Glimpse Group Inc

History

The Glimpse Group, Inc. was incorporated in June 2016 under the laws of the State of Nevada, and is headquartered in New York, New York.

Company Overview

The Glimpse Group, Inc. (“Glimpse”, the “Company”) is an Immersive technology company, providing enterprise focused Virtual Reality (VR), Augmented Reality (AR) and Spatial Computing software and services. Glimpse’s operating entities are located primarily in the United States, with a development and modeling center in Turkey. We believe that we offer significant exposure to the rapidly growing and potentially transformative Immersive technology markets, while mitigating downside risk via our diversified model and ecosystem.

Our ecosystem of Immersive technology entities, collaborative environment and diversified business model aims to simplify the challenges faced by companies in the emerging Immersive technology industry, create scale, build operational efficiencies, reduce time to market and enhance go-to-market synergies, while simultaneously providing investors an opportunity to invest directly via a diversified infrastructure.

The Immersive technology 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 ecosystem create important competitive advantages. We currently target a wide array of industry verticals, including but not limited to: Corporate Training, Education, Healthcare, Government & Defense, Branding/Marketing/Advertising, Retail, Financial Services, Food & Hospitality, Media & Entertainment, Architecture/Engineering/Construction, Corporate Events and Presentations and Social VR support groups and therapy. We focus primarily on the business-to-business (“B2B”) and business-to-business-to-consumer (“B2B2C”) segments industry and we are hardware agnostic.

In fiscal year 2024, we shifted our businesses focus to providing immersive technology solutions software and services that are primarily driven by Spatial Computing, Cloud and Artificial Intelligence (“AI”), which we refer to as “Spatial Core”. While this transition is still ongoing, we believe that Spatial Core is a key differentiator, growth driver and competitive advantage for us.

The Glimpse Ecosystem

We develop, commercialize and market innovative and proprietary Immersive technology software products, solutions and intellectual property (“IP”). Our ecosystem is comprised of several entities, each targeting different industry segments in a non-competitive, collaborative manner. Our experienced management and dynamic Immersive technology entrepreneurs and employees have deep domain expertise, providing the foundation for value-add-collaborations throughout our ecosystem.

Each of our ecosystem entities 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 the Company. We believe that our collaborative ecosystem is unique and necessary, especially given the early nature of the Immersive technology industry. By offering technologies and solutions in various industry segments, we aim to reduce dependency on any single entity, technology or industry segment.

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. All employees, no matter which entity they are allocated to, are Glimpse employees.

Additionally, aligned economic incentives encourage cross-company collaboration. Substantially all of our employees own equity in our Company. The leadership team of each entity, in addition to their initial equity ownership in Glimpse, may also have an economic interest that typically takes form of either: (i) a 5-10% economic interest in the total net sale proceeds of the entity upon a divestiture event or (ii) additional Glimpse equity issuances based on revenue milestones achieved by the entity over a period of several years (typically three years). We believe that this ownership mechanism is a strong driver of cross-pollination of ideas and fosters collaboration. While each entity owns its own IP, our parent company currently owns 100% of each entity.

Organizational Chart:

Glimpse Ecosystem Entities

Key Business Developments During Fiscal Year 2024

Securities Purchase Agreement (“SPA”)

On September 28, 2023, the Company entered into a SPA with certain institutional investors to sell 1,885,715 shares of common stock for approximately $3.30 million (at $1.75 per share). The Company received the subscription receivable on October 3, 2023 which resulted in net proceeds (after placement agent fees, professional fees and listing expenses) of $2.98 million.

The SPA shares were issued on October 3, 2023. Simultaneously, the exercise price on warrants to purchase 750,000 shares of common stock originally issued pursuant to a SPA entered into in November 2021 were repriced from $14.63 per share to $1.75 per share.

Nasdaq Listing Qualification Notice

On September 3, 2024, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, because the closing bid price for the Company’s common stock listed on Nasdaq was below $1.00 for the prior 30 consecutive business days, the Company no longer meets the minimum bid price requirement for continued listing on the Nasdaq Capital Market. In accordance with Nasdaq Marketplace rules, the Company has a period of 180 calendar days from September 3, 2024, or until March 3, 2025, to regain compliance with the Minimum Bid Price Requirement. If at any time before March 3, 2025, the bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement.

The Company’s receipt of the notification letter has no immediate effect on the listing of the Company’s shares, which will continue to trade uninterrupted on Nasdaq under the ticker “VRAR”. In addition, it does not affect the Company’s business, operations or reporting requirements with the Securities and Exchange Commission. In order to regain compliance with the Minimum Bid Price Requirements, the Company and its Board of Directors are reviewing various potential measures. The Company is not considering a reverse stock split at this time.

See 8-K filed on September 9, 2024 for additional information.

The Immersive Technology 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. Spatial Computing are the computer processes and tools used to capture, process to blend 3D data into real physical space, often by utilizing VR and AR HMDs. While distinct, VR, AR and Spatial Computing are related, utilize some similar underlying technologies and are expected to become increasingly interconnected - combined they are often referred to as Immersive technology.

Immersive technologies are emerging technologies, and the markets for them are still nascent. We believe that Immersive technologies and solutions have the potential to fundamentally transform how people and businesses interact, further enabling remote work, education and commerce. Immersive technologies are also expected to increasingly interconnect with other emerging technologies such as AI, cloud computing, computer vision, big data, and blockchain. 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 Meta (formerly, Facebook), Apple, Microsoft, Google, ByteDance (Pico), Samsung, Sony, HTC 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 Meta 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, such as the Apple Vision Pro, 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. Advances in AI technologies are expanding the Immersive technology space, enabling capabilities in massive data computing, digital twin creation, complex simulations, life like and intelligent interfaces and experiences and more.

Business Development and Sales

Each of our entities has its own business development and sales team to better focus on specific industry segments, with input and coordination from Glimpse’s management team.

Our management takes an active role in the business development activities of each entity 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 entity’s general manager is very familiar with the product offerings of the other entities and leverages those into his or her own efforts when appropriate.

On occasion, we enter into distribution partnerships for our products with third parties.

Competitive Environment

We believe that our competitors in the Immersive technology industry are focused on two primary segments: VR/AR Hardware (headsets) and Software.

Immersive Technology 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 Immersive technology 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: Meta (formerly, Facebook), Microsoft, Samsung, Google, Apple, ByteDance (Pico), HTC, HP, Lenovo, Sony and Epson) and some much smaller (for example: Magic Leap, XREAL, Varjo 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 Immersive technology solutions.

We also believe that while the core computing is done on the headset, the size of the headset will remain relatively large/heavy and the level of applications limited. Therefore, in order to reach mass adoption, it is imperative in our view that the core computing move from the headset to the cloud and then transmitted back to the headset via 5G/broadband, allowing for a smaller/lighter form factor of the headset and more impactful applications. As part of our strategic shift to Spatial Core, Glimpse is focuses on providing the middleware enabling this transition.

Immersive Technology Software (“Software”):

In contrast to Hardware, Software is highly fragmented with hundreds of Software companies targeting different segments and solutions. Many are consumer oriented, whereas we are entirely enterprise focused (B2B and B2B2C). We believe that the 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, there is currently no dominant player in any particular Immersive technology Software segment. We believe that we have the potential to become a leader in the this software space, led by our Spatial Core offerings.

As previously described, we believe that our structure, ecosystem and integrated capabilities create significant competitive advantages, not available to other Software companies in the Immersive technology space and significantly improving our ability to succeed in an emerging space.

We believe that there are a select number of earlier stage companies of approximately our size that provide Immersive technology and could be viewed as potential competitors. In addition, several of the larger technology players provide general infrastructure Software, such as, ARCore from Google and ARKit from Apple, which enable AR functionality on smartphones and tablets, and Unity and Unreal from Epic, 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 (indeed, some of these are our customers). 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.

Expansion and Diversification Strategy

As described above in “Competitive Environment,” the Immersive Technology 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 may continue to add to our ecosystem both companies and technologies, subject to the availability of capital and attractive deal terms. 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.

Strategic Divestitures

Each one of our entities has the potential to be divested or spun off. Although our intent is to grow and develop the ecosystem, each of our entities targets a specific industry vertical (e.g., Healthcare, Education, Corporate Training, Military, etc.) and as such has a distinct set of potential acquirers or investors. If an entity is divested and the proceeds are substantive, then our intent is to distribute the majority of the net proceeds to our stockholder base, if such distribution would not jeopardize our growth and operations. We have, and may continue, to divest entities due to lower than expected performance or a shift in our strategic focus.

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 we conduct business.

As of the date of the filing of this Report, and as summarized in the table below, we have been issued 10 patents by the United States Patent and Trademark Office (“USPTO”) and have an additional 5 filed patent applications in process.

Issued Patents

** Each of the patents listed above expires 20 years from its filing date.*

Filed Patents

We may continue to file for patents regarding various aspects of our products, services and technologies in the future 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 United States. 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 Immersive technology is an emerging industry, market and customer education are material and therefore the length of the typical sales cycle can be between three and 18 months, depending on the size and complexity of the proposed solution and the customer’s level of understanding of the Immersive technology space and prior experience.

Economic Dependence

For the year ended June 30, 2024, one customer accounted for approximately 23% of our revenues and another for approximately 15% of our revenues. No other customer accounted for more than 10% of our revenues for the year ended June 30, 2024. For the year ended June 30, 2023, one customer accounted for approximately 26% of our revenues and another for approximately 21% of our revenues. No other customer accounted for more than 10% of our revenues for the year ended June 30, 2023.

We operate in an early stage industry, and customers are exploring various options for Immersive technology solutions and acting as early adopters of these solutions. As such, there has been a high degree of variance on our source of revenues. A customer that may account for a higher concentration of revenue in one period may not account for any revenue in subsequent periods. 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 days’ written notice (depending on the size and complexity of the contract). In such an event, the customer would owe us unpaid amounts up until the point of cancelation. For most customers we 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 uncommon that a signed contract is canceled.

Human Capital

At June 30, 2024, we had 112 full time employees, primarily software developers, engineers and 3D artists. Of these, 56 are based in the United States and 56 are based in Turkey.

Corporate Information

Our website iswww.theglimpsegroup.com. Information contained on, or accessible through our website, is not and shall not be deemed to be part of, or incorporated or deemed incorporated by reference into, this Report, and should not be relied upon by prospective investors for the purposes of determining whether to invest in us or our securities. We have included our website address in this Report solely as an inactive textual reference.