The Glimpse Group Inc.

10/07/2024 | Press release | Distributed by Public on 10/07/2024 15:01

Material Event Form 8 K

Item 8.01 Other Events.

As part of its previously announcedstrategic realignment around Spatial Core and divestiture of non-core assets, effective on October 1, 2024, The Glimpse Group, Inc. (the "Company") entered into an agreement to divest its wholly owned subsidiary companies QReal, LLC ("QReal") and its related operating entity GLIMPSE GROUP YAZILIM VE ARGE TİCARET ANONİM ŞİRKET ("Glimpse Turkey") in a management buyout by the current General Manager of QReal (the "Divestiture"). The Divestiture's expected initial value to the Company is approximately $4.0 million, excluding further equity upside.

A summary of the key elements of the Divestiture are set forth below:

● Creates approximately $4.0 million of expected net cash value to the Company over the next two years, inclusive of $1.2 to $1.5 million in annual cash expense savings.
● Simplifies and streamlines the Company's operations (approximately 60 less employees) and eliminates Turkey country risk.
● The Company does not expect material changes to its expected revenues for fiscal years 2024 and 2025.
○ The Company retains the revenues from QReal's largest customer in full until such time that the Company has collected and retained $1.35 million net cash in the aggregate, after taking into account all related operating expenses and fees (the "Milestone").
○ After satisfaction of the Milestone, the Company will receive a monthly cash revenue share for a period of 18 months in relation to any revenues generated from this same customer.
● The Company was issued a $1.56 million Senior Secured Convertible Note in the new independent entity. Principal payback is tied directly to revenue collected by the new entity(separate from the Milestone).
● The Company was issued a minority equity stake in the new independent entity.
● The Company believes that QReal's virtual try-on business has greater growth and success potential as an independent entity outside of the Company, potentially creating significant equity value for the Company's shareholders in excess of QReal's current equity value within the Company.

Forward-Looking Statements

This report includes statements of our expectations, intentions, plans, and beliefs that constitute "forward-looking statements" within the meaning of U.S. federal securities laws. It is important for an investor to understand that these statements involve risks and uncertainties, some of which are beyond our control. Forward-looking statements in this report include our expectations regarding our revenues in the future, and the success potential of QReal's virtual try-on business. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks and factors, all of which are difficult to predict and many of which are beyond our control, that could cause actual results to differ materially from those matters expressed or implied by these forward-looking statements. Investors are cautioned not to place undue reliance on forward-looking statements in this report.