Thunderbird Entertainment : Q1 2022 MD&A

Thunderbird Entertainment Group Inc.

Management's Discussion and Analysis

For the three months ended September 30, 2021 ("Q1 2022")

and September 30, 2020 ("Q1 2021")

GENERAL

This Management's Discussion and Analysis ("MD&A") dated November 24, 2021 should be read in conjunction with the unaudited interim condensed consolidated financial statements of Thunderbird Entertainment Group Inc. ("Thunderbird" or "the Company") for the three months ended September 30, 2021 and 2020 and accompanying notes which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

Thunderbird is a public company whose common voting shares are traded on the TSX Venture Exchange ("TSX-V") under the ticker "TBRD" and the OTCQX® Best Market under the symbol "THBRF".

Unless otherwise indicated, all dollar amounts are expressed in thousands of Canadian dollars.

FORWARD-LOOKING STATEMENTS

Thunderbird's public communications may include written or oral "forward-looking statements" and "forward- looking information" as defined under applicable Canadian securities legislation. All such statements may not be based on historical facts that relate to the Company's current expectations and views of future events and are made pursuant to the "safe harbour" provisions of applicable securities laws.

Forward-looking statements or information may be identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "plan", "project", "should", "believe", "intend", or similar expressions concerning matters that are not historical facts. These statements represent management's current beliefs and are based on information currently available to management and inherently involve numerous risks and uncertainties, both known and unknown. Many factors could cause actual results to differ materially from the results discussed or implied in the forward-looking statements including: general economic and market segment conditions, competitor activity, product capability and acceptance, international risk and currency exchange rates and technology changes. An assessment of the risks that could cause actual results to materially differ from current expectations is contained in the "Risks and Uncertainty" section of this MD&A. The foregoing is not an exhaustive list. Additional risks and uncertainties not presently known to Thunderbird or that management believes to be less significant may also adversely affect the Company.

The forward-looking statements or information contained in this document represent our views as of the date hereof and as such information should not be relied upon as representing our views as of any date subsequent to the date of this document. The Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements or information.

NON-IFRS MEASURES

In addition to the results reported in accordance with IFRS, the Company uses various non-IFRS financial measures which are not recognized under IFRS, as supplemental indicators of our operating performance and financial position. These non-IFRS financial measures are provided to enhance the user's understanding of our historical and current financial performance and our prospects for the future. Management believes that these measures provide useful information in that they exclude amounts that are not indicative of our core operating results and ongoing operations and provide a more consistent basis for comparison between periods. The following discussion explains the Company's use of EBITDA, Adjusted EBITDA, Free Cash Flow, Cash Available for Use and Cash Required for Use in Productions.

"EBITDA" is calculated based on earnings before interest, income taxes, and depreciation and amortization. "Adjusted EBITDA" is calculated based on EBITDA before share-based compensation, unrealized foreign exchange gain/loss and items of an unusual or one-time nature that do not reflect our ongoing operations. EBITDA and Adjusted EBITDA are commonly reported and widely used by investors and lenders as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric. EBITDA and Adjusted EBITDA are not earnings measures recognized by IFRS and therefore do not have a standardized meaning prescribed by IFRS. Therefore, EBITDA and Adjusted EBITDA may not be comparable to similar measures presented by other issuers.

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"Free Cash Flow" ("FCF") is calculated based on cash flows from operations, purchase of property and equipment and net interim production financing. FCF represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

"Cash Available for Use" is defined as the total cash and cash equivalents of the Company less Cash Required for Use in Productions. Cash Available for Use funds ongoing working capital requirements, principal and interest payments on corporate demand loans as well as ongoing development and growth efforts and thus is an important liquidity measure that management uses to monitor the business on an ongoing basis.

"Cash Required for Use in Productions" is defined as cash required for the funding of productions from the development stage through to completion that is not considered by the Company to be available for other uses. The cash is not legally restricted and has not been classified as Restricted Cash on the consolidated statement of financial position. This cash has been provided by buyers and third-party Intellectual Property ("IP") owners that have engaged the Company to provide services, as well as banks with whom the Company has contracted to provide interim production financing. Management uses the amount of Cash Required for Use in Productions to determine the Company's Cash Available for Use.

BUSINESS OVERVIEW

Thunderbird is a company incorporated under the Business Corporation Act (British Columbia). Thunderbird's principal operating subsidiaries are the Company's Factual Division, Great Pacific Media Inc. ("GPM"), Kids and Family Division, Atomic Cartoons Inc. ("Atomic"), and Thunderbird Productions Inc., the scripted division. In accordance with industry practice, Thunderbird incorporates a new subsidiary corporation for each production, including each new season of ongoing series productions. Accordingly, Thunderbird has approximately 60 such subsidiary corporations.

Thunderbird is a global award-winning,full-service,multi-platform media production, distribution and rights management company headquartered in Vancouver, Canada, with additional offices in Los Angeles, Toronto, and Ottawa. Thunderbird's programs cover multiple genres with a significant focus on children's productions, scripted comedy and drama, and non-scripted (factual) content. Thunderbird also has a global distribution and consumer products division. Thunderbird's programs are currently being broadcast via conventional linear means, and a number of digital platforms, in more than 180 territories worldwide. A substantial and growing portion of Thunderbird's programming library has been licensed directly to leading internet "over the top" ("OTT") platforms such as Netflix, Hulu, Amazon and iTunes, which offer subscription video on demand ("SVOD"), transactional video on demand ("TVOD") and advertising video on demand ("AVOD") to their customers.

Thunderbird prides itself on the Company's culture of excellence, one that prioritizes integrity, acceptance, and flexibility as core values. As part of the Company's mission to create content and build global brands that are award- winning, entertaining, and made with integrity, Thunderbird also fosters artist-driven working environments rooted in kindness, creativity, and acceptance. The Company does this by prioritizing team members as people first, and by elevating diversity and inclusivity both on-screen and off. Across all divisions, Thunderbird employees and crew members represent a myriad of backgrounds, cultures, countries, and beliefs, under a collective goal of creating content that enriches and entertains at all levels. Thunderbird attributes the Company's success to its people. Every show, award, and ground-breaking technique reflects the profoundly talented team members across the Company's offices/studios in Vancouver, Ottawa and LA.

As an extension of Thunderbird's commitment to its team, the Company is equally dedicated to producing premium content that is both diverse and inclusive. With quality as its North Star, in a booming and saturated content development industry, Thunderbird recognizes that only premium quality will stand out. Thunderbird's premium quality also incorporates the Company's strong diversity and inclusion mandates and its mission of telling uplifting and underrepresented authentic stories.

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COMPANY RESPONSE AND IMPACTS OF COVID-19

Pre-emptive planning and actions, which included investments in new technologies, enabled Thunderbird to transition its workforce of more than 1,000 employees and crew members to work-from-home in March 2020. The Company has remained fully operational throughout the coronavirus pandemic, with work continuing on all productions. Thunderbird remaining fully operational allowed the Company to respond to increased demand for content, which also includes new partnerships with major organizations. New Thunderbird team members have been hired to help meet this growing demand, and the Company continues to pitch, develop, produce, sell, deliver and service content to its partners including Netflix, NBCUniversal, Nickelodeon, PBS, GBH, Bell Media's Discovery, APTN, Corus Entertainment, The Weather Channel, and CBC, among others.

In addition to the Company's work-from-home structure, the adoption of new filming techniques allowed Thunderbird's factual productions to continue, while adhering to physical distancing guidelines, throughout the pandemic.

With health and safety as a priority, staff and crew members predominantly work from home, and there continues to be no disruption to production or security protocols. In fact, COVID-19 has provided new awareness that staffing productions is no longer constrained by geographic location or studio space which further allows the Company to take on more work. The Company is committed to a hybrid working structure moving forward, allowing team members to create working structures to meet their unique needs.

STRATEGY AND OUTLOOK

Thunderbird's strategy is to intentionally grow the Company's divisions and their respective brands by developing long-term value through the expansion of its programming library and leveraging its owned or controlled IP. While Thunderbird generates fee income during the production and initial distribution windows for its programs, one of the Company's main objectives is to create long-term value with programming that can drive multiple revenue streams. This involves developing and owning content that has established brand recognition, which in turn helps generate a broad array of revenue streams from licensing, such as merchandise, music, video games and other ancillary sources over an extended period.

Children's programming has been and continues to be an important and growing component of Thunderbird's production slate and proprietary library. In 2015, Thunderbird expanded its focus on kids and family programming by making a substantial investment in animated programming with the acquisition of Atomic. Today, Atomic's roster of clients and partners includes Netflix, Nickelodeon, PBS, Spin Master, Sony, AppleTV+, Teletoon, Treehouse, Cartoon Network, Walt Disney, Mattel, Warner Bros., Marvel, Microsoft, Lego and NBCUniversal. Productions that Atomic has worked on include Marvel's Spidey and His Amazing Friends, Dogs in Space, The Last Kids on Earth, Trolls: Trollstopia, Molly of Denali, Curious George, The Lego Star Wars Holiday Special and Beat Bugs.

With a robust slate of programming, Atomic has been expanding rapidly. In 2017, it introduced a Los Angeles office, and expanded on this with a LA studio in 2020. Atomic's expanded presence in LA has enabled the Company to cultivate more direct and accessible relationships with many of its partners, including Netflix, Disney, and NBCUniversal. It has also provided more access to LA showrunners, directors, writers, designers, storyboard artists and editorial teams. In addition to this, in December 2018 Atomic launched Atomic Ottawa, which further expanded the capacity of the kids and family division across Canada. In January 2021, the Company launched a global distribution and consumer products division. The division, while global in focus, is located in LA.

An example of the Company's IP is the series The Last Kids on Earth which began streaming September 17, 2019 on Netflix. The Last Kids on Earth has a video game which launched in the spring of 2021, expanding on the master toy deal with JAKKS Pacific Inc. to develop and market a range of merchandise, including action figures, activity toys, role-play accessories, vehicles, plush items, novelty items, games, and play electronics. To date, apparel, merchandise and a video game have launched. The Last Kids on Earth was recognized with an Emmy Award in July 2020.

Thunderbird's factual division, GPM, remains a dominant player in the non-scripted (factual) marketplace with multiple long running television series. GPM produces Highway Thru Hell ("HTH") which chronicles the action-

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packed world of heavy rescue towing, airs on Discovery Canada and is distributed in more than 190 territories worldwide, including The Weather Channel in the United States ("U.S."). The Company aired the 100th episode of Highway Thru Hell on Discovery Canada in November 2019, and Season 10 premiered in the Fall of 2021.

One of the HTH spin-off series for Discovery Canada is Heavy Rescue: 401, and the other is Mud Mountain Haulers.

Heavy Rescue: 401 brings elements of HTH to Canada's busiest freeway, Ontario's notorious Highway 401, whereas Mud Mountain Haulers is set high in the mountains of British Columbia. Both spin-offs, as well as HTH, are Company IP and were renewed for subsequent seasons by Discovery Canada in June 2021. Heavy Rescue:401 and Mud Mountain Haulers are also distributed on The Weather Channel.

Additional GPM productions include Queen of the Oil Patch, which airs on APTN, and $ave My Reno, in the lifestyle genre, which airs on HGTV Canada. In June 2021, GPM also confirmed three new projects were ordered to series by Corus Entertainment: Styled, Gut Job and Deadman's Curse. Production has commenced on all three new series.

Thunderbird's scripted work includes producing the award-winning comedy series Kim's Convenience. This series is available on Netflix worldwide. The show also has worldwide distribution through a mix of streaming, cable and VOD partnerships in Asia. Kim's Convenience Season 5 was the last season for the popular series, with the finale airing in April 2021. Thunderbird commenced work on a new scripted spin-offof Kim's Convenience called Strays. Strays premiered September 14, 2021 on CBC Television.

In keeping with global trends, an increasing portion of Thunderbird's growth and future business focus is with OTT platforms such as Netflix, Amazon and others. Thunderbird intends to continue to be known as a preferred supplier of programming for these leading OTT platforms with the strategy of building iconic brands. Through the creation of the Company's consumer products and distribution division, Thunderbird intends to develop and expand on its IP. In addition to acquiring and producing proprietary programming, Thunderbird also plans to grow its business and library through the acquisition of complimentary companies in the entertainment industry and through strategic business alliances. The focus of these efforts is to grow its library, expand Thunderbird's production and distribution capabilities and extend its operations beyond North America.

Thunderbird has developed strategic business relationships with key North American and international broadcasters, international distributors and major global digital platforms. These strong relationships are built on a track record of past successes and demonstrate the confidence that Thunderbird's partners have in the Company to deliver quality programming, on time and on budget.

Thunderbird continues to focus on higher budget and higher quality programs as management believes this extends the life and thereby increases the value of its library. Thunderbird maintains a disciplined approach to acquiring and perfecting key exploitation rights to its content and strives to own the majority of the ancillary rights to its IP.

While Thunderbird's primary focus is on producing programming in which the Company holds long-term proprietary interests, it also generates recurring revenue from providing production services to a variety of clients. These activities generate near term earnings and provide additional opportunities for the Company to develop its emerging talent and credentials, which can be further leveraged for future proprietary productions. Additionally, service production activities can further strengthen Thunderbird's business relationships with key North American and international broadcasters and other clients.

Thunderbird's service partnerships can also include partner-managed deals. Under the terms of these deals, the productions are fully funded, and rights are controlled by the partner but entirely managed by Thunderbird. As a result, Thunderbird is entitled to receive a percentage of the backend from merchandise and consumer products.

As part of its goal to become the next major global studio, Thunderbird is also exploring merger and acquisition ("M&A") targets, with a focus in Asia and Europe, as these markets have been identified as growth areas for streaming companies. With more M&As on the horizon, the industry is set to become more competitive and the need for high quality content continues to explode. Thunderbird as a high quality, full service, global content studio is uniquely positioned to benefit from the increasing tension in the marketplace.

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