OTC: LEEEF

Since acquiring a 1,900-acre property in Santa
Barbara County in 2023, LEEF has built a vertically integrated cannabis platform spanning cultivation, extraction, and manufacturing.
LEEF’s initial 57 acres of cultivation planted in 2025 on Salisbury Canyon Ranch mark a pivotal shift—allowing LEEF to grow
its own biomass and reduce input costs by an estimated 40–60%; full-scale cultivation is anticipated to reach 179.9 acres by the
fall of 2026.

On the extraction front, the Company operates
state-of-the-art closed-loop facilities capable of producing more than 1 million pounds of concentrates annually. In early 2025,
it executed expansions across all three extraction lines—ethanol (+66%), solventless (+50%), and hydrocarbon (+38%). According
to the California Cannabis Market Outlook 2024 Report (commissioned by the California Department Cannabis Control), the regulated (licensed)
cannabis segment continues to supply approximately 40 % of the total cannabis consumption in California, with the balance met by unlicensed
sources. Industry sources estimate that California’s legal cannabis retail market in 2024 approached USD $4.66 billion. A
third-party market research provider (Stellar MR) estimates that in 2024, flowers accounted for ~57 % of market value, with concentrates
~42 %. Based on a projected growth trajectory (e.g. from Grand View Research’s implied CAGR of 9.4 % from 2024 onward), we believe
the California legal cannabis market for 2025 may exceed USD 6.5 billion (which implies continued growth in downstream demand for concentrates).

In this context, our 2025 bulk concentrate-based (extracts, oils, vapors)
sales to California and New York brands of USD $31.3 million highlight our positioning in a high-value segment of a multi-billion dollar
market.

LEEF’s revenue model centers on bulk B2B
concentrate supply, providing extracted products to major brands across California and New York. While the California cannabis market has experienced significant price compression in recent years, putting downward
pressure on average selling prices and gross margins, the Company grew revenue 22% in 2025 to $34.8 million by expanding B2B volume and
entering the New York market. To address margin pressure, the Company commenced cultivation at its Salisbury Canyon Ranch property, bringing
key portions of its biomass supply chain in-house. The impact was immediate and measurable — gross margins expanded from 27% in
2024 to 30% in 2025, with the second half of the year reaching 41%. Vertical integration of cultivation and extraction is expected to
continue reducing input costs and enhancing gross margins as production at the Ranch scales toward its full 179.9 licensed acres.

In becoming a vertically integrated cannabis
enterprise, we now own our own cultivation operation, continue to operate advanced extraction facilities, and focus on our largest revenue
stream of B2B concentrate sales. With cost-efficient cultivation, growing throughput, the expectation of strong financial performance,
and the ability to generate considerable asset value, LEEF is well-positioned to capitalize on scaling opportunities across California
and beyond.

In December 2024, the Company adopted a Bitcoin treasury strategy as part
of its broader capital allocation policy. Rather than deploying cash reserves to purchase Bitcoin directly, the Company accumulates Bitcoin
organically through its operations — accepting BTC as payment in both its B2B concentrate transactions and at its retail location.
We believe Bitcoin will appreciate over time and that growing our Bitcoin holdings through the course of ordinary business activity is
a low-friction way to strengthen our balance sheet and build a strategic reserve asset without diverting free cash flow from operations.
Our Bitcoin holdings are secured in institutional-grade cold storage and are intended to be held on a long-term basis.

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Our brands include the following:

LEEF Brands

LEEF Brands, Inc. is a California-based, vertically
integrated cannabis holding company that owns and operates a complete supply-chain — from cultivation and extraction to retail
and white-label manufacturing — under its portfolio.

●
Advanced extraction facility

●
Large-scale cultivation ranch

●
CBD Wellness line

LEEF Labs

LEEF Labs is a California and New York based, vertically integrated cannabis
extraction and manufacturing company.

●
Large-scale ethanol, hydrocarbon, and solventless extraction to produce
wholesale:

●
Concentrates

●
Distillates

●
Edibles

●
White-label services

LEEF Organics

Leef Organics is a CBD wellness line that can
be purchased online at leeforganics.com or in select retailers across North America including the Ritz Carlton and many other spas and
hospitality locations.

● Products include:

●
Recover CBD Roll on

●
The Chill CBD Balm

●
The Exfoliant CBD Body Scrub

●
Revive CBD Balm

●
Wild Crafted CBD Skin Oil Mini

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SCRSB

Salisbury Canyon Ranch is a private,
1,900-acre property located in the Cuyama Valley of Santa Barbara County, California. With 179.9 licensed acres of cannabis canopy
under cultivation, the ranch serves as both a large-scale cultivation facility and an exclusive lodging and event venue. By
reservation only via salisburycanyonranch.com.

●
Large-scale cannabis cultivation

●
The property offers a variety of accommodations

●
Private stays

●
Corporate retreats

●
Team-building events

Principal Products and Markets

Our principal products are bulk cannabis concentrates,
including distillate oils, live resin, and rosin. We primarily sell to cannabis brands that will take our concentrates and develop branded
products. We currently operate in California and New York, which represent two of the largest regulated cannabis markets in the United
States.

Distribution Methods

We sell our products directly to licensed cannabis
brands, which incorporate our concentrates into finished goods sold through licensed retailers. The Company has one retail location,
The Leaf at El Paseo in Palm Desert, California. The retail location does not provide material revenue to the Company.

New Products and Services

We hold a Type 1 Processor (Adult-Use) license
in New York, which authorizes us to perform the full suite of cannabis processing operations including extraction from raw biomass, blending
and infusing extracts into end products, and packaging, labeling, and branding (or entering into white-label contracts). Under New York’s
Marijuana Regulation and Taxation Act (MRTA) and implementing rules, processors are permitted to acquire cannabis from licensed cultivators,
process it into derivative products, and sell into the licensed distribution channel (and may hold a distributor license for their own
product). The license is valid for a fixed term (e.g. two years), at which point it must be renewed, and we must maintain compliance
with GMP (Good Manufacturing Practice) standards at our processing facilities throughout the term. We are restricted to only the processing
activities approved in our license application, and must adhere continuously to all statutory, regulatory, and guidance requirements.

As of Q4, 2025, the Company has begun limited production in New York
and expects to continue to scale operations over the coming months.

Competitive Conditions

The cannabis concentrate market is highly competitive,
with numerous private and public companies competing on quality, price, and reliability. We compete primarily with other bulk concentrate
manufacturers. We believe our vertically integrated supply chain, including company-owned cultivation, and our reputation for quality
and consistency position us competitively within the industry.

Raw Materials and Suppliers

We source cannabis input material, including
both dried biomass and fresh-frozen cannabis, for use in our extraction operations. Until early 2025, we purchased cannabis material
from multiple farms throughout California. In 2025, the Company commenced cultivation activities at its wholly controlled Salisbury Canyon
Ranch property located in Santa Barbara County, California. The Ranch encompasses approximately 1,900 acres in total, of which 179.9
acres are permitted for outdoor cannabis cultivation—representing one of the largest licensed cultivation sites in the county.

The initial development phase in 2025
included planting on approximately 57 canopy acres. Additional phases are planned through 2027, when the full 179.9 acres are
expected to be active. When fully planted and producing at targeted yields, the Ranch is expected to provide roughly 80%–90%
of the raw cannabis biomass required for the Company’s concentrate production, with the remainder sourced from long-standing
third-party cultivation partners.

The property includes irrigation, security, and
post-harvest infrastructure sufficient to support current operations. The Company believes that the acreage and facilities are adequate
to meet both current and foreseeable cultivation needs. Bringing this supply chain in-house is expected to reduce input costs, improve
quality control, and enhance gross margins across the Company’s extraction and manufacturing operations.

Major Customers

We do not have any single customer that represents
more than 10% of our revenue; however, we supply concentrates to many of the top brands in California.

Intellectual Property and Contracts

We do not currently own or license any patents,
trademarks, or other intellectual property that is material to our operations. We do not have exclusive licenses, franchise rights, royalty
agreements, or significant labor contracts.

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Government Approvals

We operate under various state and local licenses
and approvals, including:

●
California: Type 7 manufacturing license, distribution license, retail
license, hemp license, and all applicable municipal permits.

●
New York: Type 1 processor license.

All licenses are active and in good standing.

Regulatory Impact

Our operations are subject to extensive state
and local regulations in California and New York. Additionally, as a cannabis business operating in the United States, we are subject
to Section 280E of the Internal Revenue Code, which disallows deductions for ordinary business expenses due to the federal classification
of cannabis as a Schedule I controlled substance. This has a material impact on our effective tax rate. Potential federal legalization
or reclassification of cannabis could eliminate the impact of Section 280E and enable interstate commerce, which may significantly alter
competitive dynamics.

Environmental Compliance

We are required to comply with various environmental
regulations, including cannabis waste disposal, water usage, and air quality standards. Compliance does not currently result in material
costs to our business.

Employees

As of December 31, 2025, we employ approximately
81 full-time employees.

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Industry Background

The legal cannabis industry emerged as a response
to growing public support for medical and adult-use legalization, along with recognition of its economic potential. The transition from
prohibition to regulation has occurred in phases, primarily through state-level reforms. Medical Cannabis is legal in 40 U.S. states
and dozens of countries, starting with California’s Prop 215 (1996). Adult-Use (Recreational) is legal in 24+ U.S. states, Canada
(2018), Germany (2024), and several LATAM and African nations. Cannabis remains a Schedule I drug under federal law, creating challenges
for banking, taxation (280E), and interstate commerce. Rescheduling & SAFE Banking legislation are under consideration, which may
accelerate investment and infrastructure growth.

The historical challenges and risks lie in banking,
taxation (280E), and interstate commerce being limited. There is regulatory inconsistency and a patchwork of laws across states and countries.
The market is facing oversupply and price compression, particularly in mature markets like California and Oregon. There still remains
an illicit market competition, which is persisting due to price advantages and limited enforcement. Further the industry has seen capital
constraints with public cannabis companies often facing underperformance and funding challenges.

Management believes that the best way to capture
this growing market is by aggressively expanding our operations through organic growth, increased multi-state operations, and acquisition.
Opportunities lie with future rescheduling to unlock institutional investment and interstate trade, consolidation of the market with
M&A and distressed asset acquisitions offering growth paths for strong operators, and demand for low-impact growing methods and traceable
supply chains by utilizing sustainability and technology.

Our Competitive Strengths

Our competitive edge in the legal cannabis industry
focuses on the Company blending powerful vertical integration, advanced extraction capability, and strategic multi-state growth with
savvy cost management. Further our B2B-oriented approach, tech adoption, and what we perceive as undervalued market position make us
a strong contender in the cannabis extraction and concentrate space.

Using our cultivation-to-extract model through
direct ownership and operation of our 1,900-acre ranch with plans, dramatically cuts biomass costs and boosts margins, giving full supply-chain
control. As mentioned later in this annual filing, our strategic cultivation partnerships bring experts to assist with growing and focus
on quality as it relates to our extraction business.

Our cultivation process feeds directly into our
scaled extraction capacity and technology. We have multi-platform extraction and a closed loop design. Utilizing technology, we enhance
yields and reduce the amount of volume prior to extraction and preserve potency, which is highly sought after in the California market.

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Our Growth and Marketing Strategy

Our leaders have a shared vision for success.
Our management team is among the most diverse in the industry, bringing years of real-world experience, keen insight, and a shared vision
to LEEF. We’ve brought together a large group of cannabis product development talent with experience in multiple legal jurisdictions
and an operations team with 25+ years of experience scaling cannabis manufacturing businesses.

Focusing on vertical integration through cultivation
assets with our Salisbury Canyon Ranch will produce its own biomass—cutting raw material costs by an estimated 40–65% and
boosting margin control. Further cultivation partnerships and collaboration with cultivation expertise ensures high-quality supply and
operational efficiency. The ownership of the supply chain helps stabilize prices, reduce dependency on external suppliers, and enhance
cost control providing strategic payoff.

The elements of our growth strategy start with
our commitment to continuous capital reinvestment into our Company, its subsidiaries and our strategic industry partners. We aim to lead
by example and set the pace for our industry in order to attract the leading cannabis brands to join us as stakeholders. This is the
core that allows stakeholder’s growth in growing markets

By emphasizing supply reliability, product consistency,
and thought leadership, LEEF strengthens its brand equity within the industry. With continued focus on capital strategy and supporting
sustainable expansion we can mitigate dilution and leverage digital assets. This can further position the Company to methodically scaling
extraction and cultivation capacity to tighten margin controls and fuel revenue growth.

The Company combines vertical integration, production
scaling, strategic partnerships, disciplined finance, and market positioning into a coherent growth strategy. It’s engineered to
thrive as a foundational extraction partner and become a Coast to Coast Multi State Operator (“MSO”) powerhouse.

Risks Associated with Our Business

Our business is subject to
numerous risks, which are more fully described in the section entitled “Risk Factors” beginning on page 7 of this annual
filing. You should read these risks before you invest in our common shares. We may be unable, for many reasons, including those that
are beyond our control, to implement our business strategy.

As a result of these risks
and other risks described under “Risk Factors,” there is no guarantee that we will experience growth or profitability in
the future.

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Recent Developments

There are several trends that provide opportunities
and risks for the Company:

●
Growing demand from health-conscious individuals, Gen Z, and older adults for low-dose, non-smoking formats (e.g., edibles, tinctures,
topicals). As of 2025, 24 US states plus the District of Columbia have legalized recreational cannabis. Consumption among aging adults
is rising. There are risks associated with emerging studies showing increased cardiovascular risks—even from non-smoking forms—prompting
calls for health warnings and tighter regulation.

●
The mergers and acquisitions market offers growth potential for larger, well-financed firms. As midsize players exit, scale becomes essential.
On the contrary, oversupply and saturation in mature markets (e.g., California) is compressing prices—retail prices have fallen
~32% since 2021.

●
Premium, rigorously tested products that guarantee safety (pesticide-free, accurate dosage) can command higher margins, and consumer
trust provide manufacturers such as our Company a unique opportunity in an overly saturated market.

●
Potential rescheduling (“Schedule III”) and SAFE Banking Act progress may unlock better financial access and insurance products.
Until then, cannabis businesses operate in a cash-heavy environment and face high insurance premiums, limited coverage, and complex regulation.

Our Corporate Information

The Company was founded as Leef Holdings in July
2018 in La Jolla, California. On April 20, 2022, the Company effectively merged with Icanic Brands, Inc, a publicly listed Canadian company
and began operating as Leef Brands, Inc., a British Columbia Corporation.

Our principal executive offices are located at
Suite 2500 Park Place, 666 Burrard Street Vancouver, BC V6C 2X8, Canada. Our telephone number is 416-797-6455. Our Internet website address
is www.leefbrands.com. The information contained on, or that can be accessed through, our website is not a part of this annual filing.
We have included our website address in this annual filing solely as an inactive textual reference.

Implications of Being an Emerging Growth Company
and a Smaller Reporting Company

We are an “emerging
growth company,” as defined in the Jumpstart Our Business Startups Act of 2002. We will remain an emerging growth company until
the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of an offering, (b) in which
we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means
the market value of our common shares that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date
on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We refer to the Jumpstart
Our Business Startups Act of 2012 in this annual filing as the “JOBS Act,” and references in this annual filing to “emerging
growth company” shall have the meaning associated with it in the JOBS Act.

As an emerging growth company,
we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies.
These provisions include:

●
reduced disclosure about our executive compensation arrangements;

●
no requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements; and

●
exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

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We have elected to adopt
certain reduced disclosure requirements for purposes of this annual filing is a part. In addition,
for so long as we qualify as an emerging growth company, we expect to take advantage of certain of the reduced reporting and other requirements
of the JOBS Act with respect to the periodic reports we will file with the Securities and Exchange Commission, or SEC, and proxy statements
that we use to solicit proxies from our stockholders. As a result, the information contained in this annual filing and in our periodic
reports and proxy statements may be different than the information provided by other public companies.

In addition, the JOBS Act
provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting
standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with
public company effective dates for new or revised accounting standards.

For certain risks related
to our status as an emerging growth company, see the section titled “Risk Factors—Risks Related to Our Common Shares —We
are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth
companies will make our common shares less attractive to investors.”

We are also a “smaller
reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the
most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value
of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most
recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller
reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure
requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present
only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth
companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

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