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FINANCIAL INSTRUMENTS
 9 Months Ended
Mar. 31, 2023
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 March 31, 2023 and June 30, 2022, the Company’s cash and cash equivalents and investments were as follows:

 

   As of March 31, 2023 
   Cost   Unrealized Gain (Loss)   Fair Value   Cash and Cash Equivalents   Investments 
Cash  $1,370,129   $-        $1,370,129      
Level 1:                         
Money market funds   4,677,872    -   $4,677,872    4,677,872      
Total cash and cash equivalents  $6,048,001   $-   $4,677,872   $6,048,001      
                          
Level 1:                         
Investments  $250,892   $(3,381)  $247,511        $247,511 

 

   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 March 31, 2023 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 March 31, 2023 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.

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2023 AND 2022

 

As of March 31, 2023, the Company’s contingent consideration liabilities current and non-current balances were as follows:

 

SCHEDULE OF FAIR VALUE OF CONTINGENT CONSIDERATION

                          
   As of March 31, 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   $(623,300)  $1,535,500   $2,972,500   $2,972,500 
Contingent consideration, current - BLI   1,841,100    -    (823,900)   1,017,200    1,017,200 
Contingent consideration, current - XRT   -    (197,498)   331,786    134,288    134,288 
Total contingent consideration, current portion  $3,901,400   $(820,798)  $1,043,386   $4,123,988   $4,123,988 
                          
Level 3:                         
Contingent consideration, non-current - S5D  $7,108,900   $(735,701)  $(3,770,799)  $2,602,400   $2,602,400 
Contingent consideration, non-current - BLI   4,297,900    -    (380,500)   3,917,400    3,917,400 
Total contingent consideration, net of current portion  $11,406,800   $(735,701)  $(4,151,299)  $6,519,800   $6,519,800 

 

 

A summary of the quantitative significant inputs used to value S5D’s contingent consideration as of March 31, 2023 was: $3.76 market price of the Company’s common stock, revenue projections, revenue volatility of 67.2%, weighted average cost of capital discount rate of 15.4% and risk-free rate of 4.2%.

 

A summary of the quantitative significant inputs used to value BLI’s contingent consideration as of March 31, 2023 was: $3.76 market price of the Company’s common stock, revenue projections, revenue volatility of 77.4%, weighted average cost of capital discount rate of 15.6% and risk-free rate of 4.0%.

 

The change in fair value of contingent consideration for S5D and BLI for the three and nine months ended March 31, 2023 was a non-cash expense of approximately $1.81 million and a non-cash gain of approximately $1.01 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 8).

 

As of March 31, 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 three and nine months ended March 31, 2023 was an expense of approximately $0.13 and $.33 million, respectively, included as change in fair value of acquisition contingent consideration in the consolidated statements of operations. This reflects the 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 considered remote.

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2023 AND 2022

 

Goodwill of AUGGD, totaling $250,000, was measured at fair value on a non-recurring basis using significant unobservable inputs resulting in a fair value of zero at March 31, 2023 (see note 5).

 

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 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.

 

The was no change in the fair value of contingent consideration for the three and nine months ended March 31, 2022.