Annual Report for Fiscal Year Ending June 30, 2026 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The objective of this Management's Discussion and Analysis is to allow investors to view the Company from management's perspective, considering items that would have a material impact on future operations. The following discussion and analysis of the results of operations and financial condition of Brightline Interactive, Inc. and its underlying entities (collectively referred to as "Brightline" or the "Company") as of and for the fiscal years ended June 30, 2026 and 2025, should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements appearing elsewhere in this Report, as well as the other financial information we file with the SEC from time to time. References in this Management's Discussion and Analysis of Financial Condition and Results of Operations to "us," "we", "our" and similar terms refer to the Company. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks, uncertainties and other factors. Actual results could differ materially because of factors discussed in "Risk Factors" elsewhere in this Report, and other factors that we may not know. See "Cautionary Statement Regarding Forward-Looking Statements."

Company Overview

Brightline Interactive, Inc. ("Brightline," the "Company," or "BLI"), formerly known as The Glimpse Group, Inc., is a software firm building SpatialCore, an interoperability and operational context platform for Physical AI. Brightline's operating entities are located in the United States. The Company was incorporated in the State of Nevada in June 2016 under the name The Glimpse Group, Inc.

In June 2026, the Company initiated the transformation from a portfolio of businesses into a focused technology company centered on its Brightline Interactive subsidiary ("BLI Sub") and SpatialCore, its interoperability infrastructure platform for Physical AI. In connection therewith, the Company commenced divestiture or wind down of all subsidiaries at that time except BLI Sub. This culminated in August 2026 with the merger of all remaining subsidiaries into the parent The Glimpse Group, Inc. ("Glimpse") and renaming Glimpse to Brightline Interactive, Inc.

Significant Transactions and Recent Developments

Nasdaq Notice and Reverse Stock Split

On March 13, 2026, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC ("Nasdaq") notifying the Company that, because the closing bid price for the Company's common stock listed on Nasdaq was below $1.00 for the prior 30 consecutive business days, the Company no longer meets the minimum bid price requirement for continued listing on the Nasdaq Capital Market. In accordance with Nasdaq Marketplace rules, the Company had a period of 180 calendar days from March 13, 2026 or until September 9, 2026, to regain compliance with the Minimum Bid Price Requirement.

On September 11, 2026, the Company, received a written notification (the "Staff Determination") from the Nasdaq informing the Company that Nasdaq's staff had determined to delist the Company's common stock from Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2), requiring a minimum bid price of at least $1.00 per share (the "Bid Price Requirement"). The Company did not regain compliance with the Bid Price Requirement by the September 9, 2026 deadline, and Nasdaq subsequently issued the Staff Determination on September 11, 2026. Under the Staff Determination, the Company has the right to appeal the Staff Determination by requesting a hearing before a Nasdaq Hearings Panel (the "Hearings Panel"). On September 17, 2026 the Company timely submitted a request for a hearing (the "Hearing") before the Hearings Panel. The Hearing request stayed the suspension of the Company's securities and the filing of a Form 25-NSE with the Securities and Exchange Commission ("SEC") pending the issuance of a written decision by the Hearings Panel. The Common Stock will remain listed on Nasdaq, pending the outcome of the Hearing. There can be no assurance that following the Hearing, the Hearings Panel will determine to continue to allow the listing of the Common Stock on Nasdaq or that the Company will be able to evidence compliance with the applicable listing criteria within the period of time, if any, that may be granted by the Hearings Panel.

The Staff Determination does not affect the Company's operations or reporting requirements with the SEC.

In connection with the above, in an effort to regain compliance with the Bid Price Requirement, the Company declared an 1:8 reverse common stock split effective with the opening of public equity markets on September 28, 2026.

The Company and its Board of Directors continue to review other potential measures going forward.

Securities Purchase Agreement ("SPA")

On September 23, 2026 the Company entered into a $1.25 million SPA, which provides for issuance of a reverse split adjusted amount of 223,214 common shares and a like amount of warrants convertible on a one for one basis into Company common stock. The warrants are immediately exercisable at a reverse split adjusted price of $16.00 per share. The Company anticipates the full gross proceeds to be received by September 30, 2026. This transaction does not change the Company's status described in the Going Concern section below.

Highlights

RESULTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2026 AND 2025

Summary P&L

Reclassifications

In June 2026, the decision was made by the Company to transform from a portfolio of businesses into a focused technology company centered on BLI Sub and its product SpatialCore, an interoperability infrastructure platform for Physical AI.

Since the Company's new leadership and Board of Directors assumed responsibility on June 1, 2026, the Company has focused on a series of initiatives intended to simplify the business, accelerate growth and strengthen its position in the emerging Physical AI market. These efforts have included the divestiture of all non-core and underperforming subsidiaries.

Accordingly, results of operations, financial position, and cash flows for all subsidiaries except BLI Sub are reported as discontinued operations for all periods presented. Unless otherwise noted, information below relates to continuing operations.

		For the Years Ended
		June 30,								Change
		2026				2025				$				%
		(in millions)
Revenue		$	0.32			$	5.27			$	(4.95	)			-94	%
Cost of goods sold			0.13				2.06				(1.93	)			-94	%
Gross profit			0.19				3.21				(3.02	)			-94	%
Total operating expenses			15.76				4.62				11.14				241	%
Loss from continuing operations before discontinued operations and other income			(15.57	)			(1.41	)			(14.16	)			-1004	%
Discontinued operations			(1.21	)			(1.33	)			0.12				9	%
Other income			0.14				0.19				(0.05	)			-26	%
Net loss		$	(16.64	)		$	(2.55	)		$	(14.09	)			-553	%

Revenue

		For the Years Ended
		June 30,								Change
		2026				2025				$				%
		(in millions)
Software services		$	0.26			$	5.24			$	(4.98	)			-95	%
Royalty income			0.06				0.03				0.03				100	%
Total revenue		$	0.32			$	5.27			$	(4.95	)			-94	%

Total revenue for the year ended June 30, 2026 was approximately $0.32 million compared to approximately $5.27 million for the year ended June 30, 2025, a decrease of approximately 95%. The decrease primarily represents the decrease in DOW related contract revenue driven by ongoing US government budget appropriation delays in fiscal year 2026, and the runoff of certain legacy VR/AR business reported in fiscal 2025.

Customer Concentration

One customer accounted for approximately 78% of the Company's total revenue for the year ended June 30, 2026. One different customer accounted for approximately 80% of the Company's total revenue for the year ended June 30, 2025.

Gross Profit

		For the Years Ended
		June 30,								Change
		2026				2025				$				%
		(in millions)
Revenue		$	0.32			$	5.27			$	(4.95	)			-94	%
Cost of goods sold			0.13				2.06				(1.93	)			-94	%
Gross profit			0.19				3.21				(3.02	)			-94	%
Gross profit margin			59	%			61	%

Gross profit margin was approximately 59% for the year ended June 30, 2026 compared to approximately 61% for the year ended June 30, 2025, a decrease of approximately 2%. This reflects a change in cost structure of DOW projects.

Operating Expenses

		For the Years Ended June 30,								Change
		2026				2025				$				%
		(in millions)
Research and development expenses		$	2.33			$	1.10			$	1.23				112	%
General and administrative expenses			2.30				2.02				0.28				14	%
Sales and marketing expenses			0.53				1.07				(0.54	)			-50	%
Amortization of acquisition intangible assets			0.02				0.29				(0.27	)			-93	%
Goodwill impairment			10.56				-				10.56				100	%
Change in fair value of acquisition contingent consideration			0.02				0.14				(0.12	)			-86	%
Total operating expenses		$	15.76			$	4.62			$	11.14				241	%

Operating expenses for the year ended June 30, 2026 were approximately $15.76 million compared to approximately $4.62 million for the year ended June 30, 2025, an increase of approximately 241%. The increase primarily represents goodwill impairment recorded in fiscal year 2026.

Research and Development

Research and development expenses (primarily representing headcount related costs) for the year ended June 30, 2026 were approximately $2.33 million compared to approximately $1.10 million for the year ended June 30, 2025 an increase of approximately 112%. The increase primarily reflects a lesser proportion of headcount expense being allocated to revenue projects cost of goods sold due to revenue decrease.

General and Administrative

General and administrative expenses (primarily representing headcount and administrative related costs) for the year ended June 30, 2026 were approximately $2.30 million compared to approximately $2.02 million for the year ended June 30, 2025, an increase of approximately 14%. The increase primarily reflects increased investor relations efforts.

Sales and Marketing

Sales and marketing expenses (primarily representing headcount, including incentive based, related costs) for the year ended June 30, 2026 were approximately $0.53 million compared to approximately $1.07 million for the year ended June 30, 2025, a decrease of approximately 50%. The decrease primarily reflects a decrease in revenue related incentive pay.

Amortization of Acquisition Intangible Assets

Amortization of acquisition intangible assets expense for the year ended June 30, 2026 was approximately $0.02 million compared to approximately $0.29 million for the year ended June 30, 2025, a decrease of approximately 93%. The decrease represents the expiration of the intangible asset useful life.

Goodwill Impairment

Goodwill impairment for the year ended June 30, 2026 was approximately $10.56 million compared to none in the previous year.

The Company's primary customer is the DOW. U.S. Government funding for new DOW projects is on hold as a result of the U.S. Government shutdown in early 2026, continuing budget resolutions which produced no new funding, and delay in passing of the U.S. Government fiscal year 2026 budget. The budget delay has resulted in the Company no longer being able to invoice its current primary DOW customer for work currently being done, material uncertainty regarding whether the current work will be funded in an ultimate U.S. Government budget passage and limited visibility regarding its ability to secure other future revenue contracts. While revenues may be generated in the future, the current lack of sight into future revenue contracts and the Company's inability to generate material revenues in the current fiscal year has removed the primary driver of the quantitative discounted cash flow modelling that is utilized in order to determine the Company's enterprise value. This also makes the qualitative assessment of the Company's technology challenging to assess. In accordance with our accounting policies, it has been determined that the Company's enterprise value is negligible from a financial reporting perspective as of June 30, 2026. This results in a total impairment of goodwill of approximately $10.56 million.

Change in Fair Value of Acquisition Contingent Consideration

Change in fair value of acquisition contingent consideration for the year ended June 30, 2026 was approximately $0.02 million compared to approximately $0.14 million for the year ended June 30, 2025. The decrease reflects the final consideration payment in October 2025 related to the Company's acquisition of BLI Sub.

Discontinued Operations

		For the Years Ended
		June 30,								Change
		2026				2025				$				%
		(in millions)
Discontinued operations		$	(1.21	)		$	(1.33	)		$	0.12				9	%

As mentioned in the "Reclassifications" portion of this section above, discontinued operations represent the combined financial results of all of the Company's subsidiaries except BLI Sub.

Discontinued operations loss was approximately $1.21 million for the year ended June 30, 2026 compared to approximately $1.33 million for the previous year, a decrease of approximately 9%. The decrease primarily represents reduced revenue and related gross profit reflecting the wind down of the subsidiaries in fiscal year 2026 partially offset by a gain on the sale of certain subsidiary intellectual property.

Other Income

Other income for the years ended June 30, 2026 and 2025 was approximately $0.14 million and $0.19 million, respectively. This represents interest income and reflects the reduction in cash equivalent balances and changes in short term interest rates.

Net loss

For the year ended June 30, 2026, we incurred a net loss of approximately $16.64 million compared to a net loss of approximately $2.55 million for the year ended June 30, 2025. This was primarily driven by the non-cash goodwill impairment and reduced revenue and related gross profit that occurred in fiscal year 2026.

Non-GAAP Financial Measures

The following discussion and analysis includes both financial measures in accordance with 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 following 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 earnings (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 loss to Adjusted EBITDA loss for the years ended June 30, 2026 and 2025:

		For the Years Ended June 30
		2026				2025
		(in millions)
Net loss from continuing operations		$	(15.43	)		$	(1.22	)
Depreciation and amortization			0.05				0.35
EBITDA loss			(15.38	)			(0.87	)
Stock based expenses			0.74				0.62
Goodwill impairment			10.56				-
Change in fair value of acquisition contingent consideration			0.02				0.14
Adjusted EBITDA loss		$	(4.06	)		$	(0.11	)

Adjusted EBITDA loss for the year ended June 30, 2026 was approximately $4.06 million compared to approximately $0.11 million for the comparable 2025 period. The increase in Adjusted EBITDA loss is primarily due to the reduction in revenue and associated gross margin and increased research and development expenses in fiscal year 2026 compared to fiscal 2025.

Going Concern

The Company evaluated whether there are conditions or events that raise doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. The Company's evaluation entails analyzing expectations for the Company's cash needs and comparing those needs to the current cash and cash equivalent balances. This evaluation initially does not take into consideration the potential mitigating effect of management's plans that have not been fully implemented as of the date the financial statements are issued. The Company has incurred recurring losses since its inception, including a net loss of approximately $16.64 million for the year ended June 30, 2026. In addition, as of June 30, 2026, the Company had an accumulated deficit of $82.23 million. Furthermore, the circumstances around the goodwill impairment challenge the Company. The Company's cash and cash equivalents as of the date of this filing may not be sufficient to fund operations and other commitments for at least the next twelve months from the date of issuance of these consolidated financial statements. Accordingly, the Company has concluded that substantial doubt exists about the Company's ability to continue as a going concern for a period of at least 12 months from the date of issuance of these consolidated financial statements. In order to restore the going concern the Company may take actions which could include, but are not limited to equity or debt financings. There is no assurance that these actions will be taken or be successful if pursued. The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described.

Liquidity and Capital Resources

		For the Years Ended
		June 30,								Change
		2026				2025				$				%
		(in millions)
Net cash (used in) provided by continuing operating activities		$	(3.87	)		$	0.18			$	(4.05	)			-2,250	%
Net cash used in continuing investing activities			(1.53	)			(1.52	)			(0.01	)			-1	%
Net cash provided by financing activities			1.93				6.80				(4.87	)			-72	%
Net cash used in discontinued operations			(0.22	)			(0.47	)			0.25				53	%
Net increase (decrease) in cash, cash equivalents and restricted cash			(3.69	)			4.99				(8.68	)			-174	%
Cash, cash equivalents and restricted cash, beginning of year			6.84				1.85				4.99				270	%
Cash, cash equivalents and restricted cash, end of year		$	3.15			$	6.84			$	(3.69	)			-54	%

Operating activities

Net cash used in operating activities for the year ended June 30, 2026 was approximately $3.87 million, compared to cash provided of approximately $0.18 million for the year ended June 30, 2025. The decrease is primarily due to the reduction in revenue, and associated gross margin and increased research and development expenses in fiscal year 2026 compared to fiscal 2025.

Investing activities

Net cash used in investing activities for the year ended June 30, 2026 was approximately $1.53 million compared to approximately $1.52 million for the year ended June 30, 2025. For both years this primarily represented contingent consideration payments for the BLI LLC acquisition based on achieved revenue milestones.

Financing activities

Cash flow provided by financing activities during the year ended June 30, 2026 was approximately $1.93 million, compared to approximately $6.80 million for the prior period. 2026 represents the net proceeds of the securities purchase agreement entered into in May 2026. 2025 primarily represents the net proceeds of the securities purchase agreement entered into in December 2024.

Discontinued activities

The 2026 $0.25 million decrease in cash used in discontinued operations compared to 2025 primarily represents gain on the sale of a certain subsidiary intellectual property.

Capital Resources

As of June 30, 2026, the Company had cash and cash equivalents of $3.15 million.

As of June 30, 2026, the Company had no outstanding debt obligations.

As of June 30, 2026, the Company had no issued and outstanding preferred stock.

On September 23, 2026 the Company entered into a SPA and anticipates receiving gross proceeds from the SPA of $1.25 million by September 30, 2026. This transaction does not change the Company's status described in the Going Concern section above.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. On an ongoing basis, we evaluate our estimates based on assumptions that are believed to be reasonable under the circumstances. These estimates are inherently subject to judgment and actual results could differ materially from those estimates.

An accounting estimate is considered critical if it involves significant subjectivity and judgment, and if changes in the estimate have had or are reasonably likely to have a material effect on our consolidated financial statements. We believe estimates regarding revenue and goodwill are subject to a greater degree of judgment and complexity and have the greatest potential impact on our consolidated financial statements. For additional information on these and all of our significant accounting policies, see Note 4 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Smaller Reporting Company Status

We are a "smaller reporting company" as defined in the Exchange Act. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that our voting and non-voting common stock held by non-affiliates is $250 million or more measured on the last business day of our second fiscal quarter, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is $700 million or more measured on the last business day of our second fiscal quarter.

We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If, as a result of our decision to reduce future disclosure, investors find our common stock less attractive, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.