INTRODUCTION

This section provides management's discussion of the financial condition, changes in financial condition and results of operations of Quantum Energy Inc. with specific information on results of operations and liquidity and capital resources. It includes management's interpretation of our financial results, the factors affecting these results, the major factors expected to affect future operating results and future investment and financing plans. This discussion should be read in conjunction with our consolidated financial statements and notes thereto.

Several factors exist that could influence our future financial performance, some of which are described in Item 1A above, "Risk Factors". They should be considered in connection with evaluating forward-looking statements contained in this report or otherwise made by or on behalf of us since these factors could cause actual results and conditions to differ materially from those set out in such forward-looking statements.

Cautionary Statement for the Purposes of the Safe Harbor under the Private Securities Litigation Reform Act of 1995

The statements contained in this Annual Report on Form 10-K may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this Report are forward-looking statements made in good faith by us and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used in this Report, or any other of our documents or oral presentations, the words "anticipate", "believe", "estimate", "expect", "forecast", "goal", "intend", "objective", "plan", "projection", "seek", "strategy" or similar words are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements relating to our strategy, operations, markets, services, and other factors all of which are difficult to predict and many of which are beyond our control. Accordingly, while we believe these forward-looking statements to be reasonable, there can be no assurance that they will approximate actual experience or that the expectations derived from them will be realized. Further, we undertake no obligation to update or revise any of our forward-looking statements whether as a result of new information, future events or otherwise.





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Results of Operations

Year Ended February 28, 2021 Compared to Year Ended February 29, 2020.

Operating expenses for the year ended February 28, 2021 were $210,929 compared to $234,359 for the year ended February 28, 2020. The decrease in operating expenses was due to the fact that the Company had no cash to operate therefore professional fees and general and administrative expenses decreased by $109,126. Management and consulting fees however did increase by $86,584 for the year ended February 28, 2021. Other expenses for the year ended February 28, 2021 were $6,470 compared to $817,189 for the year ended February 29, 2020. During the year ended February 28, 2021 the Company had $-0- in bad debts, $21,787 gain on derivative for a convertible note payable, incurred $28,257 in interest expense and had $-0- in interest expense - warrants, compared to the year ended February 29, 2020 when the Company had $30,000 in bad debts, $138,185 loss on derivative for a convertible note payable, incurred $45,743 in interest expense, $453,261 in interest expense - warrants and $150,000 in joint venture write off.





Net Loss

Net loss for the years ended February 28, 2021 and February 29, 2020 was $217,399 and $1,051,548, respectively. The decrease in loss of $834,149 was due to the decrease in operating expenses of $23,430 and the changes to other expenses as mentioned above.

Liquidity and Capital Resources:

As of February 28, 2021, our assets totaled $47 which consisted of cash. The Company's total liabilities were $1,130,129, which consisted of accounts payable and accrued expenses, accounts payable and accrued expenses - related parties, common stock payable, convertible note payable, derivative liability, promissory notes payable and promissory notes payable - related parties. As of February 28, 2021, the Company had an accumulated deficit of $12,628,254 and working capital deficit of $1,130,082.

The Company's significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. As indicated herein, we need capital for the implementation of our business plan, and we will need additional capital for continuing our operations. We do not have sufficient revenues to pay our operating expenses at this time. Unless the Company is able to raise working capital, it is likely that the Company will either have to cease operations or substantially change its methods of operations or change its business plan. For the next 12 months the Company has an oral commitment from its CEO to advance funds as necessary to meeting our operating requirement.

Cash (Used in) Operating Activities

Net cash used in operating activities for the year ended February 28, 2021 and February 29, 2020 was $-0- and $206,571, respectively. The decrease amount was attributed to interest expense on convertible note warrants, joint venture write off and (gain) loss on derivative.

Cash from Investing Activities

Net cash used in investing activities was $-0- and $150,000 for the year ended February 28, 2021 and February 29, 2020, respectively.

Cash from Financing Activities

Net cash provided by financing activities was $-0- for the year ended February 28, 2021, and was $355,040 for year ended February 29, 2020 which was all due to cash received from notes payable.


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CRITICAL ACCOUNTING POLICIES

The Company has identified certain accounting policies, described below, that are most important to the portrayal of its current financial condition and results of operations. The Company's significant accounting policies are disclosed in the notes to the audited financial statements included in this Annual Report.

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