Mr. Dorian Banks reports

LOOKING GLASS LABS ANNOUNCES 2023 ANNUAL FINANCIAL RESULTS

Looking Glass Labs Ltd. has filed its audited financial results for the year ended July 31, 2023, under the company's profile on SEDAR+, the highlights of which are included in this news release.

Company highlights

On July 5, 2023, the company announced the results of the annual general meeting held on July 4, 2023.

On June 1, 2023, the company announced that it has entered into debt settlement agreement with an arm's-length creditor to eliminate an aggregate of $367,500 of indebtedness of the company through the issuance of an aggregate of 98,000 common shares in the capital of the company.

On May 29, 2023, the company announced the launch of its next-version Pocket Dimension. Looking Glass's Pocket Dimension metaverse is an on-line virtual space providing its owners and users a virtual space represented by one of 11 different environments, including Archipelago, Countryside, Dale, Dunes, Fjord, Marsh, Savanna, Tundra, Woodland, Zen and Genesis Moon. Each environment represents a unique representation of one of Earth's ecosystems, as described in each environment's name. Users of Pocket Dimension interact with other users through avatars.

On Nov. 1, 2022, Looking Glass launched the alpha version of Pocket Dimension, followed by the launch of the beta version on Feb. 21, 2023. The company has followed up on the previous versions and launched its public release version of Pocket Dimension (V1.0). V1.0 addresses various animation, rendering, collision and build issues reported by users during the alpha and beta versions. The latest version has made improvements to ensure smoother gameplay and a more seamless experience.

On May 23, 2023, Patrick O'Flaherty has resigned from its board of directors. In his place, Looking Glass announced that Kevin Cornish has been appointed to the board of directors.

On March 30, 2023, the company has completed the sale of its subsidiary, GenZeroes Productions Inc., the GenX smart contract and all associated intellectual property to GZU Entertainment Inc.

As consideration for the assets, the company received a promissory note for $800,000 bearing an interest rate of prime rate plus 1 per cent and a five-year term to maturity, with the option by the purchaser to extend the term for an additional five years. The company shall also retain a 50-per-cent royalty in perpetuity on all net proceeds from the content owned by the entity GenZeroes, which relates to the already completed first season of the GenZeroes series. The note shall be secured against the shares of GenZeroes and the related IP. As a condition of closing the transaction, the purchaser has also granted to the company a non-exclusive and royalty-free licence to use the GenX collection's intellectual property for its metaverse product branded as Pocket Dimension and video game branded as Overlords. The term of the IP licence is for a period from the closing date until the note is fully paid.

On Jan. 27, 2023, the company announced that it had granted 40,133 restricted share units to certain directors, officers and a consultant of the company.

On Jan. 25, 2023, the company announced that Adam Deffett had resigned from its board of directors. In his place, Looking Glass announced that James Henning had been appointed as an independent director to the board. Mr. Henning was also appointed as the chair of the audit committee.

On Dec. 29, 2022, the company announced that Carl Chow had resigned from its board of directors. In his place, Looking Glass announced that Lucas Russell had been appointed to the board of directors.

On Nov. 14, 2022, the company announced that it had completed its admission to the Access segment of the AQSE Growth Market, and trading would commence at 8 a.m. GMT on Monday, Nov. 14, 2022, under the ticker NFTX. The company's shares will also continue to trade on the NEO Exchange, now operating as Cboe Canada.

On Sept. 13, 2022, the company granted incentive stock options to consultants to purchase an aggregate of 129,250 common shares at an exercise price of $10.50 per common share for up to five years. The options vest quarterly over 24 months.

On Sept. 8, 2022, the company announced the appointment of Ryan Lange as the director of partnership for House of Kiba. Mr. Lange is an entrepreneur known for his digital work and has worked with artists including but not limited to U2 and Migos.

On Aug. 9, 2022, the company entered into a share purchase agreement to acquire 100 per cent of Web 3.0 Holdings Corp., a technology company that is addressing business-to-consumer and business-to-business infrastructure challenges within Web3 environments. On Sept. 7, 2022, pursuant to the SPA, the company issued the shareholders of Web 3.0 Holdings, 184,363 common shares and acquired Web 3.0 Holdings. Web 3.0 Holdings has aggregated a portfolio of retail-focused engagement and optimization assets, including crossover digital identity code scripts and digital distribution product frameworks. The acquisition will allow Looking Glass full access to Web 3.0 Holding's proprietary retail technology platform. The acquisition was an arm's-length transaction.

Continuing operations

The company continues to work on establishing partnerships with media companies, marketing organizations, automotive brands, fashion companies and others to create the most diverse and realistic metaverse experience for all users and brands. This is expected to allow brands to create further value by monetizing existing products, services and/or intellectual properties.

The company specializes in consumer engagement applications to leverage immersive metaverse environments, gamification and Web 3.0/blockchain monetization strategies.

The company's road map for 2023 and 2024 consists of furthering its Web 3.0 monetization strategies and finding additional avenues to utilize its developed metaverse environments.

Pocket Dimension metaverse

The Pocket Dimension metaverse is a hyperrealistic digital world that is being built using the latest version of Unreal Engine to offer users a premium virtual experience. Pocket Dimensions feature 10 different environments. Pocket Dimension is a private virtual space that provides users the ability to explore the virtual space and socialize with other users through avatars.

The company released its alpha version of its Pocket Dimension metaverse on Nov. 1, 2022, its beta version on Feb. 21, 2023, and publicly released the Pocket Dimension metaverse on May 29, 2023

Content creation

The company has an in-house design and blockchain development team, available to provide consulting services such as non-fungible-token design and back-end solutions to third party clients. The company has launched several Web 3.0 strategies for companies seeking to expand from traditional consumer markets to Web 3.0.

Crypto assets and safeguards

The company stores its ethereum cryptocurrency, the main cryptocurrency used in NFT markets, on a physical hardware device often referred to as a hardware wallet. The hardware device is similar looking to a USB thumb drive, except instead of saving data to the device, the devices store cryptocurrency off-line. The company does not hold any other cryptocurrencies beyond ETH. The seed phrase to be used to retrieve the contents of the wallet if the ledger device is physically lost is maintained by two officers of the company. If the ledger device is lost, the officers of the company may gain access of the wallet by providing the correct seed phrase. The redundancy is to ensure that the seed phrase is available if required at any time. On a weekly basis, the company assesses the cryptocurrency market conditions and its quarterly budget requirements while it monitors and liquidates its ETH holdings into Canadian currency on at least a biweekly basis by transferring the required ETH on a cryptocurrency exchange for immediate sale for Canadian currency.

Asset acquisition

On Aug. 9, 2022, the company entered into the SPA to acquire all of the issued and outstanding securities of Web 3.0 Holdings, a technology company that is addressing BtoC and BtoB infrastructure challenges within Web3 environments.

As consideration, the company issued 184,363 common shares of the company on Sept. 7, 2022, payable to the existing shareholders of Web 3.0 holdings with a fair value of $1,935,815. The acquisition of Web 3.0 Holdings did not constitute a business combination because this entity does not meet the definition of a business under international financial reporting standard 3 (Business Combination). As a result, the transaction was measured at the fair value of equity consideration issued to acquire these entities. The fair value of the consideration paid was determined based on the fair value of the assets received as determined based on IFRS 2 (Share Based Payments).

Financial result of the year ended July 31, 2023:

• Revenues in 2023 also decreased from $7,005,238 in fiscal 2022 to $654,957 in fiscal 2023 as a result of the general decrease in the cryptocurrency and NFT marketplace. This decreased both the number of sales, resales and the resale price of the company's outstanding NFTs, which resulted in a corresponding decrease in revenue and royalty revenue generated.
• Net comprehensive loss for the year ended July 31, 2023, was $12,587,314, as compared with net comprehensive loss of $12,087,045 reported for the same period of the prior year. The decrease in net loss was mainly the result of a decrease in stock-based compensation and operating expenses (particularly marketing costs) during the year ended July 31, 2023. This was offset by a decrease in sales, as well as the recording of an impairment loss on intangible assets as described above during the year ended July 31, 2023.
• Net loss per share for the year ended July 31, 2023, was $6.88 on a basic shares outstanding basis, as compared with $9.21 for the same period of the prior year.
• Total assets for the period ended July 31, 2023, decreased to $836,925 from $7,462,687 for the same period of the prior year.

For more information, please review the company's audited financial statements and accompanying management's discussion and analysis, which are posted on SEDAR+.

About Looking Glass Labs Ltd.

Headquartered in Vancouver, B.C., the company specializes in consumer engagement applications to leverage immersive metaverse environments, gamification and Web 3.0/blockchain monetization strategies.

We seek Safe Harbor.