The Glimpse (VRAR) - 2022 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited financial statements for March 31, 2022, reflect significant asset and revenue growth from acquisitions and capital raises, alongside a wider net loss Consolidated Balance Sheets The balance sheet significantly expanded by March 31, 2022, with total assets growing to $39.3 million and stockholders' equity turning positive Consolidated Balance Sheet Highlights (in USD) | Account | March 31, 2022 (Unaudited) | June 30, 2021 (Audited) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $18,043,040 | $1,771,929 | | Goodwill | $13,155,723 | $0 | | Intangible assets, net | $3,371,842 | $0 | | Total assets | $39,302,187 | $3,221,040 | | Liabilities & Equity | | | | Total current liabilities | $3,220,133 | $2,339,037 | | Total liabilities | $10,329,033 | $4,392,818 | | Total stockholders' equity (deficit) | $28,973,154 | $(1,171,778) | | Total liabilities and stockholders' equity (deficit) | $39,302,187 | $3,221,040 | Consolidated Statements of Operations The company reported strong revenue growth for the three and nine months ended March 31, 2022, but also widening net losses due to increased operating expenses Consolidated Statements of Operations (Unaudited, in USD) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Nine Months Ended March 31, 2022 | Nine Months Ended March 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $2,052,328 | $914,779 | $4,764,863 | $2,434,551 | | Gross Profit | $1,681,829 | $320,188 | $4,036,723 | $1,156,644 | | Total operating expenses | $4,058,331 | $1,582,459 | $9,385,407 | $4,351,340 | | Net Loss | $(1,751,613) | $(1,230,188) | $(4,983,768) | $(3,248,600) | | Basic and diluted net loss per share | $(0.14) | $(0.17) | $(0.44) | $(0.45) | Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' equity significantly improved from a $1.17 million deficit to a $28.97 million surplus by March 31, 2022, driven by IPO and private placement proceeds - Total stockholders' equity increased from a deficit of $(1.17 million) on July 1, 2021, to a positive balance of $28.97 million on March 31, 2022[18] - Key drivers for the increase in equity were net proceeds of $11.8 million from the Initial Public Offering and $13.6 million from a Securities Purchase Agreement[18] Consolidated Statements of Cash Flows Cash and cash equivalents increased by $16.27 million for the nine months ended March 31, 2022, primarily from financing activities, offset by operating and investing uses Cash Flow Summary for the Nine Months Ended March 31 (in USD) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,679,714) | $(1,037,420) | | Net cash used in investing activities | $(6,524,982) | $(17,109) | | Net cash provided by financing activities | $26,475,807 | $2,423,457 | | Net change in cash and cash equivalents | $16,271,111 | $1,368,928 | | Cash and cash equivalents, end of period | $18,043,040 | $2,403,774 | Notes to Consolidated Financial Statements The notes detail the company's VR/AR business, strengthened liquidity from capital raises, key accounting policies, and significant acquisitions and financing events - The company operates as a Virtual (VR) and Augmented (AR) Reality company with a portfolio of twelve wholly-owned operating subsidiaries[25] - Management believes existing cash of approximately $17.0 million is sufficient to meet cash requirements for at least twelve months from the financial statement issuance date[32] - Significant customer concentration exists, with three customers accounting for 61% of revenue in Q3 2022 and two customers accounting for 59% of revenue in the nine months ended March 31, 2022[41] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's VR/AR platform, significant transactions, and financial performance, noting strong revenue growth and improved liquidity despite increased operating expenses and a wider net loss Overview The company operates as a diversified Virtual (VR) and Augmented (AR) Reality platform through twelve wholly-owned subsidiaries providing enterprise-focused solutions - The Glimpse Group is a VR and AR platform company with twelve wholly-owned subsidiaries focused on enterprise software, services, and solutions[151][152] Significant Transactions Key transactions included a July 2021 IPO, a November 2021 private placement, the February 2022 S5D acquisition, and the March 2022 forgiveness of a $0.62 million PPP loan - IPO: Completed on July 1, 2021, raising net proceeds of $11.82 million[153] - Private Placement: Sold common stock and warrants in November 2021 for net proceeds of approximately $13.6 million[154] - S5D Acquisition: Acquired Sector 5 Digital, LLC on February 1, 2022, with an initial payment of $4.0 million in cash and ~0.28 million shares of common stock[155] - PPP Loan Forgiveness: A $0.62 million Paycheck Protection Program loan was forgiven in full on March 22, 2022[156] Results of Operations Revenue significantly increased for both the quarter and nine-month period ended March 31, 2022, driven by acquisitions and organic growth, with improved gross profit margins despite higher operating expenses leading to a wider net loss Revenue Breakdown (in millions USD) | Revenue Type | Q3 2022 | Q3 2021 | % Change | 9M 2022 | 9M 2021 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Software Services | $1.92 | $0.75 | 156% | $4.34 | $2.13 | 104% | | Software License/SaaS | $0.13 | $0.17 | -24% | $0.43 | $0.31 | 39% | | Total Revenue | $2.05 | $0.92 | 123% | $4.77 | $2.44 | 95% | Gross Profit Performance (in millions USD) | Metric | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $1.68 | $0.33 | $4.04 | $1.16 | | Gross Profit Margin | 82% | 36% | 85% | 48% | - Operating expenses increased 157% for the third quarter and 116% for the nine-month period, driven by headcount additions, public company costs, and expenses from three new subsidiaries[167] Liquidity and Capital Resources The company's liquidity significantly improved by March 31, 2022, with $18.0 million in cash, primarily from $26.47 million in financing activities, and no outstanding debt - As of March 31, 2022, the company had cash and cash equivalents of $18.0 million and no outstanding debt[186] - Net cash provided by financing activities was $26.47 million for the nine months ended March 31, 2022, primarily from the IPO and a private placement[185] - Management believes the company is sufficiently funded to meet its operational plan and obligations beyond the next 12 months[187] Non-GAAP Financial Measures The company's Adjusted EBITDA loss widened to $1.11 million for Q3 2022 and $2.54 million for the nine-month period, reflecting increased expenses for growth and acquisitions Reconciliation of Net Loss to Adjusted EBITDA (in millions USD) | Metric | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(1.75) | $(1.23) | $(4.98) | $(3.25) | | Adjusted EBITDA (loss) | $(1.11) | $(0.50) | $(2.54) | $(0.82) | Quantitative and Qualitative Disclosures about Market Risk This section is not required for smaller reporting companies - Disclosure is not required for smaller reporting companies[189] Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of March 31, 2022, with no material changes - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[191] - Based on an evaluation using the COSO framework, management concluded that internal control over financial reporting was effective as of March 31, 2022[194] PART II OTHER INFORMATION Legal Proceedings The company reported no legal proceedings - None[197] Risk Factors There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended June 30, 2021 - There have been no material changes to the risks described in the Annual Report on Form 10-K for the year ended June 30, 2021[198] Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended March 31, 2022, the company issued 1,529 shares of Common Stock for consulting services, exempt from registration - The Company issued an aggregate of 1,529 shares of Common Stock for consulting services during the three months ended March 31, 2022[199] Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The report includes exhibits such as CEO/CFO certifications (31.1, 31.2, 32.1) and Inline XBRL files (101 series)[205]