QREAL AND GLIMPSE TURKEY DIVESTITURE	6 Months Ended
Dec. 31, 2024
Qreal And Glimpse Turkey Divestiture
QREAL AND GLIMPSE TURKEY DIVESTITURE	NOTE 5. QREAL AND GLIMPSE TURKEY DIVESTITURE As part of its previously announced strategic realignment around Spatial Core and divestiture of non-core assets, effective October 1, 2024, the Company divested the business of its wholly owned subsidiary company QReal, LLC (“QReal”) and its related operating entity GLIMPSE GROUP YAZILIM VE ARGE TICARET ANONIM SIRKET (“Glimpse Turkey”) in a management buyout by the General Manager of QReal. The Company does not expect material changes to its expected revenues for years ended June 30, 2025 and 2026. The Company retains the revenues from QReal’s largest customer in full, until such time that the Company has collected and retained $1.35 million net cash in the aggregate, after taking into account all related operating expenses and fees (the “Milestone”). After satisfaction of the Milestone, the Company will receive a monthly cash revenue share for a period of 18 months in relation to any revenues generated from this same customer. The assets, as defined, of Qreal/Glimpse Turkey, were sold in return for a $1.56 million senior secured convertible 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). The note converts to New entity equity upon certain equity capital raising of New entity, as defined. The Company accounts for the investment in New entity at cost ($100) because the Company does not control or have significant influence over the investment. The Company recorded a non cash gain on the divestiture of approximately $1.40 million which is included in general and administrative expenses on the condensed consolidated statement of operations for the three and six months ended December 31, 2024. The Company has also fully reserved against the note as collectability is considered remote and recorded a loan loss reserve of $1.50 million in general and administrative expenses on the condensed statement of operations for the three and six months ended December 31, 2024. The note reserve fully offsets the gain on divestiture detailed above. Revenue from the divested business that is not being retained going forward was approximately $0.07 million and $0.13 million for the three and six months ended December 31, 2024, and approximately $0.07 million and $0.16 million for the three and six months ended December 31, 2023. The Company anticipates operational cost savings from the divestiture after only retaining direct expenses related to the retained QReal largest customer. Pursuant to the original acquisition of QReal by the Company in 2016, upon sale of the entity the original sellers are due 8% (“economic interest”) of the Milestone proceeds. As the achievement of the Milestone is uncertain, liability for these payments will be recorded as actual Milestone proceeds occur. The Company recorded an expense of approximately $0.01 million related to the economic interest in general and administrative expense on the condensed consolidated statement of operations for the three and six months ended December 31, 2024.

QREAL AND GLIMPSE TURKEY DIVESTITURE

6 Months Ended

Dec. 31, 2024

Qreal And Glimpse Turkey Divestiture

NOTE 5. QREAL AND GLIMPSE TURKEY DIVESTITURE

As part of its previously announced strategic realignment around Spatial Core and divestiture of non-core assets, effective October 1, 2024, the Company divested the business of its wholly owned subsidiary company QReal, LLC (“QReal”) and its related operating entity GLIMPSE GROUP YAZILIM VE ARGE TICARET ANONIM SIRKET (“Glimpse Turkey”) in a management buyout by the General Manager of QReal.

The Company does not expect material changes to its expected revenues for years ended June 30, 2025 and 2026. The Company retains the revenues from QReal’s largest customer in full, until such time that the Company has collected and retained $1.35 million net cash in the aggregate, after taking into account all related operating expenses and fees (the “Milestone”). After satisfaction of the Milestone, the Company will receive a monthly cash revenue share for a period of 18 months in relation to any revenues generated from this same customer.

The assets, as defined, of Qreal/Glimpse Turkey, were sold in return for a $1.56 million senior secured convertible 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). The note converts to New entity equity upon certain equity capital raising of New entity, as defined. The Company accounts for the investment in New entity at cost ($100) because the Company does not control or have significant influence over the investment.

The Company recorded a non cash gain on the divestiture of approximately $1.40 million which is included in general and administrative expenses on the condensed consolidated statement of operations for the three and six months ended December 31, 2024. The Company has also fully reserved against the note as collectability is considered remote and recorded a loan loss reserve of $1.50 million in general and administrative expenses on the condensed statement of operations for the three and six months ended December 31, 2024. The note reserve fully offsets the gain on divestiture detailed above.

Revenue from the divested business that is not being retained going forward was approximately $0.07 million and $0.13 million for the three and six months ended December 31, 2024, and approximately $0.07 million and $0.16 million for the three and six months ended December 31, 2023. The Company anticipates operational cost savings from the divestiture after only retaining direct expenses related to the retained QReal largest customer.

Pursuant to the original acquisition of QReal by the Company in 2016, upon sale of the entity the original sellers are due 8% (“economic interest”) of the Milestone proceeds. As the achievement of the Milestone is uncertain, liability for these payments will be recorded as actual Milestone proceeds occur. The Company recorded an expense of approximately $0.01 million related to the economic interest in general and administrative expense on the condensed consolidated statement of operations for the three and six months ended December 31, 2024.