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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

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

For the year ended June 30, 2023

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

For the transition period from _______ to _______

Commission file number 001-40556

THE GLIMPSE GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada |  | 81-2958271
(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

15 West 38th St, 12th Fl, New York, NY 10018 |  | 10018
(Address of principal executive offices) |  | (Zip Code)

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

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

Title of each class |  | Ticker symbol(s) |  | Name of each exchange on which registered
Common Stock, $0.001 par value per share |  | VRAR |  | The Nasdaq Stock Market LLC

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

Title of each class

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. ☐ Yes ☒ No

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

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

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

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

As of December 30, 2022, the aggregate market value of the registrants voting and non-voting common stock held by non-affiliates of the registrant was $33,286,459 based on the closing sale price as reported on The Nasdaq Stock Market LLC of $3.03 per share.

As of September 22, 2023, 14,734,190 shares of the registrant’s common stock were issued and outstanding.

TABLE OF CONTENTS

THE GLIMPSE GROUP, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

| Page
PART I | 4
Item 1. Business | 4
Item 1A. Risk Factors | 12
Item 1B. Unresolved Staff Comments | 25
Item 2. Properties | 25
Item 3. Legal Proceedings | 25
Item 4. Mine Safety Disclosures | 25
PART II | 26
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 26
Item 6. [Reserved] | 27
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27
Item 7A. Quantitative and Qualitative Disclosures About Market Risk | 39
Item 8. Financial Statements and Supplementary Data | 39
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures | 39
Item 9A. Controls and Procedures | 40
Item 9B. Other Information | 40
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 40
PART III | 41
Item 10. Directors, Executive Officers and Corporate Governance | 41
Item 11. Executive Compensation | 47
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 50
Item 13. Certain Relationships and Related Transactions, and Director Independence | 52
Item 14. Principal Accountant Fees and Services | 52
PART IV | 53
Item 15. Exhibits and Financial Statement Schedules | 53
Item 16. Form 10-K Summary | 56
Signatures | 57

| 2 |

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report includes statements of our expectations, intentions, plans, and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Nonetheless, it is important for an investor to understand that these statements involve risks and uncertainties. These statements relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, liquidity, and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. We have used words such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “think,” “estimate,” “seek,” “expect,” “predict,” “could,” “project,” “potential,” and other similar terms and phrases, including references to assumptions, in this report to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements.

Such risks and other factors also include those listed in Item 1A. “Risk Factors” and elsewhere in this report and our other filings with the Securities and Exchange Commission (“SEC”). When considering these forward-looking statements, you should keep in mind the cautionary statements in this report and the documents incorporated by reference. New risks and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. We assume no obligation to update any forward-looking statements after the date of this report as a result of new information, future events or developments, except as required by applicable laws and regulations.

When used in this annual report, the terms the “Company,” “Glimpse Group,”, “Glimpse,” “we,” “us,” “ours,” and similar terms refer to The Glimpse Group, Inc., a Nevada corporation, and its subsidiaries.

As of the date of this annual report, we currently own and operate numerous wholly-owned subsidiary companies (“Subsidiary Companies”, “Subsidiaries”): QReal, LLC (dba QReal), Immersive Health Group, LLC (dba IHG), Foretell Studios, LLC (dba Foretell Reality), 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 Brightline Interactive, LLC (“BLI”) and a legal entity in Israel.

| 3 |

PART I

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.

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. We believe that we offer significant exposure to the rapidly growing and potentially transformative Immersive technology markets, while mitigating downside risk via our diversified model and ecosystem.

Our 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.

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. 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. 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. 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. 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”). 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.

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. 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.

(1) Our ecosystem of Immersive technology software and service companies provides significant benefits to each subsidiary company and our group as a whole. We believe that the most notable benefits are: (a) economies of scale, cost efficiencies and reduced redundancies; (b) cross company collaboration, deep domain expertise, IP and knowledge transfer; (c) superior product offerings; (d) faster time to market; (e) enhanced business development and sales synergies; and (f) multiple monetization paths. In an emerging industry that is lacking in infrastructure, we believe that our ecosystem provides a distinct competitive advantage relative to a single, standalone company in the industry.

(2) By design, we incorporate multiple aspects of diversity to reduce the risks associated with an early stage industry, create multiple monetization venues and improve the probabilities of success. There is no single point of failure or dependency. 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.

(3) From our inception, we have balanced minimizing operational cash burn with capturing the growth opportunities in front of us. This remains an important factor driving our strategy to: (a) focus on enterprise software and services, only onboarding companies that are generating revenues or clearly could in the short term; (b) target solutions that are based on use cases that have a clear return on investment (“ROI”) and can be effectively developed from existing technologies and hardware; and (c) centralize costs to reduce inefficiencies. By striving to balance cash burn and growth, our goal is to lower dilution and support greater independence from capital markets, thereby increasing resiliency and maximizing upside potential.

As part of our platform, we provide a centralized corporate structure, which significantly reduces general and administrative costs (financial, operational, legal & IP), streamlines capital allocation and helps in coordinating business strategies. This allows our subsidiary company general managers to focus their time and effort almost exclusively on the core software, product and business development activities relating to their subsidiary.

Additionally, aligned economic incentives encourage cross-Company collaboration. Substantially all of our employees own equity in our Company. 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). Thus, there is benefit to them not only when their subsidiary company succeeds but also when any of the other subsidiaries succeeds, and when Glimpse as a whole succeeds. We believe that this ownership mechanism is a strong driver of cross-pollination of ideas and fosters collaboration. While each subsidiary company owns its own IP, our parent company currently owns 100% of each subsidiary company. 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. | 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. | 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. | PulpoAR, LLC (PulpoAR): AR try-on technologies, targeting the Beauty and Cosmetics industry; a subsidiary company of QReal
| 8. | 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. The transaction’s total potential purchase price is $32.5 million, with an initial payment of $8.0 million upon closing, consisting of $3.0 million in cash and approximately 0.71 million shares of the Company’s common stock valued at $5.0 million at the time the Agreement was entered (and issued at closing based on a common stock floor price of $7.00/share). Future potential purchase price considerations, up to $24.5 million, are based on BLI’s achievement of revenue growth milestones in the three years post-closing, the payment of which shall be made up to $12 million in cash and the remainder in common shares of the Company, priced at the date of the future potential share issuance subject to a common stock price floor of $7.00/share.

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. 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.

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. Augmented Reality (AR) is a less immersive experience, where the user views their immediate physical environment with digital images overlaid, via a phone, tablet or a dedicated HMD such as smart glasses. While distinct, VR and AR are related, utilize some similar underlying technologies and are expected to become increasingly interconnected - combined they are often referred to as Immersive Technology (XR).

VR and AR are emerging technologies, and the markets for them are still nascent. 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. Additionally, HMD and telecommunication (5G) advancements have been driving vast improvements in capabilities and ease of use, while significantly reducing headset cost. As a result, market adoption has accelerated and is expected to continue. 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.

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. With a standalone mobile headset, users no longer need an expensive gaming computer to power the headset and they also do not have a wire tethered to that computer restricting movement. These advances have facilitated easier corporate procurement and integration. The accelerating rollout of 5G should enable further improvement in user experience since with 5G, remote processing and heavier, real time applications become possible without noticeable visual lag, allowing for lighter, smaller, more comfortable HMDs with longer battery life.

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.

At our subsidiary company level, each company has its own business development and sales team, the size of which depends on its stage of development. Each subsidiary company’s general manager is responsible for business development, and as the subsidiary gains market traction, its business development and sales team are expanded as needed.

Our subsidiary companies’ business development and sales teams are enhanced by the shared resources and influence of our ecosystem. Our management takes an active role in the business development activities of each subsidiary company and in the overall development and integration of sale strategies, goals and budgets. As an integral part of the business development and sales processes, each subsidiary company’s general manager is very familiar with the product offerings of other subsidiary companies and leverages those into his or her own efforts when appropriate. This leads to substantial cross marketing collaboration.

We believe that a subsidiary company’s ability to demonstrate to potential customers scale as part of our ecosystem of companies, combined with our subsidiary’s ability to offer its products and solutions as well as those of our other subsidiary companies in an integrated manner, represents a key competitive advantage. 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.

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.

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. 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. 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. 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. We believe that we have the potential to become a leader in the VR/AR Software space in general and that each of our subsidiary companies has the potential to become a significant player in their particular industry sector.

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. 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.

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. 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). 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. 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. Beyond the expected financial impact of each such potential addition, these could also enhance our ecosystem, technology, scale and competitive position. These potential acquisitions may be domestic or international. We currently have multiple locations in the US, offices in several locations in Turkey and an international presence in the UK and Israel.

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Strategic Divestitures

Each one of our subsidiary companies has the potential to be divested or spun off. 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. If a subsidiary company is divested and the proceeds are substantive, then our intent is to distribute the majority of the net proceeds to our shareholder base, if such distribution would not jeopardize our growth and operations.

Intellectual Property

Our intellectual property is an integral part of our business strategy and practice. In accordance with industry practice, we protect our proprietary products, technology and competitive advantage through a combination of contractual provisions and trade secrets, patents, copyright and trademark laws in the United States and other jurisdictions where business is conducted.

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.

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 |  | 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 |  |  |  |

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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. We may make investments to further strengthen our copyright protection going forward, although no assurances can be given that we will be successful in such patent and trademark protection endeavors. We seek to limit disclosure of our intellectual property by requiring employees, consultants, and partners with access to our proprietary information to execute confidentiality agreements and non-competition agreements (when applicable) and by restricting access to our proprietary information. Due to rapid technological change, we believe that establishing and maintaining an industry and technology advantage in factors such as the expertise and technological and creative skills of our personnel, as well as new services and enhancements to our existing services, are more important to our business and profitability than other available legal protections. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our services or to obtain and use information that we regard as proprietary. The laws of many countries do not protect proprietary rights to the same extent as the laws of the U.S. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement. Any such litigation could result in substantial costs and diversion of resources and could have a material adverse effect on our business, operating results and financial condition. There can be no assurance that our means of protecting our proprietary rights will be adequate or that our competitors will not independently develop similar services or products. 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. 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.

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. 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.

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. A customer that may account for a higher concentration of revenue in one period may not account for any revenue in subsequent periods.

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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. 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.

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. 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.

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. 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.

Corporate Information

Information contained on our websites, including www.theglimpsegroup.com, shall not be deemed to be part of this filing or incorporated herein by reference and should not be relied upon by prospective investors for the purposes of determining whether to invest in the Company.

ITEM 1A. RISK FACTORS

RISKS RELATED TO OUR BUSINESS

The Company is an early stage technology company

We were incorporated on June 15, 2016 and are an early stage technology development company, comprised of a wholly-owned group of early stage companies in the VR and AR space. As such, we are subject to the risks associated with being an early stage company operating in an emerging industry, including, but not limited to, the risks set forth herein.

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 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. 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.

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.

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. There is doubt about our ability to continue as a going concern.

Since inception, we have incurred significant net losses. 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. 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 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. 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. If we cannot continue as a going concern, our stockholders would likely lose most or all of their investment in us.

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We may not be successful in raising additional capital necessary to meet expected funding 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.

We expect our capital needs to increase in the future as we continue to expand and enhance our operations. Our ability to raise additional funds through equity or debt financings or other sources will depend on the financial success of our current business and successful implementation of our key strategic initiatives, financial, economic and market conditions and other factors, some of which are beyond our control. No assurance can be given that we will be successful in raising the required capital at reasonable cost and at the required times, or at all. Further equity financings may have a dilutive effect on shareholders and any debt financing, if available, may require restrictions to be placed on our future financing and operating activities. 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. 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. Our competitors may announce new products, services, or enhancements that better meet the needs of end-users or changing industry standards. Further, new competitors or alliances among competitors could emerge. 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. Some of our competitors in this market have substantially greater financial and other resources, larger research and development staffs, and more experience and capabilities in developing, marketing and distributing products. Potential pricing pressure could result in significant price erosion, reduced profit margins and loss of market share, any of which could have a material adverse effect on our business, results of operations, financial position and liquidity.

Our plans for growth will place significant demands upon our resources. If we are unsuccessful in achieving our plan for growth, our business could be harmed.

We are actively marketing our products domestically and internationally. The plan places significant demands upon managerial, financial, and human resources. Our ability to manage future growth will depend in large part upon several factors, including our ability to rapidly:

| ● | build or leverage, as applicable, a network of business partners to create an expanding presence in the evolving marketplace for our products and services;
| ● | build or leverage, as applicable, sales teams to keep end-users and business partners informed regarding the technical features, issues and key selling points of our products and services;

| ● | attract and retain qualified technical personnel in order to continue to develop reliable and flexible products and provide services that respond to evolving customer needs;
| ● | develop support capacity for end-users as sales increase, so that we can provide post-sales support without diverting resources from product development efforts; and
| ● | expand our internal management and financial controls significantly, so that we can maintain control over our operations and provide support to other functional areas as the number of personnel and size increases.

Our inability to achieve any of these objectives could harm our business, financial condition and results of operations.

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We have material customer concentration, with a limited number of customers accounting for a material portion of our 2023 revenues.

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. It is not possible for us to predict the future level of demand for our services that will be generated by these customers or the future demand for the products and services of these customers in the end-user marketplace. In addition, revenues from these customers may fluctuate from time to time based on the commencement and completion of projects, the timing of which may be affected by market conditions or other facts, some of which may be outside of our control. Further, some of our contracts with these customers permit them to terminate our services at any time (subject to notice and certain other provisions). If any of these customers experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we charge for our services or we could lose a major customer. 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.

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.

Our R&D efforts are subject to the risks typically associated with the development of new products and technologies based on emerging and innovative technologies, including, for example, unexpected technical problems or the possible insufficiency of funds for completing development of these products or technologies. If we experience technical problems or delays, further improvements in our products or technologies and the introduction of future products or technologies could be delayed, and we could incur significant additional expenses and our business may fail.

We anticipate that we may require additional funds to increase or sustain our current levels of expenditure for the R&D of new products and technologies, and to obtain and maintain patents and other intellectual property rights in these technologies, the timing and amount of which are difficult to forecast. Any funds we need may not be available on commercially reasonable terms or at all. If we cannot obtain the necessary additional capital when needed, we might be forced to reduce our R&D efforts which would materially and adversely affect our business. If we attempt to raise capital in an offering of shares of our common stock, preferred stock, convertible securities or warrants, our then-existing stockholders’ interests will be diluted.

Our success depends on our ability to anticipate technological changes and develop new and enhanced products and services.

The markets for our products and services are characterized by rapidly changing technology, evolving industry standards and increasingly sophisticated customer requirements. The introduction of products embodying new technology and the emergence of new industry standards can negatively impact the marketability of our existing products and can exert price pressures on existing products. It is critical to our success that we are able to anticipate and react quickly to changes in technology or in industry standards and to successfully develop, introduce, and achieve market acceptance of new, enhanced and competitive products and services on a timely basis and cost-effective basis. We invest substantial resources towards continued innovation; however, there can be no assurance that we will successfully develop new products and services or enhance and improve our existing products and services, that new products and services and enhanced and improved existing products and services will achieve market acceptance or that the introduction of new products and services or enhanced existing products and services by others will not negatively impact us. 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.

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Development schedules for technology products and services are inherently uncertain. We may not meet our products and/or services development schedules, and development costs could exceed budgeted amounts. Our business, results of operations, financial position and liquidity may be materially and adversely affected if the products or product enhancements that we develop are delayed or not delivered due to developmental problems, quality issues or component shortage problems, or if our products or product enhancements do not achieve market acceptance or are unreliable. We or our competitors will continue to introduce products embodying new technologies. In addition, new industry standards may emerge. Such events could render our existing products obsolete or not marketable, which would have a material adverse effect on our business, results of operations, financial position and liquidity.

We place significant decision making powers with our subsidiaries’ management, which presents certain risks that may cause the operating results of individual subsidiaries to vary.

We believe that our practice of placing significant decision making powers with each of our subsidiaries’ management is important to our successful growth and allows us to be responsive to opportunities and to our customers’ needs. However, this practice could make it difficult to coordinate procedures across our operations and presents certain risks, including the risk that we may be slower or less effective in our attempts to identify or react to problems affecting an important business issue, or that we would be slower to identify a misalignment between a subsidiary’s and our overall business strategy. 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.

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.

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. Achieving this objective may be difficult due to many factors, including competition for such highly skilled personnel; fluctuations in global economic and industry conditions; changes in our management or leadership; competitors’ hiring practices; and the effectiveness of our compensation programs. The loss of any of these key persons could have a material adverse effect on our business, financial condition or results of operations. Competition for qualified employees is particularly intense in the technology industry. Our failure to attract and to retain the necessary qualified personnel could seriously harm our operating results and financial condition. Competition for such personnel can be intense, and no assurance can be provided that we will be able to attract or retain highly qualified technical and managerial personnel in the future, which may have a material adverse effect on our future growth and profitability.

Our financial results may fluctuate substantially for many reasons, and past results should not be relied on as indications of future performance.

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;

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| ● | 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.

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 customers may cancel or delay purchase orders for a variety of reasons, including, but not limited to, the rescheduling of new product introductions, changes in our customers’ inventory practices or forecasted demand, general economic conditions affecting our customers’ markets, changes in our pricing or the pricing of our competitors, new product announcements by us or others, quality or reliability problems related to our products, or selection of competitive products as alternate sources of supply.

Thus, there can be no assurance that we will be able to reach profitability on a quarterly or annual basis. We believe that our revenue and operating results will continue to fluctuate, and that period-to-period comparisons are not necessarily indications of future performance. Our revenue and operating results may fail to meet the expectations of public market analysts or investors, which could have a material adverse effect on the price of our common stock. In addition, portions of our expenses are fixed and difficult to reduce if our revenues do not meet our expectations. These fixed expenses magnify the adverse effect of any revenue shortfall.

Our plans for implementing our business strategy and achieving profitability are based upon the experience, judgment and assumptions of our key management personnel, and available information concerning the communications and technology industries. If management’s assumptions prove to be incorrect, it could have a material adverse effect on our business, financial condition or results of operations.

Our centralized management will have significant discretion over directing our resources and if management does not allocate resources effectively, our business, financial condition or result of operations could be harmed.

Our centralized management has significant discretion over directing our resources to any and all of our subsidiary companies. As a consequence, it is possible that one or more of our subsidiary companies will not receive adequate capital or management resources. If a subsidiary company does not receive adequate capital or resources, it may not be able to commercialize its products and services, or if its products and services are already commercialized, it may not be able to keep such products and services competitive. Therefore, if we don’t allocate resources effectively, our business, financial condition or result of operations could be harmed.

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Competitive pricing pressure may reduce our gross profits and adversely affect our financial results.

If we are unable to maintain our pricing due to competitive pressures or other factors, our margins will be reduced and our gross profits, business, results of operations, and financial condition would be adversely affected. The subscription prices for our software platforms, cloud modules, and professional services may decline for a variety of reasons, including competitive pricing pressures, discounts, anticipation of the introduction of new solutions by our competitors, or promotional programs offered by us or our competitors. Competition continues to increase in the market segments in which we operate, and we expect competition to further increase in the future.

Our future growth depends on our ability to attract, retain customers, and the loss of existing customers, or failure to attract new ones, could adversely impact our business and future prospects.

Once the platform is further developed, the size of our community of customers on our platforms is critical to our success. Our ability to achieve profitability in the future will depend, in large part, on our ability to add new customers, while retaining and even expanding offerings to existing customers. 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 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. 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.

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. Disruptions in such infrastructure, including as the result of power outages, telecommunications delay or failure, security breach, or computer virus, as well as failure by telecommunications network operators to provide us with the bandwidth we need to provide our products and offerings, could cause delays or interruptions to our products, offerings, and platforms. Any of these events could damage our reputation, resulting in fewer users actively using our platforms, disrupt our operations, and subject us to liability, which could adversely affect our business, financial condition, and operating results.

If we do not make our platforms, including new versions or technology advancements, easier to use or properly train customers on how to use our platforms, our ability to broaden the appeal of our products and services and to increase our revenue could suffer.

In order to get full use of our platforms, users generally need training. We provide a variety of training and support services to our customers, and we believe we will need to continue to maintain and enhance the breadth and effectiveness of our training and support services as the scope and complexity of our platforms increase. If we do not provide effective training and support resources for our customers on how to efficiently and effectively use our platforms, our ability to grow our business will suffer, and our business and results of operations may be adversely affected. Additionally, when we announce or release new versions of our platforms or advancements in our technology, we could fail to sufficiently explain or train our customers on how to use such new versions or advancements or we may announce or release such versions prematurely. These failures on our part may lead to our customers being confused about use of our products or expected technology releases, and our ability to grow our business, results of operations, brand and reputation may be adversely affected.

Interruptions, performance problems or defects associated with our platforms may adversely affect our business, financial condition and results of operations.

Our reputation and ability to attract and retain customers and grow our business depends in part on our ability to operate our platforms at high levels of reliability, scalability and performance, including the ability of our existing and potential customers to access our platforms at any time and within an acceptable amount of time. Interruptions in the performance of our platforms, whether due to system failures, computer viruses or physical or electronic break-ins, could affect the availability of our platforms. 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.

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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. If our platforms are unavailable or if our customers are unable to access our platforms within a reasonable amount of time or at all, we may experience a loss of customers, lost or delayed market acceptance of our platforms, delays in payment to us by customers, injury to our reputation and brand, legal claims against us, significant cost of remedying these problems and the diversion of our resources. In addition, to the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, financial condition and results of operations, as well as our reputation, may be adversely affected.

Further, the software technologies underlying our platforms are inherently complex and may contain material defects or errors, particularly when new products are first introduced or when new features or capabilities are released. We have from time to time found defects or errors in our platforms, and new defects or errors in our existing platforms or new products may be detected in the future by us or our users. We cannot assure you that our existing platforms and new products will not contain defects. Any real or perceived errors, failures, vulnerabilities, or bugs in our platforms could result in negative publicity or lead to data security, access, retention or other performance issues, all of which could harm our business. The costs incurred in correcting such defects or errors may be substantial and could harm our business. Moreover, the harm to our reputation and legal liability related to such defects or errors may be substantial and could similarly harm our business.

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.

The markets in which we compete are subject to rapid technological change, evolving industry standards, and changing regulations, as well as changing customer needs, requirements and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis. Accordingly, our ability to increase our revenue depends in large part on our ability to maintain, improve and differentiate our existing platforms and introduce new functionality.

We must continue to improve existing features and add new features and functionality to our platforms in order to retain our existing customers and attract new ones. If the technology underlying our platforms become obsolete or do not address the needs of our customers, our business would suffer.

Revenue growth from our products depends on our ability to continue to develop and offer effective features and functionality for our customers and to respond to frequently changing data protection regulations, policies and end-user demands and expectations, which will require us to incur additional costs to implement. If we do not continue to improve our platforms with additional features and functionality in a timely fashion, or if improvements to our platforms are not well received by customers, our revenue 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.

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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.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, or Section 404, 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. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we may choose to elect to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our consolidated financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make our common stock less attractive to investors. In addition, if we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards.

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.

We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future results of operations may not be as comparable to the results of operations of certain other companies in our industry that adopted such standards. 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.

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. 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. 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.

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. 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.

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. 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.

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. 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. 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. 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. Cyber-attacks may target us, our suppliers, customers or other participants, or the internet infrastructure on which we depend. Actual or anticipated attacks and risks may cause us to incur significantly higher costs, including costs to deploy additional personnel and network protection technologies, train employees, and engage third-party experts and consultants. While we do carry cybersecurity insurance, we may not be able to mitigate such risks to any third party. Cybersecurity breaches would not only harm our reputation and business, but also could materially decrease our revenue and net income.

A compromise of the security of our information technology systems leading to theft or misuse of our own or our clients’ proprietary or confidential information, or the public disclosure or use of such information by others, could result in losses, third-party claims against us and reputational harm, including the loss of clients. The theft or compromise of our or our clients’ information could negatively impact our reputation, financial results and prospects. In addition, if our reputation is damaged due to a data security breach, our ability to attract new engagements and clients may be impaired or we may be subjected to damages or penalties, which could negatively impact our businesses, financial results or financial condition.

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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.

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. If our existing subsidiary companies do not achieve sufficient levels of revenue and profits, we may be required to seek additional financing through the issuance of equity or debt securities or other arrangements to finance the operations of the business.

Additionally, there can be no assurance that we will be able to successfully identify, acquire or profitably manage such additional companies, technologies, or intellectual property or successfully integrate these, if any, into the Glimpse ecosystem without substantial costs, delays or other operational or financial problems. If potential acquisition targets are unwilling to accept our equity as the consideration for their businesses, then we may be required to seek additional financing through the issuance of equity or debt securities or other arrangements to finance the acquisition transaction. If we complete a business combination, we may require additional financing to fund the operations or growth of an acquisition target. Further, acquisitions involve a number of other special risks, including possible adverse effects on our operating results, diversion of management’s attention, dependence on retention, hiring and training of key personnel, risks associated with unanticipated problems or legal liabilities, and realization of acquired intangible assets, some or all of which could have a material adverse effect on our business, financial condition and results of operations. In addition, there can be no assurance that the companies, technologies, or intellectual property acquired in the future, if any, will generate anticipated revenues and earnings. As a result, we may be required to seek additional financing through the issuance of equity or debt securities or other arrangements. To the extent that we are unable to acquire additional companies, technologies, or intellectual property or integrate those successfully, our ability to generate and increase our revenues may be reduced significantly. As a result, we may be required to seek additional financing through the issuance of equity or debt securities or other arrangements. As an early-stage company, we cannot assure that such financing will be available on acceptable terms, if at all.

With respect to our future acquisition strategy, no assurance can be made that we will have the funds necessary to make future acquisitions. To the extent that additional financing proves to be unavailable, that fact will likely have a negative impact on our business and we may be compelled to restructure the operations of the business or abandon a particular contemplated business combination.

If we fail to integrate any existing or acquired subsidiaries into the Glimpse ecosystem, we may not realize the anticipated benefits of the collaborative Glimpse ecosystem and the integration of any acquisitions, which could harm our business, financial condition or results of operations.

Even though Glimpse’s ecosystem provides a centralized corporate structure and the potential for cross company collaboration synergies, each subsidiary company has its own business development, technology development, sales team and general manager. Although we believe that the integration of our existing subsidiary companies has been a success, there is still continued risk that we may encounter difficulties related to continued integration of the existing subsidiary companies in the future. There is also the risk that the business development, sales team and general manager of a future acquired subsidiary are unsuccessful. 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.

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.

In the future, we intend to continue to pursue acquisitions of assets, products or businesses that we believe are complementary to our existing business and/or to enhance our market position or expand our product portfolio. There is a risk that we will not be able to identify suitable acquisition candidates available for sale at reasonable prices, complete any acquisition, or successfully integrate any acquired product or business into our operations. We may face competition for acquisition candidates from other parties including those that have substantially greater available resources. Acquisitions may involve a number of other risks, including:

| ● | diversion of management’s attention from other subsidiaries;
| ● | disruption to our ongoing business;
| ● | failure to retain key acquired personnel;
| ● | difficulties in integrating acquired operations, technologies, products, or personnel;
| ● | unanticipated expenses, events, or circumstances;
| ● | assumption of disclosed and undisclosed liabilities; and
| ● | inappropriate valuation of the acquired in-process R&D, or the entire acquired business.

If we do not successfully address these risks or any other problems encountered in connection with an acquisition, the acquisition could have a material adverse effect on our business, results of operations and financial condition. Problems with an acquired business could have a material adverse effect on our performance or our business as a whole. 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.

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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. We intend to continue to pursue additional patent protection for our new software and technology. Although we own multiple patents covering our technology that have already been issued, we may not be able to obtain additional patents that we apply for, or that any of these patents, once issued, will give us commercially significant protection for our technology, or will be found valid if challenged. Moreover, we have not obtained patent protection for our technology in all foreign countries in which our products might be sold. In any event, the patent laws and enforcement regimes of other countries may differ from those of the United States as to the patentability of our personal display and related technologies and the degree of protection afforded.

Any patent or trademark owned by us may be challenged and invalidated or circumvented. Patents may not be issued from any of our pending or future patent applications. Any claims and issued patents or pending patent applications may not be broad or strong enough and may not be issued in all countries where our products can be sold or our technologies may not be licensed to provide meaningful protection against any commercial damage to us. Further, others may develop technologies that are similar or superior to our technologies, duplicate our technologies or design around the patents owned by us. Effective intellectual property protection may be unavailable or limited in certain foreign countries. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise use aspects of our processes and devices that we regard as proprietary. Policing unauthorized use of our proprietary information and technology is difficult and our efforts to do so may not prevent misappropriation of our technologies. 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.

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 addition, we may have to participate in interference or reexamination proceedings before the US Patent and Trademark Office, or in opposition, nullification or other proceedings before foreign patent offices, with respect to our patents or patent applications. All of these actions would place our patents and other intellectual property rights at risk and may result in substantial costs to us as well as a diversion of management attention. Moreover, if successful, these actions could result in the loss of patent or other intellectual property rights protection for the key technologies on which our business strategy depends.

In addition, we rely in part on unpatented proprietary technology, and others may independently develop the same or similar technology or otherwise obtain access to our unpatented technology. To protect our trade secrets, know-how and other proprietary information, we require employees, consultants, financial advisors and strategic partners to enter into confidentiality agreements. These agreements may not provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of those trade secrets, know-how or other proprietary information. In particular, we may not be able to fully or adequately protect our proprietary information as we conduct discussions with potential strategic partners. If we are unable to protect the proprietary nature of our technology, it will harm our business.

Despite our efforts to protect our intellectual property rights, intellectual property laws afford us only limited protection. A third party could copy or otherwise obtain information from us without authorization. Accordingly, we may not be able to prevent misappropriation of our intellectual property or to deter others from developing similar products or services. Further, monitoring the unauthorized use of our intellectual property is difficult. Litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. 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.

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As is commonplace in technology companies, we employ individuals who were previously employed at other technology companies. To the extent our employees are involved in research areas that are similar to those areas in which they were involved at their former employers, we may be subject to claims that such employees or we have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of the former employers. Litigation may be necessary to defend against such claims. Litigation of this type could result in substantial costs to us and divert our resources.

We also depend on trade secret protection through confidentiality and license agreements with our employees, subsidiaries, licensees, licensors and others. We may not have agreements containing adequate protective provisions in every case, and the contractual provisions that are in place may not provide us with adequate protection in all circumstances. The unauthorized reproduction or other misappropriation of our intellectual property could diminish the value of our brand, competitive advantages or goodwill and result in decreased sales.

We may incur substantial costs or lose important rights as a result of litigation or other proceedings relating to our products, patents and other intellectual property rights.

In recent years, there has been significant litigation involving patents and other intellectual property rights in many technology-related industries. Until recently, patent applications were retained in secrecy by the US Patent and Trademark Office until and unless a patent was issued. As a result, there may be US patent applications pending of which we are unaware that may be infringed by the use of our technology or a part thereof, thus substantially interfering with the future conduct of our business. In addition, there may be issued patents in the United States or other countries that are pertinent to our business of which we are not aware. We and our customers could be sued by other parties for patent infringement in the future. Such lawsuits could subject us and them to liability for damages or require us to obtain additional licenses that could increase the cost of our products, which might have an adverse effect on our sales.

In addition, in the future we may assert our intellectual property rights by instituting legal proceedings against others. We may not be able to successfully enforce our patents in any lawsuits we may commence. Defendants in any litigation we may commence to enforce our patents may attempt to establish that our patents are invalid or are unenforceable. Any patent litigation could lead to a determination that one or more of our patents are invalid or unenforceable. 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.

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. As a result, the pendency or adverse outcome of any intellectual property litigation to which we are subject could disrupt business operations, require the incurrence of substantial costs and subject us to significant liabilities, each of which could severely harm our business.

Plaintiffs in intellectual property cases often seek injunctive relief. Any intellectual property litigation commenced against us could force us to take actions that could be harmful to our business and thus to our sales, including the following:

● discontinuing selling the products that incorporate or otherwise use technology that contains our allegedly infringing intellectual property;

● attempting to obtain a license to the relevant third party intellectual property, which may not be available on reasonable terms or at all; or

● attempting to redesign our products to remove our allegedly infringing intellectual property.

If we are forced to take any of the foregoing actions, we may be unable to sell products that incorporate our technology at a profit or at all. Furthermore, the measure of damages in intellectual property litigation can be complex, and is often subjective or uncertain. If we were to be found liable for infringement of proprietary rights of a third party, the amount of damages we might have to pay could be substantial and is difficult to predict. Decreased sales of our products incorporating our technology would adversely affect our results of operations. 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.

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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. 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. 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. 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.

Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may also negatively impact the market price of our common stock. In addition, technology stocks have historically experienced high levels of volatility. In the past, companies who have experienced volatility in the market price of their securities have been subject to securities class action litigation. 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.

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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.

The market price and trading volume of our common stock may be heavily influenced by the way analysts interpret our financial information and other disclosures. We do not have control over these analysts. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, our stock price could be negatively affected. If securities or industry analysts do not publish research or reports about our business, downgrade our common stock, or publish negative reports about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our common stock.

We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

We have never declared or paid any cash dividends on our capital stock, and, subject to the discretionary dividend policy described in Part II, Item 5 of this report, we do not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, you may need to rely on sales of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on your investment.

Costs as a result of operating as a public company are significant, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.

As a public company, we incur significant legal, accounting, insurance, investor relations and other expenses that we did not incur as a private company, which we expect to further increase after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Capital Market, and other applicable securities rules and regulations impose various requirements on public companies. 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.

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.

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging growth company.”

We are required to comply with various regulatory and reporting requirements, including those required by the SEC. Complying with these reporting and other regulatory requirements is time-consuming and results in increased costs to us and could have a negative effect on our results of operations, financial condition or business.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) and the requirements of the Sarbanes-Oxley Act. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, we need to commit significant resources, hire additional staff and provide additional management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. Sustaining our growth also will require us to commit additional management, operational and financial resources to identify new professionals to join our firm and to maintain appropriate operational and financial systems to adequately support expansion. 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.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 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 several small offices in Turkey for the operations of Glimpse Turkey.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any material pending legal proceedings.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Information with Respect to our Common Stock

Our common stock is traded on the Nasdaq Capital Market, LLC, or Nasdaq, and began trading on July 1, 2021 under the symbol “VRAR”.

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.

Recent 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.

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Dividends

We have never declared or paid cash dividends on our capital stock. Although we currently intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business, we are committed, subject to the limitations on distributions under Nevada law, to pay certain distributions in the event (i) we sell the business of any of our subsidiaries; or (ii) we report consolidated net income on our fiscal year end audited financial statements. No assurances can be made that any such milestone will be achieved or if achieved that our Board of Directors will approve any distribution in connection therewith.

Distribution upon sale of business. In the event we sell all or substantially all of the business of any of our subsidiaries, whether by means of a merger, asset sale, stock sale or otherwise, for a price in excess of $10,000,000, we may distribute no less than 85% of the after-tax net proceeds for such sale. 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. Such special circumstances could include, but not be limited to, the Company or any of its subsidiary companies contemplating or actively being engaged in a prospective acquisition or acquisitions that may require the use of such net proceeds, or other uses integral to the operations, growth or business development of any existing subsidiary company. Moreover, such distribution may be waived, in writing, by the holders of a majority of our securities holders entitled to vote, voting together as a single class.

Distribution of consolidated net income. In the event our annual audited financial statements report consolidated net income, we may distribute, within 90 days after completion of such audit, 10% of the consolidated net income for such fiscal year. 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. Such special circumstances could include, but not be limited to, the Board of Directors determining that such distribution, which could have otherwise been reinvested into our existing businesses, would impair our ability to execute on our business strategy. Moreover, such distribution may be waived, in writing, by the holders of a majority of our securities holders entitled to vote, voting together as a single class.

Subject to the distribution intentions discussed above, any future determination regarding the declaration and payment of dividends, if any, will be subject to the limitations on distributions under Nevada law, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant. In addition, our ability to pay dividends may be restricted by any agreements we may enter into in the future.

ITEM 6. [RESERVED]

Not required.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The objective of this Management’s Discussion and Analysis is to allow investors to view the Company from management’s perspective, considering items that would have a material impact on future operations. 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. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us”, “we”, “our” and similar terms refer to the Company. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. 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.

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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. We believe that we offer significant exposure to the rapidly growing and potentially transformative Immersive technology markets, while mitigating downside risk via our diversified model and ecosystem.

Our 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.

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. 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. 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. 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. 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.

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”). 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. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Accounting Estimates

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

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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.

Business Combinations

The results of a business acquired in a business combination are included in the Company’s consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business generally being recorded at their estimated fair values as of the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

The Company performs valuations of assets acquired and liabilities assumed and allocates the purchase price to its respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed may require management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows. 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. 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. 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.

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.

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. 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. 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.

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. 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. 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.

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Fair Value of Financial Instruments

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

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

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

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

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

The Company’s contingent consideration is categorized as Level 3 within the fair value hierarchy. Contingent consideration is recorded within contingent consideration, current, and contingent consideration, non-current, in the Company’s consolidated balance sheets as of June 30, 2023 and 2022. Contingent consideration has been recorded at its fair values using unobservable inputs and have included using the Monte Carlo simulation option pricing framework, incorporating contractual terms and assumptions regarding financial forecasts, discount rates, and volatility of forecasted revenue. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist.

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.

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.

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

| ● | identify the contract with a customer;
| ● | identify the performance obligations in the contract;
| ● | determine the transaction price;
| ● | allocate the transaction price to performance obligations in the contract;
| ● | recognize revenue as the performance obligation is satisfied;
| ● | determine that collection is reasonably assured.

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

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

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

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

Significant Judgments

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

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.

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

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

Revenue for Software License is recognized at the point of time in which the Company delivers the software and customer accepts delivery. 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. 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.

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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.

The Company values the options using the Black-Scholes Merton (“Black Scholes”) method utilizing various inputs such as expected term, expected volatility and the risk-free rate. The expected term reflects the application of the simplified method, which is the weighted average of the contractual term of the grant and the vesting period for each tranche. 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.

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.

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. Results for reporting periods beginning after July 1, 2022 are presented under the new leasing standard, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting. The Company has elected to utilize the package of practical expedients at the time of adoption, which allows the Company to (1) not reassess whether any expired or existing contracts are or contain leases, (2) not reassess the lease classification of any expired or existing leases, and (3) not reassess initial direct costs for any existing leases. The Company also has elected to utilize the short-term lease recognition exemption and, for those leases that qualified, the Company did not recognize right-of-use (“ROU”) assets or lease liabilities. As a result of adoption, the Company recorded ROU assets related to office facility leases which are recognized on the consolidated balance sheet and the associated lease liabilities are recognized on the consolidated balance sheet. The present value of the Company’s remaining lease payments, which comprise the lease liabilities, was estimated using an estimated incremental borrowing rate as of the adoption date.

The adoption resulted in no adjustment to July 1, 2022 accumulated deficit on the consolidated balance sheet.

New Lease Accounting Policies

The Company determines if an arrangement is a lease at inception and determines the classification of the lease, as either operating or finance, at commencement.

For short-term leases with expected terms of less than one year, the Company does not recognize ROU assets or lease liabilities. The Company does not have any finance 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. As the rate implicit in the Company’s leases is not readily determinable, the Company uses an estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. 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.

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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). 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. 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. 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 is currently evaluating the impact of this standard on its consolidated financial statements.

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%. The increase reflects the addition of subsidiary companies through acquisitions and new customers.

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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”).

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.

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. 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 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.

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. 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 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.

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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%. The increase is driven primarily by the non-cash impairment and amortization of intangible assets relating to acquisitions, the addition of new subsidiaries through acquisitions and headcount additions to support growth.

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%. This reflects the addition of several new subsidiaries through acquisitions (primarily headcount and software expenses) and core headcount additions to support growth.

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.

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%. This increase primarily reflects the addition of new subsidiaries through acquisitions, including both headcount and increased use of outside marketing events / firms to drive revenue growth, and employee incentives based on achievement of certain revenue targets.

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Amortization of Acquisition Intangible Assets

Amortization of acquisition intangible assets expense for the year ended June 30, 2023 was approximately $2.05 million compared to $0.48 million for the year ended June 30, 2022, an increase of approximately 327%. This primarily reflects the addition of new subsidiaries through acquisitions.

Intangible Asset Impairment

Intangible asset impairment for the year ended June 30, 2023 was an expense of approximately $15.35 million compared to none in the previous year. This expense primarily represents impairment of S5D goodwill and long-lived assets. Also included is the impairment of AUGGD goodwill and long-lived assets.

S5D

As part of the Company’s annual review of goodwill impairment, it was determined that recent unfavorable trends in the S5D business indicated goodwill and long-lived assets of this subsidiary were impaired as of June 30, 2023. Actual revenue and financial results since acquisition, and to a greater extent in recent quarters, have significantly underperformed the expectations that were employed to determine fair value at acquisition. Cash flow of the S5D business was negative for the year ended June 30, 2023. This negative cash flow was the result of significant declines or loss in revenue from key customers compared to previous years and occurred notwithstanding cost-cutting efforts to mitigate the negative results. Declining revenue trends indicate the S5D business may not be able to generate positive cash flow for the foreseeable future. The Company believed that this trend would reverse itself based on expected significant new revenue bookings, however new revenue did not materialize and are not expected to going forward. Continued weak new order bookings have continued through the issue date of this 10-K filing.

Based on the expectations that the S5D business may not be able to produce positive cash flow for the foreseeable future and no expected market for selling the S5D business, it was determined that S5D’s long-lived assets and goodwill were fully impaired as of June 30, 2023. This determination, based on undiscounted cash flow projections, resulted in an intangible asset impairment expense of $14.87 million, representing a full write off of the net carrying value of S5D goodwill and long-lived assets.

At this time, the S5D business will continue to operate.

AUGGD

In March 2023, primarily due to a lack of market traction, a decision was made by the Company to cease the operations of its wholly owned subsidiary MotionZone, LLC (dba “AUGGD”) and divest any related assets and potential liabilities. Based on business projections, the assets of AUGGD were not expected to generate measurable revenue, and therefore no cash flow, and were deemed worthless with no future benefit. In April 2023 the Company executed an amendment to the original asset purchase agreement of AUGGD whereby the assets were transferred to a new independent entity, majority owned by the original sellers of AUGGD, in return for a 19.99% interest in said new entity. Glimpse considers this entity to have no measurable fair value for the foreseeable future.

Accordingly, an intangible asset impairment expense of $0.48 million, representing a full write off of the net carrying value of AUGGD goodwill and long-lived assets has been recorded.

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. 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. 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.

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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%. The decrease was primarily due to a reduction in income relating to the forgiveness of a Paycheck Protection Plan loan, offset by higher interest earned on cash deposits during the year ended June 30, 2023.

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. 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. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, net income (loss), operating income (loss), 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. 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.

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

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

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

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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. The increase in EBITDA loss was driven by an increase in operating expense outlays in all areas of the Company to propel future growth, including the acquisition of several new subsidiaries. This increase in operating expense outlays was partially offset by non-cash expenses.

Going Concern

The Company evaluated whether there are conditions and events, considered in the aggregate, that raise doubt about its ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued.

The Company has incurred recurring losses since its inception, including a net loss of $28.6 million for the year ended June 30, 2023. In addition, as of June 30, 2023, the Company had an accumulated deficit of $56.6 million. The Company expects to continue to generate negative cash flow for the foreseeable future. The Company expects that its cash and cash equivalents as of June 30, 2023 may not be sufficient to fund operations for at least the next twelve months from the date of issuance of these consolidated financial statements and the Company will need to obtain additional funding. Accordingly, the Company has concluded that doubt exists about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of these consolidated financial statements.

Outside of potential revenue growth generated by the Company, in order to alleviate the going concern the Company may take actions which could include but are not limited to: further cost reductions, equity or debt financings and restructuring of potential future cash contingent acquisition liabilities. There is no assurance that these actions will be taken or be successful if pursued.

The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described.

Potential liquidity resources

Potential liquidity resources may include the sale of common stock pursuant to an untapped $100 million S-3 registration statement filed with the SEC on October 28, 2022. Such financing may not be available on terms favorable to the Company, or at all.

Liquidity 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. 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. 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.

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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. Cash flow from financing activities for the 2022 period primarily reflects the net proceeds from our IPO and Securities Purchase Agreement.

Capital Resources

As of June 30, 2023, the Company had cash and cash equivalent balances of $5.62 million.

As of June 30, 2023, the Company had no outstanding corporate debt obligations.

As of June 30 2023, contingent consideration for acquisition liabilities contains cash components ranging up to $4.5 million, potentially payable through July 2025 contingent on BLI achieving certain revenue milestones.

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. As an emerging growth company we can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We intend to avail ourselves of these options. Once adopted, we must continue to report on that basis until we no longer qualify as an emerging growth company.

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. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If, as a result of our decision to reduce future disclosure, investors find our common stock less attractive, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

All financial information required by this Item is attached hereto at the end of this report beginning on page F-1 and is hereby incorporated by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) and 15d-15(f) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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

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

Management’s report on internal control over financial reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 framework set forth in the report entitled Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring.

Based on our evaluation under the 2013 framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of June 30, 2023.

Changes in Internal Control over Financial Reporting

During the year ended June 30, 2023, there was no change in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table sets forth information for our executive officers and directors, their ages and position(s) with the Company.

Name |  | Age |  | Position
Executive Officers |  |  |  |
Lyron Bentovim |  | 54 |  | President, Chief Executive Officer and Chairman of the Board
Maydan Rothblum |  | 50 |  | Chief Operating Officer, Chief Financial Officer, Secretary, Treasurer, and Director
D.J. Smith |  | 47 |  | Chief Creative Officer and Director
Jeff Meisner |  | 62 |  | Chief Revenue Officer and Director
Tyler Gates |  | 37 |  | Chief Futurist Officer and Board Observer
Non-Executive Directors |  |  |  |
Sharon Rowlands |  | 64 |  | Independent Director
Ian Charles |  | 55 |  | Independent Director and Chair of Audit Committee
Jeff Enslin |  | 56 |  | Independent Director and Chair of Governance Committee
Lemuel Amen |  | 57 |  | Independent Director and Chair of Strategy Committee
Alexander Ruckdaeschel |  | 51 |  | Independent Director and Chair of Compensation Committee

Directors are elected and hold office until the next annual meeting of the stockholders of the Company and until their successors are elected. Officers are elected and serve at the discretion of the Board of Directors.

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Executive Officers

Lyron Bentovim has been President and Chief Executive Officer since he co-founded the Company in 2016. From July 2014 to August 2015, Mr. Bentovim was Chief Operating Officer and Chief Financial Officer of Top Image Systems, a Nasdaq-listed company. From March 2013 to July 2014, Mr. Bentovim served as Chief Operating Officer and Chief Financial Officer of NIT Health and Chief Operating Officer and Chief Financial Officer and Managing Director at Cabrillo Advisors. From August 2009 until July 2012, Mr. Bentovim served as the Chief Operating Officer and Chief Financial Officer of Sunrise Telecom, Inc. a Nasdaq-listed company. Prior to Sunrise Telecom, Inc., from January 2002 to July 2009, Mr. Bentovim was a Portfolio Manager for Skiritai Capital LLC, an investment advisor. Prior to Skiritai Capital LLC, Mr. Bentovim served as the President, Chief Operating Officer and co-founder of WebBrix, Inc. Mr. Bentovim serves on the board of directors of Manhattan Bridge Capital, a Nasdaq-listed company, and has served on the board of directors of the following publicly traded companies: Blue Sphere, RTW Inc., Ault, Inc., Top Image Systems Ltd., Three-Five Systems Inc., Sunrise Telecom Inc., and Argonaut Technologies Inc. Additionally, Mr. Bentovim was a Senior Engagement Manager with strategy consultancies USWeb/CKS, Mitchell Madison Group LLC and McKinsey & Company Inc. Mr. Bentovim has an MBA from Yale School of Management and a law degree from the Hebrew University, Israel.

Maydan Rothblum has been Chief Operating Officer and Chief Financial Officer since he co-founded the Company in 2016 and a member of our board of directors since July 2021. From 2004 to 2016, Mr. Rothblum served as the co-founder, Managing Director and Chief Operating Officer of Sigma Capital Partners, a middle-market private equity firm focused on making negotiated investments directly onto the balance sheets of, primarily, small-to-mid sized publicly traded technology companies. In addition to his role as principal investor, Mr. Rothblum oversaw the fund’s portfolio, managed the fund’s day-to-day operations and financial reporting. Prior to working at Sigma Capital Partners, Mr. Rothblum held positions at Apax Partners, a global private equity fund, and Booz, Allen & Hamilton, a global strategic consultancy. Additionally, Mr. Rothblum served as an Engineer for the Israel Defense Forces. Mr. Rothblum holds an MBA from Columbia Business School and a BS in Industrial Engineering and Management from the Technion - Israel Institute of Technology.

D.J. Smith has been the Chief Creative Officer since he co-founded the company in 2016. Since June 2016, Mr. Smith has served as the co-founder and Organizer of NYVR Meetup. Prior to co-founding the Company, Mr. Smith served as the Senior Project Manager at Avison Young, where he managed construction and real estate development projects. From April 2016 to August 2020, Mr. Smith was the Founder of VRTech Consulting LLC, which provided consulting for real estate development projects and virtual reality. Mr. Smith holds a B.S. in Civil Engineering from Pennsylvania State University.

Jeff Meisner has been Chief Revenue Officer and a member of our board of directors since February 2022. Mr. Meisner is the General Manager of Sector 5 Digital, LLC a wholly owned subsidiary of the Company. From 2014 to 2022, Mr. Meisner was the CEO of S5D, an immersive technology company focused on creating innovative Virtual Reality, Augmented Reality, and other digital experiences, which was acquired by the Company, as described above. From 2001 to 2019, Mr. Meisner was Chief Executive Officer and founder of Skyline Sector 5, an experiential marketing company focused on the trade show and event industry. Prior to 2001, Mr. Meisner held various business development, operations and executive roles for a number of technology companies. Additionally, Mr. Meisner currently serves on the Board of Directors of Cristo Rey Fort Worth, a non-profit college preparatory high school for economically disadvantaged youth. Mr. Meisner holds a BASc. in Electrical Engineering from The University of Waterloo in Ontario, Canada.

Tyler Gates, as of August 1, 2022, is the General Manager of Brightline Interactive, LLC (BLI), a wholly owned subsidiary of the Company and serves as the Company’s Chief Futurist Officer and as a non-voting Board Observer of the board of directors. Prior to the closing of the BLI acquisition, Mr. Gates was the Chief Executive Officer of BLI, and has been with BLI in several executive leadership roles since 2012. BLI focuses on interactive, spatial and immersive VR & AR technology solutions for training, simulation and brand experiences. Additionally, Mr. Gates has been the President of the VR/AR Association (VRARA) DC’s Chapter since its inception in 2017 and is the Host of VRARA’s Everything VR/AR Podcast. VRARA is a global industry association for VR/AR/MR with local chapters in major cities around the world. Mr. Gates holds a BA Degree in Corporate Communications and Interpersonal Psychology from Lenoir-Rhyne University.

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Sharon Rowlands has served as a member of our board of directors since October 2017 and was the Chair of the Company’s Compensation Committee from 2018 to 2021. She has been the Chief Executive Officer and President of Newfold Digital (previously Web.com) since 2019. She has served on the board of directors of Everbridge, Inc., a Nasdaq-listed company, since 2019. Additionally, she has served on the board of directors of Pegasystems Inc., a Nasdaq-listed company, since April 2016. She served as President of USA Today Network Marketing Solutions at Gannett Co., a Nasdaq-listed company, from October 2017 to January 2019. Previously, Ms. Rowlands served as the Chief Executive Officer and member of the Board of Directors of ReachLocal, Inc., a Nasdaq-listed company, from April 2014 to January 2019. From November 2011 to December 2013, she was the Chief Executive Officer and member of the Board of Directors of Altegrity, Inc. From October 2008 to November 2011, Ms. Rowlands was the Chief Executive Officer of Penton Media, Inc. From 1997 to 2008, Ms. Rowlands held a variety of roles including Chief Executive Officer from 2005 to 2008, at Thomson Financial Inc. Ms. Rowlands received her post graduate certificate in education from the University of London and her Bachelor of Arts in History from the University of Newcastle.

Ian Charles has served as a member of our board of directors since January 2022 and as the Chair of the Company’s Audit Committee since January 2022. Mr. Charles has approximately 25 years of executive leadership experience in technology, public markets, mergers and acquisitions, and multinational operations. Since 2022, Mr. Charles has served as the Chief Financial Officer of Filevine, a provider of legal SaaS solutions. From 2019 to 2021, Mr. Charles served as the Chief Financial Officer of Scoop Technologies, Inc., a workplace management software provider. From 2014 to 2019, Mr. Charles served as the Chief Financial Officer of Planful (formerly Host Analytics), a financial planning and analysis platform that provides financial planning, consolidation, reporting and analytics.

Jeff Enslin has served as a member our board of directors since July 2018 and as the Chair of the Company’s Governance Committee since January 2022. Mr. Enslin was previously the Chair of the Company’s Audit Committee from 2018 to 2021. From 1995 to 2018, Mr. Enslin was a senior partner and senior portfolio manager at Caxton Associates LP, a macro-focused hedge fund. Mr. Enslin is the founder and managing member of Perimetre Capital LLC since 2018, where he actively manages a wide portfolio of early stage technology investments. Mr. Enslin has served on the Investment Committees at Lehigh University (2010 to 2019) and the Peddie School (2010 to present, Advisory Trustee). Mr. Enslin is an active mentor at both Creative Destruction Labs and Endless Frontier Labs. Mr. Enslin received his MBA in finance and international business from New York University’s Stern School of Business and his B.S. in Finance from Lehigh University.

Lemuel Amen has served as a member of our board of directors since May 2021 and as the Chair of the Company’s Strategy Committee since January 2022. Mr. Amen is the Founder and Chairman of Altius Manufacturing Group, LLC, an equity growth management firm, and has held senior executive positions and led global business units for Electronic Data Systems (EDS) and 3M. Mr. Amen has served on the board of directors for a privately held technology firm, AbeTech Inc., since 2009, and on the board of advisors of a privately held industrial firm, Diversified Chemical Technology, Inc., since 2018. Additionally, Mr. Amen is an experienced board governance professional serving high-growth technology, industrial services, and application software firms. Prior board governance service positions include: Chairman of the board of directors for Viking Engineering and Development Inc. (2011 to 2017); board director and operating committee member for Bauer Welding & Metal Fabricators, Inc. (2013 to 2016); and board President and lead director for HighJump Software, Inc. (2005 to 2008). Mr. Amen served as Chairman for the Federal Reserve Bank of Minneapolis, Ninth District Advisory Council from 2012 to 2015. Additional governance and board director service post includes: University of Michigan – Dearborn, College of Business, Board of Advisors (2019 to present); State of Minnesota Governor’s Workforce Development Council (2016 to 2019); Ordway Center for the Performing Arts (2015 to 2018); Junior Achievement Worldwide Inc., Global Board of Directors (2003 to 2008); and Northwestern University, McCormick School of Engineering & Computer Science, Industrial Advisory Board (2000 to 2006). Mr. Amen earned his M.S. in Civil and Environmental Engineering from Northwestern University, and his B.S. in Mechanical Engineering at California State University-Northridge.

Alexander Ruckdaeschel has served as a member of our board of directors since July 2021 and as the Chair of the Company’s Compensation Committee since January 2022. Mr. Ruckdaeschel has worked in the financial industry for over 20 years in the U.S. and Europe as a co-founder, partner and senior executive. Since 2012 and until recently, he served on the board of directors of Vuzix, a Nasdaq listed company and a leading supplier of smart glasses and AR technology products and services and was the Chairman of Vuzix’s compensation committee. Mr. Ruckdaeschel co-founded Herakles Capital Management and AMK Capital Advisors in 2008. He was also a partner with Alpha Plus Advisors and Nanostart AG, where he was the head of their U.S. group. Mr. Ruckdaeschel has significant experience in startup operations as the manager of DAC Nanotech-Fund and Biotech-Fund, and sits on several boards. Following service in the German military, Mr. Ruckdaeschel was a research assistant at Dunmore Management focusing on intrinsic value and identifying firms that were undervalued and had global scale potential.

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Committees of Our Board of Directors

Our board of directors has established an audit committee, a compensation committee, a nominating and corporate governance committee, and a strategy committee. The composition and responsibilities of each of the committees of our board of directors are described below. Members serve on these committees until their resignation or until otherwise determined by our board of directors. Our board of directors may establish other committees as it deems necessary or appropriate from time to time.

Audit Committee

Our Audit Committee consists of Ian Charles, Lemuel Amen and Jeff Enslin. The Chair of our Audit Committee is Ian Charles. Our board of directors has determined that Ian Charles is an “audit committee financial expert” within the meaning of SEC regulations. Each member of our audit committee can read and understand fundamental financial statements in accordance with applicable requirements. In arriving at these determinations, our board of directors has examined each audit committee member’s scope of experience and the nature of their employment. The Board has affirmatively determined that each member of the Audit Committee meets the additional independence criteria applicable to audit committee members under Nasdaq and SEC rules.

The primary purpose of our audit committee is to provide assistance to the board of directors in fulfilling its oversight responsibility to the shareholders and others relating to (1) the integrity of the Company’s financial statements, (2) the effectiveness of the Company’s internal control over financial reporting, (3) the Company’s compliance with legal and regulatory requirements, and (4) the independent auditor’s qualifications and independence. Specific responsibilities of our audit committee include:

| ● | Reviewing and reassessing the charter at least annually and obtaining the approval of the board of directors;
| ● | Reviewing and discussing quarterly and annual audited financial statements;
| ● | Discussing the Company’s policies on risk assessment and risk management;
| ● | Discussing with the independent auditor the overall scope and plans for their audit, including the adequacy of staffing and budget or compensation; and
| ● | Reviewing and approving related party transactions;

Our Audit Committee previously operated under a written charter, adopted by our board of directors on November 21, 2018. On April 14, 2021, the Board approved the adoption of our Amended and Restated Audit Committee Charter. Our Audit Committee now operates under the Amended and Restated Audit Committee Charter. Our Audit Committee will review and reassess the adequacy of the written charter on an annual basis.

Compensation Committee

Our Compensation Committee consists of Alexander Ruckdaeschel, Sharon Rowlands and Jeff Enslin. The Chair of our Compensation Committee is Alexander Ruckdaeschel. The Board has affirmatively determined that each member of the Compensation Committee meets the additional independence criteria applicable to compensation committee members under Nasdaq and SEC rules.

The primary purpose of our compensation committee is to discharge the responsibilities of our board of directors with respect to all forms of compensation for the Company’s executive officers and to administer the Company’s equity incentive plan for employees. Specific responsibilities of our compensation committee include:

| ● | Reviewing and overseeing the Company’s overall compensation philosophy, and overseeing the development and implementation of compensation programs aligned with the Company’s business strategy;
| ● | Determining the form and amount of compensation to be paid or awarded to the Chief Executive Officer (“CEO”) and all other executive officers of the Company;

| 44 |

| ● | Annually reviewing and approving all matters related to CEO compensation;
| ● | Reviewing, adopting, amending, and terminating incentive compensation and equity plans, severance agreements, profit sharing plans, bonus plans, change-of-control protections, and any other compensatory arrangements for our executive officers and other senior management; and
| ● | Reviewing and establishing general policies relating to compensation and benefits of our employees, including our overall compensation philosophy.

Our Compensation Committee previously operated under a written charter, adopted by our board of directors on November 21, 2018. On April 14, 2021, the Board approved the adoption of our Amended and Restated Compensation Committee Charter. Our Compensation Committee now operates under the Amended and Restated Compensation Committee Charter. Our Compensation Committee will review and reassess the adequacy of the written charter on an annual basis.

Nominating and Corporate Governance Committee

The members of our Nominating and Corporate Governance Committee are Jeff Enslin, Alexander Ruckdaeschel and Ian Charles. Jeff Enslin serves as the Chairperson of the committee. The Nominating and Corporate Governance Committee’s responsibilities include:

| ● | identifying individuals qualified to become board members;
| ● | recommending to our board of directors the persons to be nominated for election or appointed as directors and to each board committee;
| ● | reviewing and recommending to our board of directors corporate governance principles, procedures and practices, and reviewing and recommending to our board of directors proposed changes to our corporate governance principles, procedures and practices from time to time; and
| ● | reviewing and making recommendations to our board of directors with respect to the composition, size and needs of our board of directors.

Our Nominating and Corporate Governance Committee operates under a written charter, adopted by our board of directors on April 14, 2021. Our Nominating and Corporate Governance Committee will review and reassess the adequacy of the written charter on an annual basis.

Strategy Committee

The members of our Strategy Committee are Lem Amen, Alexander Ruckdaeschel, Jeff Enslin and Lyron Bentovim. Lem Amen serves as the Chairperson of the Strategy Committee. The Strategy Committee’s responsibilities include:

| ● | identifying strategic trends within the Company and industry
| ● | analyzing the potential strategic impact of various financial, operational, technological and M&A alternatives
| ● | reviewing and making recommendations to our board of directors with respect to the Company’s strategic directions

Code of Ethics

On April 14, 2021, our board of directors adopted our Code of Ethics and Business Conduct. The code of ethics codifies the business and ethical principles that govern all aspects of our business.

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Director or Officer Involvement in Certain Legal Proceedings

To our knowledge, (i) no director or executive officer has been a director or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filed against it during the past ten years; (ii) no director or executive officer has been convicted of a criminal offense or is the subject of a pending criminal proceeding during the past ten years; (iii) no director or executive officer has been the subject of any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities during the past ten years; and (iv) no director or officer has been found by a court to have violated a federal or state securities or commodities law during the past ten years.

Board Leadership Structure and Role in Risk Oversight

Although we have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined, in the past we determined that it was in the best interests of the Company and its shareholders to combine these roles.

Our Board of Directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our Company’s assessment of risks. Our Board of Directors focuses on the most significant risks facing our Company and our Company’s general risk management strategy and ensures that risks undertaken by us are consistent with the Board’s appetite for risk. While the Board oversees our Company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our Company and that our board leadership structure and role in risk oversight is effective.

Director Compensation

Because we are still in the development stage, our directors do not receive any cash compensation other than reimbursement for expenses incurred during the performance of their duties or their separate duties as officers of the Company.

The following table sets forth information concerning equity-based compensation for the fiscal year ending June 30, 2023 of our directors serving at such time who are not also named executive officers.

Name |  | Fiscal Year |  |  | Fees Earned ($) |  |  | Option Options (1) |  |  | Stock Awards ($) |  |  | All Other Compensation ($) |  |  | Total ($) |
Sharon Rowlands |  |  | 2023 |  |  |  |  |  |  | $ | 100,000 |  |  |  |  |  |  |  |  |  |  | $ | 100,000 |
Jeffrey Enslin |  |  | 2023 |  |  |  |  |  |  | $ | 100,000 |  |  |  |  |  |  |  |  |  |  | $ | 100,000 |
Lemuel Amen |  |  | 2023 |  |  |  |  |  |  | $ | 100,000 |  |  |  |  |  |  |  |  |  |  | $ | 100,000 |
Alexander Ruckdaeschel |  |  | 2023 |  |  |  |  |  |  | $ | 100,000 |  |  |  |  |  |  |  |  |  |  | $ | 100,000 |
Ian Charles |  |  | 2023 |  |  |  |  |  |  | $ | 100,000 |  |  |  |  |  |  |  |  |  |  | $ | 100,000 |

(1) | The amounts disclosed represent the approximate aggregate grant date fair value of stock options granted to our named directors during Fiscal Year 2023 under the 2016 The Glimpse Group Incentive Plan. The assumptions used to compute the fair value are disclosed in Note 10 to our audited financial statements for Fiscal Year 2023. Such grant date fair values do not take into account any estimated forfeitures related to service-vesting conditions. These amounts do not reflect the actual economic value that will be realized by the named director upon the vesting of the stock options, the exercise of the stock options, or the sale of common stock acquired under such stock options.

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Risk Management

The Company does not believe risks arising from its compensation policies and practices for its employees are reasonably likely to have a material adverse effect on the Company.

Director Independence

The Board evaluates the independence of each nominee for election as a director of our Company in accordance with the Listing Rules (the “Nasdaq Listing Rules”) of the Nasdaq Stock Market LLC (“Nasdaq”). Pursuant to these rules, a majority of our Board must be “independent directors” within the meaning of the Nasdaq Listing Rules, and all directors who sit on our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee must also be independent directors.

The Nasdaq definition of “independence” includes a series of objective tests, such as the director or director nominee is not, and was not during the last three years, an employee of Glimpse or our Subsidiaries and has not received certain payments from, or engaged in various types of business dealings with us. In addition, as further required by the Nasdaq Listing Rules, the Board has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of the Board, would interfere with such individual’s exercise of independent judgment in carrying out his or her responsibilities as a director. In making these determinations, the Board reviewed and discussed information provided by the directors with regard to each director’s business and personal activities as they may relate to the Company and its management.

As a result, the Board has affirmatively determined that each of Sharon Rowlands, Ian Charles, Lemuel Amen, Jeff Enslin and Alexander Ruckdaeschel, are independent in accordance with the Nasdaq listing rules. The Board has also affirmatively determined that all members of our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee are independent directors.

No family relationships exist between any of our officers or directors.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth all compensation earned in respect of our Co-Chairman, Chief Executive Officers and our Chief Financial Officer for our last three completed fiscal years.

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SUMMARY COMPENSATION TABLE

The following is a summary of the compensation we paid for in the years ended June 30, 2023 and 2022, respectively, to our Executive Officers.

Name and Principal Position |  | Fiscal Year |  |  | Salary |  |  | Bonus |  |  | Stock Awards ($) ** |  |  | Option Award |  |  | Non-Equity Incentive Plan Compensation ($) |  |  | Non-Qualified Deferred Compensation Earnings ($) |  |  | All Other Compensation ($) |  |  | Total |
Lyron Bentovim |  | 2023 |  |  | $ | 231,875 |  |  | $ | - |  |  |  | 51,255 |  |  | $ | 460,810 |  |  |  | - |  |  |  | - |  |  |  | 331 |  |  | $ | 744,271 |
President & CEO |  | 2022 |  |  | $ | 257,500 |  |  | $ | 100,000 |  |  |  | - |  |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | 8,417 |  |  | $ | 365,917 |
Maydan Rothblum |  | 2023 |  |  | $ | 211,500 |  |  | $ | - |  |  |  | 36,360 |  |  | $ | 293,243 |  |  |  | - |  |  |  | - |  |  |  | 4,622 |  |  | $ | 545,724 |
CFO & COO |  | 2022 |  |  | $ | 227,500 |  |  | $ | 75,000 |  |  |  | - |  |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | 1,175 |  |  | $ | 303,675 |
David J Smith CCO |  | 2023 |  |  |  | 189,000 |  |  | $ | - |  |  |  | - |  |  | $ | 101,418 |  |  |  | - |  |  |  | - |  |  |  | 1,120 |  |  | $ | 291,538 |
|  | 2022 |  |  | $ | 205,000 |  |  | $ | 40,000 |  |  |  | - |  |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | 1,188 |  |  | $ | 246,187 |
Jeff Meisner |  | 2023 |  |  | $ | 198,000 |  |  | $ | - |  |  |  | 34,042 |  |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | 4,602 |  |  | $ | 236,644 |
CRO* |  | 2022 |  |  | $ | 91,667 |  |  | $ | - |  |  |  | - |  |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  | $ | 91,667 |
* Partial from February 1, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tyler Gates |  | 2023 |  |  | $ | 175,583 |  |  | $ | - |  |  |  | - |  |  | $ | 18,058 |  |  |  | - |  |  |  | - |  |  |  | 3,601 |  |  | $ | 197,242 |
Chief Futurist Officer* |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
* Partial from August 1, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

**Represents stock-based compensation in lieu of reduced cash salary

Employment Agreements

Lyron Bentovim

On May 13, 2021, we entered into an executive employment agreement with Mr. Lyron Bentovim. Mr. Bentovim is one of our co-founders and has been the Company’s President and Chief Executive Officer since its inception. Mr. Bentovim’s employment agreement shall continue until terminated by either the Company or Mr. Bentovim. Pursuant to Mr. Bentovim’s employment agreement, as of the Company’s IPO on July 1, 2021, he received an annual base cash salary of $250,000, amended to $265,000 as of January 1, 2022. In addition, Mr. Bentovim will be eligible to receive performance bonuses as determined by the Compensation Committee.

| 48 |

Maydan Rothblum

On May 13, 2021, we entered into an executive employment agreement with Mr. Maydan Rothblum. Mr. Rothblum is one of our co-founders and has been the Company’s Chief Financial Officer and Chief Operating Officer since its inception. Mr. Rothblum’s employment agreement shall continue until terminated by either the Company or Mr. Rothblum. Pursuant to Mr. Rothblum’s employment agreement, as of the Company’s IPO on July 1, 2021 he received an annual cash base salary of $220,000, amended to $235,000 as of January 1, 2022. In addition, Mr. Rothblum will be eligible to receive performance bonuses as determined by the Compensation Committee.

David J. Smith

On May 13, 2021, we entered into an executive employment agreement with Mr. David J. Smith. Mr. Smith is one of our co-founders and has been the Company’s Chief Creative Officer since its inception. Mr. Smith’s employment agreement shall continue until terminated by either the Company or Mr. Smith. Pursuant to Mr. Smith’s employment agreement, as of the Company’s IPO on July 1, 2021, he received an annual cash base salary of $200,000, amended to $210,000 as of January 1, 2022. In addition, Mr. Smith will be eligible to receive performance bonuses as determined by the Compensation Committee.

Jeff Meisner

On February 1, 2022, we entered into an executive employment agreement pursuant to which Mr. Meisner, our Chief Revenue Officer, will receive a base annual salary of $220,000. In addition, Mr. Meisner will be eligible for performance bonuses in accordance with the terms and conditions of the employment agreement.

Tyler Gates

On August 1, 2022, in connection with Mr. Gates’ appointment as Chief Futurist Officer, the Company and Mr. Gates entered into an executive employment agreement pursuant to which Mr. Gates will receive a base annual salary of $215,000. In addition, Mr. Gates will be eligible for performance bonuses in accordance with the terms and conditions of the employment agreement. Mr. Gates did not receive any compensation from the Company in fiscal year 2022.

Equity Incentive Plan

In October 2016, our majority shareholders approved our Equity Incentive Plan, as amended (the “Plan”), to be administered by our compensation committee. Pursuant to the Plan, we are authorized to grant options and other equity awards to employees of the Company or any subsidiary, non-employee directors or key consultants to the Company, or a subsidiary, and any person who has been offered employment by the Company or a subsidiary, provided that such prospective employee may not receive any payment or exercise any right relating to an Award until such person has commenced employment with the Company or a subsidiary (together, the “Eligible Persons”) The purchase price of each share of common stock purchasable under an award issued pursuant to the Plan, shall be determined by our compensation committee, in its sole discretion, at the time of grant, but shall not be less than 100% of the fair market of such share of common stock on the date the award is granted, subject to adjustment. Our compensation committee shall also have sole authority to set the terms of all awards at the time of grant.

Pursuant to the Plan, a maximum of 10,000,000 shares of our common stock shall be set aside and reserved for issuance. In addition, subject to adjustment as provided in the Plan, the share reserve will automatically increase on January 1 of each calendar year, for the period beginning on January 1, 2022 and ending on (and including) January 1, 2030 (each, an “Evergreen Date”) in an amount equal to five percent (5%) of the total number of shares of the Company’s common stock outstanding on December 31st immediately preceding the applicable Evergreen Date (the “Evergreen Increase”). Notwithstanding the foregoing, the Board may act prior to the Evergreen Date of a given year to provide that there will be no Evergreen Increase for such year, or that the Evergreen Increase for such year will be a lesser number of shares of the Company’s common stock than would otherwise occur pursuant to the preceding sentence. Any shares of Stock delivered under the Plan shall consist of authorized and unissued shares or treasury shares. Pursuant to these provisions, effective January 1, 2023 the number of shares of our common stock set aside for the Plan automatically increased to a total of approximately 11.3 million.

Under the Plan, an Eligible Person may be granted options, stock appreciation rights, restricted stock, phantom stock, sale phantom stock, stock granted as a bonus, a performance award, other stock-based awards or an annual incentive award, together with any related right or interest.

The term of each award under the Plan shall be for such period as may be determined by the compensation committee, subject to the express limitations set forth in the Plan.

| 49 |

Unless earlier terminated by action of the Board of Directors, the Plan will remain in effect until such time as no shares of common stock remains available for delivery under the Plan and the Company has no further rights or obligations under the Plan with respect to outstanding awards under the Plan.

Outstanding Equity Awards at Fiscal Year-End

The following table discloses information regarding outstanding equity awards granted or accrued as of June 30, 2023, for our named executive officers.

Outstanding Equity Awards
|  | Option Awards |  | Stock Awards |
Name |  | Number of Securities Underlying Unexercised Options (#) Exercisable |  |  | Number of Securities Underlying Unexercised Options (#) Unexercisable |  |  | Option Exercise Price |  |  | Option Expiration Date |  | Number of Shares or Units of Stock that have not Vested (#) |  |  | Market Value of Shares or Units of Stock that have not Vested ($) |
Lyron Bentovim |  |  | 32,508 |  |  |  | - |  |  | $ | 4.00 |  |  | 8/1/2028 |  |  | - |  |  |  | - |
|  |  | 10,836 |  |  |  | - |  |  | $ | 4.00 |  |  | 9/1/2029 |  |  | - |  |  |  | - |
|  |  | 28,896 |  |  |  | - |  |  | $ | 4.50 |  |  | 1/1/2030 |  |  | - |  |  |  | - |
|  |  | 2,333 |  |  |  | - |  |  | $ | 4.50 |  |  | 5/1/2030 |  |  | - |  |  |  | - |
|  |  | 1,167 |  |  |  | - |  |  | $ | 4.50 |  |  | 7/1/2030 |  |  | - |  |  |  | - |
|  |  | 14,448 |  |  |  | - |  |  | $ | 4.50 |  |  | 1/1/2031 |  |  | - |  |  |  | - |
|  |  | - |  |  |  | 121,000 |  |  | $ | 7.00 |  |  | 2/15/2033 |  |  | - |  |  |  | - |
|  |  | - |  |  |  | 1,089,000 |  |  | $ | 7.00 |  |  | 2/15/2033 |  |  | - |  |  |  | - |
Maydan Rothblum |  |  | 250,000 |  |  |  | - |  |  | $ | 2.50 |  |  | 6/20/2027 |  |  | - |  |  |  | - |
|  |  | 25,008 |  |  |  | - |  |  | $ | 4.00 |  |  | 9/1/2028 |  |  | - |  |  |  | - |
|  |  | 8,336 |  |  |  | - |  |  | $ | 4.00 |  |  | 9/1/2029 |  |  | - |  |  |  | - |
|  |  | 22,224 |  |  |  | - |  |  | $ | 4.50 |  |  | 1/1/2030 |  |  | - |  |  |  | - |
|  |  | 2,333 |  |  |  | - |  |  | $ | 4.50 |  |  | 5/1/2030 |  |  | - |  |  |  | - |
|  |  | 1,167 |  |  |  | - |  |  | $ | 4.50 |  |  | 7/1/2030 |  |  | - |  |  |  | - |
|  |  | 11,112 |  |  |  | - |  |  | $ | 4.50 |  |  | 1/1/2031 |  |  | - |  |  |  | - |
|  |  | - |  |  |  | 77,000 |  |  | $ | 7.00 |  |  | 2/15/2033 |  |  | - |  |  |  | - |
|  |  | - |  |  |  | 693,000 |  |  | $ | 7.00 |  |  | 2/15/2033 |  |  | - |  |  |  | - |
D.J. Smith |  |  | 20,004 |  |  |  | - |  |  | $ | 4.00 |  |  | 9/1/2028 |  |  | - |  |  |  | - |
|  |  | 6,668 |  |  |  | - |  |  | $ | 4.00 |  |  | 9/1/2029 |  |  | - |  |  |  | - |
|  |  | 14,232 |  |  |  | - |  |  | $ | 4.50 |  |  | 1/1/2030 |  |  | - |  |  |  | - |
|  |  | 1,333 |  |  |  | - |  |  | $ | 4.50 |  |  | 5/1/2030 |  |  | - |  |  |  | - |
|  |  | 667 |  |  |  | - |  |  | $ | 4.50 |  |  | 7/1/2030 |  |  | - |  |  |  | - |
|  |  | 889 |  |  |  | - |  |  | $ | 4.50 |  |  | 11/1/2030 |  |  | - |  |  |  | - |
|  |  | 11,556 |  |  |  | - |  |  | $ | 4.50 |  |  | 1/1/2031 |  |  | - |  |  |  | - |
|  |  | 4,500 |  |  |  | - |  |  | $ | 7.00 |  |  | 1/6/2033 |  |  | - |  |  |  | - |
|  |  | - |  |  |  | 22,000 |  |  | $ | 7.00 |  |  | 2/15/2033 |  |  | - |  |  |  | - |
|  |  | - |  |  |  | 198,000 |  |  | $ | 7.00 |  |  | 2/15/2033 |  |  | - |  |  |  | - |
|  |  | 4,500 |  |  |  | - |  |  | $ | 7.00 |  |  | 4/1/2033 |  |  | - |  |  |  | - |
Jeff Meisner |  |  | - |  |  |  | 120,000 |  |  | $ | 7.00 |  |  | 6/1/2033 |  |  | - |  |  |  | - |
Tyler Gates |  |  | 4,608 |  |  |  | - |  |  | $ | 7.00 |  |  | 1/6/2033 |  |  | - |  |  |  | - |
|  |  | 4,608 |  |  |  | - |  |  | $ | 7.00 |  |  | 4/1/2033 |  |  | - |  |  |  | - |

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Except as otherwise indicated below, the following table sets forth certain information regarding beneficial ownership of our common stock as of September 22, 2023 by (1) each of our current directors; (2) each of the executive officers; (3) each person known to us to be the beneficial owner of more than 5% of the outstanding shares of our common stock based upon Schedules 13G or 13D filed with the SEC; and (4) all of our directors and executive officers as a group. As of September 22, 2023, there were 14,734,190 shares of our common stock issued and outstanding.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of September 22, 2023 are deemed to be outstanding and to be beneficially owned by the person or group holding such options or warrants for the purpose of computing the percentage ownership of such person or group, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or group. Unless otherwise indicated by footnote, to our knowledge, the persons named in the table have sole voting and sole investment power with respect to all common stock shown as beneficially owned by them, subject to applicable community property laws.

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|  | Common Stock |  |  | Percentage of |
|  | Beneficially |  |  | Common Stock |
Name of Beneficial Owner |  | Owned |  |  | Owned |
Directors and Officers: |  |  |  |  |  |
Lyron L. Bentovim |  |  |  |  |  |  |  |
President, Chief Executive Officer and Chairman of the Board |  |  | 1,136,456 | (1) |  |  | 7.68 | %
Maydan Rothblum |  |  |  |  |  |  |  |
Chief Operating Officer, Chief Financial |  |  |  |  |  |  |  |
Officer, Secretary and Treasurer |  |  | 806,630 | (2) |  |  | 5.37 | %
D.J. Smith |  |  |  |  |  |  |  |
Chief Creative Officer and Director |  |  | 1,066,897 | (3) |  |  | 7.23 | %
Jeff Meisner |  |  |  |  |  |  |  |
Chief Revenue Officer and Director |  |  | 232,902 | (4) |  |  | 1.58 | %
Tyler Gates |  |  |  |  |  |  |  |
Chief Futurist Officer |  |  | 116,359 | (5) |  |  | 0.79 | %
Sharon Rowlands |  |  |  |  |  |  |  |
Director and Chair of Compensation Committee |  |  | 229,179 | (6) |  |  | 1.54 | %
Jeff Enslin |  |  |  |  |  |  |  |
Director and Chair of Audit Committee |  |  | 450,825 | (7) |  |  | 2.99 | %
Lemuel Amen |  |  |  |  |  |  |  |
Director |  |  | 142,910 | (8) |  |  | 0.97 | %
Alexander Ruckdaeschel |  |  |  |  |  |  |  |
Director |  |  | 39,444 | (9) |  |  | 0.27 | %
Ian Charles |  |  |  |  |  |  |  |
Director and Chair of Audit Committee |  |  | 27,226 | (10) |  |  | 0.18 | %
All officers and directors (10 persons) |  |  | 4,248,828 |  |  |  | 26.90 | %
Beneficial owners of more than 5% |  |  |  |  |  |  |  |
VRTech Consulting LLC(11) |  |  | 1,002,548 |  |  |  | 6.82 | %
Darklight Partners LLC(12) |  |  | 1,001,945 |  |  |  | 6.82 | %
Kissa Capital LLC(13) |  |  | 898,038 |  |  |  | 6.11 | %

(1) Includes: 1,046,268 shares of common stock, of which 1,001,945 shares are owned by Darklight Partners LLC (an entity owned and managed by Mr. Bentovim) and fully vested options to purchase 90,188 shares of common stock.

(2) Includes: 486,450 shares of common stock and fully vested options to purchase 320,180 shares of common stock. An additional 3,528 shares of common stock are held by Mr. Rothblum’s mother.

(3) Includes: 1,002,548 shares of common stock owned by VRTech Consulting LLC (an entity owned and managed by Mr. Smith) and fully vested options to purchase 64,349 shares of common stock.

(4) Represents 232,902 shares of common stock

(5) Includes: 107,143 shares of common stock and fully vested options to purchase 9,216 shares of common stock.

(6) Includes: 83,163 shares of common stock, 139,349 fully vested options and 3,334 options that vest within 60 days

(7) Includes: 94,774 shares owned by Perimetre Capital, LLC (an entity owned and managed by Mr. Enslin), 349,384 fully vested option and 3,334 option that vest within 60 days

(8) Includes: 100,000 shares of common stock, 36,243 fully vested options and 3,334 options that vest within 60 days

(9) Includes: 5,000 shares of common stock, 27,777 fully vested options and 3,334 options that vest within 60 days

(10) Represents 20,559 fully vested options and 3,334 options that vest within 60 days

(11) VRTech Consulting LLC is an entity owned and managed by Mr. Smith, our Chief Creative Officer and Director.

(12) Darklight Partners LLC is an entity owned and managed by Mr. Bentovim, our President, Chief Executive Officer and Chairman.

(13) Kissa Capital LLC is an entity managed by Ariel Imas and having an address of 1775 York Avenue, New York, NY 10128.

Unless otherwise indicated, the business address of each of the individuals is c/o The Glimpse Group, Inc., 15 West 38 St., 12h Floor, New York, NY 10018.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Party Transactions

None.

Director Independence

The Board evaluates the independence of each nominee for election as a director of our Company in accordance with the Listing Rules (the “Nasdaq Listing Rules”) of the Nasdaq Stock Market LLC (“Nasdaq”). Pursuant to these rules, a majority of our Board must be “independent directors” within the meaning of the Nasdaq Listing Rules, and all directors who sit on our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee must also be independent directors.

The Nasdaq definition of “independence” includes a series of objective tests, such as the director or director nominee is not, and was not during the last three years, an employee of Glimpse or our Subsidiaries and has not received certain payments from, or engaged in various types of business dealings with us. In addition, as further required by the Nasdaq Listing Rules, the Board has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of the Board, would interfere with such individual’s exercise of independent judgment in carrying out his or her responsibilities as a director. In making these determinations, the Board reviewed and discussed information provided by the directors with regard to each director’s business and personal activities as they may relate to the Company and its management.

As a result, the Board has affirmatively determined that each of Ian Charles, Sharon Rowlands, Lemuel Amen, Alexander Ruckdaeschel and Jeff Enslin, are independent in accordance with the Nasdaq listing rules. The Board has also affirmatively determined that all members of our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee are independent directors.

No family relationships exist between any of our officers or directors.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The following is a summary of the fees billed or expected to be billed to us for professional services rendered with respect to the fiscal years ended June 30, 2023 and 2022:

|  | For the Year Ended |
|  | June 30, |
|  | 2023 |  |  | 2022 |
Audit fees |  | $ | 158,000 |  |  | $ | 119,000 |
Audit fees in connection with acquisitions |  |  | - |  |  |  | 127,000 |
Other fees |  |  | 9,000 |  |  |  | 62,000 |
Total Fees |  | $ | 167,000 |  |  | $ | 308,000 |

Audit fees represent fees for respective fiscal year audits, including the review of our quarterly financial statements. Audit fess in connection with acquisitions represent audits of the pre-acquisition financial statements of S5D and BLI. Other Fees are for the review of our S-1, Securities Registration Statement.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Our Board of Directors has adopted a policy governing the pre-approval by the Audit Committee of all services, audit and non-audit, to be provided to our Company by our independent auditors. Under the policy, the Audit Committee has pre-approved the provision by our independent auditors of specific audit, audit related, tax and other non-audit services as being consistent with auditor independence. Requests or applications to provide services that require the specific pre-approval of the Audit Committee must be submitted to the Audit committee by the independent auditors, and the independent auditors must advise the board of directors as to whether, in the independent auditor’s view, the request or application is consistent with the SEC’s rules on auditor independence.

The Audit Committee has considered the nature and amount of the fees billed by Hoberman & Lesser CPA’s LLP and believes that the provision of the services for activities unrelated to the audit is compatible with maintaining the independence of Hoberman & Lesser CPA’s LLP.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit No. |  | Exhibit Description
3.1 |  | Articles of Incorporation, incorporated by reference to Exhibit 3.1 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
3.2 |  | Amended and Restated Bylaws, incorporated by reference to Exhibit 3.2 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.1+ |  | Amended and Restated 2016 Incentive Plan, incorporated by reference to Exhibit 10.1 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.2 |  | Limited Liability Company Agreement of Number 9, LLC entered into by the Company, effective as of February 13, 2018, incorporated by reference to Exhibit 10.2 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.3 |  | Assignment of Technology, Patent, & Intellectual Property Agreement dated as of May 1, 2019, between the Company, Adept Reality, LLC and Aquinas Learning, Inc., incorporated by reference to Exhibit 10.3 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.4 |  | Limited Liability Company Agreement of Adept Reality, LLC (f.k.a. Glimpse Group Consulting, LLC) entered into by the Company, effective as of May 3, 2017, incorporated by reference to Exhibit 10.4 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.5 |  | Limited Liability Company Agreement of D6 VR, LLC (f.k.a. Dataview VR, LLC) (f.k.a. Marketview VR, LLC) entered into by the Company, effective as of August 8, 2017, incorporated by reference to Exhibit 10.5 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.6 |  | Economics Interests Agreement dated as of March 30, 2017 by and between the Company, D6 VR, LLC (f.k.a Dataview VR, LLC) (f.k.a. Marketview VR, LLC), and Andy Maggio, incorporated by reference to Exhibit 10.6 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.7 |  | Economics Interests Agreement dated as of March 30, 2017 by and between the Company, D6 VR, LLC (f.k.a Dataview VR, LLC) (f.k.a. Marketview VR, LLC), and Brennan McTernan, incorporated by reference to Exhibit 10.7 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.8 |  | Master Acquisition Agreement, dated as of April 1, 2018, among the Company, Early Adopter LLC, Early Adopter and Jay Van Buren, Lynn Van Buren, Marjorie Van Buren, Valerie Eakes-Kann, Joe Unander, and Christopher Gaughan, incorporated by reference to Exhibit 10.8 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021
10.9 |  | Bill of Sale entered into on April 1, 2018 by and between Early Adopter, and Jay Van Buren, Lynn Van Buren, Marjorie Van Buren, Valerie Eakes-Kann, Joe Unander, and Christopher Gaughan and Early Adopter, LLC, incorporated by reference to Exhibit 10.9 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.

| 53 |

10.10 |  | Limited Liability Company Agreement of Early Adopter, LLC entered into by the Company, effective as of April 1, 2018, incorporated by reference to Exhibit 10.10 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.11 |  | Master Acquisition Agreement dated as of October 31, 2016, by and between the Company, Crafty Games, LLC and Foretell Studios, LLC (f.k.a. Dire Studios, LLC) , incorporated by reference to Exhibit 10.11 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.12 |  | Bill of Sale entered into on October 31, 2016 by and between Crafty Games, LLC and Foretell Studios, LLC (f.k.a. Dire Studios, LLC) , incorporated by reference to Exhibit 10.12 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.13 |  | Right of First Refusal Agreement dated as of December 30, 2019 by and between The Company and Membit Inc., incorporated by reference to Exhibit 10.13 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.14 |  | Limited Liability Company Agreement of Immersive Health Group, LLC entered into by the Company, effective as of October 13, 2017, incorporated by reference to Exhibit 10.14 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.15 |  | Limited Liability Company Agreement of KabaQ 3D Technologies, LLC entered into by the Company, effective as of May 30, 2017, incorporated by reference to Exhibit 10.15 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.16 |  | Master Acquisition Agreement dated as of November 8, 2016, among the Company, KabaQ 3D Food Technologies, LLC and Alper Guler, incorporated by reference to Exhibit 10.16 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.17 |  | Bill of Sale entered into on November 8, 2016 by and between the Company, KabaQ Food Technologies, LLC and Alper Guler, incorporated by reference to Exhibit 10.17 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.18 |  | Master Development Agreement dated as of July 14, 2017 by and between Pandora Reality LLC and KabaQ 3D Technologies, LLC, incorporated by reference to Exhibit 10.18 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.19 |  | Agreement entered into as of June 12, 2017 by and among the Company, KabaQ 3D Food Technologies, LLC, Alper Guler and Caner Soyer, incorporated by reference to Exhibit 10.19 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.20 |  | Master Acquisition Agreement dated as of October 28, 2016 among the Company, PresentAR and LocateAR and Liron Lerman, incorporated by reference to Exhibit 10.20 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.21 |  | Limited Liability Company Agreement of Kreatar LLC entered into by the Company, effective as of May 30, 2017, incorporated by reference to Exhibit 10.21 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.22 |  | Bill of Sale entered into on October 28, 2016 by and between the Company, PresentAR and LocateAR and Liron Lerman, incorporated by reference to Exhibit 10.22 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.

| 54 |

10.23 |  | Amendment to Master Acquisition Agreement II dated as of November 12, 2018 by and between the Company and Liron Lerman, incorporated by reference to Exhibit 10.23 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.24 |  | Technology & Intellectual Property Assignability Agreement dated as of March 29, 2018 among the Company, LocateAR, LLC and Kreatar, incorporated by reference to Exhibit 10.24 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.25+ |  | Employment Agreement dated May 13, 2021 by and between the Company and Lyron Bentovim, incorporated by reference to Exhibit 10.25 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.26+ |  | Employment Agreement dated May 13, 2021 by and between the Company and Maydan Rothblum, incorporated by reference to Exhibit 10.26 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.27+ |  | Employment Agreement dated May 13, 2021 by and between the Company and David J. Smith, incorporated by reference to Exhibit 10.27 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.28 |  | Form of Series A Round Subscription Agreement, incorporated by reference to Exhibit 10.28 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021. , incorporated by reference to Exhibit 10.28 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.29 |  | Form of Seed Round Subscription Agreement, incorporated by reference to Exhibit 10.29 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.30 |  | Form of Interim Round Subscription Agreement, incorporated by reference to Exhibit 10.30 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.31 |  | Form of Convertible Note I Promissory Note, incorporated by reference to Exhibit 10.31 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.32 |  | Form of Convertible Note II Securities Purchase Agreement, incorporated by reference to Exhibit 10.32 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.33 |  | Form of Convertible Note II Promissory Note, incorporated by reference to Exhibit 10.33 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
10.34 |  | Placement Agent Agreement dated October 28, 2021, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on November 3, 2021.
10.35 |  | Form of Securities Purchase Agreement, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on November 3, 2021.
10.36 |  | Form of Immediately Exercisable Warrants, incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on November 3, 2021.
10.37 |  | Form of Warrants Exercisable after Six Months, incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on November 3, 2021.
10.38 |  | Form of Registration Rights Agreement, incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed on November 3, 2021.

| 55 |

10.39+ |  | Executive Employment Agreement dated February 1, 2022, by and between the Company and Jeff Meisner, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on February 1, 2022.
10.40 |  | Membership Interest sale Agreement between the Company and Sector 5 Digital, LLC, dated December 2, 2021, incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed on February 14, 2022.
10.41 |  | Agreement and Plan of Merger by and among the Company, Glimpse Merger Sub, LLC, and Erik Muendel, the Bradley S. Nierenberg Trust, Bruce Gates, Joyce Gates, Barton Gates and Tyler Gates (each a “Seller” and, collectively, the “Sellers”), Bruce Gates, solely in his capacity as representative of Sellers, and Brightline Interactive, LLC, a Virginia limited liability company (“BLI”) dated May 25, 2022, incorporated by reference to Exhibit 10.41 to the Annual Report on Form 10-K filed on September 28, 2022.
10.42+ |  | Executive Employment Agreement dated August 1, 2022 by and between the Company and Tyler Gates, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 2, 2022.
10.43 |  | Bentovim Option Agreement, dated February 15, 2023, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on February 16, 2023
10.44 |  | Rothblum Option Agreement, dated February 15, 2023, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on February 16, 2023
10.45 |  | Smith Option Agreement, dated February 15, 2023, incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on February 16, 2023
10.46 |  | Option Agreement, dated June 1, 2023, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 06, 2023
14.1 |  | Code of Ethics, incorporated by reference to Exhibit 14.1 of the Company’s Amendment No. 5 to the Registration Statement filed with the SEC on June 23, 2021.
21.1* |  | List of Subsidiaries

31.1* |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1** |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS |  | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

+ Indicates management contract or compensatory plan or arrangement.

* Filed herewith.

** Furnished herewith.

ITEM 16. FORM 10-K SUMMARY

None.

| 56 |

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| THE GLIMPSE GROUP, INC.
September 28, 2023 |
| By: | /s/ Lyron Bentovim
|  | Lyron Bentovim
|  | Chief Executive Officer and Chairman (Principal Executive Officer)
| By: | /s/ Maydan Rothblum
|  | Maydan Rothblum
|  | Chief Financial Officer and Director (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date |  | Name and Title |  | Signature
September 28, 2023 |  | Lyron Bentovim |  | /s/ Lyron Bentovim
|  | President Chief Executive Officer & Chairman |  |
September 28, 2023 |  | Maydan Rothblum |  | /s/ Maydan Rothblum
|  | Chief Financial Officer, Chief Operating Officer, Secretary, Treasurer & Director |  |
September 28, 2023 |  | Jeff Meisner |  | /s/ Jeff Meisner
|  | Chief Revenue Officer & Director |  |
September 28, 2023 |  | D.J. Smith |  | /s/ D.J. Smith
|  | Chief Creative Officer & Director |  |
September 28, 2023 |  | Sharon Rowlands |  | /s/ Sharon Rowlands
|  | Director |  |
September 28, 2023 |  | Jeff Enslin |  | /s/ Jeff Enslin
|  | Director |  |
September 28, 2023 |  | Lemuel Amen |  | /s/ Lemuel Amen
|  | Director |  |
September 28, 2023 |  | Alexander Ruckdaeschel |  | /s/ Alexander Ruckdaeschel
|  | Director |  |
September 28, 2023 |  | Ian Charles |  | /s/ Ian Charles
|  | Director |  |

| 57 |

THE GLIMPSE GROUP, INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2023 AND 2022

THE GLIMPSE GROUP, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

| Page
Index to Consolidated Financial Statements | F-1
Report of Independent Registered Public Accounting Firm (PCAOB ID: 00694) | F-2
Consolidated Balance Sheets | F-3
Consolidated Statements of Operations | F-4
Consolidated Statements of Stockholders’ Equity (Deficit) | F-5
Consolidated Statements of Cash Flows | F-6
Notes to Consolidated Financial Statements | F-7 - F-36

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

The Glimpse Group, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of The Glimpse Group, Inc. (the “Company”) as of June 30, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended June 30, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred recurring net losses since its inception, expects to generate negative cash flow for the foreseeable future, and expects cash and cash equivalents as of June 30, 2023 may not be sufficient to fund operations for at least the next twelve months, which raises substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Hoberman & Lesser CPA’s LLP

We have served as the Company’s auditor since 2019.

New York, NY

September 28, 2023

MGI Worldwide is a network of independent audit, tax, accounting and consulting firms. MGI Worldwide does not provide any services and its member firms are not an international partnership. Each member firm is a separate entity and neither MGI Worldwide nor any member firm accepts responsibility for the activities, work, opinions or services of any other member firm. For more information visit www.mgiworld.com/ |

F-2

THE GLIMPSE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

|  | 2023 |  |  | 2022 |
|  | As of June 30, |
|  | 2023 |  |  | 2022 |
ASSETS |  |  |  |  |  |
Cash and cash equivalents |  | $ | 5,619,083 |  |  | $ | 16,249,666 |
Investments |  |  | - |  |  |  | 239,314 |
Accounts receivable |  |  | 1,453,770 |  |  |  | 1,332,922 |
Deferred costs/contract assets |  |  | 158,552 |  |  |  | 39,484 |
Prepaid expenses and other current assets |  |  | 562,163 |  |  |  | 389,618 |
Total current assets |  |  | 7,793,568 |  |  |  | 18,251,004 |
Equipment, net |  |  | 264,451 |  |  |  | 245,970 |
Note receivable |  |  | - |  |  |  | 250,000 |
Right-of-use assets |  |  | 627,832 |  |  |  | - |
Intangible assets, net |  |  | 4,284,151 |  |  |  | 4,063,485 |
Goodwill |  |  | 11,236,638 |  |  |  | 13,464,760 |
Other assets |  |  | 71,767 |  |  |  | 121,865 |
Restricted cash |  |  | - |  |  |  | 2,000,000 |
Total assets |  | $ | 24,278,407 |  |  | $ | 38,397,084 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |  |
Accounts payable |  | $ | 455,777 |  |  | $ | 340,139 |
Accrued liabilities |  |  | 605,115 |  |  |  | 188,417 |
Accrued bonuses |  |  | 1,072,097 |  |  |  | 169,262 |
Deferred revenue/contract liabilities |  |  | 466,393 |  |  |  | 841,389 |
Asset purchase payable |  |  | - |  |  |  | 734,037 |
Lease liabilities, current portion |  |  | 405,948 |  |  |  | - |
Contingent consideration for acquisitions, current portion |  |  | 5,120,791 |  |  |  | 1,966,171 |
Total current liabilities |  |  | 8,126,121 |  |  |  | 4,239,415 |
Long term liabilities |  |  |  |  |  |  |  |
Contingent consideration for acquisitions, net of current portion |  |  | 4,505,000 |  |  |  | 5,340,800 |
Lease liabilities, net of current portion |  |  | 423,454 |  |  |  | - |
Total liabilities |  |  | 13,054,575 |  |  |  | 9,580,215 |
Commitments and contingencies |  |  | - |  |  |  | - |
Stockholders’ Equity |  |  |  |  |  |  |  |
Preferred Stock, par value $0.001 per share, 20 million shares authorized; 0 shares issued and outstanding |  |  | - |  |  |  | - |
Common Stock, par value $0.001 per share, 300 million shares authorized; 14,701,929 and 12,747,624 issued and outstanding |  |  | 14,702 |  |  |  | 12,749 |
Additional paid-in capital |  |  | 67,854,108 |  |  |  | 56,885,815 |
Accumulated deficit |  |  | (56,644,978 | ) |  |  | (28,081,695 | )
Total stockholders’ equity |  |  | 11,223,832 |  |  |  | 28,816,869 |
Total liabilities and stockholders’ equity |  | $ | 24,278,407 |  |  | $ | 38,397,084 |

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

F-3

THE GLIMPSE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

|  | 2023 |  |  | 2022 |
|  | For the Years Ended |
|  | June 30, |
|  | 2023 |  |  | 2022 |
Revenue |  |  |  |  |  |  |  |
Software services |  | $ | 12,587,192 |  |  | $ | 6,720,416 |
Software license/software as a service |  |  | 895,172 |  |  |  | 547,197 |
Total Revenue |  |  | 13,482,364 |  |  |  | 7,267,613 |
Cost of goods sold |  |  | 4,266,013 |  |  |  | 1,241,149 |
Gross Profit |  |  | 9,216,351 |  |  |  | 6,026,464 |
Operating expenses: |  |  |  |  |  |  |  |
Research and development expenses |  |  | 8,793,991 |  |  |  | 6,158,395 |
General and administrative expenses |  |  | 5,037,359 |  |  |  | 4,450,362 |
Sales and marketing expenses |  |  | 7,489,978 |  |  |  | 3,141,033 |
Amortization of acquisition intangible assets |  |  | 2,045,587 |  |  |  | 481,515 |
Intangible asset impairment (inclusive of $12,855,723 goodwill impairment) |  |  | 15,351,842 |  |  |  | - |
Change in fair value of acquisition contingent consideration |  |  | (696,722 | ) |  |  | (1,862,229 | )
Total operating expenses |  |  | 38,022,035 |  |  |  | 12,369,076 |
Loss from operations before other income (expense) |  |  | (28,805,684 | ) |  |  | (6,342,612 | )
Other income (expense) |  |  |  |  |  |  |  |
Forgiveness of Paycheck Protection Program loan |  |  | - |  |  |  | 623,828 |
Interest income |  |  | 242,401 |  |  |  | 32,227 |
Loss on conversion of convertible notes |  |  | - |  |  |  | (279,730 | )
Total other income (expense), net |  |  | 242,401 |  |  |  | 376,325 |
Net Loss |  | $ | (28,563,283 | ) |  | $ | (5,966,287 | )
Basic and diluted net loss per share |  | $ | (2.05 | ) |  | $ | (0.51 | )
Weighted-average shares used to compute basic and diluted net loss per share |  |  | 13,929,135 |  |  |  | 11,731,383 |

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

F-4

THE GLIMPSE GROUP, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED JUNE 30, 2023 and 2022

|  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | Total |
|  | Common Stock |  |  | Additional Paid-In |  |  | Accumulated |  |  |  |
|  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | Total |
Balance as of July 1, 2021 |  |  | 7,579,285 |  |  | $ | 7,580 |  |  | $ | 20,936,050 |  |  | $ | (22,115,408 | ) |  | $ | (1,171,778 | )
Common stock issued in Initial Public Offering, net |  |  | 1,912,500 |  |  |  | 1,913 |  |  |  | 11,819,451 |  |  |  | - |  |  |  | 11,821,364 |
Common stock issued in Securities Purchase Agreement, net |  |  | 1,500,000 |  |  |  | 1,500 |  |  |  | 13,576,900 |  |  |  | - |  |  |  | 13,578,400 |
Common stock issued for convertible note conversion |  |  | 324,150 |  |  |  | 324 |  |  |  | 1,605,852 |  |  |  | - |  |  |  | 1,606,176 |
Common stock issued for acquisitions |  |  | 388,342 |  |  |  | 388 |  |  |  | 3,346,915 |  |  |  | - |  |  |  | 3,347,303 |
Common stock issued to satisfy legacy acquisition obligation |  |  | 452,978 |  |  |  | 453 |  |  |  | 1,249,547 |  |  |  | - |  |  |  | 1,250,000 |
Common stock issued to vendors for compensation |  |  | 19,753 |  |  |  | 20 |  |  |  | 198,207 |  |  |  | - |  |  |  | 198,227 |
Common stock issued for exercise of options |  |  | 559,775 |  |  |  | 560 |  |  |  | 1,325,484 |  |  |  | - |  |  |  | 1,326,044 |
Common stock and stock option based compensation expense |  |  | 10,841 |  |  |  | 11 |  |  |  | 2,348,460 |  |  |  | - |  |  |  | 2,348,471 |
Stock option-based board of directors expense |  |  | - |  |  |  | - |  |  |  | 478,949 |  |  |  | - |  |  |  | 478,949 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (5,966,287 | ) |  |  | (5,966,287 | )
Balance as of June 30, 2022 |  |  | 12,747,624 |  |  |  | 12,749 |  |  |  | 56,885,815 |  |  |  | (28,081,695 | ) |  |  | 28,816,869 |
Balance |  |  | 12,747,624 |  |  |  | 12,749 |  |  |  | 56,885,815 |  |  |  | (28,081,695 | ) |  |  | 28,816,869 |
Common stock issued for acquisition |  |  | 714,286 |  |  |  | 714 |  |  |  | 2,845,430 |  |  |  | - |  |  |  | 2,846,144 |
Common stock issued for satisfaction of prior year acquisition liability |  |  | 214,288 |  |  |  | 214 |  |  |  | 733,823 |  |  |  | - |  |  |  | 734,037 |
Common stock issued for purchase of intangible asset - technology |  |  | 71,430 |  |  |  | 71 |  |  |  | 326,364 |  |  |  | - |  |  |  | 326,435 |
Common stock issued to vendors for compensation |  |  | 1,800 |  |  |  | 2 |  |  |  | 5,236 |  |  |  | - |  |  |  | 5,238 |
Common stock issued for exercise of options |  |  | 42,341 |  |  |  | 42 |  |  |  | 66,069 |  |  |  | - |  |  |  | 66,111 |
Common stock issued to satisfy contingent acquisition obligations |  |  | 755,255 |  |  |  | 755 |  |  |  | 3,058,608 |  |  |  | - |  |  |  | 3,059,363 |
Common stock and stock option based compensation expense |  |  | 154,905 |  |  |  | 155 |  |  |  | 3,491,009 |  |  |  | - |  |  |  | 3,491,164 |
Stock option-based board of directors expense |  |  | - |  |  |  | - |  |  |  | 441,754 |  |  |  | - |  |  |  | 441,754 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (28,563,283 | ) |  |  | (28,563,283 | )
Balance as of June 30, 2023 |  |  | 14,701,929 |  |  | $ | 14,702 |  |  | $ | 67,854,108 |  |  | $ | (56,644,978 | ) |  | $ | 11,223,832 |
Balance |  |  | 14,701,929 |  |  | $ | 14,702 |  |  | $ | 67,854,108 |  |  | $ | (56,644,978 | ) |  | $ | 11,223,832 |

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

F-5

THE GLIMPSE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

|  | 2023 |  |  | 2022 |
|  | For the Years Ended June 30, |
|  | 2023 |  |  | 2022 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net loss |  | $ | (28,563,283 | ) |  | $ | (5,966,287 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Amortization and depreciation |  |  | 2,192,982 |  |  |  | 540,196 |
Common stock and stock option based compensation for employees and board of directors |  |  | 4,974,519 |  |  |  | 2,893,297 |
Acquisition contingent consideration fair value adjustment |  |  | (696,722 | ) |  |  | (1,862,229 | )
Impairment of intangible assets |  |  | 15,351,842 |  |  |  | - |
Issuance of common stock to vendors as compensation |  |  | 5,238 |  |  |  | 188,336 |
Loss on conversion of convertible notes |  |  | - |  |  |  | 279,730 |
Forgiveness of Paycheck Protection Program loan |  |  | - |  |  |  | (623,828 | )
Adjustment to operating lease right-of-use asset and liability |  |  | (8,330 | ) |  |  | - |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | 132,193 |  |  |  | (295,076 | )
Pre-offering costs |  |  | - |  |  |  | 470,136 |
Deferred costs/contract assets |  |  | 433,557 |  |  |  | (17,900 | )
Prepaid expenses and other current assets |  |  | (182,410 | ) |  |  | (330,496 | )
Other assets |  |  | 149,963 |  |  |  | (32,000 | )
Accounts payable |  |  | (419,716 | ) |  |  | (132,032 | )
Accrued liabilities |  |  | 18,580 |  |  |  | (73,475 | )
Accrued bonuses |  |  | (138,761 | ) |  |  | (271,095 | )
Deferred revenue/contract liabilities |  |  | (2,412,066 | ) |  |  | 291,858 |
Net cash used in operating activities |  |  | (9,162,414 | ) |  |  | (4,940,865 | )
Cash flow from investing activities: |  |  |  |  |  |  |  |
Purchases of equipment |  |  | (146,333 | ) |  |  | (201,998 | )
Acquisitions, net of cash acquired |  |  | (2,627,261 | ) |  |  | (4,615,894 | )
Payment of contingent consideration for acquisitions |  |  | (1,000,000 | ) |  |  | - |
Sale (purchase) of investments |  |  | 239,314 |  |  |  | (239,314 | )
Net cash used in investing activities |  |  | (3,534,280 | ) |  |  | (5,057,206 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |
Proceeds from initial public offering, net |  |  | - |  |  |  | 11,821,364 |
Proceeds from securities purchase agreement, net |  |  | - |  |  |  | 13,578,400 |
Proceeds from exercise of stock options |  |  | 66,111 |  |  |  | 1,326,044 |
Issuance of note receivable |  |  | - |  |  |  | (250,000 | )
Net cash provided by financing activities |  |  | 66,111 |  |  |  | 26,475,808 |
Net change in cash, cash equivalents and restricted cash |  |  | (12,630,583 | ) |  |  | 16,477,737 |
Cash, cash equivalents and restricted cash, beginning of year |  |  | 18,249,666 |  |  |  | 1,771,929 |
Cash, cash equivalents and restricted cash, end of year |  | $ | 5,619,083 |  |  | $ | 18,249,666 |
Non-cash Investing and Financing activities: |  |  |  |  |  |  |  |
Common stock issued for acquisitions |  | $ | 2,846,144 |  |  | $ | 3,347,303 |
Common stock issued for satisfaction of prior year acquisition lability |  | $ | 734,037 |  |  | $ | - |
Common stock issued for purchase of intangible asset - technology |  | $ | 326,435 |  |  | $ | - |
Issuance of common stock for satisfaction of contingent liability, net of note extinguishment |  | $ | 318,571 |  |  | $ | - |
Extinguishment of note receivable for satisfaction of contingent liability |  | $ | 250,000 |  |  | $ | - |
Contingent acquisition consideration liability recorded at closing |  | $ | 7,325,000 |  |  | $ | 9,169,200 |
Issuance of common stock for satisfaction of contingent liability |  | $ | 3,059,363 |  |  | $ | - |
Lease liabilities arising from right-of-use assets |  | $ | 429,329 |  |  | $ | - |
Forgiveness of Paycheck Protection Program loan |  | $ | - |  |  | $ | 623,828 |
Issuance of common stock for satisfaction of legacy acquisition liability |  | $ | - |  |  | $ | 1,250,000 |
Conversion of convertible promissory notes into common stock |  | $ | - |  |  | $ | 1,606,176 |
Issuance of warrants in connection with initial public offering |  | $ | - |  |  | $ | 522,360 |
Issuance of warrants in connection with securities purchase agreement |  | $ | - |  |  | $ | 8,797,546 |

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

F-6

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

NOTE 1. DESCRIPTION OF BUSINESS

The Glimpse Group, Inc. (“Glimpse” and together with its wholly owned subsidiaries, collectively, the “Company”) is an Immersive technology company, comprised of a diversified portfolio of wholly owned Virtual (VR) and Augmented (AR) Reality software and services companies. Glimpse’s subsidiary companies are located in the United States, Turkey and Israel. The Company was incorporated in the State of Nevada in June 2016.

Glimpse’s robust Immersive technology ecosystem, collaborative environment and business model strive to simplify the many challenges faced by companies in an emerging industry. Glimpse cultivates, optimizes and manages business operations while providing a strong network of professional relationships, thereby allowing the subsidiary company to maximize their time and resources in pursuit of mission-critical endeavors, reducing time to market, optimizing costs, improving product quality and leveraging joint go-to-market strategies, while simultaneously providing investors an opportunity to invest directly into the Immersive technology industry via a diversified platform.

The Company completed an initial public offering (“IPO”) of its common stock on the Nasdaq Capital Market Exchange (“Nasdaq”) on July 1, 2021, under the ticker VRAR. In addition, pursuant to a Securities Purchase Agreement (“SPA”) the Company sold additional common stock to certain institutional investors in November 2021. See Note 10.

NOTE 2. GOING CONCERN

At each reporting period, the Company evaluates whether there are conditions or events that raise doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company’s evaluation entails analyzing expectations for the Company’s cash needs and comparing those needs to the current cash and cash equivalent balances. The Company is required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by the Company’s plans or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern.

The Company has incurred recurring losses since its inception, including a net loss of $28.6 million for the year ended June 30, 2023. In addition, as of June 30, 2023, the Company had an accumulated deficit of $56.6 million. The Company expects to continue to generate negative cash flow for the foreseeable future. The Company expects that its cash and cash equivalents as of June 30, 2023 may not be sufficient to fund operations for at least the next twelve months from the date of issuance of these consolidated financial statements and the Company will need to obtain additional funding. Accordingly, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of these consolidated financial statements.

Outside of potential revenue growth generated by the Company, in order to alleviate the going concern the Company may take actions which could include but are not limited to: further cost reductions, equity or debt financings and restructuring of potential future cash contingent acquisition liabilities. There is no assurance that these actions will be taken or be successful if pursued.

The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described.

Potential Liquidity Resources

Potential liquidity resources may include the sale of common stock pursuant to an untapped $100 million S-3 registration statement filed with the United State Securities and Exchange Commission (“SEC”) on October 28, 2022. Such financing may not be available on terms favorable to the Company, or at all.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

F-7

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

Principles of Consolidation

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

Use of Accounting Estimates

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

The principal estimates relate to the valuation of allowance for doubtful accounts, stock options, warrants, revenue recognition, 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.

Cash and Cash Equivalents, Restricted Cash

Cash and cash equivalents consist of cash and deposits in bank checking accounts with immediate access and cash equivalents that represent highly liquid investments.

Restricted cash represented escrowed cash related to the Sector 5 Digital, LLC (“S5D”) acquisition and was fully disbursed in the year ended June 30, 2023 (see Note 7).

The components of cash, cash equivalents and restricted cash on the consolidated statements of cash flows as of June 30, 2023 and 2022 are as follows:

SCHEDULE OF COMPONENTS OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH

|  | As of June 30, |  |  | As of June 30, |
|  | 2023 |  |  | 2022 |
Cash and cash equivalents |  | $ | 5,619,083 |  |  | $ | 16,249,666 |
Restricted cash |  |  | - |  |  |  | 2,000,000 |
Total |  | $ | 5,619,083 |  |  | $ | 18,249,666 |

Accounts Receivable

Accounts receivable consists primarily of amounts due from customers under normal trade terms. Allowances for uncollectible accounts are provided for based upon a variety of factors, including historical amounts written-off, an evaluation of current economic conditions, and assessment of customer collectability. As of June 30, 2023 and 2022 no allowance for doubtful accounts was recorded as all amounts were considered collectible.

Customer Concentration and Credit Risk

Two customers accounted for approximately 47% (26% and 21%, respectively) of the Company’s total gross revenues during the year ended June 30, 2023. One of the same customers and one different customer accounted for approximately 54% (40% and 14%, respectively) of the Company’s total gross revenues during the year ended June 30, 2022.

F-8

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

Two customers accounted for approximately 43% (29% and 14%, respectively) of the Company’s accounts receivable at June 30, 2023. One of the same customers and one different customer accounted for approximately 59% (37% and 22%, respectively) of the Company’s accounts receivable at June 30, 2022.

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

Business Combinations

The results of a business acquired in a business combination are included in the Company’s consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business generally being recorded at their estimated fair values as of the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

The Company performs valuations of assets acquired and liabilities assumed and allocates the purchase price to its respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed may require management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows. 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. 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. 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.

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.

Intangible assets (other than Goodwill)

Intangible assets represent the allocation of a portion of an acquisition’s purchase price (see Note 6). 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. 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. 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.

F-9

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

Impairment of Long-Lived Assets

The Company reviews long-lived assets to be held and used, other than goodwill, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If an evaluation of recoverability is required, the estimated undiscounted future cashflows directly associated with the asset are compared with the asset’s carrying amount. 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.

Fair Value of Financial Instruments

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

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

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

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

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

The Company’s contingent consideration is categorized as Level 3 within the fair value hierarchy. Contingent consideration is recorded within contingent consideration, current, and contingent consideration, non-current, in the Company’s consolidated balance sheets as of June 30, 2023 and 2022. Contingent consideration has been recorded at its fair values using unobservable inputs and have included using the Monte Carlo simulation option pricing framework, incorporating contractual terms and assumptions regarding financial forecasts, discount rates, and volatility of forecasted revenue. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist.

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.

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.

F-10

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

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

| ● | identify the contract with a customer;
| ● | identify the performance obligations in the contract;
| ● | determine the transaction price;
| ● | allocate the transaction price to performance obligations in the contract;
| ● | recognize revenue as the performance obligation is satisfied;
| ● | determine that collection is reasonably assured.

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

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

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

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

Significant Judgments

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

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.

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

F-11

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

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

Revenue for Software License is recognized at the point of time in which the Company delivers the software and customer accepts delivery. 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. If there are significant contractually stated ongoing service obligations to be performed during the term of the Software License or SaaS contract, then revenues are recognized ratably over the term of the contract.

Timing of Revenue

The timing of revenue recognition for the years ended June 30, 2023 and 2022 was as follows:

SCHEDULE OF TIMING REVENUE RECOGNITION

|  | 2023 |  |  | 2022 |
|  | For the Years Ended |
|  | June 30, |
|  | 2023 |  |  | 2022 |
Products and services transferred at a point in time |  | $ | 10,479,570 |  |  | $ | 5,181,482 |
Products and services transferred/recognized over time |  |  | 3,002,794 |  |  |  | 2,086,131 |
Total Revenue |  | $ | 13,482,364 |  |  | $ | 7,267,613 |

Remaining Performance Obligations

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

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

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

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

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

F-12

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

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

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

Unfulfilled performance obligations represent amounts expected to be earned by the Company on executed contracts. As of June 30, 2023, the Company had approximately $2.16 million in unfulfilled performance obligations.

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.

The Company values the options using the Black-Scholes Merton (“Black Scholes”) method utilizing various inputs such as expected term, expected volatility and the risk-free rate. The expected term reflects the application of the simplified method, which is the weighted average of the contractual term of the grant and the vesting period for each tranche. 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.

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.

Income Taxes

The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company establishes a valuation allowance if it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized. For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit.

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, or ASC 740, also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s consolidated financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

F-13

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest for the years ended June 30, 2023 and 2022. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

Earnings Per Share

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential shares of common stock outstanding during the period using the treasury stock method. Dilutive potential common shares include the issuance of potential shares of common stock for outstanding stock options, warrants and convertible debt.

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 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. Results for reporting periods beginning after July 1, 2022 are presented under the new leasing standard, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting. The Company has elected to utilize the package of practical expedients at the time of adoption, which allows the Company to (1) not reassess whether any expired or existing contracts are or contain leases, (2) not reassess the lease classification of any expired or existing leases, and (3) not reassess initial direct costs for any existing leases. The Company also has elected to utilize the short-term lease recognition exemption and, for those leases that qualified, the Company did not recognize right-of-use (“ROU”) assets or lease liabilities. As a result of adoption, the Company recorded ROU assets related to office facility leases which are recognized on the consolidated balance sheet and the associated lease liabilities are recognized on the consolidated balance sheet. The present value of the Company’s remaining lease payments, which comprise the lease liabilities, was estimated using an estimated incremental borrowing rate as of the adoption date.

The adoption resulted in no adjustment to July 1, 2022 accumulated deficit on the consolidated balance sheet.

As of July 1, 2022, the Company recorded right-of-use assets of $0.79 million, lease liabilities, current portion of $0.34 million and lease liabilities, net of current portion of $0.45 million. With the purchase of Brightline Interactive, LLC (“BLI”), on August 1, 2022, the Company added right-of-use assets of $0.43 million, lease liabilities, current portion of $0.09 million and lease liabilities, net of current portion of $0.34 million.

New Lease Accounting Policies

The Company determines if an arrangement is a lease at inception and determines the classification of the lease, as either operating or finance, at commencement.

F-14

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

For short-term leases with expected terms of less than 1 year, the Company does not recognize ROU assets or lease liabilities. The Company does not have any finance 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. As the rate implicit in the Company’s leases is not readily determinable, the Company uses an estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. 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.

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). 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. 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. 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 is currently evaluating the impact of this standard on its consolidated financial statements.

NOTE 4. BUSINESS ACQUISITIONS AND ASSET ACQUISTION - TECHNOLGY

Acquisition - BLI

On May 25, 2022, Glimpse entered into an Agreement and Plan of Merger (the “Merger Agreement”), with BLI and each of the equity holders of BLI named therein (collectively, the “Members”). BLI is an immersive technology company that provides VR and AR based training scenarios and simulations for commercial and government customers. The acquisition significantly expands the Company’s operating and financial scale, introduces new tier 1 customers specifically in the communication, entertainment and government segments, and bolsters the executive management team.

In August 2022, BLI became a wholly-owned subsidiary of Glimpse.

The aggregate consideration to the Members per the Merger 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 (which was the day’s closing price discounted for one year sales restriction from Closing); and (d) future purchase price considerations payable to the Members, up to a residual of $24,500,000. 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, all as defined.

F-15

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

The BLI acquisition’s fair value at Closing was $12,665,357.

The fair value allocation for the purchase price consideration paid at Closing was recorded as follows:

SCHEDULE OF BUSINESS ACQUISITION PURCHASE PRICE CONSIDERATION

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 |

The Company’s fair value estimate of the contingent consideration for the BLI acquisition was determined using a Monte Carlo simulation and other methods which account for the probabilities of various outcomes. The Company’s fair value estimate related to the identified intangible asset of customer relationships was determined using the Multi-Period Excess Earnings Method. This valuation method requires management to project revenues, customer attrition and cash flows for the reporting unit over a multiyear period, as well as determine the weighted average cost of capital to be used as a discount rate. The Company’s fair value estimate related to the identified intangible asset of technology was determined using the Relief from Royalty Method. This valuation method requires management to estimate the royalty rate based on market data for royalty arrangements involving similar technology, the obsolesce rate, and the weighted average cost of capital to be used as a discount rate.

The goodwill recognized in connection with the acquisition is primarily attributable to new markets access and will be deductible for tax purposes.

In accordance with GAAP, the fair value of the contingent consideration was remeasured at June 30, 2023, based on market conditions as of that date. The remeasurement resulted in a fair value amount at June 30, 2023 of $6.21 million, a decrease of approximately $1.11 million since Closing. The decrease in fair value of the contingent consideration is driven by revisions to BLI’s revenue projections and a decrease in the Company’s common stock price between the measurement dates. This decrease is recorded as a gain in operating expenses on the consolidated statement of operations (see Note 7).

F-16

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

Unaudited Pro Forma Results

The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and BLI, as if the companies were combined for the years ended June 30, 2023 and 2022. The unaudited pro forma financial information includes the business combination accounting effects resulting from this acquisition, including adjustments to reflect recognition of intangible asset amortization. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had taken place at July 1, 2022.

The approximate unaudited pro forma financial information if BLI was included since July 1, 2021 would be:

SCHEDULE OF PROFORMA FINANCIAL INFORMATION

|  | 2023 |  |  | 2022 |
|  | For the Years Ended June 30, |
|  | 2023 |  |  | 2022 |
Revenue |  | $ | 13,485,000 |  |  | $ | 14,180,000 |
Net Loss |  | $ | (28,702,000 | ) |  | $ | (6,698,000 | )

The pro forma net loss was adjusted to exclude approximately $0.28 million of acquisition-related costs incurred in 2023. The 2023 pro forma net loss includes a gain of approximately $1.11 million for contingent consideration fair value adjustments.

Costs related to the acquisition, which include legal, accounting and valuation fees, in the amount of approximately $0.28 million have been charged directly to operations and are included in general and administrative expenses on the consolidated statement of operations for the year ended June 30, 2023.

The Company recognized approximately $4.85 million in revenue and $1.03 million (inclusive of contingent consideration fair value adjustment gain of $1.11 million) of net loss related to BLI since the acquisition Closing date of August 1, 2022 through June 30, 2023 in the consolidated statement of operations.

Asset Acquisition - Technology

In November 2022, the Company entered into a technology assignment agreement with inciteVR (“IVR”), whereby the Company purchased the entire right, title and interest to certain VR/AR technology, as defined, to expand product offerings.

The Company issued 71,430 shares (calculated as defined) of the Company’s common stock, with a fair value (based on the Company’s common stock price at the close of business on the date of the assignment agreement) of approximately $327,000 in full payment of the assignment, with no further consideration obligations thereto. The $327,000 was recorded as intangible assets- technology on the Company’s consolidated balance sheet as of June 30, 2023.

Certain IVR owners became employees of Glimpse after the assignment.

Acquisition - S5D

In December 2021, Glimpse entered into a Membership Interest Sale Agreement (the “S5D Agreement”), with Sector 5 Digital, LLC (“S5D”) and each of the equity holders of S5D named therein (collectively, the “S5D Members”). S5D is an enterprise focused, immersive technology company that combines innovative storytelling with emerging technologies for industry leading organizations. At the time, the acquisition significantly expanded the Company’s operating and financial scale and introduced new tier 1 customers specifically in the defense contractor and industrial segments.

F-17

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

In February 2022, S5D became a wholly-owned subsidiary of Glimpse.

The aggregate consideration consisted of: (a) $4.0 million cash paid at the February 1, 2022 closing (the “S5D Closing”); (b) 277,201 shares of the Company’s common stock valued at the date of acquisition (which was the day’s closing price discounted for one year sales restriction from S5D Closing) and released from escrow to the S5D Members at S5D Closing; and (c) future purchase price considerations (“contingent consideration”) payable to the S5D Members, up to $19.0 million ($2.0 million of which was escrowed at S5D Closing and was recorded as restricted cash on the June 30, 2022 consolidated balance sheet). The $19.0 million is based and payable on S5D’s and the Company’s achievement of certain revenue growth milestones during the three years post-S5D Closing, as defined, 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 and subject to a common stock floor price of $7.00/share. See Note 5 and 7.

The S5D acquisition’s fair value at S5D Closing was $15,466,503.

The fair value allocation for the purchase price consideration paid at close was recorded as follows:

SCHEDULE OF BUSINESS ACQUISITION PURCHASE PRICE CONSIDERATION

Purchase price consideration: |  |  |
Cash paid to members at closing |  | $ | 4,000,000 |
Company common stock fair value when released from escrow at S5D Closing |  |  | 2,297,303 |
Fair value of contingent consideration to be achieved |  |  | 9,169,200 |
Total purchase price |  | $ | 15,466,503 |
Fair value allocation of purchase price: |  |  |  |
Cash and cash equivalents |  | $ | 184,106 |
Accounts receivable |  |  | 411,602 |
Other current assets |  |  | 10,259 |
Equipment, net |  |  | 60,479 |
Other assets |  |  | 9,246 |
Accounts payable and accrued expenses |  |  | (183,806 | )
Contract liability (billings in excess of cost) |  |  | (451,106 | )
Intangible assets - customer relationships |  |  | 2,820,000 |
Goodwill |  |  | 12,605,723 |
Total fair value allocation of purchase price |  | $ | 15,466,503 |

The Company’s fair value estimate of the contingent consideration for the S5D acquisition was determined using a Monte Carlo simulation method which accounts for the probabilities of various outcomes. The Company’s fair value estimate related to the identified intangible asset of customer relationships was determined using the Multi-Period Excess Earnings Method. This valuation method requires management to project revenues, customer attrition and cash flows for the reporting unit over a multiyear period, as well as determine the weighted average cost of capital to be used as a discount rate.

The goodwill recognized in connection with the acquisition is primarily attributable to new markets access and will be deductible for tax purposes.

In accordance with GAAP, the fair value of the contingent consideration was remeasured at June 30, 2022, based on market conditions as of that date. The remeasurement resulted in a fair value amount at June 30, 2022 of $6.74 million, a reduction of approximately $2.43 million since Closing. The reduction in fair value of the contingent consideration is driven by a reduction in the Company’s common stock price between the measurement dates. This reduction is recorded in operating expenses on the consolidated statement of operations.

F-18

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

Unaudited Pro Forma Results

The unaudited pro forma financial information in the table below summarizes the combined results of operations for Glimpse and S5D, as if the companies were combined for the year ended June 30, 2022. The unaudited pro forma financial information includes the business combination accounting effects resulting from this acquisition, including adjustments to reflect recognition of intangible asset amortization. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had taken place at July 1, 2021.

The approximate unaudited pro forma financial information if S5D was included since July 1, 2021 would be:

SCHEDULE OF PROFORMA FINANCIAL INFORMATION

|  | For the Year Ended |
|  | June 30, 2022 |
Revenue |  | $ | 9,768,000 |
Net loss |  | $ | (5,841,000 | )

The pro forma net loss was adjusted to exclude approximately $182,000 of acquisition-related costs incurred in 2022. The 2022 pro forma net loss includes a gain of approximately $2.43 million for contingent consideration fair value adjustments.

Costs related to the acquisition, which include legal, accounting and valuation fees, in the amount of approximately $182,000 have been charged directly to operations and are included in general and administrative expenses on the consolidated statement of operations for the year ended June 30, 2022.

The results of operations of S5D have been included in the Company’s consolidated financial statements from the date of acquisition. For the years ended June 30, 2023 and 2022, S5D had revenue of $2.73 million and $1.40 million, respectively and net losses of $1.26 million and $0.73 million, respectively (exclusive of the intangible asset impairment write off, see Note 5, and change in fair value of contingent consideration) reported in the consolidated statements of operations.

Acquisition - AUGGD

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. At the time, the acquisition was made to facilitate the Company’s endeavors in the Architecture, Engineering and Construction market segments.

Initial consideration for the purchase was $0.75 million payable in Company common stock. In August 2021, the Company issued 77,264 shares of common stock (calculated as defined in the asset acquisition agreement) to satisfy the purchase price. 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, with a maximum additional consideration of $5.25 million. At time of purchase, future revenue targets were not anticipated to be met and therefore no additional consideration beyond the initial consideration was expected. Potential future common stock issuance shall be priced at the dates of the future potential share issuance and subject to a common stock floor price of $7.00/share. If this subsidiary were sold within three years from the acquisition date, certain performance related consideration will be accelerated and become due even if not earned.

F-19

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

The AUGGD acquisition’s fair value at its closing was $750,000.

No liabilities were assumed as part of the acquisition and the primary assets acquired included employees, customer relationships and technology. The Company recorded the purchase price allocation as follows:

SCHEDULE OF ASSETS ACQUISITION PURCHASE PRICE ALLOCATION

Intangible assets: |  |  |
Customer relationships |  | $ | 250,000 |
Technology |  |  | 250,000 |
Goodwill |  |  | 250,000 |
Total |  | $ | 750,000 |

The goodwill recognized in connection with the acquisition is primarily attributable to new markets access and will be deductible for tax purposes.

In June 2022, AUGGD achieved its initial revenue threshold as defined in the asset acquisition agreement, and was issued shares of Company stock in July 2022 reflecting the payment of additional asset acquisition consideration. This additional consideration of approximately $0.57 million is included in operating expense on the consolidated statement of operations. See Notes 5, 13 and 14.

The results of operations of AUGGD have been included in the Company’s consolidated financial statements from the date of acquisition. For the years ended June 30, 2023 and 2022, AUGGD had revenue was $0.01 million and $0.29 million, respectively, and net losses of $0.33 million and $0.22 million, respectively (exclusive of the intangible asset impairment write off, see Note 5, and change in fair value of contingent consideration), reported in the consolidated statements of operations.

Pre-acquisition AUGGD financial data is not considered reliable and therefore no proforma results as if the acquisition had occurred on July 1, 2021 are included.

Acquisition - XR Terra

In October 2021, the Company, through its wholly owned subsidiary company, XR Terra, LLC (“XRT”), completed an acquisition of certain assets, as defined, from XR Terra, Inc., a developer of teaching platforms utilized in coding software used in VR and AR programming, a potential strategic growth segment for the Company as the immersive technology industry expands.

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 (calculated as defined in the asset acquisition agreement) to satisfy the purchase price. 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, with a maximum additional consideration of $2.0 million. At time of purchase, future revenue targets were not anticipated to be met and therefore no additional consideration beyond the initial consideration was expected. Potential future common stock issuance shall be priced at the dates of the future potential share issuance and subject to a common stock floor price of $7.00/share. If this subsidiary is sold within three years from the acquisition date, certain performance related consideration will be accelerated and become due even if not earned.

As of June 30 2022, no additional acquisition consideration had been earned and it was not anticipated that future additional consideration thresholds would be met. During the year ended June 30, 2023 certain revenue thresholds were met and are expected to be met in the future and the Company recognized additional consideration of $0.59 million. This is recorded as change in fair value of acquisition contingent consideration in the consolidated statements of operations. At June 30, 2023, no further revenue thresholds are anticipated to be met. See Notes 7 and 14.

F-20

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

The XRT acquisition’s fair value at its closing was $600,000.

No liabilities were assumed as part of the acquisition and the primary assets acquired included employees and technology. The Company recorded the purchase price allocation as follows:

SCHEDULE OF ASSETS ACQUISITION PURCHASE PRICE ALLOCATION

Intangible assets: |  |  |
Technology |  | $ | 300,000 |
Goodwill |  |  | 300,000 |
Total |  | $ | 600,000 |

The goodwill recognized in connection with the acquisition is primarily attributable to new markets access and will be deductible for tax purposes.

The results of operations of XRT have been included in the Company’s consolidated financial statements from the date of acquisition. For the years ended June 30, 2023 and 2022, XRT had revenue of $0.73 million and $0.18 million, respectively and net losses of $1.49 million and $0.53 million, respectively (exclusive of the change in fair value of contingent consideration), reported in the consolidated statements of operations.

Pre-acquisition XRT financial data is not considered reliable and therefore no proforma results as if the acquisition had occurred on July 1, 2021 are included.

Acquisition - PulpoAR

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. Upon integration, PulpoAR’s technology is expected to propel the business development efforts of QReal.

Initial consideration for the purchase was $2.0 million payable 75% in Company common stock (which was fair valued at the closing date’s day’s closing price discounted for one year sales restriction from closing, subject to a common stock floor price as defined) and 25% in cash. In May and June 2022, the Company collectively paid $0.50 million cash and issued in September 2022, 214,286 shares of common stock to satisfy the purchase price. The 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, with a maximum additional consideration of $12.5 million in common stock and $0.5 million in cash. At time of purchase, future revenue targets were not anticipated to be met and therefore no additional consideration beyond the initial consideration was expected. Potential future common stock issuance shall be priced at the dates of the future potential share issuance and subject to a common stock floor price of $7.00/share. If this subsidiary is sold before December 2024, certain performance related consideration will be accelerated and become due even if not earned. No additional consideration thresholds as defined in the asset acquisition agreement have been met since acquisition date through June 30, 2023, and it is not anticipated that PulpoAR will meet any further additional consideration thresholds, as defined.

F-21

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

The PulpoAR acquisition’s fair value at closing was $1,234,037.

No liabilities were assumed as part of the acquisition and the primary assets acquired included employees and technology. The Company recorded the purchase price allocation as follows:

SCHEDULE OF ASSETS ACQUISITION PURCHASE PRICE ALLOCATION

Intangible assets: |  |  |
Technology |  | $ | 925,000 |
Goodwill |  |  | 309,037 |
Total |  | $ | 1,234,037 |

The goodwill recognized in connection with the acquisition is primarily attributable to new markets access and will be deductible for tax purposes.

The results of operations of PulpoAR have been included in the Company’s consolidated financial statements from the date of acquisition. For the years ended June 30, 2023 and 2022, PulpoAR had revenue of $0.49 million and $0.08 million, respectively, and net losses of $0.87 million and $0.05 million, respectively, reported in the consolidated statements of operations.

Pre-acquisition PulpoAR financial data is not considered reliable and therefore no proforma results as if the acquisition had occurred on July 1, 2021 are included.

All acquisitions above were considered business combinations in accordance with GAAP, except the IVR asset acquisition.

NOTE 5. IMPAIRMENT OF GOODWILL AND LONG-LIVED ASSETS

S5D

As part of the Company’s annual review of goodwill impairment, it was determined that recent unfavorable trends in the S5D business indicated goodwill and long-lived assets of this subsidiary were impaired as of June 30, 2023.

The Company purchased S5D in February 2022 for the initial fair value consideration of $15.47 million, of which $12.61 million was attributed to goodwill and $2.82 million was attributed to intangible assets – customer relationships. Actual revenue and financial results since acquisition, and to a greater extent in recent quarters, have significantly underperformed the expectations that were employed to determine fair value at acquisition. Cash flow of the S5D business was negative for the year ended June 30, 2023. This negative cash flow was the result of significant declines or loss in revenue from key customers compared to previous years and occurred notwithstanding cost-cutting efforts to mitigate the negative results. Declining revenue trends indicate the S5D business may not be able to generate positive cash flow for the foreseeable future. The Company believed that this trend would reverse itself based on expected significant new revenue bookings, however new revenue did not materialize and are not expected to going forward. Continued weak new order bookings have continued through the issue date of these consolidated financial statements.

Based on the expectations that the S5D business may not be able to produce positive cash flow for the foreseeable future and there is no expected market for selling the S5D business, it was determined that S5D’s long-lived assets and goodwill were fully impaired as of June 30, 2023. This determination, based on undiscounted cash flow projections, resulted in an intangible asset impairment expense of $14.87 million on the consolidated statement of operations for the year ended June 30, 2023, comprised of:

F-22

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

SCHEDULE OF IMPAIRMENT OF GOODWILL AND LONG-LIVED ASSETS

Goodwill |  | $ | 12,605,723 |
Intangible asset - customer relationships |  |  | 2,021,000 |
(net of accumulated amortization) |  |  |  |
Operating lease - right-of-use asset |  |  | 209,901 |
(net of accumulated amortization) |  |  |  |
Fixed assets (net of accumulated depreciation) |  |  | 36,037 |
Total S5D intangible asset impairment expense |  | $ | 14,872,661 |

The S5D business will continue to operate. For the years ended June 30, 2023 and 2022, S5D had revenue was $2.73 million and $1.40 million, respectively and net losses of $1.26 million and $0.73 million, respectively (exclusive of the intangible asset write off and change in fair value of contingent consideration).

AUGGD

In March 2023, primarily due to a lack of market traction, a decision was made by the Company to cease the operations of its wholly owned subsidiary MotionZone, LLC (dba “AUGGD”) and divest any related assets and potential liabilities. The assets of AUGGD were originally acquired by the Company in August 2021 for a fair value of $0.75 million. Based on future business projections, the assets of AUGGD were not expected to generate any measurable revenue and were deemed worthless with no future benefit. On April 1, 2023 the Company executed an amendment to the asset purchase agreement for the purchase of AUGGD whereby the assets were transferred to a new independent entity, majority owned by the original sellers of AUGGD, in return for a 19.99% interest in said new entity. Glimpse has no board members nor any operational involvement in the new entity.

The Company accounts for this investment at cost ($0) because the Company does not control or have significant influence over the investment. If the new entity achieves certain revenue goals through December 31, 2024, as defined, the majority owners will receive payments not to exceed $0.65 million in the form of Company common stock. The Company considers this occurrence as remote, and no provision is made for it.

Accordingly, the net book value of intangible assets, including goodwill, originally recorded at the time of purchase of AUGGD, were written off during the year ended June 30, 2023. The $0.48 million write off (consisting of customer relationships and technology with net book values of $0.11 million and $0.12 million, respectively, and goodwill of $0.25 million) is recorded as intangible asset impairment on the consolidated statement of operations for the year ended June 30, 2023.

For the years ended June 30, 2023 (through the cease of operations of AUGGD) and 2022, AUGGD had revenue was $0.01 million and $0.29 million, respectively and net losses of $0.33 million and $0.22 million, respectively (exclusive of the intangible asset impairment write off and change in fair value of contingent consideration), reported in the consolidated statements of operations.

F-23

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

The composition of goodwill at June 30, 2023 and 2022 is as follows:

SCHEDULE OF COMPOSITION OF GOODWILL

|  | AUGGD |  |  | XRT |  |  | S5D |  |  | PulpoAR |  |  | BLI |  |  | Total |
|  | Year ended June 30, 2023 |
|  | AUGGD |  |  | XRT |  |  | S5D |  |  | PulpoAR |  |  | BLI |  |  | Total |
Goodwill - beginning of year |  | $ | 250,000 |  |  | $ | 300,000 |  |  | $ | 12,605,723 |  |  | $ | 309,037 |  |  | $ | - |  |  | $ | 13,464,760 |
Acquisitions |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 10,473,700 |  |  |  | 10,473,700 |
Adjustments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 70,000 |  |  |  | 83,901 |  |  |  | 153,901 |
Impairments |  |  | (250,000 | ) |  |  | - |  |  |  | (12,605,723 | ) |  |  | - |  |  |  | - |  |  |  | (12,855,723 | )
Goodwill - end of year |  | $ | - |  |  | $ | 300,000 |  |  | $ | - |  |  | $ | 379,037 |  |  | $ | 10,557,601 |  |  | $ | 11,236,638 |

|  | AUGGD |  |  | XRT |  |  | S5D |  |  | PulpoAR |  |  | BLI |  |  | Total |
|  | Year ended June 30, 2022 |
|  | AUGGD |  |  | XRT |  |  | S5D |  |  | PulpoAR |  |  | BLI |  |  | Total |
Goodwill - beginning of year |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Acquisitions |  |  | 250,000 |  |  |  | 300,000 |  |  |  | 12,605,723 |  |  |  | 309,037 |  |  |  | - |  |  |  | 13,464,760 |
Goodwill - end of year |  | $ | 250,000 |  |  | $ | 300,000 |  |  | $ | 12,605,723 |  |  | $ | 309,037 |  |  | $ | - |  |  | $ | 13,464,760 |

Intangible assets, their respective amortization period, and accumulated amortization at June 30, 2023 and 2022 are as follows:

SCHEDULE OF INTANGIBLE ASSETS, AMORTIZATION PERIOD AND ACCUMULATED AMORTIZATION

|  | XR Terra |  |  | PulpoAR |  |  | BLI |  |  | inciteVR |  |  | Total |  |  |  |
|  | As of June 30, 2023 |
|  | Value ($) |  |  | Amortization Period (Years) |
|  | XR Terra |  |  | PulpoAR |  |  | BLI |  |  | inciteVR |  |  | Total |  |  |  |
Intangible Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer Relationships |  | $ | - |  |  | $ | - |  |  | $ | 3,310,000 |  |  | $ | - |  |  | $ | 3,310,000 |  |  |  | 5 |
Technology |  |  | 300,000 |  |  |  | 925,000 |  |  |  | 880,000 |  |  |  | 326,435 |  |  |  | 2,431,435 |  |  |  | 3 |
Intangible Assets |  |  | 300,000 |  |  |  | 925,000 |  |  |  | 880,000 |  |  |  | 326,435 |  |  |  | 2,431,435 |  |  |  | 3 |
Less: Accumulated Amortization |  |  | (174,995 | ) |  |  | (334,025 | ) |  |  | (875,722 | ) |  |  | (72,542 | ) |  |  | (1,457,284 | ) |  |  |  |
Intangible Assets, net |  | $ | 125,005 |  |  | $ | 590,975 |  |  | $ | 3,314,278 |  |  | $ | 253,893 |  |  | $ | 4,284,151 |  |  |  |  |

|  | S5D |  |  | AUGGD |  |  | XR Terra |  |  | PulpoAR |  |  | Total |  |  |  |
|  | As of June 30, 2022 |
|  | Value ($) |  |  | Amortization Period (Years) |
|  | S5D |  |  | AUGGD |  |  | XR Terra |  |  | PulpoAR |  |  | Total |  |  |  |
Intangible Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer Relationships |  | $ | 2,820,000 |  |  | $ | 250,000 |  |  | $ | - |  |  | $ | - |  |  | $ | 3,070,000 |  |  |  | 3-5 |
Technology |  |  | - |  |  |  | 250,000 |  |  |  | 300,000 |  |  |  | 925,000 |  |  |  | 1,475,000 |  |  |  | 3 |
Intangible Assets |  |  | - |  |  |  | 250,000 |  |  |  | 300,000 |  |  |  | 925,000 |  |  |  | 1,475,000 |  |  |  | 3 |
Less: Accumulated Amortization |  |  | (235,000 | ) |  |  | (145,824 | ) |  |  | (74,997 | ) |  |  | (25,694 | ) |  |  | (481,515 | ) |  |  |  |
Intangible Assets, net |  | $ | 2,585,000 |  |  | $ | 354,176 |  |  | $ | 225,003 |  |  | $ | 899,306 |  |  | $ | 4,063,485 |  |  |  |  |

Intangible asset amortization expense for the years ended June 30, 2023 and 2022 was approximately $2.05 million and $0.48 million, respectively.

F-24

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

Estimated intangible asset amortization expense for the remaining lives are as follows:

SCHEDULE OF INTANGIBLE ASSET AMORTIZATION EXPENSE

Fiscal Year Ended June 30, 2024 |  | $ | 1,472,000 |
Fiscal Year Ended June 30, 2025 |  | $ | 1,372,000 |
Fiscal Year Ended June 30, 2026 |  | $ | 723,000 |
Fiscal Year Ended June 30, 2027 |  | $ | 662,000 |
Fiscal Year Ended June 30, 2028 |  | $ | 55,000 |

NOTE 7. FINANCIAL INSTRUMENTS

Cash and Cash Equivalents and Investments

The Company’s money market funds and investments (short term, investment grade corporate bonds) are categorized as Level 1 within the fair value hierarchy. As of June 30, 2023 and 2022, the Company’s cash and cash equivalents and investments were as follows:

SCHEDULE OF CASH AND CASH EQUIVALENTS AND INVESTMENTS

|  | As of June 30, 2023 |
|  | Cost |  |  | Unrealized Gain (Loss) |  |  | Fair Value |  |  | Cash and Cash Equivalents |
Cash |  | $ | 242,271 |  |  | $ | - |  |  |  |  |  |  | $ | 242,271 |
Level 1: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  |  | 5,376,812 |  |  |  | - |  |  | $ | 5,376,812 |  |  |  | 5,376,812 |
Total cash and cash equivalents |  | $ | 5,619,083 |  |  | $ | - |  |  | $ | 5,376,812 |  |  | $ | 5,619,083 |

|  | As of June 30, 2022
|  | Cost |  |  | Unrealized Gain (Loss) |  |  | Fair Value |  |  | Cash and Cash Equivalents |  |  | Investments
Cash |  | $ | 1,233,608 |  |  | $ | - |  |  |  |  |  |  | $ | 1,233,608 |  |  |
Level 1: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  |  | 15,016,058 |  |  |  | - |  |  | $ | 15,016,058 |  |  |  | 15,016,058 |  |  |
Total cash and cash equivalents |  | $ | 16,249,666 |  |  | $ | - |  |  | $ | 15,016,058 |  |  | $ | 16,249,666 |  |  |
Level 1: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investments |  | $ | 245,187 |  |  | $ | (5,873 | ) |  | $ | 239,314 |  |  |  |  |  | $ | 239,314

Contingent Consideration

As of June 30, 2023 and 2022, the Company’s contingent consideration liabilities related to acquisitions are categorized as Level 3 within the fair value hierarchy. Contingent consideration was valued at the time of acquisitions, at June 30, 2023 and 2022, using unobservable inputs and have included using the Monte Carlo simulation model. This model incorporates revenue volatility, internal rate of return, and risk-free rate. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist.

F-25

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

As of June 30, 2023, the Company’s contingent consideration liabilities current and non-current balances were as follows:

SCHEDULE OF FAIR VALUE OF CONTINGENT CONSIDERATION

|  | As of June 30, 2023 |
|  | Contingent Consideration at Purchase Date |  |  | Consideration Paid |  |  | Changes in Fair Value |  |  | Fair Value |  |  | Contingent Consideration |
Level 3: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration, current - S5D |  | $ | 2,060,300 |  |  | $ | (2,673,300 | ) |  | $ | 2,521,800 |  |  | $ | 1,908,800 |  |  | $ | 1,908,800 |
Contingent consideration, current - BLI |  |  | 1,264,200 |  |  |  | - |  |  |  | 1,693,500 |  |  |  | 2,957,700 |  |  |  | 2,957,700 |
Contingent consideration, current - AUGGD |  |  | - |  |  |  | (568,571 | ) |  |  | 568,571 |  |  |  | - |  |  |  | - |
Contingent consideration, current - XRT |  |  | - |  |  |  | (331,786 | ) |  |  | 586,077 |  |  |  | 254,291 |  |  |  | 254,291 |
Total contingent consideration, current portion |  | $ | 3,324,500 |  |  | $ | (3,573,657 | ) |  | $ | 5,369,948 |  |  | $ | 5,120,791 |  |  | $ | 5,120,791 |
Level 3: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration, non-current - S5D |  | $ | 7,108,900 |  |  | $ | (735,701 | ) |  | $ | (5,121,499 | ) |  | $ | 1,251,700 |  |  | $ | 1,251,700 |
Contingent consideration, non-current - BLI |  |  | 6,060,700 |  |  |  | - |  |  |  | (2,807,400 | ) |  |  | 3,253,300 |  |  |  | 3,253,300 |
Total contingent consideration, net of current portion |  | $ | 13,169,600 |  |  | $ | (735,701 | ) |  | $ | (7,928,899 | ) |  | $ | 4,505,000 |  |  | $ | 4,505,000 |

A summary of the quantitative significant inputs used to value S5D’s contingent consideration as of June 30, 2023 was: $3.56 per share market price of the Company’s common stock, revenue projections, revenue volatility of 66.6%, weighted average cost of capital discount rate of 15.7% and risk-free rate of 5.1%.

A summary of the quantitative significant inputs used to value BLI’s contingent consideration as of June 30, 2023 was: $3.56 per share market price of the Company’s common stock, revenue projections, revenue volatility of 75.6%, weighted average cost of capital discount rate of 16.4% and risk-free rate of 4.8%.

The change in fair value of contingent consideration for S5D and BLI for the year ended June 30, 2023 was a non-cash gain of approximately $0.17 million and $1.11 million, respectively, included as change in fair value of acquisition contingent consideration in the consolidated statements of operations. This was primarily driven by changes in the Company’s common stock price between the measurement dates and revisions to revenue projections.

The change in fair value of contingent consideration also reflects the first anniversary payout to the sellers of S5D based on the achievement of certain revenue thresholds as defined in the respective purchase agreement. This payout was made in March 2023 in the form of Company common stock with a fair value of $1.36 million at date of issuance (see Note 10). In addition, the S5D Membership Interest Sale agreement was amended in May 2023 to remove the thresholds for releasing $2.0 million of cash escrowed at closing (recorded as Restricted cash on the consolidated balance sheet at June 30, 2022) and was replaced with an immediate $1.0 million payment from the escrow account to the S5D sellers, along with an immediate issuance of Company common stock fair valued at $1.05 million at date of issuance (see Note 14); simultaneously, the S5D sellers released the remaining $1.0 million in escrow to the Company. These May 2023 payments to the S5D sellers were recorded as consideration paid. The range of potential additional contingent consideration through January 2025 related to S5D (see Notes 4 and 5) at June 30, 2023 is zero to $14.0 million in the form of Company common stock.

As of June 30, 2023, the Company’s contingent consideration liability related to XR Terra, LLC (“XRT”) is categorized as Level 3 within the fair value hierarchy as it is based on contractual amounts pursuant to the acquisition agreement, of which certain inputs are unobservable. The change in fair value of contingent consideration for XRT for the year ended June 30, 2023 was a non-cash expense of approximately $0.59 million, included as change in fair value of acquisition contingent consideration in the consolidated statements of operations. This reflects the actual and anticipated achievement of certain revenue thresholds as defined in the respective purchase agreement. These amounts were not included in the contingent consideration balance as of June 30, 2022 as the attainment of the revenue thresholds were originally considered remote. The range of potential additional contingent consideration through September 2024 related to XRT (see Note 4) at June 30, 2023 is zero to $1.0 million in the form of Company common stock. The Company considers this occurrence as remote, and no provision is made for it.

F-26

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

The range of potential additional contingent consideration through December 2024 related to the divestiture of AUGGD assets (see Note 4) at June 30, 2023 is zero to $0.65 million in the form of Company common stock. The Company considers this occurrence as remote, and no provision is made for it.

The range of potential additional contingent consideration through April 2025 related to the PulpoAR acquisition (see Note 4) at June 30, 2023 is zero to $13.0 million ($12.5 million in Company common stock and $0.5 million cash). The Company considers this occurrence as remote, and no provision is made for it.

As of June 30, 2022, the Company’s contingent consideration liabilities current and non-current balances were as follows:

|  | As of June 30, 2022 |
|  | Contingent Consideration at Purchase Date |  |  | Changes in Fair Value |  |  | Fair Value |  |  | Contingent Consideration |
Level 3: |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration, current - S5D |  | $ | 2,060,300 |  |  | $ | (662,700 | ) |  | $ | 1,397,600 |  |  | $ | 1,397,600 |
Contingent consideration, current - AUGGD |  |  | - |  |  |  | 568,571 |  |  |  | 568,571 |  |  |  | 568,571 |
Total contingent consideration, current |  | $ | 2,060,300 |  |  | $ | (94,129 | ) |  | $ | 1,966,171 |  |  | $ | 1,966,171 |
Level 3: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration, non-current - S5D |  | $ | 7,108,900 |  |  | $ | (1,768,100 | ) |  | $ | 5,340,800 |  |  | $ | 5,340,800 |

A summary of the quantitative significant inputs used to value S5D’s contingent consideration as of June 30, 2022 was: $3.98 per share market price of the Company’s common stock, revenue projections, revenue volatility of 60.1%, weighted average cost of capital discount rate of 15.1% and risk-free rate of 3.0%.

As of June 30, 2022, the Company’s contingent consideration liability related to MotionZone, LLC (“AUGGD”) is categorized as Level 3 within the fair value hierarchy as it is based on contractual amounts pursuant to the acquisition agreement, of which certain inputs are unobservable.

NOTE 8. DEFERRED COSTS/CONTRACT ASSETS and DEFERRED REVENUE/CONTRACT LIABILITIES

At June 30, 2023 and 2022, deferred costs/contract assets totaling $158,552 and $39,484, respectively, consists of costs deferred under contracts not completed and recognized at a point in time ($158,552 and $35,470, respectively), and costs in excess of billings under contracts not completed and recognized over time ($0 and $4,014, respectively). At June 30, 2023 and 2022, deferred revenue/contract liabilities, totaling $466,393 and $841,389, respectively, consists of revenue deferred under contracts not completed and recognized at a point in time ($459,510 and $533,214, respectively), and billings in excess of costs under contracts not completed and recognized over time ($6,883 and $308,175 respectively).

F-27

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

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

SCHEDULE OF RECONCILIATION OF COST IN EXCESS OF BILLING FOR CONTRACT RECOGNIZED OVER TIME

|  | As of June 30, 2023 |  |  | As of June 30, 2022 |
Cost incurred on uncompleted contracts |  | $ | 78,771 |  |  | $ | 199,571 |
Estimated earnings |  |  | 226,096 |  |  |  | 437,944 |
Earned revenue |  |  | 304,867 |  |  |  | 637,515 |
Less: billings to date |  |  | 311,750 |  |  |  | 941,676 |
Billings in excess of costs, net |  | $ | (6,883 | ) |  | $ | (304,161 | )
Balance Sheet Classification |  |  |  |  |  |  |  |
Contract assets includes, costs and estimated earnings in excess of billings on uncompleted contracts |  | $ | - |  |  | $ | 4,014 |
Contract liabilities includes, billings in excess of costs and estimated earnings on uncompleted contracts |  |  | (6,883 | ) |  |  | (308,175 | )
Billings in excess of costs, net |  | $ | (6,883 | ) |  | $ | (304,161 | )

NOTE 9. DEBT

Convertible Promissory Notes

At July 1, 2021 the Company had outstanding convertible promissory notes totalling approximately $1.43 million (net of original issue discount of approximately $0.16 million). The notes bore interest at 10% per annum.

All outstanding amounts on the notes at the time of the Company’s IPO were automatically converted to Company common stock at primarily $5.00/share and no further obligations existed. See Note 10.

The Company recorded a loss, during the year ended June 30, 2022, on conversion of the notes of approximately $0.28 million at time of the IPO, representing unamortized original issue discount and prepaid interest.

Paycheck Protection Program Loan

In March 2022 the Small Business Administration forgave principal and interest on a $0.62 million Paycheck Protection Program loan to the Company. The forgiveness is recorded in other income (expense) on the consolidated statements of operations.

NOTE 10. EQUITY

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.

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.

F-28

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

In connection with the IPO, and for services rendered, the underwriter was issued a warrant to purchase 87,500 shares of common stock at $7.00 per share. The warrant could not be exercised prior to December 30, 2021 and expires in June 2026. The warrant was valued at approximately $0.52 million based on the Black-Scholes options pricing model method with the following assumptions: 5 year expected term, 129% expected volatility, 0.87% risk-free rate and 0% expected dividend yield.

In conjunction with the IPO, outstanding convertible promissory notes totalling approximately $1.43 million were satisfied in full through the issuance of 324,150 shares of common stock. A loss of approximately $0.28 million was recorded on this conversion at the time of the IPO (see Note 9).

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.

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. Warrants to purchase 0.56 million shares could be exercised immediately and expire five years from the date of the SPA. Warrants to purchase 0.19 million shares were not exercisable prior to May 2, 2022 and expire five years after. The warrants are valued at approximately $8.80 million based on the Black-Scholes options pricing model method with the following assumptions: 5 year expected term, 146% expected volatility, 1.22% risk-free rate and 0% expected dividend yield.

Common Stock Issued

Common stock sold to Investors

During the year ended June 30, 2022, the Company sold approximately 1.91 million shares of common stock to investors at the IPO at a price of $7.00 per share, for total net proceeds of approximately $11.82 million. In addition, the Company sold 1.50 million shares of common stock and 0.75 million warrants to investors pursuant to a SPA for total net proceeds of approximately $13.58 million.

Common stock issued to Investors

During the year ended June 30, 2022, in connection with the conversion of convertible promissory notes and in conjunction with the IPO, the Company issued approximately 324,000 shares of common stock (Note 9).

Common stock issued for Business Acquisitions and Asset Acquisition - Technology

During the year ended June 30, 2023, the Company issued approximately: 714,000 shares of common stock, valued at $2.85 million, as consideration for the acquisition of BLI (see Note 4); 214,000 shares of common stock, valued at $0.73 million as consideration for the prior year acquisition of PulpoAR (see Note 4); and 71,000 shares of common stock, valued at $0.33 million, per the assignment agreement with inciteVR (see Note 4).

During the year ended June 30, 2022 the Company issued approximately 111,000 shares of common stock, valued at $1.05 million, as consideration for the acquisition of AUGGD and XR Terra (see Note 4). In addition, the Company issued approximately 277,000 shares of common stock, valued at $2.3 million, as consideration for the acquisition of S5D (see Note 4).

F-29

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

Common stock issued to satisfy contingent acquisition obligations

During the year ended June 30, 2023 the Company issued approximately 577,000 shares of common stock, with a fair value of approximately $2.41 million, to partially satisfy a contingent acquisition obligation related to the purchase of S5D. In addition, the Company issued approximately 107,000 shares of common stock, with a fair value of approximately $0.32 million, to satisfy a contingent acquisition obligation of approximately $0.57 million less the repayment of a secured promissory note of $0.25 million (see Note 13), related to the acquisition of AUGGD (see Note 14). Furthermore, the Company issued approximately 71,000 shares of common stock, valued at $0.33 million, for the achievement of a revenue performance milestone by XR Terra.

During the year ended June 30, 2022 the Company issued approximately 453,000 shares of common stock to satisfy pre-IPO legacy acquisition obligations of $1.25 million.

Common stock issued for Exercise of Stock Options

During the years ended June 30, 2023 and 2022, the Company issued approximately 42,000 and 560,000 shares of common stock in cash and cashless transactions, respectively, upon exercise of the respective option grants and realized cash proceeds of approximately $0.07 million and $1.33 million, respectively.

Common stock issued to Vendors

During the years ended June 30, 2023 and 2022, the Company issued approximately 1,800 and 20,000 shares of common stock, respectively, to various vendors for services performed and recorded share-based compensation of approximately $0.01 million and $0.20 million, respectively.

Common stock issued to Employees as Compensation

During the years ended June 30, 2023 and 2022, the Company issued approximately 155,000 and 11,000 shares of common stock, respectively, to various employees as compensation and recorded share-based compensation of approximately $0.64 million and $0.10 million, respectively.

Employee Stock-Based Compensation

Stock Option issuance to Executives

In February 2023, pursuant to the Equity Incentive Plan, the Company granted certain executive officers 2.32 million stock options as a long-term incentive. The options have an exercise price of $7.00 per share. 0.22 million of these options vest ratably over four years (“Initial Options”). The remainder (“Target Options”) vest in fixed amounts based on achieving various revenue or common stock prices within seven years of grant date. Given the Company’s current stock price and revenue, the Company views the achievement of the milestones that would trigger vesting of the Target Options as remote.

Equity Incentive Plan

The Company’s 2016 Equity Incentive Plan (the “Plan”), as amended, has approximately 11.3 million common shares reserved for issuance. As of June 30, 2023, there were approximately 2.1 million shares available for issuance under the Plan. The shares available are after the granting of 2.1 million shares of executive Target Options.

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

F-30

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

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

SCHEDULE OF STOCK OPTION FAIR VALUE ASSUMPTIONS

|  | 2023 |  |  | 2022 |
|  | For the Years Ended June 30, |
|  | 2023 |  |  | 2022 |
Weighted average expected terms (in years) |  |  | 6.0 |  |  |  | 5.7 |
Weighted average expected volatility |  |  | 88.8 | % |  |  | 236.7 | %
Weighted average risk-free interest rate |  |  | 3.9 | % |  |  | 1.7 | %
Expected dividend yield |  |  | 0.0 | % |  |  | 0.0 | %

The weighted average expected term (in years) excludes the executive Target Options.

The grant date fair value, for options granted during the years ended June 30, 2023 and 2022 was approximately $6.4 million (excluding executive Target Options) and $7.98 million, respectively. Executive Target Options grant date fair value was approximately $8.5 million.

The following is a summary of the Company’s stock option activity for the years ended June 30, 2023 and 2022, excluding the executive Target Options:

SUMMARY OF STOCK OPTION ACTIVITY

|  |  |  |  | Weighted Average |  |  |  |
|  |  |  |  |  |  |  | Remaining |  |  |  |
|  |  |  |  | Exercise |  |  | Contractual |  |  | Intrinsic |
|  | Options |  |  | Price |  |  | Term (Yrs) |  |  | Value |
Outstanding at July 1, 2022 |  |  | 4,484,616 |  |  | $ | 4.68 |  |  |  | 7.0 |  |  | $ | 2,404,249 |
Options Granted |  |  | 2,155,909 |  |  |  | 5.63 |  |  |  | 9.6 |  |  |  | - |
Options Exercised |  |  | (104,932 | ) |  |  | 3.94 |  |  |  | 6.1 |  |  |  | 99,505 |
Options Forfeited / Cancelled |  |  | (407,212 | ) |  |  | 7.39 |  |  |  | 8.5 |  |  |  | 28,830 |
Outstanding at June 30, 2023 |  |  | 6,128,381 |  |  | $ | 4.84 |  |  |  | 7.0 |  |  | $ | 1,676,966 |
Exercisable at June 30, 2023 |  |  | 3,741,523 |  |  | $ | 3.96 |  |  |  | 5.6 |  |  | $ | 1,676,966 |

The above table excludes executive Target Options: 2,100,000 granted, $7.00 exercise price, 9.7 remaining term in years, no intrinsic value. Vesting of these is considered remote.

|  |  |  |  | Weighted Average |  |  |  |
|  |  |  |  |  |  |  | Remaining |  |  |  |
|  |  |  |  | Exercise |  |  | Contractual |  |  | Intrinsic |
|  | Options |  |  | Price |  |  | Term (Yrs) |  |  | Value |
Outstanding at July 1, 2021 |  |  | 4,740,910 |  |  | $ | 3.40 |  |  |  | 8.5 |  |  | $ | 7,893,467 |
Options Granted |  |  | 1,037,252 |  |  |  | 9.15 |  |  |  | 9.6 |  |  |  | 2,578,954 |
Options Exercised |  |  | (969,775 | ) |  |  | 2.90 |  |  |  | 5.4 |  |  |  | (8,419,947 | )
Options Forfeited / Cancelled |  |  | (323,771 | ) |  |  | 5.65 |  |  |  | 7.9 |  |  |  | (1,908,018 | )
Outstanding at June 30, 2022 |  |  | 4,484,616 |  |  | $ | 4.68 |  |  |  | 7.0 |  |  | $ | 2,404,249 |
Exercisable at June 30, 2022 |  |  | 3,546,297 |  |  | $ | 3.54 |  |  |  | 6.3 |  |  | $ | 2,404,249 |

The intrinsic value of stock options at June 30, 2023 and 2022 was computed using a fair market value of the common stock of $3.56/share and $3.98/share, respectively.

F-31

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

The Company’s stock option-based expense for the years ended June 30, 2023 and 2022 consisted of the following:

SCHEDULE OF STOCK OPTION-BASED EXPENSE

|  | 2023 |  |  | 2022 |
|  | For the Years Ended June 30, |
|  | 2023 |  |  | 2022 |
Stock option-based expense: |  |  |  |  |  |
Research and development expenses |  | $ | 1,717,955 |  |  | $ | 1,470,039 |
General and administrative expenses |  |  | 299,664 |  |  |  | 210,876 |
Sales and marketing expenses |  |  | 833,817 |  |  |  | 585,380 |
Cost of goods sold |  |  | 755 |  |  |  | 49,617 |
Board option expense |  |  | 441,754 |  |  |  | 481,386 |
Total |  | $ | 3,293,945 |  |  | $ | 2,797,298 |

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

At June 30, 2023 total unrecognized compensation expense to employees, board members and vendors related to stock options was approximately $8.16 million (excluding executive Target Options of $8.53 million), and is expected to be recognized over a weighted average period of 2.44 years (which excludes the executive Target Options).

NOTE 11. EARNINGS PER SHARE

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

SCHEDULE OF COMPUTATION OF BASIC AND DILUTED NET LOSS PER SHARE

|  | 2023 |  |  | 2022 |
|  | For the Year Ended |
|  | June 30, |
|  | 2023 |  |  | 2022 |
Numerator: |  |  |  |  |  |
Net loss |  | $ | (28,563,283 | ) |  | $ | (5,966,287 | )
Denominator: |  |  |  |  |  |  |  |
Weighted-average common shares outstanding for basic and diluted net loss per share |  |  | 13,929,135 |  |  |  | 11,731,383 |
Basic and diluted net loss per share |  | $ | (2.05 | ) |  | $ | (0.51 | )

Potentially dilutive securities that were not included in the calculation of diluted net loss per share attributable to common stockholders because their effect would be anti-dilutive are as follows (in common equivalent shares):

SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

|  | At June 30, 2023 |  |  | At June 30, 2022 |
Stock Options |  |  | 8,228,381 |  |  |  | 4,484,616 |
Warrants |  |  | 837,500 |  |  |  | 837,500 |
Total |  |  | 9,065,881 |  |  |  | 5,322,116 |

June 30, 2023 Stock Options include 2,100,000 executive Target Options.

F-32

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

NOTE 12. PROVISION FOR INCOME TAXES

There was no current or deferred income tax provision for the years ended June 30, 2023 and 2022.

The Company’s deferred tax assets as of June 30, 2023 and 2022 consist of the following:

SCHEDULE OF DEFERRED TAX ASSETS

|  | As of June 30, |  |  | As of June 30, |
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |
Net-operating loss carryforward |  | $ | 11,557,098 |  |  | $ | 7,795,509 |
Goodwill and intangible asset impairment |  |  | 5,305,044 |  |  |  | - |
Stock-based compensation |  |  | 368,831 |  |  |  | 392,174 |
Other |  |  | 564,531 |  |  |  | 180,297 |
Total Deferred Tax Assets |  |  | 17,795,504 |  |  |  | 8,367,980 |
Valuation allowance |  |  | (17,795,504 | ) |  |  | (8,367,980 | )
Deferred Tax Asset, Net |  | $ | - |  |  | $ | - |

The Company maintains a valuation allowance on deferred tax assets due to the uncertainty regarding the ability to utilize these deferred tax assets in the future. At June 30, 2023, the Company had aggregate net operating loss carryforwards (“NOLs”) of approximately $33.44 million. NOLs for the periods ending June 30, 2018 and prior ($2.88 million) begin to expire in 2037. NOLs for the years ending June 30, 2019 through 2023 ($30.46 million), in accordance with changes to the U.S. Internal Revenue Code, have no expiration.

Section 382 of the U.S. Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss carryforwards that might be used to offset taxable income when a corporation has undergone significant changes in stock ownership. The Company has not completed a Section 382 analysis of the NOL carryforwards. Consequently, the Company’s NOL carryforwards may be subject to annual limitations under Section 382.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and taxing strategies in making this assessment. As a result of the uncertainty in the realization of the Company’s deferred tax assets, the Company has provided a valuation allowance for the full amount of the deferred tax assets at June 30, 2023 and June 30, 2022.

The Company’s valuation allowance during the years ended June 30, 2023 and 2022 increased by approximately $9.43 million and $3.91 million, respectively.

F-33

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION STATUTORY RATE

|  | For the year ended June 30, 2023 |  |  | For the year ended June 30, 2022 |
Statutory Federal Income Tax Rate |  |  | (21.00 | )% |  |  | (21.00 | )%
State and Local Taxes, Net of Federal Tax Benefit |  |  | (13.56 | )% |  |  | (13.56 | )%
Stock Based Compensation Expense (ISO) |  |  | 3.21 | % |  |  | 12.78 | %
Change in Contingent Consideration |  |  | (1.55 | )% |  |  | (14.08 | )%
Goodwill Amortization |  |  | (0.82 | )% |  |  | (2.21 | )%
Valuation Allowance |  |  | 33.72 | % |  |  | 38.07 | %
Income Taxes Provision (Benefit) |  |  | 0.00 |  |  |  | 0.00 |

Upon completion of its 2023 U.S. income tax return, the Company may identify additional remeasurement adjustments. The Company will continue to assess its provision for income taxes as future guidance is issued, but does not currently anticipate significant revisions will be necessary.

NOTE 13. RELATED PARTY TRANSACTIONS

Augmented Reality Investments Pty Ltd (“ARI”)

In March 2022, the Company lent to ARI, the entity from which the assets of AUGGD (see Notes 4 and 14) were bought, $0.25 million pursuant to a secured promissory note due March 31, 2024. The two owners of ARI are a current employee and an ex-non-employee advisor to the Company.

The note bore interest at the rate of 1% per annum and was secured by the borrower’s common shares of the Company. Any sales of said shares were to be used to prepay the note, unless otherwise agreed to by the Company.

The note and any accrued interest were extinguished in July 2022. See Note 14.

NOTE 14. COMMITMENTS AND CONTINGENCIES

Lease Costs

The Company made cash payments for all operating leases for the years ended June 30, 2023 and 2022, of approximately $0.60 million and $0.37 million, respectively, which were included in cash flows from operating activities within the consolidated statements of cash flows. As of June 30, 2023, the Company’s operating leases have a weighted average remaining lease term of 1.5 years and weighted average discount rate of 7.9%.

The total rent expense for all operating leases for the years ended June 30, 2023 and 2022, was approximately $0.54 million and $0.41 million, respectively, with short-term leases making up an immaterial portion of such expenses.

Lease Commitments

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

F-34

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

Future approximate undiscounted lease payments for the Company’s operating lease liabilities and a reconciliation of these payments to its operating lease liabilities at June 30, 2023 are as follows:

SCHEDULE OF UNDISCOUNTED LEASE PAYMENTS

Years Ended June 30, |  |  |
2024 |  | $ | 534,000 |
2025 |  |  | 324,000 |
2026 |  |  | 120,000 |
Total future minimum lease commitments, including short-term leases |  |  | 978,000 |
Less: future minimum lease payments of short -term leases |  |  | (80,000 | )
Less: imputed interest |  |  | (69,000 | )
Present value of future minimum lease payments, excluding short term leases |  | $ | 829,000 |
Current portion of operating lease liabilities |  | $ | 406,000 |
Non-current portion of operating lease liabilities |  |  | 423,000 |
Total operating lease liability |  | $ | 829,000 |

Contingent Consideration for Acquisitions

Contingent consideration for acquisitions, consists of the following as of June 30, 2023 and June 30, 2022 respectively (see Notes 4 and 7):

SCHEDULE OF CONTINGENT CONSIDERATION FOR ACQUISITIONS

|  | As of June 30, |  |  | As of June 30, |
|  | 2023 |  |  | 2022 |
S5D, current portion |  | $ | 1,908,800 |  |  | $ | 1,397,600 |
BLI, current portion |  |  | 2,957,700 |  |  |  | - |
AUGGD |  |  | - |  |  |  | 568,571 |
XRT |  |  | 254,291 |  |  |  | - |
Subtotal current portion |  |  | 5,120,791 |  |  |  | 1,966,171 |
S5D, net of current portion |  |  | 1,251,700 |  |  |  | 5,340,800 |
BLI, net of current portion |  |  | 3,253,300 |  |  |  | - |
Net of current portion |  |  | 3,253,300 |  |  |  | - |
Total contingent consideration for acquisitions |  | $ | 9,625,791 |  |  | $ | 7,306,971 |

AUGGD

In June 2022, AUGGD achieved its initial revenue threshold as defined in the asset acquisition agreement, and was issued shares of Company stock in July 2022 reflecting the payment of additional asset acquisition consideration. The share issuance was done inclusive of netting the outstanding balance of a $0.25 million note receivable due the Company by ARI (see Note 13). This additional consideration of approximately $0.57 million was included in contingent consideration for acquisitions, current portion, in the consolidated balance sheet at June 30, 2022 and was satisfied during the year ended June 30, 2023 (see Note 10).

XRT

During the year ended June 30, 2023, XRT achieved certain revenue threshold as defined in the asset acquisition agreement and is expected to meet certain further thresholds in the future. Certain earned, and not yet paid, and expected to be earned additional consideration of approximately $0.25 million were included in contingent consideration for acquisitions, current portion, in the consolidated balance sheet at June 30, 2023 (see Note 7). No further contingent consideration is expected to be earned.

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THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023 AND 2022

Employee Bonus

It is anticipated that a certain employee will meet the revenue threshold to earn a bonus payout of approximately $0.91 million in the upcoming fiscal year. This and an earned, but not yet paid, bonus of approximately $0.13 million are included in accrued bonus in the consolidated balance sheet at June 30, 2023. These bonuses will be paid entirely in the form of Company common stock.

Potential Future Distributions Upon Divestiture or Sale

In some instances, upon a divestiture or sale of a subsidiary company, the Company is contractually obligated to distribute up to 10% of the net proceeds from such divestiture or sale to the senior management team of the divested subsidiary company. Currently, there were no active discussions pertaining to a potential divestiture or sale of any of the Company’s subsidiaries that would trigger such distribution.

COVID-19

The COVID-19 pandemic caused significant business and financial markets disruption worldwide and there was significant uncertainty around the duration of this disruption. We continue to monitor the situation and the effects on our business and operations. While some level of potential uncertainty remains, given the current state of the pandemic, we do not expect the impact of COVID-19 to be material to our business and operations.

NOTE 15. SUBSEQUENT EVENTS

None.

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