XTAO Inc. — Audit Report / Information 2025

Jul 30, 2025

ADRIANNA VENTURES LTD.
Financial Statements
(Expressed in Canadian Dollars)
For the years ended March 31, 2025 and 2024

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DAVIDSON & COMPANY LLP
Chartered Professional Accountants

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of
Adrianna Ventures Ltd.

Opinion

We have audited the accompanying financial statements of Adrianna Ventures Ltd. (the “Company”), which comprise the statements of financial position as at March 31, 2025 and 2024, and the statements of loss and comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the financial statements, including material accounting policy information.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at March 31, 2025 and 2024, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the financial statements, which indicates that the Company incurred a loss and comprehensive loss of $181,896 during the year ended March 31, 2025 and, as of that date, the Company had an accumulated deficit of $591,025 and a working capital deficiency of $486,256. As stated in Note 1, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year ended. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our auditor’s report.

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management’s Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

A member of Nexia International
1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
Telephone (604) 687-0947 Davidson-co.com

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In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current year ended and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Zachary Faure.

Vancouver, Canada

July 29, 2025

Chartered Professional Accountants

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ADRIANNA VENTURES LTD.

Statements of Financial Position

(Expressed in Canadian dollars)

As at

	March 31, 2025	March 31, 2024
Assets
Current Assets
Cash	$ 537	$ 49
GST receivable	-	15,124
Total Assets	537	$ 15,173
Liabilities and Shareholders’ Deficiency
Current Liabilities
Accounts payable and accrued liabilities	$ 458,540	$ 304,095
Promissory notes payable (Notes 6 and 7)	28,253	15,438
	486,793	319,533
Shareholders’ Deficiency
Share capital (Note 8)	99,722	99,722
Reserves (Note 8)	5,047	5,047
Deficit	(591,025)	(409,129)
	(486,256)	(304,360)
Total Liabilities and Shareholders’ Deficiency	$ 537	$ 15,173

Nature of business and continuing operations (Note 1)

Subsequent events (Note 13)

Approved on Behalf of the Board on July 29, 2025:

"Karia Samaroo"

Karia Samaroo – CEO/Director

"Mitchell Demeter"

Mitchell Demeter – Director

The accompanying notes are an integral part of these financial statements.

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ADRIANNA VENTURES LTD.

Statements of Loss and Comprehensive Loss

(Expressed in Canadian dollars)

	For the year ended March 31, 2025	For the year ended March 31, 2024
Expenses
Administration and bank charges	$ 76	$ 75
Filing fees	1,898	986
Finance expense (Note 6)	2,315	1,238
Management fees	121,500	120,000
Professional fees	17,228	22,105
Rent	12,150	12,000
Transaction costs (Note 13)	5,914	-
	$ (161,081)	$ (156,404)
Other items
Impairment of GST receivable	(20,815)	-
Loss and comprehensive loss for the year	$ (181,896)	$ (156,404)
Weighted average number of shares outstanding – basic and diluted (Note 9)	24,930,500	24,930,500
Basic and diluted loss per share (Note 9)	$ (0.01)	$ (0.01)

The accompanying notes are an integral part of these financial statements.

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ADRIANNA VENTURES LTD.

Statements of Changes in Shareholders' Deficiency

(Expressed in Canadian dollars)

	Share Capital				Total Shareholders' Deficiency
	Number	Amount	Reserves	Deficit
Balance, March 31, 2023	24,930,500	$ 99,722	$ 5,047	$(252,725)	$(147,956)
Loss for the year	-	-	-	(156,404)	(156,404)
Balance, March 31, 2024	24,930,500	$ 99,722	$ 5,047	$(409,129)	$(304,360)
Loss for the year	-	-	-	(181,896)	(181,896)
Balance, March 31, 2025	24,930,500	$ 99,722	$ 5,047	$(591,025)	$(486,256)

The accompanying notes are an integral part of these financial statements.

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ADRIANNA VENTURES LTD.
Statements of Cash Flows
(Expressed in Canadian dollars)

	For the year ended March 31, 2025	For the year ended March 31, 2024
Cash provided by / (used for):
Operating Activities:
Loss for the year	$ (181,896)	$ (156,404)
Items not involving cash:
Accrued interest expense	2,315	1,238
Impairment of GST receivable	20,815	-
Net change in non-cash working capital items:
GST receivable	(5,691)	(7,660)
Accounts payable and accrued liabilities	154,445	156,487
	(10,012)	(6,339)
Cash flows from financing activities:
Proceeds from promissory note (Notes 5 and 6)	10,500	3,200
Increase (decrease) in cash for the year	488	(3,139)
Cash, beginning of the year	49	3,188
Cash, end of the year	$ 537	$ 49
Supplemental information:
Interest paid	$ -	$ -
Income taxes	$ -	$ -

The accompanying notes are an integral part of these financial statements.

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ADRIANNA VENTURES LTD.

Notes to the Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in Canadian dollars)

1. NATURE OF BUSINESS AND CONTINUING OPERATIONS

Adrianna Ventures Ltd. (the "Company" or "Adrianna") was incorporated under the British Columbia Business Corporations Act on October 29, 2021. The Company's head office is located at 515 – 701 W. Georgia Street, Vancouver, British Columbia V7Y 1C6, and the Company's records and registered office is located at 2200 – 885 West Georgia Street, Vancouver, British Columbia V6C 3E8.

The Company currently operates in one segment, which is the investigation and evaluation of business opportunities to either acquire or in which to participate (Note 13).

On March 31, 2022, ECC Diversified Inc. ("ECCD") completed a strategic reorganization of its assets in which, among other companies, it spun out Adrianna. The transaction was carried out by way of a plan of arrangement (the "Arrangement") pursuant to the Business Corporations Act (British Columbia). Under the terms of the Arrangement, shareholders of ECCD received one common share of the Company for every common share of ECCD they held as of February 8, 2022; as a result, 19,930,500 common shares of the Company were issued.

The Company incurred a loss and comprehensive loss of $181,896 for the year ended March 31, 2025. As at March 31, 2025, the Company has an accumulated deficit of $591,025 and a working capital deficiency of $486,256. As at March 31, 2025, the Company had a history of losses; consequently, continuing business as a going concern is dependent upon the ability of the Company to obtain additional debt or equity financing, both of which are uncertain. These material uncertainties may cast significant doubt on the Company's ability to continue as a going concern.

2. STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board.

3. BASIS OF PRESENTATION

The financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit or loss, which are stated at their fair value. The financial statements are presented in Canadian dollars, which is also the functional currency of the Company. In addition, the financial statements have been prepared using the accrual basis of accounting except for cash flow information. The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4. These financial statements were authorized by the Audit Committee and the Board of Directors of the Company on July 29, 2025.

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ADRIANNA VENTURES LTD.
Notes to the Financial Statements
For the years ended March 31, 2025 and 2024
(Expressed in Canadian dollars)

4. MATERIAL ACCOUNTING POLICIES

(a) Share-based payments

The stock option plan allows Company directors, officers, employees and consultants to acquire shares of the Company. The fair value of options granted is recognized as a share-based payment expense with a corresponding increase in shareholders’ equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee. Consideration paid on the exercise of stock options is credited to share capital and the fair value of the options is reclassified from share-based payment reserve to share capital.

In situations where equity instruments are issued to non-employees and some or all of the services received by the entity as consideration cannot be specifically identified, they are all measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of the services received.

The fair value is measured at grant date and each tranche is recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each reporting date, the amount recognized as an expense is adjusted to reflect the number of stock options that are expected to vest.

(b) Share capital

Common shares and preferred shares are classified as share capital. Incremental costs directly attributable to the issue of common shares and preferred shares are recognized as a deduction from equity, net of any tax effects.

(c) Basic and diluted loss per share

The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period, adjusted for own shares held. Diluted loss per share is calculated by dividing the income by the weighted average number of common shares outstanding assuming that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. In the Company’s case, diluted loss per share is the same as basic loss per share.

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ADRIANNA VENTURES LTD.
Notes to the Financial Statements
For the years ended March 31, 2025 and 2024
(Expressed in Canadian dollars)

4. MATERIAL ACCOUNTING POLICIES (continued)

(d) Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

(e) Income taxes

Current tax is the expected tax payable or receivable on the taxable income or loss for the year using tax rates enacted or substantially enacted at the reporting date.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purpose. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable operations, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantially enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(f) Financial instrument measurement and valuation

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly; and

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ADRIANNA VENTURES LTD.

Notes to the Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in Canadian dollars)

4. MATERIAL ACCOUNTING POLICIES (continued)

(f) Financial instrument measurement and valuation (continued)

Level 3 Inputs that are not based on observable market data.

The measurement of the Company's financial instruments is disclosed in Note 12 to these financial statements. Any financial instrument that is valued using level 2 or 3 inputs will involve estimation uncertainty.

Financial assets

The Company classifies its financial assets in the following categories: at fair value through profit or loss ("FVTPL"), at fair value through other comprehensive income ("FVTOCI") or at amortized cost. The determination of the classification of financial assets is made at initial recognition. Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL; for other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI.

The Company's accounting policy for each of the categories is as follows:

Financial assets at FVTPL: Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statement of income (loss). Realized and unrealized gains and losses arising from changes in the fair value of the financial assets held at FVTPL are included in the statement of income (loss) in the period.

Financial assets at FVTOCI: Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income (loss) in which they arise.

Financial assets at amortized cost: A financial asset is measured at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset's contractual cash flows are comprised solely of payments of principal and interest. They are classified as current assets or non-current assets based on their maturity date and are initially recognized at fair value and subsequently carried at amortized cost less any impairment.

Impairment of financial assets at amortized cost: The Company assesses all information available, including on a forward-looking basis, the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as the reporting date, with the risk of default as at the date of initial recognition, based on all information available, and reasonable and supportive forward-looking information.

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ADRIANNA VENTURES LTD.
Notes to the Financial Statements
For the years ended March 31, 2025 and 2024
(Expressed in Canadian dollars)

4. MATERIAL ACCOUNTING POLICIES (continued)

(f) Financial instrument measurement and valuation (continued)

Financial liabilities and equity: Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recorded at the proceeds received, net of direct issue costs.

(g) Critical accounting estimates and judgements

The preparation of financial statements requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Critical accounting estimates

Critical accounting estimates are estimates and assumptions made by management that may result in a material adjustment to the carrying amount of assets and liabilities within the next financial year, including:

Income tax

Tax provisions are based on enacted or substantively enacted laws. Changes in those laws could affect amounts recognized in profit or loss both in the period of change, which would include any impact on cumulative provisions, and in future periods. Deferred tax assets (if any) are recognized only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse and a judgment as to whether or not there will be sufficient taxable profits available to offset the tax assets when they do reverse. This requires assumptions regarding future profitability and is therefore inherently uncertain. To the extent assumptions regarding future profitability change, there can be an increase or decrease in the amounts recognized in respect of deferred tax assets as well as the amounts recognized in profit or loss in the period in which the change occurs.

Stock options

Determining the fair value of stock options requires estimates related to the choice of a pricing model, the estimation of stock price volatility, the expected forfeiture rate and the expected term of the underlying instruments. Any changes in the estimates or inputs utilized to determine fair value could have a significant impact on the Company's future operating results or on other components of shareholders' equity.

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ADRIANNA VENTURES LTD.

Notes to the Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in Canadian dollars)

4. MATERIAL ACCOUNTING POLICIES (continued)

(g) Critical accounting estimates and judgements (continued)

Fair value of investments

The Company recognizes its investments at fair value. Fair value is determined on the basis of market prices from independent sources, if available. If there is no market price, then the fair value is determined by using valuation models. The inputs to these models are derived from observable market data where possible, but where observable data is not available, judgment is required to establish fair values. There is inherent uncertainty and imprecision in estimating the factors that can affect fair value, and in estimating fair values generally, when observable data is not available. Changes in assumptions and inputs used in valuing financial instruments could affect reported fair values.

Critical accounting judgment

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the statements are, but are not limited to, the following:

Going concern

The preparation of the financial statements requires management to make judgments regarding the going concern of the Company as previously discussed in Note 1.

(h) Recent accounting pronouncements

Classification of liabilities as current or non-current (Amendments to IAS 1)

The IASB has published Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) which clarifies the guidance on whether a liability should be classified as either current or non-current. The amendments: i) clarify that the classification of liabilities as current or non-current should only be based on rights that are in place at the end of the reporting period; ii) clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and iii) make clear that settlement includes transfers to the counterparty of cash, equity instruments, other assets or services that result in extinguishment of the liability.

This amendment is effective for annual periods beginning on or after January 1, 2024. Earlier application was permitted. The adoption of this amendment did not have any impact on the Company's financial statements.

IFRS 18 Presentation and disclosure in financial statements

In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements ("IFRS 18") which introduces: i) new requirements on presentation within the statement of profit or loss; ii) disclosure standards regarding management defined performance measures; and iii) principles for aggregation and disaggregation of financial information in the financial statements and the notes.

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ADRIANNA VENTURES LTD.

Notes to the Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in Canadian dollars)

4. MATERIAL ACCOUNTING POLICIES (continued)

(h) Recent accounting pronouncements (continued)

IFRS 18 Presentation and disclosure in financial statements (continued)

IFRS 18 will be effective for annual reporting periods beginning on or after January 1, 2027 but companies can apply it earlier. IFRS 18 replaces IAS 1. It carries forward many requirements from IAS 1 unchanged. The Company is assessing the impact of the adoption of this standard.

5. INVESTMENT

The Company’s investment has been classified as FVTPL.

Investment in CoTerra Labs

Pursuant to an agreement dated March 31, 2022, the Company purchased 100,000 common shares of CoTerra Labs Inc. (“CoTerra”) from ECCD for an aggregate price of $10,000 (Note 6). CoTerra has 1 director in common with the Company. During the year ended March 31, 2023, management determined that the current market value of the Company’s investment is $nil and recorded a write-down of $10,000. There was no change in the fair value of the investment during the year ended March 31, 2025.

6. PROMISSORY NOTES PAYABLE

Pursuant to an agreement dated March 31, 2022, the Company purchased 100,000 common shares of CoTerra from ECCD for an aggregate price of $10,000, payable by promissory note. The principal outstanding under this promissory note bears interest at the simple rate of 10% per annum. The entire unpaid principal and any interest are payable upon demand of ECCD. As at March 31, 2025, the Company has incurred $3,164 in interest costs (March 31, 2024 - $2,003). The Company may repay the principal and all accrued interest thereon at any time and from time to time without notice or penalty.

Pursuant to a promissory note dated July 7, 2023, the Company borrowed $3,200 from The Emprise Special Opportunities Fund (2017) Limited Partnership (“LP2017”), a significant shareholder of the Company. The principal outstanding under this promissory note bears interest at the simple rate of 10% per annum, and the entire unpaid principal and any interest are payable upon demand of LP2017. In fiscal 2025, an additional $10,500 has been advanced under the same terms as the previous note. As at March 31, 2025, the Company has incurred $1,388 (March 31, 2024 - $235) in interest costs. The Company may repay the principal and all accrued interest thereon at any time and from time to time without notice or penalty.

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ADRIANNA VENTURES LTD.

Notes to the Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in Canadian dollars)

7. RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

The Company secured promissory notes from ECCD and LP2017, both significant shareholders of the Company. See Note 6 for details of these promissory notes.

Key management personnel include persons having the authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has identified its directors and certain senior officers as its key management personnel and the compensation costs for key management personnel and companies related to them are recorded at their exchange amounts as agreed upon by transacting parties.

There were no other related party transactions during the years ended March 31, 2025 or 2024.

8. SHARE CAPITAL

(a) Authorized

The Company's authorized capital consists of an unlimited number of common and preferred shares without par value. The preferred, Series A Shares of the Company shall have attached the following special rights and restrictions: 1) no voting rights at any general meetings, 2) shall be entitled to receive dividends, if and when they are declared by the directors, and 3) in the event of liquidation, each holder of a Series A share shall be entitled to be paid, in respect of each such share held and in preference to and priority over any distribution or payment on any share of any other class of whares, the amount paid up with respect to each Series A share held by them.

(b) Issued and outstanding

As at March 31, 2024, and 2025, the Company had 24,930,500 common shares, and nil preferred shares, issued and outstanding.

(c) Stock options

On October 29, 2021, the Company adopted a stock option plan (the "Stock Option Plan") whereby it can grant incentive stock options to directors, officers, employees, and technical consultants of the Company. The maximum number of shares that may be reserved for issuance under the Stock Option Plan is limited to 10% of the issued and outstanding common shares of the Company at any time. The vesting period for all options is at the discretion of the Board of Directors. The exercise price will be set by the Board of Directors at the time of grant and cannot be less than the discounted market price (if any) of the Company's common shares.

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ADRIANNA VENTURES LTD.
Notes to the Financial Statements
For the years ended March 31, 2025 and 2024
(Expressed in Canadian dollars)

8. SHARE CAPITAL (continued)

(c) Stock options (continued)

The Stock Option Plan provides that the number of common shares that may be reserved for issuance to any one individual upon exercise of all stock options held by such an individual may not exceed 5% of the issued and outstanding common shares, if the individual is a director or officer, or 2% of the issued and outstanding common shares, if the individual is a consultant or engaged in providing investor relations services, on a yearly basis. All options granted under the Stock Option Plan will expire not later than the date that is ten years from the date that such options are granted. Options terminate as follows: (i) immediately in the event of dismissal with cause; (ii) 90 days from date of termination other than for cause; or (iii) one year from the date of death or disability. Options granted under the Stock Option Plan are not transferable or assignable other than by will or other testamentary instrument or pursuant to the laws of succession.

There was no stock option activity during the year ended March 31, 2025, or the years ended March 31, 2024 and 2023.

As at March 31, 2025, outstanding options were as follows:

Grant Date	Number of Options Outstanding and Exercisable	Exercise Price	Expiry Date	Remaining Contractual Life (Years)
March 31, 2022	1,900,000	$ 0.05	December 17, 2031	6.72
	1,900,000	$ 0.05

9. BASIC AND DILUTED LOSS PER SHARE

The calculation of basic and diluted loss per share for the year ended March 31, 2025 was based on the loss attributable to common shareholders of $181,896 (March 31, 2024 - $156,404) and the weighted average number of common shares outstanding of 24,930,500 (March 31, 2024 - 24,930,500).

10. MANAGEMENT OF CAPITAL

The Company defines capital as consisting of shareholder's deficiency (comprised of issued share capital, reserves, and deficit). Management's objectives when managing capital are to maintain financial strength and to protect its ability to meet its ongoing liabilities, to continue as a going concern, to maintain creditworthiness and to maximize returns for shareholders over the long term. Protecting the ability to pay current and future liabilities includes maintaining capital above minimum regulatory levels, current financial strength rating requirements and internally determined capital guidelines and calculated risk management levels.

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ADRIANNA VENTURES LTD.

Notes to the Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in Canadian dollars)

10. MANAGEMENT OF CAPITAL (continued)

The Company manages its capital structure to maximize its financial flexibility, adjusting it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital, but rather relies on the expertise of the Company's management to sustain the future development of the business. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes to management's approach to capital management during the year ended March 31, 2025. As at March 31, 2025, the Company is not subject to any externally imposed capital requirements or debt covenants.

11. FINANCIAL INSTRUMENTS

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Market Risk

Market risk is the risk that the fair value or future cash flows from a financial instrument will fluctuate because of changes in market prices or prevailing conditions. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk and are disclosed as follows:

(i) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company holds no financial instruments that are denominated in a currency other than Canadian dollars. As at March 31, 2025, the Company is not exposed to currency risk.

(ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in market risk. The Company's sensitivity to interest rates relative to its cash balances is currently immaterial. The Company also has no long-term debt with variable interest rates, so it has no negative exposure to changes in the market interest rate.

(iii) Price rate risk

The Company has no exposure to price risk with respect to equity prices as the Company is not listed. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general movements in the level of the stock market.

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ADRIANNA VENTURES LTD.

Notes to the Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in Canadian dollars)

11. FINANCIAL INSTRUMENTS (continued)

Credit Risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets including cash. The Company limits the exposure to credit risk by only investing its cash with high-credit quality financial institutions. The Company’s maximum exposure to credit risk is equal to the carrying value of cash receivable. Management believes that the credit risk related to its cash is negligible.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. At March 31, 2025, the Company had no sources of revenue and has a cash balance of $537 to settle current liabilities of $486,793. Management estimates that the Company has insufficient cash to fund corporate overhead costs for the next year.

Additionally, the Company has insufficient funds from which to finance any identified business acquisition and as such will require additional financing to accomplish the Company’s long-term strategic objectives. Future funding may be obtained by means of issuing share capital and/or debt financing. There can be no certainty of the Company’s ability to raise additional financing through these means. If the Company is unable to continue to finance itself through these means, it is possible that the Company will be unable to continue as a going concern.

Consequently, the Company is exposed to liquidity risk as at March 31, 2025.

Fair Value Risk

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities
• Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, and
• Level 3 – Inputs that are not based on observable market data.

As of March 31, 2025 the Company’s financial instruments consist of cash, accounts payable and accrued liabilities, and promissory notes payable. These financial instruments are classified as amortized cost. The fair values of these financial instruments approximate their carrying values because of their short-term nature.

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ADRIANNA VENTURES LTD.

Notes to the Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in Canadian dollars)

12. INCOME TAXES

The following table reconciles the amount of income tax recoverable on application of the combined statutory Canadian federal and provincial income tax rates:

	2025	2024
Loss before income taxes	$ (181,896)	$ (156,404)
Expected income tax recovery at statutory rates	(49,000)	(42,000)
Change in statutory tax rates	(73,000)	-
Change in unrecognized deductible temporary differences	122,000	42,000
Income tax expense (recovery)	$ -	$ -

The significant components of the Company's deferred income tax assets that have not been included on the statement of financial position are as follows:

	2025	2024
Deferred tax assets (liabilities)
Non-capital losses available for future periods	$ 138,000	$ 89,000
Unrecognized deferred tax assets	(138,000)	(89,000)
Net deferred tax assets	$ -	$ -

The significant components of the Company's temporary differences, unused tax credits and unused tax losses that have not been included on the Company's statement of financial position are as follows:

	2025		2024
Temporary Differences	$	Expiry Date	$	Expiry Date
Non-capital losses available for future periods	511,000	2042 to 2045	329,000	2042 to 2044

Tax attributes are subject to review and potential adjustment by tax authorities.

13. SUBSEQUENT EVENTS

On April 28, 2025, the Company settled $250,000 of outstanding indebtedness with certain creditors through the issuance of 10,000,000 common shares of the Company.

On May 1, 2025, the Company entered into a definitive agreement with xTAO Inc. ("xTAO"), a company whose core business in the operation of a validator on the Bittensor network, pursuant to which the Company and xTAO proposed to complete a business combination transaction to facilitate a listing on the TSX Venture Exchange (the "Exchange") by the resulting issuer (the "Resulting Issuer").

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ADRIANNA VENTURES LTD.

Notes to the Financial Statements

For the years ended March 31, 2025 and 2024

(Expressed in Canadian dollars)

13. SUBSEQUENT EVENTS (continued)

On May 12, 2025, the Company continued from British Columbia under the Business Corporations Act (British Columbia) into the jurisdiction of the Cayman Islands under the Cayman's Companies Law (2025 Revision), as approved by shareholders of the Company at its Annual General & Special Meeting held on April 22, 2025.

On June 30, 2025, all 1,900,000 outstanding stock options were cancelled without consideration.

On July 10, 2025, Adrianna and xTAO merged. The surviving entity to the merger, maintained the name xTAO Inc.

Pursuant to the merger, (i) all Adrianna shareholders who would have held twenty-five or fewer Resulting Issuer Shares immediately subsequent to the merger had their Adrianna shares redeemed by the Resulting Issuer at an equivalent price of US$1 per Resulting Issuer Share; and (ii) all remaining Adrianna shares outstanding as of closing of the merger were exchanged for an aggregate of 540,000 Resulting Issuer shares.

The new registered and records office of the Company in the Cayman Islands is at Fifth Floor, Zephyr House, 122 Mary Street, George Town, P.O. Box 31493, Grand Cayman, KY1-1206, Cayman Islands.

In connection with the completion of the merger, xTAO completed a private placement financing (the "Private Placement") for aggregate gross proceeds of US$22,779,225, through the issuance of 4,555,845 Subscription Receipts, at a price of US$5.00 for each Subscription Receipt. On completion of the merger the securities underlying the Subscription Receipts converted on a 1 for 5 basis for an aggregate of 22,779,225 common shares of the Resulting Issuer (the "Resulting Issuer Shares").

Following closing of the merger and Private Placement, xTAO has 28,319,225 Resulting Issuer Shares issued and outstanding, comprised of: (i) 22,779,225 Resulting Issuer Shares issued in connection with the Private Placement; (ii) 5,000,000 Resulting Issuer Shares issued to xTAO shareholders, which shares are subject to a three year lock-up, with 10% being releasable on the three year anniversary date of listing on the Exchange, and an additional 10% releasable every three (3) months thereafter (the "Lockup"); and (iii) 540,000 Resulting Issuer Shares issued to former Adrianna shareholders, which are also subject to the Lockup.

On July 22, 2025, xTAO commenced trading on the Exchange under the trading symbol "XTAO.U".

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