Urbana : Management’s Discussion & Analysis June 30, 2021

URBANA CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the six months ended June 30, 2021

This Management's Discussion and Analysis ("MD&A") supplements, but does not form part of, the unaudited condensed interim financial statements of Urbana Corporation ("Urbana" or the "Corporation") and notes thereto for the six months ended June 30, 2021 (the "Interim Financial Statements") and the audited financial statements of Urbana and notes thereto for the year ended December 31, 2020 (the "Annual Audited Financial Statements"). Consequently, the following discussion and analysis of the financial condition and results of operations should be read in conjunction with the Interim Financial Statements and the Annual Audited Financial Statements, both of which have been prepared in accordance with International Financial Reporting Standards ("IFRS"). All amounts shown in this MD&A, unless otherwise specified, are presented in Canadian dollars. This MD&A is current as of August 11, 2021. The Corporation's Audit Committee reviewed this document, and prior to its release, the Corporation's Board of Directors approved it, on the Audit Committee's recommendation.

You can obtain information relating to the Corporation, including the Corporation's annual information form and Annual Audited Financial Statements, at no cost, by calling Urbana collect at [phone], by writing to us at: 150 King Street West, Suite 1702, Toronto, Ontario M5H 1J9 or by visiting our website at www.urbanacorp.com or the SEDAR website at www.sedar.com.

REPORTING REGIME

Urbana is subject to National Instrument 51-102 ("NI 51-102") Continuous Disclosure Obligations. For accounting purposes, Urbana is treated as an investment entity under IFRS.

NON-GAAPMEASURES

The Corporation prepares audited annual financial statements and unaudited condensed interim financial statements in accordance with IFRS. This MD&A complements IFRS results with the following financial measures which are not recognized under IFRS and which do not have a standard meaning prescribed by IFRS: "net assets per share", "total return of net assets per share" and "compound annual growth rate of net assets per share since inception".

Net assets per share

The three financial measures used to calculate "net assets per share", namely assets, liabilities and number of shares outstanding, are individually recognized under IFRS, but "net assets per share" is not. The calculation of net assets per share as at June 30, 2021 and December 31, 2020 is presented in the following table:

June 30, 2021 December 31, 2020

Assets ($)	330,495,275	288,334,640
LESS Liabilities ($)	41,083,872	39,165,354
EQUALS Net Assets ($)	289,411,403	249,169,286
DIVIDED BY Number of Shares Outstanding	44,114,627	44,211,727
EQUALS Net assets per share ($)	6.56	5.64

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Total return of net assets per share

The total return of net assets per share over a given period refers to the increase or decrease of Urbana's net assets per share over a specified time period, expressed as a percentage of Urbana's net assets per share at the beginning of the time period, assuming that each dividend paid during the period was reinvested at a price equal to the net assets per share at the relevant time.

Compound annual growth rate of net assets per share since inception

Compound annual growth rate ("CAGR") of net assets per share since inception is the compound annual growth rate of Urbana's net assets per share from October 1, 2002, when Caldwell Investment Management Ltd., the investment manager of Urbana, started managing Urbana's investment portfolio, to the end of the period in question.

We calculate CAGR of net assets per share since inception by dividing Urbana's net assets per share at the end of the period in question by its net assets per share at inception (i.e. October 1, 2002), raising the result to the power of the quotient obtained by having one divided by the number of years representing the period length, and then subtracting one.

The Corporation provides the three non-IFRS measures indicated above because it believes each measure can provide information that may assist shareholders to better understand the Corporation's performance and to facilitate a comparison of the results of ongoing operations. No measure that is calculated in accordance with IFRS is directly comparable to or provides investors with this net assets per share information. As a result, no quantitative reconciliation from "net assets per share" to an IFRS measure is provided in this MD&A.

Non-IFRS measures should not be construed as alternatives to net comprehensive income (loss) determined in accordance with IFRS as indicators of the Corporation's performance. CAGR of net assets per share since inception describes the historical rate at which Urbana's net assets per share would have increased at a steady rate. This single historical rate is only an illustration and does not represent the actual annual growth rate of Urbana's net assets per share in any given year. The growth rate of Urbana's net assets per share in any given year since 2002 may have been higher or lower than the CAGR of net assets per share due to market volatility and other factors.

BUSINESS OBJECTIVES AND STRATEGIES, AND RISK FACTORS

The business objectives and strategies of Urbana are to seek out, and invest in, private investment opportunities for capital appreciation and to invest in publicly traded securities to provide growth, income and liquidity. Urbana has the scope to invest in any sector in any region. There were no material changes to Urbana's investment style during the second financial quarter of 2021 ("2021 Q2") that affected the overall level of risk associated with investment in the Corporation. Some of the risk factors associated with investing in Urbana are described in Urbana's most recent annual information form, which is available on the Corporation's website at www.urbanacorp.comand on SEDAR at www.sedar.com. Risks and uncertainties that may materially affect Urbana's future performance include individual corporate risk, macroeconomic risk, currency risk and product price risk.

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OVERALL PERFORMANCE AND DISCUSSION OF OPERATIONS

The second quarter of 2021 was positive for overall equity markets as well as Urbana's holdings. This was a continuance of the good first quarter of the year.

During 2021 Q2, Urbana's net assets per share increased from $5.98 to $6.56, resulting in a 9.7% total return of net assets per share. During the same period, the S&P/TSX Composite Total Return Index ("S&P/TSX Index") increased by 8.5% and the Dow Jones Industrial Average Total Return Index (converted to Canadian Dollars) ("DJIA Index") increased by 3.7%.

During the first half of 2021, Urbana's net assets per share increased from $5.64 to $6.56, after the payment of a dividend of nine cents ($0.09) per share1 in January 2021, resulting in an 18.2% total return of net assets per share. During the same period, the S&P/TSX Index increased by 17.3% and the DJIA Index increased by 10.9%.

Public equity holdings and trading were the largest contributing factors to Urbana's portfolio performance in the second calendar quarter and first half of the year, with significant increases in the United States financial services category.

Metamaterial Inc. was also a contributor to Urbana's gains, as were our energy holdings.

Our private equity component showed growth in the first six months of 2021 with Four Lakes Capital Fund LP and Evolve Funds, being among the larger performance contributors.

In 2021 Q2, we sold the balance of our Bombay Stock Exchange position and commenced liquidation of the entities through which the investment was held.

Urbana also made an investment of $10.5M in Blue Ocean Technologies, LLC through its wholly- owned subsidiary, Urbana International Inc. This company has established an Alternative Trading System which allows the trading of U.S. listed equities from 8pm ET to 4am ET, for investors, including those based in the Asia-Pacific region, who will now be able to trade U.S. equities during their daytime hours. This is a new business in a technology driven niche market that has not been widely explored, therefore both the risks and potential rewards are high.

The overall stock market trend is still determined by the low level of interest rates and indirectly by longer term inflation. As a result, we anticipate a positive tone to markets for the next several months.

The volatility of stock market prices can be disconcerting to some. The key however, is to quell one's emotions and see the opportunities provided in price declines in order to build long term positions.

At the start of July 2021, Urbana doubled the size of its loan facility to a maximum size of $50 million, which will enhance our ability to capitalize on future investment opportunities as they may arise.

• The common shares and the Class A shares participate equally in dividends.

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Urbana's long-term performance, represented by its CAGR of net assets per share since inception on October 1, 2002 to June 30, 2021, was 15.0% (after-tax). This compares favourably with the CAGR of the S&P/TSX Index of 9.5% and the CAGR of the DJIA Index of 9.7%, for the same period.2 Our long-term goal is to strive for and maintain superior long-term performance.

In 2021 Q2, dividend income was $643,355, down slightly from $648,107 in the second quarter of 2020 ("2020 Q2"). This decrease, which was somewhat offset by increased foreign dividends, stemmed primarily from the sale of some of our Canadian dividend paying stocks, namely Husky Energy and Suncor Energy. In 2021 Q2, interest income amounted to $78,076, down from $184,050 in 2020 Q2. 2021 Q2 revenue reflects interest on promissory notes held by Urbana in Highview Financial Holdings Inc. and interest on a debenture held by Urbana in Integrated Grain Processors Co-operative Inc. 2020 Q2 interest revenue related to Highview, Radar Capital Inc., Kognitiv Corporation and Vive Crop Protection Inc. The Radar note was fully repaid in 2021 Q1 and the Kognitiv and Vive notes were converted into equity securities in late 2020 Q2.

Urbana realized a net gain of $6.1M from the sale and disposal of investments in 2021 Q2 (2020 Q2 - $14.0M). This gain stemmed primarily from the disposal of Metamaterial Inc. ($11.2M), which was partially offset by losses from the wind up of OneChicago, LLC ($2.9M), an investment held by Urbana Special Investment Holdings Ltd. ("USIH"), a wholly-owned subsidiary of Urbana, and from the redemption of Urbana Mauritius Inc. ("UMI") shares ($2.3M).

Urbana recorded $24.3M in unrealized gains in 2021 Q2 (2020 Q2 - $23.1M). The best performers during 2021 Q2 were Real Matters Inc. ($5.7M), Morgan Stanley ($4.0M), USIH ($2.9M), Cboe Global Markets, Inc. ($2.6M), Caldwell Canadian Value Momentum Fund ($2.5M), KKR & Co. Inc. ($2.4M) and UMI ($2.1M). The valuation increases related to USIH and UMI stemmed from the wind up of USIH and the redemption of UMI shares, whereby the previously recorded unrealized losses were removed when they were converted to realized losses. The largest unrealized loss in 2021 Q2 related to Metamaterial ($3.2M), whereby the previously recorded unrealized gain was removed when it was converted to a realized gain when Metamaterial shares were sold.

During 2021 Q2, Urbana recorded net income before income taxes of $29.0M (2020 Q2 - $36.3M) primarily due to $24.3M in unrealized gains on investments. Investment management fees in 2021 Q2 were $1.7M, up from $1.3M in 2020 Q2, due to an increase in the average net assets under management. Interest expense in 2021 Q2 amounted to $176,444 compared to $1,094 in 2020 Q2 due to an increase in borrowings in 2021 Q2. Transaction costs, which relate entirely to purchases under the normal course issuer bid ("NCIB"), amounted to $3,000 in 2021 Q2, down from $10,886 in 2020 Q2. Since Urbana aggressively made purchases under its NCIB in late 2020, there is very little room left to continue making purchases during the course of the current NCIB program. Transaction costs in respect of all trades, excluding NCIB trades, are absorbed by Caldwell Investment Management Ltd. ("CIM" or the "Manager"). Professional fees, comprised of audit fees and legal costs, were $75,423 in 2021 Q2, down from $81,170 in 2020 Q2, because 2020 Q2 included legal fees related to a special project. Administrative expenses in 2021 Q2 were $298,319, down from $347,750 in 2020 Q2, primarily due to reduced marketing costs in 2021 Q2 as well as reduced stock exchange fees in 2021 Q2, which were paid in a different quarter in 2020, thus representing a timing difference. Foreign withholding tax expense in 2021 Q2 was $67,740,

• The CAGR of the indexes is calculated in the same way as the CAGR of net assets per share since inception.

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down from $9,006 in 2020 Q2, because 2020 Q2 included the reimbursement of excess withholding taxes that were deducted previously. A deferred income tax expense of $3.6M has been recorded in 2021 Q2 (2020 Q2 - $3.5M) due to the unrealized gains recorded during 2021 Q2, which were only slightly higher than the unrealized gains in 2020 Q2.

Urbana purchased and cancelled 97,100 non-voting Class A shares ("Class A shares") in the first half of 2021 at an average price of $3.16 per Class A share. Subsequent to June 30, 2021, Urbana purchased an additional 14,627 Class A shares at an average price of $3.37 per Class A share. Since May 2010, Urbana has purchased and cancelled a total of 43,426,320 Class A shares under its normal course issuer bid programs. The number of Class A shares now outstanding is 34,100,000.

Past Performance

The performance information presented in this section shows how Urbana has performed in the past and does not necessarily indicate how it will perform in the future.

Year-by-Year Performance

The following bar chart shows the net assets per share performance of Urbana's common shares for the financial periods indicated. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial period would have grown or decreased by the last day of each financial period based on the net assets per share of Urbana, assuming that each dividend paid during the period was reinvested.

Urbana's Class A shares, which have the same rights as the common shares as to dividends and upon liquidation, are treated as if they are common shares for the purposes of the net assets per share calculation.

				Total return of net assets per share
50%				25.4%
25%						11.9%		18.2%
0%
	-15.8%
-25%
2018	2019	2020		Six months ended
									June 30, 2021

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