The Glimpse Group, Inc.

Welcome to the Glimpse Group Fiscal Year 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. The earnings press release that accompanies this call was issued at the close of market today and is available on the Investors section of the company's website at ir.com. theglimpsegroup.com. Before we begin the formal presentation, I would like to remind everybody 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 like to refer you to the company's website for more supporting industry information. The replay of this call will be available on the company's IR website under the Events and Presentations section. I would now like to hand the call over to LaRon Ventovim, President and CEO of the Glimpse Group. LaRon, the floor is yours.

Thank you, Sherry, and thank you, everyone, for joining us. I'm pleased to welcome you to the Glimpse Group's fiscal year 2022 financial results investor call for a year ended June 30, 2022. Glimpse's fiscal year 2022 was a transformational year, commencing with our NASDAQ IPO, ending with the addition of Brightline Interactive, and highlighted by consecutive record revenue quarters, high gross margins, strong organic growth, and several accretive acquisitions. As it relates to revenue, we had revenue, record revenue for fiscal year 2022 of approximately 7.3 million, representing 2.1X growth compared to the fiscal year 2021 revenues of approximately 3.4 million. This includes five months of sector five digital S5D acquisition, which closed on February 2nd, 2022. On a full as if fiscal year basis with full year of S5D revenues would have been approximately 9.8 million, almost 3X increase compared to fiscal year 21. Our acquisitions of Brightline Interactive closed on August 1st, 2022. Brightline generated over 5 million in fiscal year 2022. On a combined basis, we are at 15 million trailing annual revenue run rate. In other words, in about a year's time, we have grown our revenue base by 4.4x. We also continue to send record revenue on a quarterly basis with Q4 fiscal year 2022 revenue of 2.5 million, 2.5x growth compared to approximately 1 million for the same quarter last year, and sequentially breaking out a third quarter fiscal year 2022 records revenue of approximately $2 million. Importantly, our core software and services revenue, which excludes project revenue, grew by about 2.5x for the fiscal year, while our gross margins were over 80%. Cash flow and balance sheet. As McDonnell will detail later in his prepared remarks, we remain well capitalized and have a clean cap structure. Our expense structure is highly variable. Approximately 85% of expenses are labor related, and we have a controlled annual net cash burn of approximately 4 million expected for calendar year 22, which is well below our cash balance. That being said, we continue to be mindful of macroeconomic development and their potential impact on our customers, our revenue pipeline, and our operations. and we maintain the flexibility to adjust our expense and organizational structure if needed. As our subsidiaries grow, and in combination with the continued development of the immersive technology industry, we have begun an internal evaluation of potential consolidations of some of our subsidiary companies in order to optimize operations, maximize go-to-market synergies, reduce overlaps, create stronger branding, and increase scale within our ecosystem. organic growth and acquisitions. We continue to see traction and revenue growth across industries, and we have an impressive roster of Tier 1 customers, which have significantly expanded with the addition of S5D and Brightline. While we're not always in a position to name these in press releases, you can review the customer and relationship slides in the corporate presentation on our IR website for a select list. In parallel to our organic growth, we continue to explore acquisitions and are in discussions with several potential targets that would lead to our creative acquisitions. As per all of our post-IPO acquisitions, to protect our shareholders, we remain committed to not issuing equity at below our IPO price of $7 a share as floor issuance. In addition, we will continue to strive to structure acquisitions intelligently. primarily performance-based and accredited. While there is no guarantee that this will materialize, we do expect to complete additional acquisitions during this calendar year. IP. We continue to expand our intellectual property assets with four recent new patent issuances. Our seventh and eighth US patents were for a virtual reality system cross-platform, allowing for simultaneous interaction across viewing platforms and a marker-based positioning of simulated reality relating to a system for presenting a simulated reality relative to a user's position. Our 9th and 10th US patents were transferred at the close of Brightline Interactive Transaction and are for an immersive ecosystem and system and method for generating an augmented reality experience. We have several more patents in process and view our patents as forward-looking strategically positioned with significant potential and importance when the immersive industry matures. With the addition of S5D and Brightline Interactive and our organic growth, we have achieved critical scale in an industry which solely lacks that. We are now on a trailing $15 million annual revenue runway without further growth or acquisitions, have over 200 immersive industry developers, engineers, and 3D artists, own 10 patents, and an impressive roster of tier one customers and partners across industries and geographies. With these, we are one of the largest independent VR and AR software and services companies. While the immersive industry remains an early stage industry, there has been a tremendous level of progress. With many of the leading companies in the world across industries, making initial forays with increasing enterprise adoption of ROI-based solutions. While we are operating in an increasingly challenging global economic environment, Glimpse is built for the long run, has the balance sheet and operating structure to withstand microeconomic headwinds, and is well-positioned to capitalize on the immense growth opportunities ahead of us. With that, I will now turn it over to Meydan Rasloom, blimpses CFO and COO to review the financial results. Medan?

Thanks, Liron. I will limit my portion to a summary review of our financial results. A full breakdown is available in our 10-K and in the press release that were filed after market closed 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 of our 10-K filing, which you can find on our website under SEC Filings. I'll quickly note that the fiscal year 2022 financials do not include the recent addition of Brightline Interactive, which closed on August 1, 2022. Brightline, or BLI, generated approximately $5 million of revenues in calendar year 2021 with 65% gross margins and positive net income. While I will focus my remarks on our fiscal year, I will mention that we achieved record quarterly revenue of approximately $2.5 million for Q4 fiscal year 22, a 149% increase compared to Q4 fiscal year 21 revenue of approximately $1 million. and a 22% increase compared to our previous revenue record achieved in Q3 fiscal year 22. That's the January to March 22 quarter of $2.1 million. Total revenue for the year ended June 30, 2022 was approximately 7.27 million compared to approximately 3.42 million for the year ended June 30, 2021. an increase of approximately 113% at the high range of our initial estimate of approximately 7.15 to 7.25 million pre-announced in July 2022. For the year ended June 30, 2022, core software and services revenue, which excludes project revenue, was approximately 4.18 compared to approximately 1.72 for the year ended June 30, 2021, an increase of approximately 143%. For the year ended June 30, 2022, non-project revenue accounted for approximately 58% of total revenue compared to approximately 50% for the year ended June 30, 2021. For the year end of June 30, 2022, software license revenue was approximately 0.55 million compared to approximately 0.34 million for the year end of June 30, 2021, an increase of approximately 62%. 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. Gross profit was approximately 83%, for fiscal year 22 compared to approximately 57% for fiscal year 21. The increase in gross profit margin was primarily due to an increase in non-project revenue, improved project management, and expanded utilization of our Turkey-based staff. On a go-forward basis, we expect overall gross margins to decrease to the 60% to 70% range due to the additions of VLI and S5D. Operating expenses for the year ended June 30, 2022 were approximately $12.37 million compared to $7.91 million for the year ended June 30, 2021, an increase of approximately 56%. These increases were driven by four acquisitions in fiscal year 22 associated infrastructure to support a greater revenue base and to increase expenses attributable to operations of a public company commencing from our IPO in July 1, 2021. Net loss for the year ended June 30, 2022 was 5.96 compared to a net loss of 6.09 million for the prior 2021 period, an improvement of 2%, primarily driven by increases in revenue, gross profit, and other income expense outpacing growth and operating expenses. Net cash used in operating activities was 4.94 million for the year ended June 30, 2022, compared to 1.21 million for the year ended June 30, 2021. This is primarily driven by operating expenses outpacing revenue and gross profit driven by four acquisitions made in fiscal year 2022, associated infrastructure to support a greater revenue base, and increased expenses attributable to operations of a public company. Adjusted EBITDA loss of $3.97 million for the year ended June 30, 2022, increased by $2.5 million as compared to $1.47 million EBITDA loss for the year ended June 30, 2021. To recap, we ended the fiscal year with a strong balance sheet of approximately $16.2 million in cash and an additional $2 million held in escrow for potential future performance payments related to the S5D acquisition. Cash balance decreased in Q1 of fiscal year 23, that's the July to September quarter, primarily to account for the cash portion of the Brightline acquisition, approximately $3.5 million in cash, including fees and expenses, which closed on August 1, 2022. We have no material cash liabilities, no preferred equity outstanding, no convertible debt obligations, and no debt. As Leron mentioned, we have a highly variable expense structure. We watch every dollar closely and are highly cognizant of the macroeconomic environment. Insiders continue to own a substantial portion of the company, approximately 40%, which we believe aligns us very well with the shareholder base at large. In this regard, I'd like to note that in conjunction with our earnings report, we also filed a form SA with the SEC to register executive founders and board of directors stock options and founder shares. As a reminder, Form SA registering the company's employee stock options was filed with the SEC approximately one year ago. The founder, executives, and board have not sold a single share in the company's history, nor is there any intention to sell in the foreseeable future. In fact, the group has been a purchaser of common shares on the open market, despite already having a large position in the company. As the largest shareholders in the company, we have a strong, long commitment to success and all the growth is in front of us. We view this registration as a technicality and a natural step in our development as a public company. I'd now like to pass it back to Liron for some closing remarks, after which we will begin our question and answer session.