Columbus Energy Limited — Management Reports 2021

Apr 30, 2021

COLUMBUS ENERGY LIMITED Management Discussion and Analysis For the Year Ended December 31, 2020

April 29, 2021

The following discussion and analysis of Columbus Energy Limited's ("Columbus" or “the Company) financial condition and results of operations therein should be read in conjunction with the audited financial statements for the year ended December 31, 2020. All dollar amounts are expressed in Canadian dollars unless otherwise noted. Additional information relating to the Company is available on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.

BUSINESS OVERVIEW

Columbus is a natural resource exploration company engaged in the acquisition, exploration and development of resource properties. The Company is incorporated under the laws of British Columbia and is listed on the NEX board of the TSX Venture Exchange (the “Exchange”) under the trading symbol, “CEL:H”, and is a reporting issuer in British Columbia and Alberta.

The Company was transferred to NEX by the TSX Venture exchange effective at the opening of trading September 30, 2015 for failure to meet Tier 2 Continued Listing Requirements. NEX is a separate board of the exchange that is designed to provide a trading forum for publicly listed companies while they assess their business plans, operations, and formulate a strategy to reactivate their business for future growth.

The Company is currently inactive with limited operations and is in the process of seeking business opportunities.

FORWARD LOOKING STATEMENTS

This MD&A contains forward-looking statements and information. Such forward looking statements are based on the Company’s plans and expectations and involve known and unknown risks, uncertainties and factors which may cause the actual results, performance or achievements of the Company to be materially different from any performance or achievement expressed or implied by such forward looking statement.

REPORT ON OPERATIONS

Share Capital

No capital was issued in the year.

As a result, there were 22,410,185 common shares outstanding.

Options

No stock options were granted during the year ended December 31, 2020. There are no stock options outstanding at the date of this report.

1

Warrants

As at December 31, 2020 and the date of this report, nil (December 31, 2019 – nil) warrants remain outstanding.

Summary of Financial Results

Overall Performance

Overall net loss for the year ended December 31, 2020 decreased to $82,885 (2019 – $84,766). As at December 31, 2020, the Company had no continuing source of revenues and related expenditures. The Company has not paid any dividends on its common shares and has no present intention of paying dividends, as it anticipates that all available funds for the foreseeable future will be used to finance its business activities.

Selected Annual Information

Selected Annual Information
	For the Years Ended December 31,
	2020	2019	2018
Net sales (royalty)	$ -	$ -	$ -
Loss before discontinued operations	$ 82,885	$ 84,766	$ 828,374
Net loss	$ 82,885	$ 84,766	$ 828,374
Net loss per share (basic & diluted)	$ 0.00	$ 0.00	$ 0.04
Total assets	$ 3,117	$ 7,977	$ 9,767
Total long-term financial liabilities	NIL	NIL	NIL
Cash dividends declared	NIL	NIL	NIL

Year Ending December 31, 2020

For the year ended December 31, 2020, net loss decreased to $82,885 (2019 - $84,766). During the year ended December 31, 2020, the Company actively evaluated several prospective business projects including several different resource projects including a lithium exploration project; a precious metals exploration prospect and a copper exploration project.

2

Summary of Quarterly Results

	December 31,	September 30,	June 30,	March 31,
	2020	2020	2020	2020
Three months ended	-$-	-$-	-$-	-$-
Total assets	3,117	8,442	8,413	8,006
Working deficiency	(329,810)	(304,039)	(287,455)	(262,518)
Shareholders’ deficiency	(329,810)	(304,039)	(287,455)	(262,518)
Net loss	(25,771)	(16,584)	(24,937)	(15,593)
Lossper share - basic and diluted	(0.00)	(0.00)	(0.00)	(0.00)

	December 31,	September 30,	June 30,	March 31,
	2019	2019	2019	2019
Three months ended	-$-	-$-	-$-	-$-
Total assets	7,977	8,209	8,010	9,800
Working deficiency	(246,925)	(214,593)	(198,220)	(179,496)
Shareholders’ deficiency	(246,925)	(214,593)	(198,220)	(179,496)
Net loss	(32,302)	(16,373)	(18,539)	(17,331)
Lossper share - basic and diluted	(0.00)	(0.00)	(0.00)	(0.00)

Liquidity and Capital Resources

The Company’s cash balance at December 31, 2020 was $nil compared to $nil at December 31, 2019 since the Company has closed its bank account in 2019. Net cash used in operating activities for the year ended December 31, 2020 was $nil (2019 - $2,680). The Company did not engage in any investing and financing activities during the years ended December 31, 2020 and 2019.

The Company’s ability to meet its obligations and maintain its current operations is contingent upon successful completion of additional financing arrangements.

The Company does not have any loans or bank debt and there are no restrictions on the use of its cash resources.

On April 14, 2020, the Company proposed the issuance of two million units at 7.5 cents per unit to settle an aggregate of $150,000 of indebtedness. Each unit comprises one common share and one share purchase warrant, exercisable at 30 cents for one year. The transaction was abandoned and not proceeded with.

Contractual obligations

There are no contractual obligations at December 31, 2020 and as at the date of this report.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

3

RELATED PARTY TRANSACTIONS

Related party transactions

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company’s Board of Directors and corporate officers. No post-employment benefits, other longterm benefits and termination benefits were made during the year ended December 31, 2020.

As at December 31, 2020, the Company has an account payable of $175 to its related parties (2019: $175).

RISKS

The operations of the Company are subject to regulation of government agencies at the federal, state and local levels. Management believes it is in compliance with all current requirements and does not anticipate any significant changes to these regulations, which will have a material effect on the Company’s operations.

The Company is engaged in the exploration for and development of natural resources. These activities involve significant risks which careful evaluation, experience and knowledge may not, in some cases, eliminate. The commercial viability of any resource depends on many factors not all of which are within the control of management. Some of the factors that affect the financial viability of a given resource include its size, production, and proximity to infrastructure. Government regulation, taxes, royalties, land tenure, land use, environmental protection and reclamation and closure obligations, have an impact on the economic viability of a resource.

The Company relies on equity and debt financings to fund its activities. While it has been successful in the past there is no guarantee that the Company will be successful in raising funds through those means in the future.

SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of these financial statements in conformity of IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.

Estimates and assumptions

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from the assumptions made, relate to, but are not limited to, the following:

Provisions for deferred taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing authorities. Where the final outcome of these

4

tax-related matters is different from the amounts that were originally recorded, such differences will affect the tax provisions in the period in which such determination is made.

JUDGEMENTS

The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies from those involving estimations that have the most significant effect on the amounts recognized in the Company’s financial statements include, but are not limited to those relating to the assessment of the Company’s ability to continue as a going concern.

FINANCIAL INSTRUMENTS

The Company is a junior exploration company and considers items included in shareholders' equity as capital. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of underlying assets. In order to maintain or adjust its capital structure, the Company may issue new shares, purchase shares for cancellation pursuant to normal course issuer bids or make special distributions to shareholders. The Company is not subject to any externally imposed capital requirements and does not presently utilize any quantitative measures to monitor its capital.

The Company is currently inactive with limited operations and is in the process of seeking business opportunities. In order to fund future projects and pay for administrative costs, the Company will spend its existing working capital and raise additional funds as needed. As at December 31, 2020, the Company had working capital deficiency of $329,810 and shareholders’ deficiency of $16,646,868. The Company's ability to continue as a going concern on a long-term basis and realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation is primarily dependent upon its ability to borrow or raise additional financing from equity or debt markets.

The Company’s financial instruments are exposed to certain financial risks, including credit risk, interest rate risk, market risk, liquidity risk and currency risk.

• a) Credit risk The Company is exposed to credit risk by holding cash. This risk is minimized by holding the investments in large Canadian financial institutions or with Canadian governments. Management believes that no concentration of credit risk exists with respect to investment of its cash.

• b) Interest rate risk

The Company has cash balance. The Company believes it has no significant interest rate risk.

• c) Market risk

• The Company has no marketable financial instruments and is therefore not exposed to market risk.

• d) Liquidity risk

• Liquidity risk is the risk that the Company is unable to meet its financial obligations as they come due. The ability for the Company to settle its financial obligation relies on the Company raising equity financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at December 31, 2020 the Company had a cash balance of $nil (December 31, 2019 - $nil) to settle current liabilities of $332,927 (December 31, 2019 - $254,902).

5

• e) Fair value hierarchy

The Company categorizes its financial assets and liabilities measured at the fair value into one of three different levels depending on the observability of the inputs used in the measurement.

The three levels are defined as follows:

• Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 – inputs to valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company’s financial instruments consist of cash, accounts payable and accrued liabilities and due to related parties. Management does not believe the Company is exposed to significant credit, currency, market or interest rate risks relating to these financial instruments. The fair values of these financial instruments approximate their carrying value, unless otherwise noted.

MANAGEMENT’S RESPONSIBILITY AND OVERSIGHT

The disclosures and information contained in this MD&A have been prepared by the management of the Company. Management has implemented and maintained a system of controls and procedures to ensure the timeliness and accuracy of information disclosed in the MD&A.

ADDITIONAL INFORMATION

See the Company’s listing on SEDAR at www.sedar.com.

6