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FINANCIAL INSTRUMENTS
 6 Months Ended
Dec. 31, 2022
Investments, All Other Investments [Abstract]  
FINANCIAL INSTRUMENTS

NOTE 6. 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 December 31 and June 30, 2022, the Company’s cash and cash equivalents and investments were as follows:

   As of December 31, 2022 
   Cost   Unrealized Gain (Loss)   Fair Value   Cash and Cash Equivalents   Investments 
Cash  $611,626   $-       $611,626     
Level 1:                         
Money market funds   6,593,096    -    6,593,096    6,593,096     
Total cash and cash equivalents  $7,204,722   $-   $6,593,096   $7,204,722      
                          
Level 1:                         
Investments  $241,595   $(5,019)  $236,576        $236,576 

 

   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 December 31 and June 30, 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 and at December 31 and June 30, 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.

 

As of December 31, 2022, the Company’s contingent consideration liabilities current and non-current balances were as follows:

 

                     
   As of December 31, 2022 
   Contingent Consideration at Purchase Date   Changes in Fair Value   Fair Value   Contingent Consideration 
Level 3:                    
Contingent consideration, current - S5D  $2,060,300   $(1,437,000)  $623,300   $623,300 
Contingent consideration, current - BLI   1,841,100    (870,700)   970,400    970,400 
Total contingent consideration, current portion  $3,901,400   $(2,307,700)  $1,593,700   $1,593,700 
                     
Level 3:                    
Contingent consideration, non-current - S5D  $7,108,900   $(2,238,400)  $4,870,500   $4,870,500 
Contingent consideration, non-current - BLI   4,297,900    (707,300)   3,590,600    3,590,600 
Total contingent consideration, net of current portion  $11,406,800   $(2,945,700)  $8,461,100   $8,461,100 

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

DECEMBER 31, 2022 AND 2021

 

A summary of the quantitative significant inputs used to value S5D’s contingent consideration as of December 31, 2022 was: revenue volatility of 61.4%, weighted average cost of capital discount rate of 15.8% and risk-free rate of 4.4%. The market price of the Company’s common stock as of December 31, 2022 and revenue projections were also used.

 

A summary of the quantitative significant inputs used to value BLI’s contingent consideration as of December 31, 2022 was: revenue volatility of 70.8%, weighted average cost of capital discount rate of 15.5% and risk-free rate of 4.3%. The market price of the Company’s common stock as of December 31, 2022 and revenue projections were also used.

 

The change in fair value of contingent consideration for the three and six months ended December 31, 2022 was a gain of approximately $5.43 and $2.82 million, respectively, included as change in fair value of acquisition contingent consideration in the consolidated statements of operations. This was driven by a decrease in the Company’s common stock price between the measurement dates and revisions to revenue projections.

 

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 

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

DECEMBER 31, 2022 AND 2021

 

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

 

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.

 

The was no change in fair value of contingent consideration for the three and six months ended December 31, 2021.