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EQUITY
 12 Months Ended
Jun. 30, 2023
Equity [Abstract]  
EQUITY

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.

 

 

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).

 

 

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.

 

 

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:

 

   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:

 

       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.

 

 

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:

 

   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).