As Chair of the Board of Directors of Engage XR Holdings plc (Engage XR, EXR, we, or the Company/Group as the context requires), I am responsible for leading the Board effectively and for overseeing the adoption, delivery and communication of the Company’s corporate governance arrangements. The Board believes that good governance supports sustainable growth and long-term value creation for shareholders, while having regard to the interests of wider stakeholders.

Part of my role also requires the promotion and pursuit of a healthy corporate culture, where the Board provides both appropriate support and effective challenge to the Executive, and the Executive are empowered to pursue the agreed strategy within the Company’s risk tolerance and report openly to the Board on challenges facing the business.

During the year, the Board sought to ensure that governance arrangements remained aligned to the Company’s purpose, strategy and business model and that they enabled effective oversight of performance, culture, risk and internal control. This includes promoting an open culture of constructive challenge, ensuring high-quality information flows to the Board and maintaining effective engagement with shareholders and other stakeholders. The Board recognises that this has been a challenging year for the Group and believes that the governance arrangements in place, together with the Board’s culture, have been effective in supporting the Group in responding to those challenges.

The Board also recognises that the Group operates in a fast-moving technology environment and that the governance framework must remain proportionate, practical and capable of evolving as the business develops.

The Company has adopted the Quoted Companies Alliance Corporate Governance Code 2023 (the QCA Code). This report explains how we have applied the QCA Code’s ten principles and provides the related disclosures. Where our arrangements differ from the QCA Code’s stated application guidance, we explain why the Board considers the alternative approach to be appropriate and, where relevant, how and when the Company expects its governance arrangements to evolve.

QCA Code (2023) Principles

1. Establish a purpose, strategy and business model which promote long-term value for shareholders

The Board has concluded that the highest medium and long-term value can be delivered to its shareholders by the adoption of a single strategy for the Company to establish Engage XR as the metaverse platform of choice for corporations, professionals, education organisations, and event organisers to create their own virtual worlds, provide services directly to their clients and allow them to engage with employees, customers, and suppliers.

Engage XR aims to deliver shareholder returns primarily through capital appreciation. The Company’s methodology is to secure partnerships with leading hardware suppliers and corporates / educators who are adopters of the metaverse technology and opportunity, to demonstrate the attractiveness and application of the metaverse generally and the Company’s products. The directors believe that this, together with the work of other companies in the space, is generating a critical mass environment in preparation for a substantial growth phase both for the Company and the metaverse market. The directors also believe that the ongoing developments in other emerging technologies, including artificial intelligence, present a number of opportunities that the Company is well positioned to capitalise upon.

2. Promote a corporate culture that is based on ethical values and behaviours

The Directors recognise the importance of maintaining a healthy corporate culture, including open and respectful communication with employees, clients and other stakeholders. In a rapidly evolving market (including the metaverse and other emerging technologies), the Company seeks to foster a culture that supports dynamism, innovation, openness and transparency, underpinned by sound ethical values and behaviours which support delivery of the Company’s objectives.

The Company maintains a range of policies that support ethical values and behaviours, which are available to all employees via the employee handbook. These include “Must Read Policies” that employees are required to read and acknowledge, and which management monitors and updates where necessary. The Company also has an Anti-Bribery and Corruption Policy.

The Company has adopted a code for directors’ and employees’ dealings in securities appropriate for a company whose securities are traded on AIM and in accordance with the Market Abuse Regulation.

The Board monitors culture through regular employee reviews and internal meetings and, given the Company’s close working environment, is able to assess whether ethical values and behaviours are understood and applied. The Directors consider that the Company has an open culture that encourages dialogue and feedback and enables positive and constructive challenge.

3. Seek to understand and meet shareholder needs and expectations

The Company places importance on maintaining effective communication and constructive dialogue with shareholders and the wider investment community. The Company retains financial PR support and communicates with shareholders through regulatory announcements, results reporting and presentations, the annual general meeting and the Company’s website.

The Company places great importance on the need for effective communication and constructive dialogue with investors and the media and retains the services of a financial PR company to help ensure that key information reaches the right audience.

The Company communicates with shareholders through a variety of platforms including:

• Regular financial reports, including the Group’s full-year and interim results, alongside periodic trading updates;
• RNS announcements regarding noteworthy developments in the business;
• results presentations to institutional shareholders which provide an opportunity for the executive to receive feedback from institutional shareholders;
• the Company's website;
• the Annual General Meeting where shareholders have the opportunity to meet the Board and ask questions about the business; and

Shareholder views are also represented in the Boardroom. In addition, the Chair, Karthik Manimozhi, acts as a liaison for shareholders where required.  The Board is confident that the range of methods that the Board and the Company have in place to engage with shareholders is effective.

All 2025 AGM resolutions were passed comfortably, with all resolutions passing by more than 90% of those votes cast. The results of voting at AGMs are disclosed on the Company’s website.

4. Take into account wider stakeholder interests, including social and environmental responsibilities, and their implications for long-term success

The Board recognises that the Company’s long-term success depends on strong relationships with employees, contractors, customers/users, suppliers, regulators and other stakeholders. The Board receives feedback via management reporting and engagement processes and considers stakeholder impacts as part of decision-making.

Environment
The Directors consider that the Group has no significant direct environmental impact, but recognises the need to consider and, where appropriate, implement actions to mitigate environmental and social impacts.
Employees
The Group aims to value, incentivise and support employees and promotes equal opportunities regardless of race, gender, gender identity or reassignment, age, disability, religion, or sexual orientation. Employee feedback is supported through annual reviews and team engagement and wellbeing initiatives, including flexible working arrangements.
Customers
The Board recognises that customer and user experience is central to business success. The Group engages with customers and users through project/service delivery processes, a customer review process, and responsive handling of queries and support requests. Product improvement is supported through regular product meetings and a two-week sprint approach to ensure smooth process.
Suppliers
The Board recognises the importance of fair and effective supplier relationships, including timely settlement of contractual obligations. The Board receives updates from executive directors on supplier interactions and payment practices.

5. Embed effective risk management, internal controls and assurance activities, considering both opportunities and threats, throughout the organisation

The Board recognises the need for an effective and well-defined risk management process, and it oversees and regularly reviews the current risk management and internal control mechanisms. While the Board retains ultimate responsibility for the integrity of financial reporting, the Audit Committee has delegated responsibility for ensuring that the financial performance of the Company is properly monitored and reported.

The Company has an ongoing process to identify, evaluate, manage and mitigate the significant risks the Company faces and review the effectiveness of related controls. The Company has a risk register which identifies risks, evaluates the risk level (level of impact and the probability of the risk materialising), and the principal person responsible for each risk.  This is reviewed regularly by the Audit Committee and the Board, with the nature, extent and mitigation of such risks considered.

The Audit Committee, on behalf of the Board, and the Board regularly review the mechanisms of internal control it has implemented, assessing for effectiveness, including taking into account views expressed by our external auditor.  On the basis of such review, the Board is confident that the reporting and control mechanisms remain appropriate in assessing the effectiveness of our control systems.

The Audit Committee regularly considers the auditor's independence, in particular ahead of the Company’s year-end audit, and is satisfied that the auditor continues to have appropriate measures in place to preserve its independence and objectivity in the provision of its services.
An internal audit function is not yet considered necessary or practical due to the size of the Company and the day-to-day control exercised by the Executive Directors. However, the Board will continue to monitor the need for an internal audit function.

6. Establish and maintain the board as a well-functioning, balanced team led by the chair

The Board is collectively responsible for promoting the success of the Company for the benefit of its members as a whole and for establishing governance arrangements appropriate to the Company’s size, complexity and stage of development. The Chair has overall responsibility for board leadership, effectiveness and governance.

Currently, the Board comprises the following directors:

• Independent Non-Executive Chair – Karthik Manimozhi
• CEO – David Whelan
• COO – Sandra Whelan
• CFO – Séamus Larrissey
• Independent Non-Executive Director – Richard Cooper
• Non-Executive Director – Marc Metis

It is the Board’s opinion that Karthik Manimozhi and Richard Cooper are independent in character and judgement and that there are no relationships or circumstances which could materially affect or interfere with the exercise of their independent judgement. The Board considers Marc Metis not to be independent, as he is an appointed representative of a major shareholder (HTC).

As at 31 December 2025, Richard Cooper had an interest in 1,070,400 shares. As at 31 December 2025, Karthik Manimozhi held options over 2,625,000 ordinary shares. The Board has determined that these interests do not, of themselves, compromise independence and keeps this assessment under review. Directors are expected to dedicate sufficient time to fulfil their roles. Non-executive directors are expected to dedicate at least two days per month to the Company.

While the Company’s Articles provide for rotation of directors, all directors submit themselves for re-election at each AGM.

7. Maintain appropriate governance structures and ensure that individually and collectively the directors have the necessary up-to-date experience, skills and capabilities

The Board is committed to, and ultimately responsible for, high standards of corporate governance, and has adopted the QCA Code. We review our corporate governance arrangements regularly and expect to evolve these processes over time, in line with the Company's growth. The Board delegates responsibilities to Committees and individuals as it sees fit, with the Chairman being responsible for the effectiveness of the Board, and the Executive Directors being accountable for the management of the Company's business and primary contact with shareholders, clients and partners.

The Chairman is responsible for shareholder communications, the leadership of the Board and ensuring its effectiveness in all aspects of its role, including creating the right Board dynamic and ensuring that all important matters, in particular strategic decisions and corporate governance arrangements, receive adequate time and attention at Board meetings.

The Executive Directors are responsible for the day-to-day running of the business, the leadership of the management team and the development and execution of corporate strategy. The Non-Executive Directors are tasked with constructively challenging the decisions of executive management and satisfying themselves that the systems of business risk management and internal financial controls are robust.

The Board delegates authority to two Committees to assist in meeting its business objectives whilst ensuring a sound system of internal control and risk management. The Committees meet independently of Board meetings.

The Audit and Risk Committee oversee financial reporting, internal controls, risk management, auditor independence and compliance with the AIM Rules and UK Market Abuse Regulation.

The Remuneration Committee is responsible for the Company’s Remuneration Policy and the remuneration of Executive Directors, the Chairman and senior management.

The Board has elected not to establish a Nominations Committee, preferring instead that the Board should, itself, deal with such matters, including succession planning and the balance of the Board. Therefore, the Board will review Board composition.

The Chairman and the Board continue to monitor and evolve the Company's corporate governance structures and processes, and maintain that these will evolve over time, in line with the Company's growth and development.

8. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The Board recognises the importance of regular evaluation of its effectiveness, including the performance of its committees, the Chair and individual directors, and the role this plays in continuous improvement and succession planning.

The Company has not historically implemented a formal board performance review process; the Board has instead relied on ongoing discussion and feedback through the year. The Board recognises that this is not fully aligned with the QCA Code’s expectations and intends to evolve its approach, however the Directors are supportive of the principle of regular review and will consider the most effective time to implement such a review.

Each member of the Board is invited to openly share their views on all aspects of the Board’s performance and effectiveness with the Chairman of the Board, who acts upon such views as required. The Directors remain confident that each Director contributes actively to the Board and that the Board, as a whole, performs its role effectively.

9. Establish a remuneration policy which is supportive of long-term value creation and the company’s purpose, strategy and culture

The Board recognises that remuneration arrangements should support delivery of the Company’s purpose, strategy and culture, incentivise appropriate performance over the medium to long-term and align the interests of executive management with those of shareholders.

The Remuneration Committee oversees remuneration policy and practice for executive directors and senior management, including incentive arrangements and share plans, as appropriate.

The Board has determined not to put remuneration-related resolutions to shareholders at this year’s AGM in light of its ongoing review of the Group’s remuneration framework to ensure alignment with strategy and shareholder expectations. The Board and Remuneration Committee will undertake this review during 2026, including appropriate shareholder engagement, and intends to bring forward proposals for shareholder consideration at the 2027 AGM.

10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other key stakeholders

The Company discloses on its website and within its annual report and accounts how the Company is governed.

The Board discloses the result of general meetings by way of announcement and discloses the proxy voting numbers to those attending the meetings as well as posting them on the website. The Board will take measures to ensure that, if there is a resolution passed at an AGM with at least 20% of votes cast being against the resolution, the Company will seek to understand the reason for the result and, where appropriate, take suitable action.