BUSINESS ACQUISITION AND ASSET ACQUISTION - TECHNOLOGY

12 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

BUSINESS ACQUISITION AND ASSET ACQUISTION - TECHNOLOGY

NOTE 4. BUSINESS ACQUISITION AND ASSET ACQUISTION - TECHNOLOGY

Acquisition – Brightline Interactive, LLC (“BLI”)

On May 25, 2022, Glimpse entered into an Agreement and Plan of Merger (the “Merger Agreement”), with BLI and each of the equity holders of BLI named therein (collectively, the “Members”). BLI is an immersive technology company that provides Spatial Computing, VR and AR based training scenarios and simulations for commercial and government customers. The acquisition significantly expands the Company’s operating and financial scale, introduces new tier 1 customers specifically in the communication, entertainment and government segments, and bolsters the executive management team.

In August 2022, BLI became a wholly-owned subsidiary of Glimpse.

The aggregate consideration to the Members per the Merger Agreement consisted of: (a) $568,046 cash paid (net of working capital adjustments, as defined, of $505,787) at the August 1, 2022 closing (the “Closing”); (b) $1,926,167 of cash paid at the Closing to extinguish BLI’s outstanding debt and pay down other obligations; (c) 714,286 shares of the Company’s common stock fair valued at the Closing (which was the day’s closing price discounted for one year sales restriction from Closing); and (d) future purchase price considerations payable to the Members, up to a residual of $24,500,000. The $24,500,000 is based and payable on BLI’s achievement of certain revenue growth milestones at points in time and cumulatively during the three years post-Closing Date, the payment of which shall be made up to $12,000,000 in cash and the remainder in common shares of the Company, priced at the dates of the future potential share issuance subject to a common stock price floor of $7.00 per share, all as defined.

The BLI acquisition’s fair value at Closing was $12,665,357.

The fair value allocation for the purchase price consideration paid at Closing was recorded as follows:

Purchase price consideration:
Cash paid to members at Closing	$	2,494,213
Company common stock fair value at Closing		2,846,144
Fair value of contingent consideration to be achieved		7,325,000
Total purchase price	$	12,665,357
Fair value allocation of purchase price:
Cash and cash equivalents	$	15,560
Accounts receivable		253,041
Deferred costs/contract assets		552,625
Other assets		10,000
Equipment, net		55,580
Accounts payable and accrued expenses		(848,079	)
Deferred revenue/contract liabilities		(2,037,070	)
Intangible assets - customer relationships		3,310,000
Intangible assets - technology		880,000
Goodwill		10,473,700
Total fair value allocation of purchase price	$	12,665,357

The Company’s fair value estimate of the contingent consideration for the BLI acquisition was determined using a Monte Carlo simulation and other methods which account for the probabilities of various outcomes. The Company’s fair value estimate related to the identified intangible asset of customer relationships was determined using the Multi-Period Excess Earnings Method. This valuation method requires management to project revenues, customer attrition and cash flows for the reporting unit over a multiyear period, as well as determine the weighted average cost of capital to be used as a discount rate. The Company’s fair value estimate related to the identified intangible asset of technology was determined using the Relief from Royalty Method. This valuation method requires management to estimate the royalty rate based on market data for royalty arrangements involving similar technology, the obsolesce rate, and the weighted average cost of capital to be used as a discount rate.

THE GLIMPSE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024 AND 2023

The goodwill recognized in connection with the acquisition is primarily attributable to new markets access and will be deductible for tax purposes.

The results of operations of BLI have been included in the Company’s consolidated financial statements from the date of acquisition. For the years ended June 30, 2024 and 2023, BLI had revenue of $2.78 million and $4.85 million, respectively, and net losses of $2.63 million and $2.14 million, respectively (exclusive of contingent consideration fair value adjustment gains of $1.87 million and $1.11 million, respectively), reported in the consolidated statements of operations.

Asset Acquisition - Technology

In November 2022, the Company entered into a technology assignment agreement with inciteVR (“IVR”), whereby the Company purchased the entire right, title and interest to certain VR/AR technology, as defined, to expand product offerings.

The Company issued 71,430 shares (calculated as defined) of the Company’s common stock, with a fair value (based on the Company’s common stock price at the close of business on the date of the assignment agreement) of approximately $327,000 in full payment of the assignment, with no further consideration obligations thereto. The $327,000 was recorded as intangible assets- technology on the Company’s consolidated balance sheet as of June 30, 2024 and 2023.

Certain IVR owners became employees of Glimpse after the assignment.