The Glimpse Group, Inc.

Welcome to the Glimpse Group fiscal third quarter 2022 financial results webinar. At this time, all participants are in a listen-only mode. 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 in 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 this 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. With that, I would like to now turn the call over to Lerone Bentabim, 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's Fiscal Third Quarter 2022 Financial Results Investor Call for our quarter-ended March 31, 2022. The Glimpse Fiscal Third Quarter was highlighted by record revenue, continued strong growth, high gross margins, the completion of our largest acquisition to date, new partnerships and Tier 1 customers, international expansion, and additional issued patents. These continue to confirm the adoption of our enterprise-focused VRAR software and services solutions. As it relates to revenues, we had record revenue for the three- and nine-month period, with revenue approximately doubling versus the previous year period. Q3 financial year 2022 was the first quarter in which we surpassed $2 million in revenue, compared to approximately $0.9 million for the same quarter last year, thereby breaking our previous record revenue of $1.7 million approximately achieved in December 21st quarter. This is especially notable as our Q3, January to March, is historically the slowest quarter of our fiscal year. Our reported numbers include only two months of S5D financials, which closed on February 1st, 2022. On a pro forma basis, if S5D had been included for the entire reported period, then our revenue would have been approximately $7.3 million for the nine-month period and approximately $2.3 million for the three-month period. Importantly, our core software incentives which exclude project revenue, also set a company record increasing by over 170% compared to the same three and nine month periods of fiscal 2021, comprising over 50% of total revenue. Given the current environment, I'm increasingly asked about our cash flow and general financial condition. This is an area of focus for us. The company's cash position as of March 31st, 2022, was approximately 20 million, including 2 million held in escrow for potential future performance payments related to the S5D acquisition. We have a clean capital structure with no debt, no convertible debt, no preferred equity, or any material obligations. Our expense structure is highly variable. Approximately 85% of expenses are labor related. And we have a controlled annual net cash burn rate of approximately 3 to 4 million expected for the calendar year 2022. which is significantly below our cash balance. We constantly monitor macroeconomic developments, our customers, revenue pipeline and operations, and maintain the flexibility to adjust our expense structure if needed. We continue to see customer traction, which demonstrate a variety of diverse applications and use cases for AR and VR technologies. We entered into a new paid customer agreement with several Fortune 500 companies, While I cannot name these currently, and these are initial contracts, they add to our existing list of top tier global customers across industries, further demonstrating our capabilities and ability to deliver to global enterprises. We believe that non-fungible tokens, NFTs, and blockchain technologies will be key elements of transacting and value creation in the metaverse. To that end, we continue to develop these capabilities internally and announce a paid partnership with the Commission, an Ethereum blockchain decentralized finance company and creator of the Commission token, one of the first digital assets principally backed by gold for the development of multiple 3D AR-based NFTs. In parallel to our organic growth, we continue to explore acquisitions and are in discussions with several potential targets. While there is no guarantee that these will materialize, we do expect to complete additional acquisitions during this calendar year. As demonstrated previously, we strive to structure acquisitions intelligently, primarily performance-based, accretive, and in full alignment with the long-term operational and strategic goals. During the quarter, we closed the accretive acquisition of Sector 5 Digital, S5D, the largest Williams acquisition to date, approximately doubling our revenue base. The acquisition closed on February 1, 2022, and the integration is substantially complete. Approximately 70% of the potential future acquisition proceeds are based on the achievement of significant revenue milestones over the next three years, with payments that are primarily equity-based, with a floor issuance price of $7 per share, like all of our previous post-IPO acquisitions. We expanded our global footprint with the launch of Glimpse Israel, the company's fourth operating location after the US, Turkey, and Australia, as an integral part of our international expansion into global hubs for technology, innovation, and bringing our solutions to these markets. During the period, we appointed Ian Charles to our board of directors as an independent director and chair of our audit committee. Ian is a strategic CFO with nearly 25 years of executive leadership experience in scaling software companies, as well as experience in public markets, M&A, and multinational operations. With the development of immersive industries, we believe that this is the proper time to strengthen the Gleams brand, marketing and digital strategies at the corporate level and across our subsidiary companies. To help achieve this, we appointed James Watson as chief marketing officer, CMO. James is a 20 plus year technology marketing veteran with significant immersive technology experience who has spent the last 10 years developing award-winning marketing programs across the VR and AR sectors with leading global companies. On the IP front, we continue to add to our intellectual property portfolio. During this quarter, Glimpse was issued its sixth U.S. patent for presenting a simulated reality adaptive user space and our seventh U.S. patent for a cross-platform virtual reality system allowing for simultaneous interactions across viewing platforms. With our growing and significant revenue base post-S5D acquisition, Our 150 plus VR and AR software developers, engineers, 3D artists, and business professionals, as well as seven issued patents, we believe that we are one of the largest independent VR and AR software and services companies. As I've mentioned before, I believe we are at the early stage of a hyper growth tech cycle, which will last for decades to come and become ubiquitous throughout industries. While we may be heading into more challenging economic times, enterprises' curiosity, Interest in immersive technologies and the metaverse remains high. Adoption is increasing. Glymphs is built for the long run. As the balance sheet and operating structure to withstand a potentially challenging environment and is well positioned to capitalize on the immense growth opportunities. With that, I will now turn it over to Meydan Rothblum, Glymphs' CFO and COO to review the financial results. Meydan.

Thanks everyone. I will limit my portion to a succinct review of our financial results. A full breakdown is available in our 10Q and in the press release that were filed after market close today. Please note that I'll 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 section, which is available in our 10Q filing which you can find on our website under SEC filings. Well, our fiscal year Q3 period, January to March, has historically been the slowest quarter of the year. We achieved record quarterly revenue of approximately 2.05 million for Q3 fiscal year 22. A 123% increase compared to Q3 fiscal year 21 revenue of approximately 0.9 million and a 21% increase compared to our previous revenue record achieved in Q2 fiscal year 22, October to December 21 of 1.69 million. Including S5D for the entire quarter, revenues would have been approximately 2.3 million. Total revenue for the nine months ended March 31st, 2022 were approximately 4.8 million compared to approximately 2.4 million for the nine months ended March 31st, 2021, an increase of 95%. Including S5D for the nine-month period, total revenue would have been approximately 7.3 million, an increase of over 200%. The increase for both periods reflect the addition of S5D and organic growth. For the three months ended March 31st, 2022, software services revenue were approximately 1.9 million compared to approximately 0.8 million for the three months ended March 31st, 2021, an increase of approximately 156%. For the nine months ended March 31st, 2022, software services revenues was approximately 4.3 million compared to approximately 2.1 million for the nine months ended March 31st, 2021, an increase of approximately 104%. The increase for both periods reflect the addition of S5D and organic growth. For the three months ended March 31st, 2022, software license revenue was approximately 0.13 million compared to approximately 0.17 million for the three months ended March 31st, 2001, a decrease of approximately 24% reflecting a difference in timing of license renewals. For the nine months ended March 31st, 2022, software license revenue was approximately 0.4 million compared to approximately 0.3 million for the nine months ended March 31st, 2021, an increase of approximately 39%. As the VR and AR industries 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 three months ended March 31st, 2022, non-project revenue, i.e. VR and AR software and services revenue only, For approximately 1.2 million compared to approximately 0.4 million for the three months ended March 31st, 2021, an increase of approximately 176%. For the three months ended March 31st, 2022, non-project revenue accounted for approximately 58% of total revenues compared to approximately 47% for the three months ended March 31st, 2021. For the nine months ended March 31st, 2022, non-project revenue, again, VR and AR software and services revenue only, were approximately 2.9 million compared to approximately 1.1 million for the nine months ended March 31st, 2021, an increase of approximately 171%. For nine months ended March 31st, 2022, non-project revenue accounted for approximately 61% of full revenue compared to approximately 44% for the nine months ended March 31st, 2021. Gross profit was approximately 82% for the three months ended March 31st, 2022, compared to approximately 36% for the three months ended March 31st, 2021. Gross profit was approximately 85% for the nine months ended March 31st, 2022, compared to approximately 48% for the nine months ended March 31st, 2021. The increase for both periods was driven by the increase in non-project revenue, which produces higher margin, improved management of project revenue costs, sorry, improved management of project revenue costs of goods sold, and utilization of lower cost limps turkey staff. On a going forward basis, We expect overall gross profit to decrease from this level as S5D's gross profit has historically been in the 55 to 65% range, and it currently comprises about half of the company's combined revenue base. Operating expenses for the three months ended March 31st, 2022 were approximately 4.1 compared to 1.6 million for the three months ended March 31st, 2021. an increase of approximately 157%. Operating expenses for the nine months ended 30, sorry, March 31st, 2022 were approximately 9.4 million compared to 4.4 million for the nine months ended March 31st, 2021, an increase of approximately 116%. The increase for both periods was driven by employee headcount additions to support growth incurrence of expenses specific to Glimpse being the publicly traded company and the addition of three new subsidiary companies. We sustained a net loss of $1.8 million for the three months ended March 31st, 2022, as compared to a net loss of $1.2 million for the prior 2021 period, a loss increase of $0.1 million, or 42%. Net loss for the nine months ended March 31st, 2022 was $5 million, as compared to a net loss of $3.2 million for the prior nine-month 2021 period, a loss increase of $1.7 million, or 53%. This represents operating expense growth outpacing revenue and related gross profit, reflecting investments in all facets of the company to propel future growth, including the acquisition of three new subsidiary companies. Net cash used in operating activities was 3.7 million for the nine months ended March 31, 2022, compared to 1 million during the prior nine-month period, an increase of approximately 2.7 million. This is primarily driven by an increase in net loss of approximately 1.7 million, an increase in accounts receivable reflective of increased revenue period over period, and payment of performance-related bonuses. For the three months ended March 31st, 2022 adjusted EBITDA loss of 1.1 million increased by 0.6 million as compared to 0.5 million loss for the three months ended March 31st, 2021. Adjusted EBITDA loss of 2.5 million for the nine months ended March 31st, 2022 increased by 1.7 million as compared to a 0.8 million loss for the nine months ended March 31st, 2021. To recap, we ended the fiscal quarter with a strong balance sheet of approximately $20 million in cash, including $2 million held in escrow for potential future performance payments relating to the S5D acquisition. We have no material cash liabilities, no preferred equity outstanding, and no debt of any sort. That being said, we are in uncertain times. Given our cash balance, clean balance sheet, highly variable cost structure, and a controlled annual expected net cash burn rate of 3 to 4 million for calendar year 2022, we are well positioned to weather any potential slowdown in the economy if such were to occur and capitalize on any unexpected opportunities should those arise. I'd like to pass it back to Liron for some closing remarks, after which we will begin our Q&A session.