Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto, and related disclosures, as of and for the fiscal year ended June 30, 2025, which are included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 filed with the Securities and Exchange Commission (the "SEC"). Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to "we," "us," "our" or "the Company," refer to The Glimpse Group, Inc., a Nevada corporation.

Cautionary Statement Regarding Forward-Looking Statements

The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), which are subject to the "safe harbor" created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 filed with the SEC and in our other filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.

Overview

We are an Immersive technology company, providing enterprise focused Spatial Computing, Virtual Reality (VR), and Augmented Reality (AR) software and services (Immersive technologies). Glimpse's operating entities are located in the United States. We believe that we offer significant exposure to the rapidly growing and potentially transformative Immersive technology markets, while mitigating downside risk via our diversified model and ecosystem.

Our ecosystem of Immersive technology entities, collaborative environment and diversified business model aims to simplify the challenges faced by companies in the emerging Immersive technology industry, create scale, build operational efficiencies, reduce time to market and enhance go-to-market synergies, while simultaneously providing investors an opportunity to invest directly via a diversified infrastructure.

The Immersive technology industry is an early-stage technology industry with nascent markets. We believe that this industry has significant growth potential across verticals, may be transformative, and that our diversified ecosystem creates important competitive advantages. We currently target a wide array of industry verticals, including but not limited to: Government & Defense, Corporate Training, Education, Healthcare, Branding/Marketing/Advertising, Retail, Media & Entertainment, Corporate Events and Social VR support groups and therapy. We focus primarily on the business-to-business (B2B) segment and we are hardware agnostic.

In fiscal year 2024, we shifted our businesses ("Strategic Shift") to focus on providing immersive technology solutions software and services that are primarily driven by Spatial Computing, Cloud and Artificial Intelligence (AI), including our product "Spatial Core," led by our entity Brightline Interactive, Inc. ("BLI"). We believe that Spatial Core is a key differentiator, growth driver and competitive advantage for us.

At the time of this filing, we have approximately 40 full time employees, primarily software developers, engineers and 3D artists.

The Glimpse Group, Inc. was incorporated in June 2016 under the laws of the State of Nevada, and is headquartered in New York, New York.

Business Organization Chart (as of December 31, 2025):

Significant Transactions

Increase in At-The-Market Offering

As previously reported, on July 11, 2025, we entered into an At-the-Market ("ATM") Sales Agreement (the "Sales Agreement") with WestPark Capital, Inc., as sales agent (the "Agent"), pursuant to which we could offer and sell, from time to time through the Agent, up to $3,081,340 of our common stock (the "Shares"), by any method permitted by law and deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act.

On November 21, 2025, the Sales Agreement was amended to increase the maximum amount we may offer and sell, from time to time through the Agent, from $3,081,340 to $3,502,910.

Subsequent to the end of the period, on January 2, 2026, the Sales Agreement was further amended to increase the maximum amount we may offer and sell, from time to time through the Agent, from $3,502,910 to $9,478,200.

As of the date of this filing, no Shares have been sold under the ATM facility.

Update on Potential Subsidiary Spin Off

As previously reported, in September 2025, our board of directors approved the exploration of a potential spin off of our BLI subsidiary as a separate public company to potentially unlock shareholder value and provide growth resources to BLI. We filed a confidential S1 registration with the Securities and Exchange Commission ("SEC"). In parallel, we are also exploring other divestiture alternatives for BLI. The success of the potential BLI initial public offering or other divestiture is uncertain and may not occur.

Financial Highlights for the three and six months ended December 31, 2025 compared to the three and six months ended December 31, 2024.

Results of Operations

The following table sets forth our results of operations for the three months and six months ended December 31, 2025 and 2024:

Summary P&L

		For the Three Months Ended																For the Six Months Ended
		December 31,								Change								December 31,								Change
		2025				2024				$				%				2025				2024				$				%
		(in millions)																(in millions)
Revenue		$	1.30			$	3.17			$	(1.87	)			-59	%		$	2.70			$	5.61			$	(2.91	)			-52	%
Cost of goods sold			0.51				1.14				(0.63	)			-55	%			0.90				1.66				(0.76	)			-46	%
Gross profit		$	0.79			$	2.03			$	(1.24	)			-61	%		$	1.80			$	3.95			$	(2.15	)			-54	%
Total operating expenses			2.05				2.02				0.03				1	%			4.40				4.97				(0.57	)			-11	%
Income (loss) from operations before other income		$	(1.26	)		$	0.01			$	(1.27	)			N/A			$	(2.60	)		$	(1.02	)		$	(1.58	)			-155	%
Other income			0.03				0.01				0.02				200	%			0.34				0.04				0.30				750	%
Net income (loss)		$	(1.23	)		$	0.02			$	(1.25	)			N/A			$	(2.26	)		$	(0.98	)		$	(1.28	)			-131	%

Revenue

		For the Three Months Ended																For the Six Months Ended
		December 31,								Change								December 31,								Change
		2025				2024				$				%				2025				2024				$				%
		(in millions)																(in millions)
Software services		$	1.18			$	3.13			$	(1.95	)			-62	%		$	2.42			$	5.36			$	(2.94	)			-55	%
Software license/software as a service			0.10				0.04				0.06				150	%			0.25				0.25				-				0	%
Royalty income			0.02				-				0.02				100	%			0.03				-				0.03				100	%
Total Revenue		$	1.30			$	3.17			$	(1.87	)			-59	%		$	2.70			$	5.61			$	(2.91	)			-52	%

Total revenue for the three months ended December 31, 2025 was approximately $1.30 million compared to approximately $3.17 million for the three months ended December 31, 2024, a decrease of 59%. Total revenue for the six months ended December 31, 2025 was approximately $2.70 million compared to approximately $5.61 million for the six months ended December 31, 2024, a decrease of 52%. The decrease for both periods primarily reflects timing of Department of War ("DoW") contracts and U.S. Government budget delays, the run off of certain legacy customers reflecting our Strategic Shift and a decline in some existing customer accounts.

We break out our revenue into three categories - Software Services, Software License and Royalty Income.

	●	Software Services revenues are primarily comprised of Immersive technology projects, services related to our software licenses and consulting retainers.
	●	Software License revenues are comprised of the sale of our internally developed Immersive technology software as licenses or as software-as-a-service (SaaS).
	●	Royalty income represents a percentage of revenue from divested subsidiaries pursuant to the respective divesture agreements.

For the three months ended December 31, 2025, Software Services revenue was approximately $1.18 million compared to approximately $3.13 million for the three months ended December 31, 2024, a decrease of 62%. For the six months ended December 31, 2025, Software Services revenue was approximately $2.42 million compared to approximately $5.36 million for the six months ended December 31, 2024, a decrease of 55%. The decrease for both periods primarily reflects timing of DoW contracts and U.S. Government budget delays, the run off of certain legacy customers reflecting our Strategic Shift and a decline in some existing customer accounts.

For the three months ended December 31, 2025, Software License revenue was approximately $0.10 million compared to approximately $0.04 million for the three months ended December 31, 2024, an increase of 150%, reflecting license timing. For the six months ended December 31, 2025, Software License revenue was approximately $0.25 million compared to approximately $0.25 million for the six months ended December 31, 2024, flat period over period.

Royalty income was approximately $0.02 million and approximately $0.03 million, respectively, for the three and six months ended December 31, 2025, and zero for the prior year period, reflecting a new revenue stream driven by prior subsidiary company divestitures.

Customer Concentration

Four customers accounted for approximately 81% (29%, 21%, 21% and 10%, respectively) of the Company's total gross revenues during the three months ended December 31, 2025. One of the same customers and two other customers accounted for approximately 80% (56%, 14% and 10%, respectively) of the Company's total gross revenues during the three months ended December 31, 2024. Three customers accounted for approximately 76% (28%, 28% and 19%, respectively) of the Company's total gross revenues during the six months ended December 31, 2025. One of the same customers and another customer accounted for approximately 65% (44% and 21%, respectively) of the Company's total gross revenues during the six months ended December 31, 2024.

Gross Profit

		For the Three Months Ended																For the Six Months Ended
		December 31,								Change								December 31,								Change
		2025				2024				$				%				2025				2024				$				%
		(in millions)																(in millions)
Revenue		$	1.30			$	3.17			$	(1.87	)			-59	%		$	2.70			$	5.61			$	(2.91	)			-52	%
Cost of goods sold			0.51				1.14				(0.63	)			-55	%			0.90				1.66				(0.76	)			-46	%
Gross profit		$	0.79			$	2.03			$	(1.24	)			-61	%		$	1.80			$	3.95			$	(2.15	)			-54	%
Gross profit margin			61	%			64	%											67	%			70	%

Gross profit margin was approximately 61% for the three months ended December 31, 2025, compared to approximately 64% for the three months ended December 31, 2024. Gross profit margin was approximately 67% for the six months ended December 31, 2025 compared to approximately 70% for the six months ended December 31, 2024. The decrease for both periods was primarily driven by the change in cost structure of DoW projects.

Operating Expenses

		For the Three Months Ended																For the Six Months Ended
		December 31,								Change								December 31,								Change
		2025				2024				$				%				2025				2024				$				%
		(in millions)																(in millions)
Research and development expenses		$	0.90			$	0.66			$	0.24				36	%		$	1.87			$	1.78			$	0.09				5	%
General and administrative expenses			0.84				0.85				(0.01	)			-1	%			1.82				1.78				0.04				2	%
Sales and marketing expenses			0.30				0.38				(0.08	)			-21	%			0.63				1.12				(0.49	)			-44	%
Amortization of acquisition intangible assets			0.01				0.10				(0.09	)			-90	%			0.06				0.23				(0.17	)			-74	%
Change in fair value of acquisition contingent consideration			-				0.03				(0.03	)			-100	%			0.02				0.06				(0.04	)			-67	%
Total operating expenses		$	2.05			$	2.02			$	0.03				1	%		$	4.40			$	4.97			$	(0.57	)			-11	%

Operating expenses for the three months ended December 31, 2025 were approximately $2.05 million compared to approximately $2.02 million for the three months ended December 31, 2024, an increase of 1%. The increase primarily reflects headcount utilization changes, offset by decreases in revenue based incentive compensation and intangible asset amortization. Operating expenses for the six months ended December 31, 2025 were approximately $4.40 million compared to approximately $4.97 million for the six months ended December 31, 2024, a decrease of 11%. The decrease primarily reflects the divestiture of the QReal business, reduction in non-core businesses, decrease in revenue based incentive compensation and reduction in intangible asset amortization, offset by headcount utilization changes.

Research and Development

Research and development expenses for the three months ended December 31, 2025 were approximately $0.90 million compared to approximately $0.66 million for the three months ended December 31, 2024, an increase of 36%. The increase primarily reflects a lesser proportion of headcount expense being allocated to revenue projects cost of goods in the current period. Research and development expenses for the six months ended December 31, 2025 were approximately $1.87 million compared to $1.78 million for the six months ended December 31, 2024, an increase of 5%. The increase reflects a lesser proportion of headcount expense being allocated to revenue projects cost of goods in the current period, offset by decreased expense driven by the QReal divestiture.

General and Administrative

General and administrative expenses for the three months ended December 31, 2025 were approximately $0.84 million compared to approximately $0.85 million for the three months ended December 31, 2024, flat period over period. General and administrative expenses for the six months ended December 31, 2025 were approximately $1.82 million compared to approximately $1.78 million for the six months ended December 31, 2024, an increase of 2%. The six month period increase reflects increased investor relation efforts.

Sales and Marketing

Sales and marketing expenses for the three months ended December 31, 2025 were approximately $0.30 million compared to approximately $0.38 million for the three months ended December 31, 2024, a decrease of 20%. The decrease reflects a reduction in revenue driven incentive compensation. Sales and marketing expenses for the six months ended December 31, 2025 were approximately $0.63 million compared to approximately $1.12 million for the six months ended December 31, 2024, a decrease of 44%. The decrease represents the divestiture of the QReal business, reduction in non-core businesses and decrease in revenue driven incentive compensation.

Amortization of Acquisition Intangible Assets

Amortization of acquisition intangible assets expense for the three months ended December 31, 2025 was approximately $0.01 million compared to approximately $0.10 million for the three months ended December, 2024, a decrease of 90%. Amortization of acquisition intangible assets expense for the six months ended December 31, 2025 was approximately $0.06 million compared to approximately $0.23 million for the six months ended December 31, 2024, a decrease of 74%. The decrease for both periods reflects the expiration of the intangible assets useful life in 2025.

Change in Fair Value of Acquisition Contingent Consideration

Change in fair value of acquisition contingent consideration for the three months ended December 31, 2025 was zero compared to approximately $0.03 million for the three months ended December 31, 2024. Change in fair value of acquisition contingent consideration for the six months ended December 31, 2025 was approximately $0.02 million compared to approximately $0.06 million for the six months ended December 31, 2024. The decrease for both periods reflects the final consideration payment related to the BLI acquisition in October 2025.

Other Income

		For the Three Months Ended																For the Six Months Ended
		December 31,								Change								December 31,								Change
		2025				2024				$				%				2025				2024				$				%
		(in millions)																(in millions)
Gain on sale of business		$	-			$	-			$	-				N/A			$	0.24			$	-			$	0.24				100	%
Interest income			0.03				0.01				0.02				200	%			0.10				0.04				0.06				150	%
Total other income		$	0.03			$	0.01			$	0.02				200	%		$	0.34			$	0.04			$	0.30				750	%

Other income for the three months ended December 31, 2025 was approximately $0.03 million compared to approximately $0.01 million for the three months ended December 31, 2025. The increase reflects increased investable cash balances and associated interest income as a result of the equity raise in December 2024. Other income for the six months ended December 31, 2025 was approximately $0.34 million compared to approximately $0.04 million for the six months ended December 31, 2025. The increase reflects the 2025 gain on sale of the Pose With the Pros business and also reflects increased investable cash balances and associated interest income as a result of the equity raise in December 2024.

Net Loss

Net loss for the three months ended December 31, 2025 was approximately $1.23 million compared to net income of approximately $0.02 million for the three months ended December 31, 2024. This is primarily driven by reduced revenue and related gross profit. Net loss for the six months ended December 31, 2025 was approximately $2.26 million compared to a net loss of approximately $0.98 million for the six months ended December 31, 2024. This is primarily driven by reduced revenue and related gross profit, partially offset by expense reductions and gain on sale of business.

Non-GAAP Financial Measures

The following discussion and analysis includes both financial measures in accordance with Generally Accepted Accounting Principles ("GAAP"), as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, net income (loss), operating income (loss), and cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. Our management uses and relies on EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. We believe that both management and stockholders benefit from referring to the aforementioned non-GAAP financial measures in planning, forecasting and analyzing future periods.

Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the described excluded items.

The Company defines Adjusted EBITDA as income (or loss) from continuing operations before the items in the table below. Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing the impact of items of a non-operational nature that affect comparability.

We have included a reconciliation of our financial measures calculated in accordance with GAAP to the most comparable non-GAAP financial measures. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between the Company and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.

The following table presents a reconciliation of Net income (loss) to Adjusted EBITDA income (loss) for the three and six months ended December 31, 2025 and 2024:

		For the Three Months Ended								For the Six Months Ended
		December 31,								December 31,
		2025				2024				2025				2024
		(in millions)								(in millions)
Net income (loss)		$	(1.23	)		$	0.02			$	(2.26	)		$	(0.98	)
Depreciation and amortization			0.02				0.12				0.08				0.27
EBITDA income (loss)			(1.21	)			0.14				(2.18	)			(0.71	)
Stock based compensation expenses			0.32				0.04				0.57				0.41
(Gain) loss on sale of business/subsidiary/lease termination			-				0.07				(0.24	)			0.07
Non cash change in fair value of acquisition contingent consideration			-				0.03				0.02				0.06
Adjusted EBITDA income (loss)		$	(0.89	)		$	0.28			$	(1.83	)		$	(0.17	)

Adjusted EBITDA loss was $0.89 million for the three months ended December 31, 2025 compared to $0.28 million income for the three months ended December 31, 2024. Adjusted EBITDA loss was $1.83 million for the six months ended December 31, 2025 compared to a $0.17 million loss for the six months ended December 31, 2024. The reduction in both periods is primarily driven by reduced revenue and related gross profit in the 2025 periods.

Liquidity and Capital Resources

		For the Six Months Ended
		December 31,								Change
		2025				2024				$				%
			(in millions)
Net cash used in operating activities		$	(2.03	)		$	(0.25	)		$	(1.78	)			-712	%
Net cash used in investing activities			(1.52	)			(0.03	)			(1.49	)			N/A
Net cash provided by financing activities			0.06				6.87				(6.81	)			-99	%
Net increase (decrease) in cash and cash equivalents			(3.49	)			6.59				(10.08	)			-153	%
Cash and cash equivalents beginning of period			6.83				1.85				4.98				269	%
Cash and cash equivalents end of period		$	3.34			$	8.44			$	(5.10	)			-60	%

Operating Activities

Net cash used in operating activities was approximately $2.03 million for the six months ended December 31, 2025, compared to approximately $0.25 million during the six months ended December 31, 2024. This was primarily driven by reduced revenue and related gross profit in the 2025 period.

Investing Activities

Net cash used in investing activities for the six months ended December 31, 2025 was approximately $1.52 million compared to approximately $0.03 million during the comparable 2024 period. The 2025 period primarily represents the final $1.50 million contingent consideration payment in October 2025 related to the BLI acquisition.

Financing Activities

Net cash provided by financing activities during the six months ended December 31, 2025 was approximately $0.06 million compared to approximately $6.87 million during the six months ended December 31, 2024. The 2024 amount represents the proceeds of securities purchase agreements entered into with institutional investors.

Capital Resources

As of December 31, 2025, the Company had cash and cash equivalents of $3.34 million, plus $0.56 million of accounts receivable.

As of December 31, 2025, the Company had no outstanding debt obligations.

As of December 31, 2025, the Company had no issued and outstanding preferred stock.

As of December 31, 2025, the Company had no outstanding contingent obligation.

As of the date of this filing, the ATM facility has not been utilized.

Recently Adopted Accounting Pronouncements

Please see Note 2 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q that describes the impact, if any, from the adoption of recent accounting pronouncements.