SEDAR Interim Financial Statements

HORIZON PETROLEUM LTD. Interim Condensed Consolidated Financial Statements (Expressed in Canadian dollars) Unaudited As at and for the three and six months ended February 28, 2026 and 2025 NOTIFICATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS In accordance with National Instrument 51-101 released by the Canadian Security Administrators, the Company discloses that its auditors have not reviewed the unaudited interim condensed consolidated financial statements as at and for the six months ended February 28, 2026 and 2025 HORIZON PETROLEUM LTD. Interim Condensed Consolidated Statements of Financial Position Unaudited (Expressed in Canadian dollars) As at February 28, 2026 August 31, 2025 Assets Current Assets Cash $ 191,225 $ 111,385 Prepaid expenses 160,195 192,043 Receivables 20,310 32,066 Total Assets $ 371,731 $ 335,494 Liabilities and Shareholders' Deficiency Current Liabilities Accounts payable and accrued liabilities $ 1,360,943 $ 1,108,771 Short term debt (Note 4) 786,161 699,121 Acquisition cost payable (Note 11) 2,699,553 2,711,465 Total Current Liabilities 4,846,658 4,519,357 Decommissioning obligation (Note 5) 9,747 - Long-term debt (Note 6) 304,930 - Total Liabilities 5,161,334 4,519,357 Shareholders' deficiency Share capital (Note 7) 22,245,791 22,136,414 Stock option reserve (Note 8) 396,711 365,863 Warrants (Note 8) 429,142 472,933 Deficit (27,861,247) (27,159,073) Total Shareholders' Deficiency (4,789,603) (4,183,863) Total Liabilities and Shareholders' Deficiency $ 371,731 $ 335,494 Going concern (Note 1) Commitments and contingencies (Notes 12 and 13) Subsequent events (Note 14) See accompanying notes to the interim condensed consolidated financial statements. Approved by the Board “Trevor Williams” Director “David Winter” Director HORIZON PETROLEUM LTD. Interim Condensed Consolidated Statements of Loss and Comprehensive Loss Unaudited (Expressed in Canadian dollars) February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025 Salaries and benefits $ 120,926 $ 109,664 $ 235,414 $ 214,627 Poland licenses 127,080 - 127,080 238,714 Professional fees 12,068 138,685 87,003 176,386 Office 29,428 3,904 58,380 63,190 Operations and development 6,245 87,296 55,435 87,296 Consulting fees 9,947 270,118 49,209 310,758 Stock based compensation (Note 8) 25,066 59,539 30,848 78,418 Transfer agent and regulatory fees 17,619 23,677 18,283 39,103 Management fees (Note 9) - 43,072 16,592 67,667 Shareholder communication 5,599 217,067 9,210 220,334 Travel 8,551 7,399 8,551 48,813 Bank charges 1,022 1,646 2,574 2,477 Foreign exchange (gain) loss (38,629) 48,526 (2,538) 116,967 Gain on settlement of debt (31,667) (16,237) (31,667) (47,903) Total expenses 293,254 994,356 664,373 1,616,847 Interest Expense (Note 4) 43,280 - 87,040 - Loss and comprehensive loss $ 336,534 $ 994,356 $ 751,412 $ 1,616,847 Basic and fully diluted loss per common share $ (0.01) $ (0.02) $ (0.01) $ (0.04) Weighted average number of common shares outstanding, basic and fully diluted $ 58,206,864 $ 44,926,858 $ 58,206,864 $ 44,926,858 See accompanying notes to the interim condensed consolidated financial statements Three months ended Six months ended HORIZON PETROLEUM LTD. Interim Condensed Consolidated Statements of Cash Flows Unaudited (Expressed in Canadian dollars) 2026 2025 Operating Activities Loss for the period $ (751,412) $ (1,616,847) Stock based compensation 30,848 67,667 Gain on settlement of debt (31,667) (47,903) Interest --- accretion on short term debt 87,040 Unrealised foreign exchange loss 29,502 150,508 Changes in non-cash working capital Receivables 11,756 (37,979) Prepaid expenses 31,848 (49,612) Accounts payable and accrued liabilities 252,172 109,122 Cash flow (used in) operating activities (339,913) (1,425,044) Financing Activities Proceeds on share and warrant issue - 1,262,040 Share issue costs - (69,742) Proceeds on warrants issued - 436,950 Proceeds on convertible debenture 445,000 - Convertible debenture issue costs (25,247) Cash flow from financing activities 419,754 1,629,248 Change in cash during the period 79,840 204,204 Cash, beginning of period 111,385 76,408 Cash, end of period $ 191,225 $ 280,612 See accompanying notes to the interim condensed consolidated financial statements Supplemental information Shares issued for debt $ - $ 345,000 February 28, Six months ended HORIZON PETROLEUM LTD. Interim Condensed Consolidated Statements of Changes in Shareholders’ Deficiency Unaudited (Expressed in Canadian dollars) Number of Shares Share Capital Warrants Stock Option Reserve Deficit Total Balance at August 31, 2024 33,786,135 $ 20,167,048 $ 111,631 $ 160,765 $ (23,904,903) $ (3,465,459) Shares issued 20,155,729 2,111,251 - - - 2,111,251 Share issue costs - (60,873) - - - (60,873) Warrants issued - (450,057) 450,057 - - - Finder warrants issued - - 26,372 - - 26,372 Warrant issue costs - - (35,241) - - (35,241) Warrants exercised - - (67,261) - - (67,261) Stock based compensation - - - 78,418 - 78,418 Net loss for the period - - - - (1,616,847) (1,616,847) Balance as February 28, 2025 53,941,864 $ 21,767,369 $ 485,558 $ 239,183 $ (25,521,750) $ (3,029,640) Balance at August 31, 2025 58,206,864 $ 22,136,414 $ 472,933 $ 365,863 $ (27,159,073) $ (4,183,863) Warrants expired - - (49,238) - 49,238 - Share component on convertible debenture - 117,480 - - - 117,480 Share issue costs - (8,103) - - - (8,103) Finders warrants issued - - 5,447 - - 5,447 Stock based compensation - - - 30,848 - 30,848 Net loss for the period - - - - (751,412) (751,412) Balance at February 28, 2026 58,206,864 $ 22,245,791 $ 429,142 $ 396,711 $ (27,861,247) $ (4,789,603) See accompanying notes to these unaudited interim condensed consolidated financial statement. HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 1. Corporate information and going concern: Horizon Petroleum Ltd. (“Horizon” or the “Company”) was incorporated in Alberta, Canada. The principal business of the Company is the acquisition, exploration, and development of oil and gas properties. The registered and records office of the Company are located at 1000, 250 – 2nd Street SW, Calgary, Alberta T2P 0C1. The business of exploring for oil and gas reserves involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable operations. The Company's continued existence is dependent upon the preservation of its properties, the discovery of economically recoverable reserves, the achievement of profitable operations, or the ability of the Company to raise additional financing, if necessary, or alternatively upon the Company's ability to dispose of its interests on an advantageous basis. Although the Company has taken steps to verify title to the concessions in which it has an interest, in accordance with industr --- y standards for the current stage of exploration of such concessions, these procedures do not guarantee the Company's title. Concession titles may be subject to government licensing registration or regulations, social licensing requirements, unregistered prior agreements, unregistered claims, aboriginal claims and noncompliance with regulatory and environmental requirements. The Company’s assets may also be subject to increases in taxes and royalties, renegotiation of contracts, currency exchange fluctuations, restriction and political uncertainty. The Company has not generated revenues from operations. These interim condensed consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. If this assumption were not appropriate, adjustments to these interim condensed consolidated financial statements may be necessary. Material uncertainties as to the Company’s ability to obtain additional financing to fund future operations cast significant doubt on the Company’s ability to continue as a going concern. The successful future operations of the Company are dependent on the ability of the Company to secure sufficient funds through financing or other sources, and there are no assurances that such financing will be obtained. The Company has incurred losses since its inception and is currently not generating any revenue except for interest income. For the six months ended February 28, 2026 the Company used cash from operating activities of $339,913 (six months ended February 28, 2025 $1,425,044). As at February 28, 2026 the Company had a working capital deficiency of $4,474,927 (August 31, 2025 $4,183,863). HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 2. Basis of presentation and statement of compliance: (a) Statement of compliance: These interim condensed consolidated financial statements have been prepared in accordance with international Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Committee (“IFRIC”) as applicable to the preparation of interim financial statements, including International Account Standard (“IAS”) 34, “Interim Financial Reporting”. The policies set out in the Company’s annual consolidated financial statements for the year ended August 31, 2025 were consistently applied to all periods presented unless otherwise noted below. These interim condensed consolidated financial statements were authorized for issue by the Board of Directors on April 27, 2026. (b) Basis of consolidation and presentation: These interim condensed consolidated financial statements have been prepared on a historical cost basis. In addition, these interim condensed consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information. These interim condensed consolidated financial statements are presented in Canadian dollars, which is also the functional currency of the Company and its subsidiaries. These interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Control exists when the Company is exposed to, or has rights --- to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are de-consolidated from the date control ceases. The interim condensed consolidated financial statements include all of the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating inter-entity balances and transactions. The preparation of interim condensed consolidated financial statements in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting, requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company’s accounting policies. Certain disclosures included in annual financial statements have been condensed or omitted. HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 2. Basis of presentation and statement of compliance (continued): (c) Company Subsidiaries: The Company holds 100% of the below subsidiaries: Legal Business Name of Subsidiary Country of Incorporation Energia Karpaty Zachodnie Sp. Z.O.O. Poland Energia Karpaty Zachodnie spolka z ograniczona odpowiedzialnoscia Sp. K. Poland Kotlarka Energy spolka z ograniczona odpowiedzialnoscia Poland Prusice Energy spolka z ograniczona odpowiedzialnoscia Poland The above subsidiaries in Poland (the “Polish Subsidiaries”) were acquired during 2019 (Note 12). The Company had a 100% interest in SAS Petromanas Energy (France) SAS (“Petromanas”) but lost control during 2020 when Petromanas entered a court approved liquidation process. The Company derecognized all assets and liabilities of this subsidiary in 2020. 3. New accounting standards, amendments and interpretations: Recent accounting pronouncements Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing September 1, 2025. Many are not applicable or do not have a significant impact to the Company and have been excluded. Management is currently evaluating the impact of these pronouncements on the Company’s consolidated financial statements. IFRS 9 Financial Instruments and IFRS 7 Financial Instruments – Disclosures. In May 2024, the IASB issued amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments – Disclosures. The amendments clarify the derecognition of financial liabilities and introduces an accounting policy option to derecognize financial liabilities that are settled through an electronic payment system. The amendments also clarify how to assess the contractual cash flow characteristics of financial assets that include environmental, social and governance (ESG)- linked features and other similar contingent features and the treatment of non-recourse assets and contractually linked instruments (CLIs). Further, the amendments mandate additional disclosures in IFRS 7 for financial instruments with contingent features and equity instruments classified at FVOCI. HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 3. New accounting standards, amendments and interpretations (continued) --- : IFRS 18 – Presentation and Disclosure in Financial Statements. In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements to improve reporting of financial performance. The new standards replace IAS 1 Presentation of Financial Statements. IFRS 18 introduces new categories and required subtotals in the statement of profit and loss and also requires disclosure of management-defined performance measures. It also includes new requirements for the location, aggregation, and disaggregation of financial information. The standard is effective for annual reporting periods beginning on or after January 1, 2027, including interim financial statements. Retrospective application is required, and early adoption is permitted. 4. Short-term debt: On May 20, 2025 the Company closed a Secured Non-Convertible Debenture of 720,000 debenture units of the company at a price of $1 per unit, for aggregate gross proceeds of $720,000. Each unit consists of an aggregate of $1 principal amount of secured subordinated debentures and 5 common share purchase warrants. The common share purchase warrants are exercisable at $0.20 per warrant and expire on May 20, 2026. The Debentures are not convertible into equity securities of the Company. The Debenture is secured against the assets and properties of the Corporation pursuant to the terms of a general security agreement issued in favor of the debenture holders. The Debenture of $720,000 matures on May 20, 2026 and bears interest at 15 per cent per annum, payable on maturity. The Company may prepay the debentures at any time prior to the maturity date. The liability portion was calculated by using an estimated discount rate of 20%. See the summary on the following table: Short-term debt obtained 720,000 Less: allocated to warrants (30,000) Less: issuance costs (41,545) Add:Interest and accretion expense 50,666 Balance August 31, 2025 699,121 Add:Interest and accretion expense 87,040 Balance February 28, 2026 $ 786,161 HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 5. Decommissioning obligation: The Company has estimated the present value of the decommissioning obligations which exist in relation to its properties to February 28, 2026. The estimate is based on the best available information regarding the timing and amount of expected expenditure and recorded a provision of $9,747. The obligation is calculated by estimating the current cost of decommissioning, applying to 2.5% inflation rate between the current period and the settlement date of November 30, 2029 and calculating the current period present value of the future obligation at a 20% discount rate. 6. Long-term debt: On December 19, 2025, December 24, 2025 and February 27, 2026 the Company closed 445 units of a Secured Convertible Debenture at a price of $1,000 per unit, for aggregate gross proceeds of $445,000. The Secured Convertible Debenture Units mature 24 months after close and bear interest at 15% per annum, paid annually in arrears, until maturity. The Secured Convertible Debenture Units are secured in second position behind the May 20, 2025 debentures (see Note 4.) 125 of the units were subscribed to by insiders of the corporation. Each holder of a Secured Convertible Debenture Unit shall have the right, up to maturity, to convert any or all of the Secured Convertible --- Debenture Units into equity units on the basis of each $1,000 principal amount for (i) 10,000 common shares of the Corporation issued at $0.10 per Common Share, and (ii) 5,000 Common Share purchase warrants with each Warrant exercisable until thirty-six months from closing the Debentures, into one Common Share at a price of $0.15. Cash finders fees of $21,000 were paid and 210,000, $0.10 finders warrants with an expiry of 24 month after closing were issued. The liability portion of the Secured Convertible Debenture Units was calculated using an estimated discount rate of 20%. The finders warrants were valued using the Black- Scholes option pricing model with a current share price of $0.06 or $0.08, a warrant expected life of 1 year, an expected price volatility of 120% and a risk free interest rate of 2.25%.: See the summary on the following table: Long-term debt obtained 445,000 $ Less: allocated to shares (117,480) Less: debenture issue costs (22,590) Balance February 28, 2026 304,930 $ HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 7. Share capital: Authorized • Unlimited common shares without par value and an unlimited number of preferred shares without par value. Issued and outstanding, basic and fully diluted: • 58,206,864. In the quarter ended February 28, 2026, $117,480 was added to share capital for the equity component of the convertible debentures issued during the period. See Note 6. 8. Reserves: a. Stock options: (i) Option plan: The Company has a stock option plan covering the grant of options to its directors, officers and employees. A limit of 10% of the issued and outstanding common shares base can be issued in stock options without shareholder approval. The stock option plan provides that the options are for a maximum term of ten years and that the option exercise price shall be for not less than the market price on the grant date. The following table reflects the continuity of stock options for the six months ended February 28, 2026: Grant Date Number of Options Weighted average exercise price Issued May 25, 2023 1,900,000 0.250 $ Issued April 11, 2023 1,040,000 $ 0.075 Issued December 5, 2024 1,420,000 $ 0.160 Issued December 26, 2024 80,000 $ 0.130 Balance August 31, 2025 and February 28, 2026 4,440,000 $ 0.180 The options vest 1/3 on grant date, 1/3 on the first anniversary and 1/3 on the second anniversary. The options expire 5 years from the date of the grant. The weighted average contractual life for the share options outstanding as at February 28, 2026 is 2.96 years (August 31, 2025 – 3.46 years). For the six months ended February 28, 2026, the share-based payments expense recognized was $30,848 (February 28, 2025 – $78,418). HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 8. Reserves (continued): b. Warrants: The following table reflects the continuity of warrants for the six months ended February 28, 2026: Number of Warrants Weighted average exercise price Balance August 31, 2024 10,091,000 0.075 $ Issued 8,609,409 0.300 Issued 1,045,455 0.200 Issued 423,024 0.200 Issued 1,538,500 0.300 Issued 3,775,000 0.075 Exercised (10,091,000) 0.075 Balance August 31, 2025 15,391,388 0.235 $ Expired (1,468,479) 0.200 --- $ Balance November 30, 2025 13,922,909 0.239 $ Issued 210,000 0.100 $ Balance February 28, 2026 14,132,909 0.237 $ As at February 28, 2026, the Company had outstanding warrants enabling the holder to acquire common shares as follows: Number of warrants Exercise price Expiry date 3,775,000 0.200 $ May 20, 2026 6,530,227 0.300 $ September 17, 2028 2,079,182 0.300 $ October 31, 2028 1,538,500 0.300 $ January 15, 2029 70,000 0.100 $ December 24, 2027 140,000 0.100 $ February 27, 2028 14,132,909 0.270 $ For the six months ended February 28, 2026, warrants valued at $49,238 expired (six months ended February 28, 2025-$Nil). HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 9. Related party transactions: The Company incurred the following expenses charged by key management personnel and companies controlled by key management personnel: Six Months Six Months February 28, 2026 February 28, 2025 Executive Compensation (a) 180,000 $ 180,000 $ Share-based payments (c) 30,848 $ 64,907 $ (a)Executive compensation includes all management fees and salaries accrued to the Company's current CEO, President and CFO. (b) Share based payments are the value of options granted to the Company's current CEO, President and CFO and Directors. See Note 8. Refer to Note 13 for more details on commitments and contingencies for certain management contracts. 10. Financial instruments and risk management: Financial instruments that are measured subsequent to initial recognition at fair value are grouped in Levels 1 to 3 based on the degree to which the fair value is observable: (a) Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; (b) Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantively the full term of the asset or liability; and (c) Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). The Company does not have any financial instruments carried at fair value as at February 28, 2026 or 2025. The carrying values of cash, receivables, accounts payable and accrued liabilities, and acquisition cost payable approximate their fair values because of their short terms to maturity. HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 10. Financial instruments and risk management (continued): (a) Financial instrument risk exposure and risk management: 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 below: (b) Credit risk: Credit risk is the risk of potential loss to the Company if a counterparty 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 and receivables. The Company limits the exposure to credit risk by only investing its cash with high credit quality financial --- institutions in business and saving accounts. The carrying amount of cash and receivables represents the Company’s maximum exposure to credit risk. (c) Interest rate risk: Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has no interest- bearing financial instruments which bear interest at variable rates. The Company is not exposed to material interest rate risk. (d) Liquidity risk: Liquidity risk is the risk that the Company will not be able to meet its financial obligations when they become due. The Company ensures, as far as reasonably possible, it will have sufficient capital in order to meet short-term business requirements, after taking into account cash flows used in operations and the Company’s holdings of cash. The Company’s cash is currently invested in business accounts which are available on demand by the Company for its programs. As at February 28, 2026, the Company had cash of $191,225 (August 31, 2025 - $111,385) to settle current liabilities of $4,846,658 (August 31, 2025- $4,519,357). (e) Foreign currency: The Company is exposed to foreign currency risk as some of its cash and accounts payable and accrued liabilities are held in United States dollars (“USD”), Euros and Polish Zloty. A portion of the Company’s acquisition cost payable is denominated in USD and Euros. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks at this time. HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 11. Capital management: The Company’s objectives when managing capital are: • To maintain and safeguard its accumulated capital in order to provide an adequate return to shareholders by maintaining a sufficient level of funds to acquire, explore, and develop other mineral properties. • To invest cash on hand in highly liquid and highly rated financial instruments with high credit quality issuers, thereby minimizing the risk of loss of principal. • To obtain the necessary financing to complete exploration and development of its properties, if and when it is required. In the management of capital, the Company includes shareholders’ equity in the definition of capital. The Company is not exposed to externally imposed capital requirements. The Company is not subject to any capital requirements imposed by a lending institution or regulatory body. The Company manages the capital structure and makes adjustments to it, based on the level of funds required to manage its operations in light of changes in economic conditions and the risk characteristics of its underlying assets. There were no significant changes in the Company’s approach to capital management during the three-month periods ended February 28, 2026 and 2025. In order to maximize ongoing exploration and future development efforts, the Company does not pay dividends. Notwithstanding the risks described in Note 1 of these financial statements, the Company expects to continue to raise funds, from time to time, to continue meeting its capital management objectives. HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 12. Ac --- quisition of subsidiaries in Poland: During June 2017, the Company entered into a memorandum of understanding (“MOU”) regarding the acquisition of a 100% interest the Poland Subsidiaries which hold five conventional oil and natural gas concessions in Poland from San Leon Energy plc (“SLE”). Subsequently, the Company entered into a series of definitive agreements with SLE, in September 2017, for the acquisition of the Poland Subsidiaries (the “Acquisition”). Under the terms of the MOU, the Company advanced USD$200,000 to the counterparty to cover certain obligations relating to the concessions going forward where such obligations would be assumed by the Company upon the completion of the transaction. USD$100,000 ($140,130) of the option payment is non-refundable if the transaction is not completed due to any action or inaction on the part of the Company and has been expensed as part of property investigation costs for the year ended August 31, 2017, while the remaining USD$100,000 ($140,130) was advanced as a loan which bore interest at the rate of 6% per annum. The definitive agreements were subsequently amended and pursuant to the amended terms, the Company agreed to pay the following, in exchange for a 100% interest in the subsidiaries holding the Cieszyn and Bielsko-Biala concessions (the “Primary Concessions”) in Poland: a) Cash payment of USD$1,080,000 ($1,513,404); b) $1,000,000 in common shares of the Company. The common shares are to be issued at the lesser of: a) $0.20 per share, b) the lowest price per share at which the Company completes an equity placement for a minimum of $1,000,000, up to but not including the date of closing of the acquisition, and c) the volume weighted average price of the Company’s common shares for the period of 10 trading days immediately prior to the closing date. There are various warranties the Company provided to SLE which must be maintained by the Company, including a requirement for the Company’s shares to remain trading on the TSXV. If Horizon is unable to meet these requirements, it will be required to pay to SLE the equivalent value of the common shares in cash, and c) a 6% net profits interest. d) The consideration for the acquisition of the subsidiaries holding the other 3 concessions, being the Kotlarka, Prusice, and Buchowice concessions (“Secondary Concessions”) is €10,000 ($14,826) per concession, the payment of administrative costs totaling USD$130,000 ($182,169) and the issuance of a 6% net profits interest. The Company subsequently withdrew the applications for these concessions in January 2020. e) The outstanding loan owing to the Company from SLE of USD$100,000 ($140,130) as at the closing date) was assigned to Energia Karpaty Zachodnie SP. Z.O.O SP.K., one of the Polish Subsidiaries. In addition, the Company accepted a transfer from SLE of certain intercompany loans. These loans have been eliminated in these interim condensed consolidated financial statements on consolidation. HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 12. Acquisition of subsidiaries in Poland (continued): On August 12, 2019, the Acquisition closed. On November 19, 2024 the Company received the final, signed concession agreements for a 100% working interest in the Bielsko-Biala and Cieszyn concessions located in southwest Poland. The consideration has been --- recorded as acquisition cost payable in the consolidated statements of financial position as at February 28, 2026 and August 31, 2025. On June 23, 2025 the Company negotiated an amendment to its definitive agreement with SLE to extend the due date for payment on the consideration owing to the earlier of October 31, 2025 or 5 days after an equity closing of USD $2,000,000 or greater. On October 31, 2025, the due date for payment of the consideration owing to SLE passed without payment being made. Per the June 23, 2025 amended definitive agreement, Horizon has until February 28, 2026 to make payment. After February 28, 2026 SLE can begin proceedings to reclaim ownership of the Poland subsidiaries. 13. Commitments and contingencies: (a) The Company’s oil and gas activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations. (b) The Company has discontinued oil and gas operations in various jurisdictions and has sold, dispersed of, or written down the carrying value of the related assets to nominal amounts. An estimate of the total liability, if any, for which the Company might become obligated as a result of its role as operator, guarantor, or indemnifier is not determinable, nor expected to be material, and no amount has been provided for in these consolidated financial statements. (c) The Poland concessions are subject to annual mining usufruct fees of Polish Zloty 331,932 ($127,080) and surface lease rentals paid to landowners of Polish Zloty 98,295 ($37,092). The fees are due in December and January of each year respectively. The Company is required to perform the work commitments within the time period allotted, which started on November 19, 2024, the date the licenses were granted. Failure to perform the work commitments in the time allotted could result in the licenses reverting to the Government of Poland. The work program in one period must be completed for the Company to retain the license and move onto the next phase of development. There is no minimum dollar amount to be spent. If the program is not completed, there are no penalties owing, or liabilities accruing. Therefore, no amounts have been recorded. HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 13. Commitments and contingencies (continued): (d) During 2020, the Company received a tax assessment for Petromanas in the amount of €2,085,686 ($3,340,304) relating to taxes assessed on a 2017 gain on intercompany debt forgiveness. The Company disagrees with the assessment and would have disputed the amount. However, during 2020, the Company lost control of Petromanas as it entered a court approved liquidation process. Accordingly, no amounts have been accrued in these consolidated financial statements relating to this contingent liability. During 2021 the Company was advised that the liquidator for Petromanas commenced action against the Company’s subsidiary Gallic Lux 2 in order to recover the amount owing pursuant to the tax assessment. The Company believes the claims are without m --- erit. As the ultimate resolution of this dispute cannot be predicted at this time, no liability has been accrued related to it as at February 28, 2026 or August 31, 2025. Gallic Lux 2 was dissolved on November 29, 2024. (e) The Company may be subject to various claims, lawsuits and other complaints arising in the ordinary course of business. The Company records provisions for losses when claims become probable and the amounts are estimable. Although the outcome of such matters cannot be determined, it is the opinion of management that the final resolution of these matters will not have a material adverse effect on the Company’s financial condition, operations or liquidity. The outcome of these litigations cannot be reasonably determined, as a result, no amounts have been accrued. (f) The Company is party to certain management contracts. At the year-end these contracts contain minimum commitments of approximately $350,000 for each of three executives, totaling $1,050,000. The payment is triggered by termination without due cause or a corporate change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. 14. Subsequent events: Convertible Debenture On March 20, 2026 the Company closed a Secured Convertible Debenture Unit financing of 1,213 units for a total of $1,213,000. The debentures bear interest from the applicable issuance date at 7% per annum until the date that is 24 months following the closing date (the "Maturity Date") with interest paid semi-annually, in arrears, in cash or shares at the Company’s option. The debentures are secured in third position behind the $720,000 of debentures issued on May 20, 2025 and the $445,000 in convertible debentures issued in December 2025 and February 2026. HORIZON PETROLEUM LTD. Notes to the Interim Condensed Consolidated Financial Statements Unaudited (Expressed in Canadian dollars) As at and for the three and six months ended February 28, 2026 and 2025 14. Subsequent events (continued): Each holder of a Secured Convertible Debenture Unit shall have the right, at its option, at any time up to and including the maturity date, to convert any or all of the Secured Convertible Debenture Units into equity units on the basis of each $1,000 principal amount for (i) 9,524 common shares of the Corporation issued at $0.105 per Common Share, and (ii) 4,762 Common Share purchase warrants with each warrant exercisable until thirty-six months from closing the Debentures, into one (1) Common Share at a price of $0.15. In connection with the tranche, the Company paid finder's fees of $84,910 cash and 808,667 finder warrants with an exercise price of $0.10 per warrant with an expiry date of 12 months after closing. Convertible Debenture On April 13 and April 24, 2026 the Company closed two tranches of a Secured Convertible Debenture Unit financing of 4,000 units for a total of $4,000,000. The Secured Convertible Debenture Unit financing is closed. The debentures bear interest from the applicable issuance date at 7% per annum until the date that is 24 months following the closing date (the "Maturity Date") with interest paid semi-annually, in arrears, in cash or shares at the Company’s option. The debentures are secured in third position behind the $445,000 in convertible debentures issued in December 2025 and February 2026 and the $1,213,000 in convertible debentures issued on March 20, 2026. Each holder of a Secured --- Convertible Debenture Unit shall have the right, at its option, at any time up to and including the maturity date, to convert any or all of the Secured Convertible Debenture Units into equity units on the basis of each $1,000 principal amount for (i) 9,524 common shares of the Corporation issued at $0.105 per Common Share, and (ii) 4,762 Common Share purchase warrants with each warrant exercisable until thirty-six months from closing the Debentures, into one (1) Common Share at a price of $0.15. In connection with the tranche, the Company paid finder's fees of $260,400 cash and 2,480,000 finders warrants with an exercise price of $0.105 per warrant with an expiry date of 12 months after closing. Prepayment of May Debenture In March and April 2026, the Company prepaid the $720,000 debenture issued on May 20, 2025. The total payment including accrued interest was $828,000.