UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-K
(Mark
One)
For
the year ended June 30, 2021
For
the transition period from _______ to _______
Commission
file number 001-38804
THE GLIMPSE GROUP, INC.
(Exact
name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (917)292-2685
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Ticker symbol(s) Name of each exchange on which registered
Common Stock, $0.001 par value per share VRAR The Nasdaq Stock Market LLC
Securities
registered pursuant to Section 12(g) of the Act:
Title
of each class
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes
☒No
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. ☐ Yes ☒
No
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). ☒ Yes
☐ No
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No
As
of December 31, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, there was no established
public market for the registrant’s common stock and, therefore, the registrant cannot calculate the aggregate market value of its
voting and non-voting common stock held by non-affiliates as of such date.
As
of September 24, 2021, 10,291,638 shares of the registrant’s common stock were issued and outstanding.
TABLE
OF CONTENTS
THE
GLIMPSE GROUP, INC.
ANNUAL
REPORT ON FORM 10-K
FOR
THE YEAR ENDED JUNE 30, 2021
Page
PART I 3
Item 1. Business 3
Item 1A. Risk Factors 13
Item 1B. Unresolved Staff Comments 27
Item 2. Properties 27
Item 3. Legal Proceedings 27
Item 4. Mine Safety Disclosures 27
Item 6. Selected Financial Data 28
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 38
Item 8. Financial Statements and Supplementary Data 38
Item 9A. Controls and Procedures 38
Item 9B. Other Information 39
PART III 39
Item 10. Directors, Executive Officers and Corporate Governance 39
Item 11. Executive Compensation 44
Item 14. Principal Accounting Fees and Services 50
Item 15. Exhibits, Financial Statement Schedules 51
Signatures 55
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This
report includes statements of our expectations, intentions, plans, and beliefs that constitute “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Nonetheless, it is important for an investor to understand that these statements involve risks and uncertainties. These statements
relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, liquidity,
and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not
yet determinable. We have used words such as “may,” “will,” “should,” “expect,” “intend,”
“plan,” “anticipate,” “believe,” “think,” “estimate,” “seek,”
“expect,” “predict,” “could,” “project,” “potential,” and other similar terms
and phrases, including references to assumptions, in this report to identify forward-looking statements. These forward-looking statements
are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks and factors
relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control,
that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements.
Such
risks and other factors also include those listed in Item 1A. “Risk Factors” and elsewhere in this report and our other filings
with the Securities and Exchange Commission (“SEC”). When considering these forward-looking statements, you should keep in
mind the cautionary statements in this report and the documents incorporated by reference. New risks and uncertainties arise from time
to time, and we cannot predict those events or how they may affect us. We assume no obligation to update any forward-looking statements
after the date of this report as a result of new information, future events or developments, except as required by applicable laws and
regulations.
When
used in this annual report, the terms the “Company,” “Glimpse Group,”, “Glimpse:,” “we,”
“us,” “ours,” and similar terms refer to The Glimpse Group, Inc., a Nevada corporation, and its subsidiaries.
As of the date of this annual report, we currently own and operate ten wholly-owned subsidiary companies (“Subsidiary Companies”,
“Subsidiaries”): Adept Reality, LLC (dba Adept XR Learning), Kabaq 3D Technologies, LLC (dba QReal), KreatAR, LLC (dba PostReality),
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) and Glimpse Group Yazilim ve ARGE Ticaret Anonim Sirketi (Glimpse Turkey). In addition, we
own one non-active subsidiary company, In-It VR, LLC (dba Mezmos), which may be reactivated based on need and market conditions.
PART
I
ITEM
1. BUSINESS
History
The
Glimpse Group, Inc. was incorporated on June 15, 2016, under the laws of the State of Nevada and is headquartered in New York, New York.
On
July 6, 2021, the Company completed its initial public offering (“IPO”). In connection with the IPO, the Company’s
common stock began trading on the Nasdaq Capital Market on and as of July 1, 2021. In conjunction with its IPO, the Company sold approximately
1.91 million shares of its common stock at $7.00 per share, raising approximately $11.82 million in net proceeds after fees and expenses.
COMPANY
OVERVIEW
We
are a Virtual (“VR”) and Augmented (“AR”) Reality platform company, comprised of a diversified group of wholly-owned
and operated 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 markets, while mitigating downside risk via our diversified
model and ecosystem.
Our
platform of VR/AR subsidiary companies, collaborative environment and diversified business model aims to simplify the challenges faced
by companies 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 infrastructure.
Leveraging
our platform, we strive to cultivate and manage the business operations of our 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, we intend to carefully add to our current portfolio of subsidiary companies via a combination of organic
expansion and/or outside acquisition.
The
VR/AR industry is an early-stage technology industry with nascent markets. We believe that this industry has significant growth potential
across verticals, may be transformative and that our diversified platform and ecosystem create important competitive advantages. Our
subsidiary companies currently target a wide array of industry verticals, including but not limited to: Corporate Training, Education,
Healthcare, Branding/Marketing/Advertising, Retail, Financial Services, Food & Hospitality, Media & Entertainment, Architecture/Engineering/Construction
(“AEC”) and Social VR support groups and therapy. We do not currently target direct-to-consumer (“B2C’) VR/AR
software or services, only business-to-business (“B2B”) and business-to-business-to-consumer (“B2B2C”), and we
are hardware agnostic.
The
Glimpse Platform
We
develop, commercialize and market innovative and proprietary VR/AR software products, solutions and intellectual property (“IP”).
Our platform is currently comprised of ten active wholly-owned subsidiary companies, each targeting different industry segments in a
non-competitive, collaborative manner. Our experienced management and dynamic VR/AR entrepreneurs have deep domain expertise, providing
the foundation for value-add-collaborations throughout our ecosystem.
Each
of our subsidiary companies share operational, financial and IP infrastructure, facilitating shorter time-to-market, higher quality products,
reduced development costs, fewer redundancies, significant go-to-market synergies and, ultimately, a higher potential for success for
each subsidiary company. We believe that our collaborative platform is unique and necessary, especially given the early nature of the
VR/AR industry. By offering technologies and solutions in various industry segments, we aim to reduce dependency on any one single subsidiary
company, technology or industry segment.
We
believe that three core tenets enhance our probability of success: (1) our ecosystem of VR/AR companies, (2) diversification and (3)
profitable growth.
(1)
Our ecosystem of VR/AR software and service companies provides significant benefits to each subsidiary company and our group as a
whole. We believe that the most notable benefits are: (a) economies of scale, cost efficiencies and reduced redundancies; (b) cross
company collaboration, deep domain expertise, IP and knowledge transfer; (c) superior product offerings; (d) faster time to market;
(e) enhanced business development and sales synergies; and (f) multiple monetization paths. In an emerging industry that is lacking
in infrastructure, we believe that our ecosystem provides a distinct competitive advantage relative to a single, standalone company
in the industry.
(2)
By design, we incorporate multiple aspects of diversity to reduce the risks associated with an early stage industry, create multiple
monetization venues and improve the probabilities of success. There is no single point of failure or dependency. This is created
through: (a) ownership of numerous wholly-owned subsidiary companies operating in different industry segments; (b) targeting large
industries with clear VR/AR use-cases; (c) developing and utilizing various technologies and IP; (d) expanding to different
geographic technology centers in a hub model under our umbrella; and (e) across industries, having a wide array of customers and
potential acquirers/investors.
(3)
From our inception, we have prioritized achieving operational cash flow neutrality early in our life. This was an important factor
that drove our strategy to: (a) focus on enterprise software and services, only onboarding companies that are generating revenues or
clearly could in the short term; (b) target solutions that are based on use cases that have a clear return on investment
(“ROI”) and can be effectively developed from existing technologies and hardware; and (c) centralize costs to reduce
inefficiencies. By targeting cash flow neutrality, our goal is to minimize dilution and support greater independence from capital
markets, thereby increasing resiliency and maximizing upside potential.
As
part of our platform, we provide a centralized corporate structure, which significantly reduces general and administrative costs (financial,
operational, legal & IP), streamlines capital allocation and helps in coordinating business strategies. This allows our subsidiary
company general managers to focus their time and effort almost exclusively on the core software, product and business development activities
relating to their subsidiary.
Additionally,
aligned economic incentives encourage cross-Company collaboration. All of our employees own equity in our Company. The leadership team
of each subsidiary company, in addition to their equity ownership in Glimpse, also have an economic interest in their particular subsidiary
company. This economic interest is negotiated with lead management of a subsidiary company upon their joining of our Company, and typically
ranges between 5-10% of the total net sale proceeds of the subsidiary and includes a three-year vesting schedule. Thus, there is benefit
to them not only when their subsidiary company succeeds but also when any of the other subsidiaries succeeds, and when Glimpse as a whole
succeeds. We believe that this ownership mechanism is a strong driver of cross-pollination of ideas and fosters collaboration. While
each subsidiary company owns its own IP, our parent company currently owns 100% of each subsidiary company. In addition, there will be
perpetual licensing agreements between our subsidiary companies, so that if a subsidiary company is divested, then the remaining subsidiaries,
if utilizing the IP of a divested subsidiary company, will continue to retain usage rights post-divestiture.
Active
Glimpse Subsidiary Companies
8. Early Adopter, LLC (EA): AR/VR solutions for K-12 education
1.
QReal
QReal
is a software and services company that creates and distributes lifelike photorealistic 3D and AR content. This content is typically
integrated in social media campaigns and e-commerce platforms with the goal of increasing sales, improving brand recognition, creating
viral content and boosting e-commerce conversion. Current industry verticals include: food, fashion, apparel, architecture and automotive.
QReal
offers both one-time content creation as well as monthly subscriptions. With a monthly subscription, QReal offers content management
and digital distribution.
We
recently opened a development center, Glimpse Turkey, that primarily creates 3D models for QReal.
2.
Adept XR Learning
Adept
XR Learning (“Adept”) provides higher education learning and corporate VR training solutions via its SaaS platform (“Elevate”)
built around collaboration and multi-user learning across geographical areas. The platform provides users the unique ability to create
multiple sessions of a corporate VR training experience, incorporating data visualization, computer graphics, blended real-life 360 videos,
artificial intelligence, data and analytics.
Adept’s
platform can be purchased as a Software as a Service (“SaaS”) subscription, software license or a white label solution.
3.
PostReality
PostReality
creates cloud-based, cost effective, SaaS solutions that enable businesses to rapidly create, edit, integrate and deploy AR experiences.
PostReality’s
solutions are:
c) Custom specialized AR applications, white label solutions and services
PostReality’s
platform can be purchased as a SaaS subscription, software license or a white label solution.
4.
D6 VR
D6
VR (“D6”) is a comprehensive, VR-based, analysis, presentation and education software platform, designed specifically to
provide insight into complex data sets, improve productivity and facilitate virtual collaboration. D6 targets data intensive industries,
with an initial focus on Financial Services and Higher Education.
Key
attributes of D6’s platform:
D6’s
platform can be purchased as a SaaS subscription, software license or a white label solution.
5.
Immersive Health Group
Immersive
Health Group (“IHG”) is a digital health platform company that leverages VR/AR technology to simplify and streamline complex
healthcare challenges in scale.
IHG’s
main software platform is ContinuumXR:
IHG’s
platform can be purchased as a SaaS subscription, software license or a white label solution.
6.
Foretell Reality
Foretell
Reality (“Foretell”) provides remote groups an immersive, engaging and safe space to meet and collaborate in customizable,
distraction-free environments. Through its VR software platform, Foretell aims to enhance human communications and productivity by overcoming
geographic and physical constraints.
Foretell
offers an enterprise-grade and easy-to-use solution for meeting others in VR with rich environments and features. The Foretell platform
is designed to support applications and use cases across multiple industries, including: VR Telemental Health (especially support groups
and therapy), Corporate Collaboration and Soft Skills and Remote Learning. Foretell’s platform can be purchased as a SaaS subscription,
software license or a white label solution.
7.
Pagoni VR
Pagoni
VR (“Pagoni”) provides immersive and interactive VR video broadcasting solutions to universities, enterprise, entertainment
venues, sports venues and houses of worship. Pagoni’s main product, Chimera, enables real-time communications between a presenter
and local and remote attendees in VR.
Pagoni’s
platform can be purchased as a SaaS subscription, software license or a white label solution.
8.
Early Adopter
Early
Adopter (“EA”) provides immersive VR and AR EdTech solutions for K-12 schools and pediatric hospital programs, based on engaging
inquiry-driven and game-based learning.
In
response to the Covid-19 pandemic, EA created Common Room, a social AR SaaS app that allows users to interact as if they were with one
another. Common Room can also be white labeled by schools and other third parties.
EA’s
platform can be purchased as a SaaS subscription, software license, or a white label solution.
9.
AUGGD
AUGGD
provides AR software and services primarily for the Architecture, Engineering & Construction (AEC) industries. Its solutions seek
to improve building quality, lower construction costs, provide clearer planning and impactful marketing.
Based
historically in Australia and Europe, AUGGD is looking to expand in the US.
AUGGD’s
solutions can be purchased as a SaaS subscription, software license, white label solution or service.
10.
Glimpse Turkey
Glimpse
Turkey specializes in utilizing photogrammetry tools in order to develop and create web optimized 3D models, primarily for QReal.
It
is based in Turkey and is currently a development center.
Recent
Business Developments
Initial
Public Offering (“IPO”)
On
July 1, 2021, the Company completed an IPO of common stock on the NASDAQ under the symbol “VRAR”, at a price of $7.00 per
share.
The
Company sold approximately 1.91 million shares of common stock and realized net proceeds (after underwriting, professional fees and listing
expenses) of $11.82 million.
In
connection with the IPO, the underwriter was issued a warrant to purchase 87,500 shares of common stock at $7.00 per share. The warrant
cannot be exercised prior to December 30, 2021, and expires in June 2026.
In
conjunction with the IPO, the outstanding convertible promissory notes (the “March 2021 Notes” and the “December 2019
Notes”) were converted and satisfied in full through issuance of 0.324 million shares of commons stock. The Company has no other
convertible promissory notes outstanding after the IPO.
The
following is a condensed consolidated balance sheet reflecting the proforma effect of the IPO on the June 30, 2021 balance sheet.
As Reported at June 30, 2021 Proforma for IPO
Convertible promissory notes, net 1,429,953 -
Total liabilities and stockholders’ equity (deficit) $ 3,221,040 $ 14,603,897
AUGGD
Asset Acquisition
In
August 2021, the Company, through its wholly owned subsidiary company, MotionZone, LLC, (dba AUGGD) completed an acquisition of certain
assets, as defined, from Augmented Reality Investments Pty Ltd., an Australia based company providing augmented reality software and
services to the AEC market segments. AUGGD is our 10th active subsidiary company.
Initial
consideration for the purchase is $0.75 million payable in the Company’s common stock. In August 2021, the Company issued 77,264
shares of common stock to satisfy the purchase price. The acquisition agreement provides for additional contingent consideration in the
form of Company common stock if certain future revenue targets are achieved through June 2024. No liabilities were assumed as part of
the acquisition and the primary assets acquired included employees, customer relationships and technology. The Company is currently determining
its purchase price allocation between customer list, intellectual property and goodwill.
In
conjunction with this acquisition, the Company has begun the process of establishing a new subsidiary - “Glimpse Australia”
- focused on facilitating the potential introduction of our products and services to the Australian markets and, in addition to AUGGD,
potentially adding other Australian VR/AR companies to Glimpse Australia over time.
The
VR and AR (XR) Markets
Virtual
Reality (VR) fully immerses the user in a digital environment via a head mounted display (“HMD”), where the user is blocked
out of their immediate physical environment. Augmented Reality (AR) is a less immersive experience, where the user views their immediate
physical environment with digital images overlaid, via a phone, tablet or a dedicated HMD such as smart glasses. While distinct, VR and
AR are related, utilize some similar underlying technologies and are expected to become increasingly interconnected - combined they are
often referred to as Immersive Technology (XR).
VR
and AR are emerging technologies, and the markets for them are still nascent. We believe that XR technologies and solutions have the
potential to fundamentally transform how people and businesses interact, further enabling remote work, education and commerce. XR is
also expected to increasingly interconnect with other emerging technologies such as artificial intelligence, computer vision, big data,
NFT and crypto currencies. Additionally, HMD and telecommunication (5G) advancements have been driving vast improvements in capabilities
and ease of use, while significantly reducing headset cost. As a result, market adoption has accelerated and is expected to continue.
Leading technology companies such as Facebook, Apple, Microsoft, Google, Samsung, Sony and HP have been at the forefront of VR/AR hardware
development and software infrastructure, while also increasing integration of their products with AR and VR capabilities.
Since
Facebook released its first VR headset as a consumer product in 2016 (after its $2B+ acquisition of Oculus), successive iterations of
it, as well as others, have become significantly lighter, more comfortable, lower priced, with higher resolution and increasingly wireless/mobile.
With a standalone mobile headset, users no longer need an expensive gaming computer to power the headset and they also do not have a
wire tethered to that computer restricting movement. These advances have facilitated easier corporate procurement and integration. The
accelerating rollout of 5G should enable further improvement in user experience since with 5G, remote processing and heavier, real time
applications become possible without noticeable visual lag, allowing for lighter, smaller, more comfortable HMDs with longer battery
life.
Based
on Artillery Intelligence’s market forecasts, the VR and AR markets are forecasted to grow 31% in 2021 to over $9 billion, expanding
at a 39% Compound Annual Growth Rate (CAGR) over the next three years, exceeding $35 billion by 2023. In particular, VR and AR enterprise
software – the segment we are focused on – is projected to grow 59% in 2021 and expand at a 55% CAGR to more than $10 billion
in 2023.
Business
Development and Sales
We
utilize a hybrid approach to the sales and distribution of our software products and services.
At
our subsidiary company level, each company has its own business development and sales team, the size of which depends on its stage of
development. Each subsidiary company’s general manager is responsible for business development, and as the subsidiary gains market
traction, its business development and sales team are expanded as needed.
Our
subsidiary companies’ business development and sales teams are enhanced by the shared resources and influence of our ecosystem.
Our management takes an active role in the business development activities of each subsidiary company and in the overall development
and integration of sale strategies, goals and budgets. As an integral part of the business development and sales processes, each subsidiary
company’s general manager is very familiar with the product offerings of other subsidiary companies and leverages those into his
or her own efforts when appropriate. This leads to substantial cross marketing collaboration.
We
believe that a subsidiary company’s ability to demonstrate to potential customers scale as part of our ecosystem of companies,
combined with our subsidiary’s ability to offer its products and solutions as well as those of our other subsidiary companies in
an integrated manner, represents a key competitive advantage. We believe our customers often view us as a “one-stop-shop”
for all their VR/AR needs and an expert in the emerging VR/AR space.
We
and our subsidiary companies continue to develop a shared partner ecosystem to further scale business and expand our solutions into new
and existing target markets.
Competitive
Environment
We
believe that our competitors in the VR/AR industry are focused on two primary segments: VR/AR Hardware (headsets) and Software.
VR/AR
Hardware (Headsets) (“Hardware”):
We
do not develop any Hardware, and our software and service solutions are mostly compatible with any Hardware. We believe that Hardware
development, commercialization and distribution are highly capital intensive and there is not yet large enough scale or mass adoption
in the VR/AR industry to justify such expenditures for a smaller company. As such, there are relatively few participants on the Hardware
side, some very large (for example: Facebook/Oculus, Microsoft, Samsung, Google, Apple, HTC, HP, Lenovo, Sony and Epson) and some much
smaller (for example: Magic Leap, Pico, Valve and Vuzix). In general, Hardware cycles have been accelerating and performance improving,
with simplified usability and reduced end-user costs. The more advanced, easier to use and cheaper the Hardware becomes, the higher the
potential for the development of robust software applications and increased market adoption of VR/AR solutions.
VR/AR
Software (“Software”):
In
contrast to VR/AR Hardware, Software is highly fragmented with hundreds of VR/AR Software companies targeting different segments and
solutions. Many are consumer oriented, whereas we are entirely enterprise focused (B2B, B2B2C). We believe that the AR/VR Software segment
is currently far less competitive than traditional software markets, as most companies in the space tend to be early stage and often
underfunded.
While
competition is evolving and increasing, there is currently no dominant player in any particular VR/AR Software segment. We believe that
we have the potential to become a leader in the VR/AR Software space in general and that each of our subsidiary companies has the potential
to become a significant player in their particular industry sector.
As
previously described, we believe that our structure, ecosystem and integrated capabilities create significant competitive advantages
for each of our subsidiary companies, not available to other Software companies in the VR/AR space. By owning and operating a diverse
set of VR/AR companies, we believe that we significantly improve each of our subsidiary company’s ability to succeed by addressing
many of the challenges early stage companies face and expanding each’s opportunity set and capabilities.
We believe that there are a select number
of earlier stage companies of approximately our size that provide VR/AR Software and could be viewed as potential competitors. In addition,
several of the larger technology players provide general infrastructure VR/AR Software. In particular: ARCore from Google and ARKit
from Apple, which enable AR functionality on smartphones and tablets; and Unity and Epic Unreal, which enable software languages used
in VR and AR programing. We do not view these larger companies as competition, but rather as complementary to our business. We believe
infrastructure software benefits us, and the industry at large, as they are not industry specific and enable companies like us to more
effectively build industry specific solutions, thereby saving significant costs and development efforts.
Platform
Expansion and Diversification Strategy
As
described above in “Competitive Environment,” the VR/AR software and services industries are highly fragmented. There are
numerous potential acquisition targets that, while having established a niche market position, product or technology, have limited resources
and ability to pursue growth initiatives. We intend to leverage our position and relative scale in the industry in order to continue
to add to our platform both earlier stage companies and technologies and, subject to the availability of capital and appropriate targets,
more mature companies. Beyond the expected financial impact of each such potential addition, these could also enhance our ecosystem,
technology, scale and competitive position. These potential acquisitions may be domestic or international. If there is sufficient scale
in a certain geographic location (beyond our current NYC headquarters), then a new hub may be established in such location, with several
subsidiary companies operating in that hub, under the overall Glimpse umbrella.
Strategic
Divestitures
Each
one of our subsidiary companies has the potential to be divested or spun off. Although the purpose of our platform is to grow and develop
the ecosystem on which each of our subsidiaries can mature by benefitting from collaboration, each subsidiary company targets a specific
industry vertical (i.e. Healthcare, Education, Corporate Training, etc.) and as such has a distinct set of potential acquirers or investors.
If a subsidiary company is divested and the proceeds are substantive, then our intent is to distribute the majority of the net proceeds
to our shareholder base, if such distribution would not jeopardize our growth and operations.
Intellectual
Property
Our
intellectual property is an integral part of our business strategy and practice. In accordance with industry practice, we protect our
proprietary products, technology and competitive advantage through a combination of contractual provisions and trade secrets, patents,
copyright and trademark laws in the United States and other jurisdictions where business is conducted.
As
of the date of this disclosure and summarized in the table below, we have filed thirteen (13) patent applications, four (4) of which
have been issued and one (1) allowed and registered with the United States Patent and Trademark Office (the “USPTO”).
Issued Patent
Allowed Patent:
Patent Applications
Simulated Reality Data Representation System and Method D6VR 2/2/2018
Viewer Position Coordination in Simulated Reality KreatAR 6/10/2019
Virtual Reality System Cross Platform Foretell Reality 4/23/2019
Marker-Based Positioning of Simulated Reality KreatAR 4/23/2019
Presentation Interface and Immersion Platform Pagoni VR 4/30/2019
Simulated Reality Based Confidence Assessment Adept Reality 6/6/2019
Simulated Reality Risks Mitigation System Adept Reality 7/19/2019
Simulated Reality Adaptive User Space Immersive Health Group 7/26/2019
We
may continue to file for patents regarding various aspects of our products, services and technologies at a later date depending on the
costs and timing associated with such filings. We may make investments to further strengthen our copyright protection going forward,
although no assurances can be given that we will be successful in such patent and trademark protection endeavors. We seek to limit disclosure
of our intellectual property by requiring employees, consultants, and partners with access to our proprietary information to execute
confidentiality agreements and non-competition agreements (when applicable) and by restricting access to our proprietary information.
Due to rapid technological change, we believe that establishing and maintaining an industry and technology advantage in factors such
as the expertise and technological and creative skills of our personnel, as well as new services and enhancements to our existing services,
are more important to our business and profitability than other available legal protections.
Despite
our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our services or to obtain and use
information that we regard as proprietary. The laws of many countries do not protect proprietary rights to the same extent as the laws
of the U.S. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine
the validity and scope of the proprietary rights of others or to defend against claims of infringement. Any such litigation could result
in substantial costs and diversion of resources and could have a material adverse effect on our business, operating results and financial
condition. There can be no assurance that our means of protecting our proprietary rights will be adequate or that our competitors will
not independently develop similar services or products. Any failure by us to adequately protect our intellectual property could have
a material adverse effect on our business, operating results and financial condition. See “Risk Factors—Risks Related to
our Business.”
Business
Cycles
Based
on our history and information available to date, we have not been able to identify any seasonality of cycles within our business. Since
VR/AR is an emerging industry, market and customer education are material and the length of the typical sales cycle can be between 3
and 18 months, depending on the size and complexity of the proposed solution and the customer’s level of understanding of the VR/AR
space and prior experience.
Economic
Dependence
For
the year ended June 30, 2021, one customer accounted for approximately 26% of our revenues and another for approximately 23% of our revenues.
These same customers accounted for approximately 0.5% and 5% of revenues, respectively, for the year ended June 30, 2020. No other customer
accounted for more than 10% of our revenues for the year ended June 30, 2021. For the fiscal year ended June 30, 2020, a different customer
than mentioned above accounted for 12.5% of our revenues. For the fiscal year ended June 30, 2020, no other customer accounted for 10%
or more of our revenues.
We
operate in an early stage industry, and customers are exploring various options for AR and VR solutions and acting as early adopters
of VR and AR solutions. As such, there is a high degree of variance on our source of revenues while customers are on-boarded and our
software product and solutions are integrated, measured and digested. A customer that may account for a higher concentration of revenue
in one period may not account for any revenue in subsequent periods. In some cases those customers could re-engage after they have evaluated
our solutions and may or may not be a source of future revenue.
As
such, customers that make up a significant portion of revenues in one period, often do not make up a significant portion in other periods.
Given this dynamic, which has continued both prior and subsequent to the reported periods, we expect this variability in Customer Concentration
to continue until such point in time when our revenue has reached larger scale, and with a larger portion of our revenues coming from
Software Licenses/SaaS. While there has been consistent oscillation in Customer Concentration from period-to-period, a significant reduction
in revenue from our larger customers could have a material negative impact on our operations.
Typically,
customer contracts can be canceled at any time by the customer upon 30-90 day written notice (depending on the size of the contract).
In such an event, the customer would owe the Company unpaid amounts up until the point of cancelation. We typically charge 25-50% of
the contract value upfront and the amounts are usually not refundable, mitigating some of the contract cancellation risk. While it does
happen on occasion, it is rare that a signed contract is canceled.
Facilities
We
are based in New York, New York. Our current facilities are leased and adequate to meet our ongoing needs. If we require additional space
or expand geographically, we may seek additional facilities on commercially reasonable terms at such time. Due to Covid-19 constraints,
since March 2020 our personnel have been working primarily on a remote basis, without detrimental effects. We returned to partial in
person work in July 2021 and expect to continue as such for the foreseeable future, subject to Covid-19 developments.
We
also lease a small office in Izmir, Turkey for the operations of Glimpse Turkey.
Human
Capital
We
currently have approximately 65 full time employees and consultants, primarily software developers, engineers and 3D artists.
Corporate
Information
Information
contained on our websites, including www.theglimpsegroup.com, shall not be deemed to be part of this filing or incorporated herein
by reference and should not be relied upon by prospective investors for the purposes of determining whether to invest in the Company.
ITEM
1A. RISK FACTORS
RISKS
RELATED TO OUR BUSINESS
The
Company is an early stage technology company
We
were incorporated on June 15, 2016 and are an early stage technology development company, comprised of a wholly-owned group of early
stage companies in the VR and AR space. As such, we are subject to the risks associated with being an early stage company operating in
an emerging industry, including, but not limited to, the risks set forth herein.
Health
epidemics, including the current COVID-19 pandemic, have had, and could in the future have, an adverse impact on our business, operations,
and the markets and communities in which we, our partners and customers operate. For example, sales cycles have generally lengthened
and some customers have delayed purchase decisions.
Our
business and operations could be adversely affected by health epidemics, including the current COVID-19 pandemic, impacting the markets
and communities in which we, our partners and customers operate. The COVID-19 pandemic has caused and continues to cause significant
business and financial markets disruption worldwide and there is significant uncertainty around the duration of this disruption on both
a nationwide and global level, as well as the ongoing effects on our business.
The
full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition
will depend on future developments that are highly uncertain and cannot be accurately predicted, and we may be unable to accurately forecast
our revenue or financial results. Further, as many of our customers or partners experience downturns or uncertainty in their own business
operations or revenue resulting from the spread of COVID-19, they may decrease or delay their spending, request pricing concessions or
seek renegotiations of their contracts, any of which may result in decreased revenue for us. As a result of the COVID-19 pandemic, we
have seen the length of our sale cycles generally increase and some of our customers have delayed purchase decisions. In addition, we
may experience customer or strategic partner losses, including due to bankruptcy or our customers or strategic partners ceasing operations,
which may result in an inability to collect receivables from these parties. A decline in revenue or the collectability of our receivables
could harm our business.
In
addition, in response to the spread of COVID-19, we are requiring or have required substantially all of our employees to work remotely
to minimize the risk of the virus to our employees and the communities in which we operate, and we may take further actions as may be
required by government authorities or that we determine are in the best interests of our employees, customers and business partners.
There is no guarantee that we will be as effective while working remotely because our team is dispersed, employees may have less capacity
to work due to increased personal obligations (such as childcare, eldercare, or caring for family members who become sick), may become
sick themselves and be unable to work, or may be otherwise negatively affected, mentally or physically, by the COVID-19 pandemic and
prolonged social distancing. Decreased effectiveness and availability of our team could adversely affect our results due to slow-downs
in our sales cycles and recruiting efforts, delays in our entry into customer contracts, delays in addressing performance issues, delays
in product development, delays and inefficiencies among various operational aspects of our business, including our financial organization,
or other decreases in productivity that could seriously harm our business. Furthermore, we may decide to postpone or cancel planned investments
in our business in response to changes in our business as a result of the spread of COVID-19, which may impact our ability to attract
and retain customers and our rate of innovation, either of which could harm our business. In addition, our facilities needs could evolve
based on continuing changes and impact on work environments as a result of the COVID-19 pandemic, and we may not be able to alter our
contractual commitments to accommodate such changes, which could cause us to incur additional costs or otherwise harm our business. More
generally, the COVID-19 outbreak has adversely affected economies and financial markets globally, which could decrease technology spending
and adversely affect demand for our platforms and solutions.
The
global impact of COVID-19 continues to rapidly evolve, and we will continue to monitor the situation and the effects on our business
and operations closely. We do not yet know the full extent of potential impacts on our business, operations or the global economy as
a whole, particularly if the COVID-19 pandemic and related public health measures continue and persist for an extended period of time.
Given the uncertainty, we cannot reasonably estimate the impact on our future results of operations, cash flows or financial condition.
While the spread of COVID-19 may eventually be contained or mitigated, there is no guarantee that a future outbreak of this or any other
widespread epidemics will not occur, or that the global economy will recover, either of which could harm our business.
We
have incurred significant net losses since inception and anticipate that we will continue to incur net losses for the foreseeable future
and may never achieve or maintain profitability.
Since
inception, we have incurred significant net losses. As of June 30, 2021 and June 30, 2020, we had an accumulated deficit of approximately
$22.1 million and $16.0 million respectively. The net loss for the fiscal year ended June 30, 2021 was approximately $6.1 million and
fiscal year ended June 30, 2020 was approximately $5.0 million. To date, we have devoted our efforts towards securing financing, building
and evolving our technology platform and creating an infrastructure that allows for the growth of such technology platform. In the past,
the combination of operating losses, cash expected to be used to continue operating activities and uncertain conditions relating to additional
capital raises and continued revenue growth created an uncertainty about the Company’s ability to continue as a going concern.