UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to ________
Commission
File Number:
BRIGHTLINE INTERACTIVE, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 11, 2026, the registrant had shares of common stock, par value $ per share, outstanding.
BRIGHTLINE INTERACTIVE, INC.
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
BRIGHTLINE INTERACTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2026 | As of June 30, 2026 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Other current assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| Equipment and leasehold improvements, net | ||||||||
| Right-of-use assets, net | ||||||||
| Other assets | ||||||||
| Assets of discontinued operations | ||||||||
| Total assets | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities | ||||||||
| Due to related party | ||||||||
| Deferred revenue | ||||||||
| Lease liabilities | ||||||||
| Other current liabilities of discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 11) | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred Stock, par value $ per share, shares authorized; shares issued and outstanding | ||||||||
| Common Stock, par value $ per share, shares authorized; and issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
BRIGHTLINE INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | ||||||||
| Software services | $ | $ | ||||||
| Royalty income | ||||||||
| Total revenue | ||||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Research and development expenses | ||||||||
| General and administrative expenses | ||||||||
| Sales and marketing expenses | ||||||||
| Amortization of acquisition intangible assets | ||||||||
| Change in fair value of acquisition contingent consideration | ||||||||
| Total operating expenses | ||||||||
| Loss from operations before other income | ( | ) | ( | ) | ||||
| Gain (loss) from discontinued operations | ( | ) | ||||||
| Other income: | ||||||||
| Interest income | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted net loss per share | $ | ) | $ | ) | ||||
| Weighted-average common shares used to compute basic and diluted net loss per share | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
BRIGHTLINE INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2026
(Unaudited)
| Common Stock | Additional Paid-In | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance as of July 1, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock and stock option-based compensation expense | ||||||||||||||||||||
| Stock option-based board of directors expense | - | |||||||||||||||||||
| Common stock issued in Securities Purchase Agreement, net | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of September 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
BRIGHTLINE INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2025
(Unaudited)
| Common Stock | Additional Paid-In | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance as of July 1, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock and stock option-based compensation expense | ||||||||||||||||||||
| Stock option-based board of directors expense | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of September 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
BRIGHTLINE INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
| For the Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Less: Net gain (loss) from discontinued operations | ( | ) | ||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization and depreciation | ||||||||
| Common stock and stock option based compensation for employees and board of directors | ||||||||
| Acquisition contingent consideration fair value adjustment | ||||||||
| Adjustment to operating lease right-of-use assets and liabilities | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Deferred costs | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Other assets | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued liabilities | ||||||||
| Due to related party | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities from discontinued operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flow from investing activities: | ||||||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows provided by financing activities: | ||||||||
| Notes receivable repayment | ||||||||
| Proceeds from securities purchase agreement, net | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 7 |
BRIGHTLINE INTERACTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS
Brightline Interactive, Inc. (“BLI,” the “Company,” or “Brightline”), formerly The Glimpse Group, Inc., is a software company building SpatialCore, an interoperability and operational context platform for Physical AI. BLI’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 (“BLI Sub”) subsidiary 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.
The Company is listed on the Nasdaq Capital Market Exchange (“Nasdaq”) under the ticker BTLN.
NOTE 2. GOING CONCERN
At each reporting period, the Company evaluates 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. The Company is required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by the Company’s plans or when its plans alleviate substantial doubt about the Company’s ability to continue as a going concern.
The
Company has incurred recurring losses since its inception, including a net loss of approximately $
Until the Company can generate sufficient revenue, if ever, to fund its operations and other commitments, the Company may take actions to finance future cash needs 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.
NOTE 3. NASDAQ LISTING NOTIFICATION AND REVERSE STOCK SPLIT
On March 13, 2026, the Company received a notification letter from the Listing Qualifications Department of Nasdaq notifying the Company that, because the closing bid price for the Company’s common stock listed on Nasdaq was below $ 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.
| 8 |
In
connection with the above, in an effort to regain compliance with the bid price requirement, the Company declared a
On October 12, 2026 the Company received a notification letter from the Listing Qualifications Department of Nasdaq informing the Company that it had regained compliance with the bid price requirement and the matter was closed (see Note 12).
NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2026, and the results of operations and cash flows for the three months ended September 30, 2026 and 2025. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three months ended September 30, 2026 are not necessarily indicative of the results to be expected for the entire year ending June 30, 2027 or for any subsequent periods. The consolidated balance sheet as of June 30, 2026 has been derived from the audited consolidated financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the SEC’s rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended June 30, 2026.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the balances of Brightline and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. In August 2026, all Company subsidiaries were merged into the parent Brightline Interactive, Inc.
Use of Estimates
In preparation of the condensed consolidated financial statements in accordance with GAAP, the Company makes certain estimates and assumptions in determining the amounts reflected in the financial statements and the related notes. Actual results could differ from those estimates.
Discontinued Operations and 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 its 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.
| 9 |
As further detailed in Note 5, the Company determined that the divestiture/wind down of subsidiaries pursuant to the efforts above met the criteria for presentation as discontinued operations as it represented a strategic shift that had a major impact on the Company’s operations and financial results.
Accordingly, results of operations, financial position, and cash flows for all subsidiaries except BLI Sub are reported as discontinued operations on the condensed consolidated statement of operations and assets/liabilities of discontinued operations on the condensed consolidated balance sheets for all periods presented.
Unless otherwise noted, information throughout these condensed consolidated financial statements relates to continuing operations.
Cash and Cash Equivalents
Cash and cash equivalents represent cash and short-term, highly liquid investments, that are both readily convertible to known amounts of cash and so near their maturity they present insignificant risk of changes in value because of changes in interest rates, with maturities three months or less at the date of purchase.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy, which is based on three levels of inputs, the first two of which are considered observable and the last unobservable, that may be used to measure fair value, is as follows:
● Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;
● Level 2 — inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
● Level 3 — unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company classifies its cash equivalents within Level 1 of the fair value hierarchy on the basis of valuations based on quoted prices for the specific securities in an active market.
The Company’s other financial instruments consist primarily of accounts receivable, accounts payable and other liabilities, and are reported at approximate fair value due to the short-term nature of these instruments.
Revenue Recognition
Nature of Revenues
The Company primarily reports its revenues in two categories:
| ● | Software Services: Spatial Computing projects, solutions and consulting services. | |
| ● | Royalty Income: royalty income earned pursuant to specific agreements. |
| 10 |
The Company applies the following steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
| ● | identify the contract with a customer; | |
| ● | identify the performance obligations in the contract; | |
| ● | determine the transaction price; | |
| ● | allocate the transaction price to performance obligations in the contract; | |
| ● | recognize revenue as the performance obligation is satisfied; | |
| ● | determine that collection is reasonably assured. |
Revenue is recognized when the Company satisfies its performance obligation under the contract by transferring the promised product to its customer or service is performed and collection is reasonably assured. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A portion of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct. Other contracts can include various services and products which are at times capable of being distinct, and therefore may be accounted for as separate performance obligations.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. As such, revenue is recorded net of returns, allowances, customer discounts, and incentives. Sales taxes and other taxes are excluded from revenues.
For distinct performance obligations recognized at a point in time, any unrecognized portion of revenue and any corresponding unrecognized expenses are presented as deferred revenue and deferred costs, respectively, in the accompanying condensed consolidated balance sheets. Deferred costs include cash payroll costs and may include payments to consultants and vendors.
For distinct performance obligations recognized over time, the Company records deferred costs (costs in excess of billings) when revenue is recognized prior to invoicing, or deferred revenue (billings in excess of costs) when revenue is recognized subsequent to invoicing.
The Company recognizes royalty income pursuant to agreements with divested entities representing a percentage of said entities collected revenue.
Significant Judgments
The Company’s contracts with customers may include promises to transfer multiple products/services. Determining whether products/services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Further, judgment may be required to determine the standalone selling price for each distinct performance obligation.
Disaggregation of Revenue
The Company generated revenue by delivering: (i) Software Services, consisting primarily of Spatial Computing projects, solutions and consulting services, and (ii) Royalty income. The Company generates its revenues primarily from customers in the United States.
Revenue for a significant portion of Software Services projects and solutions (projects whereby, the development of the project leads to an identifiable asset with an alternative use to the Company) is recognized at the point of time in which the customer obtains control of the project, customer accepts delivery and confirms completion of the project. The Company also generates Software Services revenues which are custom project solutions (projects whereby, the development of the custom project leads to an identifiable asset with no alternative use to the Company, and, in which, the Company also has an enforceable right to payment under the contract) and are therefore recognized based on the percentage of completion using an input model with a master budget. The budget is reviewed periodically and percentage of completion adjusted accordingly.
Revenue for Software Services consulting services and website maintenance is recognized when the Company performs the services, typically on a monthly retainer basis.
| 11 |
Timing of Revenue
Timing of revenue recognition may differ from the timing of invoicing to customers. The Company generally records an unbilled receivable asset when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing.
For certain Software Services project contracts the Company invoices customers after the project has been delivered and accepted by the customer. Software Service project contracts typically consist of designing and programming software for the customer. In most cases, there is only one distinct performance obligation, and revenue is recognized upon completion, delivery and customer acceptance. Contracts may include multiple distinct projects that can each be implemented and operated independently of subsequent projects in the contract. In such cases, the Company accounts for these projects as separate distinct performance obligations and recognizes revenue upon the completion of each project or obligation, its delivery and customer acceptance.
For contracts recognized over time, deferred revenue includes billings invoiced for software projects for which the contract’s performance obligations are not complete.
In certain Software Services project contract situations, the Company invoices customers for a substantial portion of the project upon entering into the contract due to their custom nature and revenue is recognized based upon percentage of completion. Revenue recognized subsequent to invoicing is recorded as deferred revenue (billings in excess of cost) and revenue recognized prior to invoicing is recorded as a deferred cost (cost in excess of billings).
For Software Services consulting or retainer contracts, the Company generally invoices customers monthly at the beginning of each month in advance for services to be performed in the following month. The sole performance obligation is satisfied when the services are performed. Software Services consulting or retainer contracts typically consist of ongoing support for a customer’s software or specified business practices.
The timing of revenue recognition for the three months ended September 30, 2026 and 2025 was as follows:
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Products and services transferred at a point in time | $ | $ | ||||||
| Products and services transferred/recognized over time | ||||||||
| Total revenue | $ | $ | ||||||
Customer Concentration
One
customer accounted for approximately
Other Significant Accounting Policies
There have been no material changes to other significant accounting policies from those detailed in the audited consolidated financial statements and notes thereto for the fiscal year ended June 30, 2026.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to enhance specified information about certain costs and expenses at each interim and annual reporting period so that investors can better understand an entity’s overall performance. The guidance is effective for the Company’s annual periods beginning July 1, 2027. The Company is currently evaluating the ASU to determine its impact on its financial statements and related disclosures.
| 12 |
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU provides a comprehensive list of interim disclosures that are required by GAAP and clarifies the applicability of Topic 270, as well as a requirement to disclose events since the end of the last annual reporting period that have a material impact on the entity. The new standard will become effective for the Company’s interim disclosures beginning in fiscal year 2029. Early adoption is permitted and the new guidance should be applied prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of this standard on its financial statements and disclosures.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. This ASU includes amendments to the FASB Accounting Standards Codification for a broad range of topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. These amendments are not expected to have a significant effect on current accounting practice for most entities. The new standard will become effective for the Company’s interim and annual reporting periods beginning in fiscal year 2028. Early adoption is permitted on an issue-by-issue basis and the new guidance should be applied prospectively or retrospectively on an issue-by-issue basis. The Company is currently evaluating the impact of this standard on its financial statements and disclosures.
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 BLI Sub 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 condensed consolidated statement of operations and assets/liabilities of discontinued operations on the condensed 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 officer of the Company (see Note 10).
Learning’s results of operations are reported in loss from discontinued operations on the condensed consolidated statement of operations and its assets and liabilities are reports as assets or liabilities of discontinued operations on the condensed consolidated balance sheet.
Business Wind Downs
Glimpse Lenses, LLC (“Lenses”)
Lenses’ 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 are reported in loss from discontinued operations on the condensed consolidated statement of operations and its assets and liabilities are reports as assets or liabilities of discontinued operations on the condensed consolidated balance sheet.
| 13 |
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 three months ended September 30, 2025, the Company sold certain assets of S5D and recorded a gain on sale of $
S5D’s results of operations (including gain on sale of certain assets) are reported in loss from discontinued operations on the condensed consolidated statement of operations and its assets and liabilities are reports as assets or liabilities of discontinued operations on the condensed consolidated balance sheet.
Summary
Following are the details of the aforementioned subsidiaries divestiture/wind downs reported as assets/liabilities of discontinued operations on the condensed consolidated balance sheets as of September 30 and June 30, 2026. All subsidiaries were merged into the parent BLI in August 2026. Accordingly, there is no separate entity detail as of September 30, 2026.
| As of September 30, 2026 | ||||
| ASSETS | ||||
| Accounts receivable | $ | |||
| Prepaid expenses and other current assets | ||||
| Current assets of discontinued operations | $ | |||
| LIABILITIES | ||||
| Accounts payable | $ | |||
| Accrued liabilities | ||||
| Deferred revenue | ||||
| Other current liabilities of discontinued operations | $ | |||
| As of June 30, 2026 | ||||||||||||
| Lenses | S5D | Total | ||||||||||
| ASSETS | ||||||||||||
| Accounts receivable | $ | $ | $ | |||||||||
| Deferred costs | ||||||||||||
| Prepaid expenses and other current assets | ||||||||||||
| Current assets of discontinued operations | $ | $ | $ | |||||||||
| Right-of-use assets, net | $ | $ | $ | |||||||||
| Other assets | ||||||||||||
| Non-current assets of discontinued operations | $ | $ | $ | |||||||||
| LIABILITIES | ||||||||||||
| Accounts payable | $ | $ | $ | |||||||||
| Accrued liabilities | ||||||||||||
| Deferred revenue | ||||||||||||
| Lease liabilities, current portion | ||||||||||||
| Other current liabilities of discontinued operations | $ | $ | $ | |||||||||
| 14 |
Following are the details of the aforementioned subsidiaries divestiture/wind downs reported as discontinued operations on the condensed consolidated statements of operations for the three months ended September 30, 2026 and 2025. All subsidiaries were merged into the parent BLI in August 2026. Accordingly, there is no separate entity detail as of September 30, 2026.
| For the Three Months ended September 30, 2026 | ||||
| Total revenue | $ | |||
| Cost of goods sold | ||||
| Gross profit | ||||
| Operating expenses (including allocated corporate overhead): | ||||
| Research and development expenses | ||||
| General and administrative expenses | ||||
| Total operating expenses | ||||
| Gain from discontinued operations | $ | |||
| For the Three Months ended September 30, 2025 | ||||||||||||||||
| Learning | Lenses | S5D | Total | |||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses (including allocated corporate overhead): | ||||||||||||||||
| Research and development expenses | ||||||||||||||||
| General and administrative expenses (net of gain on sale of business) | ( | ) | ||||||||||||||
| Sales and marketing expenses | ||||||||||||||||
| Amortization of acquisition intangible assets | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Gain (loss) from discontinued operations | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
NOTE 6. SEGMENT AND RELATED INFORMATION
The
Company has
The Company’s chief operating decision maker (“CODM”) is the chief executive officer who reviews financial information presented on a consolidated basis to allocate resources, evaluate performance and make overall operating decisions. The measure of segment profit or loss that is most consistent with the condensed consolidated financial statements is net cash used in operating activities. The accounting policies of our single reportable segment are the same as those for the condensed consolidated financial statements. The level of disaggregation and amounts of significant revenue and cash expenses that are regularly provided to the CODM are the same as presented in the condensed consolidated statement of operations. Likewise, the measure of segment assets is reported on the condensed consolidated balance sheets as total assets.
| 15 |
The table below is a summary of segment operating expenses from continuing operations.
For the Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Personnel related | $ | $ | ||||||
| Stock based compensation | ||||||||
| Professional fees | ||||||||
| Software/IT services | ||||||||
| Equity market listing and investor relations | ||||||||
| Other expenses | ||||||||
| Total operating expenses from continuing operations | $ | $ | ||||||
Other expenses include facilities costs and other individually insignificant costs.
NOTE 7. FINANCIAL INSTRUMENTS
Cash and Cash Equivalents
The Company’s money market funds are categorized as Level 1 within the fair value hierarchy. As of September 30 and June 30, 2026, the Company’s money market funds were as follows:
| As of September 30, 2026 | ||||||||||||
Unrealized Gain (Loss) | Fair Value | Cash Equivalents | ||||||||||
| Level 1: | ||||||||||||
| Money market funds | $ | $ | $ | |||||||||
| As of June 30, 2026 | ||||||||||||
Unrealized Gain (Loss) | Fair Value | Cash Equivalents | ||||||||||
| Level 1: | ||||||||||||
| Money market funds | $ | $ | $ | |||||||||
| 16 |
NOTE 8. EQUITY
Common Stock Issued
Securities Purchase Agreements (“SPA”)
SPA September 2026
In September 2026, the Company entered
into securities purchase agreements with certain existing institutional and individual investors (see Note 10) for the issuance of an
aggregate of
units for $
per Unit, with each Unit being comprised of one share of the Company’s common stock, par value $ per share (the “Common
Stock”), and one warrant (the “Warrant”) exercisable for one share of Common Stock at an exercise price of $
The
Company realized total net proceeds (after professional fees) of $
Warrants
In connection with offerings in November 2021, May 2026 and the September 2026 Offering, the Company issued warrants, which are exercisable into shares of Company common stock on a one-for-one basis, as detailed below. The warrants are not publicly traded.
The remaining outstanding warrants as of September 30, 2026 are:
| Warrants Outstanding | Exercise Price | Expiration Date | ||||||||
| November 2021 | $ | |||||||||
| November 2021 | $ | |||||||||
| May 2026 | $ | |||||||||
| May 2026 (Prefunded Warrants) | $ | |||||||||
| September 2026 Offering | $ | |||||||||
| Total | ||||||||||
Stock-Based Compensation
Equity Incentive Plan
The Company’s 2016 Equity Incentive Plan (the “Plan”), as amended, has approximately million common shares reserved for issuance. As of September 30, 2026, there were approximately million shares available for issuance under the Plan.
The Company recognizes compensation expense relating to awards ratably over the requisite period, which is generally the vesting period.
| For the Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Weighted average expected terms (in years) | ||||||||
| Weighted average expected volatility | % | % | ||||||
| Weighted average risk-free interest rate | % | % | ||||||
| Expected dividend yield | % | % | ||||||
| 17 |
The grant date fair value for options granted during the three months ended September 30, 2026 and 2025 was approximately $ million and $ million, respectively.
| Weighted Average | ||||||||||||||||
| Remaining | ||||||||||||||||
| Exercise | Contractual | Intrinsic | ||||||||||||||
| Options | Price | Term (Yrs) | Value | |||||||||||||
| Outstanding at July 1, 2026 | $ | $ | ||||||||||||||
| Options Granted | ||||||||||||||||
| Options Exercised | ||||||||||||||||
| Options Forfeited / Cancelled | ( | ) | ||||||||||||||
| Outstanding at September 30, 2026 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2026 | $ | $ | ||||||||||||||
| Weighted Average | ||||||||||||||||
| Remaining | ||||||||||||||||
| Exercise | Contractual | Intrinsic | ||||||||||||||
| Options | Price | Term (Yrs) | Value | |||||||||||||
| Outstanding at July 1, 2025 | $ | $ | ||||||||||||||
| Options Granted | ||||||||||||||||
| Options Exercised | ||||||||||||||||
| Options Forfeited / Cancelled | ( | ) | ||||||||||||||
| Outstanding at September 30, 2025 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2025 | $ | $ | ||||||||||||||
The intrinsic value of stock options activity for the years ended September 30, 2026 and 2025 was computed using a fair market value (fiscal year to date VWAP – volume weighted average price) of the common stock of $ per share and $ per share, respectively.
The intrinsic value of stock options outstanding and exercisable as of September 30, 2026 and 2025 was computed using Nasdaq market closing prices of the common stock of $ per share and $ per share, respectively.
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Stock option-based expense: | ||||||||
| Research and development expenses | $ | $ | ||||||
| General and administrative expenses | ||||||||
| Sales and marketing expenses | ||||||||
| Board option expense | ||||||||
| Total | $ | $ | ||||||
As of September 30, 2026, total unrecognized compensation expense to employees, board members and vendors related to stock options was approximately $ million and is expected to be recognized over a weighted average period of years.
| 18 |
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Numerator: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Weighted-average common shares outstanding for basic and diluted net loss per share | ||||||||
| Basic and diluted net loss per share | $ | ) | $ | ) | ||||
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Options | ||||||||
| Warrants | ||||||||
| Total | ||||||||
NOTE 10. RELATED PARTY TRANSACTIONS
In
June 2026, the Company sold the Learning subsidiary to an entity (“New Learning”) controlled by the former chief executive
officer of the Company. In July 2026 the Company paid New Learning $
The
September 2026 Offering (see Note 8) included
shares of common stock (and associated warrants) issued to a family member of the Company’s chief executive officer. Gross proceeds
received from this related party was approximately $
NOTE 11. COMMITMENTS AND CONTINGENCIES
Lease Costs
The
Company made cash payments for all operating leases for the three months ended September 30, 2026 and 2025, of approximately $
The
total rent expense for all operating leases for the three months ended September 30, 2026 and 2025, was approximately $
| 19 |
Lease Commitments
The
Company has two operating leases for its offices.
Future approximate undiscounted lease payments for the Company’s operating lease liabilities and a reconciliation of these payments to its operating lease liabilities as of September 30, 2026 are as follows:
| Year Ended June 30, 2027 | ||||
| Total future minimum lease commitments, including short-term leases | $ | |||
| Less: future minimum lease payments of short -term leases | ( | ) | ||
| Less: imputed interest | ( | ) | ||
| Present value of future minimum lease payments, excluding short term leases | $ | |||
| Total operating lease liability | $ | |||
NOTE 12. SUBSEQUENT EVENTS
On October 12, 2026 the Company received a notification letter from the Listing Qualifications Department of Nasdaq informing the Company that it had regained compliance with the $ per share minimum bid price requirement for listed companies on the Nasdaq Stock Market and the matter was closed.
| 20 |
Item 2. 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, 2026, which are included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2026 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 Brightline Interactive, 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,” “future,” “intends,” “may,” “plans,” “possibility,” “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, 2026 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
Our product, SpatialCore, is designed to enable Physical AI, technology that perceives, decides, and acts in real-world physical environments, and we believe it is a key differentiator, growth driver and competitive advantage for us. On June 1, 2026, a new Board of Directors and executive leadership team, led by Chief Executive Officer Tyler Gates and Board Chairman Admiral Scott Swift, USN (Ret.), assumed responsibility for the Company. Management and the new Board concluded that the Company’s resources, personnel, and public-company platform were best concentrated around Brightline and SpatialCore, rather than the broader portfolio of immersive-technology businesses we had previously operated. Consistent with that conclusion, we divested or discontinued non-core operations, including Glimpse Learning LLC, and in August 2026 changed our corporate name to Brightline Interactive, Inc. and our Nasdaq ticker symbol from “GGRP” to “BTLN” to reflect this focus, and have positioned ourselves as a pureplay Physical AI infrastructure company.
Following our transformation into a pureplay Physical AI infrastructure company, we are a software technology company that provides SpatialCore, an open standards-based interoperability and operational context platform. SpatialCore is designed to connect autonomous systems, sensors, digital twins, AI models, and other real-world data sources into a shared, governed understanding of the physical environments in which they operate. We provide this platform primarily to the Department of War (“DoW”) and aim to expand delivery into civil government entities and commercial enterprises that utilize intensive, large and complex data sets (“Big Data”).
Companies deploying digital twins, autonomous systems, and AI workflows in DoW and Big Data scenarios face persistent challenges: integrating fragmented data, scaling across complex environments, achieving operational efficiency, and maintaining safety, security, and performance as these systems evolve and grow. Robotics, autonomous systems, and simulation technologies span diverse industries, each demanding continuous innovation to remain effective. Our technology directly addresses these challenges by providing a unified, multimodal data layer that enables AI workflows to interpret signals from environments, systems, sensors, and other disparate inputs. By normalizing and contextualizing this data, our solution empowers AI models to generate meaningful insights and take informed actions across domains.
| 21 |
We specialize in building AI-enabled workflows on top of dynamic, synthetic environments for digital twins, robots, drones, and autonomous vehicles, where real-time and multimodal data must be orchestrated seamlessly. This approach accelerates decision-making, enhances mission readiness, and expands the capabilities of both humans and machines.
SpatialCore is the result of more than four years of co-development with the U.S. Navy and has components used in live Navy operations. We have developed SpatialCore’s technology and operational approach over the past several years through Cooperative Research and Development Agreements (“CRADAs”) and funded programs with the FAA, U.S. Navy, and the U.S. Army to align the platform with DoW requirements and support the warfighter. In July 2025, we completed development of a unified synthetic training ecosystem for the DoW, providing digital-twin simulation, multi-domain scenario modeling, AI-augmented scenario creation, and open-standards interoperability across live, virtual, and constructive training assets. SpatialCore is built on open data standards designed to support interoperability across autonomous systems and Physical AI applications.
We believe that these emerging industry segments have significant growth potential across numerous DoW and Big Data industry verticals and that our SpatialCore platform creates important competitive advantages that may enable us to become a significant provider of interoperability and operational context software and services. We are hardware agnostic.
Recent Developments
Nasdaq Ticker Symbol and Corporate Name Change
On August 17, 2026, we filed with the Secretary of the State of Nevada a certificate of amendment to change the name of the company to “Brightline Interactive, Inc.” (the “Name Change Amendment”). The Name Change Amendment took effect on August 20, 2026. Further, effective August 20, 2026, we changed our ticker symbol on The Nasdaq Stock Market LLC (“Nasdaq”) from “GGRP” to “BTLN.” The change was implemented to better align our ticker with our going forward strategy. The change did not alter the terms of our common stock. The name and ticker change were related to efforts to concentrate our resources, personnel, and public-company platform around Brightline and SpatialCore, including the divestiture described above.
Reverse Stock Split
On September 21, 2026, we filed a Certificate of Change (the “Certificate of Change”) pursuant to Section 78.209 of the Nevada Revised Statutes (the “NRS”) with the Secretary of State of the State of Nevada to effect a one-for-eight (1-for-8) reverse stock split (the “Reverse Stock Split”) of our authorized and outstanding common stock effective as of 12:01 a.m. Eastern Time on September 28, 2026. The Reverse Stock Split was approved by the Company’s Board of Directors by unanimous written consent dated September 13, 2026, without stockholder approval, as permitted under Section 78.207 of the NRS. This was done to regain compliance with the Nasdaq $1.00 minimum bid price requirement for continued listing on the Nasdaq Capital Market. All references to the Company’s common stock in this Item 2. section have been revised to reflect the reverse stock split.
PIPE Offering
On September 23, 2026, we entered into securities purchase agreements (the “Purchase Agreements”) with certain investors (the “Investors”) pursuant to which we agreed to sell an aggregate of 446,436 units (the “Units”) for $5.60 per Unit, with each Unit being comprised of one share of common stock and one warrant (the “Warrant”) exercisable for one share of common stock at an exercise price of $16.00 per share (the “Offering”). We received gross proceeds of $1.25 million in connection with the Offering. We intend to use the net proceeds from the Offering to fund current and future growth initiatives and general working capital.
| 22 |
Nasdaq Minimum Bid Price Compliance
On October 12, 2026 the Company received a notification letter from the Listing Qualifications Department of Nasdaq informing the Company that it had regained compliance with the $1.00 minimum bid price requirement and the matter was closed.
Results of Operations
The following table sets forth our results of operations for the three months ended September 30, 2026 and 2025:
Summary P&L
| For the Three Months Ended | ||||||||||||||||
| September 30, | Change | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| (in millions) | ||||||||||||||||
| Revenue | $ | - | $ | 0.39 | $ | (0.39 | ) | -100 | % | |||||||
| Cost of goods sold | - | 0.22 | (0.22 | ) | -100 | % | ||||||||||
| Gross profit | - | 0.17 | (0.17 | ) | -100 | % | ||||||||||
| Total operating expenses | 1.50 | 1.13 | 0.37 | 33 | % | |||||||||||
| Loss from operations before other income | (1.50 | ) | (0.96 | ) | (0.54 | ) | -56 | % | ||||||||
| Gain (loss) from discontinued operations | 0.04 | (0.13 | ) | 0.17 | -131 | % | ||||||||||
| Other income | 0.02 | 0.06 | (0.04 | ) | -67 | % | ||||||||||
| Net loss | $ | (1.44 | ) | $ | (1.03 | ) | $ | (0.41 | ) | -40 | % | |||||
Revenue
| For the Three Months Ended | ||||||||||||||||
| September 30, | Change | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| (in millions) | ||||||||||||||||
| Software services | $ | - | $ | 0.38 | $ | (0.38 | ) | -100 | % | |||||||
| Royalty income | - | 0.01 | (0.01 | ) | -100 | % | ||||||||||
| Total revenue | $ | - | $ | 0.39 | $ | (0.39 | ) | -100 | % | |||||||
Total revenue for the three months ended September 30, 2026 was zero compared to approximately $0.39 million for the three months ended September 30, 2025, reflecting a 100% decline. The decrease reflects the Company’s refocus of the business to SpatialCore in 2026 and the lead time required to secure customer contracts.
Customer Concentration
One customer accounted for approximately 99% of the Company’s total revenues during the three months ended September 30, 2025.
| 23 |
Gross Profit
| For the Three Months Ended | ||||||||||||||||
| September 30, | Change | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| (in millions) | ||||||||||||||||
| Revenue | $ | - | $ | 0.39 | $ | (0.39 | ) | -100 | % | |||||||
| Cost of goods sold | - | 0.22 | (0.22 | ) | -100 | % | ||||||||||
| Gross profit | - | 0.17 | (0.17 | ) | -100 | % | ||||||||||
| Gross profit margin | - | 44 | % | |||||||||||||
Gross profit margin for the three months ended September 30, 2026 was zero compared to approximately 44% for the three months ended September 30, 2025 reflecting a “cost plus” customer project. This reflects the refocus to SpatialCore in 2026 and the lead time required to secure customer contracts.
Operating Expenses
| For the Three Months Ended | ||||||||||||||||
| September 30, | Change | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| (in millions) | ||||||||||||||||
| Research and development expenses | $ | 0.59 | $ | 0.35 | $ | 0.24 | 69 | % | ||||||||
| General and administrative expenses | 0.84 | 0.62 | 0.22 | 35 | % | |||||||||||
| Sales and marketing expenses | 0.07 | 0.13 | (0.06 | ) | -46 | % | ||||||||||
| Amortization of acquisition intangible assets | - | 0.02 | (0.02 | ) | -100 | % | ||||||||||
| Change in fair value of acquisition contingent consideration | - | 0.01 | (0.01 | ) | -100 | % | ||||||||||
| Total Operating Expenses | $ | 1.50 | $ | 1.13 | $ | 0.37 | 33 | % | ||||||||
Operating expenses for the three months ended September 30, 2026 were approximately $1.50 million compared to approximately $1.13 million for the three months ended September 30, 2025, an increase of approximately 33%. The increase reflects payroll expenses not allocated to cost of goods sold, and increased professional fees related to the refocus of the Company to SpatialCore and regaining Nasdaq minimum bid price compliance.
Research and Development
Research and development expenses for the three months ended September 30, 2026 were approximately $0.59 million compared to approximately $0.35 million for the three months ended September 30, 2025, an increase of approximately 69%. The increase reflects payroll expenses not allocated to cost of goods sold.
General and Administrative
General and administrative expenses for the three months ended September 30, 2026 were approximately $0.84 million compared to approximately $0.62 million for the three months ended September 30, 2025, an increase of approximately 35%. The increase reflects increased professional fees related to the refocus of the Company to SpatialCore and regaining Nasdaq minimum bid price compliance.
| 24 |
Sales and Marketing
Sales and marketing expenses for the three months ended September 30, 2026 were approximately $0.07 million compared to approximately $0.13 million for the three months ended September 30, 2025, a decrease of approximately 46%. This decrease primarily represents a reduction in headcount.
Amortization of Acquisition Intangible Assets
Amortization of acquisition intangible assets expense for the three months ended September 30, 2026 was zero compared to approximately $0.02 million for the three months ended September 30, 2025, representing the runoff of the remaining useful life of the intangible assets.
Change in Fair Value of Acquisition Contingent Consideration
Change in fair value of acquisition contingent consideration expense for the three months ended September 30, 2026 was zero compared to approximately $0.01 million for the three months ended September 30, 2025. The expense represents the change in the present value of cash contingent consideration between balance sheet measurement dates.
Gain (Loss) from Discontinued Operations
| For the Three Months Ended | ||||||||||||||||
| September 30, | Change | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| (in millions) | ||||||||||||||||
| Discontinued operations | $ | 0.04 | $ | (0.13 | ) | $ | 0.17 | 131 | % | |||||||
Discontinued operations reflected a gain of approximately $0.04 million for the three months ended September 30, 2026 compared to a loss of approximately $0.13 million compared for the three months ended September 30, 2025. The 2026 gain reflects runoff of certain customer contracts with only direct costs incurred.
Other Income
Other income for the three months ended September 30, 2026 was approximately $0.02 million compared to approximately $0.06 million for the three months ended September 30, 2025, representing a reduction in interest income driven by decreased cash balances year over year.
Net Loss
Net loss for the three months ended September 30, 2026 was approximately $1.44 million compared to approximately $1.03 million for the three months ended September 30, 2025. This reflects the reduction in 2026 revenue.
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.
| 25 |
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 loss to Adjusted EBITDA for the three months ended September 30, 2026 and 2025:
For the Three Months Ended September 30 | ||||||||
| 2026 | 2025 | |||||||
| Net loss from continuing operations | $ | (1.47 | ) | $ | (0.90 | ) | ||
| Depreciation and amortization | 0.01 | 0.03 | ||||||
| EBITDA loss | (1.46 | ) | (0.87 | ) | ||||
| Stock based expenses | 0.15 | 0.13 | ||||||
| Change in fair value of acquisition contingent consideration | 0.00 | 0.02 | ||||||
| Adjusted EBITDA loss | $ | (1.31 | ) | $ | (0.72 | ) | ||
Adjusted EBITDA loss was $1.31 million for the three months ended September 30, 2026 compared to approximately $0.72 million loss for the three months ended September 30, 2025. This reflects the 2026 revenue reduction.
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 $1.44 million for the three months ended September 30, 2026. In addition, as of September 30, 2026, the Company had an accumulated deficit of $83.66 million. 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 condensed 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 condensed consolidated financial statements. Until we can generate sufficient revenue, if ever, to fund our operations and other commitments, we may take actions to finance future cash needs or other commitments 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.
| 26 |
Liquidity and Capital Resources
| For the Three Months Ended | ||||||||||||||||
| September 30, | Change | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| (in millions) | ||||||||||||||||
| Net cash used in continuing operating activities | $ | (1.31 | ) | $ | (0.92 | ) | $ | (0.39 | ) | -42 | % | |||||
| Net cash used in investing activities | (0.01 | ) | (0.01 | ) | - | % | ||||||||||
| Net cash provided by financing activities | 1.18 | 0.03 | 1.15 | 3,833 | % | |||||||||||
| Net cash used in discontinued operations | (0.03 | ) | (0.37 | ) | 0.34 | 92 | % | |||||||||
| Net decrease in cash and cash equivalents | (0.17 | ) | (1.27 | ) | 1.10 | -87 | % | |||||||||
| Cash and cash equivalents, beginning of year | 3.15 | 6.83 | (3.68 | ) | -54 | % | ||||||||||
| Cash and cash equivalents, end of year | $ | 2.98 | $ | 5.56 | $ | (2.58 | ) | -46 | % | |||||||
Operating Activities
Net cash used in operating activities was approximately $1.31 million for the three months ended September 30, 2026 compared to approximately $0.92 million during the three months ended September 30, 2025. This reflects the reduction in 2026 revenue.
Investing Activities
Net cash used in investing activities was flat year over year. The amount represents equipment purchases.
Financing Activities
Net cash provided by financing activities was approximately $1.18 million for the three months ended September 30, 2026 compared to approximately $0.03 million in the prior year period. The 2026 amount represents the net proceeds of the September 2026 equity raise.
Discontinued Activities
Net cash used in discontinued activities was approximately $0.03 million for the three months ended September 30, 2026 compared to approximately $0.37 million during the three months ended September 30, 2025. This reflects the runoff of certain customer contracts in 2026 with only direct costs incurred.
Capital Resources
As of September 30, 2026, the Company had cash and cash equivalents of $2.98 million.
As of September 30, 2026, the Company had no outstanding debt obligations.
As of September 30, 2026, the Company had no issued and outstanding preferred stock.
Recently Adopted Accounting Pronouncements
Please see Note 4 to the 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.
| 27 |
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, we are required to apply judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2026 because of the material weakness in our internal control over financial reporting described below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected in a timely basis.
Material Weakness
The Company’s new management identified a material weakness in the design and operating effectiveness of the Company’s documentation and accounting of complex financial instruments. The Company’s finance department had insufficient technical resources supporting the assessment of the complex technical accounting and review procedures were not performed at a level of precision to prevent or detect a material misstatement on a timely basis in the normal course of the review.
Based on this assessment, management believes that our internal control over financial reporting was not effective as of September 30, 2026.
Remediation Measures
We have identified and begun to implement steps, as further described below, designed to remediate the foregoing material weakness. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
To remediate this material weakness, we are in the process of evaluating and strengthening the finance department surrounding this area.
While the foregoing measures are intended to effectively remediate the material weakness, it is possible that additional remediation steps will be necessary. As such, as we continue to evaluate and implement our plan to remediate the material weakness, our management may decide to take additional measures to address the material weakness or modify the remediation steps described above. Until this material weakness is remediated, we plan to continue to perform additional analyses and other procedures to help ensure that our financial statements are prepared in accordance with GAAP.
Notwithstanding the identified material weakness, management believes that the financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows for the periods presented.
Changes in Internal Control Over Financial Reporting
As described above, we are in the process of implementing changes to our internal control over financial reporting to remediate the material weaknesses described herein. Other that these changes, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting during the period ended September 30, 2026.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
As a smaller reporting company, we are not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
The following exhibits are filed as part of this Quarterly Report on Form 10-Q.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on this [12th] day of November, 2026.
| BRIGHTLINE INTERACTIVE, INC. | |
| Date: November 12, 2026 | /s/ Tyler Gates |
| Tyler Gates | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| Date: November 12, 2026 | /s/ William Keneally |
| William Keneally | |
| Chief Financial Officer | |
| (Principal Financial Officer) |
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