Brightline Interactive, Inc./NV

NOTE 1. DESCRIPTION OF BUSINESS

Brightline Interactive, Inc. (“BLI,” the “Company,” or “Brightline”), formerly The Glimpse Group, Inc., is a software firm building SpatialCore, an interoperability and operational context platform for Physical AI. BLI’s operating entities are located in the United States. The Company was incorporated in the State of Nevada in June 2016 under the name The Glimpse Group, Inc.

In June 2026, the Company initiated the transformation from a portfolio of businesses into a focused technology company centered on its Brightline Interactive (“BLI Sub”) subsidiary and SpatialCore, its interoperability infrastructure platform for Physical AI. In connection therewith, the Company commenced divestiture or wind down of all subsidiaries at that time except BLI Sub. This culminated in August 2026 with the merger of all remaining subsidiaries into the parent The Glimpse Group, Inc. (“Glimpse”) and renaming Glimpse to Brightline Interactive, Inc. See Note 16.

The Company is listed on the Nasdaq Capital Market Exchange (“Nasdaq”) under the ticker BTLN (as of August 19, 2026, prior ticker was GGRP).

NOTE 2. GOING CONCERN

At each reporting period, the Company evaluates whether there are conditions or events that raise doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company’s evaluation entails analyzing expectations for the Company’s cash needs and comparing those needs to the current cash and cash equivalent balances. The Company is required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by the Company’s plans or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern.

The Company has incurred recurring losses since its inception, including a net loss of approximately $16.63 million for the year ended June 30, 2026. In addition, as of June 30, 2026, the Company had an accumulated deficit of approximately $82.23 million. The Company’s cash and cash equivalents as of June 30, 2026 may not be sufficient to fund operations and other commitments for at least the next twelve months from the date of issuance of these consolidated financial statements. Accordingly, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of these consolidated financial statements.

In order to restore the going concern the Company may take actions which could include, but are not limited to, equity or debt financings. There is no assurance that these actions will be taken or be successful if pursued.

The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described.

NOTE 3. NASDAQ LISTING NOTIFICATION AND REVERSE STOCK SPLIT

On March 13, 2026, the Company received a notification letter from the Listing Qualifications Department of 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 March 13, 2026 or until September 9, 2026, to regain compliance with the Minimum Bid Price Requirement.

On September 11, 2026, the Company, received a written notification (the “Staff Determination”) from the Nasdaq informing the Company that Nasdaq’s staff had determined to delist the Company’s common stock from Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2), requiring a minimum bid price of at least $1.00 per share (the “Bid Price Requirement”). The Company did not regain compliance with the Bid Price Requirement by the September 9, 2026 deadline, and Nasdaq subsequently issued the Staff Determination on September 11, 2026. Under the Staff Determination, the Company has the right to appeal the Staff Determination by requesting a hearing before a Nasdaq Hearings Panel (the “Hearings Panel”). On September 17, 2026, the Company timely submitted a request for a hearing (the “Hearing”) before the Hearings Panel. The Hearing request stayed the suspension of the Company’s securities and the filing of a Form 25-NSE with the Securities and Exchange Commission (“SEC”) pending the issuance of a written decision by the Hearings Panel. The Common Stock will remain listed on Nasdaq, pending the outcome of the Hearing. There can be no assurance that following the Hearing, the Hearings Panel will determine to continue to allow the listing of the Common Stock on Nasdaq or that the Company will be able to evidence compliance with the applicable listing criteria within the period of time, if any, that may be granted by the Hearings Panel.

The Staff Determination does not affect the Company’s operations or reporting requirements with the SEC.

In connection with the above, in an effort to regain compliance with the Bid Price Requirement, the Company declared an 1:8 reverse common stock split effective with the opening of public equity markets on September 28, 2026 (see Note 16). All information throughout these consolidated financial statements related to the Company’s common stock has been retroactively revised to reflect the reverse stock split.

The Company and its Board of Directors continue to review other potential measures going forward.

NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation

The accompanying consolidated financial statements include the balances of Brightline and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

In preparation of the consolidated financial statements in accordance with GAAP, the Company makes certain estimates and assumptions in determining the amounts reflected in the financial statements and the related notes. Actual results could differ from those estimates.

Discontinued Operations and Reclassifications

In June 2026, the decision was made by the Company to transform from a portfolio of businesses into a focused technology company centered on its BLI Sub and its product SpatialCore, an interoperability infrastructure platform for Physical AI.

Since the Company’s new leadership and Board of Directors assumed responsibility on June 1, 2026, the Company has focused on a series of initiatives intended to simplify the business, accelerate growth and strengthen its position in the emerging Physical AI market. These efforts have included the divestiture of all non-core and underperforming subsidiaries.

As further detailed in Note 5, the Company determined that the divestiture/wind down of subsidiaries pursuant to the efforts above met the criteria for presentation as discontinued operations as it represented a strategic shift that had a major impact on the Company’s operations and financial results.

Accordingly, results of operations, financial position, and cash flows for all subsidiaries except BLI Sub are reported as discontinued operations on the consolidated statement of operations and assets/liabilities of discontinued operations on the consolidated balance sheets for all periods presented.

Unless otherwise noted, information throughout these consolidated financial statements relates to continuing operations.

Cash and Cash Equivalents

Cash and equivalents represent cash and short-term, highly liquid investments, that are both readily convertible to known amounts of cash and so near their maturity they present insignificant risk of changes in value because of changes in interest rates, with maturities three months or less at the date of purchase.

Accounts Receivable

Accounts receivable consists of amounts due from customers under normal trade terms. We recognize accounts receivable at the amount we expect to collect from our customers. We provide an allowance for credit losses to reflect the estimated amount of accounts receivable that may not be collectible. We determine the allowance for credit losses through a combination of specific identification of troubled accounts, historical loss experience, industry trends, current market conditions, and customer creditworthiness. The allowance for credit losses is adjusted periodically to reflect changes in these factors.

Goodwill

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.

Goodwill is tested at the reporting unit (“RU”) level under the acquisition method approach per Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) 350-20, which represents all direct revenue and expense of the RU business. Goodwill is analyzed both quantitatively and qualitatively.

Quantitative measures primarily include a discounted cash flow model (“DCF”) assuming certain revenue and profit levels. The enterprise value of the RU based on the DCF model is compared to the carrying value of the RU. Quantitative models also may include industry comparable revenue multiple analyses.

Qualitative analysis includes existing customer contracts and quality of customers, expected new and follow-on contracts, value of the underlying technology developments, etc.

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 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 in the Company’s consolidated balance sheet as of June 30, 2025. Contingent consideration has been recorded at its fair values using unobservable inputs that include assumptions regarding financial forecasts and discount rates. 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.

The Company’s other financial instruments consist primarily of accounts receivable, accounts payable and other liabilities, and are reported at approximate fair value due to the short-term nature of these instruments.

Lease Obligations

Our operating leases are primarily comprised of administrative office space. We determine if an arrangement is a lease at inception and most of our leases contain fixed components. Our lease agreements may contain variable costs and such variable lease costs are expensed as incurred on the consolidated statements of operations.

For leases with a lease term greater than 12 months, Right-of-use (“ROU”) assets and lease liabilities are recognized on our balance sheets at the commencement date based on the present value of the remaining fixed lease payments and includes only payments that are fixed and determinable at the time of commencement.

Our lease terms may include options to extend the lease When determining the probability of exercising such options, we consider contract-based and market-based factors. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Our incremental borrowing rate is based on our understanding of what our credit rating would be in a similar economic environment.

Operating lease costs are recognized on a straight-line basis over the lease terms.

Revenue Recognition

Nature of Revenues

The Company primarily 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 and deferred costs, respectively, in the accompanying consolidated balance sheets. Deferred costs include cash payroll costs and may include payments to consultants and vendors.

For distinct performance obligations recognized over time, the Company records deferred costs (costs in excess of billings) when revenue is recognized prior to invoicing, or deferred revenue (billings in excess of costs) when revenue is recognized subsequent to invoicing.

The Company recognizes royalty income pursuant to agreements with divested entities representing a percentage of said entities collected revenue.

Significant Judgments

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.

Disaggregation of Revenue

The Company generated revenue by delivering: (i) Software Services, consisting primarily of Spatial Computing projects, solutions and consulting services, and (ii) Royalty income. The Company 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. The Company also generates Software Services revenues which 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.

Timing of Revenue

Timing of revenue recognition may differ from the timing of invoicing to customers. The Company generally records an unbilled receivable asset when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing.

For certain Software Services project contracts the Company invoices customers after the project has been delivered and accepted by the customer. Software Service project contracts typically consist of designing and programming software for the customer. In most cases, there is only one distinct performance obligation, and revenue is recognized upon completion, delivery and customer acceptance. Contracts may include multiple distinct projects that can each be implemented and operated independently of subsequent projects in the contract. In such cases, the Company accounts for these projects as separate distinct performance obligations and recognizes revenue upon the completion of each project or obligation, its delivery and customer acceptance.

For contracts recognized over time, deferred revenue includes billings invoiced for software projects for which the contract’s performance obligations are not complete.

In certain Software Services project contract situations, the Company invoices customers for a substantial portion of the project upon entering into the contract due to their custom nature and revenue is recognized based upon percentage of completion. Revenue recognized subsequent to invoicing is recorded as deferred revenue (billings in excess of cost) and revenue recognized prior to invoicing is recorded as a deferred cost (cost in excess of billings).

For Software Services consulting or retainer contracts, the Company generally invoices customers monthly at the beginning of each month in advance for services to be performed in the following month. The sole performance obligation is satisfied when the services are performed. Software Services consulting or retainer contracts typically consist of ongoing support for a customer’s software or specified business practices.

The timing of revenue recognition for the years ended June 30, 2026 and 2025 was as follows:

Customer Concentration

One customer accounted for approximately 78% of the Company’s total revenue for the year ended June 30, 2026. One different customer accounted for approximately 80% of the Company’s total revenue for the year ended June 30, 2025.

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 based upon historical volatility for a rolling previous year’s trading days of the Company’s common stock. 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 emerging industry and uncertain market environment the Company operates in, research and development costs are not capitalized.

Income Taxes

The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company establishes a valuation allowance if it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest for the years ended June 30, 2026 and 2025. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

Warrants

The Company accounts for warrants issued in connection with equity financings as either equity-classified or liability-classified instruments based on an assessment of the specific terms of each warrant and applicable authoritative guidance in ASC 480 and ASC 815-40. The assessment considers whether the warrants are freestanding financial instruments under ASC 480, whether they meet the definition of a liability under ASC 480, and whether they meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed to the Company’s own common stock and whether the holders could potentially require net cash settlement in circumstances outside the Company’s control. This assessment is performed at issuance and as of each subsequent reporting date while the warrants remain outstanding. Equity-classified warrants are recorded within additional paid-in capital at their issuance-date relative fair value and are not subsequently remeasured. When an equity-classified warrant containing a down-round feature is triggered, the Company measures the value of the effect of that feature and recognizes it as a deemed dividend and a reduction of income available to common stockholders in basic earnings per share.

Earnings Per Share

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of potentially dilutive shares of common stock outstanding during the period using the treasury stock method. Potentially dilutive common shares include the issuance of potential shares of common stock for outstanding stock options and warrants.

Recent Accounting Pronouncements Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes – Improvements to Income Tax Disclosures, requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company adopted this standard update effective July 1, 2025 using a prospective approach and included the required disclosures in Note 13. This standard update did not affect the Company’s operating results.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to enhance specified information about certain costs and expenses at each interim and annual reporting period so that investors can better understand an entity’s overall performance. The guidance is effective for the Company’s annual periods beginning July 1, 2027. The Company is currently evaluating the ASU to determine its impact on its financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU provides a comprehensive list of interim disclosures that are required by GAAP and clarifies the applicability of Topic 270, as well as a requirement to disclose events since the end of the last annual reporting period that have a material impact on the entity. The new standard will become effective for the Company’s interim disclosures beginning in fiscal year 2029. Early adoption is permitted and the new guidance should be applied prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of this standard on its financial statements and disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements. This ASU includes amendments to the FASB Accounting Standards Codification for a broad range of topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. These amendments are not expected to have a significant effect on current accounting practice for most entities. The new standard will become effective for the Company’s interim and annual reporting periods beginning in fiscal year 2028. Early adoption is permitted on an issue-by-issue basis and the new guidance should be applied prospectively or retrospectively on an issue-by-issue basis. The Company is currently evaluating the impact of this standard on its financial statements and disclosures.

NOTE 5. DIVESTITURES, BUSINESS WIND DOWNS, DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

In June 2026, the decision was made by the Company to transform from a portfolio of businesses into a focused technology company centered on its Brightline subsidiary and its SpatialCore product, an interoperability infrastructure platform for Physical AI.

Since the Company’s new leadership and Board of Directors assumed responsibility on June 1, 2026, the Company has focused on a series of initiatives intended to simplify the business, accelerate growth and strengthen its position in the emerging Physical AI market. These efforts have included the divestiture of all non-core and underperforming subsidiaries.

Accordingly, all subsidiaries except BLI Sub are reported as discontinued operations on the consolidated statement of operations and assets/liabilities of discontinued operations on the consolidated balance sheets for all periods presented.

Divestiture

Glimpse Learning, LLC (“Learning”)

In June 2026, the company sold its Learning subsidiary to a newly formed entity which is majority owned by the former chief executive of the Company (see Note 14). The Company received a 19.99% equity interest in the new entity and potential future royalty payments commencing in July 2027. The Company also paid the new entity a $200,000 working capital adjustment in July 2026, which represented the remaining term of software license customer support payments the Company had received as of June 30, 2026, in return for new entity assuming the obligation to satisfy these support commitments. This is reported as due to related party on the consolidated balance sheet as of June 30, 2026.

Learning has historically incurred losses, and the Company believes this trend will continue with the new entity, particularly considering the challenges to the future viability of the Virtual Reality/Augmented Related industry. In addition, this situation makes the likelihood of receiving more than de minimis royalties in the future remote. Accordingly, the Company considers the non-controlling equity interest to have no value and has recorded no contingent consideration to be received resulting in no gain, or loss, on the Learning divestiture.

Prior to the Learning divestiture and the Company’s refocus to SpatialCore, it was determined that the goodwill of Learning was impaired based on historical operating losses and lack of visibility to future profitable operations. A total goodwill impairment of $300,000 was recorded in the year ended June 30, 2026 and is included in the loss from discontinued operations on the consolidated statement of operations

Learning’s results of operations are reported in loss from discontinued operations on the consolidated statement of operations and its assets and liabilities are reports as assets or liabilities of discontinued operations on the consolidated balance sheet.

Divestiture and Business Wind Down

Glimpse Lenses, LLC (“Lenses”)

In October 2024, a significant portion of Lenses (known as QReal, LLC (“QReal”) at that time) was divested, including its Tukish subsidiary, in a management buyout by the then General Manager of QReal.

The assets, as defined in the divestiture agreement, of QReal/Glimpse Turkey, were sold in return for a $1.56 million senior secured convertible note (the “Note”) from the purchasing (“New”) entity and a 10% equity stake in New entity. Principal payback of the note is tied directly to revenue collected by New entity (separate from the Milestone – see below). The Company has fully reserved against the Note as collectability was considered remote at the time and there have been no note payments to date. The Company recorded a loss on this divestiture of approximately $0.16 million in the year ended June 30, 2025.

The Company retained the revenues from QReal’s largest customer in full, until such time that the Company had collected and retained $1.35 million net cash in the aggregate, after taking into account all related operating expenses and fees (the “Milestone”). The Milestone was never fully achieved and QReal’s major customer terminated their revenue agreement in March 2026. This customer termination led to the wind down of the Lenses subsidiary during the year ended June 30, 2026.

Lenses’ results of operations (including loss on QReal divestiture) are reported in loss from discontinued operations on the consolidated statement of operations and its assets and liabilities are reports as assets or liabilities of discontinued operations on the consolidated balance sheet.

Business Wind Down

Sector 5 Digital, LLC (“S5D”)

As part of the Company’s refocus on SpatialCore, S5D was identified as a non-core and underperforming subsidiary. During the year ended June 30, 2026, all S5D customer were informed of the decision to wind down the business and all employees were terminated.

During the year ended June 30, 2026, the Company sold certain assets of S5D and recorded a gain on sale of $0.24 million.

S5D’s results of operations (including gain on sale of certain assets) are reported in loss from discontinued operations on the consolidated statement of operations and its assets and liabilities are reports as assets or liabilities of discontinued operations on the consolidated balance sheet.

Summary

Following are the details of the aforementioned subsidiaries divestiture/wind downs reported as assets/liabilities of discontinued operations on the consolidated balance sheets as of June 30, 2026 and 2025.

Following are the details of the aforementioned subsidiaries divestiture/wind downs reported as discontinued operations on the consolidated statements of operations for the years ended June 30, 2026 and 2025.

NOTE 6. GOODWILL IMPAIRMENT

During the year ended June 30, 2026 (specifically during the three months ended March 31, 2026) there occurred a triggering event that gave rise to assess the carrying value of the BLI Sub RU goodwill balance.

The BLI Sub reporting unit (“BRU”) product customer is principally the U.S. Department of War (“DOW”). U.S. Government funding for new DOW projects that BRU was anticipating was put on hold as a result of: 1) the U.S. Government shutdown in January 2026, 2) the Continuing Budget Resolution in February 2026 which produced no new funding, and 3) delay in passing of the U.S. Government fiscal year 2026 budget.

The budget delay above resulted in BRU no longer being able to invoice its current primary DOW customer for work currently being done, material uncertainty regarding whether the current work will be funded in an ultimate U.S. Government budget passage and limited visibility regarding its ability to secure other future revenue contracts.

While revenues may be generated in the future, if the U.S. Government fiscal year 2026 budget or subsequent years budgets are approved or when the project is included in an approved budget in subsequent years, the current lack of sight into future revenue contracts and the Company’s inability to generate material revenues in the current fiscal year has removed the primary driver of the quantitative DCF modelling that is utilized in order to determine the enterprise value of BRU. This also makes the qualitative assessment of BRU’s technology challenging to assess. In accordance with our accounting policies (see Note 4), it was determined that BRU enterprise value is negligible from a financial reporting perspective. This resulted in a total goodwill impairment to the BRU, and the Company recorded a goodwill impairment expense of approximately $10.56 million in the consolidated statement of operations for the year ended June 30, 2026.

NOTE 7. SEGMENT AND RELATED INFORMATION

The Company hasone reportable segment managed on a consolidated basis: immersive technology software development and commercialization. The Company derives revenue primarily in the United States and manages all business activities on a consolidated basis. The services are deployed to customers in a similar manner.

The Company’s chief operating decision maker (“CODM”) is the chief executive officer who reviews financial information presented on a consolidated basis to allocate resources, evaluate performance and make overall operating decisions. The measure of segment profit or loss that is most consistent with the consolidated financial statements is net cash used in operating activities. The accounting policies of our single reportable segment are the same as those for the consolidated financial statements. The level of disaggregation and amounts of significant revenue and cash expenses that are regularly provided to the CODM are the same as presented in the consolidated statement of operations. Likewise, the measure of segment assets is reported on the consolidated balance sheets as total assets.

The table below is a summary of segment operating expenses from continuing operations.

Other expenses include facilities costs and other individually insignificant costs.

NOTE 8. FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

The Company’s money market funds are categorized as Level 1 within the fair value hierarchy. As of June 30, 2026 and, 2025, the Company’s cash and cash equivalents were as follows:

Contingent Consideration

Contingent consideration was valued at the time of the BLI Sub acquisition using unobservable inputs and included using a Monte Carlo simulation model, which model incorporated revenue volatility, internal rate of return, and a risk-free rate. 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, at times, of a third-party valuation specialist.

There is no contingent consideration as of June 30, 2026.

In July 2025 the Company finalized the contingent consideration related to the acquisition of BLI Sub which resulted in a final contingent consideration cash payout of $1.50 million in October 2025. $0.75 million of this payment was made to the current chief executive officer (effective June 1, 2026) of the Company and his immediate family. See Note 14.

The change in fair value of contingent consideration for BLI Sub for the year ended June 30, 2026 was a non-cash expense of approximately $0.02 million included as change in fair value of acquisition contingent consideration in the consolidated statement of operations. This reflects the change in the time value of money related to the present value of anticipated payment.

As of June 30, 2025, the Company’s contingent consideration liability balance was as follows:

Actual BLI Sub revenue through June 30, 2025 resulted in additional gross consideration of $1.50 million over the remainder of the contingent consideration payout period ending on July 31, 2025, payable in cash. Actual BLI Sub revenue through July 31, 2025 did not trigger additional consideration. Accordingly, contingent consideration remaining for the BLI Sub acquisition as of June 30, 2025 is calculated at the present value of the remaining $1.50 million cash discounted at risk-free interest rates from the estimated payment date.

The change in fair value of contingent consideration for BLI Sub for the year ended June 30, 2025 was a non-cash expense of approximately $0.14 million included as change in fair value of acquisition contingent consideration in the consolidated statement of operations. This reflects the change in the time value of money related to the present value of anticipated payments.

The change in fair value of contingent consideration for XR Terra, LLC (“XRT”, ultimately part of Learning) for the year ended June 30, 2025 was a non-cash gain of approximately $0.03 million included in loss on discontinued operations in the consolidated statement of operations. This reflects the reversal of the estimated final consideration payment related to the acquisition of XRT. The contingent consideration payout period ended September 2024.

NOTE 9. NOTES RECEIVABLE

In connection with the QReal divestiture (see Note 5), the Company made personal loans to the majority owner of the purchasing entity to assist in startup funding of said entity. These loans were personally guaranteed by said majority owner. The loans were fully repaid during the year ended June 30, 2026. The outstanding balance on the loans is recorded as of June 30, 2025 in the consolidated balance sheets as notes receivable.

NOTE 10. DEFERRED COSTS AND DEFERRED REVENUE

As of June 30, 2026 and, 2025, deferred costs totaling $0 and $42,153, respectively, consist of costs deferred under contracts not completed and recognized at a point in time. As of June 30, 2026 and 2025, deferred revenue, totaling $6,961 and $0, respectively, consists of revenue deferred under contracts not completed and recognized at a point in time.

The following table shows the net activity of deferred cost and deferred revenue for the years ended June 30, 2026 and 2025:

NOTE 11. EQUITY

Common Stock Issued

Securities Purchase Agreements (“SPA”)

SPA 2026

In May 2026, the Company completed a SPA with certain existing institutional and individual investors selling 77,788 shares of common stock at $4.40 per share and prefunded warrants to purchase up to 341,530 shares of common stock at $4.39 per warrant (which is convertible to one share of common stock on a one for one basis).

Included with this SPA, the Company issued common stock warrants to purchase up to 524,148 shares of common stock at $4.39 per warrant, convertible to common stock on a one for one basis. The relative fair value of the warrants issued in connection with this SPA is $1,609,692, which is included in additional paid-in capital.

The Company realized total net proceeds (after professional fees) of $1.77 million from the May 2026 SPA.

Also see Notes 14 and 16.

SPA 2024

In December 2024, the Company completed a SPA with an institutional investor selling 248,750 shares of common stock at $21.20 per share and prefunded warrants to purchase up to 95,000 shares of common stock at $21.19 per warrant (which is convertible to one share of common stock on a one for one basis). The prefunded warrants had an exercise price of $0.001 per share of common stock, and were exercised in full in January 2025 for a de minimis amount (95,000 shares at $0.001 per share).

The Company realized total net proceeds (after underwriting and professional fees) of $6.79 million from the December 2024 SPA.

Exercise of Warrants

In December 2024, an institutional investor exercised warrants (issued in connection with the November 2021 SPA) convertible into 12,500 shares of common stock. The Company realized proceeds of $0.18 million ($14.00 per share).

In January 2025, an institutional investor exercised warrants (issued in connection with a December 2024 SPA) convertible into 95,000 shares of common stock. The Company realized de minimis proceeds (95,000 shares at $0.001 per share).

Common stock issued to Employees as Compensation

During the year ended June 30, 2026, the Company issued 2,625 unrestricted shares of common stock to an employee as compensation and recorded share-based compensation expense of approximately $0.03 million in loss on discontinued operations in the consolidated statement of operations.

During the year ended June 30, 2025, the Company issued 4,625 unrestricted shares of common stock to an employee as compensation and recorded share-based compensation expense of approximately $0.05 million in loss on discontinued operations in the consolidated statement of operations.

Common stock issued to Vendors

During the year ended June 30, 2025, the Company issued 312 unrestricted shares of common stock to a vendor for services performed and recorded share-based compensation expense of approximately $0.01 million in loss on discontinued operations in the consolidated statement of operations.

Common stock issued for Exercise of Stock Options

During the year ended June 30, 2025, the Company issued approximately 1,000 shares of common stock in cashless transactions upon exercise of the respective option grants and realized cash proceeds ofzero.

Warrants

In connection with the November 2021 SPA and the May 2026 SPA, the Company issued warrants, which are exercisable into Company common shares on a one-for-one basis, as detailed below. The warrants are not publicly traded.

The remaining outstanding warrants as of June 30, 2026 are:

Down-round adjustment

The warrants issued in the Company’s November 2021 SPA contain a provision that reduces the exercise price if the Company subsequently issues common stock, or securities exercisable or convertible into common stock, at an effective price per share below the then-current exercise price, subject to specified exceptions. In connection with the May 2026 SPA offering of common stock and pre-funded warrants at an effective price of $4.40 per share, this provision was triggered and the exercise price of the 81,250 such warrants then outstanding was reduced from $14.00 per share to $4.40 per share. The number of shares issuable upon exercise of those warrants was not changed.

In accordance with ASC 815-40-35-17, the Company measured the value of the effect of the down round feature as the difference between the fair value of the warrants immediately after the trigger using the pre-reduction exercise price of $14.00 and their fair value using the reduced exercise price of $4.40. For each tranche, both measurements were performed as of the same date using the same stock price, expected volatility, risk-free interest rate and remaining contractual term, so that the exercise price is the only assumption that differs between them, and neither measurement reflects the down-round feature. The Company determined that value to be $89,005 using a Black-Scholes option pricing model. Because the two tranches have different remaining contractual terms, the assumptions were determined separately for each tranche: expected volatility of 83.9% and 84.7%; risk-free interest rates of 3.8% and 3.8%; remaining contractual terms of 0.47 and 0.97 years; and an expected dividend yield of 0% for both tranches.

The $89,005 value of the effect of the down round feature was recognized as a deemed dividend and reduced income available to common stockholders in the computation of net loss per share for the year ended June 30, 2026. Because the Company has an accumulated deficit and the amount represents a return of contributed capital rather than a distribution of earnings, no amount was reclassified within stockholders’ equity and total stockholders’ equity was unchanged. The down round adjustment did not affect the equity classification of the warrants, and the warrants were not remeasured.

Stock-Based Compensation

Equity Incentive Plan

The Company’s 2016 Equity Incentive Plan (the “Plan”), as amended, has approximately 1.78 million common shares reserved for issuance. As of June 30, 2026, there were approximately 1.33 million shares available for issuance under the Plan.

The Company recognizes compensation expense relating to awards ratably over the requisite period, which is generally the vesting period.

Stock options have been recorded at their fair value. The Black-Scholes option-pricing model assumptions used to value the issuance of stock options under the Plan for the specific periods below are noted in the following table:

The grant date fair value for options granted during the years ended June 30, 2026 and 2025 was approximately $0.48 million and $0.75 million, respectively.

The following is a summary of the Company’s stock option activity for the years ended June 30, 2026 and 2025:

The intrinsic value of stock options activity for the years ended June 30, 2026 and 2025 was computed using a fair market value (fiscal year to date VWAP – volume weighted average price) of the common stock of $8.80 per share and $18.48 per share, respectively.

The intrinsic value of stock options outstanding and exercisable as of June 30, 2026 and 2025 was computed using Nasdaq market closing prices of the common stock of $6.16 per share and $10.88 per share, respectively.

The preceding stock option activity tables exclude 0.25 million executive target options, whose vesting was considered remote (and therefore not expensed) from issuance in 2023 until these never-vested options were cancelled upon the executives’ resignations in May and June 2026.

The Company’s stock option-based expense for the years months ended June, 2026 and 2025 consisted of the following:

As of June 30, 2026, total unrecognized compensation expense to employees, board members and vendors related to stock options was approximately $0.23 million and is expected to be recognized over a weighted average period of 1.56 years.

NOTE 12. EARNINGS PER SHARE

The following table presents the computation of basic and diluted net loss per common share:

Potentially dilutive securities, on a weighted average basis, that were not included in the calculation of diluted net loss per share attributable to common stockholders because their effect would be anti-dilutive, are as follows (in common equivalent shares):

The potentially dilutive options include 0.25 million executive target options for both periods (see Note 11).

NOTE 13. PROVISION FOR INCOME TAXES

The components of loss before provision for income taxes for the years ended June 30, 2026 and 2025 were as follows:

The Company recordedno provision for foreign income taxes for the years ended June 30, 2026 and 2025.

There wasno current or deferred income tax provision for the years ended June 30, 2026 and 2025.

A reconciliation of the expected tax provision at the statutory federal income tax rate to the Company’s recorded tax provision consisted of the following, subsequent to the adoption of ASU 2023-09:

A reconciliation of the expected tax provision at the statutory federal income tax rate to the Company’s recorded tax provision consisted of the following, prior to the adoption of ASU 2023-09:

There was no cash paid for income taxes for the year ended June 30, 2026 subsequent to the adoption of ASU 2023-09.

Net deferred tax asset consisted of the following as of June 30, 2026 and 2025:

The Company has established a valuation allowance against the net U.S. deferred tax assets due to uncertainty regarding the ability to utilize these deferred tax assets in the future. As of June 30, 2026, the Company had Federal net operating loss carryforwards (“NOLs”) for the years ending June 30, 2018 and prior of approximately $2.88 million that begin to expire in 2037 and NOLs for the years ending June 30, 2019 through 2026 of approximately $52.46 million that have no expiration date. New York State / New York City NOLs as of June 30, 2026 of approximately $15.26 million and $15.26 million, respectively, have no expiration date. California and Virginia State NOLs as of June 30, 2025 of $17.02 million and $4.97 million, respectively, have no expiration date.

Section 382 of the U.S. Internal Revenue Code imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in stock ownership. The Company has not completed a Section 382 analysis of stock ownership and its effect upon federal and state NOL carryforwards. Consequently, the Company’s NOL carryforwards may be subject to annual limitations under Section 382.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and taxing strategies in making this assessment. As a result of the uncertainty in the realization of the Company’s deferred tax assets, the Company has provided a valuation allowance for the full amount of the deferred tax assets as of June 30, 2026 and 2025.

Upon completion of its 2025 (for fiscal year ending June 30, 2026) U.S. income tax return, the Company may identify additional remeasurement adjustments. The Company will continue to assess its provision for income taxes as future guidance is issued, but does not currently anticipate significant revisions will be necessary.

Uncertain Tax Positions

The following table summarizes the activity related to unrecognized tax benefits for the years ended June 30, 2026 and 2025:

No interest and penalties were incurred or accrued for the years ended June 30, 2026 and 2025.

The Company files U.S., state and foreign tax returns with varying statutes of limitations. No examinations by U.S., state or foreign authorities are currently under way.

NOTE 14. RELATED PARTY TRANSACTION

In June 2026, the company sold the Learning subsidiary to an entity controlled by the former chief executive officer of the Company. See Note 5.

In February 2025, the company paid to the current (effective June 1, 2026) chief executive officer of the Company and his immediate family $0.75 million representing contingent consideration due from the August 2022 purchase of the BLI Sub. In October 2025, the company paid to the current (effective June 1, 2026) chief executive officer of the Company and his immediate family an additional $0.75 million representing the final contingent consideration due from the August 2022 purchase of the BLI Sub by the Company. There are no further contingent consideration payments due on the August 2022 purchase of the BLI Sub as of June 30, 2026. See Note 8.

The May 2026 SPA (Note 11) included 16,197 shares of common stock (and associated warrants) issued to current and former Company executives and Board members. Gross proceeds received from these related parties was approximately $71,000.

NOTE 15. COMMITMENTS AND CONTINGENCIES

Lease Costs

The Company made cash payments for all operating leases for the years ended June 30, 2026 and 2025, of approximately $0.22 million and $0.27 million, respectively, which were included in net cash used in operating activities within the consolidated statements of cash flows. As of June 30, 2026, the Company’s operating leases have a weighted average remaining lease term of 0.58 years and weighted average discount rate of 8.44%.

The total rent expense for all operating leases for the years ended June 30, 2026 and 2025, was approximately $0.21 million and $0.29 million, respectively.

Lease Commitments

The Company has two operating leases for its offices. These existing leases have remaining lease terms ranging from approximately 0.34 to 0.58 years. Certain lease agreements contain options to renew, with renewal terms that generally extend the lease terms by 1 to 3 years for each option. Lease renewals have not been determined at this time.

Future approximate undiscounted lease payments for the Company’s operating lease liabilities and a reconciliation of these payments to its operating lease liabilities as of June 30, 2026 are as follows:

Contingent Consideration for Acquisitions

Contingent consideration for acquisition consists of the following as of June 30, 2026 and 2025, respectively (see Note 8):

NOTE 16. SUBSEQUENT EVENTS

In August 2026, as part of the transformation from a portfolio of businesses into a focused technology company centered on SpatialCore, the Company:1) merged all of its subsidiary companies into the parent, The Glimpse Group, Inc., and 2) changed the name of the Company to Brightline Interactive, Inc. In conjunction therewith, the Company’s Nasdaq ticker changed to “BTLN” (previously “GGRP”).

As detailed in Note 3, the Company declared an 1:8 reverse stock split effective with the opening of public equity markets on September 28, 2026. This is in an effort to remediate the delisting notification from the Nasdaq received on September 11, 2026, which listing suspension is currently stayed pursuant to a hearing request with the Nasdaq pending the issuance of a written decision by the hearings panel.

On September 23, 2026 the Company entered into a $1.25 million SPA, which provides for theissuance of a reverse split adjusted amount of 223,214 common shares and a like amount of warrants convertible on a one for one basis into Company common stock. The warrants are immediately exercisable at a reverse split adjusted price of $16.00 per share. The Company anticipates the full gross proceeds to be received by September 30, 2026. This transaction does not change the Company’s status described in Note 2. Going Concern.