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EQUITY
 9 Months Ended
Mar. 31, 2023
Equity [Abstract]  
EQUITY

NOTE 8. 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.

 

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 totaling 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.

 

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 can 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.

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2023 AND 2022

 

Common Stock Issued

 

Common stock issued for Business Acquisitions and Asset Acquisition - Technology

 

During the nine months ended March 31, 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; and 71,000 shares of common stock, valued at $0.33 million, per the assignment agreement with inciteVR (see Note 4).

 

During the nine months ended March 31, 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. In addition, the Company issued approximately 277,000 shares of common stock, valued at $2.3 million, as consideration for the acquisition of S5D.

 

Common stock issued to satisfy contingent acquisition obligations

 

During the nine months ended March 31, 2023 the Company issued approximately 327,000 shares of common stock, with a fair value of approximately $1.36 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 10), related to the acquisition of AUGGD (see Note 11). Furthermore, the Company issued approximately 36,000 shares of common stock, valued at $0.20 million, for the achievement of a revenue performance milestone by XR Terra.

 

During the nine months ended March 31, 2022 the Company issued 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 nine months ended March 31, 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 nine months ended March 31, 2023 and 2022, the Company issued approximately 1,800 and 15,000 shares of common stock, to various vendors for services performed and recorded share-based compensation of approximately $0.01 million and $0.16 million, respectively.

 

Common stock issued to Employees as Compensation

 

During the nine months ended March 31, 2023 and 2022, the Company issued approximately 80,000 and 11,000 shares of common stock, to various employees as compensation and recorded share-based compensation of approximately $0.33 million and $0.10 million, respectively.

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2023 AND 2022

 

Employee Stock-Based Compensation

 

Stock Option issuance to Executives

 

In February 2023, pursuant to the Equity Incentive Plan, the Company granted certain executive officers 2.2 million stock options as a long-term incentive. The options have an exercise price of $7.00 per share. Approximately 0.2 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.

 

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 March 31, 2023, there were approximately 2.1 million shares available for issuance under the Plan.

 

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

 

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   2023   2023 
  

For the Three Months Ended

March 31,

  

For the Nine Months Ended

March 31,

 
   2023   2022   2023   2023 
Weighted average expected terms (in years)   6.0    5.7    6.0    5.7 
Weighted average expected volatility   100.7%   232.7%   100.8%   205.6%
Weighted average risk-free interest rate   3.8%   1.4%   3.7%   1.4%
Expected dividend yield   0.0%   0.0%   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 nine months ended March 31, 2023 and 2022 was approximately $15.2 million (including executive officers’ Initial Options of $0.90 million and Target Options of $8.08 million) and $7.98 million, respectively.

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2023 AND 2022

 

The following is a summary of the Company’s stock option activity for the nine months ended March 31, 2023 and 2022:

 

       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   4,076,933    6.30    9.8    4,862 
Options Exercised   (94,932)   3.88    6.2    107,426 
Options Forfeited / Cancelled   (291,605)   7.87    8.7    16,208 
Outstanding at March 31, 2023   8,175,012   $5.38    7.9   $2,005,800 
Exercisable at March 31, 2023   3,677,049   $3.91    5.7   $2,005,800 

 

       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   836,141    9.68    9.8    2,276,040 
Options Exercised   (969,775)   2.90    7.5    (9,176,737)
Options Forfeited / Cancelled   (273,799)   4.98    7.7    (2,020,350)
Outstanding at March 31, 2022   4,333,477   $4.63    8.9   $10,404,816 
Exercisable at March 31, 2022   3,568,874   $3.59    8.7   $10,293,216 

 

The intrinsic value of stock options at March 31, 2023 and 2022 was computed using a fair market value of the common stock of $3.76/share and $6.39/share, respectively.

 

The Company’s stock option-based expense for the three and nine months ended March 31, 2023 and 2022 consisted of the following:

 

SCHEDULE OF STOCK OPTION-BASED EXPENSE

   2023   2022   2023   2022 
   For the Three Months Ended   For the Nine Months Ended 
   March 31,   March 31, 
   2023   2022   2023   2022 
Stock option-based expense :                    
Research and development expenses  $433,877   $448,321   $1,204,934   $1,053,829 
General and administrative expenses   86,729    43,265    175,777    167,837 
Sales and marketing expenses   238,180    160,657    558,461    401,496 
Cost of goods sold   -    4,348    755    48,506 
Board option expense   85,752    156,298    379,319    334,603 
Total  $844,538   $812,889   $2,319,246   $2,006,271 

 

Stock option-based expense attributable to the executive officers’ Initial Options for the three and nine months ended March 31, 2023 was approximately $0.03 million, and included in the table above. There is no expense included for the executive officers’ Target Options.

 

 

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

MARCH 31, 2023 AND 2022

 

At March 31, 2023 total unrecognized compensation expense to employees, board members and vendors related to stock options was approximately $17.89 million (including executive officers’ Initial and Target Options of $0.87 million and $8.08 million, respectively), and is expected to be recognized over a weighted average period of 1.48 years (which excludes the executive Target Options).