v3.26.3
DIVESTITURES, BUSINESS WIND DOWNS, DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS
 12 Months Ended
Jun. 30, 2026
Discontinued Operations and Disposal Groups [Abstract]  
DIVESTITURES, BUSINESS WIND DOWNS, DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

NOTE 5. DIVESTITURES, BUSINESS WIND DOWNS, DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

 

In June 2026, the decision was made by the Company to transform from a portfolio of businesses into a focused technology company centered on its Brightline subsidiary and its SpatialCore product, 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, all subsidiaries except BLI Sub are reported as discontinued operations on the consolidated statement of operations and assets/liabilities of discontinued operations on the consolidated balance sheets for all periods presented.

 

Divestiture

 

Glimpse Learning, LLC (“Learning”)

 

In June 2026, the company sold its Learning subsidiary to a newly formed entity which is majority owned by the former chief executive of the Company (see Note 14). The Company received a 19.99% equity interest in the new entity and potential future royalty payments commencing in July 2027. The Company also paid the new entity a $200,000 working capital adjustment in July 2026, which represented the remaining term of software license customer support payments the Company had received as of June 30, 2026, in return for new entity assuming the obligation to satisfy these support commitments. This is reported as due to related party on the consolidated balance sheet as of June 30, 2026.

 

Learning has historically incurred losses, and the Company believes this trend will continue with the new entity, particularly considering the challenges to the future viability of the Virtual Reality/Augmented Related industry. In addition, this situation makes the likelihood of receiving more than de minimis royalties in the future remote. Accordingly, the Company considers the non-controlling equity interest to have no value and has recorded no contingent consideration to be received resulting in no gain, or loss, on the Learning divestiture.

 

Prior to the Learning divestiture and the Company’s refocus to SpatialCore, it was determined that the goodwill of Learning was impaired based on historical operating losses and lack of visibility to future profitable operations. A total goodwill impairment of $300,000 was recorded in the year ended June 30, 2026 and is included in the loss from discontinued operations on the consolidated statement of operations

 

Learning’s results of operations are reported in loss from discontinued operations on the consolidated statement of operations and its assets and liabilities are reports as assets or liabilities of discontinued operations on the consolidated balance sheet.

 

Divestiture and Business Wind Down

 

Glimpse Lenses, LLC (“Lenses”)

 

In October 2024, a significant portion of Lenses (known as QReal, LLC (“QReal”) at that time) was divested, including its Tukish subsidiary, in a management buyout by the then General Manager of QReal.

 

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 – see below). The Company has fully reserved against the Note as collectability was considered remote at the time and there have been no note payments to date. The Company recorded a loss on this divestiture of approximately $0.16 million in the year ended June 30, 2025.

 

The Company retained the revenues from QReal’s largest customer in full, until such time that the Company had collected and retained $1.35 million net cash in the aggregate, after taking into account all related operating expenses and fees (the “Milestone”). The Milestone was never fully achieved and QReal’s major customer terminated their revenue agreement in March 2026. This customer termination led to the wind down of the Lenses subsidiary during the year ended June 30, 2026.

 

Lenses’ results of operations (including loss on QReal divestiture) are reported in loss from discontinued operations on the consolidated statement of operations and its assets and liabilities are reports as assets or liabilities of discontinued operations on the consolidated balance sheet.

 

 

Business Wind Down

 

Sector 5 Digital, LLC (“S5D”)

 

As part of the Company’s refocus on SpatialCore, S5D was identified as a non-core and underperforming subsidiary. During the year ended June 30, 2026, all S5D customer were informed of the decision to wind down the business and all employees were terminated.

 

During the year ended June 30, 2026, the Company sold certain assets of S5D and recorded a gain on sale of $0.24 million.

 

S5D’s results of operations (including gain on sale of certain assets) are reported in loss from discontinued operations on the consolidated statement of operations and its assets and liabilities are reports as assets or liabilities of discontinued operations on the consolidated balance sheet.

 

Summary

 

Following are the details of the aforementioned subsidiaries divestiture/wind downs reported as assets/liabilities of discontinued operations on the consolidated balance sheets as of June 30, 2026 and 2025.

 

   Lenses   S5D   Total 
   As of June 30, 2026 
   Lenses   S5D   Total 
             
ASSETS               
Accounts receivable  $7,350   $61,191   $68,541 
Deferred costs   -    23,754    23,754 
Prepaid expenses and other current assets   -    8,622    8,622 
Current assets of discontinued operations  $7,350   $93,567   $100,917 
                
Right-of-use assets, net  $-   $4,557   $4,557 
Other assets 

-  

1,000  

1,000 
Non-current assets of discontinued operations  $-   $5,557   $5,557 
                
LIABILITIES               
Accounts payable  $87   $15,117   $15,204 
Accrued liabilities   28,331    27,837    56,168 
Deferred revenue   -    155,500    155,500 
Lease liabilities, current portion   -    4,704    4,704 
Other current liabilities of discontinued operations  $28,418   $203,158   $231,576 

 

 

   Learning   Lenses   S5D   Total 
   As of June 30, 2025 
   Learning   Lenses   S5D   Total 
                 
ASSETS                    
Accounts receivable  $237,102   $385,010   $218,439   $840,551 
Deferred costs   (270)   7,088    -    6,818 
Prepaid expenses and other current assets   61,493    376    74,921    136,790 
Current assets of discontinued operations  $

298,325

   $392,474   $293,360   $984,159 
                     
Equipment and leasehold improvements, net 

$

-  

$

-  

$

15,077  

$

15,077 
Right-of-use assets, net   -    -    14,791    14,791 
Intangible assets, net   36,270    -    -    36,270 
Goodwill   300,000    -    -    300,000 
Other assets   -    -    1,000    1,000 
Non-current assets of discontinued operations  $

336,270

   $-   $30,868   $367,138 
LIABILITIES                    
Accounts payable  $30,940   $115,970   $38,417   $185,327 
Accrued liabilities   11,066    214,129    55,517    280,712 
Deferred revenue   -    7,875    44,701    52,576 
Lease liabilities, current portion   -    -    10,405    10,405 
Other current liabilities of discontinued operations  $

42,006

   $337,974   $149,040   $529,020 
                     
Long term liabilities                    
Lease liabilities, net of current portion  $-   $-   $4,704   $4,704 
Long term liabilities of discontinued operations  $-   $-   $4,704   $4,704 

 

Following are the details of the aforementioned subsidiaries divestiture/wind downs reported as discontinued operations on the consolidated statements of operations for the years ended June 30, 2026 and 2025.

 

   Learning   Lenses   S5D   Total 
   For the Years ended June 30 2026 
   Learning   Lenses   S5D   Total 
                 
Total revenue  $1,035,352   $951,689   $1,349,196   $3,336,237 
Cost of goods sold   291,171    159,498    482,909    933,578 
Gross profit   744,181    792,191    866,287    2,402,659 
                     
Operating expenses (including allocated corporate overhead):                    
Research and development expenses   633,492    692,482    546,475    1,872,449 
General and administrative expenses (net of (gain) on sale of business)   301,584    252,198    310,267    864,049 
Sales and marketing expenses   292,388    95,860    150,595    538,843 
Amortization of acquisition intangible assets   36,271    -    -    36,271 
Goodwill impairment   300,000    -    -    300,000 
Total operating expenses   1,563,735    1,040,540    1,007,337    3,611,612 
                     
Loss from discontinued operations  $(819,554)  $(248,349)  $(141,050)  $(1,208,953)

 

 

   Learning   Lenses   S5D   Total 
   For the Years ended June 30, 2025 
   Learning   Lenses   S5D   Total 
                 
Total revenue  $1,115,464   $2,337,044   $1,808,731   $5,261,239 
Cost of goods sold   178,461    405,665    768,490    1,352,616 
Gross profit   937,003    1,931,379    1,040,241    3,908,623 
                     
Operating expenses (including allocated corporate overhead):                    
Research and development expenses   676,751    987,593    726,383    2,390,727 
General and administrative expenses  (net of loss on sale of business)   375,774    684,550    555,796    1,616,120 
Sales and marketing expenses   538,223    370,656    226,045    1,134,924 
Amortization of acquisition intangible assets   133,817    -    -    133,817 
Change in fair value of acquisition contingent consideration   (35,714)   -    -    (35,714)
Total operating expenses   1,688,851    2,042,799    1,508,224    5,239,874 
                     
Loss from discontinued operations  $(751,848)  $(111,420)  $(467,983)  $(1,331,251)