Carbon Done Right Developments Inc. — Management Reports 2025

Mar 1, 2025

CARBON DONE RIGHT

Carbon Done Right Developments Inc.
(formerly Klimat X Developments Inc.)

Management's Discussion and Analysis
For the unaudited interim years ended December 31, 2024 and 2023

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MANAGEMENT'S DISCUSSION AND ANALYSIS

BASIS OF PRESENTATION AND DESCRIPTION OF THE COMPANY

February 28, 2025 - The following Management's Discussion and Analysis ("MD&A") of financial condition and results of operations for Carbon Done Right Developments Inc. and its subsidiaries ("Carbon Done Right" or the "Company" which includes references to "we", "our", "us", "its"), is a review of the operations, current financial position and condition for the twelve months ended December 31, 2024 and should be read in conjunction with the Company's audited consolidated financial statements for the years ended December 31, 2023 and 2022.

FORWARD-LOOKING INFORMATION

This MD&A contains forward-looking statements and introduces financial measures which are not defined under IFRS aimed at helping the reader in making comparisons to metrics similarly disclosed by industry peers. Readers are cautioned that the MD&A should be read in conjunction with the Company's disclosure under "Non-GAAP Measures" and "Forward-Looking Information" included at the end of this MD&A.

DESCRIPTION OF BUSINESS

Carbon Done Right, headquartered in Vancouver, British Columbia, Canada, is a carbon exploration and development company with global reach into jurisdictions with the highest production potential from forestry and marine carbon sequestration projects.

The Company's focus is on mobilizing investment dollars to develop nature-based solutions on an unprecedented scale drawing on the experience of some of the most senior executives in the mining and resource sectors and emerging market leaders.

Carbon Done Right is in the business of developing validated and verified carbon credits from afforestation and reforestation of degraded land areas and marine ecosystems, including mangroves, for sale into international voluntary carbon markets. In contrast to streaming and royalty companies, Carbon Done Right works upstream as a direct owner and operator of projects, addressing a key supply constraint in the current market and the rapidly growing demand for carbon credits in global voluntary and regulated markets. Carbon Done Right intends to achieve this by investing in the exploration, restoration and management of terrestrial and marine systems that can either be protected to enhance the sequestration of greenhouse gases or restored from a degraded status to fully productive ecosystems. Carbon Done Right will draw on the experience of a senior executive team and board that provide access into key target jurisdictions through relationships in the mining and natural resources sectors, combined with decades of experience in carbon markets. Carbon Done Right plans to deploy capital at risk under various arrangements (including cooperation, assignment and production sharing agreements) with large landowners and governments in various suitable jurisdictions around the world. Carbon Done Right secures pre-purchase and offtake agreements with funds, commodity traders, and large final emitters to finance the development of Nature Based Solutions.

Carbon Done Right was incorporated under the British Columbia Companies Act as a Specialty Limited Company on November 21, 1963. In July 1998, the Company continued to the Cayman Islands. In February 2018, the Company continued back to British Columbia. Prior to the COB (as defined below), the Company's principal business activities historically included acquiring options to explore and develop mineral properties, internationally. From a period beginning in 2003 and ending on closing date of the COB (as defined below), the Company was inactive with limited operations, and its common shares ("Common Shares") were listed on the NEX board of the TSXV ("NEX") under the symbol "ERL.H".

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The head office and principal address of the Company is located at Suite 1012, 1030 West Georgia Street, Vancouver, British Columbia, V6E 2Y3, Canada.

During the year ended December 31, 2023, the Company changed its name from “Klimat X Developments Inc.” to “Carbon Done Right Developments Inc.”.

On November 14, 2024, the Company announced that it is changing its financial year-end to March 31 from its current year-end of December 31. As a result, the company will file an additional interim report as of December 31, 2024, and will report audited financial results for a 15-month transition year from January 1, 2024, to March 31, 2025 (with a comparative of the 12 months ended December 31, 2023).

CARBON STREAMING CONTRACTS

Sierra Leone

RML assigned and transferred to Carbon Done Right fifty-one per cent (51%) of all:

• RML Carbon Credits that are produced from or in connection with the Maforki Project;
• Biological asset rights and revenues that are produced or generated from or in connection with the Maforki Project; and

All-in consideration for the Initial Advance and the issuance of Consideration Shares to RML and subject to and in accordance with the terms of a deed agreement and the Sierra Leone Prepayment Agreement.

During the year ended December 31, 2023, RML transferred the remaining 49% to the Company (the Company now currently owns 100%) for further funding commitments to advance the projects. The Company further advanced US$1,270,000 ($1,721,227) and had an additional commitment on advances up to US$2,200,000.

During the period ended December 31, 2024, the Company further advanced US$1,445,506 ($2,079,938) in funding towards the development of the projects.

Forest and Mangrove Protection Ltd. ("FMPL")

On August 15, 2022, the Company entered into a carbon credit streaming agreement with FMPL, a Company owned by the Company's Director of Operations, to acquire carbon credit development rights for approximately 32,000 hectares of land located in Sierra Leone. Pursuant to the acquisition, the Company will assume FMPL's cost of the land rights acquisition and all carbon credit development costs associated with implementing a large-scale rewilding project under the relevant Verra afforestation/reforestation protocol, in exchange for the carbon credit rights and other revenues generated through the sale of timber and other biological assets produced from, or in connection with the project. The cost of acquisition was $898,269 (US$655,912) into the FMPL project.

AGREEMENT WITH THE GOVERNMENT OF SURINAME

On April 25, 2023, the Company announced it has signed a binding agreement with the national government of Suriname to develop mangrove carbon credit and agroforestry projects. The Company has built a presence in Suriname and is actively conducting fieldwork to establish project size and feasibility.

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CARBON CREDIT OFFTAKE TRANSACTION AGREEMENT

On June 15, 2023, the Company signed a pre-purchase agreement with BP Carbon Trading Limited ("BP"). The terms are as follows:

• The pre-purchase agreement is intended for the development of the first 5,000 ha of native species planting.
• Under the pre-purchase financing structure, US$2.5m of investment is prepaid in exchange for 165,000 carbon credits. The financing will be provided upon certain milestones are achieved:

Milestone	Milestone details	Amount (US$)
1	• Carbon sequestration model
• Draft project design
• Account set with Verra
• Cash forecast draft	$500,000 (received in 2023)
2	• Completion of certain process with relevant community
• Carbon rights and land tenure of at least 5ha
• Preparation of at least 1000ha of land with certain target survival rate and blanking
• Revised cash forecast draft	$500,000 (received in 2023)
3	• Certain carbon credits certification documentations reviewed and approved by BP
• Certain mixed species planted on at least 1,000ha of land with certain target survival rate and blanking.
• Revised cash forecast draft
• Site visit by BP	$500,000
($250,000 received in Q1 2024; $250,000 received in Q2 2024).
4	• Preparation of an additional 1000ha of land with certain target survival rate and blanking
• Revised cash forecast draft	$500,000
($500,000 received in Q3 2024).
5	• Certain mixed species planted on at least 1,500ha of land with certain target survival rate and blanking.
• Complete certain reports with an expected generation of 3,000 carbon credits
• Verification site visit schedule for Q1 2025
• Revised cash forecast draft	$500,000
($250,000 received in Q4 2024).

• Upon the delivery of 165,000 carbon credits, BP has the option to purchase the carbon credits from the first 5,000 ha of planting at 20% discount to a mutually agreed carbon index price that reflects the scale and volume of high-quality reforestation projects in the market. Upon completion

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of the delivery of 165,000 carbon credits, BP has first right to purchase any further carbon credits generated up to 1 million carbon credits.

• BP has a time limited Right of First Offer to pre-purchase credits from the remaining 20,000 ha within the project area.
• In the event of a non-delivery:
• If no carbon credits were transferred by December 31, 2028, BP may elect to terminate the agreement and required repayment of the payments advanced. This is to be repaid in cash by the Company within 5 business days of written notice by BP. The Penalty will be adjusted by applying an interest based on EFFR + 6% from the first prepayment date to default date.
• In the event that the Company failed to delivery 165,000 carbon credits by December 31, 2033, the Company can provide alternative units (e.g. carbon credits sourced from a 3rd party) by June 1, 2034. If BP rejects or if the Company fails to deliver alternative units by June 1, 2034, then BP will be compensated in the amount of US$30 per carbon credit shortfall.

During the current period ended December 31, 2024, the Company received payment of $1,701,675 (USD $1,250,000) from BP which has been presented as a derivative liability in the Company's financial statements (December 31, 2023 - $1,350,022 (USD $1,000,000)).

OUTLOOK

Carbon Done Right currently has projects under development in Sierra Leone, Guyana, Suriname and the State of Yucatan in Mexico, and is actively developing projects in other key jurisdictions. As of the date of this report, Carbon Done Right is proud to report the following highlights:

• Sierra Leone project team has completed the first 400 hectares of reforestation in the Maforki Kingdom of Sierra Leone. Planting activity started in July 2022 with the completion of the relisting of the company and this is a major accomplishment. This area is equivalent to almost 750 soccer pitches. Over the lifespan of the project, this area will produce up to 200,000 tonnes of carbon credits. A very significant ramp up in planting activity in 2023, which also generates significant economic and employment benefits to local rural communities. The company takes a world-leading approach to securing consent over the planting activities and to economic benefit sharing.
• The company has established a nursery and sourced seedlings to plant 1000 ha during the summer of 2023 and has completed 400 ha YTD.
• The Company has secured rights to almost 60,000 hectares of reforestation in the country of Sierra Leone and is also developing a large-scale programme for protecting and restoring degraded mangrove areas along the coastline covering tens of thousands of hectares. The company has completed extensive feasibility work in the mangrove areas for both conservation and restoration projects.
• The Company is also active in the State of Yucatan and in Guyana and is making very strong progress in new project development across all jurisdictions.
• The Company received a feasibility study confirming scope of Sierra Leone project with near term goal of securing further land and carbon rights of 75-100,000 hectares;

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• The Company continues to make strong progress in Suriname, focusing on a mangrove restoration project with the national government.
• The Company remains confident in the approach of working upstream to secure and de-risk project sites using equity. The Company has made strong progress in securing investor interest in pre-purchase agreements that should help fund project capital expenditures.

Carbon Done Right is pursuing a strategy to develop financing, pre-sales and offtake agreements with large buyers seeking to meet the growth in demand for credits anticipated by the Task Force on Voluntary Carbon Credits.

RESULTS OF OPERATIONS

The following table summarizes selected financial data reported by Carbon Done Right for the year ended December 31, 2024 and 2023. The information set forth should be read in conjunction with the audited consolidated financial statements prepared in accordance with IFRS, and the related notes thereon. All amounts are in Canadian dollars, unless otherwise specified.

(Canadian $)	Three months ended December 31,		Twelve months ended December 31,
	2024	2023	2024	2023
Revenue	-	45,424	67,737	174,107
Cost of goods sold	-	117,318	(93,935)	(227,306)
	-	162,742	(26,197)	(53,199)
Expenses
Consulting fees	(165,607)	(533,286)	(1,290,346)	(2,230,028)
Professional fees	(271,019)	(80,214)	(852,638)	(515,281)
Amortization expense	(8,854)	(26,006)	(126,473)	(126,788)
Marketing and investor relations	-	(124,383)	(298,963)	(591,876)
Listing and filing fees	(4,262)	(1,788)	(32,280)	(31,078)
Office and administrative	(38,568)	(122,769)	(143,751)	(463,582)
Share-based compensation	-	(18,091)	(2,657)	(79,362)
Travel and corporate development	-	(7,935)	(912)	(74,578)
Total expenses	(488,309)	(914,472)	(2,748,021)	(4,112,573)
Other income (expenses)
Finance costs	(82,817)	(150,512)	(452,321)	(296,335)
Foreign exchange gain (loss)	(93,366)	76,528	(255,177)	12,139
Gain in settlement of AP	-	-	16,586	-
Loss on asset disposal	-	-	(366,748)	-
Loss on lease termination	-	-	(2,816,167)	-
Other	-	-	240,029	-
Write-off of carbon credit streaming rights	-	(338,463)	-	(338,463)
Net loss	(664,492)	(1,164,177)	(6,408,016)	(4,788,431)

During the year ended December 31, 2024, the Company incurred a net loss of $6.4M (December 31, 2023 - $4.8M, 2023 - $4.9M). The current year's losses were higher compared with prior year's, with the increase due mainly to the loss in PTHL's Leasehold Estate lease termination and the disposal loss of related property assets, partially offset by decreased business and operational activities during the current year. More specifically, the following contributed to the movements noted:

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i) Cost of goods sold was $94k in the current year vs. $227K in the prior year. This is in line with lower revenues from coconuts as a result of lower production in the current year.
ii) Depreciation expense was $126k in the current year vs. $127K in the prior year. This is in line with prior year's given there were no additions in property, plant, and equipment during the period.
iii) Marketing expense was $299K in the current year vs. $592K in the prior year. There was less focus from the Company in the current year on building awareness of the Company as it did in the prior year after the COB.
iv) Consulting expenses were $1.3 million in the current year vs. $2.2 million in the prior year. The Company reduced Yucatan related consulting expenses, as well as consulting fees related to its Liberia and Sierra Leone operations compared with prior year.
v) Office and administrative expenses were $144K in the current year vs. $464K in the prior year. The Company reduced insurance and payroll expenses compared with prior year given lower operational needs.
vi) The Company recorded finance costs of $452k in the current year vs. $296K in the prior year. This is predominantly due to increased interest and accretion from new promissory notes issued during the current period.
vii) The Company recorded a $367k loss on asset disposal in the current year vs. $nil in the prior year due to bearer plants, rehabilitation assets and equipment being disposed of, as well as a loss of $2.8 million from the termination of the PTHL Leasehold Estate lease vs. $nil in the prior year.

Financial condition

The following table compares selected financial information as of:

	December 31, 2024	December 31, 2023	December 31, 2022
Total assets	8,399,275	11,508,025	11,906,529
Total non-current liabilities	4,447,174	3,539,651	1,724,517

Total assets at December 31, 2024 consisted predominantly of right of use assets of $0.6M and carbon credit streaming agreements totaling $7.6M. Non-current liabilities consist of $0.6M in lease liabilities, $2.3m in derivative liability, $0.9M in deferred liability and a $0.6M convertible debenture. Deferred liability and derivative liability arose during the year ended December 31, 2023 due to the Company entering into a carbon credit pre-purchase agreement on July 18, 2023.

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SUMMARY OF QUARTERLY INFORMATION

The table below summarizes Carbon Done Right's quarterly financial and operational highlights for the 12 months ended December 31, 2024, as well as the previous four quarters. The selected financial information is derived from the Company's consolidated financial statements, prepared in accordance with IFRS. All amounts are in Canadian dollars, unless otherwise specified.

(Canadian £, except per-share amounts and percentages)	2024 Q4	2024 Q3	2024 Q2	2024 Q1	2023 Q4	2023 Q3	2023 Q2	2023 Q1
Net loss	(664,492)	(4,068,798)	(834,577)	(840,149)	(840,149)	(1,164,177)	(1,415,670)	(1,321,689)
Net loss - NCI	(22,772)	43,460	(80,538)	(59,688)	(59,688)	(110,901)	(13,362)	(96,740)
Net loss – Shareholders of Company	(641,720)	(4,112,258)	(754,039)	(780,461)	(780,461)	(1,053,276)	(1,402,308)	(1,224,949)
Revenue	-	18,312	22,501	26,924	26,924	45,424	43,737	39,293
Total assets	8,399,275	7,937,198	12,207,678	12,204,504	12,204,504	11,508,025	12,465,961	10,530,507
Working capital surplus (deficiency)(1)	(4,375,618)	(3,809,632)	(3,545,030)	(2,644,419)	(2,644,419)	(1,976,887)	(1,546,952)	(717,977)
Non-current debt(1)	4,369,962	3,758,262	4,483,810	3,982,270	3,982,270	3,539,651	3,510,511	1,755,906

(1) Non-GAAP measure as defined in the Non-GAAP measures section of this MD&A.

Q4 2024 in comparison to Q1, Q2 and Q3 2024

Q4 2024 net losses was lower than historical quarters in 2024 and can be attributable to lower expenses incurred towards marketing and investor relations expenses, as well as consulting fees. This is due to the overall decreased business activities carried out during the current period. Total assets increased during the period predominantly due to an increased amount related to carbon credit streaming agreement with BP. Non-current debt increased during the period as a result an increase in deferred revenue from the carbon credit prepurchase agreement.

Q4 2024 in comparison to all historical quarters in 2023

The Company continues to run a net loss in the current quarter as the Company has continued to incur expenses growing our global carbon presence. Major contributors to this include consulting and professional fees, as well as finance costs. The significant decrease in total assets is mainly due to the decrease in right of use assets related to the PTHL Leasehold Estate lease. Working capital deficit continues to increase as the Company has deployed the capital it had raised on various initiatives in the global carbon space as we continue to develop our business. Non-current debt increased during the period as a result of an increase deferred liability and derivative liability from the carbon credit prepurchase agreement.

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CONSOLIDATED LIQUIDITY AND CAPITAL RESOURCES

(Canadian $)	Twelve months ended
	December 31,
	2024	2023
Net cash flow used in operating activities	(743,619)	(2,702,125)
Net cash flow used in investing activities	(2,079,938)	(1,944,143)
Net cash flow from financing activities	2,685,386	2,484,067
Decrease in cash and cash equivalents	(138,172)	(2,162,201)
Cash and cash equivalents, beginning of period	156,549	2,318,750
Cash and cash equivalents, end of period	18,377	156,549

As at December 31, 2024, the Company's working capital deficiency was $4.4 million (December 31, 2023 – $2.0M deficiency). The decreased working capital is largely due to the increase in accounts payable as well as new current loans obtained during the year.

Cash flow used in operating activities in the current year was $744K vs. $2.0M in 2023. The decrease in cash flow used in operating activities from 2024 to 2023 was predominantly the result of the decrease in net loss during the period after adjusting for the loss on lease termination and asset disposal, as well as the decrease in non-cash operating working capital changes related to accounts payable and prepaid expenses, partially offset by an increase in accounts receivable.

Cash flow used in investing activities during the current year was $2.1M vs. $729K in 2023. The increase is predominantly due to the increased advances into the Maforki project.

Cash flows from financing activities in the current year were $2.7M vs. $973K in 2023. The cash flows during the current year arose from funds received in relation to the pre-purchase agreement with BP Carbon Trading Ltd. and proceeds from the new loans entered into during the year.

The Company's strategy is to carry a capital base to maintain investor, creditor and market confidence and to sustain future development of the business. The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the development of any identified business opportunities and to maintain a flexible capital structure for the benefit of its stakeholders.

The Company considers its capital structure to include working capital, debt, lease liabilities and shareholders' equity (deficit). The Company manages the capital structure and makes adjustments to it in light of changes in the economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may issue new shares, enter into joint venture arrangements, acquire or dispose of assets and adjust capital and operating expenditures to manage its current and projected available capital.

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Share capital

The Company had the following outstanding Common Shares and equity instruments as at the date of this report:

	Common Shares	Stock options	Warrants
As at December 31, 2024	94,699,957	3,162,500	7,163,233
As at date of report	111,699,957	3,162,500	7,163,233

On January 2, 2024, the Company settled an aggregate of $45,234 of indebtedness to a certain arm's length creditor through the issuance of 301,563 common shares at a deemed issuance price of $0.15 per share. The indebtedness relates to professional services rendered to the Company. A gain on settlement of debt of $16,586 was recorded in other income on the statement of loss and comprehensive loss, and the remaining $28,648 was allocated to share capital.

On February 23, 2024, the Company issued 337,500 shares to Outside the Box Capital Inc. in relation to an option exercise at an exercise price of $0.10.

In December 2024, the Company received net proceeds of $105,000 relating to an ongoing private placement that had not yet closed as of December 31, 2024. This amount has been recorded as subscriptions received.

Subsequent to period end, the Company completed the first two tranches of a non-brokered private placement offering with the placement of 17,000,000 units at a price of $0.015 per unit for gross proceeds of $255,000.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

The Company's objectives will be pursued in conjunction with its commitment to participating in a circular economy and by fulfilling the Company's environmental, social and corporate governance ("ESG") values.

E – Projects are focused on nature-based solutions, involving both conservancy and restoration projects to generate carbon credits and reduce greenhouse gas emissions;

S – The Company operates as a community-focused business, focusing on partnering with local indigenous groups including as hosts for its operations and as workforce participants; and

G – The Company is committed to strong governance practices in its current operations and in the planned growth and development of nature-based solutions. The Company is dedicated to developing a sustainable business through collaboration with stakeholders, communities, local indigenous groups, employees and contractors, customers, and investors and through responsible development, disciplined asset management, financial strength and resiliency, and the capacity to operate and grow sustainably.

The Company is committed to maintaining meaningful and collaborative relationships in the countries, regions, and communities in which it operates, with a key focus on working with indigenous groups, who are integral to their local communities and environment and who will make up a significant percentage of the project level workforce.

RISK ASSESSMENT

There are a number of risks facing the Company. Some of the risks are common to all businesses while others are specific to the sector within which the Company operates.

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Many of these risks are outside of the Company's control. The risks and uncertainties described below are not the only risks that the Company faces. Additional risks and uncertainties, including those of which management is not currently aware of or which are currently deemed immaterial, may adversely affect the Company. Any of these factors, either alone or taken together, could have a material adverse effect on the Company and could change whether any forward-looking statements are ultimately realized.

These risks cannot be eliminated, however, the Company's management is committed to proactively monitoring, and where possible, mitigating risk. Issues affecting, or with the potential to affect, the Company's assets, operations and/or reputation, are generally of a strategic nature or are emerging issues that can be identified early and then managed, but occasionally include unforeseen issues that arise unexpectedly and must be managed on an urgent basis. The Company takes a proactive approach to the identification and management of issues that may affect the Company's assets, operations and/or reputation and has established consistent and clear policies, procedures, guidelines and responsibilities for issue identification, management and mitigation.

The general and specific risks to which the Company is exposed to as well as the business risks with regards to the COB as described in the "Change of Business Transaction and Reactivation of Listing" section is summarized in the "Risk Factors" section below and should be read in conjunction with the detailed "Risk Factors" section in the Company's Filing Statement (In respect of the Change of Business Transaction of Earl Resources Limited pursuant to Policy 5.2 of the TSX Venture Exchange) dated as of June 8, 2022 and available under the Company's SEDAR+ profile at www.sedarplus.ca.

RISK FACTORS

The Company is subject to various risks and investment in its publicly traded Common Shares should be considered highly speculative. The Company considers the following material risk factors in addition to those outlined or otherwise referred to below, related to both its own operations and that of its subsidiary PTHL. If any of the following risks or uncertainties occur, the Company's business, financial condition, and results of operations could be materially and adversely affected and the trading price of the Company's securities could decline.

Additional Funding

Depending on future exploration, development, acquisition and divestiture plans, the Company may require additional financing. In particular, the current projects of the Company are capital intensive and may never be able to realize any revenue or profits until considerable additional financing has been arranged to bring such projects into a position where they are able to validate and verify carbon credits.

The Company's Management Team may not be Successful in implementing its Business Strategy

There can be no assurance that the Company's management team will be successful in implementing its strategy or that forecasted results will be realized going forward. The management team may experience difficulties in effecting key strategic goals such as growth and investment top tier assets and the development of exploration projects. The performance of the Company's operations could be adversely affected if the Company's management team cannot implement the stated business strategy effectively.

Inaccurate Estimates of Growth Strategy

Market opportunity estimates and growth strategies are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate and may not be indicative of future growth. Since the growth in demand for carbon credits from large voluntary market the Company is relatively new, the trend may not gain wider acceptance, or experience widespread growth, as anticipated.

While the Company's estimates of growth are made in good faith and based on assumptions and estimates the Company believes to be reasonable, the estimates may not prove to be accurate. Further, even if the

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estimate of market opportunity and growth strategy does prove to be accurate, the Company could fail to capture a significant portion, or any portion, of the available market.

Non-Operated Risk of Significant Assets

The assets not operated by the Company in which the Company has a 65% ownership interest in, and the majority of near-term future revenues are attributed to that asset. As a result, the Company may not have the ability to manage development of the assets on a pace that the Company would choose. Further, managing the cost of development is largely the responsibility of the operator of the asset. To date, the operator and the Company have agreed on the exploration and development efforts for the asset. A Joint Operating Agreement between PTHL and the Company will be put in place to provide certain protections such as the right to audit the operator, the right for approval of all capital plans for the block and the approval of an annual capital and operating budget.

Projects

The Company's ability to produce, sustain or increase levels of carbon credit production is dependent in part on the success of its projects. There are many risks and unknowns inherent in all projects. For example, the economic feasibility of projects is based upon many factors, including:

• the accuracy of carbon credit reserve estimates;
• carbon recoveries with respect to Carbon Done Right projects;
• capital and operating costs of such projects;
• the timetables for the construction, commissioning and ramp-up of such projects and any delays or interruptions;
• the accuracy of engineering and technical specification and changes in scope;
• the ability to manage large-scale construction;
• the future prices of the carbon credits; and
• the ability to secure appropriate financing to develop such projects.

The Company's ability to maintain its license to operate in all of the jurisdictions in which the Company has projects is also important to the success of those projects.

Risks Inherent in an Agriculture Business

The Company's business involves cultivation of agricultural products. As such, the business is subject to the risks inherent in the agricultural business, including but not limited to, pests, plant diseases, crop failure and similar agricultural risks. There can be no assurance that natural elements will not have a material adverse effect on the volume, quality and consistency of the Company's agriculture products, and of agricultural products processed from the projects, and consequently on the Company's sales, profitability and financial condition.

Risks Specifically Relating to the Company's Securities

• Market Price of Common Shares

• Changing Investor Sentiment

• Equity Dilution

• Forward-Looking Statements May Prove Inaccurate

Additional Risks Specific to the Company's Business

• Diseases and Epidemics (such as Covid-19) may Adversely Impact the Company's Business
• Labor Relations

• Limited Operating History for the Company's Strategy

• The Company Depends on its Key Personnel

• Ability to Attract and Retain Qualified Personnel
• Acquisitions and Integration
• Due Diligence

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• Reputational Risk Associated with the Company's Operations

• Expansion into New Activities

• Future Acquisitions

• Failure to Realize Anticipated Benefits of Acquisitions
• Foreign Investments and Operations

Risks Relating to the Company's Operations

• Competition
• Reduced Carbon Credit Demand
• Verification, Cancellation and Other Risks Associated with Carbon Credits
• Carbon Trading May Become Obsolete
• Concentration Risk
• Government Regulations and Changes in Legislation
• Political Uncertainty
• Security and insurance
• Liquidity and level of indebtedness
• Exchange and capital controls

• Currency fluctuations

• Environmental, Health, Safety Regulations

• Title to Properties and Assets
• Litigation
• Breach of Confidentiality
• Cash from Subsidiaries
• Global Financial Conditions
• Inflation
• Income Taxes
• Changes in Accounting Standards and Interpretations
• Internal Controls
• Infrastructure and IT Systems
• Reserve estimates
• Earnings of the Company

• Accounting Adjustments

• Carbon Credit Price Volatility

• Lack of Liquidity and High Volatility of Carbon Markets
• Carbon Pricing Initiatives are based on Scientific Principles that are Subject to Debate
• Permitting
• Social Disruptions and Instability
• Corruption
• Legal systems
• Sensitivity to Nature and Climate Conditions
• Potential Conflicts of Interest
• Ability to Support the Carrying Value of Goodwill and Non-Current Assets

Environmental and Other Regulatory Requirements

The current or future operations of the Company, including development activities and production within the project areas, may require permits from various governmental authorities and such operations are and may be subject to laws and regulations governing growing, cultivation and similar activities. There can be no assurance that the Company will be able to obtain or maintain all approvals and permits that may be required to develop or operate the projects on terms which enable operations to be conducted at economically justifiable costs. In particular, there can be no assurance that the Company will receive the Government Consent (as defined above) required for the Yucatan Contract.

The Company Relies on International Advisors and Consultants in Order to Keep Abreast of Material Legal, Regulatory and Government Developments that Impact its Business and Operations in the Jurisdictions in which it Operates.

The legal and regulatory requirements in the foreign countries in which the Company operates, as well as local business culture and practices are different from those in Canada. The Company's officers and directors must rely, to a great extent, on local legal counsel and consultants in order to keep abreast of material legal, regulatory and governmental developments as they pertain to and affect the Company's business operations, and to assist with governmental relations. The Company must rely, to some extent, on those members of management and the board of directors who have previous experience working and

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conducting business in these countries, if any, in order to enhance its understanding of and appreciation for the local business culture and practices. The Company also relies on the advice of local experts and professionals in connection with current and new regulations that develop in respect of the cultivation and sale of carbon credits as well as in respect of banking, financing, labour, litigation and tax matters in these jurisdictions. Any developments or changes in such legal, regulatory or governmental requirements or in local business practices are beyond its control. The impact of any such changes may adversely affect the Company's business.

Risks Specific to Foreign Subsidiary PTHL

A significant portion of the Company's business is carried on through a foreign subsidiary, PTHL. Accordingly, any limitation on the transfer of cash or other assets between the parent corporation and this entity, could restrict the Company's ability to fund its operations efficiently. Any such limitations, or the perception that such limitations may exist now or in the future, could have an adverse impact on the Company's valuation and stock price. The performance of PTHL can be impacted by many factors:

• Risk operating in Guyana
• Risk to war
• Coconut market risk
• Labor costs
• Climate risk
• Risk of theft

Risks Specific to PTHL's Operations

Harvesting, processing, and development activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power sources, and water supply are important determinants, which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government, or other interference in the maintenance or provision of such infrastructure could adversely affect PTHL's operations, financial condition, and results of operations. Operating risks include but are not limited to the following:

• Energy Prices
• Other Agricultural Risk
• Supply and Demand Imbalances
• Coconut Disease
• Other Environmental Factors
• Biological pests (bugs, fungus)

The risks referred to herein are not the only risks and uncertainties that the Company faces. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also impair its business operations. These risk factors could materially affect the Company's future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to the Company.

FINANCIAL RISKS

The Company defines financial risk as the risk of loss or lost opportunity resulting from financial management and market conditions that could have a positive or negative impact on the Company's cash flows.

Financial risk management

The Company's activities expose it to certain financial risks, including market risk, credit risk and liquidity risk. The following table summarizes the Company's financial instruments as of December 31, 2024 and December 31, 2023:

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(Canadian $)	December 31, 2024	December 31, 2023
Financial Assets
Amortized cost:
Cash	18,377	156,549
Accounts receivable	32,983	12,038
Fair value through profit or loss:
Carbon credit streaming agreements	7,640,674	5,560,736
Financial Liabilities
Amortized cost:
Accounts payable and accrued liabilities	3,455,491	2,031,500
Convertible debenture	574,992	392,107
Deferred liability	924,577	450,688
Fair value through profit or loss:
Derivative liability	2,312,948	870,812

Market risk

Market risk is the risk that changes in market conditions, such as interest rates and foreign exchange rates will affect the Company's net loss or value of financial instruments.

Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates.

The Company may manage its interest expense using a mix of fixed and variable interest rates on its debt. Changes in interest rates could result in an increase or decrease in the amount the Company pays to service variable interest rate debt.

The interest rates on PTHL's debt loans payable are fixed and not subject to interest rate risk.

Foreign exchange risk

Foreign exchange risk is the risk that future cash flows or the fair value of a financial instrument will fluctuate as a result of changes in foreign exchange rates.

The Company is primarily exposed to fluctuations in the U.S. dollar and Guyanese dollar in relation to its foreign operations.

A 1% change in the value of the U.S. dollar and Guyanese dollar would have had no material impact on the net loss and comprehensive loss of the Company at December 31, 2024.

Commodity price risk

The Company may be exposed to commodity price risk through the sale of its agricultural produce and biological assets and inventories held.

At December 31, 2024 and December 31, 2023, the Company does not hold significant biological assets or inventories nor has it recognized significant revenue related to the sale of its agricultural produce.

Carbon market risk

Carbon market risk is the risk that the fair value of a financial instrument will fluctuate from changes in market forces including, but not limited to, interest rates, voluntary carbon credit prices, foreign exchange, and timing and number of anticipated carbon credit deliveries and sales. There has been no change in fair value in the year for the carbon credit assets acquired.

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Credit risk

Credit risk is the risk that a customer or counterparty to a financial asset will default, resulting in the Company incurring a financial loss.

The Company's accounts receivables are predominantly for PTHL customers and other partners who are subject to normal industry credit risks in Guyana. The Company assesses the creditworthiness of its customers on an ongoing basis as well as monitoring the amount and age of balances outstanding. Accordingly, the Company views the credit risks on these amounts as normal for the industry. The carrying amount of accounts receivable represents the maximum credit exposure on this balance.

An impairment analysis is performed at each reporting date using a provision matrix to measure ECL. The calculation reflects the probability-weighted outcome, the time value of money and reasonable supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

The Company's accounts receivable payment terms with customers vary by contract; however, standard payment terms are 30 days from the invoice date. Any credit risk related to the accounts receivable will have an immaterial impact to the Company.

The Company held cash and cash equivalents of $18,377 at December 31, 2024, which represents its maximum credit exposure on these assets (December 31, 2023 - $156,549). The cash is held with major, high credit-quality financial institution counterparties and management believes credit risk is minimal.

Liquidity risk

Liquidity risk is the risk that the Company will be unable to fulfill its obligations associated with financial liabilities on a timely basis or at a reasonable cost. The Company's objective in managing liquidity risk is to maintain sufficient available resources to meet its liquidity requirements at any point.

The Company is exposed to this risk mainly in respect of its accounts payable and accrued liabilities, lease obligations and long-term debt.

The Company mitigates this risk through efforts to maintain the support of its lenders and through the issuance of additional capital, if required.

The Company has the following payments (gross amount, undiscounted) due within the period noted below:

	Within 1 year	1-3 years	3-5 years	More than 5 years	Total
Accounts payables	3,455,491	-	-	-	3,455,491
Convertible debenture	-	574,992	-	-	574,992
Derivative liability	-	2,312,948	-	-	2,312,948
Lease liability	21,584	43,167	287,780	6,906,720	7,259,251
	3,477,075	2,931,108	287,780	6,906,720	13,602,682

ACCOUNTING STANDARDS, CHANGES AND PRONOUNCEMENTS

The Company's audited consolidated financial statements have been prepared in accordance International Financial Reporting Standards ("IFRS") using accounting policies consistent with International Financial Reporting Standards as issued by the International Accounting Standards Board. The MD&A should be read in conjunction with the Company's audited financial statements for the years ended December 31, 2023, and unaudited interim financial statements for the year ended December 31, 2024.

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A summary of significant accounting policies can be found in the audited consolidated financial statements for the years ended December 31, 2023, and unaudited interim financial statements for the year ended December 31, 2024.

Certain accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on these Financial Statements.

CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ASSUMPTIONS

The preparation of financial statements requires management to make certain judgments, accounting estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and expenses.

A summary of the Company's critical accounting estimates, judgments and assumptions can be found in the audited consolidated financial statements for the years ended December 31, 2023, and 2022.

Certain accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on these Financial Statements.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Management is responsible for the preparation and integrity of the Company's financial statements, including the maintenance of appropriate information systems, procedures and internal controls, and to ensure that information used internally or disclosed externally, including the financial statements and MD&A, is complete and reliable.

Disclosure controls and procedures ("DC&P") are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Chief Executive Officer and Chief Financial Officer, on a timely basis so that appropriate decisions can be made regarding information to be included in public disclosures required under Canadian securities law.

Internal controls over financial reporting ("ICFR") are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Absolute assurance cannot be provided that all misstatements have been detected because of inherent limitations in all control systems. The Company's management is responsible for designing and maintaining adequate ICFR for the Company.

The Company has commenced a process to strengthen its control systems and internal control environment.

It should be noted that a control system, including the Company's disclosure and internal controls and procedures, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met and it should not be expected that the disclosure and internal controls and procedures will prevent all errors or fraud.

RELATED PARTY TRANSACTIONS

Related party transactions

Except as disclosed elsewhere, the Company incurred the following with directors and companies controlled by Directors of the Company for the years ended December 31, 2024 and 2023:

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Related party	Nature of transactions
Bedrock Capital (Paul Matysek, Director)	Consulting fees
662 Ventures (Neil Passmore, Director, Officer)	Consulting fees
Canvas Impact (James Tansey, Director, Officer)	Consulting fees

Key management personnel compensation:

(Canadian $)	Three months ended December 31,		Twelve months ended December 31,
	2024	2023	2024	2023
Consulting fees	18,000	217,800	192,000	332,454
Management fees	86,250	208,400	537,400	703,600
Total	104,250	426,200	729,400	1,036,054

Included in related party consulting fees for the year ended December 31, 2024, a minority shareholder of Pomeroon Suriname N.V (a subsidiary of the Company) charged $106,844 (December 31, 2023 - $105,300) to the Company.

On June 29, 2022, the Company entered into a carbon credit streaming agreement with RML, a Company owned by the Company's Director of Operations (Kevin Godlington). During the year ended December 31, 2024, the Company advanced $2,012,501 (December 31, 2023 - $1,721,226) to develop the carbon credits project.

On August 15, 2022, the Company entered into a carbon credit streaming agreement with FMPL, a Company owned by the Company's Director of Operations (Kevin Godlington).

During July 2022, the Company paid back a US $65,000 ($83,759) loan balance from 662 Ventures Limited (wholly owned by Director of Corporate Development of the Company).

The Company is the lessee to the Suriname leasehold agreement, with the lessor being an organization whose chairwoman is a related party to the Company. As such, the Suriname lease is considered a related party transaction.

Due to related parties

As at December 31, 2024, the Company owes $1,745,392 (December 31, 2023 - $552,142) to directors or officers of the Company. This balance includes a $515,000 loan due to related party (December 31, 2023 - $Nil). The amount owed was recorded in accounts payable and accrued liabilities in the statement of financial position.

COMMITMENTS AND CONTINGENCIES

Other commitments – Right of first offer

The Guyana COB Agreement also provides that the Company shall execute a right of first offer agreement, valid for a period of 12 months following closing of the transactions pursuant to the Guyana COB Agreement, pursuant to which the Company will agree with PTHL that, subject to one or more qualifying carbon credit project(s) being initiated by PTHL (to the satisfaction of the Company), the Company will make an offer to all remaining shareholders of PTHL to acquire all of their PTHL common shares at a price

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to be agreed, but which price shall be subject to a minimum of US$8.00 per share and subject to approval of the TSX Venture Exchange, accepting that the consideration to be paid pursuant to any such acquisition shall be settled through the issuance of additional Common Shares (at a price calculated as the 30 day volume-weighted average price of Common Shares) unless otherwise mutually agreed between the Company and a remaining PTHL shareholder.

Lease Liabilities

The Company has the following future commitments associated with its lease liabilities:

(Canadian $)	December 31, 2024	December 31, 2023
Less than 1 year	21,584	218,571
2 to 3 years	43,167	437,141
4 to 5 years	287,780	437,141
More than 5 years	6,906,720	14,372,670
Total lease payments	7,259,251	15,465,523
Amounts representing interest over the term of the lease	(6,614,302)	(13,417,626)
Present value of lease liabilities	644,949	2,047,897

Litigation and claims

The Company may be involved in litigation and claims arising in the normal course of operations. Management is of the opinion that pending litigation will not have a material impact on the Company's financial position or results of operations.

OFF BALANCE SHEET ARRANGEMENTS

As at December 31, 2024 and date of this report, the Company is not a party to any off balance sheet arrangements or transactions.

PROPOSED TRANSACTIONS

As at December 31, 2024 and the date of this report, the Company does not have any proposed transactions.

ADDITIONAL INFORMATION

Additional information regarding the Company and its business and operations can be obtained by contacting the Company at Carbon Done Right Developments Inc., Suite 1012, 1030 West Georgia Street, Vancouver, British Columbia, Canada or by e-mail at info@klimatx.com. Additional information related to the Company is available on the Company's website at www.carbondoneright.com or under the Company's SEDAR+ profile at www.sedarplus.ca.

NON-GAAP MEASURES

The Company uses certain financial measures referred to in this MD&A to quantify its results that are not prescribed by IFRS. The following terms: "working capital" and "non-current debt" are not recognized measures under IFRS and may not be comparable to that reported by other companies. The Company believes that, in addition to measures prepared in accordance with IFRS, these non-GAAP measures provide useful information to evaluate the Company's performance and ability to generate cash, profitability and meet financial commitments.

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These non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

FORWARD-LOOKING STATEMENTS

This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated in such forward-looking statements.

Forward looking information and statements are included throughout this MD&A and include, but are not limited to, statements pertaining to the following:

• the Company's ability to continue as a going concern;
• the potential impacts of access to capital conditions;
• the Company's projects in various international locations, including in the Middle East and Africa;
• the Company's liquidity and capital resources; and
• the nature of the risks faced by the Company.

The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this MD&A:

• general economic conditions in Canada, the United States and globally, including reduced availability of debt and equity financing generally;
• industry conditions, including fluctuations in the pricing;
• governmental regulation of carbon credit industry, including environmental regulation;
• fluctuation in foreign exchange or interest rates;
• incorrect assessments of the value of acquisitions;
• unanticipated operating events which can reduce production or cause production to be delayed;
• failure to obtain industry partner and other third party consents and approvals, when required;
• stock market volatility and market valuations;
• availability of financing on acceptable terms;
• competition for, among other things, capital, acquisitions of land and skilled personnel;
• the need to obtain required approvals from regulatory authorities;
• general business and market conditions; and
• economic slowdown as a result of COVID-19.

These factors should not be considered exhaustive.

Forward-looking statements or information is based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. The Company currently believes the expectations reflected in these forward-looking statements are reasonable but cannot assure that such expectations will prove to be correct, and thus, such statements should not be unduly relied upon. These forward-looking statements are made as of the date of this MD&A and the Company disclaims any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required pursuant to applicable laws. Risk and

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assumptions that could cause actual results to differ materially from those anticipated in these forward-looking statements are described under the heading "Risks Assessment" in this MD&A. Although the Company has attempted to take into account important factors that could cause actual costs or operating results to differ materially, there may be other unforeseen factors and therefore results may not be as anticipated, estimated or intended.

The above summary of assumptions and risks related to forward-looking information has been provided in this MD&A in order to provide readers with a more complete perspective on the Company's future operations and prospects. Readers are cautioned that this information may not be appropriate for other purposes. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.

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