The Glimpse Group, Inc.

Welcome to the Glimpse Group fiscal second quarter 2022 financial results webinar. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. The earnings release that accompanies this call is available on the investor section of the company's website at ir.theglimpsegroup.com. Before we begin the formal presentation, I'd like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's regulatory filings for a list of associated risks, and we would also refer you to the company's website for more supporting industry information. I would now like to hand the call over to Lerone Bentivim, President and CEO of the Glimpse Group. Lerone, the floor is yours.

Thank you, Mark, and thank you, everyone, for joining us. I am pleased to welcome you to the Glimpse Group fiscal second quarter 2022 financial results investor call for quarter-ended December 31st, 2021. Glimpse's fiscal second quarter was highlighted by record revenue. continued strong growth, our largest acquisition to date, a healthy follow-on financing, and additional key customer engagement that further confirm the adoption of our enterprise-focused VR, AR software and services solution. To review these operational highlights in more detail, during the quarter, we continue to see strong top-line growth as a result of new customer engagement and existing customer follow-on engagement INCLUDING MULTI-YEAR COMMITMENTS. RECORD SIX MONTH FINANCIAL 22 REVENUE FOR THE FIRST HALF OF 2.71 MILLION, A 78% INCREASE COMPARED TO THE FIRST HALF OF OUR FISCAL 21 EXCLUDING S5D ACQUISITION. RECORD SIX MONTH CORE SOFTWARE AND SERVICES REVENUE INCREASED BY 166% COMPARED TO THE FIRST HALF OF OUR 21 excluding Glymph's project-based revenue and the S5D acquisition. One of the most impactful second quarter highlights was our acquisition of Sector 5 Digital, or S5D, an enterprise-focused immersive technology company and Glymph's largest acquisition to date. We believe that this creative and well-structured acquisition has the potential to be a game changer, as it not only strengthens our financial and operational foundations, but also significantly improves our ability to scale and create synergies. I'll expand on this later in the presentation. Including S5D's unreviewed six-month revenue of approximately 2 million, the combined company's revenue was approximately 4.7 million for the first half of our financial year 2022. With continued internal growth, we're now on an expected annual revenue run rate of over $10 million without any additional organic growth or additional potential acquisitions. Post the S5D acquisition, between our combined revenues and with over 120 VR and AR software developers, engineers, and 3D artists, and five issued patents, I believe we are one of the largest independent VR and AR software and services company, and we plan on continuing to strengthen this position. Our position in the industry is translating into increased traction with major enterprise customers for AR and VR software and services. For example, during the quarter, we signed the largest contract in the company's history, a 1 million master service agreement and statement of work with a leading global social media and metaverse company for AR software and services. Our healthcare subsidiary company, Immersive Health Group, IHG, entered into a five-year VR software and services contract with Boston Medical Center, a large health system in New England. Our subsidiary company, Q-Reals, collaboration with Bole and M7 Innovations on AR campaigns showcasing volleys, sunglasses, goggles, and helmets in try-on and try-out experiences was awarded the best use of technology by the Modern Retail Award in 2021 in competition with tech leaders like Google and Snap. Importantly, the campaign saw commercial results that led to significant increase in sales growth. This helps validate our beliefs that AR technologies will fundamentally change the retail environment and the way customers evaluate, try on, and ultimately purchase products. One of the key benefits to being early to an industry is the potential to capture very wide concepts that we envision may be of great significance in the future as the industry matures. That effect we added to our intellectual property portfolio with the issuance of our fifth patent, and have additional patents previously filed and in process, we expect to file more patents throughout this year. Together with immersive technologies, blockchain and AI will be a vital part of the infrastructure of the metaverse. A demonstration of this is the rapidly growing NFT market. We believe NFTs will play an important role in the creation and transacting processes of assets in the metaverse. To that end, we created a limited edition 3D collectible, glimpse metal, non-fungible token that showcases our advanced capabilities. Over the coming quarters, we expect to make additional significant steps exploring AI and blockchain technologies. We continue to strengthen the composition of our board and recently added two new directors. Ian Charles, an experienced tech CFO with an expertise in software and services scaling, joined our board as an independent director in January 2022 and took the role of chair of our audit committee. And Jeff Meisner, a longtime industry veteran, in addition to continuing as Sector 5 Digital's general manager, became Glimpse's chief revenue officer as well as a director. This brings the number of directors to nine, five of which are independent, and demonstrates the importance of strong corporate governance practice for us. During the quarter, we completed a 15 million private placement comprised of common stock at approximately 43% premium to our IPO price and warrants price at approximately 110% premium to our IPO price. We have a strong and clean balance sheet, low burn rates relative to our cash position, and are very well positioned for further growth. In conjunction with our organic growth, we added three companies to the glimpse umbrella during the second half of 2021, and we continue to look to add high-quality companies that will expand us into new industry segments, increase our scale, further diversify and deepen the Glymph ecosystem, and enhance and strengthen our positioning in existing and new markets and geographies. Given the immediate impact and transformative potential of the Sector 5 digital acquisition, I'd like to further elaborate on the many benefits we believe it will come to bear. S5D is a leading and award-winning immersive technologies company. with a first-year customer base, including American Airlines, BAE Systems, Bell Flight, Ecolab, Halliburton, Galderma, and Textral Systems, among many others. This acquisition approximately doubles Glimpse's pre-acquisition annual revenue, significantly improves our business, operating, and financial scale, opens new markets to Glimpse, such as defense government contractors, while generating compelling go-to-market synergies across LIMC's diverse ecosystem. This acquisition helped grow our team by approximately 25 hard-to-come-by immersive technology talent, including a high-caliber industry executive in Jeff Meisner. From total revenue, immersive technology headcount, and customer diversification perspective, We believe this acquisition makes Glymphs one of the largest independent enterprise VR, AR software and services companies. I stress this as building scale in this emerging industry is critical and in our view creates a strong competitive advantage on several fronts. This acquisition, as well as the other two, was well structured with relatively small upfront payments and with most of the purchase price consideration dependent on the achievement of significant revenue growth milestones over the next three years. To be paid primarily in common stock based on Glimpse's stock price at those times. We always seek to align interest with our shareholders. When we acquire companies, they understand that it is not an exit, but rather aligning their future with Glimpse and becoming part of a larger ecosystem. While Gleams has been at it for almost six years, the Meta Facebook announcement in October 2021 set off a tidal wave of interest and awareness for the potential of the metaverse and immersive technology with other tech giants such as Microsoft, Roblox, NVIDIA, and Autodesk, also embracing that vision as well. Companies and consumers around the globe are exploring the new possibilities that exist to bring the metaverse to life and enable its development. We see this surge as the beginning of a hyper-growth cycle for this nascent industry, which will last for decades to come. I often get asked, what is the metaverse? As we see it, the metaverse will be a third immersive dimension to the two-dimensional digital world created in the previous tech cycle. It will be a combination of virtual 3D worlds brought to life using VR, AR, AI, and blockchain technologies. While still in early stages of development, in time, the metaverse will fundamentally transform the way we learn, work, shop, get entertained, and engage with society. Glimpse's subsidiary companies today provide the VR and AR software and service solutions that are enabling companies and organizations to make initial forays into the immersive world. As the metaverse develops, we believe that the Glimpses subsidiary companies will be supplying the underlying immersive software solutions, picks and shovels, that will facilitate enterprises and organizations' ability to build their presence and establish their footprint in the metaverse. The ability to transact will become a crucial component in the underlying functionality of the metaverse. In this regard, during the quarter, as a proof of concept of our capabilities, we launched the Glimpse Medal, one of the first fully metaverse-ready NFTs. By metaverse-ready, I mean that it can seamlessly and easily be used across all augmented and virtual reality platforms, from AR on a mobile phone, to a 2D website on a computer, to a VR headset, and brought into all existing and future NFT-based virtual worlds. As the metaverse matures, we plan to continue expanding our NFT capabilities and offerings by integrating it with our wide array of VR and AR technologies across its diverse base of subsidiary companies into the emerging Web3 ecosystem and related business applications. With that, I will now turn it over to Meydan Rothblum Glimpse's CFO and COO to review the financial results. Edan?

Thanks, everyone. I will limit my portion to a succinct review of our financial results. A full breakdown is available in our attend queue and in the press release that were filed after market closed today. Please note that I will refer to adjusted EBITDA and other non-GAAP measures. For the calculation of adjusted EBITDA and other non-GAAP measures, please refer to the MD&A, which is available in our 10Q filing, which you can find on our website under SEC filings. Total revenue for the six months ended December 31st, 2021 was approximately $2.71 million compared to approximately $1.52 million for the six months ended December 31st, 2020, an increase of 78%. The increase was due to organic growth and the addition of new customers. Including S5D unreviewed revenue for the six-month period, we estimate approximately 4.7 combined revenue for the six-month period. Total revenue for the three months ended December 31st, 2021 was approximately 1.69 million compared to approximately 1.26 for the three months ended December 31st, 2020, an increase of 34%. This increase was impacted by a delay of revenues from Q1 fiscal year 21 to Q2 fiscal year 21 due to COVID-19 constraints. On a normalized basis, the relative growth quarter to quarter would have been significantly higher, including S5D, REVIEWED REVENUE FOR THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2021, WE ESTIMATE 2.45 MILLION COMBINED REVENUE FOR THE THREE-MONTH PERIOD. I WOULD ALSO ADD THAT COMPARED TO OUR PREVIOUS QUARTER, Q1 FISCAL YEAR 22, ENDING SEPTEMBER 30, 2022, REVENUE INCREASED BY 65% FROM 1.02 MILLION TO 1.69 MILLION. FOR THE SIX MONTHS ENDED DECEMBER 31st, 2021, software license revenue was approximately 0.29 million compared to approximately 0.14 for the six months ended December 31st, 2020, an increase of approximately 107%. As VR and AR continue to mature, we expect our software license revenue to continue to grow on an absolute basis and as an overall percentage of total revenue. For the six months ended December 31st, 2021, core VR software and services, excluding non-project revenue, was approximately 1.7 million compared to approximately 0.64 million for the six months ended December 31st, 2020, an increase of approximately 166%. For the six months ended December 31st, 2021, non-project revenue accounted for approximately 63% of total revenues compared to approximately 42% for the three months ended December 31st, 2020. For the three months ended December 31st, 2021, non-project revenue, i.e. VR, AR, software and services revenue only, with approximately 0.85 million compared to approximately 0.5 million for the three months ended December 31st, 2020, an increase of approximately 70%. As I mentioned previously, the three months ended December 31st, 2020 revenues included delay sales from Q1 fiscal year 21 into Q2 fiscal year 21 due to COVID-19. On a normalized basis, the relative growth quarter to quarter would have been significantly higher. for the three months ended December 31st, 2021, non-project revenue accounted for approximately 50% of total revenues compared to approximately 40% for the three months ended December 31st, 2020. Gross profit was approximately 88% for the three months ended December 31st, 2021 compared to approximately 56% for the three months ended December 31st, 2020. Gross profit was approximately 87% for the six months ended December 31st, 2021, compared to approximately 55% for the six months ended December 31st, 2020. The increase in gross profit for both periods was driven by the increase in non-project revenue, which produces higher margin, improved management of project revenue, cost of goods sold, and utilization of lower-cost Glimpse turkey staff. On a going forward basis, we expect overall gross profit to stabilize in the 65 to 75% range. Operating expenses for the three months ended December 31st, 2021 were approximately 3.05 million compared to 1.41 million for the three months ended December 31st, 2020, an increase of approximately 116%. Operating expenses for the six months ended December 31st, 2021 were approximately $5.33 million compared to $2.77 million for the six months ended December 31st, 2020, an increase of approximately 92%. The increase for both periods was driven by employee headcount additions to support growth The occurrence of expenses specific to Glimpse being a publicly traded company and the addition of two new subsidiary companies. For the three months ended December 31st, 2021, net loss from operations was approximately 1.4 million compared to a net loss of approximately 1.24 million for the three months ended December 31st, 2020. An increase of approximately 13% period to period. We sustained a net loss of 1.57 million for the three months ended December 31st, 2021, as compared to a net loss of 0.75 million for the prior 2020 period, a loss increase of 0.82 million, or 109%. This reflects a period-over-period increase in revenue and related gross profit offset by an increase in operating expenses. Net loss for the six-month period ended December 31st, 2021 with 3.24 million compared to a net loss of 2.02 million for the prior 2020 period. A loss increase of 1.22 million or 60%. This reflects a period over period increase in revenue and related gross profit offset by an increase in operating expenses and the occurrence of non-cash loss on conversion of convertible notes The common stock is a result of the July 1st, 2021 initial public offering, offset by a decrease in non-cash interest expense. Net cash used in operating expenses was $2.36 million for the six months ended December 31st, 2021, compared to $0.78 million during the prior period, an increase of approximately $1.5 million. This was primarily driven by an increase in net loss of approximately 1.22 million and an increase in accounts receivable reflective of increased revenue period over period. With three months ended December 21st, adjusted EBITDA loss was 0.47 million, an increase by 0.67 million as compared to 0.2 million gain for the three months ended December 31st, 2020. adjusted EBITDA loss of 0.9 million for the six months ended December 31st, 2021, increased by 0.58 million as compared to 3.2 million loss for the six months ended December 31st, 2020. Our current net cash burn is approximately 2.5 to 3 million annual, which is relatively low in our view given our growth profile in relation to our cash position and is predominantly variable and under tight control. To recap, our fiscal second quarter had a strong cash balance of approximately 24.8 million at the end of the quarter, December 31st, 2021. As of today, we have approximately $21 million in cash and cash equivalents. following the closing of the Sector 5 digital acquisition, which includes $2 million in escrow to satisfy future potential performance-based earnouts. We have no material cash liabilities, no preferred equity outstanding, and no convertible debt. With a fortified balance sheet, strong revenue growth, and a relatively low cash burn and improving operating scale, we remain well positioned for future growth. I'd now like to pass it back to Liron for some closing remarks, after which we will begin our question and answer session.