred to as “Glimpse” or the “Company”) as of and for the years ended June 30, 2022 and 2021 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Annual Report.
The following discussion and analysis of the results of operations and financial condition of The Glimpse Group, Inc. and its wholly owned subsidiaries (collectively referred to as “Glimpse” or the “Company”) as of and for the years ended June 30, 2023 and 2022 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Annual Report.
The Company’s other financial instruments consist primarily of accounts receivable, note receivable, accounts payable, accrued liabilities and other liabilities approximate fair value due to the short-term nature of these instruments.
The Company’s other financial instruments consist primarily of accounts receivable, accounts payable, accrued liabilities and other liabilities, and approximate fair value due to the short-term nature of these instruments.
While our significant accounting policies are more fully described in our financial statements, we believe the following accounting policies are the most critical to aid in fully understanding and evaluating this management discussion and analysis. Principles of Consolidation The consolidated financial statements include the balances of the Company and its wholly owned subsidiaries.
While our significant accounting policies are more fully described in our financial statements, we believe the following accounting policies are the most critical to aid in fully understanding and evaluating this management discussion and analysis. Principles of Consolidation The consolidated financial statements include the balances of Glimpse and its wholly owned subsidiaries.
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 nascent industry and uncertain market environment the Company operates in, research and development costs are not capitalized.
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.
Contingent consideration is recorded within contingent consideration, current and contingent consideration, non-current in the Company’s consolidated balance sheets as of June 30, 2022 and 2021.
Contingent consideration is recorded within contingent consideration, current, and contingent consideration, non-current, in the Company’s consolidated balance sheets as of June 30, 2023 and 2022.
This standard removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. The Company does not expect to adopt this standard prior to July 1, 2023.
This standard removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. The Company will adopt this standard on July 1, 2023.
The Company does not expect to adopt this standard prior to July 1, 2023. The Company is currently evaluating the impact of this standard on its consolidated financial statements. Income Taxes In December 2019, the FASB issued ASU 2019-12 to simplify the accounting in ASC 740, Income Taxes .
The Company will adopt this standard on July 1, 2023. The Company is currently evaluating the impact of this standard on its consolidated financial statements. Income Taxes In December 2019, the FASB issued ASU 2019-12 to simplify the accounting in ASC 740, Income Taxes .
The Company believes that it is sufficiently funded to meet its operational plan and future obligations beyond the 12-month period from the date of this filing. 38 Emerging Growth Company Status We are an “emerging growth company”, as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Emerging Growth Company Status We are an “emerging growth company”, as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Leveraging its platform, the Company strives to cultivate and manage the business operations of its VR/AR subsidiary companies, with the goal of allowing each underlying company to better focus on mission-critical endeavors, collaborate with the other subsidiary companies, reduce time to market, optimize costs, improve product quality and leverage joint go-to-market strategies.
By leveraging our platform, we strive to cultivate and manage the business operations of our Immersive technology subsidiary companies, with the goal of allowing each underlying company to better focus on mission-critical endeavors, collaborate with the other subsidiary companies, reduce time to market, optimize costs, improve product quality and leverage joint go-to-market strategies.
The Company currently generates its revenues primarily from customers in the United States. 31 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.
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.
Actual results could differ from those estimates. The principal estimates relate to the valuation of allowance for doubtful accounts, common stock, stock options, warrants, revenue recognition, cost of goods sold and allocation of the purchase price of assets relating to business combinations.
Actual results could differ from those estimates. 28 The principal estimates relate to the valuation of allowance for doubtful accounts, stock options, warrants, revenue recognition, cost of goods sold, allocation of the purchase price of assets relating to business combinations, calculation of contingent consideration for acquisitions and fair value of intangible assets.
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.
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.
Glimpse’s ecosystem of VR/AR subsidiary companies, collaborative environment and diversified business model aim to simplify the challenges faced by entrepreneurs in the emerging VR/AR industry, potentially improving each subsidiary company’s ability to succeed, while simultaneously providing investors an opportunity to invest directly into the emerging VR/AR industry via a diversified platform.
Our platform of Immersive technology subsidiary companies, collaborative environment and diversified business model aims to simplify the challenges faced by companies in the emerging Immersive technology industry, potentially improving each subsidiary company’s ability to succeed, while simultaneously providing investors an opportunity to invest directly via a diversified infrastructure.
The Company’s convertible debt approximated fair value due to its short-term nature and market rate of interest. 30 Revenue Recognition Nature of Revenues The Company reports its revenues in two categories: ● Software Services: Virtual and Augmented Reality projects, solutions and consulting services. ● Software License and Software-as-a-Service (“SaaS”): Virtual and Augmented Reality software that is sold either as a license or as a SaaS subscription.
Revenue Recognition Nature of Revenues The Company reports its revenues in two categories: ● Software Services: Virtual and Augmented Reality projects, solutions and consulting services. ● Software License and Software-as-a-Service (“SaaS”): Virtual and Augmented Reality software that is sold either as a license or as a SaaS subscription.
Critical Accounting Policies and Estimates and Recent Accounting Pronouncements Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The following information should be read in conjunction with our Consolidated Financial Statements and related notes contained in this Annual Report. Critical Accounting Policies and Estimates and Recent Accounting Pronouncements Basis of presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
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.
If the estimated future cash flows from the use of the asset are less than the carrying value, an impairment charge would be recorded to write down the asset to its estimated fair value. 29 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.
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.
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.
Highlights RESULTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2022 AND 2021 Summary P&L For the Year Ended June 30, Change 2022 2021 $ % (in millions) Revenue $ 7.27 $ 3.42 $ 3.85 113 % Cost of Goods Sold 1.24 1.46 (0.22 ) -15 % Gross Profit 6.03 1.96 4.07 208 % Total Operating Expenses 12.37 7.91 4.46 56 % Loss from Operations before Other Income (Expense) (6.34 ) (5.95 ) (0.39 ) 7 % Other Income (Expense), net 0.38 (0.14 ) 0.52 -371 % Net Loss $ (5.96 ) $ (6.09 ) $ 0.13 -2 % Revenue For the Year Ended June 30, Change 2022 2021 $ % (in millions) Software Services $ 6.72 $ 3.08 $ 3.64 118 % Software License/Software as a Service 0.55 0.34 0.21 62 % Total Revenue $ 7.27 $ 3.42 $ 3.85 113 % Total revenue for the year ended June 30, 2022 was approximately $7.27 million compared to approximately $3.42 million for the year ended June 30, 2021, an increase of approximately 113%.
Highlights RESULTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2023 AND 2022 Summary P&L For the Years Ended June 30, Change 2023 2022 $ % (in millions) Revenue $ 13.48 $ 7.27 $ 6.21 85 % Cost of Goods Sold 4.26 1.24 3.02 244 % Gross Profit 9.22 6.03 3.19 53 % Total Operating Expenses 38.02 12.37 25.65 207 % Loss from Operations before Other Income (Expense) (28.80 ) (6.34 ) (22.46 ) -354 % Other Income (Expense), net 0.24 0.37 (0.13 ) 35 % Net Loss $ (28.56 ) $ (5.97 ) $ (22.59 ) -378 % Revenue For the Years Ended June 30, Change 2023 2022 $ % (in millions) Software Services $ 12.59 $ 6.72 $ 5.87 87 % Software License/Software as a Service 0.89 0.55 0.34 62 % Total Revenue $ 13.48 $ 7.27 $ 6.21 85 % Total revenue for the year ended June 30, 2023 was approximately $13.48 million compared to approximately $7.27 million for the year ended June 30, 2022, an increase of approximately 85%.
This growth was due to the addition of new subsidiaries, new customers and increased business with existing customers. 33 We break out our revenues into two main categories – Software Services and Software License. ● Software Services revenues are primarily comprised of VR/AR projects, services related to our software licenses and consulting retainers. ● Software License revenues are comprised of the sale of our internally developed VR/AR software as licenses or as software-as-a-service (“SaaS”).
The increase reflects the addition of subsidiary companies through acquisitions and new customers. 33 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/acquired Immersive technology software as licenses or as software-as-a-service (“SaaS”).
Employee Stock-Based Compensation The Company recognizes stock-based compensation expense related to grants to employees or service providers based on grant date fair values of common stock or the stock options, which are amortized over the requisite period, as well as forfeitures as they occur.
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. 31 Employee Stock-Based Compensation The Company recognizes stock-based compensation expense related to grants to employees or service providers based on grant date fair values of common stock or the stock options, which are amortized over the requisite period, as well as forfeitures as they occur.
For the year ended June 30, 2022, Software License revenue was approximately $0.55 million compared to approximately $0.34 for the year ended June 30, 2021, an increase of approximately 62%.
For the year ended June 30, 2023, Software License revenue was approximately $0.89 million compared to approximately $0.55 million for the year ended June 30, 2022, an increase of approximately 62%. The increase reflects the addition of subsidiary companies through acquisitions and new customers.
Change in Fair Value of Acquisition Contingent Consideration Change in fair value of acquisition contingent consideration expense for the year ended June 30, 2022 was approximately $2.43 million of income, compared to none for the year ended June 30, 2021.
Change in Fair Value of Acquisition Contingent Consideration Change in fair value of acquisition contingent consideration for the year ended June 30, 2023 was a gain of approximately $0.70 million compared to a gain $1.86 million for the year ended June 30, 2022.
For the year ended June 30, 2022, non-project revenue (i.e., VR/AR software and services revenue only), was approximately $4.18 million compared to approximately $1.72 million for the year ended June 30, 2021, an increase of approximately 143%.
As the Immersive technology industries continue to mature, we expect our Software License revenue to continue to grow. For the year ended June 30, 2023, non-project revenue (i.e., Immersive technology software and services revenue only), was approximately $4.23 million compared to approximately $4.18 million for the year ended June 30, 2022, an increase of approximately 1%.
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.
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.
Disaggregation of Revenue The Company generated revenue by delivering: (i) Software Services, consisting primarily of VR/AR software projects, solutions and consulting services, and (ii) Software Licenses & SaaS, consisting primarily of VR and AR software licenses or SaaS.
Disaggregation of Revenue The Company generated revenue for the years ended June 30, 2023 and 2022 by delivering: (i) Software Services, consisting primarily of VR/AR software projects, solutions and consulting services, and (ii) Software Licenses & SaaS, consisting primarily of VR and AR software licenses or SaaS. The Company currently generates its revenues primarily from customers in the United States.
Expected volatility is derived from a weighted average of volatility inputs for comparable software and technology service companies. The risk-free rate is based on the implied yield of U.S. Treasury notes as of the grant date with a remaining term approximately equal to the expected life of the award.
Expected volatility is based upon historical volatility for a rolling previous year’s trading days of the Company’s common stock. The risk-free rate is based on the implied yield of U.S. Treasury notes as of the grant date with a remaining term approximately equal to the expected life of the award.
Subject to operational, market and financial developments and conditions, Glimpse intends to carefully add to its current portfolio of subsidiary companies via a combination of organic expansion and/or outside acquisitions.
Subject to operational, market and financial developments and conditions, we intend to carefully add to our current portfolio of subsidiary companies via a combination of organic expansion and/or outside acquisitions. The Immersive technology industry is an early-stage technology industry with nascent markets.
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.
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.
These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Annual Report, and other factors that we may not know.
These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations.
Estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. 29 Intangible assets (other than Goodwill) Intangibles represent the allocation of a portion of an acquisitions purchase price. Intangibles are stated at allocated cost less accumulated amortization.
Estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
For the year ended June 30, 2022, Software Services revenue was approximately $6.72 million compared to approximately $3.08 million for the year ended June 30, 2021, an increase of approximately 118%. This growth was due to the addition of new subsidiaries, new customers and increased business with existing customers.
For the year ended June 30, 2023, Software Services revenue was approximately $12.59 million compared to approximately $6.72 million for the year ended June 30, 2022, an increase of approximately 87%. The increase reflects the addition of subsidiary companies through acquisitions and new customers.
The gain in 2022 represents a decrease in the fair value of contingent consideration liability related to the S5D acquisition between acquisition closing date, February 1, 2022 and June 30, 2022. The change is primarily driven by the decrease in the common stock price of Glimpse during that period.
This represents a change in the fair value of the contingent consideration liability related to the BLI (2023) and S5D (2022) acquisitions. The change is driven primarily by changes in the common stock price of Glimpse between measurement dates and revisions to revenue projections.
The Company does not anticipate this adoption will have a material effect on its consolidated financial statements. 32 Financial Instruments – Credit Losses In June 2016, the Financial Accounting Standards Board (the “FASB”) issued a new standard to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates (Accounting Standards Codification – “ASC” 326).
The Company estimates the incremental borrowing rate to reflect the profile of secured borrowing over the expected term of the leases based on the information available at the later of the initial date of adoption or the lease commencement date. 32 Recent Accounting Pronouncements Financial Instruments – Credit Losses In June 2016, the FASB issued a new standard to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates (ASC 326).
Overview We are a Virtual (“VR”) and Augmented (“AR”) Reality platform company, comprised of a diversified group of wholly-owned VR and AR companies, providing enterprise-focused software, services and solutions. We believe that we offer significant exposure to the rapidly growing and potentially transformative VR and AR immersive technology markets, while mitigating downside risk via our diversified model and ecosystem.
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.
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 liabilities and deferred costs/contract costs, respectively, in the accompanying consolidated balance sheets. Contract assets include cash and equity based payroll costs, and may include payments to consultants and vendors.
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 consolidated balance sheets.
Amortization is computed using the straight-line method over the estimated useful lives of the related assets. The Company reviews intangibles, being amortized, for impairment when current events indicate that the fair value may be less than the carrying value.
The Company reviews intangibles, being amortized, for impairment when current events indicate that the fair value may be less than the carrying value. 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.
Glimpse’s subsidiary companies target a wide array of industry verticals, including but not limited to: Corporate Training, Education, Healthcare, Branding & Marketing, Retail, Financial Services, Food & Hospitality, Media & Entertainment and Social VR group meetings. The Company does not currently target direct-to-consumer (“B2C’) customers, focusing primarily on the business-to-business (“B2B”) and business-to-business-to-consumer (“B2B2C”) segments.
Our subsidiary companies currently target a wide array of industry verticals, including but not limited to: Corporate Training, Education, Healthcare, Government & Defense Branding/Marketing/Advertising, Retail, Financial Services, Food & Hospitality, Media & Entertainment, Architecture/Engineering/Construction (“AEC”), Corporate Events and Presentations, Beauty and Cosmetics, and Social VR support groups and therapy.
Sales and Marketing Sales and marketing expenses for the year ended June 30, 2022 were approximately $3.14 million compared to $1.27 million for the year ended June 30, 2021, an increase of approximately 147%. The increase was primarily due to increased headcount to support increased revenue and four acquisitions made in fiscal year 2022.
Sales and Marketing Sales and marketing expenses (primarily representing headcount, including incentive based, related costs) for the year ended June 30, 2023 were approximately $7.49 million compared to $3.14 million for the year ended June 30, 2022, an increase of approximately 139%.
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.
In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance.
Research and Development Research and development expenses for the year ended June 30, 2022 were approximately $6.16 million compared to $3.18 million for the year ended June 30, 2021, an increase of approximately 94%. This increase is primarily driven by increased headcount to support increased revenue, software product development, and four acquisitions made in fiscal year 2022.
Research and Development Research and development expenses (primarily representing headcount related costs) for the year ended June 30, 2023 were approximately $8.79 million compared to $6.16 million for the year ended June 30, 2022, an increase of approximately 43%.
Non-GAAP Financial Measures The following discussion and analysis includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures.
The increase is driven by non-cash intangible asset impairment and amortization expenses relating to previous acquisitions and the addition of newly acquired subsidiaries’ expenses outpacing the increase in revenue and gross profit. Non-GAAP Financial Measures The following discussion and analysis includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures.
General and Administrative General and administrative expenses for the year ended June 30, 2022 were approximately $4.93 million compared to $2.21 million for the year ended June 30, 2021, an increase of approximately 123%.
General and Administrative General and administrative expenses (primarily representing headcount and administrative related costs) for the year ended June 30, 2023 were approximately $5.04 million compared to $4.45 million for the year ended June 30, 2022, an increase of approximately 13%. This reflects the addition of new subsidiaries through acquisitions.
The following table presents a reconciliation of net loss to Adjusted EBITDA for the years ended June 30, 2022 and 2021: For the Year Ended June 30, 2022 2021 (in millions) Net loss $ (5.97 ) $ (6.09 ) Interest expense - 0.18 Depreciation and amortization 0.54 0.03 EBITDA (loss) (5.43 ) (5.88 ) Stock based compensation expenses 3.08 3.08 Stock based financing related expenses 0.28 0.52 Stock based acquisition contingent consideration costs 0.57 1.36 Acquisition expenses 0.58 - Non cash change in fair value of acquisition contingent consideration (2.43 ) - Forgiveness of Paycheck Protection Program loans (0.62 ) (0.55 ) Adjusted EBITDA (loss) $ (3.97 ) $ (1.47 ) Fiscal Year 2022 Adjusted EBITDA loss increased by $2.5 million compared to that of Fiscal Year 2021.
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. 37 The following table presents a reconciliation of net loss to Adjusted EBITDA loss for the years ended June 30, 2023 and 2022: For the Years Ended June 30, 2023 2022 (in millions) Net loss $ (28.56 ) $ (5.97 ) Depreciation and amortization 2.19 0.54 EBITDA loss (26.37 ) (5.43 ) Stock based compensation expenses 4.98 3.08 Change in fair value of acquisition contingent consideration (0.70 ) (1.86 ) Intangible asset impairment 15.35 - Acquisition related expenses 0.28 0.58 Stock based financing related expenses - 0.28 Forgiveness of PPP loan - (0.62 ) Adjusted EBITDA loss $ (6.46 ) $ (3.97 ) Adjusted EBITDA loss for year ended June 30, 2023 was $6.46 million compared to $3.97 million for the comparable 2022 period.
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.
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. 30 Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services.
Operating Expenses For the Year Ended June 30, Change 2022 2021 $ % (in millions) Research and development expenses $ 6.16 $ 3.18 $ 2.98 94 % General and administrative expenses 4.93 2.21 2.72 123 % Sales and marketing expenses 3.14 1.27 1.87 147 % Additional asset purchase consideration 0.57 1.25 (0.68 ) -54 % Change in fair value of acquisition contingent consideration (2.43 ) - (2.43 ) NA Total Operating Expenses 12.37 7.91 4.46 56 % 34 Operating expenses for the year ended June 30, 2022 were approximately $12.37 million compared to $7.91 million for the year ended June 30, 2021, an increase of approximately 56%, primarily due to increases in research and development, general and administrative, and sales and marketing expenses.
The decrease in internal staffing as a percentage of total cost of goods sold was due to the addition of BLI and S5D, which have a higher utilization of external production sources. 34 Operating Expenses For the Years Ended June 30, Change 2023 2022 $ % (in millions) Research and development expenses $ 8.79 $ 6.16 $ 2.63 43 % General and administrative expenses 5.04 4.45 0.59 13 % Sales and marketing expenses 7.49 3.14 4.35 139 % Amortization of acquisition intangible assets 2.05 0.48 1.57 327 % Intangible asset impairment 15.35 - 15.35 N/A Change in fair value of acquisition contingent consideration (0.70 ) (1.86 ) 1.16 -62 % Total Operating Expenses $ 38.02 $ 12.37 $ 25.65 207 % Operating expenses for the year ended June 30, 2023 were approximately $38.02 million compared to $12.37 million for the year ended June 30, 2022, an increase of approximately 207%.
For the year ended June 30, 2022, we incurred a net loss of approximately $5.96 million compared to a net loss of approximately $6.09 million for the year ended June 30, 2021, an improvement of approximately 2% year-over-year, primarily driven by increases in revenue, gross profit and other income (expense) outpacing growth in operating expenses.
Net loss For the year ended June 30, 2023, we incurred a net loss of approximately $28.57 million compared to a net loss of approximately $5.97 million for the year ended June 30, 2022, an increase of approximately 379% year-over-year.
Investing activities Net cash used in investing activities for the year ended June 30, 2022 was approximately $5.06 million compared to approximately $28,000 for the year ended June 30, 2021. The increase primarily represents cash paid for acquisitions, along with increased purchase of equipment for additional infrastructure and purchase of investments.
This is primarily driven by an increase in net loss and a decrease in accounts payable and deferred revenue primarily related to the BLI acquisition. Investing activities Net cash used in investing activities for the year ended June 30, 2023 was approximately $3.53 million compared to approximately $5.06 million for the year ended June 30, 2022.
In addition, we are hardware agnostic. 28 We currently have approximately 200 full time employees, primarily software developers, engineers and 3D artists. Of these, approximately 100 are based in the US and 100 internationally (primarily in Turkey). Impact of COVID-19 In January 2020, an outbreak of a new strain of coronavirus, COVID-19, was identified in Wuhan, China.
We do not currently target direct-to-consumer (“B2C’) customers, we focus primarily on the business-to-business (“B2B”) and business-to-business-to-consumer (“B2B2C”) segments. In addition, we are hardware agnostic. At the time of this filing, we have approximately 165 full time employees, primarily software developers, engineers and 3D artists. Of these, approximately 77 are based in the US and 88 internationally primarily in Turkey.
For the year ended June 30, 2022, non-project revenue accounted for approximately 58% of total revenues compared to approximately 50% for the year ended June 30, 2021. Cost of Revenue Cost of revenue for the year ended June 30, 2022 was $1.24 million compared to $1.46 million for the year ended June 30, 2021, a decrease of approximately 15%.
For the year ended June 30, 2023, non-project revenue accounted for approximately 31% of total revenues compared to approximately 57% for the year ended June 30, 2022. The decrease reflects the additions of BLI during 2023 and S5D during 2022, which primarily generate project revenue, representing an increased portion of total revenue.
The increase in gross profit margin was primarily due to an increase in non-project revenue, improved project management and expanded utilization of Turkey based staff. For the year ended June 30, 2022 and 2021, internal staffing was approximately $1.02 million (82% of total cost of revenue) and approximately $1.35 million (92% of total cost of revenue), respectively.
The decrease was driven by the addition of BLI and S5D lower margin project revenue. For the years ended June 30, 2023 and 2022, internal staffing was approximately $2.52 million (59% of total cost of goods sold) and approximately $1.02 million (82% of total cost of goods sold), respectively.
The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.
For the year ended June 30, 2022, our gross profit was approximately $6.03 million representing a gross profit margin of approximately 83%, compared to a gross profit of approximately $1.96 million representing a gross profit margin of approximately 57% for the year ended June 30, 2021.
Gross Profit For the Years Ended June 30, Change 2023 2022 $ % (in millions) Revenue $ 13.48 $ 7.27 $ 6.21 85 % Cost of Goods Sold 4.26 1.24 3.02 244 % Gross Profit 9.22 6.03 3.19 53 % Gross Profit Margin 68 % 83 % Gross profit was approximately 68% for the year ended June 30, 2023 compared to approximately 83% for the year ended June 30, 2022.
Other Income (Expense) For the Year Ended June 30, Change 2022 2021 $ % (in millions) Forgiveness of Paycheck Protection Program loans $ 0.62 $ 0.55 $ 0.07 13 % Interest income 0.03 0.01 0.02 200 % Interest expense - (0.18 ) 0.18 NA Loss on conversion of convertible notes (0.28 ) (0.52 ) 0.24 -46 % Total Other Income (Expense), net 0.37 (0.14 ) 0.51 364 % Other income (expense), net for the year ended June 30, 2022 consisted of other net income of approximately $0.37 million compared to other net expense of approximately $0.14 million for the year ended June 30, 2021, an increase of greater than 100%.
These gains were offset by expenses related to XRT (2023) and AUGGD (2022) representing additional contingent consideration due for certain revenue thresholds being met that were not anticipated at the respective closings. 36 Other Income (Expense) For the Years Ended June 30, Change 2023 2022 $ % (in millions) Forgiveness of PPP loan $ - $ 0.62 $ (0.62 ) N/A Interest income 0.24 0.03 0.21 700 % Loss on conversion of convertible notes - (0.28 ) 0.28 N/A Other Income (Expense), net $ 0.24 $ 0.37 $ (0.13 ) -35 % Other income (expense), net for the year ended June 30, 2023 consisted of other income of approximately $0.24 million compared to other income, net of approximately $0.37 million for the year ended June 30, 2022, a decrease of approximately 35%.
Financing activities Cash flow provided from financing activities during the year ended June 30, 2022 was $26.48 million, compared to $1.97 million for the prior period. 2022 reflects the net proceeds from our IPO and SPA common stock transactions and exercise of stock options offset by issuance of a note receivable. 2021 financing activities reflect proceeds from convertible promissory notes, proceeds from a Paycheck Protection Plan loan and issuance of common stock to investors, offset by prepaid payments made for our IPO.
This primarily reflects the difference in the cash component of the BLI 2023 acquisition compared to the S5D, XR Terra and PulpoAR 2022 acquisitions. 2023 also included a $1.0 million cash contingent consideration payment made to S5D. 38 Financing activities Cash flow provided from financing activities during the year ended June 30, 2023 was approximately $0.06 million, compared to $26.48 million for the prior period.
Removed
The Company was incorporated as The Glimpse Group, Inc. in the State of Nevada, on June 15, 2016 and is headquartered in New York, New York.
Added
Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Annual Report, and other factors that we may not know. 27 Overview We are an Immersive technology company, comprised of a diversified group of wholly-owned and operated Virtual (“VR”) and Augmented (“AR”) Reality software and services companies, providing enterprise-focused software, services and solutions.
Removed
Glimpse currently owns and operates numerous subsidiary companies (“Subsidiary Companies”, “Subsidiaries”): Adept Reality, LLC (dba Adept XR Learning), QReal, LLC (dba QReal), KreatAR, LLC (dba Post Reality), D6 VR, LLC, Immersive Health Group, LLC (dba IHG), Foretell Studios, LLC (dba Foretell Reality), Number 9, LLC (dba Pagoni VR), Early Adopter, LLC, MotionZone, LLC (dba AUGGD), Glimpse Group Yazilim ve ARGE Ticaret Anonim Sirketi (Glimpse Turkey), XR Terra, LLC, Sector 5 Digital, LLC (“S5D”), PuploAR, LLC (a subsidiary company of QReal) and, as of August 1, 2022, Brightline Interactive, LLC (“BLI”).
Added
We believe that this industry has significant growth potential across verticals, may be transformative and that our diversified platform and ecosystem create important competitive advantages.
Removed
In addition, we own one inactive subsidiary company, In-It VR, LLC (dba Mezmos), which may be reactivated based on need and market conditions and a legal entity in Australia - Glimpse Group Australia Pty Ltd.
Added
During the measurement period, which is typically one year from the acquisition date, if new information is obtained about facts and circumstances that existed as of the acquisition date, changes in the estimated values of the net assets recorded may change the amount of the purchase price allocated to goodwill.
Removed
Through the first quarter of 2020, the disease became widespread around the world, and on March 11, 2020, the World Health Organization declared a pandemic. The COVID-19 pandemic caused significant business and financial markets disruption worldwide and there was significant uncertainty around the duration of this disruption and its ongoing effects on our business.
Added
Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statement of operations. At times, the Company engages the assistance of valuation specialists in concluding on fair value measurements in connection with determining fair values of assets acquired and liabilities assumed in a business combination.
Removed
For our business specifically, this primarily manifested itself in prolonged sales cycles which generally increased by several months. In addition, some of our customers put purchase decisions on hold, in particular customers in our hospital and education segments. These have since recovered to varying extents. We continue to monitor the situation and the effects on our business and operations.
Added
Further, during the year ended June 30, 2022, the Company early adopted ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires an acquirer to account for the related revenue contracts, acquired in the business acquisition, in accordance with ASC Topic 606 Revenue from Contracts with a Customer as if the Company had originated the contracts.
Removed
While some level of potential uncertainty remains, given the current state of the pandemic our expected revenue growth and current cash balance, we do not expect the impact of COVID-19 to be material to our business and operations. The following information should be read in conjunction with our Consolidated Financial Statements and related notes contained in this Annual Report.
Added
Intangible assets (other than Goodwill) Intangible assets represent the allocation of a portion of an acquisition’s purchase price. They include acquired customer relationships and developed technology purchased. Intangible assets are stated at allocated cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of the related assets.
Removed
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.
Added
Impairment of Long-Lived Assets The Company reviews long-lived assets to be held and used, other than goodwill, for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Removed
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. Recently Issued Pronouncements Leases In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842).
Added
If an evaluation of recoverability is required, the estimated undiscounted future cash flows directly associated with the asset are compared with the asset’s carrying amount.
Removed
The amendments under this pronouncement will change the way all leases with durations of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or capital lease liability.
Added
Software License 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.
Removed
Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized in the same manner as capital leases are amortized under current accounting rules, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations.
Added
Recently Adopted Accounting Pronouncements Leases Adoption of the New Lease Accounting Standard On July 1, 2022, the Company adopted ASU No. 2016-02, Leases (Topic 842), using the modified retrospective transition method applied at the adoption date of the standard.

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