NOTE 8. QREAL AND GLIMPSE TURKEY DIVESTITURE / CUSTOMER TERMINATION

Divestiture

Effective October 1, 2024, the Company divested the business of its wholly owned subsidiary company QReal, LLC (“QReal”) and its related operating entity GLIMPSE GROUP YAZILIM VE ARGE TİCARET ANONİM ŞİRKET (“Glimpse Turkey”) in a management buyout by the then General Manager of QReal.

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”). As of March 31, 2026, the Company received $0.32 million of the Milestone. Revenue from the divested business that was not retained going forward was approximately $0.14 million for the nine months ended March 31, 2025.

The assets, as defined in the divestiture agreement, of QReal/Glimpse Turkey, were sold in return for a $1.56 million senior secured convertible note (the “Note”) from the purchasing (“New”) entity and a 10% equity stake in New entity. Principal payback of the note is tied directly to revenue collected by New entity (separate from the Milestone). The note converts to New entity equity upon certain equity capital raising of New entity, as defined. The Company accounts for the investment in New entity at cost ($100) because the Company does not control or have significant influence over the investment. The Company has also fully reserved against the Note as collectability is considered remote.

Pursuant to the original acquisition of QReal by the Company in 2016, upon sale of the entity the original sellers are due 8% (“economic interest”) of the Milestone proceeds. As the achievement of the Milestone is uncertain, liability for these payments will be recorded as actual Milestone proceeds occur. The Company recorded an expense of approximately $0 and $0.01 million, respectively, related to the economic interest in sales and marketing expense on the condensed consolidated statement of operations for the three months and nine months ended March 31, 2026, and $0.01 and $0.02 million, respectively, for the three and nine months ended March 31, 2026.

In connection with the QReal divestiture, the Company made personal loans to the majority owner of New entity to assist in startup funding of New entity. These loans are personally guaranteed by said majority owner. The loans bear interest at a nominal rate, have monthly repayment requirements and are due in full by May 31, 2026. The outstanding balance on the loans is recorded as of March 31, 2026 and June 30, 2025 in the condensed consolidated balance sheets as notes receivable.

Customer Termination

In March 2026, QReal’s largest customer terminated their revenue agreement with Glimpse/QReal. Glimpse will record no further revenue from this customer and we do not anticipate a material further increase in the Milestone receipt. Revenue recorded by Glimpse related to this customer was $0.23 million and $0.99 million, respectively, for the three and nine months ended March 31, 2026 and $0.46 million and $1.61 million, respectively, for the three and nine months ended March 31, 2025.