The Glimpse (VRAR) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial information, including financial statements, management's discussion, market risk disclosures, and controls and procedures ITEM 1. FINANCIAL STATEMENTS (Unaudited) This section presents the unaudited consolidated financial statements of The Glimpse Group, Inc. for the periods ended December 31, 2021, including the balance sheets, statements of operations, stockholders' equity (deficit), and cash flows, along with detailed notes explaining the company's business, accounting policies, and significant transactions Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of December 31, 2021, and June 30, 2021 Consolidated Balance Sheet Highlights | Metric | Dec 31, 2021 (Unaudited) | Jun 30, 2021 (Audited) | Change | | :-------------------------- | :----------------------- | :--------------------- | :--------------------- | | Cash and cash equivalents | $24,828,043 | $1,771,929 | +$23,056,114 | | Total current assets | $30,863,750 | $3,178,868 | +$27,684,882 | | Total assets | $32,267,150 | $3,221,040 | +$29,046,110 | | Total current liabilities | $1,213,670 | $2,339,037 | -$1,125,367 | | Total liabilities | $1,837,498 | $4,392,818 | -$2,555,320 | | Total stockholders' equity (deficit) | $30,429,652 | $(1,171,778) | +$31,601,430 | Consolidated Statements of Operations This section outlines the company's financial performance, presenting revenues, expenses, and net loss for the three and six months ended December 31, 2021 Consolidated Statements of Operations Highlights | Metric | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | Change (YoY) | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change (YoY) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenue | $1,690,002 | $1,259,845 | +34.14% | $2,712,535 | $1,519,772 | +78.49% | | Gross Profit | $1,477,748 | $713,653 | +107.08% | $2,354,894 | $836,456 | +181.49% | | Total operating expenses | $3,053,276 | $1,407,035 | +117.00% | $5,327,076 | $2,769,259 | +92.37% | | Net Loss | $(1,575,394) | $(741,088) | +112.58% | $(3,232,155) | $(2,018,412) | +60.14% | | Basic and diluted net loss per share | $(0.14) | $(0.11) | +27.27% | $(0.30) | $(0.29) | +3.45% | Consolidated Statements of Stockholders' Equity (Deficit) This section details changes in stockholders' equity (deficit) over the three and six months ended December 31, 2021, reflecting capital transactions and accumulated losses Stockholders' Equity (Deficit) Changes (Three Months) | Metric | Balance as of Oct 1, 2021 | Balance as of Dec 31, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Common Stock (Shares) | 10,291,638 | 12,480,416 | | Common Stock (Amount) | $10,292 | $12,480 | | Additional Paid-In Capital | $36,595,898 | $55,764,735 | | Accumulated Deficit | $(23,772,169) | $(25,347,563) | | Total Stockholders' Equity (Deficit) | $12,834,021 | $30,429,652 | Stockholders' Equity (Deficit) Changes (Six Months) | Metric | Balance as of Jul 1, 2021 | Balance as of Dec 31, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Common Stock (Shares) | 7,579,285 | 12,480,416 | | Common Stock (Amount) | $7,580 | $12,480 | | Additional Paid-In Capital | $20,936,050 | $55,764,735 | | Accumulated Deficit | $(22,115,408) | $(25,347,563) | | Total Stockholders' Equity (Deficit) | $(1,171,778) | $30,429,652 | Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended December 31, 2021 Consolidated Statements of Cash Flows Highlights | Activity | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(2,359,760) | $(776,244) | $(1,583,516) | | Net cash used in investing activities | $(597,510) | $(15,036) | $(582,474) | | Net cash provided by financing activities | $26,013,384 | $225,705 | $25,787,679 | | Net change in cash and cash equivalents | $23,056,114 | $(565,575) | $23,621,689 | | Cash and cash equivalents, end of period | $24,828,043 | $469,271 | $24,358,772 | Notes to Consolidated Financial Statements These notes provide detailed explanations of the accounting policies, significant transactions, and financial position of The Glimpse Group, Inc., including information on its business, liquidity, acquisitions, debt, equity, and subsequent events NOTE 1. DESCRIPTION OF BUSINESS This note describes The Glimpse Group, Inc. as a VR/AR company, highlighting its IPO, recent capital raises, and strategic acquisition of Sector 5 Digital - The Glimpse Group, Inc. is a Virtual (VR) and Augmented (AR) Reality company comprising a diversified portfolio of eleven wholly-owned VR and AR software and services subsidiaries[25] - The company completed an initial public offering (IPO) on Nasdaq on July 1, 2021, under the ticker VRAR, and sold additional common stock to institutional investors in November 2021 via a Securities Purchase Agreement (SPA)[28] - In December 2021, Glimpse entered into a definitive agreement to purchase Sector 5 Digital, LLC (S5D), an enterprise-focused immersive technology company, with the purchase closing in February 2022[26] NOTE 2. LIQUIDITY AND CAPITAL RESOURCES This note assesses the company's financial liquidity, capital resources, and ability to meet future obligations, considering recent financing activities and operational losses - The company incurred a net loss of $3.23 million for the six months ended December 31, 2021, an increase from $2.02 million in the prior year, primarily due to funding operational expenses like R&D, G&A, and S&M[29] - Net proceeds from the IPO on July 1, 2021, were approximately $11.8 million, and an additional $13.6 million was raised from a Securities Purchase Agreement in November 2021[30] - Management believes existing cash and cash equivalents of approximately $19 million (after the S5D purchase) will be sufficient for at least twelve months, with plans for future equity and/or debt financings if needed[31] NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles and policies applied in preparing the financial statements, including revenue recognition and expense treatment - The unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC rules, reflecting normal recurring adjustments[34] - Revenue is disaggregated into two categories: Software Services (VR/AR projects, solutions, consulting) and Software License & SaaS (VR/AR software licenses or subscriptions)[57][59] Revenue Timing | Timing of Revenue | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Products transferred at a point in time | $1,634,998 | $1,099,423 | $2,590,749 | $1,292,598 | | Products and services transferred over time | $55,004 | $160,422 | $121,786 | $227,174 | | Total Revenue | $1,690,002 | $1,259,845 | $2,712,535 | $1,519,772 | - Research and development expenses are expensed as incurred, including payroll, benefits, stock-based compensation, and third-party development costs, due to the emerging industry and uncertain market environment[72] NOTE 4. ASSET ACQUISITIONS This note details the company's asset acquisitions, including AUGGD and XR Terra, and their strategic impact on market access and technology platforms - In August 2021, the Company acquired certain assets from Augmented Reality Investments Pty Ltd (dba AUGGD) for $0.75 million in common stock, gaining access to the AEC market[80][81] - In October 2021, the Company acquired assets from XR Terra, Inc., a developer of VR/AR coding teaching platforms, for $0.60 million (50% cash, 50% common stock)[83][84] NOTE 5. INTANGIBLE ASSETS This note provides a breakdown of intangible assets acquired, their valuation, and estimated amortization expenses over future fiscal years Intangible Assets Breakdown (as of Dec 31, 2021) | Intangible Assets | AUGGD ($) | XR Terra ($) | Total ($) | Amortization Period (Years) | | :-------------------------- | :---------- | :----------- | :---------- | :-------------------------- | | Customer Relationships | 250,000 | - | 250,000 | 3 | | Technology | 250,000 | 300,000 | 550,000 | 3 | | Less: Accumulated Amortization | (62,500) | (24,999) | (87,499) | | | Intangible Assets, net | 437,500 | 275,001 | 712,501 | | Estimated Intangible Asset Amortization Expense | Fiscal Year Ended | Amortization Expense ($) | | :-------------------------- | :------------------- | | Remaining FYE June 30, 2022 | $133,333 | | Fiscal Year Ended June 30, 2023 | $266,667 | | Fiscal Year Ended June 30, 2024 | $266,667 | | Fiscal Year Ended June 30, 2025 | $45,834 | NOTE 6. CONTINGENT ACQUISITION LIABILITY This note describes the contingent liabilities related to past acquisitions, detailing how these obligations were triggered and settled through common stock issuance - Contingent acquisition consideration for Kabaq 3D Technologies, LLC ($750,000) was triggered and satisfied in August 2021 through the issuance of common stock[89] - Contingent acquisition consideration for KreatAR, LLC ($500,000) was triggered in August 2021 and partially satisfied in December 2021 through common stock issuance, with the remainder settled in January 2022[90][136] NOTE 7. DEBT This note outlines the company's debt obligations, specifically convertible promissory notes, and their conversion into common stock following the IPO - Convertible Promissory Notes 1 ($1.33 million issued in Dec 2019) were primarily converted into common stock at $4.00/share in Dec 2020/Jan 2021, with remaining notes converting at IPO at $4.25/share[91][94][95] - Convertible Promissory Notes 2 ($1.48 million issued in March 2021) automatically converted at $5.00/share upon the Company's IPO, with no further obligations[97][99] - A non-cash loss of approximately $280,000 was recorded on the conversion of both Notes 1 and 2 at the time of the IPO[96][100][103] NOTE 8. EQUITY This note details the company's equity transactions, including its IPO, private placement, and issuance of shares for acquisitions and convertible note conversions - The Company completed an IPO on July 1, 2021, selling 1.91 million shares at $7.00/share, raising $11.82 million in net proceeds[101] - In November 2021, the Company sold 1.50 million shares and warrants to purchase 0.75 million shares to institutional investors in a private placement for $10.00 per unit, generating $13.58 million in net proceeds[105][106] - During the six months ended December 31, 2021, the Company issued 324,150 shares for convertible note conversions, approximately 111,000 shares for AUGGD and XR Terra acquisitions, and 395,000 shares for legacy acquisition obligations[109][110][111] - Stock option-based compensation expense for the six months ended December 31, 2021, was approximately $1.19 million, with total unrecognized compensation expense of $1.29 million expected to be recognized over 2.22 years[120] NOTE 9. EARNINGS PER SHARE This note presents the calculation of basic and diluted net loss per share, along with a summary of potentially dilutive securities Basic and Diluted Net Loss Per Share | Metric | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(1,575,394) | $(741,088) | $(3,232,155) | $(2,018,412) | | Weighted-average common shares outstanding | 11,637,318 | 7,053,986 | 10,802,570 | 7,046,510 | | Basic and diluted net loss per share | $(0.14) | $(0.11) | $(0.30) | $(0.29) | Potentially Dilutive Securities (Anti-Dilutive) | Security Type | At Dec 31, 2021 | At Dec 31, 2020 | | :-------------------------- | :---------------- | :---------------- | | Stock Options | 3,974,702 | 4,168,162 | | Warrants | 837,500 | - | | Convertible Notes | - | 281,667 | | Total | 4,812,202 | 4,449,829 | NOTE 10. COMMITMENTS AND CONTINGENCIES This note discloses the company's contractual obligations, including office leases and potential payouts, and discusses the impact of the COVID-19 pandemic - The Company has an office lease in New York expiring December 31, 2022, with approximately $300,000 due for the remaining term[123][124] - New office leases in Turkey, effective December 1, 2021, expire November 30, 2022, with monthly rent expense of approximately $2,400[127][128] - The Company is contractually obligated to distribute up to 10% of net proceeds from a subsidiary divestiture or sale to the divested subsidiary's senior management team[129] - The COVID-19 pandemic has caused business disruption and prolonged sales cycles, but given expected revenue growth and current cash, the company does not anticipate the impact to worsen[130][132] NOTE 11. SUBSEQUENT EVENTS This note reports significant events occurring after the balance sheet date, including the acquisition of Sector 5 Digital and settlement of contingent liabilities - The acquisition of Sector 5 Digital, LLC (S5D) closed in February 2022, with an initial payment of $8.0 million ($4.0 million cash, $4.0 million common stock) and potential future considerations up to $19.0 million based on revenue milestones[133][134] - The remaining contingent acquisition liability for KreatAR, LLC was settled in January 2022 through the issuance of 42,978 shares of common stock and 15,000 stock options[136] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the company's financial condition, operating results, liquidity, and cash flows for the three and six months ended December 31, 2021, compared to the prior year, highlighting significant transactions, revenue growth, expense increases, and non-GAAP financial measures Overview This overview introduces The Glimpse Group as a diversified VR/AR platform company, emphasizing its strategy to mitigate risk in a growing market - The Glimpse Group is a Virtual (VR) and Augmented (AR) Reality platform company, operating a diversified group of wholly-owned VR and AR companies focused on enterprise software, services, and solutions[141] - The company aims to provide significant exposure to the growing VR and AR markets while mitigating risk through its diversified model and ecosystem[141] Significant Transactions This section highlights key financial and strategic transactions, including the IPO, private placement, and recent acquisitions, impacting the company's capital structure and growth - Completed an IPO on Nasdaq on July 1, 2021, raising $11.82 million in net proceeds[143] - Acquired XR Terra, Inc. in October 2021 for $0.60 million (cash and common stock)[144] - Sold 1.50 million shares and warrants in a private placement in November 2021, generating $13.6 million in net proceeds[145] - Closed the acquisition of Sector 5 Digital, LLC (S5D) on February 1, 2022, with an initial payment of $8.0 million and potential future considerations up to $19.0 million[147] Financial Highlights for the three and six months ended December 31, 2021 compared to the three and six months ended December 31, 2020 This section presents a comparative analysis of the company's financial performance for the three and six months ended December 31, 2021, against the prior year Results of Operations This section summarizes the consolidated financial results, including revenue, gross profit, operating expenses, and net loss, for the reported periods Consolidated Results of Operations Summary | Metric (in millions) | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | Change ($) | Change (%) | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Revenue | $1.69 | $1.26 | $0.43 | 34% | $2.71 | $1.52 | $1.19 | 78% | | Cost of Goods Sold | $0.21 | $0.55 | $(0.34) | -62% | $0.36 | $0.68 | $(0.32) | -47% | | Gross Profit | $1.48 | $0.71 | $0.77 | 108% | $2.35 | $0.84 | $1.51 | 180% | | Total Operating Expenses | $3.05 | $1.41 | $1.64 | 116% | $5.33 | $2.77 | $2.56 | 92% | | Net Loss | $(1.57) | $(0.75) | $(0.82) | 109% | $(3.24) | $(2.02) | $(1.22) | 60% | Revenues This section analyzes the company's revenue performance, breaking down growth by software services and software license/SaaS categories Revenue Breakdown and Growth | Revenue Category (in millions) | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | Change ($) | Change (%) | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Software Services | $1.61 | $1.19 | $0.42 | 35% | $2.42 | $1.38 | $1.04 | 75% | | Software License/SaaS | $0.08 | $0.07 | $0.01 | 14% | $0.29 | $0.14 | $0.15 | 107% | | Total Revenue | $1.69 | $1.26 | $0.43 | 34% | $2.71 | $1.52 | $1.19 | 78% | - Non-project revenue (VR/AR Software and Services) increased by approximately 70% to $0.85 million for the three months ended December 31, 2021, and by 166% to $1.70 million for the six months ended December 31, 2021[153] - Non-project revenue accounted for approximately 50% of total revenues for the three months ended December 31, 2021 (up from 40% in 2020) and 63% for the six months ended December 31, 2021 (up from 42% in 2020)[153] Customer Concentration This section discusses the company's reliance on a few key customers and the expected variability in customer concentration given the industry's early stage - Two customers accounted for approximately 75% of total gross revenues for the three months ended December 31, 2021, and 67% for the six months ended December 31, 2021[154] - Due to the early stage of the industry and customer exploration, high variability in customer concentration is expected to continue until revenue reaches a larger scale with a higher percentage from Software Licenses/SaaS[155] Gross Profit This section examines the company's gross profit and margin trends, attributing improvements to higher-margin revenue and cost management strategies Gross Profit and Margin | Metric | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Gross Profit | $1.48 million | $0.71 million | $2.35 million | $0.84 million | | Gross Profit Margin | 88% | 56% | 87% | 55% | - The increase in gross profit margin was driven by higher margin non-project revenue, improved management of project revenue costs, and utilization of lower-cost Glimpse Turkey staff[156] Operating Expenses This section provides an overview of the company's operating expenses, detailing increases across R&D, G&A, and S&M due to growth and public company costs Operating Expenses Summary | Expense Category (in millions) | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | Change ($) | Change (%) | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change ($) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Research and development expenses | $1.19 | $0.59 | $0.60 | 102% | $2.18 | $1.33 | $0.85 | 64% | | General and administrative expenses | $1.19 | $0.37 | $0.82 | 222% | $1.98 | $0.71 | $1.27 | 179% | | Sales and marketing expenses | $0.67 | $0.45 | $0.22 | 49% | $1.17 | $0.73 | $0.44 | 60% | | Total operating expenses | $3.05 | $1.41 | $1.64 | 116% | $5.33 | $2.77 | $2.56 | 92% | - The overall increase in operating expenses was due to employee headcount additions, costs associated with being a publicly traded company, and the addition of two new subsidiaries[157] Research and Development This section details the increase in R&D expenses, driven by headcount additions and new subsidiaries, including the impact of non-cash stock option expenses - R&D expenses increased by 102% to $1.19 million for the three months and 64% to $2.18 million for the six months ended December 31, 2021, driven by headcount additions and new subsidiaries[158] - Non-cash stock option expenses comprised approximately 22% of total R&D expenses for the three months and 28% for the six months ended December 31, 2021, expected to decrease as a percentage over time[159] General and Administrative This section analyzes the surge in G&A expenses, attributed to infrastructure build-out, public company costs, and new subsidiaries, including non-cash stock option and common stock expenses - G&A expenses surged by 221% to $1.19 million for the three months and 179% to $1.98 million for the six months ended December 31, 2021, reflecting infrastructure build-out, public company costs (e.g., D&O insurance, listing fees), and new subsidiaries[160] - Non-cash stock option and common stock expenses accounted for approximately 20% of G&A for the three months and 23% for the six months ended December 31, 2021, expected to decrease as a percentage over time[161] Sales and Marketing This section reviews the increase in S&M expenses, driven by headcount, revenue growth initiatives, and new subsidiaries, including non-cash stock option and common stock expenses - S&M expenses increased by 49% to $0.67 million for the three months and 60% to $1.17 million for the six months ended December 31, 2021, due to headcount additions, revenue growth initiatives, and new subsidiaries[162] - Non-cash stock option and common stock expenses represented approximately 30% of S&M for the three months and 28% for the six months ended December 31, 2021, expected to decrease as a percentage over time[164] Other Income and Expense, net This section explains the net other income and expense, primarily due to a non-cash loss on convertible note conversion at the time of the IPO - Other income and expense, net, for the six months ended December 31, 2021, was an expense of $0.26 million, an increase of $0.17 million compared to the prior year, primarily due to a $0.28 million non-cash loss on convertible note conversion at IPO[165] Net Losses This section discusses the increase in net loss, primarily driven by higher operating expenses and a non-cash loss from convertible note conversion - Net loss increased by 109% to $1.57 million for the three months and 60% to $3.24 million for the six months ended December 31, 2021, driven by increased operating expenses and the non-cash loss on convertible note conversion, partially offset by higher revenue and gross profit[166] Non-GAAP Financial Measures This section presents the reconciliation of net loss to Adjusted EBITDA, a non-GAAP measure used by management to assess core operating performance - Adjusted EBITDA is used by management and investors to evaluate core operating results by removing non-operational impacts[169] Reconciliation of Net Loss to Adjusted EBITDA | Metric (in millions) | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(1.58) | $(0.74) | $(3.23) | $(2.02) | | Interest expense, net | - | 0.05 | - | 0.10 | | Depreciation and amortization | 0.08 | 0.01 | 0.10 | 0.01 | | EBITDA (loss) | $(1.50) | $(0.68) | $(3.13) | $(1.91) | | Stock based compensation expenses | 0.60 | 0.87 | 1.31 | 1.59 | | Stock based financing related expenses | - | - | 0.28 | - | | Public company expenses | 0.35 | - | 0.53 | - | | Acquisition related expenses | 0.09 | - | 0.11 | - | | Adjusted EBITDA (loss) | $(0.46) | $0.19 | $(0.90) | $(0.32) | - Adjusted EBITDA loss increased by $0.65 million to $0.46 million for the three months and by $0.58 million to $0.90 million for the six months ended December 31, 2021, primarily due to increased net loss partially offset by public company and acquisition expenses[171] Liquidity and Capital Resources This section details the company's cash flow activities, current capital position, and future funding outlook, emphasizing the significant impact of recent financing activities on liquidity Operating Activities This section analyzes the cash used in operating activities, attributing the increase to higher net loss and accounts receivable Net Cash Used in Operating Activities | Metric | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change ($) | Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(2.36) million | $(0.78) million | $(1.58) million | -203% | - The increase in cash used in operating activities was primarily driven by a $1.22 million increase in net loss and higher accounts receivable due to increased revenue[173] Investing Activities This section details the cash used in investing activities, primarily due to asset purchases and investments in corporate fixed income securities Net Cash Used in Investing Activities | Metric | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change ($) | Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Net cash used in investing activities | $(0.60) million | $(0.02) million | $(0.58) million | -2,900% | - The significant increase in cash used in investing activities was due to the cash portion of the XR Terra asset purchase and investments in corporate fixed income securities[175] Financing Activities This section highlights the substantial cash provided by financing activities, mainly from the IPO and private placement of common stock Net Cash Provided by Financing Activities | Metric | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change ($) | Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | Net cash provided by financing activities | $26.01 million | $0.23 million | $25.78 million | 11,209% | - The substantial increase in cash from financing activities was primarily due to net proceeds from the IPO and Securities Purchase Agreement common stock transactions[176] Capital Resources This section outlines the company's cash and cash equivalents, debt obligations, and management's assessment of sufficient funding for future operations - As of December 31, 2021, the Company had $24.8 million in cash and cash equivalents, which decreased to approximately $19.0 million by February 14, 2022, after the S5D acquisition[177] - The Company had no outstanding debt obligations as of December 31, 2021, except for a $0.62 million Paycheck Protection Program loan expected to be fully forgiven[178] - Management believes the Company is sufficiently funded to meet operational plans and future obligations beyond the next 12 months[179] Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements as defined by SEC regulations - The Company does not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4)[180] Recently Adopted Accounting Pronouncements This section states that no recently issued accounting standards are expected to materially impact the company's financial statements - Management does not believe that any recently issued, but not yet effective, accounting standards would have a material effect on the Company's financial statements if currently adopted[78][181] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section states that quantitative and qualitative disclosures about market risk are not required for smaller reporting companies - Quantitative and qualitative disclosures about market risk are not required for smaller reporting companies[182] ITEM 4. CONTROLS AND PROCEDURES This section details the evaluation of the company's disclosure controls and procedures and internal control over financial reporting, concluding on their effectiveness as of December 31, 2021 Evaluation of Disclosure Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and internal control over financial reporting as of December 31, 2021 - Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of December 31, 2021, concluding they were effective[184] - Management also concluded that the internal control over financial reporting was effective as of December 31, 2021, based on the COSO 2013 framework[187] - No material changes occurred in internal control over financial reporting during the period ended December 31, 2021[187] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits ITEM 1. LEGAL PROCEEDINGS This section states that there are no legal proceedings to report - There are no legal proceedings to report[190] ITEM 1A. RISK FACTORS This section refers to the Annual Report on Form 10-K for a discussion of material risks, noting no material changes - There have been no material changes to the risk factors described in the Annual Report on Form 10-K for the year ended June 30, 2021[191] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details the unregistered sales of equity securities during and subsequent to the quarter ended December 31, 2021, primarily for consulting services, employee compensation, and legacy acquisition expenses - During the three months ended December 31, 2021, the Company issued 18,169 shares of Common Stock for consulting services and employee compensation[192] - Subsequent to December 31, 2021, the Company issued 43,466 shares of Common Stock for legacy acquisition expense and consulting services[192] - These transactions were exempt from registration requirements under Section 4(a)(2) or Section 3(a)(9) of the Securities Act of 1933[193] ITEM 6. EXHIBITS This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including agreements, warrants, certifications, and XBRL documents - The report includes various exhibits such as the Placement Agent Agreement, Form of Securities Purchase Agreement, Forms of Warrants, Registration Rights Agreement, Membership Interest Sale Agreement for S5D, and certifications from executive officers[198][199] SIGNATURES This section contains the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the accuracy of the report Signatures This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report - The report was duly signed on February 14, 2022, by Lyron Bentovim, Chief Executive Officer and President, and Maydan Rothblum, Chief Financial Officer[201][202]