December 3, 2022

The objective of this Management’s Discussion and Analysis is to allow investors to view the Company from management’s perspective, considering items that would have a material impact on future operations. The following discussion and analysis of the results of operations and financial condition of The Glimpse Group, Inc. and its wholly owned subsidiaries (collectively referred to as “Glimpse” or the “Company”) as of and for the years ended June 30, 2022 and 2021 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Annual Report. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us”, “we”, “our” and similar terms refer to the Company. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Annual Report, and other factors that we may not know.
We are a Virtual (“VR”) and Augmented (“AR”) Reality platform company, comprised of a diversified group of wholly-owned VR and AR companies, providing enterprise-focused software, services and solutions. We believe that we offer significant exposure to the rapidly growing and potentially transformative VR and AR immersive technology markets, while mitigating downside risk via our diversified model and ecosystem.
The Company was incorporated as The Glimpse Group, Inc. in the State of Nevada, on June 15, 2016 and is headquartered in New York, New York. Glimpse currently owns and operates numerous subsidiary companies (“Subsidiary Companies”, “Subsidiaries”): Adept Reality, LLC (dba Adept XR Learning), QReal, LLC (dba QReal), KreatAR, LLC (dba Post Reality), D6 VR, LLC, Immersive Health Group, LLC (dba IHG), Foretell Studios, LLC (dba Foretell Reality), Number 9, LLC (dba Pagoni VR), Early Adopter, LLC, MotionZone, LLC (dba AUGGD), Glimpse Group Yazilim ve ARGE Ticaret Anonim Sirketi (Glimpse Turkey), XR Terra, LLC, Sector 5 Digital, LLC (“S5D”), PuploAR, LLC (a subsidiary company of QReal) and, as of August 1, 2022, Brightline Interactive, LLC (“BLI”). In addition, we own one inactive subsidiary company, In-It VR, LLC (dba Mezmos), which may be reactivated based on need and market conditions and a legal entity in AustraliaGlimpse Group Australia Pty Ltd.
Glimpse’s ecosystem of VR/AR subsidiary companies, collaborative environment and diversified business model aim to simplify the challenges faced by entrepreneurs in the emerging VR/AR industry, potentially improving each subsidiary company’s ability to succeed, while simultaneously providing investors an opportunity to invest directly into the emerging VR/AR industry via a diversified platform.
Leveraging its platform, the Company strives to cultivate and manage the business operations of its VR/AR subsidiary companies, with the goal of allowing each underlying company to better focus on mission-critical endeavors, collaborate with the other subsidiary companies, reduce time to market, optimize costs, improve product quality and leverage joint go-to-market strategies. Subject to operational, market and financial developments and conditions, Glimpse intends to carefully add to its current portfolio of subsidiary companies via a combination of organic expansion and/or outside acquisitions.
Glimpse’s subsidiary companies target a wide array of industry verticals, including but not limited to: Corporate Training, Education, Healthcare, Branding & Marketing, Retail, Financial Services, Food & Hospitality, Media & Entertainment and Social VR group meetings. The Company does not currently target direct-to-consumer (“B2C’) customers, focusing primarily on the business-to-business (“B2B”) and business-to-business-to-consumer (“B2B2C”) segments. In addition, we are hardware agnostic.
We currently have approximately 200 full time employees, primarily software developers, engineers and 3D artists. Of these, approximately 100 are based in the US and 100 internationally (primarily in Turkey).
In January 2020, an outbreak of a new strain of coronavirus, COVID-19, was identified in Wuhan, China. Through the first quarter of 2020, the disease became widespread around the world, and on March 11, 2020, the World Health Organization declared a pandemic.
The COVID-19 pandemic caused significant business and financial markets disruption worldwide and there was significant uncertainty around the duration of this disruption and its ongoing effects on our business. For our business specifically, this primarily manifested itself in prolonged sales cycles which generally increased by several months. In addition, some of our customers put purchase decisions on hold, in particular customers in our hospital and education segments. These have since recovered to varying extents.
We continue to monitor the situation and the effects on our business and operations. While some level of potential uncertainty remains, given the current state of the pandemic our expected revenue growth and current cash balance, we do not expect the impact of COVID-19 to be material to our business and operations.
The following information should be read in conjunction with our Consolidated Financial Statements and related notes contained in this Annual Report.
Critical Accounting Policies and Estimates and Recent Accounting Pronouncements
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). While our significant accounting policies are more fully described in our financial statements, we believe the following accounting policies are the most critical to aid in fully understanding and evaluating this management discussion and analysis.
The consolidated financial statements include the balances of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the accompanying consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The principal estimates relate to the valuation of allowance for doubtful accounts, common stock, stock options, warrants, revenue recognition, cost of goods sold and allocation of the purchase price of assets relating to business combinations.
The results of a business acquired in a business combination are included in the Company’s consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business generally being recorded at their estimated fair values as of the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.
The Company performs valuations of assets acquired and liabilities assumed and allocates the purchase price to its respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed may require management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows. Estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Intangible assets (other than Goodwill)
Intangibles represent the allocation of a portion of an acquisitions purchase price. Intangibles are stated at allocated cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of the related assets. The Company reviews intangibles, being amortized, for impairment when current events indicate that the fair value may be less than the carrying value.
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the acquisition method. Goodwill is not amortized but instead is tested at least annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy, which is based on three levels of inputs, the first two of which are considered observable and the last unobservable, that may be used to measure fair value, is as follows:
? Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
? Level 2 – inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
? Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company classifies its cash equivalents and investments within Level 1 of the fair value hierarchy on the basis of valuations based on quoted prices for the specific securities in an active market.
The Company’s contingent consideration is categorized as Level 3 within the fair value hierarchy. Contingent consideration is recorded within contingent consideration, current and contingent consideration, non-current in the Company’s consolidated balance sheets as of June 30, 2022 and 2021. Contingent consideration has been recorded at its fair values using unobservable inputs and have included using the Monte Carlo simulation option pricing framework, incorporating contractual terms and assumptions regarding financial forecasts, discount rates, and volatility of forecasted revenue. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist.
The Company’s other financial instruments consist primarily of accounts receivable, note receivable, accounts payable, accrued liabilities and other liabilities approximate fair value due to the short-term nature of these instruments. The Company’s convertible debt approximated fair value due to its short-term nature and market rate of interest.
The Company reports its revenues in two categories:
The Company applies the following steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
Revenue is recognized when the Company satisfies its performance obligation under the contract by transferring the promised product to its customer or service is performed and collection is reasonably assured. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A portion of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct. Other contracts can include various services and products which are at times capable of being distinct, and therefore may be accounted for as separate performance obligations.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. As such, revenue is recorded net of returns, allowances, customer discounts, and incentives. Sales taxes and other taxes are excluded from revenues.
For distinct performance obligations recognized at a point in time, any unrecognized portion of revenue and any corresponding unrecognized expenses are presented as deferred revenue/contract liabilities and deferred costs/contract costs, respectively, in the accompanying consolidated balance sheets. Contract assets include cash and equity based payroll costs, and may include payments to consultants and vendors.
For distinct performance obligations recognized over time, the Company records a contract asset (costs in excess of billings) when revenue is recognized prior to invoicing, or a contract liability (billings in excess of costs) when revenue is recognized subsequent to invoicing.
The Company’s contracts with customers may include promises to transfer multiple products/services. Determining whether products/services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Further, judgment may be required to determine the standalone selling price for each distinct performance obligation.
The Company generated revenue by delivering: (i) Software Services, consisting primarily of VR/AR software projects, solutions and consulting services, and (ii) Software Licenses & SaaS, consisting primarily of VR and AR software licenses or SaaS. The Company currently generates its revenues primarily from customers in the United States.
Revenue for a significant portion of Software Services projects and solutions (projects whereby, the development of the project leads to an identifiable asset with an alternative use to the Company) is recognized at the point of time in which the customer obtains control of the project, customer accepts delivery and confirms completion of the project. Certain other Software Services revenues are custom project solutions (projects whereby, the development of the custom project leads to an identifiable asset with no alternative use to the Company, and, in which, the Company also has an enforceable right to payment under the contract) and are therefore recognized based on the percentage of completion using an input model with a master budget. The budget is reviewed periodically and percentage of completion adjusted accordingly.
Revenue for Software Services consulting services and website maintenance is recognized when the Company performs the services, typically on a monthly retainer basis.
Revenue for Software License is recognized at the point of time in which the Company delivers the software and customer accepts delivery. If there are significant contractually stated ongoing service obligations to be performed during the term of the Software License or SaaS contract, then revenues are recognized ratably over the term of the contract.
Employee Stock-Based Compensation
The Company recognizes stock-based compensation expense related to grants to employees or service providers based on grant date fair values of common stock or the stock options, which are amortized over the requisite period, as well as forfeitures as they occur.
The Company values the options using the Black-Scholes Merton (“Black Scholes”) method utilizing various inputs such as expected term, expected volatility and the risk-free rate. The expected term reflects the application of the simplified method, which is the weighted average of the contractual term of the grant and the vesting period for each tranche. Expected volatility is derived from a weighted average of volatility inputs for comparable software and technology service companies. The risk-free rate is based on the implied yield of U.S. Treasury notes as of the grant date with a remaining term approximately equal to the expected life of the award.
Research and Development Costs
Research and development expenses are expensed as incurred, and include payroll, employee benefits and stock-based compensation expense. Research and development expenses also include third-party development and programming costs. Given the nascent industry and uncertain market environment the Company operates in, research and development costs are not capitalized.
Certain accounts in the prior period financial statements have been reclassified for comparative purposes to conform with the presentation in the current period financial statements.
Recently Issued Pronouncements
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842). The amendments under this pronouncement will change the way all leases with durations of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or capital lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized in the same manner as capital leases are amortized under current accounting rules, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. The Company plans to adopt this standard on July 1, 2022. The Company does not anticipate this adoption will have a material effect on its consolidated financial statements.
Financial Instruments – Credit Losses
In June 2016, the Financial Accounting Standards Board (the “FASB”) issued a new standard to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates (Accounting Standards Codification – “ASC” 326). The Company will be required to use a forward-looking expected credit loss model for accounts receivable, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities, if any, will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The Company does not expect to adopt this standard prior to July 1, 2023. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12 to simplify the accounting in ASC 740, Income Taxes. This standard removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. The Company does not expect to adopt this standard prior to July 1, 2023. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
RESULTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
Software License/Software as a Service 0.55 0.34 0.21 62 % Total Revenue
Total revenue for the year ended June 30, 2022 was approximately $7.27 million compared to approximately $3.42 million for the year ended June 30, 2021, an increase of approximately 113%. This growth was due to the addition of new subsidiaries, new customers and increased business with existing customers.
We break out our revenues into two main categories – Software Services and Software License.
For the year ended June 30, 2022, Software Services revenue was approximately $6.72 million compared to approximately $3.08 million for the year ended June 30, 2021, an increase of approximately 118%. This growth was due to the addition of new subsidiaries, new customers and increased business with existing customers.
For the year ended June 30, 2022, Software License revenue was approximately $0.55 million compared to approximately $0.34 for the year ended June 30, 2021, an increase of approximately 62%. As the VR and AR industries continue to mature, we expect our Software License revenue to continue to grow on an absolute basis and as an overall percentage of total revenue.
For the year ended June 30, 2022, non-project revenue (i.e., VR/AR software and services revenue only), was approximately $4.18 million compared to approximately $1.72 million for the year ended June 30, 2021, an increase of approximately 143%. For the year ended June 30, 2022, non-project revenue accounted for approximately 58% of total revenues compared to approximately 50% for the year ended June 30, 2021.
Cost of revenue for the year ended June 30, 2022 was $1.24 million compared to $1.46 million for the year ended June 30, 2021, a decrease of approximately 15%. Lower cost of revenue was driven by the increase in higher margin non-project revenue and expanded utilization of our Turkey based staff.
For the year ended June 30, 2022, our gross profit was approximately $6.03 million representing a gross profit margin of approximately 83%, compared to a gross profit of approximately $1.96 million representing a gross profit margin of approximately 57% for the year ended June 30, 2021. The increase in gross profit margin was primarily due to an increase in non-project revenue, improved project management and expanded utilization of Turkey based staff.
For the year ended June 30, 2022 and 2021, internal staffing was approximately $1.02 million (82% of total cost of revenue) and approximately $1.35 million (92% of total cost of revenue), respectively. The decrease in internal staffing as a percentage of total cost of revenue was due to the addition of S5D revenue from February 1, 2022, which has a larger component of external staffing.
Operating expenses for the year ended June 30, 2022 were approximately $12.37 million compared to $7.91 million for the year ended June 30, 2021, an increase of approximately 56%, primarily due to increases in research and development, general and administrative, and sales and marketing expenses. These increases are driven by the four acquisitions in fiscal year 2022, associated infrastructure to support a greater revenue base and the increased expenses attributable to operations of a public company commencing July 1, 2021.
Research and development expenses for the year ended June 30, 2022 were approximately $6.16 million compared to $3.18 million for the year ended June 30, 2021, an increase of approximately 94%. This increase is primarily driven by increased headcount to support increased revenue, software product development, and four acquisitions made in fiscal year 2022.
For the year ended June 30, 2022, non-cash stock option expenses relating to research and development included approximately $1.47 million of employee compensation expenses, comprising approximately 24% of total research and development expenses. For the year ended June 30, 2021, non-cash stock option expenses relating to research and development included approximately $1.38 million of employee compensation expenses, comprising approximately 43% of total research and development expenses. Over time, we expect non-cash stock options research and development expenses, as a percentage of the total related expenses, to continue to decrease as we utilize a larger portion of cash in compensation.
General and administrative expenses for the year ended June 30, 2022 were approximately $4.93 million compared to $2.21 million for the year ended June 30, 2021, an increase of approximately 123%. The increase is driven by acquisition related expenses (professional fees and intangible asset amortization), public company related expenses (directors’ and officers’ insurance, investor relations, listing fees and expanded board of directors), increased headcount and infrastructure expenses related to support increased revenue and four acquisitions made in fiscal year 2022.
For the year ended June 30, 2022, non-cash stock option and common stock expenses relating to general and administrative expenses included approximately $0.89 million of employee, board of directors and other compensation expenses, comprising approximately 18% of total general and administrative expenses. For the year ended June 30, 2021, non-cash stock option and common stock expenses relating to general and administrative expenses included approximately $0.62 million of employee, board of directors and other compensation expenses, comprising approximately 28% of total general and administrative expenses. Over time, we expect non-cash stock options and common stock general and administrative expenses, as a percentage of the total related expenses, to continue to decrease as we utilize a larger portion of cash in compensation.
Sales and marketing expenses for the year ended June 30, 2022 were approximately $3.14 million compared to $1.27 million for the year ended June 30, 2021, an increase of approximately 147%. The increase was primarily due to increased headcount to support increased revenue and four acquisitions made in fiscal year 2022.
For the year ended June 30, 2022, non-cash stock option and common stock expenses relating to sales and marketing included approximately $0.68 million of employee, vendor and fee compensation expenses, comprising approximately 22% of total sales and marketing expenses. For the year ended June 30, 2021, non-cash stock option and common stock expenses relating to sales and marketing included approximately $0.55 million of employee, vendor and fee compensation expenses, comprising approximately 43% of total sales and marketing expenses. Over time, we expect non-cash stock options and common stock sales and marketing expenses, as a percentage of the total related expenses, to continue to decrease as we utilize a larger portion of cash in compensation.
Additional Asset Purchase Consideration
Additional asset purchase consideration expenses for the year ended June 30, 2022 were approximately $0.57 million compared to $1.25 million for the year ended June 30, 2021, a decrease of approximately 54%. The expense in 2022 represents additional purchase consideration related to the purchase of AUGGD. The expense in 2021 represents additional purchase consideration triggered in that fiscal year as a result of the Company’s IPO related to the purchase of QReal and Post Reality prior to 2021.
Change in Fair Value of Acquisition Contingent Consideration
Change in fair value of acquisition contingent consideration expense for the year ended June 30, 2022 was approximately $2.43 million of income, compared to none for the year ended June 30, 2021. The gain in 2022 represents a decrease in the fair value of contingent consideration liability related to the S5D acquisition between acquisition closing date, February 1, 2022 and June 30, 2022. The change is primarily driven by the decrease in the common stock price of Glimpse during that period.
Other income (expense), net for the year ended June 30, 2022 consisted of other net income of approximately $0.37 million compared to other net expense of approximately $0.14 million for the year ended June 30, 2021, an increase of greater than 100%. The increase was primarily due to a reduction in interest expense (pre-IPO notes were converted to equity at IPO) and a decrease in the loss on conversion of convertible notes in fiscal year 2022 versus fiscal year 2021.
For the years ended June 30, 2022 and 2021, loss from operations before other income (expense) were approximately $6.34 million and $5.95 million, respectively, an increase of approximately 7% year-over-year, primarily driven by an increase in operating expenses outpacing an increase in revenue and gross profit.
For the year ended June 30, 2022, we incurred a net loss of approximately $5.96 million compared to a net loss of approximately $6.09 million for the year ended June 30, 2021, an improvement of approximately 2% year-over-year, primarily driven by increases in revenue, gross profit and other income (expense) outpacing growth in operating expenses.
Non-GAAP Financial Measures
The following discussion and analysis includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, net income, operating income, and cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.
Our management uses and relies on EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measures in planning, forecasting and analyzing future periods. Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the described excluded items.
The Company defines Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table below. Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing the impact of items of a non-operational nature that affect comparability.
We have included a reconciliation of our non-GAAP financial measures to the most comparable financial measures calculated in accordance with GAAP. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between the Company and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.
The following table presents a reconciliation of net loss to Adjusted EBITDA for the years ended June 30, 2022 and 2021:
Fiscal Year 2022 Adjusted EBITDA loss increased by $2.5 million compared to that of Fiscal Year 2021. This reflects operating expenses outpacing revenue and gross profit driven by the four acquisitions made in fiscal year 2022, associated infrastructure to support a greater revenue base and the increased expenses attributable to operations of a public company commencing July 1, 2021.
Liquidity and Capital Resources
Net cash used in operating activities for the year ended June 30, 2022 was approximately $4.94 million, compared to approximately $1.21 million for the year ended June 30, 2021, reflecting operating expenses outpacing revenue and gross profit driven by the four acquisitions made in fiscal year 2022, associated infrastructure to support a greater revenue base and the increased expenses attributable to operations of a public company commencing July 1, 2021.
Net cash used in investing activities for the year ended June 30, 2022 was approximately $5.06 million compared to approximately $28,000 for the year ended June 30, 2021. The increase primarily represents cash paid for acquisitions, along with increased purchase of equipment for additional infrastructure and purchase of investments.
Cash flow provided from financing activities during the year ended June 30, 2022 was $26.48 million, compared to $1.97 million for the prior period. 2022 reflects the net proceeds from our IPO and SPA common stock transactions and exercise of stock options offset by issuance of a note receivable. 2021 financing activities reflect proceeds from convertible promissory notes, proceeds from a Paycheck Protection Plan loan and issuance of common stock to investors, offset by prepaid payments made for our IPO.
As of June 30, 2022, the Company had cash and cash equivalent balances of $16.25 million, plus $0.24 million of liquid corporate bond investments. In addition, there is a $2.0 million cash escrow for contingent consideration of the S5D acquisition, payable upon achievement of S5D and the Company’s performance targets (refundable to Glimpse if targets not achieved).
As of June 30, 2022, the Company had no outstanding debt obligations.
As of June 30, 2022, the Company had no issued and outstanding preferred stock.
The Company believes that it is sufficiently funded to meet its operational plan and future obligations beyond the 12-month period from the date of this filing.
Emerging Growth Company Status
We are an “emerging growth company”, as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company we can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We intend to avail ourselves of these options. Once adopted, we must continue to report on that basis until we no longer qualify as an emerging growth company.
We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of our initial public offering; (ii) the first fiscal year after our annual gross revenues are $1.07 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If, as a result of our decision to reduce future disclosure, investors find our common stock less attractive, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.
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