The Glimpse (VRAR) - 2025 Q4 - Annual Report

PART I Item 1. Business The Glimpse Group, Inc. is an immersive technology company specializing in enterprise-focused VR, AR, and Spatial Computing software and services. In fiscal year 2024, the company strategically shifted its focus to Spatial Computing, Cloud, and AI-driven solutions, particularly with its 'Spatial Core' product. The company operates an ecosystem of entities targeting diverse industry verticals, aiming for competitive advantages through collaboration and shared infrastructure. Key developments in FY2025 included the divestiture of QReal, a registered direct offering raising $6.79 million, and a new $2+ million SpatialCore contract - The Glimpse Group, Inc. is an Immersive technology company providing enterprise-focused Virtual Reality (VR), Augmented Reality (AR), and Spatial Computing software and services[13] - In fiscal year 2024, the company shifted its business focus (Strategic Shift) to immersive technology solutions primarily driven by Spatial Computing, Cloud, and Artificial Intelligence (AI), including its 'Spatial Core' product[16] - The company's ecosystem comprises several entities targeting different industry segments in a non-competitive, collaborative manner, sharing operational, financial, and intellectual property infrastructure[17][18] - Key business developments in FY2025 included the divestiture of QReal, a registered direct offering that realized net proceeds of $6.79 million, and a new $2+ million SpatialCore contract[23][26][28] Customer Revenue Concentration (FY2025 vs. FY2024) | Fiscal Year | Top 2 Customers Revenue Share | Top 5 Customers Revenue Share | | :---------- | :----------------------------- | :---------------------------- | | 2025 | 61% (40%, 21%) | 76% | | 2024 | 38% (23%, 15%) | 53% | Item 1A. Risk Factors Investing in The Glimpse Group involves significant risks due to its early-stage nature in an emerging industry. Key risks include a history of net losses and potential future losses, the need for additional capital, intense and dynamic market competition, customer concentration, and the ability to attract and retain customers. The company also faces challenges in ongoing R&D, anticipating technological changes, and managing its decentralized entity structure. Intellectual property protection, cybersecurity threats, and stock price volatility are also material risks. As an 'emerging growth company' and 'smaller reporting company,' it benefits from reduced reporting requirements, but this may affect investor attractiveness - The company is an early-stage technology development company operating in an emerging industry, subject to associated risks[59] - The company has incurred significant net losses since inception ($2.6 million in FY2025, $6.4 million in FY2024) and may continue to do so, with an accumulated deficit of approximately $65.6 million as of June 30, 2025[60] - Future growth depends on the ability to attract and retain customers in a competitive and dynamic market, requiring ongoing R&D and adaptation to rapid technological changes[68][69][71] - Significant customer concentration exists, with the top five customers accounting for 76% of revenues in FY2025, posing a risk if these relationships decline[67] - The company faces risks related to its acquisition strategy, intellectual property protection, potential stock price volatility, and the significant costs and management time associated with operating as a public company[97][103][118][124] Item 1B. Unresolved Staff Comments This section states that there are no unresolved staff comments applicable to the company - Not applicable[133] Item 1C. Cybersecurity The company has a cybersecurity risk management program led by its Director of Information Technology, guided by the NIST Cybersecurity Framework. The program includes risk assessments, security controls, external service providers, employee training, and an incident response plan. The board of directors oversees cybersecurity risks, receiving reports from the Director of Information Technology. As of the report date, no cybersecurity threats are believed to have materially affected the company, though future incidents remain a risk - The company's cybersecurity risk management program is led by the Director of Information Technology and is based on industry frameworks like the NIST Cybersecurity Framework[134][135] - The program includes risk assessments, security controls, external service provider engagement, employee training, and an incident response plan[136] - The board of directors has primary responsibility for cybersecurity oversight, receiving reports from the Director of Information Technology, with the Audit Committee annually reviewing security policies and internal controls[140][141] - As of the report date, the company does not believe any cybersecurity threats have materially affected or are reasonably likely to materially affect its business, operations, or financial condition[138] Item 2. Properties The Glimpse Group maintains leased offices in New York, New York (lease expiring December 31, 2025), Ashburn, Virginia (for BLI operations, expiring April 2026, expected to renew), and Richardson, Texas (nominal lease expiring November 2026). Current facilities are deemed adequate for ongoing needs, with potential for additional facilities if expansion occurs - The company's headquarters in New York, NY, has a lease expiring December 31, 2025, with renewal status undetermined[143] - Other leased properties include an office in Ashburn, VA, for Brightline Interactive, LLC (BLI) operations, expiring April 2026 (expected to renew), and a nominal lease in Richardson, TX, expiring November 2026[144] - Current leased facilities are considered adequate for present and future needs, with potential for additional facilities if geographical expansion requires it[144] Item 3. Legal Proceedings The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or results of operations. However, litigation, regardless of outcome, can negatively impact the company due to costs and diversion of management resources - The company is not currently a party to or aware of any legal proceedings that are believed to have a material adverse effect on its business, financial condition, or results of operations[145] - Litigation, regardless of outcome, can have an adverse impact due to defense and settlement costs, and diversion of management resources[145] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Not applicable[146] PART II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the Nasdaq Capital Market under 'VRAR'. As of September 22, 2025, there were 100 holders of record. The company reported recent sales of unregistered securities for compensation and vendor expenses totaling $14,218 for 11,750 shares in Q4 FY2025. No equity securities were purchased by the issuer or affiliates. The company has never paid cash dividends and intends to retain earnings for business development, but has a discretionary policy to distribute a majority of net proceeds from significant entity sales (over $10 million) or 10% of consolidated net income, subject to board approval and certain conditions - The company's common stock is traded on the Nasdaq Capital Market under the symbol 'VRAR' since July 1, 2021[148] - As of September 22, 2025, there were 100 holders of record for the common stock[149] Recent Sales of Unregistered Securities (Q4 FY2025) | Category | Number of Shares | Value of Shares ($) | | :----------------------- | :--------------- | :------------------ | | Compensation and vendor expense | 11,750 | 14,218 | | Total | 11,750 | 14,218 | - The company has never declared or paid cash dividends and intends to retain all available funds and future earnings for business development[153] - A discretionary dividend policy allows for distribution of no less than 85% of after-tax net proceeds from the sale of an entity's business (if over $10 million) or 10% of consolidated net income, subject to board approval and specific conditions[154][155] Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the fiscal years ended June 30, 2025 and 2024. The Glimpse Group, an immersive technology company, strategically shifted its focus to Spatial Computing, Cloud, and AI-driven solutions in FY2024. The company reported a 20% increase in total revenue to $10.53 million in FY2025, primarily from new Spatial Core customers, and a significant improvement in net loss from $6.39 million in FY2024 to $2.55 million in FY2025. Operating expenses decreased by 21%, driven by the strategic shift and divestitures. Liquidity improved significantly, with cash and cash equivalents increasing to $6.83 million by June 30, 2025, supported by a $6.79 million net proceeds from a securities purchase agreement Company Overview The Glimpse Group is an immersive technology company focused on enterprise Virtual Reality (VR), Augmented Reality (AR), and Spatial Computing software and services. It operates an ecosystem of entities to simplify industry challenges, achieve scale, and provide diversified investment opportunities. In fiscal year 2024, the company underwent a strategic shift to focus on Spatial Computing, Cloud, and AI-driven solutions, particularly its 'Spatial Core' product, targeting B2B and B2B2C segments across various industry verticals - The Glimpse Group is an Immersive technology company providing enterprise-focused VR, AR, and Spatial Computing software and services[159] - The company's ecosystem model aims to simplify challenges in the emerging Immersive technology industry, create scale, build operational efficiencies, and enhance go-to-market synergies[160] - In fiscal year 2024, the company shifted its business focus to immersive technology solutions primarily driven by Spatial Computing, Cloud, and AI, including its 'Spatial Core' product[162] - The company targets a wide array of industry verticals and focuses primarily on B2B and B2B2C segments, remaining hardware agnostic[161] Critical Accounting Policies and Estimates and Recent Accounting Pronouncements The company's financial statements are prepared under GAAP, requiring significant management estimates for areas like allowance for doubtful accounts, stock options, revenue recognition, business combinations, and impairment of assets. Key policies include consolidating wholly-owned entities, recording acquired assets and liabilities at fair value, amortizing intangible assets over their useful lives, and testing goodwill for impairment annually. Revenue is recognized when performance obligations are satisfied, disaggregated into Software Services, Software License/SaaS, and Royalty Income. Stock-based compensation is expensed based on grant date fair values, and R&D costs are expensed as incurred. The company is evaluating ASU 2023-09 for income tax disclosure improvements, effective July 1, 2025 - Consolidated financial statements are prepared in accordance with GAAP, requiring estimates for valuation of allowance for doubtful accounts, stock options, revenue recognition, business combinations, contingent consideration, fair value of intangible assets, and goodwill impairment[164][166][167] - Goodwill is tested annually for impairment, and intangible assets are amortized using the straight-line method over their estimated useful lives[170][171] - Revenue is disaggregated into Software Services, Software License/SaaS, and Royalty Income, recognized when performance obligations are satisfied and collection is reasonably assured[178][179][184] - Employee stock-based compensation is recognized based on grant date fair values using the Black-Scholes Merton method and amortized over the requisite period[189][190] - Research and development expenses are expensed as incurred due to the emerging industry and uncertain market environment[191] - The company is evaluating ASU 2023-09, effective July 1, 2025, for improvements to income tax disclosures[193] Highlights The Glimpse Group reported a 20% increase in total revenue to $10.53 million in FY2025, primarily driven by new Spatial Core customers, despite a decrease in Software License revenue due to the QReal divestiture. Gross profit margin improved to 68%. Total operating expenses decreased by 21% to $9.86 million, largely due to reductions in R&D, G&A, and S&M expenses following the strategic shift and divestitures, and a significant decrease in amortization and impairment charges. The net loss improved by 60% to $2.55 million in FY2025 Summary P&L (in millions) | Metric | FY2025 ($) | FY2024 ($) | Change ($) | Change (%) | | :------------------------- | :--------- | :--------- | :--------- | :--------- | | Revenue | 10.53 | 8.80 | 1.73 | 20% | | Cost of Goods Sold | 3.41 | 2.94 | 0.47 | 16% | | Gross Profit | 7.12 | 5.86 | 1.26 | 22% | | Total Operating Expenses | 9.86 | 12.47 | (2.61) | -21% | | Loss from Operations | (2.74) | (6.61) | 3.87 | 59% | | Other Income | 0.19 | 0.22 | (0.03) | -14% | | Net Loss | (2.55) | (6.39) | 3.84 | 60% | Revenue Breakdown (in millions) | Revenue Category | FY2025 ($) | FY2024 ($) | Change ($) | Change (%) | | :---------------------------- | :--------- | :--------- | :--------- | :--------- | | Software Services | 10.00 | 8.13 | 1.87 | 23% | | Software License/SaaS | 0.51 | 0.67 | (0.16) | -24% | | Royalty Income | 0.02 | - | 0.02 | 100% | | Total Revenue | 10.53 | 8.80 | 1.73 | 20% | - Gross profit margin increased by 1% to 68% in FY2025, reflecting increased margin on Spatial Core revenue due to less reliance on third-party vendors[199] Operating Expenses (in millions) | Expense Category | FY2025 ($) | FY2024 ($) | Change ($) | Change (%) | | :---------------------------------------- | :--------- | :--------- | :--------- | :--------- | | Research and development expenses | 3.49 | 5.45 | (1.96) | -36% | | General and administrative expenses | 3.64 | 4.29 | (0.65) | -15% | | Sales and marketing expenses | 2.20 | 2.82 | (0.62) | -22% | | Amortization of acquisition intangible assets | 0.43 | 1.24 | (0.81) | -65% | | Goodwill impairment | - | 0.38 | (0.38) | -100% | | Intangible asset impairment | - | 2.56 | (2.56) | -100% | | Change in fair value of acquisition contingent consideration | 0.10 | (4.27) | 4.37 | -102% | | Total Operating Expenses | 9.86 | 12.47 | (2.61) | -21% | - Net loss improved by approximately $3.84 million (60%) in FY2025, driven by increased revenue/gross profit and expense reductions from the Strategic Shift and divestitures[209] Non-GAAP Financial Measures The company uses non-GAAP financial measures, specifically Adjusted EBITDA, to evaluate operating performance and facilitate period-to-period comparisons by excluding non-operational items. Adjusted EBITDA loss significantly improved to $0.87 million in FY2025 from $4.63 million in FY2024, reflecting increased revenue, gross profit, and expense reductions from the strategic shift and divestitures - Adjusted EBITDA is a non-GAAP financial measure used by management to evaluate core operating results by removing the impact of non-operational items[210][212] Reconciliation of Net Loss to Adjusted EBITDA Loss (in millions) | Metric | FY2025 ($) | FY2024 ($) | | :-------------------------------------------- | :--------- | :--------- | | Net loss | (2.55) | (6.39) | | Depreciation and amortization | 0.51 | 1.36 | | EBITDA loss | (2.04) | (5.03) | | Stock based compensation expenses | 0.99 | 2.28 | | Loss on subsidiary divestiture | 0.11 | - | | Gain on lease termination | (0.03) | - | | Change in fair value of acquisition contingent consideration | 0.10 | (4.27) | | Intangible asset impairment | - | 2.94 | | Change in fair value of accrued performance bonus | - | (0.55) | | Adjusted EBITDA loss | (0.87) | (4.63) | - Adjusted EBITDA loss improved from $4.63 million in FY2024 to $0.87 million in FY2025, driven by increased revenue/gross profit and expense reductions from the Strategic Shift and divestitures[215] Liquidity and Capital Resources The company's liquidity significantly improved in FY2025, with net cash used in operating activities decreasing by 95% to $0.27 million. Net cash provided by financing activities increased by 129% to $6.80 million, primarily from a securities purchase agreement. Cash and cash equivalents at year-end increased by 271% to $6.83 million. The company believes it is sufficiently funded for its operational plan beyond the next 12 months, with no outstanding debt or preferred stock as of June 30, 2025 Cash Flow Summary (in millions) | Cash Flow Category | FY2025 ($) | FY2024 ($) | Change ($) | Change (%) | | :-------------------------------------- | :--------- | :--------- | :--------- | :--------- | | Net cash used in operating activities | (0.27) | (5.21) | 4.94 | 95% | | Net cash used in investing activities | (1.54) | (1.53) | (0.01) | -1% | | Net cash provided by financing activities | 6.80 | 2.97 | 3.83 | 129% | | Net increase (decrease) in cash and cash equivalents | 4.99 | (3.77) | 8.76 | NA | | Cash and cash equivalents, end of year | 6.83 | 1.84 | 4.99 | 271% | - The significant improvement in net cash used in operating activities is driven by increased revenue/gross profit and expense reductions from the Strategic Shift and divestitures[217] - Financing activities in FY2025 were primarily boosted by $6.80 million in net proceeds from a securities purchase agreement[219] - As of June 30, 2025, the company had $6.83 million in cash and cash equivalents, no outstanding debt obligations, and no issued preferred stock[220][221][222] - The company believes it is sufficiently funded to meet its operational plan and future obligations beyond the next 12 months[338] Emerging Growth Company and Smaller Reporting Company Status The Glimpse Group is classified as an 'emerging growth company' and a 'smaller reporting company,' allowing it to take advantage of reduced reporting and disclosure requirements. This includes exemptions from auditor attestation for internal controls, reduced executive compensation disclosures, and an extended transition period for new accounting standards. While these exemptions reduce compliance costs, they may make the common stock less attractive to some investors, potentially affecting trading market activity and stock price volatility - The company is an 'emerging growth company' and 'smaller reporting company,' benefiting from reduced reporting and disclosure requirements under the JOBS Act[223][226] - Exemptions include auditor attestation for internal controls, reduced executive compensation disclosures, and an extended transition period for new accounting standards[223][224] - The company has elected to use the extended transition period for complying with new or revised accounting standards, which may make its financial statements not comparable to other public companies[224] - Reliance on these exemptions could make the common stock less attractive to investors, potentially leading to a less active trading market and more volatile stock price[227] Item 7A. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company - Not applicable[228] Item 8. Financial Statements and Supplementary Data This item indicates that all required financial information is attached at the end of the report, starting on page F-1, and is incorporated by reference - All financial information required by this Item is attached at the end of this Report beginning on page F-1 and is incorporated herein by reference[229] Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Hoberman & Lesser, CPAs LLP resigned as the independent registered public accounting firm effective December 20, 2023. During the fiscal years ended June 30, 2023, and the subsequent interim period through December 20, 2023, there were no disagreements or reportable events between the company and Hoberman regarding accounting principles, financial disclosure, or auditing scope - Hoberman & Lesser, CPAs LLP resigned as the independent registered public accounting firm effective December 20, 2023[230] - There were no disagreements or reportable events with Hoberman regarding accounting principles, financial statement disclosure, or auditing scope during the specified periods[231] Item 9A. Controls and Procedures The company's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures as of June 30, 2025, concluding they were effective. They also assessed the effectiveness of internal control over financial reporting based on the COSO 2013 framework and concluded it was effective as of June 30, 2025. No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025 - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of June 30, 2025[233] - Management also concluded that internal control over financial reporting was effective as of June 30, 2025, based on the COSO 2013 framework[235] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[236] Item 9B. Other Information This section states that there is no other information to report - None[237] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This section states that disclosures regarding foreign jurisdictions that prevent inspections are not applicable to the company - Not applicable[238] PART III Item 10. Directors, Executive Officers and Corporate Governance This section details the executive officers and directors of The Glimpse Group, including their ages and positions as of September 30, 2025. The board is divided into three classes with staggered three-year terms. Key executive officers include Lyron Bentovim (President, CEO, Chairman), Maydan Rothblum (CFO, COO), David J. Smith (Chief Creative Officer), and Tyler Gates (Chief Futurist Officer). The board has established four standing committees: Audit, Compensation, Nominating and Corporate Governance, and Strategy, with specific independent directors serving on each. The company has a written code of ethics and business conduct and complies with Section 16(a) reporting requirements Executive Officers and Directors (as of September 30, 2025) | Name | Age | Position | | :----------------- | :-- | :-------------------------------------------------------------------- | | Lyron Bentovim | 56 | President, Chief Executive Officer, Director and Chairman of the Board | | Maydan Rothblum | 52 | Chief Financial Officer, Chief Operating Officer, Secretary and Director | | David J. Smith | 49 | Chief Creative Officer | | Tyler Gates | 39 | Chief Futurist Officer | | Ian Charles | 57 | Independent Director | | Jeff Enslin | 58 | Lead Independent Director | | Lemuel Amen | 59 | Independent Director | | Alexander Ruckdaeschel | 53 | Independent Director | | Tamar Elkeles | 56 | Independent Director | - The board of directors is divided into three classes, with each class elected to a three-year term[242] - The company has established four standing committees: Audit, Compensation, Nominating and Corporate Governance, and Strategy[259] - The Audit Committee consists of Ian Charles (Chair), Lemuel Amen, and Jeff Enslin, all determined to be independent, with Ian Charles identified as an 'audit committee financial expert'[260] - The company has adopted a written code of ethics and business conduct applicable to its directors, officers, and employees[268] - All executive officers, directors, and greater than ten-percent beneficial owners complied with Section 16(a) reporting requirements for the year ended June 30, 2025[271] Item 11. Executive Compensation This section outlines the compensation for the named executive officers (Lyron Bentovim, Maydan Rothblum, and David J. Smith) for fiscal years 2025 and 2024, primarily consisting of base salaries and performance bonuses. Directors do not receive cash compensation but are reimbursed for expenses and receive equity-based compensation. The company's Equity Incentive Plan, administered by the compensation committee, allows for various equity awards, with approximately 7.40 million shares available for issuance as of June 30, 2025. Total stock option-based expense for employees and board members was $0.93 million in FY2025, down from $1.61 million in FY2024 Summary Compensation Table for Named Executive Officers | Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Award ($) | Total ($) | | :-------------------------------------- | :---------- | :--------- | :-------- | :--------------- | :--------------- | :-------- | | Lyron Bentovim, President and CEO | 2025 | 259,133 | 120,000 | - | - | 379,133 | | | 2024 | 265,000 | - | - | 69,638 | 334,638 | | Maydan Rothblum, CFO and COO | 2025 | 246,833 | 100,000 | - | - | 346,833 | | | 2024 | 235,000 | - | - | 357,746 | 592,746 | | David J Smith, Chief Creative Officer | 2025 | 210,000 | 10,000 | - | - | 220,000 | | | 2024 | 210,000 | - | - | 49,686 | 259,686 | - Executive employment agreements specify annual base cash salaries and eligibility for performance bonuses[278][279][280] - The Equity Incentive Plan, approved in October 2016, authorizes the grant of options and other equity awards to eligible persons, with approximately 13.17 million common shares reserved and 7.40 million available for issuance as of June 30, 2025[281][282] Director Equity-Based Compensation (FY2025) | Name | Fiscal Year | Options ($) | Stock Awards ($) | Total ($) | | :------------------- | :---------- | :---------- | :--------------- | :-------- | | Jeffrey Enslin | 2025 | 81,788 | - | 81,788 | | Lemuel Amen | 2025 | 81,788 | - | 81,788 | | Alexander Ruckdaeschel | 2025 | 81,788 | - | 81,788 | | Ian Charles | 2025 | 81,788 | - | 81,788 | | Tamar Elkeles | 2025 | 81,788 | - | 81,788 | Stock Option-Based Expense | Expense Category | FY2025 ($) | FY2024 ($) | | :-------------------------------- | :--------- | :--------- | | Research and development expenses | 210,498 | 731,638 | | General and administrative expenses | 394,039 | 346,309 | | Sales and marketing expenses | 97,520 | 349,377 | | Board option expense | 229,389 | 179,950 | | Total | 931,446| 1,607,274| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. This section details the beneficial ownership of the company's common stock by directors, executive officers, and significant shareholders as of September 22, 2025. As of this date, 21,066,006 shares of common stock were outstanding. Lyron L. Bentovim is the largest individual beneficial owner among directors and officers with 5.43%, followed by D.J. Smith with 4.89%. All officers and directors as a group beneficially own 16.69% of the common stock - Beneficial ownership information is provided as of September 22, 2025, based on 21,066,006 shares of common stock outstanding[293] Security Ownership of Certain Beneficial Owners and Management | Name of Beneficial Owner | Common Stock Beneficially Owned | Percentage of Common Stock Owned | | :-------------------------------------------------------- | :------------------------------ | :------------------------------- | | Lyron L. Bentovim (President, CEO, Chairman) | 1,149,102 | 5.43% | | Maydan Rothblum (COO, CFO, Secretary, Treasurer, Director) | 652,345 | 3.07% | | D.J. Smith (Chief Creative Officer and Director) | 1,030,708 | 4.89% | | Jeff Enslin (Director) | 369,780 | 1.75% | | Lemuel Amen (Director) | 182,497 | 0.86% | | Alexander Ruckdaeschel (Director) | 83,264 | 0.39% | | Ian Charles (Director and Chair of Audit Committee) | 78,850 | 0.37% | | Tamar Elkeles (Director) | 54,375 | 0.26% | | All officers and directors (8 persons) | 3,600,921 | 16.69% | - Beneficial ownership includes shares issuable upon exercise of options, warrants, or other rights exercisable within 60 days of September 30, 2025[293] Item 13. Certain Relationships and Related Transactions, and Director Independence This section confirms that there were no related party transactions to disclose. The board of directors has affirmatively determined that five of its members (Ian Charles, Lemuel Amen, Alexander Ruckdaeschel, Tamar Elkeles, and Jeff Enslin) are independent according to Nasdaq Listing Rules. This determination ensures that a majority of the board and all members of the audit, nominating and corporate governance, and compensation committees meet independence criteria - There were no related party transactions to disclose[297] - The board of directors has determined that Ian Charles, Lemuel Amen, Alexander Ruckdaeschel, Tamar Elkeles, and Jeff Enslin are independent in accordance with Nasdaq Listing Rules[300] - All members of the audit committee, nominating and corporate governance committee, and compensation committee are independent directors[300] Item 14. Principal Accountant Fees and Services This section provides a summary of fees billed by the company's current auditors, Turner, Stone & Company, L.L.P., for professional services during fiscal years 2025 and 2024. Total fees increased from $141,000 in FY2024 to $158,000 in FY2025, primarily due to an increase in audit fees. The audit committee has a policy for pre-approving all audit and permissible non-audit services to ensure auditor independence Principal Accountant Fees and Services | Category | FY2025 ($) | FY2024 ($) | | :-------------------- | :--------- | :--------- | | Audit fees | 128,000 | 108,000 | | Audit fees - benefit plan | 16,000 | 20,000 | | Tax fees | 14,000 | 13,000 | | Total Fees | 158,000| 141,000| - Audit fees represent fees for respective fiscal year audits, including the review of quarterly financial statements[301] - The audit committee has a policy for pre-approving all audit and permissible non-audit services to ensure auditor independence[302] PART IV Item 15. Exhibits and Financial Statement Schedules This section lists the exhibits and financial statement schedules included as part of the report. Financial statements are referenced starting on page F-1, and all financial statement schedules have been omitted as the information is either not applicable, insufficient to require submission, or included within the consolidated financial statements and notes. A detailed index of exhibits, including articles of incorporation, bylaws, employment agreements, and other corporate documents, is provided - Financial statements are included starting on page F-1 of the report[305][308] - Financial statement schedules are omitted because the required information was not applicable, insufficient, or already included in the consolidated financial statements or notes[305] - A list of exhibits is provided, including corporate governance documents, employment agreements, and other regulatory filings[306][307][311] Item 16. Form 10-K Summary This section indicates that there is no Form 10-K summary provided - None[310] Financial Statements Report of Independent Registered Public Accounting Firm Turner, Stone & Company, L.L.P., the independent registered public accounting firm since 2023, issued an unqualified opinion on The Glimpse Group, Inc.'s consolidated financial statements for the years ended June 30, 2025 and 2024. The audit was conducted in accordance with PCAOB standards, assessing risks of material misstatement and evaluating accounting principles and estimates. The firm did not audit internal control over financial reporting - Turner, Stone & Company, L.L.P. issued an unqualified opinion on the consolidated financial statements for the years ended June 30, 2025 and 2024[319] - The audit was conducted in accordance with PCAOB standards, assessing risks of material misstatement and evaluating accounting principles and estimates[321][322] - The firm has served as the company's auditor since 2023 and was not engaged to perform an audit of internal control over financial reporting[321][323] Consolidated Balance Sheets The consolidated balance sheets show an increase in total assets from $15.56 million in FY2024 to $19.28 million in FY2025, primarily driven by a significant increase in cash and cash equivalents. Total liabilities decreased from $4.02 million to $2.34 million, mainly due to a reduction in long-term contingent consideration for acquisitions and lease liabilities. Stockholders' equity increased from $11.54 million to $16.94 million, reflecting additional paid-in capital from securities issuances despite an accumulated deficit of $65.59 million Consolidated Balance Sheets Summary (as of June 30, in $) | ASSETS | 2025 | 2024 | | :-------------------------------------- | :----------- | :----------- | | Cash and cash equivalents | 6,832,725 | 1,848,295 | | Accounts receivable | 840,551 | 723,032 | | Total current assets | 8,172,657 | 3,520,289 | | Equipment and leasehold improvements, net | 54,898 | 167,325 | | Right-of-use assets, net | 122,094 | 452,808 | | Intangible assets, net | 60,717 | 487,867 | | Goodwill | 10,857,600 | 10,857,600 | | Total assets | 19,279,066 | 15,558,603 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Accounts payable | 228,371 | 181,668 | | Accrued liabilities | 446,896 | 340,979 | | Total current liabilities | 2,338,472 | 2,427,598 | | Contingent consideration for acquisitions, net of current portion | - | 1,413,696 | | Lease liabilities, net of current portion | 4,704 | 178,824 | | Total liabilities | 2,343,176 | 4,020,118 | | Common Stock | 21,056 | 18,158 | | Additional paid-in capital | 82,506,758 | 74,559,600 | | Accumulated deficit | (65,591,924) | (63,039,273) | | Total stockholders' equity | 16,935,890 | 11,538,485 | | Total liabilities and stockholders' equity | 19,279,066 | 15,558,603 | - Cash and cash equivalents increased significantly from $1.85 million in FY2024 to $6.83 million in FY2025[325] - Total liabilities decreased by approximately $1.68 million, primarily due to the reduction in long-term contingent consideration for acquisitions and lease liabilities[325] - Stockholders' equity increased by approximately $5.4 million, driven by an increase in additional paid-in capital[325] Consolidated Statements of Operations The consolidated statements of operations show a 20% increase in total revenue to $10.53 million in FY2025, primarily from Software Services. Gross profit increased by 22% to $7.12 million. Total operating expenses decreased by 21% to $9.86 million, largely due to significant reductions in R&D, sales and marketing, and amortization/impairment expenses. The net loss improved by 60% from $6.39 million in FY2024 to $2.55 million in FY2025. Basic and diluted net loss per share improved from $(0.38) to $(0.13) Consolidated Statements of Operations Summary (for the years ended June 30, in $) | Metric | 2025 | 2024 | | :-------------------------------------------- | :----------- | :----------- | | Software services | 9,996,491 | 8,130,515 | | Software license/software as a service | 503,734 | 673,684 | | Royalty income | 27,700 | - | | Total Revenue | 10,527,925 | 8,804,199 | | Cost of goods sold | 3,407,946 | 2,941,460 | | Gross profit | 7,119,979 | 5,862,739 | | Research and development expenses | 3,494,731 | 5,455,612 | | General and administrative expenses | 3,636,266 | 4,292,001 | | Sales and marketing expenses | 2,201,754 | 2,819,668 | | Amortization of acquisition intangible assets | 427,150 | 1,241,228 | | Goodwill impairment | - | 379,038 | | Intangible asset impairment | - | 2,563,331 | | Change in fair value of acquisition contingent consideration | 102,412 | (4,272,080) | | Total operating expenses | 9,862,313 | 12,478,798 | | Loss from operations before other income | (2,742,334) | (6,616,059) | | Interest income | 189,683 | 221,764 | | Net loss | (2,552,651)| (6,394,295)| | Basic and diluted net loss per share | (0.13) | (0.38) | - Total revenue increased by 20% year-over-year, primarily driven by a 23% increase in Software Services revenue[328] - Net loss improved by 60% in FY2025, reflecting increased gross profit and a 21% reduction in total operating expenses[328] - Weighted-average common shares outstanding for basic and diluted net loss per share increased to 19,633,374 in FY2025 from 16,681,234 in FY2024[328] Consolidated Statements of Stockholders' Equity The consolidated statements of stockholders' equity show an increase in total stockholders' equity from $11.54 million at June 30, 2024, to $16.94 million at June 30, 2025. This was primarily driven by $6.78 million in net proceeds from a securities purchase agreement and $0.18 million from the exercise of warrants, contributing to additional paid-in capital. The accumulated deficit increased from $63.04 million to $65.59 million due to the net loss incurred in FY2025 Consolidated Statements of Stockholders' Equity Summary (for the years ended June 30, in $) | Metric | Shares (2025) | Amount (2025) | Additional Paid-In Capital (2025) | Accumulated Deficit (2025) | Total (2025) | | :-------------------------------------- | :------------ | :------------ | :-------------------------------- | :------------------------- | :----------- | | Balance as of July 1, 2023 | 14,701,929 | 14,702 | 67,854,108 | (56,644,978) | 11,223,832 | | Common stock and stock option based compensation expense | 37,000 | 37 | 754,717 | - | 754,754 | | Common stock issued in Securities Purchase Agreement, net | 1,990,000 | 1,990 | 6,783,562 | - | 6,785,552 | | Common stock issued for exercise of warrants | 860,000 | 860 | 174,900 | - | 175,760 | | Net loss | - | - | - | (2,552,651) | (2,552,651) | | Balance as of June 30, 2025 | 21,055,506| 21,056 | 82,506,758 | (65,591,924) | 16,935,890 | - Total stockholders' equity increased from $11.54 million in FY2024 to $16.94 million in FY2025[331] - Additional paid-in capital increased significantly due to net proceeds from securities purchase agreements ($6.78 million) and warrant exercises ($0.18 million)[331] - The accumulated deficit grew from $63.04 million to $65.59 million, reflecting the net loss for the year[331] Consolidated Statements of Cash Flows The consolidated statements of cash flows show a substantial improvement in cash from operating activities, with net cash used decreasing by 95% to $0.27 million in FY2025. Net cash provided by financing activities increased by 129% to $6.80 million, primarily from proceeds of a securities purchase agreement and warrant exercises. Net cash used in investing activities remained stable at approximately $1.54 million, mainly for contingent consideration payments. Overall, cash and cash equivalents increased by $4.98 million, ending FY2025 at $6.83 million Consolidated Statements of Cash Flows Summary (for the year ended June 30, in $) | Cash Flow Category | 2025 | 2024 | | :-------------------------------------- | :----------- | :----------- | | Net cash used in operating activities | (273,774) | (5,209,847) | | Net cash used in investing activities | (1,542,508) | (1,529,442) | | Net cash provided by financing activities | 6,800,712 | 2,968,501 | | Net change in cash and cash equivalents | 4,984,430 | (3,770,788) | | Cash and cash equivalents, end of year | 6,832,725 | 1,848,295 | - Net cash used in operating activities significantly improved, decreasing by 95% from $5.21 million in FY2024 to $0.27 million in FY2025[333] - Net cash provided by financing activities increased by 129%, primarily due to $6.79 million in net proceeds from a securities purchase agreement and $0.18 million from warrant exercises[333] - Cash and cash equivalents at the end of the year increased by $4.98 million, reaching $6.83 million[333] Notes to Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies, financial instruments, and specific transactions. Key areas include the company's business description as an immersive technology provider, its improved liquidity position with $6.83 million in cash, and critical accounting estimates. Significant events include the divestiture of QReal and Glimpse Turkey, resulting in a non-cash gain offset by a loan loss reserve, and the impairment of goodwill and intangible assets related to PulpoAR and BLI's strategic shift. The notes also detail equity transactions, including securities purchase agreements and stock option activity, and provide information on earnings per share, income taxes, and lease commitments NOTE 1. DESCRIPTION OF BUSINESS The Glimpse Group, Inc. is a Nevada-incorporated immersive technology company, founded in June 2016, providing VR, AR, and Spatial Computing software and services. Headquartered in the United States, its business model focuses on building scale and a robust ecosystem in this emerging industry. The company completed its IPO on the Nasdaq Capital Market in July 2021 - The Glimpse Group, Inc. is an immersive technology company providing Virtual Reality (VR), Augmented Reality (AR), and Spatial Computing software and services, incorporated in Nevada in June 2016[335] - The company's business model aims to build scale and a robust ecosystem in the emerging immersive technology industry[336] - The company completed its initial public offering (IPO) on the Nasdaq Capital Market in July 2021 under the ticker VRAR[336] NOTE 2. LIQUIDITY AND CAPITAL RESOURCES The company's liquidity significantly improved with $6.79 million in net cash proceeds from a Securities Purchase Agreement in December 2024 and January 2025. As of June 30, 2025, cash and cash equivalents totaled $6.83 million, with working capital of $5.83 million. Net cash used in operating activities for FY2025 was $0.27 million, a substantial improvement. The company believes it is sufficiently funded to meet operational plans and future obligations beyond the next 12 months, operating on a going concern basis - The company completed a Securities Purchase Agreement in December 2024 and January 2025, generating $6.79 million in net cash proceeds[337] Liquidity and Capital Resources (as of June 30, 2025, in $) | Metric | Amount | | :----------------------------------- | :---------- | | Cash and cash equivalents | 6,832,725 | | Working capital | 5,830,000 | | Net cash used in operating activities (FY2025) | (273,774) | - The company believes it is sufficiently funded to meet its operational plan and future obligations beyond the 12-month period from the date of financial statement issuance[338] - The consolidated financial statements are prepared assuming the company will continue as a going concern[339] NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note details the company's significant accounting policies, including GAAP basis presentation, consolidation of wholly-owned entities, and the use of estimates for various valuations. It covers policies for cash and cash equivalents, accounts receivable (with customer concentration noted), business combinations (recording assets/liabilities at fair value), intangible assets (amortized straight-line), goodwill (tested annually for impairment), and long-lived assets (reviewed for impairment). Fair value measurements are categorized into a three-level hierarchy. Revenue recognition is based on satisfying performance obligations across Software Services, Software License/SaaS, and Royalty Income. Employee stock-based compensation is valued using Black-Scholes, and R&D costs are expensed as incurred. Income taxes are recorded using the asset and liability method with a valuation allowance. The company adopted ASU 2023-07 and is evaluating ASU 2023-09 - Financial statements are prepared in accordance with GAAP, consolidating wholly-owned entities, and relying on management estimates for various valuations[340][341][342][343] - Customer concentration risk is noted, with two customers accounting for approximately 61% of total gross revenues in FY2025 and one customer for 46% of accounts receivable[347][348] - Intangible assets are amortized straight-line, goodwill is tested annually for impairment, and long-lived assets are reviewed for impairment when circumstances indicate[352][354][355] - Revenue is recognized across Software Services, Software License/SaaS, and Royalty Income, based on satisfying distinct performance obligations[366][367] - Employee stock-based compensation is expensed based on Black-Scholes fair values, and R&D costs are expensed as incurred[390][391] - The company adopted ASU 2023-07 (Improvements to Reportable Segment Disclosures) and is evaluating ASU 2023-09 (Improvements to Income Tax Disclosures), effective July 1, 2025[395][396] NOTE 4. SEGMENT AND RELATED INFORMATION The Glimpse Group operates as a single reportable segment: immersive technology software development and commercialization. The Chief Executive Officer, as the chief operating decision maker (CDOM), reviews financial information on a consolidated basis to manage resources and evaluate performance. All business activities and revenue generation are primarily in the United States, and accounting policies are consistent with consolidated financial statements - The company has one reportable segment: Immersive technology software development and commercialization, managed on a consolidated basis[398] - The Chief Executive Officer acts as the chief operating decision maker (CDOM), reviewing consolidated financial information for resource allocation and performance evaluation[399] - Revenue is primarily derived from customers in the United States, and accounting policies are consistent across the single reportable segment and consolidated financial statements[398][399] NOTE 5. QREAL AND GLIMPSE TURKEY DIVESTITURE Effective October 1, 2024, The Glimpse Group divested QReal, LLC and Glimpse Turkey in a management buyout as part of a strategic realignment around Spatial Core. The company retains full revenue from QReal's largest customer until $1.35 million net cash is collected, followed by an 18-month revenue share. The divestiture yielded a $1.56 million senior secured convertible note and a minority equity stake in the new entity, though a $1.50 million loan loss reserve was recorded due to collectability uncertainty. A non-cash gain of $1.40 million on divestiture was offset by this reserve. Revenue from the divested business not retained was $0.15 million in FY2025 and $0.67 million in FY2024 - Effective October 1, 2024, the company divested QReal, LLC and Glimpse Turkey in a management buyout, aligning with its Spatial Core strategy[400] - The company retains full revenue from QReal's largest customer until $1.35 million net cash is collected, followed by an 18-month revenue share[401] - The divestiture resulted in a $1.56 million senior secured convertible note and a 10% equity stake in the new entity, but a $1.50 million loan loss reserve was recorded due to uncertain collectability[402][403] - A non-cash gain on divestiture of approximately $1.40 million was recorded, fully offset by the loan loss reserve[403] - Revenue from the divested business not being retained was approximately $0.15 million in FY2025 and $0.67 million in FY2024[404] NOTE 6. IMPAIRMENT OF GOODWILL AND LONG-LIVED ASSETS In December 2023, the company divested PulpoAR, LLC due to poor revenue performance and non-strategic alignment, resulting in a $0.90 million write-off of net assets (including $0.38 million goodwill and $0.52 million intangible assets). A non-cash gain of $1.0 million on divestiture was fully offset by a loan loss reserve for a $1.0 million note received. Additionally, as of June 30, 2024, Brightline Interactive, LLC's (BLI) intangible assets related to legacy customer relationships were fully impaired, leading to a $2.04 million non-cash expense, driven by a strategic shift to Spatial Computing and a significant turnover in its customer base - The divestiture of PulpoAR, LLC in December 2023 led to a $0.90 million write-off of net assets, including $0.38 million in goodwill and $0.52 million in intangible assets[409][410] - A non-cash gain of $1.0 million on the PulpoAR divestiture was fully offset by a loan loss reserve for a $1.0 million note received, due to remote collectability[411] - As of June 30, 2024, BLI's intangible assets related to legacy customer relationships were fully impaired, resulting in a $2.04 million non-cash expense[412][413] - This impairment was driven by BLI's strategic shift to Spatial Computing, Cloud, and AI, leading to a significant turnover in its customer base[412] NOTE 7. GOODWILL AND INTANGIBLE ASSETS Goodwill remained stable at $10.86 million from FY2024 to FY2025, with the 2024 balance reflecting the write-off of PulpoAR's goodwill. Intangible assets, net, decreased significantly from $0.49 million in FY2024 to $0.06 million in FY2025. This reduction is primarily due to the full impairment of BLI's customer relationships in FY2024 and ongoing amortization. The remaining intangible asset amortization expense for FY2026 is estimated at $60,717 Goodwill Composition (as of June 30, in $) | Entity | 2025 | 2024 | | :----- | :----------- | :----------- | | XRT | 300,000 | 300,000 | | BLI | 10,557,600 | 10,557,600 | | PulpoAR| - | - | | Total| 10,857,600 | 10,857,600 | Intangible Assets, Net (as of June 30, in $) | Intangible Assets | 2025 | 2024 | | :---------------- | :------- | :------- | | Technology | 60,717 | 487,867 | | Total, net | 60,717 | 487,867| - Intangible asset amortization expense decreased from $1.24 million in FY2024 to $0.43 million in FY2025[417] - Estimated intangible asset amortization expense for FY2026 is $60,717[417] NOTE 8. FINANCIAL INSTRUMENTS This note details the fair value measurements of financial instruments. Cash equivalents, primarily money market funds, are classified as Level 1. Contingent consideration liabilities related to acquisitions are categorized as Level 3, valued using unobservable inputs like financial forecasts and discount rates. For FY2025, the change in fair value of contingent consideration for BLI was a $0.14 million non-cash expense, while for XR Terra (XRT) it was a $0.03 million non-cash gain. As of June 30, 2025, the remaining contingent consideration for BLI is $1.48 million, payable in cash, with no future contingent consideration for S5D or XRT Cash and Cash Equivalents (as of June 30, in $) | Category | 2025 | 2024 | | :---------------- | :---------- | :---------- | | Cash | 130,288 | 109,659 | | Money market funds | 6,702,437 | 1,738,636 | | Total | 6,832,725 | 1,848,295 | - Contingent consideration liabilities are categorized as Level 3, valued using unobservable inputs such as financial forecasts and discount rates[420] - For FY2025, the change in fair value of contingent consideration was a $0.14 million non-cash expense for BLI and a $0.03 million non-cash gain for XRT[424][425] Contingent Consideration for Acquisitions (as of June 30, in $) | Entity | 2025 | 2024 | | :----- | :----------- | :----------- | | BLI | 1,483,583 | 2,845,457 | | XRT | - | 35,714 | | S5D | - | - | | Total| 1,483,583 | 2,881,171 | - As of June 30, 2025, the remaining contingent consideration for the BLI acquisition is $1.5 million cash, payable in calendar year 2025, representing the final payment[222][423] NOTE 9. DEFERRED COSTS AND DEFERRED REVENUE Deferred costs decreased from $170,781 in FY2024 to $48,971 in FY2025, while deferred revenue decreased from $72,788 to $52,576