Exhibit 99.2





NOTE TO READER:







|This corrected
Management’s Discussion and Analysis has been filed by IMRIS Inc. (“IMRIS”) for the purpose of correcting
the following of the Management’s Discussion and Analysis dated March 5, 2012 (the “IMRIS MDA”):
        
        ● in the Annual Results of Operations
chart on page 9 of the IMRIS MDA, under “basic and diluted loss per share”, the amount was corrected to show (.47)
as opposed to (.46) for the year ended December 31, 2011.
        
        Other than as described herein, the IMRIS
MDA remains unchanged as at March 5, 2013.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------























MANAGEMENT’S
DISCUSSION AND ANALYSIS

For the year ended December 31, 2012

Tables are expressed in USD $000’s
except share and per share amounts



The following provides management’s
discussion and analysis (‘‘MD&A’’) of IMRIS Inc.’s consolidated results of operations and financial
condition for the year ended December 31, 2012. In this MD&A, “IMRIS”, the “Company”, “we”,
“our” and “us” are used to refer to IMRIS Inc.



This MD&A is dated as at March
5, 2013 and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended
December 31, 2012.



Effective January 1, 2011, the Company
adopted United States generally accepted accounting principles (“U.S. GAAP”) as its basis of accounting and the U.S.
dollar as its reporting currency. Unless otherwise indicated, all currency amounts referenced in this MD&A are denominated
in U.S. dollars.



This MD&A contains forward-looking
statements about future events or future performance and reflects management’s expectations and assumptions regarding our
growth, results of operations, performance and business prospects and opportunities. Such forward-looking statements reflect management’s
current beliefs and are based on information currently available to us. In some cases, forward-looking statements can be identified
by terminology such as “may”, “would”, “could”, “will”, “should”,
“expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”,
“predict”, “potential”, “continue” or the negative of these terms or other similar expressions
concerning matters that are not historical facts. In particular, statements regarding our future operating results, economic performance
and product development efforts are or involve forward-looking statements.



A number of factors could cause actual
events, performance or results, including those in respect of the foregoing items, to differ materially from the events, performance
and results discussed in the forward-looking statements. Factors which could cause future outcomes to differ materially from those
set forth in the forward-looking statements include, but are not limited to: [i] timing and amount of revenue recognition of order
backlog and the Company’s expectation of sales and margin growth [ii] obtaining sufficient and suitable financing to support
operations and commercialization of products, [iii] adequately protecting proprietary information and technology from competitors,
[iv] obtaining regulatory approvals and successfully completing new product launches, [v] successfully competing in the targeted
markets, and [vi] maintaining third party relationships, including key personnel, and key suppliers. In evaluating these forward-looking
statements, readers should specifically consider various factors, including the risks outlined under “Risks and Uncertainties”,
which may cause actual events, performance or results to differ materially from any forward-looking statement.



Readers are cautioned that our expectation,
beliefs, projections and assumptions used in preparation of such information, although considered reasonable at the time of preparation,
may prove to be wrong, and as such, undue reliance should not be placed on forward-looking statements. By their nature, forward-looking
statements are subject to numerous known and unknown risks and uncertainties so as a result, we can give no assurance that any
of the actual events, performance, results, or expectations will occur or be realized. These forward-looking statements are expressly
qualified by this cautionary statement as of the date of this MD&A and we do not intend, and do not assume any obligation,
to update or revise them to reflect new or future events or circumstances.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 1 of 27











OVERVIEW



IMRIS designs, manufactures and markets
Image Guided Therapy Systems that enhance the effectiveness of therapy delivery. Our Image Guided Therapy Systems
are a combination of real time visualization products and therapy delivery products that are designed to improve patient outcomes
and reduce the cost of patient care. We accomplish this by combining our visualization technology products with therapy delivery
products in a single integrated system that has the ability to provide timely information to clinicians to properly assess the
treatment plan at the point of therapy delivery. We believe this approach to patient care not only improves patient outcomes,
but also contributes to reduced cost of care for those patients. Our goal is too continuously deliver products that improve therapy
delivery for an increasing number of medical procedures while at the same time are supported by peer reviewed published measurement
of improved outcomes and reduced cost of care.







Visualization and Therapy Delivery



In 2005 at the founding of the company,
we created a visualization platform based on a single Magnetic Resonance (MR) Imaging product. Since then we have introduced a
variety of next generation imaging capabilities into our visualization products. These include multiple field strength MR systems,
X-Ray Fluoroscopy (AX) systems, and Computed Tomography (CT) systems, all designed to provide imaging capabilities for different
therapy delivery products. All of these imaging capabilities are marketed as the VISIUS Surgical Theatre.



Our goal is to design visualization products
that have the ability to be used in a large number of surgical and interventional procedures and to become a foundational investment
in every hospital. To do this the system must be flexible enough to meet current and evolving procedural requirements while at
the same time improving patient care and reducing costs to the hospital. The VISIUS Surgical Theatre can incorporate multiple
configurations and imaging modalities while reducing patient risk and delivering real-time information to clinicians while preserving
optimal surgical access and techniques.



Our visualization product, the VISIUS
Surgical Theatre, is used in combination with multiple therapy delivery systems including traditional surgery, Surgeon directed
robotic surgery, and Radio-surgery. It is our goal to provide a means for clinicians to improve therapy delivery by moving towards
a minimally invasive surgical (MIS) procedure whenever possible. The transition to an MIS procedure is expected to contribute
to improved outcomes and reduced costs of care versus traditional surgical methods.



We sell our VISIUS Surgical Theatre globally
to hospitals that deliver clinical services to patients in the neurosurgical, cerebrovascular, and cardiovascular markets. Historically
our products have enabled therapy delivery through traditional surgical techniques, primarily for neurosurgical applications.
We believe that the VISIUS Surgical Theatre, in combination with therapy delivery, has the ability to continue to expand across
a large number of clinical procedures. As we continue to work with clinicians to promote and identify potential new areas of clinical
application, new high value procedures are expected, resulting in increased utilization and further adoption of the products.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 2 of 27











Value Proposition



We believe that the combination of the
VISIUS Surgical Theatre with therapy delivery benefits patients, physicians and hospitals:



Patients



| | · | Improved
                                                                                                               Outcomes: Peer
                                                                                                               reviewed published
                                                                                                               research has shown
                                                                                                               significant improvements
                                                                                                               in patient outcomes
                                                                                                               when the intraoperative
                                                                                                               MRI available in
                                                                                                               the VISIUS Surgical
                                                                                                               Theatre is used
                                                                                                               in a procedure.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Risk
                                                                                                               Reduction:
                                                                                                               The risk of requiring
                                                                                                               a repeat operation
                                                                                                               because of incomplete
                                                                                                               procedures is significantly
                                                                                                               reduced due to
                                                                                                               improved levels
                                                                                                               of complete resection
                                                                                                               in the case of
                                                                                                               brain tumors as
                                                                                                               a result of the
                                                                                                               intraoperative
                                                                                                               visualization.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Clinicians



| | · | Enhanced
                                                                                                               Efficiency and
                                                                                                               Effectiveness for
                                                                                                               Clinicians:
                                                                                                               High resolution
                                                                                                               imaging information
                                                                                                               is captured rapidly
                                                                                                               and presented in
                                                                                                               a manner designed
                                                                                                               to enhance clinician
                                                                                                               efficiency and
                                                                                                               effectiveness.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Enhanced
                                                                                                               Workflow for Clinicians:
                                                                                                               The patient can
                                                                                                               be maintained in
                                                                                                               the optimal surgical
                                                                                                               position throughout
                                                                                                               the procedure and
                                                                                                               the MRI or CT imaging
                                                                                                               system is removed
                                                                                                               from the surgical
                                                                                                               or interventional
                                                                                                               theatre when not
                                                                                                               required resulting
                                                                                                               in unrestricted
                                                                                                               access to the patient
                                                                                                               by the surgical
                                                                                                               team.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Hospitals



| | · | Greater
                                                                                                               Utilization of
                                                                                                               the VISIUS Surgical
                                                                                                               Theatre:The
                                                                                                               VISIUS Surgical
                                                                                                               Theatre permits
                                                                                                               greater utilization
                                                                                                               of the imaging
                                                                                                               equipment as the
                                                                                                               MR or CT scanner
                                                                                                               can be shared by
                                                                                                               multiple operating
                                                                                                               rooms and a diagnostic
                                                                                                               imaging suite allowing
                                                                                                               for a single asset
                                                                                                               to be used by numerous
                                                                                                               clinicians.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Increased
                                                                                                               Patient Volumes:
                                                                                                               Improved patient
                                                                                                               outcomes may result
                                                                                                               in higher patient
                                                                                                               volumes and revenue
                                                                                                               for hospitals.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Technology
                                                                                                               Attracts Clinicians:
                                                                                                               Access to technologies
                                                                                                               such as the VISIUS
                                                                                                               Surgical Theatre
                                                                                                               can assist in both
                                                                                                               the recruitment
                                                                                                               and retention of
                                                                                                               clinicians.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



PRODUCT PORTFOLIO



The VISIUS Surgical Theatre is the foundational
technology of our Company and continues to evolve in its utilization across numerous surgical and interventional applications.
We have invested in research and development to further broaden our product portfolio by introducing new procedures into the VISIUS
Surgical Theatre as well as combining it with new therapy products.



Our product portfolio consists of three
therapy delivery systems made up of the VISIUS Surgical Theatre in combination with:



| | 1: | Traditional surgical
                                                                                techniques,
| | -- | ----------------------------------------------------------------------------------------------------------------

| | 2: | The SYMBIS Surgical
                                                                                System, a surgeon controlled surgical robot, and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | 3: | The TrueBeamTM radiation
                                                              therapy product from Varian Medical Systems, Inc. (Varian).
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 3 of 27













(The SYMBIS surgical system and the
Radiosurgery product with the TrueBeamTM system are both works in progress and not available for commercial sale)



All of these Image Guided Therapy systems
include our proprietary VISIUS Surgical Theatre in combination with therapy delivery systems that are integrated with multiple
proprietary supporting products and technologies. These include patient handling systems, data management and information presentation
systems, surgical devices, imaging and system control software platforms, and safety and remote management products. These are
proprietary products that underlay the VISIUS Surgical Theatre’s ability to be integrated with each therapy delivery product.



| | I. | VISIUS Surgical
                                                                         Theatre and Traditional Surgical Procedures
| | -- | ------------------------------------------------------------------------------------------------------------------------------------



The VISIUS Surgical Theatrecan
be configured to support the delivery of a wide rangeof neurosurgical, cardiovascular and cerebrovascular procedures using
traditional surgical techniques. The VISIUS Surgical Theatre can be equipped with intraoperative imaging utilizing MRI, x-ray
angiography and computed tomography, alone or in multimodality combinations.



The VISIUS Surgical Theatre provides a
fully integrated surgical environment with the availability of high-resolution images for use in a number of surgical procedures.
These procedures include neurological tumor resection, epilepsy foci resection, arteriovenous malformation, aneurysm, upper C-spine
and frame-based stereotaxy. Due to the invasive nature of brain surgery and the importance of minimizing disturbance to healthy
brain tissue, neurosurgical procedures may particularly benefit from an MRI's unique ability to distinguish between diseased and
healthy brain tissue. The VISIUS Surgical Theatre provides visualization information to allow clinicians to make adjustments to
the procedure while the procedure is in progress, which may lead to improved patient outcomes and reduce the likelihood that repeat
surgeries will be needed.



When equipped with an MR scanner and integrated
x-ray angiography system, the VISIUS Surgical Theatre provides clinicians with timely and accurate images for visualizing the
patient anatomy before, during and after interventions for the treatment of a wide variety of cardiovascular and cerebrovascular
conditions, such as atrial fibrillation, certain structural heart disorders and stroke. With seamless transitions between MR and
x-ray angiography systems, the VISIUS Surgical Theatre enables surgical and catheter-based treatments and real-time assessment
of therapy in a single integrated suite. The single integrated system in a VISIUS Surgical Theatre eliminates patient transport
between imaging modalities and streamlines workflow. After MR scanning, the patient can be transitioned to image-guided intervention
on the angiography system without moving the patient from the table. During and immediately after the procedure, new MR images
can be taken to assess treatment and to determine if further intervention is required.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 4 of 27











In certain cranial and spinal procedures,
the VISIUS Surgical Theatre can also be equipped with a multi-slice floor mounted CT which moves over top of a stationary patient,
to provide intraoperative images of diagnostic quality, without the additional risk of moving the patient. The VISIUS Surgical
Theatre with CT imaging delivers real-time information to clinicians while preserving optimal surgical access and techniques.



We are currently developing a ceiling
mounted CT based version of the VISIUS Surgical Theatre leveraging our know-how from our existing VISIUS Surgical Theatre offering
in MR systems. This system will have the ability to move between multiple operating rooms and offer significant benefits over
the current floor mounted system. This product is expected to be submitted to the FDA with an anticipated regulatory clearance
in the first half of 2013.



| | II. | VISIUS Surgical
                                                                          Theatre and the SYMBIS Surgical System
| | --- | --------------------------------------------------------------------------------------------------------------------------------



In February 2010, we acquired NeuroArm
Surgical Ltd and all of its intellectual property. Since then we have been developing the SYMBIS Surgical System, a surgeon controlled
surgical robot designed to enable minimally invasive procedures that are currently performed in a more invasive manner. This system
consists of a MR compatible robot and surgical control console integrated together with the VISIUS Surgical Theatre. We believe
that the combination of optical and MR imaging integrated with a surgical robot may have the ability to transform a number of
surgical procedures to MIS procedures. The robot has been designed to operate in the bore of a high field MR system that can provide
unprecedented visualization of the surgical site by providing both optical and MR views of the surgical target. The SYMBIS Surgical
System is a micro-surgical system that has all of the traditional attributes of a robotic system such as accuracy, repeatability,
and control, but also has integrated MR and optical imaging, along with haptic feedback to the clinician. The haptic feedback
or “sense of touch” may enable surgeons to complete procedures in a way never before possible. The SYMBIS Surgical
System is designed to be installed in both existing VISIUS Surgical Theatre systems, and in new installations.



We are developing surgical instruments
for the SYMBIS that are procedure specific and are designed to enable greater precision and flexibility for the surgeon. We believe
that the SYMBIS Surgical System will be applicable for a large number of high volume surgical procedures with the potential to
be clinically meaningful and thereby further adoption of the system.



Our SYMBIS Surgical System is currently
in a single site clinical trial with a planned cohort of 120 neurosurgical patients. It is expected that the initial outcomes
will be published in peer reviewed journals over the next 6 months.



The SYMBIS Surgical System was submitted
to the FDA in August 2012 and is pending clearance.



| | III. | VISIUS Surgical Theatre and the TrueBeamTMSystem for Radiosurgery
| | ---- | -----------------------------------------------------------------



On October 5, 2010 we announced
our agreement with Varian to integrate the capabilities of the VISIUS Surgical Theatre together with the therapy capability of
Varian’s TrueBeamTM radiotherapy system. This product has the potential to provide a number of high value capabilities
to radiation oncology centres that are hospital based or standalone clinics. This system is designed to provide a radiation oncology
centre with the ability to deliver MR guided radiation therapy, MR simulation, and MR guided brachytherapy from a single integrated
system. The system consists of three connected rooms that provide radiosurgery, simulation, and brachytherapy all with a common
MR imaging platform.



MR simulation is a planning
and imaging procedure that is done in conjunction with a patient’s preparation for radiation therapy delivery. Our system
allows for a high field MR to be used in a diagnostic simulation suite and then, on demand, be available for use in MR guided
radiosurgery, or MR guided brachy therapy. This may provide a significant economic advantage over other means of completing the
same procedure.



For MR guided radiation therapy,
the patient is located in the radiation therapy bunker and a high field MR moves into the bunker over top of a stationary patient.
The MR image is acquired, the MR moves out of the room, and the therapy treatment plan is developed and delivered to the TrueBeamTMradiosurgery system which executes the treatment. The ability to image soft tissue lesions with MR, immediately before the
application of radiation therapy may allow for more accurate targeting of the lesion, resulting in a reduction in the radiation
delivered to adjacent healthy tissue. This improved targeting may also result in the ability to increase the energy delivered
at a treatment session, which may result in fewer treatment sessions for the patient. This new approach to treatment delivery
is expected to provide improved patient outcomes versus existing radiosurgery technology systems and have the opportunity to reduce
the cost of care.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 5 of 27











We believe that the ability to deliver
MR guided brachytherapy in a single suite may have compelling advantages over other means of delivering brachytherapy to patients.
Brachytherapy is the deposition of high dose radiation seeds into target tissue for the delivery of radiation. It requires the
ability to image, target, and deliver the seeds with precision and confidence. Our system is designed to enhance the workflow
and provide improved procedural outcomes.

This product is currently under development
with regulatory clearance anticipated in 2013.



Technology and Product Development



Underlying all of our image guided therapy
solutions is advanced proprietary technology and intellectual property that we have developed as part of our unique solutions.
The protection of these products, our processes and know-how is integral to our business. We currently have 50 patents either
issued or pending. As we develop our technologies, we will continue to seek patent protection to contribute to our competitive
advantage. We have patents in place in the United States, Canada and other countries, where available, to protect our core patent
family and we have filed a number of additional patent applications that are directed to specific aspects of our technology.



Innovation and the creation of high value
novel products is a cornerstone of IMRIS’s development activities. To grow the Company and remain competitive, we are continuously
engaged in new product development and enhancement and each year we invest significantly in research and development to drive
continuing innovations that support our competitive position.



As we move forward our product development
efforts will be focused on enhancing the capabilities of the VISIUS Surgical Theatre so that we are increasing the number and
quantity of traditional procedures that can be completed in our theatres. Following commercialization of our products that combine
robotics and radiosurgery with the VISIUS Surgical Theatre, we expect to continue to expand the capabilities of these systems
to continue to grow their value proposition.



Regulatory



IMRIS is a global company serving global
markets. We have registered our core MR VISIUS Surgical Theatre in the United States, Canada, European Union, Australia, Japan,
China, Singapore and South Korea. We continue to maintain our facility and product registrations to serve these global markets.
We successfully completed re-certification to ISO-13485 in September 2012, which is a requirement for many of our global markets.
During this period, IMRIS cleared the Oncology Package for the VISIUS Surgical Theatre with the FDA, providing a suite of tools
to enable radiation therapy planning using the VISIUS Surgical Theatre MR system.



IMRIS currently has two 510(k)s pending
with the United States FDA involving innovative products and industry firsts: the SYMBIS Surgical Robot (the first microsurgical
robot for neurosurgery) and the VISIUS Wireless Coil (the first inductive wireless coil for MRI).



IMRIS maintains a proven network of global
regulatory partners and will seek product registrations based on market demand and product launch strategy as the new planned
therapy products and technologies are developed.



Market and Sales Cycle



We sell our VISIUS Surgical Theatres globally
to hospitals that deliver clinical services to patients in the neurosurgical, cerebrovascular and cardiovascular markets. We believe
that the primary market for our current product portfolio is comprised of those hospitals having relatively large neurosurgical,
cerebrovascular or cardiovascular practices. Clinical appreciation for the benefits of VISIUS Surgical Theatres for neurosurgical
applications is growing supported by repeat purchases from hospitals and market penetration within regions in which our product
is being sold.



We have a direct sales force in the United
States, Canada, China, Japan and Europe, excluding Italy and Eastern European countries. We utilize distributors in all other
markets that we serve.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 6 of 27











Our sales force is focusing its efforts
on hospitals with the greatest ability to benefit from neurosurgical applications. They are aggressively working our sales pipeline
and we are increasing our marketing efforts. As a result, we expect that market interest will develop for new applications of
the product and the new products being developed, which can be utilized within our Theatres.



The purchase and installation of a VISIUS
Surgical Theatre for traditional surgical procedures represents a significant capital project for our customers that can range
in price from approximately $4 million to $12 million depending on the product solution, the configuration of the VISIUS
Surgical Theatre layout and system options selected. In addition to the capital equipment sale, most of our customers enter into
equipment service contracts that are generally 4-5 years in duration. These contracts begin after the typical one-year warranty
period and are on average equal to approximately 5% of the original equipment purchase price per year in revenues. In addition
to our equipment and services, customers may require further capital expenditures for construction and ancillary equipment. The
sales cycle for our VISIUS Surgical Theatres is both complex and lengthy and can be more than 12 months from initial customer
engagement to receipt of a purchase order.



Following the receipt of a customer purchase
order, the delivery and installation cycle for one of our VISIUS Surgical Theatres typically ranges from 8 months to 18 months
or more depending on the configuration of our system and the amount of additional construction work that may be required to be
completed by the customer. We invoice customers for a VISIUS Surgical Theatre in installments spread over a number of milestones,
which typically include a deposit at the time of order and a percentage of the remaining total price upon delivery of the equipment,
completion of installation and final acceptance. Due to the project nature of our VISIUS Surgical Theatre sales, we recognize
revenues and related cost of sales on a percentage-of-completion basis as the VISIUS Surgical Theatre is installed.



As our newer products are commercialized,
we believe we can leverage our significant customer relationships to accelerate new product introductions. Moreover, our VISIUS
Surgical Theatres equipped with CT or the SYMBIS Surgical System are being designed to have shorter installation timeframes. These
factors together are expected to result in significantly shorter sales and installation cycles for our Company.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 7 of 27











Overall Performance



2012 Highlights



| | Ø | 10
                                                                                                             new systems orders
                                                                                                             and 14 service contracts
                                                                                                             contributed to a
                                                                                                             record $89 million
                                                                                                             in total order bookings
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | Ø | Order backlog increases 29% to $122.5 million from the prior year period.
| | - | -------------------------------------------------------------------------



| | Ø | We
                                                                                                             sold the first VISIUS
                                                                                                             Surgical Theatre
                                                                                                             in the Middle East
                                                                                                             and completed installation
                                                                                                             of the first system
                                                                                                             in Japan
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | As
                                                                                                             at December 31, 2012,
                                                                                                             we have sold 58 systems
                                                                                                             worldwide including
                                                                                                             45 in North America,
                                                                                                             9 in the Asia Pacific,
                                                                                                             and four in Europe/the
                                                                                                             Middle East.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | Substantially completed the installation of seven
IMRIS systems, bringing the total installed base to 45.
| | - | ---------------------------------------------------------------------------------------------------------



Ø   Filed
seven new patent applications and received a U.S. patent for a moveable magnet system in combination with radiation therapy.



Ø   FDA
clearance received for planned MR Guided Radiation Therapy system’s oncology package.



Ø   Completed
development of the VISIUS Surgical Theatre utilizing computed tomography and submitted the FDA clearance application in January
2013.



Ø   Strengthened
leadership team with appointment of Jay Miller as President & COO, Maurice Holloman as Executive Vice-President Operations
and in 2013, and Michael Fritts as Executive Vice-President Global Customer Service.



SUMMARY OF SELECTED FINANCIAL INFORMATION



Quarterly Results



The following table sets forth selected
financial information for the dates and periods indicated:



Selected Quarterly Financial Information

(Thousands of US dollars, except per share amounts)

(Unaudited)



|                                |  | Fourth Quarter |        |   | %    |  
|------------------------------- |  | -------------- | ------ | - | ---- | -
|                                |  | 2012           |        |   | 2011 |  
|Sales                           |  | $              | 20,095 |   |      | $
|Gross profit                    |  | $              | 6,995  |   |      | $
|Gross profit %                  |  | $              | 34.8   | % |      |  
|Operating expenses              |  | $              | 13,311 |   |      | $
|Operating loss                  |  | $              | (6,316 | ) |      | $
|Net loss                        |  | $              | (6,604 | ) |      | $
|Basic loss per share            |  | $              | (0.14  | ) |      | $
|Diluted loss per share          |  | $              | (0.14  | ) |      | $
|Net decrease in cash in quarter |  | $              | (9,323 | ) |      | $



nmf – not meaningful



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 8 of 27











For a discussion of the
factors that have caused variations in the results of operations of the Company for the year ended December 31, 2011 to December
31, 2012, refer to the discussion below and for the year ended December 31, 2010 to December 31, 2011, refer to the Management’s
Discussion and Analysis for the year ended December 31, 2011.



| | Ø | Revenues
                                                                                                             increased by approximately
                                                                                                             $5.4 million or 37%
                                                                                                             to $20 million for
                                                                                                             the three months
                                                                                                             ended December 31,
                                                                                                             2012, compared to
                                                                                                             the same period in
                                                                                                             2011. The quarterly
                                                                                                             increase in project
                                                                                                             revenue in 2012 is
                                                                                                             attributed to an
                                                                                                             increase in active
                                                                                                             projects at varying
                                                                                                             stages of completion
                                                                                                             compared to the previous
                                                                                                             period as well as
                                                                                                             increase in service
                                                                                                             revenue from the
                                                                                                             same period in 2011.
                                                                                                             The increase in service
                                                                                                             revenue is attributed
                                                                                                             to a higher installation
                                                                                                             base of VISIUS Surgical
                                                                                                             Theatres in 2012
                                                                                                             compared to 2011.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | Gross
                                                                                                             profit for the three
                                                                                                             months ended December
                                                                                                             31, 2011 increased
                                                                                                             to $7.0 million from
                                                                                                             $4.8 million from
                                                                                                             the prior year. The
                                                                                                             Company recognized
                                                                                                             project revenues
                                                                                                             with gross margins
                                                                                                             of approximately
                                                                                                             35% compared to 37.6%
                                                                                                             in the prior year.
                                                                                                             The decrease in project
                                                                                                             margins were primarily
                                                                                                             related to unplanned
                                                                                                             costs and product
                                                                                                             changes on certain
                                                                                                             projects in the period
                                                                                                             as well as lower
                                                                                                             project margins on
                                                                                                             the initial iCT product
                                                                                                             installations. Overall
                                                                                                             margins were higher
                                                                                                             at 34.8% in the fourth
                                                                                                             quarter compared
                                                                                                             to 32,9% in the prior
                                                                                                             year due to improved
                                                                                                             margins on the new
                                                                                                             post-warranty install
                                                                                                             base and decreased
                                                                                                             warranty provisions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | Operating
                                                                                                             expenses for the
                                                                                                             fourth quarter were
                                                                                                             $13.3 million, an
                                                                                                             increase of approximately
                                                                                                             $3.2 million or 31%
                                                                                                             over the fourth quarter
                                                                                                             of 2011. The increase
                                                                                                             in operating expenses
                                                                                                             was primarily related
                                                                                                             to higher research
                                                                                                             and development costs
                                                                                                             for the Symbis surgical
                                                                                                             robot as well as
                                                                                                             accrued employee
                                                                                                             costs of $1.4 million
                                                                                                             for severance and
                                                                                                             retention related
                                                                                                             to the announcement
                                                                                                             of the relocation
                                                                                                             of the Company’s
                                                                                                             operations from Canada
                                                                                                             to the U.S.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | The
                                                                                                             net decrease in cash
                                                                                                             for the three months
                                                                                                             ended December 31,
                                                                                                             2011 was $9.3 million
                                                                                                             compared to a net
                                                                                                             decrease of $0.5
                                                                                                             million for the same
                                                                                                             period in 2011. Cash
                                                                                                             decreased in the
                                                                                                             fourth quarter of
                                                                                                             2012 due to the increase
                                                                                                             in operating expenses
                                                                                                             in research and development.
                                                                                                             Cash decreased slightly
                                                                                                             in the fourth quarter
                                                                                                             of 2011 because of
                                                                                                             general operating
                                                                                                             activities.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Annual Results of Operations



The following table sets forth selected
financial information for the dates and periods indicated:



Selected Quarterly Financial Information

(Thousands of US dollars, except per share amounts)

(Unaudited)



|                                 |  | Year ended  |        
|-------------------------------- |  | ----------- | -------
|                                 |  | December 31 |        
|                                 |  | 2012        |        
|                                 |  |             |        
|Sales                            |  | $           | 52,392 
|Gross profit                     |  |             | 17,798 
|Gross profit %                   |  |             | 34.0   
|Operating expenses               |  |             | 45,322 
|Operating loss                   |  |             | (27,524
|Income taxes                     |  |             | 86     
|Net loss                         |  | $           | (27,756
|Basic and diluted loss per share |  | $           | (0.61  



|                     |  | As at        |        |  | As at        |  |        | As at        | 
|-------------------- |  | ------------ | ------ |  | ------------ |  | ------ | ------------ | 
|                     |  | December 31, |        |  | December 31, |  |        | December 31, | 
|                     |  | 2012         |        |  | 2011         |  |        | 2010         | 
|Balance Sheet Data   |  |              |        |  |              |  |        |              | 
|                     |  |              |        |  |              |  |        |              | 
|Cash                 |  |              | 19,060 |  |              |  | 40,425 |              | 
|Total assets         |  |              | 81,958 |  |              |  | 94,290 |              | 
|Deferred revenue     |  |              | 10,182 |  |              |  | 7,147  |              | 
|Total liabilities    |  |              | 31,398 |  |              |  | 19,731 |              | 
|Shareholders’ equity |  |              | 50,588 |  |              |  | 74,559 |              | 



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 9 of 27











Revenues



Revenues by sales classification



|(Thousands of US dollars)                                        |  | Year ended  |        |   |      |  
|---------------------------------------------------------------- |  | ----------- | ------ | - | ---- | -
|                                                                 |  | December 31 |        |   | %    |  
|                                                                 |  | 2012        |        |   | 2011 |  
|                                                                 |  |             |        |   |      |  
|VISIUS Surgical Theatres                                         |  | $           | 47,285 |   |      | $
|Extended maintenance contracts                                   |  |             | 5,107  |   |      |  
|Total revenues                                                   |  | $           | 52,392 |   |      | $
|                                                                 |  |             |        |   |      |  
|VISIUS Surgical Theatres as a percentage of total revenues       |  |             | 90     | % |      |  
|Extended maintenance contracts as a percentage of total revenues |  |             | 10     | % |      |  



Revenues by region



|(Thousands of US dollars) |  | Year ended  |        |  |      |  
|------------------------- |  | ----------- | ------ |  | ---- | -
|                          |  | December 31 |        |  | %    |  
|                          |  | 2012        |        |  | 2011 |  
|                          |  |             |        |  |      |  
|North America             |  | $           | 36,372 |  |      | $
|Europe and Middle East    |  |             | 2,085  |  |      |  
|Asia Pacific              |  |             | 13,935 |  |      |  
|                          |  | $           | 52,392 |  |      | $



Revenues increased by approximately $0.5
million or 1% to $52.4 million for the year ended December 31, 2012. Product revenues for 2012 were $1.2 million lower than the
prior year primarily due to a change in the product mix, resulting in a slightly higher average sale price per project in 2011.
Extended maintenance contract revenue increased $1.8 million from the same period in 2011 as a result of a larger installation
base of VISIUS Surgical Theatres, which have transitioned to chargeable service programs.



Revenues were higher in North America
and Asia Pacific due to increased VISIUS Surgical Theatre system deliveries and increased service revenue. The North American
revenues increased due to increased project activity in the United States partially offset by a reduction in the Canadian market
compared to the same period in 2011. Revenues in Asia Pacific increased due to increased VISIUS Surgical system deliveries in
China and the Company’s first installation in the Japanese market. Sales in the Middle East region accounted for most of
the revenues in it’s region as there were no significant delivery activities in Europe in the current period.



Gross Profit



|(Thousands of US dollars) |  | Year ended  |        |   |      |  
|------------------------- |  | ----------- | ------ | - | ---- | -
|                          |  | December 31 |        |   | %    |  
|                          |  | 2012        |        |   | 2011 |  
|                          |  |             |        |   |      |  
|Gross profit              |  | $           | 17,798 |   |      | $
|As a percentage of sales  |  |             | 34.0   | % |      |  



Gross profit for the year ended December
31, 2012 increased marginally compared with the prior year period at $17.8 million. Gross profit as a percentage of sales decreased
marginally from 34.1% to 34.0% compared to the same period in 2011. Gross margin and gross margin as a percentage of sales for
VISIUS Surgical Theatres products were lower than the prior year partially offset by increased gross margins and gross margin
as a percentage of sales on extended maintenance contracts.



Product margins in 2012 were negatively
impacted by a change in the product mix compared to the prior year, lower margins on new product introductions, as well as the
negative impact of an expected low margin project for our first installation in Japan. This particular project carried a lower
margin as a result of lower pricing to penetrate the Japanese market and establish a reference system in the marketplace. Total
project margins in both 2012 and 2011 were also reduced as a result of the planned delivery of certain equipment as part of two
separate collaborative arrangements in each year respectively where the Company has entered clinical research projects in the
area of interventional cerebrovascular, and cardiovascular science, with a specific focus on the integration of angiography and
MR imaging modalities.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 10 of 27











Extended maintenance contracts gross margins
increased from the prior year as a result of a larger installation base of VISIUS Surgical Theatres, which have transitioned to
chargeable service programs. Gross margins as a percentage of sales have also increased due to the additional leverage of service
infrastructure, primarily in the North American market.



Operating Expenses



Operating expenses for the year ended
December 31, 2012 were $45.3 million, an increase of approximately $7.1 million or 19% over the same period in 2011. The increase
is primarily related to the planned increase in research and development costs for robotics, MR-guided radiation therapy and other
ancillary research projects, additional headcount and recruitment costs within the customer service and operations organization
and one-time severance and employee retention costs of $1.4 million related to the relocation of the operations from Canada to
the U.S.



Administrative



|(Thousands of US dollars) |  | Year ended  |       |  |      |  
|------------------------- |  | ----------- | ----- |  | ---- | -
|                          |  | December 31 |       |  | %    |  
|                          |  | 2012        |       |  | 2011 |  
|                          |  |             |       |  |      |  
|Administrative            |  | $           | 8,224 |  |      | $



Administration expenses for the year ended
December 31, 2012 were marginally higher ($0.1 million) compared to the same period in 2011. Employee costs were higher ($0.4
million) primarily due to severance and retention costs accrued as part of the relocation of the operations from Canada to the
U.S., an increase in annual management bonus and recruiting costs for new employees partially offset by a reduction of salary
costs due to lower staffing levels including the re-appointment of a new President and Chief Operating Officer at the end of the
third quarter. Professional fees are lower ($0.3) because of a planned reduction in audit, consulting and legal costs related
to the 2011 U.S. listing and conversion of the financial systems to U.S. dollars in that year.



Sales and marketing



|(Thousands of US dollars) |  | Year ended  |       |  |      |  
|------------------------- |  | ----------- | ----- |  | ---- | -
|                          |  | December 31 |       |  | %    |  
|                          |  | 2012        |       |  | 2011 |  
|                          |  |             |       |  |      |  
|Sales and marketing       |  | $           | 9,833 |  |      | $



Sales and marketing expense for the year
ended December 31, 2012 decreased $0.2 million or 2% from the same period in 2011. Travel costs decreased ($0.4 million) from
the prior year as a result of more effective management to reduce sales and marketing travel. Marketing and promotion costs decreased
($0.6 million) due to a reduction in tradeshow spending, a reduction in new product evaluations at customer sites, and reduced
customer marketing activities. These reductions were partially offset increased employee related costs ($0.4 million) including
additional recruiting costs for placement fees and relocation for new staff, increased commission and management bonus costs and
additional non-cash employee stock based compensation for new employees. Professional fees increased $0.2 million for the development
of public relations program and an additional $0.1 million for the addition of a sales and marketing office in the U.S.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 11 of 27











Customer support and operations



|(Thousands of US dollars)       |  | Year ended  |       |  |      |  
|------------------------------- |  | ----------- | ----- |  | ---- | -
|                                |  | December 31 |       |  | %    |  
|                                |  | 2012        |       |  | 2011 |  
|                                |  |             |       |  |      |  
|Customer support and operations |  | $           | 8,612 |  |      | $



Customer support and operations expense
for the year ended December 31, 2012 increased $1.7 million or 24% compared to the same period in 2011. The majority of the increase
was incurred in employee related costs ($1.0 million) including severance and retention costs of $0.7 million due to the relocation
of operations to the U.S. and additional salary related and recruiting costs for new management and executive management employees.
Business travel is higher ($0.2 million) as a result of additional customer support activities. Office costs are higher ($0.4
million) because of an increase in the percentage of costs being allocated as a result of additional manufacturing space and professional
fees increased $0.1 million for additional contract staff in the Asia Pacific regions.



Research and development



|(Thousands of US dollars) |  | Year ended  |        |  |      |  
|------------------------- |  | ----------- | ------ |  | ---- | -
|                          |  | December 31 |        |  | %    |  
|                          |  | 2012        |        |  | 2011 |  
|                          |  |             |        |  |      |  
|Research and development  |  | $           | 14,556 |  |      | $



Research and development expenses for
the year ended December 31, 2012 increased $4.9 million compared to the same period in 2011. The increase in is mainly due to
increases in technical development spending $4.4 million) relating to the SYMBIS Surgical System, the intraoperative computed
tomography program as part of the VISIUS Surgical System, MR guided radiation therapy development, and other ongoing development
projects. Employee related costs also increased $0.5 million from the prior year related to severance and retention costs due
to the pending relocation of certain research and development personnel to the U.S.



Amortization



|(Thousands of US dollars) |  | Year ended  |       |  |      |  
|------------------------- |  | ----------- | ----- |  | ---- | -
|                          |  | December 31 |       |  | %    |  
|                          |  | 2012        |       |  | 2011 |  
|                          |  |             |       |  |      |  
|Amortization              |  | $           | 4,097 |  |      | $



The increase in amortization expense for
the year ended December 31, 2012 is due to additional amortization on fixed asset additions partially offset by the disposal of
certain research and tradeshow assets in the year.



Foreign exchange



|(Thousands of US dollars) |  | Year ended  |      |   |      |  
|------------------------- |  | ----------- | ---- | - | ---- | -
|                          |  | December 31 |      |   | %    |  
|                          |  | 2012        |      |   | 2011 |  
|                          |  |             |      |   |      |  
|Foreign exchange loss     |  | $           | (125 | ) |      | $



Foreign exchange losses for the year ended
December 31, 2012 are mainly the result of a weakening of the U.S. dollar negatively impacting the Company’s Canadian dollar
operational costs and lower non-USD net monetary assets compared to the same period last year. The previous period losses resulted
from the translation of a large non-USD receivable at period end.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 12 of 27











Income tax



|(Thousands of US dollars) |  | Year ended  |    |  |      |  
|------------------------- |  | ----------- | -- |  | ---- | -
|                          |  | December 31 |    |  | %    |  
|                          |  | 2012        |    |  | 2011 |  
|                          |  |             |    |  |      |  
|Income tax expense        |  | $           | 86 |  |      | $



The Company generates taxable income in several of its foreign subsidiaries due to transfer pricing policies
used in those foreign jurisdictions. As a result of activities in these foreign subsidiaries, the Company has recognized tax expense
during the year ended December 31, 2012. The change in income tax expense for the year ended December 31, 2012 compared with the
same period last year is primarily due to lower taxable income in those foreign jurisdictions.



Operating Loss and Net Loss



|(Thousands of US dollars) |  | Year ended  |         |   |      |  
|------------------------- |  | ----------- | ------- | - | ---- | -
|                          |  | December 31 |         |   | %    |  
|                          |  | 2012        |         |   | 2011 |  
|                          |  |             |         |   |      |  
|Operating loss            |  | $           | (27,524 | ) |      | $
|                          |  |             |         |   |      |  
|Net loss                  |  | $           | (27,756 | ) |      | $



The operating loss for the year ended
December 31, 2012 increased $7.0 million from the prior year. The increase in the loss was due to higher operating expenses, primarily
in research and development costs for the robotics, intraoperative computed tomography and radiation therapy programs as well
as increased spending in customer support and operations and one-time severance and retention related costs of $1.4 million related
to the pending relocation of the Canadian operations to the U.S. The loss was also negatively impacted by an increase in non-cash
costs for amortization ($0.6 million) and stock based compensation ($0.2 million).The net loss for the year ended December 31,
2012 increased $6.8 million from the same period in 2011. The increase in the net loss from the prior year is a result of the
increased operating expenses, additional foreign exchange losses partially offset by foreign currency translation adjustments
occurring for foreign subsidiaries whose functional currency is not USD within other comprehensive income and a reduction of income
tax expense.



Adjusted EBITDA



|(Thousands of US dollars) |  | Year ended  |         |   |      |  
|------------------------- |  | ----------- | ------- | - | ---- | -
|                          |  | December 31 |         |   | %    |  
|                          |  | 2012        |         |   | 2011 |  
|                          |  |             |         |   |      |  
|Adjusted EBITDA           |  | $           | (21,868 | ) |      | $



We use the non-GAAP measure Adjusted EBITDA
to measure aspects of our financial performance (see “Non-GAAP Financial Measures” for a reconciliation of adjusted
EBITDA to GAAP measures). We define Adjusted EBITDA as earnings (loss) before stock based compensation, interest income (expense),
foreign exchange gain (loss), embedded derivatives gain (loss), income taxes and amortization.



For the year ended December 31, 2012,
Adjusted EBITDA was negative $21.8 million compared with negative $15.7 million for the same period in 2011. The decrease in Adjusted
EBITDA from the prior year was primarily due to higher operating costs related to higher research and development costs, customer
support and operations and severance and retention costs related to the pending relocation of the Canadian operations to the U.S.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 13 of 27











SUMMARY OF QUARTERLY RESULTS



The following table is a summary of our
financial results for the past eight quarters:



|(Thousands of US dollars)            |  | Q4   |        |   | Q3   |   |        | Q2   |  |   | Q1     |   |  | Q4   |        |   | Q3   |   |        | Q2   |  |   | Q1     |  
|------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                     |  | 2102 |        |   | 2012 |   |        | 2012 |  |   | 2012   |   |  | 2011 |        |   | 2011 |   |        | 2011 |  |   | 2011   |  
|                                     |  |      |        |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |  
|Sales                                |  | $    | 20,095 |   |      | $ | 11,569 |      |  | $ | 17,235 |   |  | $    | 3,493  |   |      | $ | 14,677 |      |  | $ | 7,182  |  
|Cost of sales                        |  |      | 13,100 |   |      |   | 8,818  |      |  |   | 10,577 |   |  |      | 2,099  |   |      |   | 9,855  |      |  |   | 5,104  |  
|Gross profit                         |  |      | 6,995  |   |      |   | 2,751  |      |  |   | 6,658  |   |  |      | 1,394  |   |      |   | 4,822  |      |  |   | 2,078  |  
|As a percentage of sales             |  |      | 34.8   | % |      |   | 23.8   | %    |  |   | 38.6   | % |  |      | 39.9   | % |      |   | 32.9   | %    |  |   | 28.9   | %
|                                     |  |      |        |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |  
|Operating expenses                   |  |      |        |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |  
|Administration                       |  |      | 2,664  |   |      |   | 2,000  |      |  |   | 1,887  |   |  |      | 1,673  |   |      |   | 2,037  |      |  |   | 2,026  |  
|Sales and marketing                  |  |      | 2,785  |   |      |   | 2,427  |      |  |   | 2,536  |   |  |      | 2,052  |   |      |   | 2,940  |      |  |   | 2,204  |  
|Customer support and operations      |  |      | 3,062  |   |      |   | 2,007  |      |  |   | 1,908  |   |  |      | 1,670  |   |      |   | 1,805  |      |  |   | 1,580  |  
|Research and development             |  |      | 3,730  |   |      |   | 3,840  |      |  |   | 3,411  |   |  |      | 3,576  |   |      |   | 2,433  |      |  |   | 2,541  |  
|Amortization                         |  |      | 1,071  |   |      |   | 1,067  |      |  |   | 990    |   |  |      | 969    |   |      |   | 908    |      |  |   | 884    |  
|                                     |  |      | 13,311 |   |      |   | 11,341 |      |  |   | 10,731 |   |  |      | 9,939  |   |      |   | 10,124 |      |  |   | 9,235  |  
|                                     |  |      |        |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |  
|Operating loss before the following: |  |      | (6,316 | ) |      |   | (8,590 | )    |  |   | (4,073 | ) |  |      | (8,545 | ) |      |   | (5,302 | )    |  |   | (7,157 | )
|Foreign exchange                     |  |      | (232   | ) |      |   | 118    |      |  |   | (207   | ) |  |      | 196    |   |      |   | 710    |      |  |   | (1,351 | )
|Interest                             |  |      | (55    | ) |      |   | -      |      |  |   | (2     | ) |  |      | 17     |   |      |   | (1     | )    |  |   | 3      |  
|Gain on sale of asset disposal       |  |      | 19     |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |  
|Loss before taxes                    |  | $    | (6,584 | ) |      | $ | (8,472 | )    |  | $ | (4,282 | ) |  | $    | (8,332 | ) |      | $ | (4,593 | )    |  | $ | (8,505 | )
|Income taxes                         |  |      | 20     |   |      |   | 48     |      |  |   | -      |   |  |      | 18     |   |      |   | 366    |      |  |   | -      |  
|Net loss for the quarter             |  | $    | (6,604 | ) |      | $ | (8,520 | )    |  | $ | (4,282 | ) |  | $    | (8,350 | ) |      | $ | (4,959 | )    |  | $ | (8,505 | )
|                                     |  |      |        |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |  
|Loss per share                       |  |      |        |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |  
|Basic                                |  | $    | (0.14  | ) |      | $ | (0.19  | )    |  | $ | (0.09  | ) |  | $    | (0.18  | ) |      | $ | (0.11  | )    |  | $ | (0.19  | )
|Diluted                              |  | $    | (0.14  | ) |      | $ | (0.19  | )    |  | $ | (0.09  | ) |  | $    | (0.18  | ) |      | $ | (0.11  | )    |  | $ | (0.19  | )



The financial results for the eight most
recent quarters reflect the progression of an early stage Company with a limited operating history. Factors that have caused our
results to vary are described below.



| | Ø | As
                                                                                                             a result of the limited
                                                                                                             number of VISIUS
                                                                                                             Surgical Theatres
                                                                                                             sold and installed
                                                                                                             to date and the high
                                                                                                             dollar value associated
                                                                                                             with each sale, our
                                                                                                             revenues recorded
                                                                                                             from quarter to quarter
                                                                                                             have varied depending
                                                                                                             on the number and
                                                                                                             stage of active projects
                                                                                                             in any given quarter.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | Gross
                                                                                                             margins for the VISIUS
                                                                                                             Surgical Theatre
                                                                                                             are largely dependent
                                                                                                             on whether a particular
                                                                                                             product application
                                                                                                             has achieved acceptance
                                                                                                             amongst clinical
                                                                                                             thought leaders.
                                                                                                             Given the maturity
                                                                                                             and clinical data
                                                                                                             surrounding the neurosurgical
                                                                                                             application of the
                                                                                                             VISIUS Surgical Theatre,
                                                                                                             margins for these
                                                                                                             products have generally
                                                                                                             been stronger than
                                                                                                             other newer clinical
                                                                                                             applications.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | The
                                                                                                             decrease in gross
                                                                                                             profit percentage
                                                                                                             in the latter stages
                                                                                                             of 2011 is primarily
                                                                                                             tied to market penetration
                                                                                                             pricing for the introduction
                                                                                                             of the VISIUS Surgical
                                                                                                             Theatre for cerebrovascular
                                                                                                             and cardiovascular
                                                                                                             applications, as
                                                                                                             well as the provision
                                                                                                             of certain equipment
                                                                                                             for research purposes
                                                                                                             to a third party
                                                                                                             customer. The decrease
                                                                                                             in gross margins
                                                                                                             in 2012 is mainly
                                                                                                             due to higher installation
                                                                                                             costs with third
                                                                                                             quarter margins being
                                                                                                             further impacted
                                                                                                             by the provision
                                                                                                             of certain equipment
                                                                                                             for research purposes
                                                                                                             and lower margins
                                                                                                             for the Company’s
                                                                                                             first customer installation
                                                                                                             in Japan.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 14 of 27











| | Ø | Net
                                                                                                             losses generally
                                                                                                             vary depending on
                                                                                                             the timing of when
                                                                                                             specific projects
                                                                                                             were installed and
                                                                                                             the pricing associated
                                                                                                             with the respective
                                                                                                             projects. Net losses
                                                                                                             in 2011 in 2012 have
                                                                                                             largely been the
                                                                                                             result of lower product
                                                                                                             installations and
                                                                                                             planned increases
                                                                                                             in research and development
                                                                                                             activity for the
                                                                                                             Company’s MR
                                                                                                             guided radiation
                                                                                                             therapy program and
                                                                                                             the image-guided
                                                                                                             robotics program.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | Operating
                                                                                                             expenses began to
                                                                                                             increase in 2011
                                                                                                             because of planned
                                                                                                             research and development
                                                                                                             activities for robotics,
                                                                                                             MR-guided radiation
                                                                                                             therapy and other
                                                                                                             ancillary research
                                                                                                             projects, increased
                                                                                                             employee costs, and
                                                                                                             professional fees
                                                                                                             as a result of additional
                                                                                                             reporting requirements
                                                                                                             as a NASDAQ registrant.
                                                                                                             Operating expenses
                                                                                                             during the first
                                                                                                             part of 2012, in
                                                                                                             areas outside of
                                                                                                             research and development,
                                                                                                             are lower as a result
                                                                                                             of cost management
                                                                                                             measures undertaken
                                                                                                             by management. Increases
                                                                                                             in the second half
                                                                                                             of the year reflect
                                                                                                             additional efforts
                                                                                                             to recruit qualified
                                                                                                             personnel and severance
                                                                                                             and retention costs
                                                                                                             recorded in the fourth
                                                                                                             quarter related to
                                                                                                             the relocation of
                                                                                                             operations from Winnipeg,
                                                                                                             Canada to Minneapolis,
                                                                                                             U.S.A.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | Although
                                                                                                             the majority of the
                                                                                                             Company’s sales
                                                                                                             are denominated in
                                                                                                             U.S. dollars, the
                                                                                                             Company sells its
                                                                                                             VISIUS Surgical Theatres
                                                                                                             in a variety of foreign
                                                                                                             currencies. As well,
                                                                                                             a significant portion
                                                                                                             of the Company’s
                                                                                                             operating costs are
                                                                                                             in Canadian dollars.
                                                                                                             This gives rise to
                                                                                                             foreign exchange
                                                                                                             gains or losses each
                                                                                                             quarter depending
                                                                                                             on the change in
                                                                                                             value of the U.S.
                                                                                                             dollar versus the
                                                                                                             Canadian dollar and
                                                                                                             other currencies
                                                                                                             in each quarter.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | The
                                                                                                             Company generated
                                                                                                             taxable income in
                                                                                                             several of its foreign
                                                                                                             subsidiaries in 2011
                                                                                                             and 2012 because
                                                                                                             of our transfer pricing
                                                                                                             methodology. As a
                                                                                                             result, the Company
                                                                                                             began recognizing
                                                                                                             tax expense in the
                                                                                                             4th quarter
                                                                                                             of 2011 related to
                                                                                                             these subsidiaries.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Backlog



During 2012, total order bookings were
$88.7 million, consisting of $66.9 million of product bookings including 10 new VISIUS Surgical Theatres order and $21.8 million
of new service contracts. We converted $52.4 million of backlog into revenues and changes in foreign exchange increased backlog
by $0.9 million. We evaluate our backlog and individual order conversion on a regular basis and our experience is that orders
typically convert into revenues over 12 to 18 months on average. As disclosed in our MD&A for the past two quarters ended
June 30, 2012 and September 30, 2012, we indicated that there was one order in backlog which was not proceeding at a rate consistent
with our expectations. As a result of this orders continued non-advancement, we have removed this order, valued at $9.6 million
from backlog. Total backlog, net of this change, is $122.5 million at December 31, 2012.



The table below provides the Company’s
backlog as at December 31, 2012 and its comparable periods for each of the last three years as of December 31:



|                         |  | December 31 |        
|------------------------ |  | ----------- | -------
|                         |  | 2009        |        
|VISIUS Surgical Theatres |  | $           | 85,045 
|Service contracts        |  |             | 24,035 
|Total backlog            |  | $           | 109,080



To December 31, 2012, we have sold 58
systems, of which 45 are installed and 13 are in the delivery phase. Of the 58 sold, 38 are in the United States, 7 are in Canada,
9 are in Asia Pacific and 4 are in Europe and the Middle East.



We use the non-GAAP measure “backlog”
to measure aspects of our financial performance. Backlog is defined as the unrecognized portion of (i) revenues anticipated to
be recorded from VISIUS Surgical Theatre orders, including confirmed orders and orders subject to the completion of formal documentation
and (ii) service contracts with a term of four to five years and which commence at the conclusion of the warranty period on our
VISIUS Surgical Theatres. The term of our service contracts generally ranges from 4 to 5 years commencing at the conclusion of
the warranty period on our VISIUS Surgical Theatres, which are typically 1 year in length. Service contract revenue is recognized
ratably over the term of the contract.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 15 of 27











OUTLOOK



In 2012, we saw significantly improved
performance in the U.S. market which contributed two thirds of the Company’s total bookings for the year. In 2013 we expect
to deliver continued growth in order bookings. When we assess the opportunity today for our existing products, we have a significant
numbers of customers in the mid-to-later stages of the sales funnel. This does not take into account the potential that exists
for our Symbis Surgical System, our MR guided Radiation Therapy System, and only includes a modest projection for Visius CT. Our
sales funnel has increased substantially from a year ago, and while not all of these customers move to purchase order we believe
that most will convert over time, and it is on this basis that we believe we will deliver strong order bookings performance in
2013.



In 2013, we anticipate that the U.S. will
continue to be a strong contributor to overall bookings performance, with approximately half of all system bookings coming from
this region. We are also well positioned in China. We have a solid position from which to continue to expand our installed base
and have a substantial funnel of customers. Asia Pacific, and specifically Japan, are also areas of focus for our company. We
believe that the Japanese market potential is substantial and we are positioning ourselves to serve that market. In Europe we
will be focused on advancing a select number of opportunities this year. While the market is not robust across all of Europe,
there are many centers who are proceeding with the procurement of systems, and we intend to be a part of that.



New Product Development



As planned, our VISIUS Surgical Theatre
equipped with a ceiling mounted CT scanner has been submitted to the FDA, and we anticipate receiving regulatory clearance in
the first half of 2013. This product addresses the demand for radiological quality imaging during spinal and other procedures
and we believe that the combination of enhanced work flow, ceiling mounted technology and radiological quality imaging will be
a compelling value for many centers.



Completion of our MR Guided Radiation
Therapy system is also scheduled for 2013. This innovative new product is designed to deliver MR guided radiation therapy, MR
simulation, and MR guided brachytherapy from a single integrated system. We believe that our MR guided brachy therapy solution
has the ability to improve workflow and also reduce the cost of care. The MR Guided radiotherapy portion of the system is expected
to be completed in the second quarter and soon after begin acceptance testing with the goal of completion by summer. Final submissions
for regulatory clearance of this new product offering are expected by the end of the second quarter.



Our third major product development initiative
is the SYMBIS Surgical System — the world's first commercialized MR compatible surgical robot. Version 1 of the system is
currently in a single site clinical trial with a cohort of 120 neurosurgical patients and from that we submitted a 510(k) clearance
application for the SYMBIS Surgical System in August 2012. The 510(k) process is underway and we continue to work with the FDA
to address any concerns. We believe that we will be required to provide more clinical trial data for evaluation in addition to
what we have already submitted. We are working with the FDA to determine the scope and size of the additional patient data that
will satisfy the needs of the evaluators and provide us with clarity and a timeline to completion.



Financial Outlook



In 2012 we saw a significant improvement
in order flow for our VISIUS Surgical Theatres. System bookings totaled 10 during the year – double the number of orders
achieved in 2011. While the underlying global economic recovery continued to be soft in 2012, we experienced a rebound in customer
demand and activity in the United States and Asia Pacific. For 2013, our expectation is for another year of improved order flow,
with continues strength in the United States and the Asia-Pacific markets.



Revenues



Our ability to complete installations
and recognize revenue on a timely basis is directly influenced by the circumstances of each hospital and schedules can shift because
of unique customer specific requirements. The delivery cycle and installation process for a VISIUS Surgical Theatre is lengthy
and installation times can be further lengthened depending on additional site-specific construction work that may be required
to be completed by the customer.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 16 of 27











In 2013 revenues are expected to be in
the range of $65 million to $72 million and include revenues from the conversion of both system and service backlog. Included
in this forecast are revenues associated with our new VISIUS Surgical Theatre equipped with a ceiling mounted CT. We anticipate
this product will receive FDA regulatory clearance in the first half of 2013. Relative to MR-equipped VISIUS Surgical Theatres,
our new CT product is expected to have a lower price point as well as quicker sales and significantly reduced installation cycles.
As a result, we have included the sale and installation of our new CT-equipped VISIUS Surgical Theatres as a component in our
2013 revenue expectations.



IMRIS’s quarterly revenue profile
varies depending on the underlying system installations in each period. We anticipate that Q1 2013 revenues will be in the $5
million to $7 million range, and similar to prior years, the strongest quarterly revenue performance will once again occur in
the second half of 2013.



Gross Profit



Strong increases in gross profit are expected
in 2013, including significantly higher gross profit as a percentage of sales, which is forecast to be in the range of 40%. Quarterly
gross profit as a percentage of sales will vary depending on the underlying system installations in the respective quarters.



Operating Expenses



Carefully managing expenses is a
priority for our Company and in 2013 we expect our departmental cash operating expenses to decrease approximately $4 million
from 2012 levels to approximately $34 million. Not included in this amount are one-time cash costs of $4 million associated
with the relocation of the Company’s facility from Winnipeg to Minneapolis and a charge of approximately $7 million to
research and development costs which is described further below. The total cost of the Company’s relocation is forecast
to be $5.4 million including $1.4 million incurred in 2012 and $4.0 million in 2013.



Total research and development expenses
are anticipated to be approximately $17 million, including an exceptional research and development charge of $7 million arising
from the completion of the collaborative arrangement we entered into with Princess Margaret Hospital in October 2011 for their
clinical MR-guided radiation therapy system. The MR-guided radiation therapy system will be used to conduct research at the hospital
in order to clinically validate the system and develop a commercially viable version of the platform. The $7 million charge includes
$5 million of deferred costs incurred in prior year periods as part of the development of the clinical site and has been recorded
in prepaid expenses and other assets. These costs will be deferred until the installation is complete and then charged as research
and development when clinical validation can begin.



Research and development will continue
to be a priority in 2013 in support of commercializing our MR-guided radiation therapy system and SYMBIS Surgical System as well
as enhancements for the VISIUS Surgical Theatre and traditional surgical procedures, including the addition of a ceiling mounted
CT to the VISIUS Surgical Theatre.



Taken together, total cash and non-cash
operating expenses in 2013 are expected to be approximately $51 million, as summarized in the table below:



|2013 Forecast                            |  | $ Millions |     
|---------------------------------------- |  | ---------- | ----
|Cash operating expenses                  |  |            | 34.0
|Minneapolis relocation costs             |  |            | 4.0 
|R&D Development charge                   |  |            | 2.0 
|Total                                    |  |            | 40.0
|Research & Development charge (non-cash) |  |            | 5.0 
|Depreciation (non-cash)                  |  |            | 4.0 
|Stock Based Compensation (non-cash)      |  |            | 2.0 
|Total operating expenses                 |  |            | 51.0



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 17 of 27











Liquidity and Capital Resources



With cash and accounts receivable at December 31, 2012 of $32.2
million and order backlog of $122.5 million, we have a solid base from which to continue to build the business.



Our cash requirements in 2013 include
funding for operations, capital investments related to robotics, iCT and MRgRT test labs, the costs related to the U.S. relocation
and prepaid development costs associated with our collaborative arrangements. Our total capital expenditures for the year are
expected to be in the range of $6 million to $8 million this year.



LIQUIDITY AND CAPITAL RESOURCES



Our principal capital needs are for funding
scientific research and development programs, supporting our sales and marketing activities and funding capital expenditures and
working capital. The Company has financed its cash requirements primarily through issuances of securities and advanced customer
deposits from new orders.



We had cash of $19.1 million as at December
31, 2012, a decrease of $21.4 million from December 31, 2011. The $21.4 million decrease from December 31, 2011 primarily resulted
from operating activities, which included an operating loss (excluding non-cash related items) of $21.1 million and cash from
working capital and other items of $6.5 million. Investing activities included capital spending of $8.3 million. These uses of
cash were offset by $2.4 million raised through employee stock options being exercised and a foreign exchange translation adjustment
of $0.1 million.



The following table sets forth the summary
statement of cash flows for the dates and periods indicated:



Statements of Cash Flows

(Thousands of US dollars)

(Unaudited)

|                                        |  | Twelve months ended |        
|--------------------------------------- |  | ------------------- | -------
|                                        |  | December 31,        |        
|                                        |  | 2012                |        
|Cash flows                              |  |                     |        
|(Used in) from Operating Activities     |  | $                   | (15,638
|From Financing Activities               |  |                     | 2,420  
|Used in Investing Activities            |  |                     | (8,279 
|Foreign exchange translation adjustment |  |                     | 132    
|Net decrease                            |  |                     | (21,365
|Cash and cash equivalents, opening      |  |                     | 40,425 
|Cash and cash equivalents, closing      |  | $                   | 19,060 



Operating Activities



The cash used from operating activities
for the year ended December 31, 2012 was $15.6 million. The cash from operating activities was comprised of an operating loss
of approximately $22.1 million (excluding non-cash related items), $1.2 million cash used for advance payments and $7.7 million
cash from working capital. The $6.5 million in cash from working capital consists of a decrease in accounts receivable ($2.8 million),
an increase in accounts payable and accrued liabilities ($8.6 million), and an increase in deferred revenue ($3.0 million) offset
by an increase in unbilled receivables ($3.9 million), an increase in inventory ($0.8 million), and a net increase in prepaid
expenses and other assets ($2.0 million).



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 18 of 27











Financing Activities



Financing activities for the year ended
December 31, 2012 was $2.4 million compared to $1.1 million in the same period in 2011. The cash generated in financing activities
for both 2011 and 2012 was a result of employee share options being exercised.



Investing Activities



The cash used from investing activities
for the current quarter was approximately $8.3 million compared to approximately $3.7 million in the same period in 2011. Investing
activities in 2012 include restricted cash ($1.9 million), acquisition of tangible and intangible capital assets ($5.0 million)
and the increases in other assets ($1.9 million) offset by proceeds on sales of assets ($0.5 million). The $5.0 million in capital
asset consists mainly of additions to our test labs, including the new labs for robotics and iCT. The $1.9 million increase in
other assets consists mainly of additional research and development costs related to collaborative arrangements.



Liquidity and Capital Resources Summary



Our cash as at December 31, 2012 totaled
$21.0 million, which includes restricted cash $1.9 million. This cash position is expected to provide sufficient liquidity to
meet the anticipated needs of current operations and existing projects and budgeted capital asset expenditures.



Summary of Contractual Obligations



The Company had commitments under operating
leases requiring future minimum annual lease payments for the next five years as of December 31, 2012 as follows:



|     |  |   |      
|---- |  | - | -----
|     |  |   |      
|2013 |  | $ | 1,558
|2014 |  |   | 1,714
|2015 |  |   | 1,667
|2016 |  |   | 1,294
|2017 |  |   | 1,144
|     |  | $ | 7,377



OUTSTANDING SHARE DATA



The following table sets forth our outstanding
share data as at the dates given:



|                           |  | Authorized |  | March 5, 2013 |                            |  | December 31, 2011 |  
|-------------------------- |  | ---------- |  | ------------- | -------------------------- |  | ----------------- | -
|                           |  |            |  |               |                            |  |                   |  
|Common shares              |  | unlimited  |  | $             | 147,882,296                |  |                   | $
|                           |  |            |  |               | (46,087,979 common shares) |  |                   |  
|                           |  |            |  |               |                            |  |                   |  
|Preferred shares           |  | unlimited  |  |               | Nil                        |  |                   |  
|                           |  |            |  |               |                            |  |                   |  
|Additional paid-in capital |  |            |  | $             | 4,861,045                  |  |                   | $



As at March 5, 2013, a total of 4,231,751
stock options were outstanding under the Company’s stock option plan.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 19 of 27











NON-GAAP FINANCIAL MEASURES



In this MD&A, we use the non-GAAP
measure “Backlog” and "Adjusted EBITDA". We define backlog as the unrecognized portion of the revenues anticipated
to be recorded from VISIUS Surgical Theatre orders, including confirmed orders and orders subject to completion of formal documentation
and the unrecognized portion of service contracts which have a term of 4-5 years commencing at the conclusion of the warranty
period on our theatres, which is typically one year in length. In view of the long sales cycle, high unit price and limited quarterly
installations that are characteristic of our business, we believe that our backlog provides a better measure at any particular
point in time of the long-term performance prospects of our business than our quarterly operating results. Backlog does not have
any standardized meaning prescribed by U.S GAAP and is, therefore, unlikely to be comparable to similar measures presented by
other companies.



We define Adjusted EBITDA as earnings
before stock based compensation, interest income (expense), foreign exchange gain (loss), embedded derivative gain (loss), income
taxes, and amortization. We have begun reporting Adjusted EBITDA because we believe investors use it as another measure of our
operating performance. Adjusted EBITDA does not have a standardized meaning as prescribed by U.S. GAAP and it is not necessarily
comparable to similarly titled measures used by other companies.



Reconciliation to the most comparable
U.S. GAAP measure for Adjusted EBITDA for the fourth quarter and the year ended December 31, 2012 is as follows:



|(Thousands of US dollars)
(Unaudited) |  | 3 months ended December 31 |        |   | Year ended December 31 |  
|------------------------------------- |  | -------------------------- | ------ | - | ---------------------- | -
|                                      |  | 2012                       |        |   | 2011                   |  
|Loss for the year                     |  | $                          | (6,604 | ) |                        | $
|Stock based compensation              |  |                            | 455    |   |                        |  
|Foreign exchange loss                 |  |                            | 232    |   |                        |  
|Interest expense (income)             |  |                            | 55     |   |                        |  
|Amortization                          |  |                            | 1,071  |   |                        |  
|Gain on asset disposals               |  |                            | (19    | ) |                        |  
|Loss on embedded derivative           |  |                            | -      |   |                        |  
|Income taxes                          |  |                            | 20     |   |                        |  
|Adjusted EBITDA                       |  | $                          | (4,790 | ) |                        | $



FINANCIAL INSTRUMENTS



Our financial instruments consist of cash,
cash equivalents, accounts receivables, unbilled receivables, accounts payable and accrued liabilities.



We are subject to credit risk with respect
to our accounts receivable and unbilled receivables to the extent debtors do not meet their obligations and we are subject to
foreign exchange risk with respect to financial instruments denominated in a currency other than the U.S. dollar.



Our accounts receivable at December 31,
2012 were $11.1 million, of which $10.4 million is considered current (less than 60 days old). Accounts receivable includes $0.3
million denominated in a currency other than the U.S. dollar.



RELATED PARTY TRANSACTIONS



We lease air travel time from a corporation that is controlled by the Chairman of IMRIS Inc.. The amount
charged to travel expenses during the twelve-month period ended December 31, 2012, 2011 and 2010, with respect to transactions
with this related party totaled $396,000, $357,000 and $298,000, respectively. On December 31, 2012, there was no receivable and
a payable balance of $118,000 owing to this corporation ($Nil as of December 31, 2011) and on December 31, 2011, there was
no receivable or payable balance owing.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 20 of 27











CRITICAL ACCOUNTING POLICIES AND ESTIMATES



Use of Estimates



The preparation of financial statements
in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the year. Among the accounting estimates described in the notes to the financial statements, we consider the
accounting estimates used in the determination of recognized revenues, the value of goodwill and the valuation of stock options
to be critical. Our results as determined by actual events could differ materially from the previously mentioned estimates.



Revenue Recognition



We recognize revenues for our VISIUS Surgical
Theatre sales on a percentage-of-completion basis as the theatre is installed. The percentage-of-completion is determined by the
ratio of actual costs incurred to date to the estimated cost of completion for the project. Actual costs include only those costs
that are directly attributable to contract performance with respect to the revenue recognized. In the event that the actual costs
of completion differ from the estimated cost we have used in determining the percentage-of-completion, recognized revenues may
be over or under-estimated until all costs have been incurred and the project is complete. Funds received from our customers in
advance of meeting the criteria for recognition of revenues are recorded as deferred revenue until the revenue is recognized.
Revenues recognized in advance of the criteria for invoicing to our customer are recorded as unbilled receivables. Accordingly,
the reported amounts shown on the balance sheet under deferred revenue or unbilled receivables may be over or understated.



Value of Goodwill



We recorded goodwill on the purchase of
the assets of a predecessor company. The value of goodwill is tested for impairment annually or more frequently, if an event or
circumstance occurs which we feel may result in an impairment of the value of goodwill.



Stock Based Compensation Plan



From time to time we issue stock options
to employees, directors, officers or consultants. The Company measures compensation expense at the date of granting stock options
to employees and recognizes the expense based on their fair values determined in accordance with the U.S. GAAP codification Accounting
Standards Codification 718. The fair value of options is determined using the Black-Scholes option-pricing model. The fair value
amount is amortized to earnings over the vesting period, with the related credit recorded as additional paid-in capital. Amortization
takes into consideration estimated forfeitures, determined on a historic basis, at the time of grant to determine the number of
awards that will ultimately vest. Upon exercise of these stock options, amounts previously credited to additional paid-in capital
are reversed and credited to share capital.



FUTURE ACCOUNTING STANDARDS



In October 2012, the Financial Accounting
Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2012-04, Technical Corrections and Improvements,
which was meant to correct minor technical errors in the codification and to conform terminology and clarify certain guidance
in various topics of the codification to fully reflect the fair value measurement and disclosure requirements of Topic 820. This
guidance is effective for interim and annual periods beginning after December 15, 2012. This guidance is not expected to have
an impact on the results of operations or financial position of the Company.



On February 5, 2013, the FASB issued authoritative
guidance (ASU 2013-02), which further revises the manner in which entities present comprehensive income in their financial statements.
The new guidance requires entities to report the effect of significant reclassifications out of accumulated other comprehensive
income on the respective line items in the net income if the amount being reclassified is required under U.S. GAAP to be classified
in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to
net income in the same reporting period, entities are required to cross-reference other disclosures required under U.S. GAAP that
provide additional detail about those amounts. This guidance is effective for interim and annual periods beginning after December
15, 2012. The guidance affects presentation only and is not expected to have an impact on the results of operations or financial
condition of the Company.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 21 of 27











DISCLOSURE AND INTERNAL CONTROLS



We have established and maintain disclosure
controls and procedures in order to provide reasonable assurance that material information relating to IMRIS is made known in
a timely manner. We have evaluated the effectiveness of our disclosure controls and procedures as at the date of our 2012 Financial
Statements and are not aware of any material changes that are required to be made to these controls and procedures; we believe
them to be effective in providing such reasonable assurance.



We are also responsible for the design
of our internal controls over financial reporting (ICFR) in order to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Management
used the framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to evaluate the effectiveness
of internal controls in fiscal 2012, based on this evaluation management concluded that our internal control over financial reporting
was effective as at December 31, 2012. The Company’s independent registered public accounting firm, Deloitte LLP, has issued an unqualified opinion on the Company’s internal controls over financial reporting as at December 31, 2012.



As of the date of this report, there have
been no changes to the Company’s internal controls over financial reporting that materially affect, or are reasonably likely
to materially affect, its internal controls over financial reporting.



In compliance with rules of the Canadian
Securities Administration and the U.S. Securities and Exchange Commission, we have filed certificates signed by our Chief Executive
Officer (‘‘CEO’’) and Chief Financial Officer (‘‘CFO’’) regarding the effectiveness
of our disclosure controls and our internal controls over financial reporting. It should be noted however, that while the Company’s
CEO and CFO believe the organizations disclosure controls and internal controls over financial reporting are effective any system
of internal control has inherent limitations and cannot prevent all errors or fraud. Even systems determined to be effective can
provide only reasonable assurance of the reliability of financial statement preparation and presentation.



RISKS AND UNCERTAINTIES



The
operating results, business prospects and financial position of the Company are subject to a number of risks and uncertainties.Risks relating to our business include: our long sales cycle; high unit price and limited quarterly installations; our
limited operating history and accumulated deficit; our lack of product diversity; our dependence on our suppliers; the development
of VISIUS Surgical Theatres for cardiovascular and cerebrovascular procedures; our reliance on key personnel; the lack of supporting
clinical data; market competition and technological advances; patent protection and trade secrets; intellectual property litigation;
our ability to shift from research and development to commercialization; our ability to manage growth; foreign exchange fluctuations;
additional financing requirements; and regulatory matters. If any of the events described
as risks or uncertainties actually occurs, our business, prospects, financial condition and operating results would likely suffer,
possibly materially. We have discussed several of the more significant risks and uncertainties that may affect the business below;
however, for a more comprehensive list of the risks and uncertainties affecting the business, readers are advised to refer to
our 2011 Annual Information Form (AIF) and our Base Shelf Prospectus (Base Shelf) filed October 2, 2012. Both the AIF and Base
Shelf are available atwww.sedar.comand on theUnited States Securities and Exchange
Commission (SEC) website at www.sec.gov. The AIF is located in the Company’s Annual Report
on Form 40-F.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 22 of 27











Financial Risks



The Company is exposed to a variety of
financial risks by virtue of its activities. These risks include market risk (including currency risk; fair value interest rate
risk; cash flow interest rate risk); credit risk and liquidity risk. The Company’s overall risk management efforts focus
on the unpredictability of financial markets and seek to minimize potential adverse effects on financial performance. Management
identifies and evaluates financial risks in close cooperation and direction from the Board of Directors. Management is charged
with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated.



The following is a brief overview of the Company’s financial
risk management for each of the risks identified above:



Market Risks



Currency risk



The Company operates internationally
and is exposed to foreign exchange risk from various currencies. Foreign exchange risk arises from future sales and purchase transactions
as well as recognized financial assets and liabilities denominated in foreign currencies. The Company’s main objective in
managing its foreign exchange risk is to preserve gross margins and reduce variations in performance. The Company prices a significant
portion of its VISIUS Surgical Theatre sales in USD. To offset these revenues, the Company sources a major portion of the components
it delivers in U.S. dollars. In addition, the Company incurs nearly all of its sales expenses in U.S. dollars.



Cash flow and fair value interest rate risk



Interest rate risk is the risk
that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk. The
Company’s restricted cash includes short-term highly liquid investments that earn interest at market rates. Financial assets
and financial liabilities that bear interest at fixed rates are subject to fair value interest rate risk. The Company’s
restricted cash is the only financial asset bearing fixed interest rates. The Company manages its interest rate risk by minimizing
financing costs on its borrowings and maximizing the interest income earned on excess funds while maintaining the liquidity necessary
to conduct operations on a day-to-day basis. The Company’s investment policy limits the investing of excess funds to Bankers
Acceptances, Canadian Chartered bank term deposits, and short-term highly liquid money market mutual funds sponsored by Canadian
Chartered banks.



Credit Risk



Credit risk is the risk of financial
loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation. The maximum
exposure to credit risk of the Company at quarter end is the carrying value of its financial assets. The Company manages its credit
risk on financial assets by dealing solely with reputable banks and financial institutions. The Company’s North American
customers are large credit worthy medical hospitals and thus there is very little exposure to credit risk. When selling internationally,
the Company uses irrevocable letters of credit to reduce its exposure to credit risk. The Company reviews the collectability of
its accounts receivable and would record an allowance for doubtful accounts receivable if accounts were determined to be uncollectible.
The loss would be recognized in the income statement within ‘Administrative expense’. Significant financial difficulties
of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments
are considered indicators that the account receivable is uncollectible.



Liquidity Risk



Liquidity risk is the risk that
the Company will not be able to meet its obligations as they fall due. The Company manages its liquidity risk by forecasting cash
flows from operations and anticipated investing and financing activities. The Board of Directors reviews and approves the Company’s
operating and capital budgets as well as any material transactions that are not in the ordinary course of business.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 23 of 27











Long Sales Cycle, High Unit Price and Limited Installations



The long sales cycle, as well as the high
unit price of the VISIUS Surgical Theatre, among other factors, may contribute to substantial fluctuations in our quarterly operating
results. Because of the high unit price of VISIUS Surgical Theatres and the fact that we have installed only 45 units over the
Company’s history, each installation currently represents a significant component of our revenue for a particular quarter.
VISIUS Surgical Theatres represent a significant capital expenditure for our customers and adverse global economic and business
conditions could result in a loss of consumer confidence, which could decrease capital spending or increase the length of time
and effort our customers require to gain approval for capital spending. If we lose a single customer order or if customers defer
installation of a VISIUS Surgical Theatre for even a short period of time, recognition of a significant amount of revenue may
be lost or deferred to a subsequent period. Given that our operating costs are relatively fixed, our inability to recognize revenue
in a particular quarter may adversely affect our profitability in that quarter.



We expect that revenues from a limited
number of new customers will account for a large percentage of total revenues in future quarters. Our ability to attract new customers
will depend on a variety of internal factors, including the capability, safety, efficacy, ease of use, price, quality and reliability
of our products and effective sales support, training and service. In addition, if we are unable to fulfill our current purchase
orders and other commitments on a timely basis or at all, market acceptance of our products could be adversely affected and hospitals
may instead purchase our competitors’ products. The loss or delay of individual orders, failure to add new customers or
worsening macroeconomic conditions could have a significant impact on future revenues and operating results.



Limited Operating History and Accumulated
Deficit



We have a limited operating history from
which investors can evaluate our business and prospects. We have a large accumulated deficit and we
may not achieve profitability. We have incurred substantial losses since inception and may incur additional operating losses in
the near term. If the time required to generate significant revenues and consistently achieve profitability is longer than anticipated,
we may not be able to continue our operations without additional capital.Our prospects must be considered in light of
the risks and uncertainties encountered by an early-stage company in the continuously evolving surgical imaging market. If we
cannot successfully address these risks, our business and financial condition would suffer.



Actual Bookings May Vary from Forecast



We periodically forecast information about
the rate we will be able to convert potential customers in our order pipeline into actual bookings we expect to achieve in future
periods. The actual bookings we achieve in a period may vary from the bookings we forecast in public disclosure documents, presentations
or other public information and these variations could be material and adverse. Our forecasts reflect numerous assumptions concerning
our expected performance, as well as other factors, which may not be accurate. Actual bookings rely on the occurrence of numerous
factors beyond our control such as a customer’s capital budget, their patient requirements and timing. Although we believe
that the assumptions underlying our guidance and other forward looking statements were reasonable at the time such statements
were made, actual results could be materially different. If actual bookings vary from our announced guidance, the price of our
Common Shares may decline, and such a decline could be substantial. Except as required under applicable securities legislation,
we do not undertake to update any guidance or other forward-looking information we may provide, whether as a result of new information,
future events or otherwise.



Backlog may not Result in Future Net Sales



Our backlog at any particular date may
not be indicative of recognized revenues in our financial statements in subsequent periods. We evaluate each customer order to
determine qualification for inclusion in backlog; however, there can be no assurance that amounts included in backlog will ultimately
result in recognition of revenue or occur in a financial reporting period. In addition, in any given period management can reduce
backlog due to factors such as a cancellation of an order, lack of confidence in the customer proceeding with the order, changes
in the financial condition at a customer, changes in government or third party funding for customers, and changes in installation
schedules. Changes to backlog during any particular period, or the failure of our backlog to result in future sales, could harm
our business, financial condition, results of operations and cash flows.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 24 of 27











Lack of Product Diversity



Currently, our commercially available
products include the VISIUS Surgical Theatre for neurosurgical, cardiovascular and cerebrovascular applications. Although we expect
sales of our VISIUS Surgical Theatres to increase with market acceptance of the theatres for cardiovascular and cerebrovascular
applications, we currently generate substantially all of our revenue from sales of VISIUS Surgical Theatres for neurosurgical
applications and multiyear service plans for the theatres. If we are unable to sustain or grow sales of the VISIUS Surgical Theatre
for use in multiple applications beyond neurosurgery, we may not generate sufficient revenue to support our business. Accordingly,
we are currently dependent on our ability to market and sell the VISIUS Surgical Theatre for neurosurgical applications. Any factor
materially and/or adversely affecting our ability to market and sell the VISIUS Surgical Theatre for neurosurgical applications
or pricing and demand for the theatre may have a material and adverse effect on our financial condition and results of operations.



Foreign Exchange Fluctuations



We currently generate a significant portion
of our sales in U.S. dollars but many of our expenses are denominated in Canadian dollars. To date, we have not used forward exchange
contracts to hedge exposures denominated in foreign currencies or any other derivative instrument for trading, hedging or speculative
purposes. As such, we are exposed to fluctuations in the exchange rate between certain foreign currencies, including Canadian,
Euros and Australian dollars, versus the U.S. dollar as a result of the translation into U.S. dollars of our balance sheet and
income statement items denominated in those foreign currencies.



Regulatory Matters



Products intended for diagnostic and therapeutic
use for humans are governed by a wide array of regulatory authorities in various jurisdictions throughout the world. For most
of these products in most jurisdictions, applicable statutes and regulations require testing and government review and approval
prior to marketing the product. This procedure can take a number of years and involves the expenditure of substantial resources.
Any failure or delay by us to obtain regulatory approvals or clearances could adversely affect the marketing of any products developed
by us and our ability to receive product revenue. There is no assurance that any of our planned products will be approved by any
regulatory authority on a timely basis, or at all. Also, in the event that a regulatory authority revokes any approvals granted
in respect of our products, or a recall of our products is required in the event of material deficiencies or defects, our business,
financial condition and results of operations could be adversely affected.



Dependence on Suppliers



We depend on Siemens to supply the MR
scanner, CT scanner and angiography systems for our VISIUS Surgical Theatres. Our current agreement with Siemens was entered into
as of November 2009 for a five-year term with automatic renewal provisions thereafter, subject to six months' advance written
notice of termination by either party. The agreement may be terminated earlier in the event of default or in the event of insolvency
or equivalent proceedings against either party or in the event of a change of control or similar sale transaction affecting IMRIS
where the buyer or controlling shareholder is a direct competitor to Siemens. If for any reason, we could not obtain MR scanners,
CT scanners and angiography systems from Siemens there is no certainty that we could find another vendor willing to supply this
equipment for the VISIUS Surgical Theatre and a change would require a redesign of the VISIUS Surgical Theatre, which could take
a year or more to implement. We are dependent on Siemens to provide support and maintenance services to our customers under contract
to IMRIS; if Siemens' services became unavailable, any resulting service issues could disrupt our customer relationships and cause
damage to our reputation.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 25 of 27











We purchase certain other components of
our VISIUS Surgical Theatre from outside vendors, including radio-frequency shielding systems, certain hardware components for
our surgical information management system and operating room booms and lights. For the majority of our theatre components, we
do not have long-term supply contracts with the suppliers; however, we attempt to establish dual sourcing for most of these
other components of our theatre and we believe that we would be able to establish alternative sources for these components, subject
to any regulatory qualifications, as may be required. It is possible that a disruption of the supply of these components could
result in increased costs and delays in deliveries of VISIUS Surgical Theatre, which could adversely affect our reputation and
results of operations. Additionally,any transition to alternate manufacturers or suppliers
would likely result in operational problems and increased expenses and could delay the shipment of, or limit our ability to provide
our products.



We purchase all significant components
for development of our image guided surgical robotics program from MacDonald, Dettwiler and Associates Ltd. (MDA). We
do not have a formal long-term supply contracts with MDA; however, IMRIS and MDA have signed a collaborative development
agreement for development of the surgical robotics program. It is possible that a disruption of the supply of these components
could result in increased costs and delays in the development of our image guided surgical robotics program, which could adversely
affect our reputation and results of operations. Additionally, any transition to alternate manufacturers or suppliers would likely
result in operational problems and increased expenses, which could also delay the development of our image guided surgical robotics
program.



Competition and Technological Advances



The surgical imaging industry is subject
to intense and increasing competition and rapidly evolving technologies. Many government, academic and business entities are investing
substantial resources in research and development of treatments and new products that may render surgical imaging obsolete, including
radiation treatment, new drug treatments and gene therapy. Successful developments that result in new approaches for treatments
could reduce the attractiveness of our products or render them obsolete. MRI competes with other surgical imaging technologies
such as CT, fluoroscopy and ultrasound for market share in the overall surgical imaging market.



The market for surgical imaging is highly
competitive, with a number of companies providing competing surgical imaging systems. Many of these competitors are large medical
system suppliers which have considerably greater resources at their disposal to advance the development of their systems. These
competitors or other companies may at any time develop new or improved surgical imaging solutions. Alternatively, these competitors
may choose to increase their respective market share by changing their pricing model or by lowering the price of their surgical
imaging solutions or ancillary supplies. If we are unable to address these competitor tactics by either continuing to enhance
and improve our current product(s) or we are unable to maintain or increase our selling price in the face of competition, there
can be no assurance that the Company will be able to maintain its desired market share or achieve its financial objectives.



Changes to Financial Accounting Standards



A change in accounting standards or practices
can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change
is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur
in the future. Changes to existing standards or the questioning of current practices may adversely affect our reported financial
results or the way we conduct our business.



Relocating our Operations to the United
States



On November 9, 2012, we announced that
we plan to relocate our research and development, customer service, manufacturing and administration functions currently
located in our Winnipeg facility to Minneapolis Minnesota in order to gain access to a larger
pool of talented personnel and access to a qualified ecosystem of suppliers. The move will be completed by the end of
the third quarter of 2013. If we are not able to timely recruit individuals with the requisite skills, or timely gain access
to a qualified ecosystem of suppliers, the delay could materially and adversely affect our financial condition, results of
operations, and cash flows.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 26 of 27











ADDITIONAL INFORMATION



Additional information about IMRIS, including
our annual information form, can be found on the SEDAR website at www.sedar.com or the United States Securities and Exchange Commission
(SEC) website at www.sec.gov.



IMRIS Inc.

Management’s Discussion and Analysis
– March 5, 2013

Page 27 of 27