Leef converts $10.5M (U.S.) debentures to equity early

Executive Summary

• Leef Brands Inc. completed the full early conversion of its outstanding 11% secured convertible debentures, totaling approximately $10.59 million in principal and accrued interest.
• The conversion was executed under amended incentive terms, resulting in the issuance of approximately 59.2 million units to debenture holders.
• The transaction significantly strengthens the company's balance sheet by eliminating substantially all remaining long-term debenture debt, while CEO Micah Anderson also converted his personal debenture and additional notes payable.

Key Details

• Transaction Value: Full early conversion of debentures in principal amount together with accrued and unpaid interest of approximately $10,588,928 (U.S.).
• Conversion Terms:
  • Conversion price: 25 cents per unit.
  • Unit composition: One common share and one common share purchase warrant.
  • Warrant terms: Exercisable at 30 cents for a period of 36 months.
• Equity Issuance: Approximately 59,209,048 units issued to settle the debentures.
• Insider Participation: CEO Micah Anderson settled his full debenture under the same terms, plus an additional $982,080 in notes payable at 25 cents per unit.
• Balance Sheet Impact:
  • Elimination of substantially all remaining long-term debenture debt.
  • Remaining real estate debt on balance sheet:
    • One note payable for $4.2 million at 4% interest.
    • A second note payable for $7 million at 0% interest.
• Operational Context: The conversion coincides with 24% year-over-year revenue growth and a doubling of gross margins in Q3.
• Strategic Goals: Improves financial flexibility for scaling operations in California and New York, including expanding Salisbury Canyon Ranch and New York operations.

Notable Quotes

• "We are pleased to complete this full conversion, which immediately strengthens our capital structure and enhances our financial flexibility heading into 2026... I am proud to participate personally in this conversion alongside our long-standing debenture holders." — Micah Anderson, CEO
• "With this conversion complete, the company enters 2026 with a simplified balance sheet, improved margins from cultivation, and a new, high-margin revenue stream from our New York operations." — Kevin Wilson, CFO