MANAGEMENT DISCUSSION AND ANALYSIS

For the Fiscal Year Ended June 30, 2025

INTRODUCTION

The following Management Discussion and Analysis ("MD&A") of Fobi AI Inc. ("Fobi", "We" or "the Company") is dated March 27, 2026, and has been prepared by Management in accordance with the requirements of National Instrument 51-102. The information contained in this MD&A is not a substitute for detailed investigation or analysis on any particular issue. The information provided in this MD&A is not intended to be a comprehensive review of all matters and developments concerning the Company.

This MD&A should be read in conjunction with the Company's condensed audited consolidated financial statements for the fiscal year ended June 30, 2025, the related notes contained therein which have been prepared under International Financial Reporting Standards ("IFRS"), and any quarterly filings within that same period, or thereafter. All references to dollar amounts are in Canadian dollars unless otherwise noted.

FORWARD LOOKING STATEMENTS

This MD&A contains certain forward-looking statements and information relating to the Company that is based on the beliefs of management as well as assumptions made by and information currently available to management. When used in this document the words "anticipate", "believe", "estimate", "expect" and similar expressions, as they relate to the Company or management, are intended to identify forward looking statements. This MD&A contains forward-looking statements relating to, among other matters, regulatory compliance, the sufficiency of current and future working capital and the estimated cost and availability of funding for the continued development of the Company's technological property, as well as its overall business development. Such statements reflect the current views of management with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from those expressed or implied by such forward looking statements.

COMPANY OVERVIEW

Fobi AI (TSXV: FOBI) is a Company involved in Artificial Intelligence ("AI"), Web3 technology platforms, and digital wallet products and technology. We are a provider of product and capability which can deliver end-to-end execution from strategic advisory through proprietary technology deployment and can do so with live, production-scale systems. With over 100 million wallet passes issued across 150+ countries, the Company operates commercially-licensed AI systems on Canadian-hosted infrastructure. This provides our client and customer enterprises with private AI capabilities where public platforms cannot be used due to data privacy restrictions and concern, as well addressing regulatory requirements. Unlike legacy consulting firms that deliver strategy without implementation capability, Fobi's consultancy-plus-technology

model integrates strategic vision with owned technology stack and production-proven systems at scale.

The Company operating portfolio include Qples, our U.S. retail and CPG coupon subsidiary built on the 8110 industry standard; PulseIR, our investor engagement and digital wallet platform; and Passwords, our European wallet pass subsidiary.

On June 11, 2025, the Company completed the strategic divestiture of Passcreator, another European wallet pass company subsidiary, to create further focus on scaling Qples, PulseIR and Passwords, and the core FOBI business assets, across key global markets and target industries.

Fobi's products and solutions are applied in industries including sports and entertainment, telecommunications, financial services, insurance, hospitality and retail. Fobi's capabilities enable client and partner enterprises to deliver personalized, real-time customer experiences at scale. Fobi's technology platform can generate actionable intelligence and end user engagement. The Company's strategy is to simplify adoption, embed and deliver its products seamlessly into existing client information technology infrastructure and then ultimately capture, collect, analyze and transform data into enterprise value.

During 2025, the Company refined the deployment of its existing technology assets to align with three key information technology dynamics shaping modern enterprises. These refinements have focused on two areas. The first area is artificial intelligence as a universal priority and web based decentralized technology environment commonly referred to as Web3. The second area is mobile digital wallet integrated applications as the primary real time interface between enterprises and end users. Together these elements support real time data capture analysis and actionability with increased efficiency, value-add to our current and target client audience and scalability.

The Company expects to generate revenues across three primary areas: through consulting engagements supporting customers as they deploy and expand technology initiatives aligned with Fobi products and services; through the sale of software as a service offerings and associated analytics; and, through licensing and deployment of our proprietary technology which incorporate artificial intelligence and multi-platform data layering.

FOBI AI BRANDS AND ASSETS

(Listed chronologically by year of original development or acquisition)

2021 - PulseIR - Investor relations and digital wallet platform delivering real-time two-way communication and lock-screen notifications to shareholders, with segmentation and analytics tools. This business line is currently paused pending future growth capital.

2021 – Qples – U.S. based coupon management subsidiary for consumer-packaged goods brands enabling the creation, distribution, and tracking of print-at-home and digital coupons integrated with the 8110 industry standard. The Company intends to continue maintaining and

updating Qples in line with evolving industry standards including fraud detection and validation processes.

2021 – PassWallet - An intellectual property acquisition of a proprietary mobile wallet application enabling users to store, organize, update, and use digital passes, currencies, and identifications such as boarding passes, loyalty cards, tickets vouchers, and coupons delivered via email SMS barcode or QR code.

2022 – Passwords S.A. - European wallet pass subsidiary enabling brands to issue mobile coupons, loyalty cards, and event tickets directly to mediums such as Apple Wallet and Google Pay, with a focus on retail and ticketing.

2025 – Passcreator (Divestiture) – Former German wallet pass subsidiary, divested on June 11, 2025. Fobi retains a 48-month, non-exclusive worldwide license to continue use of the platform technology.

ALIGNMENT WITH ARTIFICIAL INTELLIGENCE AND WEB3

Fobi has been developing AI automation and Blockchain infrastructure for its entire existence, positioning the Company at the convergence of three technology trends before they became mainstream enterprise priorities. The Company operates proprietary AI systems built on commercially-licensed models, and deployed on Canadian-hosted infrastructure, providing enterprises with private AI capabilities where public platforms cannot be used due to data privacy and regulatory requirements. This production-grade AI architecture has been validated through live deployments and can process and manage thousands of automated operations across the Company's digital wallet infrastructure.

Fobi's digital wallet platform has over 100 million passes issued and exists in 150+ countries. The platform was built natively for Web3 integration rather than retrofitted from legacy systems. The architecture supports tokenization, credentials verification, and customer-owned data models, and positions the platform as infrastructure for the ownership economy. Fobi is unlike competitors dependent on third-party APIs or consultants lacking proprietary technology. Fobi's integrated approach combines strategic advisory with an owned technology stack and production-proven systems at scale.

Fobi has an operational track record and further strives to be a first-mover infrastructure development across AI, digital wallets, and Web3-ready architecture. This will position Fobi to capture market share as client and customer enterprises shift from strategy consultation arrangements to execution-focused technology deployment. The Company's consultancy-plus-technology model differentiates it from legacy consulting firms that lack proprietary systems and pure technology vendors that lack strategic advisory capabilities.

A Chief Technology Officer with relevant AI and Web3 expertise was appointed in July 2025 to oversee a continuation and enhancement of the technology platform development, expansion and migration to next-generation architecture. This positions Fobi to capture market share as client and customer enterprises shift from strategy consultation to execution-focused

deployment. The Company is focused toward an estimated $500 billion addressable market at the convergence of AI automation, mobile engagement, and Web3 infrastructure.

CAPITAL MARKETS EQUITY STATUS – AUDIT / FINANCIAL STATEMENTS

Due to certain audit and financial statement filing matters and delays, the Company's common stock was temporarily suspended from public trading during the fiscal year end 2025 by the relevant Canadian oversight exchange regulators. The Company has now filed updated Audits and Financial Statements for the Fiscal year end 2024 and expects to similarly do so for the Fiscal year end 2025 in the current month (December 2025). As of December 12, 2025, given the Company's compliance, there has been a Partial Revocation Order issued by the Provincial Securities oversight agency.

OVERALL PERFORMANCE

Announcements and Highlights during the year ended June 30, 2025:

On June 11, 2025, the Company completed the divestiture of Passcreator to a third party. Pursuant to the agreement, the purchaser paid the Company an aggregate of €1,540,000 ($2,186,082) consisting of a cash purchase price of €1,400,000 and an additional €140,000 license fee which will be paid by the purchaser to Passcreator on behalf of the Company. In exchange for the license fee, the Company was granted a license to use Passcreator's software for a period of 48 months following closing of the transaction.

SUBSEQUENT EVENTS

On December 12, 2025, Fobi AI Inc. received partial revocation of its cease trade order from the British Columbia Commission to conduct a private placement offering of up to 30 million units at $0.05 per unit, aiming to raise up to $1.5 million. Each unit will consist of one common share and one warrant exercisable at $0.10 for 36 months. The proceeds are planned to be used primarily to cover accounting, audit, and legal fees needed to file outstanding disclosure documents and obtain full revocation of the cease trade order, with closing expected around January 12, 2026.

Subsequent to year end, the Company completed two tranches of the above non-brokered private placement of units at a price of $0.05 per unit. On January 23, 2026, the Company closed the first tranche and issued 10,084,000 units for gross proceeds of $504,200. In connection with the first tranche, the Company would pay finder's fees consisting of $3,500 in cash and issued 70,000 finder's warrants.

On February 3, 2026, the Company closed the second tranche and issued 10,000,000 units for gross proceeds of $500,000. No finder's fees were disclosed in connection with the second tranche. The total issuance across both tranches amounted to 20,084,000 units for aggregate gross proceeds of $1,004,200.

Between November 2024 and early 2025, the Company received complaints from certain former employees alleging non-payment of wages and related employee entitlements under the British

Columbia Employment Standards Act. The British Columbia Employment Standards Branch conducted an investigation covering unpaid wages and other employee-related amounts within the applicable statutory recovery periods. Based on the findings of the investigation, a demand notice in the amount of $465,838.07 was issued. On August 18, 2025, the Employment Standards Branch issued a formal notice cancelling the demand notice upon Company's payment of the owed wages. As at the date of authorization of these financial statements, the investigation has concluded and there is no outstanding enforcement order related to this matter.

RESULTS OF OPERATIONS

As at June 30, 2025, the Company had negative working capital of $3,050,852 (June 30, 2024 – negative working capital of $2,515,035). Working capital has decreased mainly as a result of increased accounts payable at June 30, 2025, of $4,532,840 as compared to $3,321,818 at June 30, 2024.

Comparison of the years ended June 30, 2025, and 2024

Revenue

The Company's revenue is primarily earned from selling platform-as-a-service, referring and hosting its technology to users, as well as consulting services and development services. Revenue from continuing operations decreased by $829,640, or 62%, from $1,337,265 during the year ended June 30, 2024, to $507,625 during the year ended June 30, 2025. The revenue from Passcreator up to the divestiture increased $634,884 from $1,583,533 on June 30, 2024, to $2,218,417 on June 30, 2025. The decrease is revenues from continuing operations is primarily attributed to the following factors:

The Company focused on the divestiture of Passcreator within the fiscal year versus looking to expand market share footprint, as done in prior years. The Company looks forward to returning focus to Passworks, Qples, and Walletcom in the 2026 fiscal year to create a complementary suite of platforms driving sustainable growth, strengthening enterprise relationships, and positioning the Company for long-term value creation.

Net Loss

Net loss from continuing operations decreased by $6,185,584 from $9,196,214 during the year ended June 30, 2024, to $3,010,630 during the year ended June 30, 2025. The net income from Passcreator up to the divestiture was $13,978 on June 30, 2025 compared to a net income of $42,424 on June 30, 2024. The decrease in the net loss from continuing operations can be attributed to a decrease in most expenses, specifically advertising, amortization, consulting fees, professional fees, and wages.

Operating Expenses

Advertising and Marketing

Advertising and marketing from continuing operations decreased by $530,225, or 76%, from $695,211 during the year ended June 30, 2024, to $164,986 during the year ended June 30, 2025. Passcreator's advertising expenses increased during the year from $16,389 on June 30, 2024, to $45,569 on June 30, 2025. Over the course of the last year, the Company has developed its own in-house sales and marketing teams, along with its own internal media and marketing platform, rather than outsourcing. The Company believes these further shifts toward focus and reliance on internal staff for sales and marketing will be more cost-effective and will improve revenue growth and overall volume.

Amortization

Amortization expense from continuing operations, which includes equipment, intellectual property, intangible assets, and right-of-use assets, decreased by $1,229,895, or 71%, to $490,537 for the year ended June 30, 2025, compared with $1,720,432 for the prior year. Passcreator's amortization decreased to nil at June 30, 2025 from $1,886,768 at June 30, 2024. With no new additions to intangible assets, amortization remained broadly consistent with the prior period.

Consulting Fees

Consulting fees from continuing operations decreased by $573,363, or 68%, from $842,766 in 2024 to $269,403 in 2025. Passcreator's consulting fees decreased to nil at June 30, 2025 compared to $842,766 at June 30, 2024. This reduction reflects a deliberate strategy to decrease reliance on external consultants by leveraging automation and internal capabilities, resulting in stronger operational control and lower costs.

Professional Fees

Professional fees decreased by $747,935, or 64%, to $415,104 for the year ended June 30, 2025, from $1,163,039 for the year ended June 30, 2024. Passcreator's professional fees increased $47,836 over the span of the fiscal year. The decrease is primarily attributed to a decrease in legal and audit expenses.

Wages and Benefits

Wages and benefits decreased to $1,529,482 for the year ended June 30, 2025, from $3,010,225 for the year ended June 30, 2024. Passcreator's wages and benefits increased during the year to $1,066,855 at June 30, 2025, from $751,253 at June 30, 2024. During the year, the Company had to terminate employment for staff due to a lack of cash flow.

SUMMARY OF QUARTERLY RESULTS

The following is selected financial information as prepared in Canadian dollars under International Financial Reporting Standards derived from the Company's most recently completed fiscal quarters:

	June 30, 2025 $	March 31, 2025 $	December 31, 2024 $	September 30, 2024 $
Total Assets	1,568,973	815,695	907,028	879,314
Working Capital (Deficiency)	(3,050,852)	(4,893,719)	(4,499,661)	(3,796,196)
Revenue
*Reduced due to the derecognition of the discontinued operations of Passcreator	(1,430,088)	632,045	767,099	538,569
Net Income (Loss)	1,733,086	(377,222)	(783,939)	(1,681,257)
Loss per Share	F (0.01)	(0.00)	(0.00)	(0.01)
	June 30, 2024 $	March 31, 2024 $	December 31, 2023 $	September 30, 2023 $
---	---	---	---	---
Total Assets	1,574,233	5,231,939	4,560,585	4,787,294
Working Capital (Deficiency)	(2,515,035)	(7,152)	(1,563,711)	(1,132,353)
Revenue	718,994	688,093	780,313	733,398
Net Loss	(6,083,298)	(1,427,656)	(1,273,183)	(2,262,601)
Loss per Share	(0.03)	(0.01)	(0.01)	(0.01)

LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN

Since our inception, we have incurred operating losses. We will need capital to fund our operations, which we may obtain from additional financings, debt and operations revenue or other sources. To date, we have financed our operations primarily through the issuance of our common shares.

As at June 30, 2025, we had total assets of $1,568,973 compared to $1,574,233 at June 30, 2024. We had a cash balance of $1,344,431 and negative working capital of $3,050,852 at June 30, 2025, as compared with a cash balance of $222,700 and negative working capital of $2,515,035 at June 30, 2024. The decrease in working capital was primarily a result of an increase in accounts payable and accrued liabilities during the year ended June 30, 2025, as compared the year ended June 30, 2024. Cash utilized in operating activities during the year ended June 30, 2025, was $858,182 as compared to $4,877,814 during the year ended June 30, 2024.

The consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As of June 30, 2025, the Company had not yet generated significant revenue or positive cash flow from operations and had an accumulated deficit of $83,101,713. These factors, among others, create significant doubt as to the ability of the Company to continue as a going concern. Management believes that the proceeds from additional equity financing activities that it is currently pursuing, combined with revenue that the Company expects to generate, will provide the Company with sufficient working capital to satisfy its liabilities and commitments as they become due for the foreseeable future. There can be no assurances that sufficient equity can be raised on acceptable terms on a timely basis. The

Company's strategy is to mitigate risks and uncertainties and to execute a business plan aimed at revenue growth and managing operating expenses and working capital requirements. Failure to implement this plan could have a material adverse effect on the Company's financial condition and results of operations. Although the Company has been successful in the past in raising funds to continue operations, there is no assurance it will be able to do so in the future.

Cash Flows

The following table summarizes the results of our cash flows for the years ended June 30, 2025, and 2024:

	2025 Amount $	2024 Amount $
Opening balance	222,700	201,241
Net cash outflow from operating activities	(858,182)	(4,877,814)
Net cash inflow (outflow) from investing activities	1,987,009	(42,290)
Net cash inflow (outflow) from financing activities	(32,751)	4,919,953
Effect of foreign exchange on cash	25,655	21,610
Closing balance	1,344,431	222,700

Operating Activities

Net cash outflow from operating activities decreased by $4,019,632 to $858,182 for the year ended June 30, 2025, compared to $4,877,814 for the year ended June 30, 2024. The decrease in net cash outflow is primarily attributed to decreased operating expenditures.

Investing Activities

Net cash outflow from investing activities for the year ended June 30, 2025, increased by $2,029,299 to inflows of $1,987,009 for the year ended June 30, 2025, compared to outflows of $42,290 for the year ended June 30, 2024. The net cash inflow was due to divestiture of Passcreator.

Financing Activities

Net cash outflows from financing activities for the year ended June 30, 2025, and 2024 relates primarily to no issuance of common shares and no exercising of options during the fiscal year. During the year ended June 30, 2024, the Company received net proceeds of $682,630 from the issuance of 4,671,854 common shares pursuant to the exercise of warrants and stock options, as well as net proceeds of $4,226,742 for the issuance of 49,315,247 common shares pursuant to private placement financings.

CAPITAL MANAGEMENT

The Company considers cash and share capital to be the elements of shareholders' equity. The Company's primary objectives in capital management are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and to maintain sufficient funds to finance the sale and distribution of its technology products. The Company manages its capital structure to maximize its financial flexibility making adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital and is not subject to externally imposed capital requirements.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The following table summarized our contractual commitments and obligations as of June 30, 2025:

	Payments Due by Period
	Total $	Less Than 1 Year $	Between 1 and 3 Years $	Between 3 and 5 Years $	More Than 5 Years $
Lease liabilities	29,112	15,379	13,733	-	-
Total contractual obligations	29,112	15,379	13,733	-	-

CONTINGENCIES

There are no contingent liabilities outstanding as at June 30, 2025.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

TRANSACTIONS WITH RELATED PARTIES

The Company has identified its directors and senior officers as its key management personnel. No post-employment benefits, other long-term benefits and termination benefits were made during the year ended June 30, 2025, beyond what was required under the court order as disclosed in the subsequent events section. Short-term key management compensation consists of the following:

As at June 30, 2025, the Company has amounts payable to its directors and officers totaling 162,485 (payable as at June 30, 2024 - $18,179) which is included in accounts payable and accrued liabilities. The amounts payable to related parties are unsecured, non-interest bearing and due on demand.

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with IFRS requires management to make judgements, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Critical accounting estimates

We make estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

The effect of a change in accounting estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.

Information about critical judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in our unaudited condensed interim consolidated financial statements within the next financial year are discussed below.

Assumptions used in the calculation of the fair value assigned to share-based payments

The grant date fair value of share-based payment awards granted to employees is recognized as a stock-based compensation expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

Where equity instruments are granted to parties other than employees, they are recorded by reference to the fair value of the services received. If the fair value of the services received cannot be reliably estimated, we measure the services received by reference to the fair value of the equity instruments granted, measured at the date the counterparty renders service.

All equity-settled share-based payments are reflected in share-based payment reserve, until exercised. Upon exercise, shares are issued from treasury and the amount reflected in share-based payment reserve is credited to share capital, adjusted for any consideration paid.

The fair value of stock options granted is measured using a Black-Scholes model. Measurement inputs include share price on measure date, exercise price of the option, expected volatility, actual and expected life of the option, expected dividends based on the dividend yield at the date of the grant, anticipated forfeiture rate, and the risk-free interest rate. The expected life of the options is based on historical experience and general option holder behaviour. The Company also makes an estimate of the number of options that will be forfeited and the rate is adjusted to reflect the actual number of options that vest. Consequently, the actual stock-based compensation expense may vary from the amount estimated.

Impairment of non-financial assets

The carrying amounts of our non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If indicators exist, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit, or "CGU").

Our corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

In respect of assets other than goodwill that have indefinite useful lives, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Going concern

The assumption that the Company will be able to continue as a going concern is subject to critical judgments by management with respect to assumptions surrounding the short and long-term operating budget, expected profitability, investing and financing activities and management's strategic planning. Should those judgments prove to be inaccurate, management's continued use of the going concern assumption could be inappropriate.

The Company's significant accounting policies are disclosed in Note 3 of the Company's annual audited consolidated financial statements for the year ended June 30, 2025.

RISK FACTORS

The Company has diversified technologies and is focused on many verticals and distribution strategies. The Company continues to focus on multiple verticals to generate future sales in the Company's main products but there is no assurance of success.

The Company has incurred a net loss of $1,109,332 for the year ended June 30, 2025, and has a deficit of $83,101,713. Management is continuing efforts to attract additional equity and capital investors and implement cost control measures to maintain adequate levels of working capital. Nevertheless, there can be no assurance provided with respect to the successful outcome of these ongoing actions. If the Company is unable to obtain additional financing on reasonable terms, the Company may be required to amend its business plan to create a successful strategy.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT FINANCIAL RISK

Cash and cash equivalents and short-term investments are carried at fair value using a level 1 fair value measurement. The carrying value of amounts receivable, loan receivable, accounts payable and loans payable approximate their fair value because of the short-term nature of these instruments.

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

The Company's risk exposures and the impact on the Company's financial instruments are summarized below:

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations associated with its financial liabilities. The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at June 30, 2025, the Company had a

cash balance of $1,344,431 which is not sufficient to settle current liabilities of $4,593,565. Whether and when the Company can generate sufficient operating cash flows to pay for its expenditures and settle its obligations as they fall due subsequent to June 30, 2025, is uncertain. These events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Management applies judgment in its evaluation of the Company's ability to continue as a going concern. If the going concern assumption were not appropriate for the Company's financial statements, then adjustments would be necessary to the carrying value of the assets and liabilities, the reported expenses and the statement of financial position classifications used.

There can be no assurance the Company will be able to obtain required financing in the future on acceptable terms. The Company anticipates it will need additional capital in the future to finance on-going enhancements of its technology, such capital to be derived from the completion of possible equity or debt financing options. The Company has no assurance that additional funding will be successfully secured for the future enhancements of its technology. The ability of the Company to secure additional capital in the future will depend on the prevailing capital market conditions. In recent years, the securities markets have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that continual fluctuations in price will not occur. Any quoted market for the common shares may be subject to market trends generally, notwithstanding any potential success of the Company in creating revenue, cash flows or earnings.

Credit risk

Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to its liquid financial assets including cash. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash with high-credit quality financial institutions. Receivables consist of accounts receivable from customers and GST receivable from the Government of Canada.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. The Company does not have a practice of trading derivatives.

a) Interest rate risk

The Company's financial assets exposed to interest rate risk consist of cash. The Company's current policy will be to invest excess cash in investment-grade short-term deposit certificates issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. As at June

30, 2025, the Company had $nil in investment-grade short term deposit certificates (2024 - $75,000).

b) Foreign currency risk

Foreign currency risk refers to the risk that the value of a financial commitment or recognized asset or liability will fluctuate due to changes in foreign currency rates. Our net income and financial position, as expressed in Canadian dollars, are exposed to movements in foreign exchange rates against the U.S. dollar and the Euro. We are exposed to foreign currency risk as a result of operating transactions and the translation for foreign bank accounts. We monitor our exposure to foreign exchange risk. Exposures are generally managed through natural hedging via the currency denomination of cash balances and any impact currently is not material to us.

c) Price risk

The Company is exposed to market risk with respect to its marketable securities, which consists of common shares held in publicly traded companies and is dependent upon the market price or the fair value of the common shares for those companies. The market price or the fair value of the common shares of those companies can fluctuate significantly, and there is no assurance that the future market price or the fair value of those companies will not decrease significantly.

OUTSTANDING SHARE DATA

Common shares

As of the date of this MD&A, the Company has 224,597,977 issued and outstanding common shares.

Stock options

As of the date of this MD&A, the Company has 20,480,494 stock options outstanding.

Share purchase warrants

As of the date of this MD&A, the Company has 48,439,632 share purchase warrants outstanding.

OTHER MD&A REQUIREMENTS

Additional information relating to the Company is on SEDAR+ at www.sedarplus.ca.