Mr. Alen Silverrstieen reports

IMAGINEAR RESPONDS TO CONTINUOUS DISCLOSURE REVIEW

As a result of a review by the British Columbia Securities Commission, ImagineAR Inc. is issuing the following press release to correct and clarify its disclosure.

The company will amend and refile the interim financial statements and corresponding management discussion and analysis where revenue figures did not conform with international financial reporting standards and were materially misstated for the periods ending Nov. 30, 2022, Feb. 28, 2023, and May 31, 2023. The revenue figures were adjusted in the company's annual audited financial statements for the year ended Aug. 31, 2022. The company's 2023 interim financial statements incorporated the prior 2022 interim financial statements as comparatives and, as a result, the company's 2023 interim financial statements and management discussion and analysis that contain comparative interim 2022 information will also be amended and refiled. At the time the 2023 interim financial statements were certified by the CEO (chief executive officer) and CFO (chief financial officer), the company determined that the year-end financial statements were adjusted so there was no need to adjust the comparable 2022 interim statements.

The statement disclosed in the Aug. 31, 2023, annual financial statements, "Management does not consider the company to have significant concentrations of credit risk," will be revised in the amended and refiled financial statements as there was concentration and credit risk with one customer. The company's major customer contributed to 52 per cent and 66 per cent of revenue during the year ended Aug. 31, 2022, and Aug. 31, 2023, respectively. Accounts receivables due from the company's major customer of $39,952 and $173,547 were written off during the year ended Aug. 31, 2022, and Aug. 31, 2023, respectively. The company determined that further action to collect the receivables was not warranted.

With respect to the disclosure in paragraph 2 on page 5 of the management discussion and analysis for the above periods, the shares were issued on Nov. 22, 2023. The potential purchase of a property located in the Southern United States was not successful and the refundable deposit was returned to Gurdip Panaich and the other individual. The company previously disclosed that a director and another individual provided a refundable deposit escrow on behalf of the company. The company would like to clarify that the refundable deposit was not owned by the company, and it was not refunded to the company when the project did not proceed. The company issued 10 million common shares in consideration for funding committed and services provided for the company to meet competitive bidding requirements for the project detailed on June 25, 2023. The company initially recorded the consideration as a transaction cost of the project in the company's financial statements during the period ended Nov. 30, 2023. During the year ended Aug. 31, 2024, an audit adjustment was made to correct the fair value of the shares to $400,000, and it was reclassified as a share payment compensation. The company has revised the errors contained in the interim financial statements for the period ended Nov. 30, 2024, and will revised the errors contained in the interim financial statements for the periods ended Feb. 28, 2025, and May 31, 2025, by restating the comparative figures presented. The company will also revise the errors contained in the interim MD&As (management's discussion and analysis) for the periods ended Feb. 28, 2025, and May 31, 2025, relating to the restated comparatives and references to the fair value of the 10 million facilitation shares. In determining the reasonableness of the consideration, the board considered the opportunity to be significant but did not have the funds available to proceed, therefore it determined it was in the best interest of the company to proceed with the share issuance as a facilitation fee.

The quantitative forward-looking information below was based on the following:

1. The interim May 31, 2024, MD&A discloses the company signed a license agreement with S3iai and that the "total value for this license agreement is $203,397."
   1. The contract valuation of $203,397 was calculated based on the $150,000 (U.S.) over three years converted into Canadian dollars.
   2. No revenue was recorded to date.
2. On May 1, 2023, the company announced contracts worth $533,000 were booked to date for the fiscal year.
   1. The amount of $533,000 was the total bookings, which was the aggregation of all the executed contracts, of which $192,000 was recognized as revenue during the year ended Aug. 31, 2023. However, due to unfavorable market conditions, the majority of the customers were not able to make payments, and ultimately the company wrote off accounts receivable of $173,000 as bad debt expenses during the year ended Aug. 31, 2023.
3. On March 1, 2023, the company executed a MoU (memorandum of understanding) with a global digital company to provide SDK licences "expected to generate revenue in the range between $200,000 to $414,000 per year for three years."
   1. The estimated revenue amounts were based the potential consideration to be received (translated to Canadian dollars) in accordance with a non-binding memorandum of understanding with a global digital publishing company to purchase a range of minimum of 10 and a maximum of 25 three-year SDK mobile app licences.
   2. No revenue was recorded.
4. The Aug. 18, 2022, partnership with Hip Hop Hall of Fame Inc. was disclosed to provide the company with "minimum revenue of $95,000 (U.S.) per year."
   1. The amount disclosed was based on the consideration to be received in accordance to the executed agreement with Hip Hop Hall of Fame.
   2. During the year ended Aug. 31, 2023, the company recorded revenue for the first year, which was $127,982 ($95,000 (U.S.)).
   3. The company collected $10,124 ($7,472 (U.S.)), but unfortunately had to write off the remaining accounts receivable of $118,596 ($87,528 (U.S.)) due to uncertainty with collectability.

About ImagineAR Inc.

ImagineAR is an augmented reality platform that enables businesses of any size to create and implement their own AR campaigns with no programming or technology experience. Every organization, from enterprises to professional sports franchises to small retailers, can develop interactive AR campaigns that blend the real and digital worlds. The company uniquely integrates GenAI technology, developed by S3iai, with augmented reality, enabling businesses across vertical industries to create smarter, personalized and more immersive customer experiences delivering instantaneous voice and text interactions directly on mobile devices through avatars and AR holograms. Integrated real-time analytics mean that all customer interaction is tracked and measured in real time. The AR enterprise platform supports both iOS and Android mobile devices and coming wearable technologies. The AR platform is available as an SDK plug-in for existing mobile apps.

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