The Glimpse Group, Inc.

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 the market today and is available on the Investors section of the company's website at ir.theglimpsgroup.com. Before we begin the formal presentation, I'd like to remind everyone that statements made on today's call-in 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. 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 Laurent Bentouven, President and CEO of the Glimpse Group. Laurent, the floor is yours.

Thank you, and thank you everyone for joining us. I am pleased to welcome you to the Glimpse Group's fiscal first quarter 2023 financial results investor call for our quarter ended September 30th, 2022. Glimpse's first quarter was highlighted by record revenue and continued momentum, driven by organic growth and several recent acquisitions. Revenue. We had record revenue for fiscal first quarter 2023 of approximately $4 million. representing 287% growth, or almost 4X compared to first quarter 2022 revenues of approximately $1 million. And a 58% increase quarter over quarter compared to Q4 financial year, fiscal year 2022, in which we had our prior record quarterly revenue of approximately $2.5 million. The quarter's financials included two months of our acquisition of Brightline Interactive, which closed on August 1st, 2022. As mentioned previously, Brightline generated over $5 million of revenue in 2021 with 65% gross margins and positive net income. As a reminder, we IPO'd in July 1st, 2021 with approximately 3.4 million annual revenues for financial year 21. a number we significantly surpassed in just this quarter alone. As McDonnell will detail later in his prepared remarks, we remain well capitalized and have a clean capital structure. With the core S5D and Brightline acquisitions complete, we do not expect to utilize our current cash balance as part of the purchase price of any acquisition we may make in the foreseeable future. We also remain steadfast in our $7 share IPO price minimum for any equity issuance, whether it be acquisition related or employee stock options or other. Trading cost structure remains predominantly variable. Through continued revenue growth combined with expense controls, we are committed to reaching cash flow neutrality from our operations in calendar year 2023. Just as Gleams has achieved critical scale in aggregate, we believe that there are key strategic advantages in creating more scale within our subsidiary companies. As such, we have begun the process of consolidating some of our subsidiary companies into larger core entities, a process which we expect will be concluded by year-end 2022. At the end of this process, we expect to have six to eight larger remaining subsidiary companies, which will allow us to maximize go-to-market and branding synergies, optimize operations, and reduce overlaps. Operational highlights. We successfully completed the integration process of Sector 5 Digital, Brightline Interactive, and Popo AR, our most recent acquisitions. We continue to see traction and growth across industries, and we have an impressive roster of Tier 1 customers, which has significantly expanded with the addition of S5D and Brightline. Recent examples include our subsidiary S5D completed a mid-six-figure contract for the development of a 3D interactive gamified experience and NFTs for a partner event held by a Fortune 50 global technology company. S5D also entered into a mid-six-figure agreement with a global pharmaceutical company to continue development of its award-winning interactive anatomy training platform. Our subsidiary company XR Terra entered into a six-figure agreement with one of the largest telecommunications companies for the training in VR skills of 700 K-12 teachers. is partnering with AT&T for collaborative immersive technologies 5G demonstration to be deployed at ISEC, the largest training and simulation trade show in the U.S. organic growth. We continue to explore acquisitions and are in discussions with several potential targets that would lead to accretive acquisitions. Subject to the caveats I mentioned before, no cash consideration, and equity with a seven-door per share floor. During the quarter, ninth and tenth US patents were transferred at the close of the Brightline Interactive Transaction, and they are for an immersive ecosystem and system and method for generating an augmented reality experience. Both are fundamental patents in our view. We have several more patents in process, and view our patent as a forward-looking, strategically positioned, with significant potential and importance when the immersive industry matures. With that, I will now turn it over to Meydan Rothglum, Glimpse's CFO and COO, to review the financial results. Meydan?

Thanks, Liron. I will limit my portion to a summary review of our financial results. A full breakdown is available in our $10,000 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-Q filing, which you can find on our website under SEC Filings. Total revenue for the three months ended September 30, 2022, were approximately 4 million compared to approximately 1 million for the three months ended September 30th, 2021, an increase of approximately 287%. The increase reflects the addition of several subsidiary companies after September 30th, 2021, organic growth and new customers. For the three months ended September 30, 2022, Software service revenue was approximately $3.9 million compared to approximately $0.8 million for the three months ended September 30, 2021, an increase of approximately 383%. The increase reflects the addition of several subsidiary companies after September 30, 2021, organic growth, and new customers. For the three months ended September 30, 2022, software license revenue was approximately $0.09 million compared to approximately $0.22 million for the three months ended September 30, 2021, reflecting a difference in timing of renewals. For the three months ended September 30, 2022, core software and services revenue, i.e., VR and AR software and services revenue excluding projects, was approximately $1.3 million compared to approximately $0.86 million for the three months ended September 30, 2021, an increase of approximately 49%. For the three months ended September 30, 2022, core software and services revenue accounted for approximately 32% of total revenues, compared to approximately 84% for the three months ended September 30, 2021, reflecting the additions of Brightline and Sector 5. For the three months ended September 30, 2022, gross profit margin was approximately 69% compared to a gross profit margin of approximately 85% for the three months ended September 30, 2021. The decrease was driven by the additions of Brightline and Sector 5, which have lower margin project revenue. On a go-forward basis, we expect overall gross profit to remain in the 60 to 70 percent range, again, due to the additions of BLI, Brightline, and Sector 5. Operating expenses for the three months ended September 30, 2022 were approximately 8.2 million compared to 2.3 million for the three months ended September 30, 2021, an increase of approximately 260 percent. The increase was driven by employee headcount additions to support growth the addition of several new subsidiaries, which includes headcount, amortization of intangibles, and professional fees related to the acquisitions, and the change in fair value acquisition contingent consideration due to fluctuations in our stock price. We sustained a net loss for the three months ended September 30th, 2022 of 5.4 million compared to a net loss of approximately 1.7 million for the three months ended September 30th, 2021. a loss increase of $3.72 million or 224%. $2.41 million of this loss increase is driven by non-cash change in fair value consideration of contingent acquisition consideration. The balance primarily represents operating expense growth, outpacing revenue, and related gross profit. This reflects Current expense outlays in all areas of the companies to propel future growth, including the acquisition of several new subsidiaries and related costs. Net cash used in operating activities for the three months ended September 30th, 2022 was approximately 3.1 million compared to approximately 1.1 million for the three months ended September 30th, 2021. This was impacted by the addition of Brightline, which had a high component of deferred revenue and cash collected prior to the closing of the transaction. For the three months ended September 30th, 2022, adjusted EBITDA loss, a non-GAAP measure, was approximately 1.1 million, compared to 0.6 million adjusted EBITDA loss for the three months ended September 30th, 2021. To recap, the end of the quarter with a strong balance sheet of approximately $13 million in cash, including $2 million cash held in escrow for potential future performance payments relating to the Sector 5 acquisition. The cash decrease in Q1 of fiscal year 2023 was 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 1st, 2022. As Leron mentioned, with the core sector five and Brightline acquisitions complete, we do not expect to utilize our current cash balance as part of the purchase price for any acquisition we make in the foreseeable future. We have no material cash liabilities, no preferred equity outstanding, no convertible debt or any debt obligations. And again, as Leron said, stated, getting to cash flow break even and beyond from our operations in calendar year 2023 is a key strategic objective. I'd now like to pass it back to Liron for some closing remarks, after which we will begin our question and answer session.