LEEF BRANDS INC.
(FORMERLY ICANIC BRANDS COMPANY INC.)

BRANDS

MANAGEMENT DISCUSSION AND ANALYSIS
AS OF SEPTEMBER 30, 2025 AND DECEMBER 31, 2024 AND
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(Unaudited - Expressed in United States Dollars)

LEEF BRANDS INC. (FORMERLY ICANIC BRANDS COMPANY INC.)
Management Discussion and Analysis
As of September 30, 2025 and December 31, 2024 and for the Three and Nine Months Ended September 30, 2025 and 2024

Set out below is a review of the activities, results of operations and financial condition of Leef Brands Inc. (Formerly Icanic Brands Company Inc). (the "Company") for the three and nine months ended September 30, 2025 and 2024. The discussion below should be read in conjunction with the Company's condensed consolidated financial statements (unaudited) for the three and nine months ended September 30, 2025 and 2024 and the audited consolidated financial statements for the years ended December 31, 2024 and 2023. Those financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All dollar figures included in the following Management Discussion and Analysis ("MD&A") are quoted in United States ("US") dollars unless otherwise indicated. This MD&A has been prepared as at November 3, 2025. The Company is a reporting issuer in the provinces British Columbia, Alberta and Ontario and is listed on the Canadian Securities Exchange as LEEF. Additional information related to the Company, is available on SEDAR at www.sedar.com.

1. BACKGROUND

Leef Brands Inc. (Formerly Icanic Brands Company Inc.) was incorporated on September 15, 2011, under the laws of the province of British Columbia and is registered extra-provincially under the laws of Ontario. The Company is a cannabis branded products manufacturer based in California. The Company is a public company whose common shares are listed for trading on the Canadian Securities Exchange ("CSE") under the symbol "LEEF". The head office of the Company is located at Suite 2500 Park Place, 666 Burrard Street, Vancouver, BC V6C 2X8.

Reverse recapitalization

On April 20, 2022, the Company acquired all of the common stock of LEEF Holdings, Inc. ("LEEF"). LEEF is a leading cannabis extraction company located in the state of California and provides bulk concentrate to cannabis brands in the state of California. LEEF's manufacturing capabilities in a 12,000 square foot extraction and manufacturing facility with significant throughput and distillate extraction capability. Core manufacturing competencies include ethanol extraction (Type 6 manufacturing license), hydrocarbon extraction (Type 7 manufacturing license), and solventless extraction. LEEF received a 186.7 acre cultivation land use permit, which will result in owning one of the largest cannabis cultivation site in the state of California. See details on the transaction included in the "Company Highlights - During the three and nine months ended September 30, 2025 and 2024, and subsequent" discussed below.

Non-GAAP Financial Measures

In addition to providing financial measurements based on GAAP, the Company provides additional financial metrics that are not defined under, prepared in accordance with or a standardized financial measure under GAAP and may not be comparable to similar financial measures disclosed by other issuers. Management uses such non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision-making, for planning and forecasting purposes and to evaluate the Company's financial performance. These non-GAAP financial measures (collectively, the "non-GAAP financial measures") are:

EBITDA Net Loss (GAAP) adjusted for interest and financing costs, income taxes, depreciation, and amortization.
Adjusted EBITDA (Non-GAAP) adjusted for share-based compensation, stock appreciation rights expense, loss (income) on equity method investments, change in fair value of derivative liabilities, change in fair value of contingent liabilities, acquisition-related professional fees, non-operational start-up costs and loss on disposition of subsidiary. Non-operational start-up costs are set-up costs to prepare a location for its intended use. Start-up costs are expensed as incurred and are not indicative of ongoing operations.

LEEF BRANDS INC. (FORMERLY ICANIC BRANDS COMPANY INC.)

Management Discussion and Analysis

As of September 30, 2025 and December 31, 2024 and for the Three and Nine Months Ended September 30, 2025

and 2024

1. BACKGROUND (Continued)

Management believes that these non-GAAP financial measures assess the Company's ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. Management also believes that these non-GAAP financial measures enable investors to evaluate the Company's operating results and future prospects in the same manner as management. These non-GAAP financial measures may also exclude certain material non-cash items, expenses and gains and other adjustments that may be unusual in nature, infrequent or that the Company believes are not reflective of the Company's ongoing operating results and performance.

As there are no standardized methods of calculating these non-GAAP financial measures, the Company's methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similarly titled measures used by others in the cannabis industry or otherwise. Accordingly, these non-GAAP financial measures are intended to provide additional information and are not intended to represent and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity. Such non-GAAP financial measures should only be considered in conjunction with the GAAP financial measures presented herein.

These supplemental non-GAAP financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. In addition, the Company believes investors use both GAAP and non-GAAP measures to assess management's past and future decisions associated with its priorities and allocation of capital, as well as to analyze how the business operates in, or responds to, swings in economic cycles or to other events that impact the cannabis industry.

These non-GAAP financial measures have important limitations as analytical tools and should not be considered in isolation or as a substitute for any standardized measure under GAAP. For example, certain of these non-GAAP financial measures:

exclude certain tax payments that may reduce cash available to the Company;
do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;
do not reflect changes in, or cash requirements for, working capital needs; and
do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on debt.

Other companies in the cannabis industry may calculate these measures differently than the Company does, limiting their usefulness as comparative measures.

LEEF BRANDS INC. (FORMERLY ICANIC BRANDS COMPANY INC.)

Management Discussion and Analysis

As of September 30, 2025 and December 31, 2024 and for the Three and Nine Months Ended September 30, 2025

and 2024

1. BACKGROUND (Continued)

Adjusted EBITDA (non-GAAP) (Unaudited)

The following table provides a reconciliation of the Company's net loss to Adjusted EBITDA (non-GAAP) for the three and nine months ended September 30, 2025 and 2024:

	Three Months Ended		Nine Months Ended
	September 30, 2025	September 30, 2024	September 30, 2025	September 30, 2024
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Net Loss (GAAP)	$ (3,803,812)	$ (9,344,741)	$ (6,471,235)	$ (17,446,633)
Depreciation and amortization	598,948	577,277	1,703,462	1,412,825
Interest expense	635,385	532,327	1,807,274	4,657,713
Income tax expense	1,038,063	442,068	2,367,067	2,203,377
EBITDA (non-GAAP)	(1,531,416)	(7,793,069)	(593,432)	(9,172,718)
Adjustments:
Share-based compensation	297,246	121,558	1,280,131	1,981,739
Gain on extinguishment of debt	-	-	-	2,883,245
Change in fair value of derivative liabilities	1,970,168	5,271,824	(2,134,953)	5,012,433
Adjusted EBITDA (non-IFRS)	$ 735,998	$ (2,399,687)	$ (1,448,253)	$ 704,700

Adjusted EBITDA, a non-GAAP financial measure, was a gain of $0.7 million and a loss of ($1.4) million, respectively, for the three and nine months ended September 30, 2025, compared to a loss of ($2.4) and a gain of $0.7 million for the three and nine months ended September 30, 2024, respectively. The unfavorable change in adjusted EBITDA of $2.1 million for the nine months ended September 30, 2025 compared with the same period in 2024, is primarily due to a reduction in net loss of $11.0 million, net of a decrease in interest expense of $2.9 million and the difference in change in fair value of derivative liabilities of $7.1 million. The favorable change in adjusted EBITDA of $3.1 million for the three months ended September 30, 2025 compared to the same period in 2024 is primarily due to a decrease in net loss of $5.5 million, net of a difference in change in fair value of derivative liabilities of $3.3 million.

2. COMPANY HIGHLIGHTS

During the nine months ended September 30, 2025 and 2024, and subsequent:

In 2024, the Company continued to strategically transition away from consumer-packaged goods (CPG) sales through retail strategy, shifting the sales focus to leveraging our core strength in concentrate manufacturing to support and power the top brands in California. This strategic pivot was aimed at aligning the Company's resources with market demands. As a result of this transition, the Company's revenues had decreased in 2024, primarily due to the reduction in CPG sales. While CPG sales were more substantial in 2023, they have become immaterial in 2024 and 2025 as the Company concentrated efforts on the bulk sales concentrates market, which have led to increased revenue for the nine months ended September 30, 2025 compared to the prior year. The Company has remained committed to managing selling, general, and administrative (SG&A) expenses efficiently. Management continues to explore cost-saving measures and maintain a disciplined approach to financial management, ensuring that we operate as leanly as possible while positioning the company for future growth.

While Icanic Brands, Inc. was the legal acquirer in the Business Combination, because LEEF Holdings, Inc. was deemed the accounting acquirer, the historical financial statements of LEEF Holdings, Inc. became the historical financial statements of the Company upon the consummation of the Business Combination. As a result, the financial statements included in this report reflect (i) the historical operating results of LEEF Holdings, Inc. prior to the Business Combination; (ii) the combined results of the Company and LEEF Holdings, Inc. following the closing of the Business Combination; (iii) the assets and liabilities of LEEF Holdings, Inc. at their historical cost; and (iv) the Company's equity structure before and after the Business Combination.

2. COMPANY HIGHLIGHTS (Continued)

Following our acquisition of LEEF Holdings, Inc. on April 20, 2022, we implemented cost-cutting measures to consolidate staff and resources at our main facility in northern California. While the process was not without its challenges, we expect to see further benefits of these measures beginning in the first quarter of 2024 and beyond, as we continue to optimize our operations and invest in other areas of the business.

The Leaf Business Combination

On September 19, 2022, the Company entered into a non-binding LOI to acquire 100% equity interest in The Leaf at 73740 LLC ("The Leaf"), a premium California retailer and dispensary in Palm Desert, California. This acquisition closed during the first quarter of 2023 on January 11, 2023. For the consideration of the interests, the Company issued 76,336,969 common shares valued at approximately $3.7 million in addition to holdbacks and working capital adjustment consideration of approximately $1.2 million. On April 18, 2023, there was an additional 5,083,983 shares issued with a fair value of $252,000 and was related to the working capital adjustment for the total consideration noted above.

Share Consolidation Plan

On October 29, 2024, the Company announced a 10:1 share consolidation plan. The Consolidation has consolidated the Company's issued and outstanding common shares based on ten pre-consolidation shares for one post-consolidation share. The Consolidation aimed to improve the Company's capital structure, increase its attractiveness to institutional investors, and provide a more stable trading platform. Upon completion of the Consolidation, the Company had approximately 162,762,651 common shares issued and outstanding, subject to rounding adjustments. The Consolidation took effect November 18, 2024. Accordingly, all periods presented have been adjusted retroactively to reflect the 10:1 share consolidation plan.

Operational update

Effective June 2024, the Company restructured its matured debt obligations for convertible debentures. As such the Company reduced its overall obligation and extended its maturity date through 2027 through the conversion of a portion of debentures totaling approximately $4.9 million through the issuance of 22,395,948 common shares.

The Company continues to settle and pay down unfavorable debt arrangements and increase liquidity through existing operations and practical equity driven capital raises.

LEEF BRANDS INC. (FORMERLY ICANIC BRANDS COMPANY INC.)

Management Discussion and Analysis

As of September 30, 2025 and December 31, 2024 and for the Three and Nine Months Ended September 30, 2025

and 2024

2. COMPANY HIGHLIGHTS (Continued)

SELECTED FINANCIAL INFORMATION

A summary of selected financial information for the three and nine months ended September 30, 2025 and 2024 is as follows, as expressed in United States dollars, and in accordance with GAAP:

	Three Months Ended		Nine Months Ended
	September 30, 2025	September 30, 2024	September 30, 2025	September 30, 2024
Net revenue	$ 8,379,306	$ 6,763,391	$ 26,469,224	$ 22,505,391
Gross profit	$ 3,778,616	$ 1,480,377	$ 8,361,389	$ 7,294,319
Loss from operations	$ (135,801)	$ (2,939,414)	$ (4,416,504)	$ (2,678,166)
Total other expense, net	$ 2,629,948	$ 5,804,151	$ (312,336)	$ 12,557,776
Net loss and comprehensive loss	$ (3,803,812)	$ (9,185,633)	$ (6,471,235)	$ (17,439,319)
Net loss and comprehensive loss attributable to shareholders' of Leef Brands Company Inc.	$ (3,803,812)	$ (9,344,741)	$ (6,471,235)	$ (17,446,633)
Basic and diluted loss per share attributable to shareholders' of Leef Brands Company Inc.	$ (0.02)	$ (0.06)	$ (0.04)	$ (0.13)

During the three and nine months ended September 30, 2025, revenues increased to $8.4 and $26.5 million, respectively, as compared to revenues for three and nine months ended September 30, 2024 of $6.7 million and $22.5 million, respectively. During the three and nine months ended September 30, 2025, net loss and comprehensive loss was $3.8 million and $6.5 million as compared to net loss and comprehensive loss for the three and nine months ended September 30, 2024 of $9.3 million and $17.4 million, respectively.

3. RESULTS OF OPERATIONS

3.1 Results of operations for the three months ended September 30, 2025 and 2024

Revenue

Revenue for the three months ended September 30, 2025, was $8,379,306, an increase of $1,615,915, or 24%, compared to $6,763,391 for the same period in 2024. The year-over-year increase reflects the Company's continued diversification of its product mix and a strategic emphasis on partnering with high-quality brands within the wholesale concentrate market. This focus on core manufacturing strengths and premium brand partnerships has contributed to stronger and more stable sales performance while maintaining disciplined credit practices. In addition, the Company entered the New York market near the end of the quarter, marking an initial step in its multi-state expansion strategy.

Cost of sales and gross profit

Cost of sales for the three months ended September 30, 2025 was $4,600,690, a decrease of $682,324, or 13% as compared to $5,283,015 for the three months ended September 30, 2024. Gross profit for the three months ended September 30, 2025 was $3,778,616, representing a gross margin of 45.1%, compared with a gross profit of $1,480,376, representing a gross margin of 21.9% for the three months ended September 30, 2024. The increase in gross profit margin percentage is primarily attributable to bringing the Salisbury Canyon Ranch ("SCR") online, resulting in a significant reduction in input costs. SCR represents the Company's internal supply chain, allowing for the cultivation of high-quality biomass at substantially lower costs compared to third-party sourcing.

3. RESULTS OF OPERATIONS (Continued)

Total operating expenses

Total operating expenses for the three months ended September 30, 2025 were $3,914,417, a decrease of $505,374, or 11%, compared to total operating expenses of $4,419,791 for the three months ended September 30, 2024. The decrease in total operating expenses was attributable to the factors described below.

Wages and salaries for the three months ended September 30, 2025 and 2024 were $1,440,974 and $1,990,892, respectively, a decrease of $549,918, or 28%. The decrease in wages and salaries expense is primarily attributable to stock compensation expense.

Net income (loss) and comprehensive income (loss) attributable to shareholders of LEEF Brands, Inc.

Net income (loss) and comprehensive income (loss) attributable to shareholders of LEEF Brands, Inc. for the three months ended September 30, 2025 and 2024 were losses of $3,803,812 and $9,344,741, respectively, a decreased loss of $5,540,929 or 59%. The net loss and comprehensive net loss saw a large decrease mainly related to the change in fair value of the Company's derivative liability as well as increased gross profit margins. During the three months ended September 30, 2025 and 2024, other (income) expenses totaled $2,629,948 and $5,804,151, respectively, which includes a favorable increase in the change in fair value of derivative liability of $3,301,656.

3.2 Results of operations for the nine months ended September 30, 2025 and 2024

Revenue

Revenue for the nine months ended September 30, 2025, was $26,469,224, an increase of $3,963,833, or 18%, compared to $22,505,391 for the same period in 2024. The year-over-year increase reflects the Company's continued diversification of its product mix and a strategic focus on partnering with high-quality brands within the wholesale concentrate market. This shift away from CPG retail sales toward leveraging the Company's core strength in concentrate manufacturing has resulted in stronger and more consistent sales performance. The Company also entered the New York market near the end of the period, marking the beginning of its multi-state expansion strategy, while maintaining disciplined credit practices with a focus on high-quality customers.

Cost of sales and gross profit

Cost of sales for the nine months ended September 30, 2025, was $18,107,835, an increase of $2,896,763, or 19%, compared to $15,211,072 for the same period in 2024. Gross profit for the nine months ended September 30, 2025, was $8,361,389, representing a gross margin of 32%, consistent with the gross margin of 32% achieved in the prior-year period. While gross margin was lower in the first half of 2025 due to a higher proportion of sales in the bulk concentrates segment, margins strengthened in the third quarter with the launch of the Salisbury Canyon Ranch ("SCR"). SCR represents the Company's internal supply chain, allowing for the cultivation of high-quality biomass at substantially lower input costs, which helped offset earlier margin pressure and stabilize profitability for the period.

Total operating expenses

Total operating expenses for the nine months ended September 30, 2025 were $12,777,893, an increase of $2,805,408 or 28%, compared to total operating expenses of $9,972,485 for the nine months ended September 30, 2024. The increase in total operating expenses was attributable to the factors described below.

3. RESULTS OF OPERATIONS (Continued)

Wages and salaries for the nine months ended September 30, 2025 and 2024 were $5,265,231 and $4,203,886, respectively, an increase of $1,061,345, or 25%. The increase in wages and salaries expense is primarily attributable to an increase in stock based compensation.

Office and general expenses for the nine months ended September 30, 2025 and 2024 were $2,531,666 and $1,794,065, respectively, an increase of $737,601, or 41%. The increase in office and general expenses is primarily attributable to an increase in facility costs related to SCR and New York as well as increased shipping costs.

Net income (loss) and comprehensive income (loss) attributable to shareholders of LEEF Brands, Inc.

Net income (loss) and comprehensive income (loss) attributable to shareholders of LEEF Brands, inc. for the nine months ended September 30, 2025 and 2024 were losses of $6,471,235 and $17,446,633, respectively, a decreased loss of $10,975,398 or 63%. The net loss and comprehensive net loss saw a large decrease mainly related to long-term debt restructuring in April 2024 associated with refinancing. During the nine months ended September 30, 2025 and 2024, other (income) expenses totaled ($312,336) and $12,557,776, respectively, for a favorable increase related to decreases in interest expense for the period of $2,850,439 and a loss from extinguishment of debt of $2,883,245. In addition, the Company recognized a large favorable change during the nine months ended September 30, 2025 related to revaluation of its derivative liabilities.

3.3 Cash flows for the nine months ended September 30, 2025 and 2024

Cash flow from operating activities

Cash (used in) provided by operating activities for the nine months ended September 30, 2025 and 2024 was ($1,682,705) and ($845,787), respectively, an unfavorable change of 836,918. The decrease in net cash provided by operating activities was primarily due to the unfavorable changes in non-cash operating items, including the change in fair value of derivative liability, loss on extinguishment of debt, and amortization of debt discounts, totaling $15.4 million. These were offset by a decrease in net loss of $11.0 million and favorable changes in changes in operating assets and liabilities of $2.8 million for the nine months ended September 30, 2025 as compared to the prior period.

Cash flow from investing activities

Cash used in investing activities for the nine months ended September 30, 2025 and 2024 was $582,377 and $4,862,735, respectively, a favorable change of $4,280,358. The favorable change was primarily due to a decrease in capital expenditures of $4.2 million compared to the prior period.

Cash flow from financing activities

Cash (used in) provided by financing activities for the nine months ended September 30, 2025 and 2024 was $1,449,746 and $1,450,861, respectively, an unfavorable change of $1,115. The amount is consistent with the prior year.

LEEF BRANDS INC. (FORMERLY ICANIC BRANDS COMPANY INC.)

Management Discussion and Analysis

As of September 30, 2025 and December 31, 2024 and for the Three and Nine Months Ended September 30, 2025

and 2024

3. RESULTS OF OPERATIONS (Continued)

3.4 Revenue and cost of sales analysis

During the three and nine months ended September 30, 2025 and 2024, revenue and cost of sales was as follows:

	Three Months Ended		Nine Months Ended
	September 30, 2025	September 30, 2024	September 30, 2025	September 30, 2024
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Net revenue	$ 8,379,306	$ 6,763,391	$ 26,469,224	$ 22,505,391
Cost of sales	4,600,690	5,283,014	18,107,835	15,211,072
Gross profit	3,778,616	1,480,377	8,361,389	7,294,319
Gross margin rate	45.09%	21.89%	31.59%	32.41%

The Company is a cannabis concentrate manufacturer based in northern California. The Company utilizes its distribution channels to facilitate significant revenue growth.
Cost of sales include all expenditure related to the products which include ingredients and manufacturing costs and depreciation of equipment used in the production and sale of cannabis and related derivatives.
Revenue for the three and nine months ended September 30, 2025, was $8,379,306 and $26,469,224, respectively, representing increases of $1,615,915 and $3,963,833 compared to $6,763,391 and $22,505,391 for the corresponding periods in 2024. The year-over-year growth reflects the Company's continued diversification of its product mix and strategic focus on partnering with high-quality brands within the wholesale concentrate market. This shift away from CPG retail sales toward leveraging the Company's core strength in concentrate manufacturing has resulted in stronger and more consistent sales performance. In addition, the Company entered the New York market near the end of the period, marking an important step in its multi-state expansion strategy. The Company continues to prioritize relationships with high-quality customers to maintain disciplined credit practices and support sustainable growth.
The gross margin rate for the three and nine months ended September 30, 2025, was 45% and 32%, respectively, compared to 22% and 32% for the corresponding periods in 2024. Gross margin improvement in the quarter reflects the Company's increased operating efficiency and lower input costs following the launch of the Salisbury Canyon Ranch ("SCR"). SCR serves as the Company's internal supply chain, allowing for the cultivation of high-quality biomass at significantly lower costs compared to third-party sourcing. While gross margin was lower in the first half of 2025 due to a greater share of sales in the bulk concentrates segment, the contribution from SCR in the third quarter strengthened margins and stabilized overall profitability for the nine-month period.

3.5 Financial position

The Company had a cash balance and total assets of $1,916,300 and $41,458,754, respectively, as of September 30, 2025. The Company's total assets include property and equipment and intangible assets of $25,561,120, and $2,463,740, respectively, as of September 30, 2025.
Accounts payable and accrued liabilities as of September 30, 2025 was $6,484,796.
The Company has a derivative liability related to convertible debentures and warrants totaling $7,891,771 as of September 30, 2025.

LEEF BRANDS INC. (FORMERLY ICANIC BRANDS COMPANY INC.)

Management Discussion and Analysis

As of September 30, 2025 and December 31, 2024 and for the Three and Nine Months Ended September 30, 2025

and 2024

3. RESULTS OF OPERATIONS (Continued)

3.6 Summary of Quarterly Results

The following tables set out financial performance highlights for the last ten quarters and have been prepared in accordance with GAAP.

	Revenues	Net Income (Loss) and Comprehensive Income (Loss) Attributable to Shareholders
	(Unaudited)
September 30, 2025	$ 8,379,306	$ (3,803,812)
June 30, 2025	$ 8,691,656	$ (2,933,542)
March 31, 2025	$ 9,398,261	$ 265,776
December 31, 2024	$ 5,990,057	$ (10,400,641)
September 30, 2024	$ 6,763,391	$ (3,367,351)
June 30, 2024	$ 7,916,653	$ (8,097,508)
March 31, 2024	$ 7,825,346	$ (2,763,328)
December 31, 2023	$ 15,647,268	$ (12,760,368)
September 30, 2023	$ 5,667,291	$ (1,834,406)
June 30, 2023	$ 9,294,792	$ (20,056,661)

4. LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company's primary source of liquidity has been its operations, capital contributions made by equity investors and debt issuances. The Company is currently meeting its current operational obligations as they become due from its current working capital and from operations. However, the Company has sustained losses since inception and may require additional capital in the future. As of September 30, 2025, the Company had net working capital deficit of $17,874,649 and had a cash balance of $1,916,300. Such uncertainties related to events and conditions raise substantial doubt about the Company's ability to continue as a going concern and that based on current business operations and working capital, it will continue to meet its obligations as they become due in the short term.

The Company is generating cash from revenues and deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term. Capital reserves are primarily being utilized for capital expenditures, facility improvements, product development and marketing.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with financial liabilities. The Company manages liquidity risk through the management of its capital structure. The Company's approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due.

5. OFF BALANCE SHEET ARRANGEMENTS

As of September 30, 2025, the Company had no material off-balance sheet arrangements such as guarantee contracts, contingent interest in assets transferred to an entity, or any obligations that trigger financing, liquidity, market or credit risk to the Company.

6. RELATED PARTY TRANSACTIONS

Key Management Compensation

Key management personnel are persons responsible for planning, directing and controlling activities of an entity, and include executive and non-executive persons. During the nine months ended September 30, 2025 and 2024, the Company recognized approximately $1,419,000, and $1,350,000, respectively, in compensation and stock-based compensation, respectively, provided to key management.

Related Party Balances

During the nine months ended September 30, 2025, the Company had accrued approximately $396,000 of expenses to a farming company that is owned by a member of management and shareholder with approximately $450,000, unpaid as of period end.

On November 2, 2021, the Company acquired 100% of the outstanding membership interests of Anderson Development SB, LLC ("ADSB") from third parties and a controlling interest holding related party in exchange for approximately $1,440,000 plus up to an additional $2,400,000 of consideration (the "Contingent Consideration") (collectively, the "Consideration"). The Consideration is payable in Common Stock. The Contingent Consideration is subject to ADSB obtaining a land use permit and a business license by February 28, 2025 that permits ADSB to conduct cannabis cultivation operations. ADSB primarily holds an option to acquire certain real property in Santa Barbara County, California. The Company determined that the acquisition of ADSB membership interest was a common control transaction and have elected to record the assets acquired and liabilities assumed at the historical book value rather than fair value with no recognition of goodwill or gain or loss.

Additionally, the Company has elected to record the equity consideration at par value and will recognize the Contingent Consideration in the consolidated financial statements only when met. During the year ended December 31, 2022, Management determined it became highly probably ADSB would acquire the permit and license within the allotted time. This was based on a large change and turnaround in the cultivation market during the year ended December 31, 2022. As such, the Company has recorded an additional contingent consideration for the Earnout that will be paid out in the form of equity and totals $2,400,000 and was reduced to $500,000 as of December 31, 2024. See "Note 15 – Contingent Consideration and Consideration Payable" for further information.

7. CRITICAL ACCOUNTING ESTIMATES

Significant accounting judgments and estimates

The preparation of the unaudited condensed interim consolidated financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the Financial Statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

7. CRITICAL ACCOUNTING ESTIMATES (Continued)

Critical accounting estimates

Business combinations and asset acquisitions

Judgement is required to determine if the Company's acquisition represented a business combination or an asset purchase. More specifically, in a business combination, substantially all identifiable assets, liabilities and contingent liabilities acquired are recorded at the date of acquisition at their respective fair values. One of the most significant areas of judgment and estimation relates to the determination of the fair value of these assets and liabilities, including the fair value of contingent consideration, if applicable. If any intangible assets are identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent external valuation expert may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. These valuations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied. In certain circumstances where estimates have been made, the Company may obtain third-party valuations of certain assets, which could result in further refinement of the fair-value allocation of certain purchase prices and accounting adjustments.

Functional Currency Translations

The functional currency of the Company and each of the Company's subsidiaries is the currency of the primary economic environment in which the respective entity operates. Such determination involves certain judgements to identify the primary economic environment. The Company reconsiders the functional currency of an entity if there is a significant change in the events and/or conditions which determine the primary economic environment. In the event of a change of functional currency, the Company revaluates the classification of financial instruments. Upon the change in the parent Company's functional currency during the period, the financing warrants, which were initially classified as a derivative liability on the consolidated statements of financial position, were reassessed and reclassified as equity instruments at the fair value on the date of the functional currency change.

Inventory

Inventory is carried at the lower of cost or net realizable value. The determination of net realizable value involves significant management judgement and estimates, including the estimation of future selling prices.

The Company uses the Black-Scholes Option Pricing Model for valuation of share-based payments. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate, and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company's earnings and equity reserves.

The valuation of shares and other equity instruments issued in non-cash transactions. Generally, the valuation of non-cash transactions is based on the value of the goods or services received. When non-cash transactions are entered into with employees and those providing similar services, the non-cash transactions are measured at the fair value of the consideration given up using market prices.

Estimated useful life of long-lived assets

Judgment is used to estimate each component of a long-lived asset's useful life and is based on an analysis of all pertinent factors including, but not limited to, the expected use of the asset and in the case of an intangible asset, contractual provisions that enable renewal or extension of the asset's legal or contractual life without substantial cost, and renewal history. If the estimated useful lives were incorrect, it could result in an increase or decrease in the annual amortization expense, and future impairment charges or recoveries.

7. CRITICAL ACCOUNTING ESTIMATES (Continued)

Impairment of long-lived assets

Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances indicating that the carrying value of the asset may not be recoverable. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The recoverable amount is the higher of an asset's fair value less costs to sell and value in use (being the present value of the expected future cash flows of the relevant asset or cash-generating unit). An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount.

Valuation of share-based payments

The Company uses the Black-Scholes Option Pricing Model for valuation of share-based payments. Option pricing models require the input of subjective assumptions including expected price volatility, and interest rate. The Company determines the term of share-based payments in accordance with ASC 718, Stock Compensation (the "plain vanilla" method). Changes in the input assumptions can materially affect the fair value estimate and the Company's earnings and equity reserves.

Income taxes

Income taxes and deferred income tax assets or liabilities. Management uses judgment and estimates in determining the appropriate rates and amounts in recording deferred taxes, giving consideration to timing and probability. Actual taxes could vary significantly from these estimates as a result of future events, including changes in income tax law or the outcome of reviews by tax authorities and related appeals. The resolution of these uncertainties and the associated final taxes may result in adjustment to the Company's tax assets and tax liabilities. The recognition of deferred income tax assets is subject to judgment and estimation over whether these amounts can be realized.

Provisions

Provisions are accrued for liabilities with uncertain timing or amounts, if, in the opinion of management, it is both likely that a future event will confirm that a liability had been incurred at the date of the consolidated financial statements and the amount can be reasonably estimated. In cases where it is not possible to determine whether such a liability has occurred, or to reasonably estimate the amount of loss until the performance of some future event, no accrual is made until that time. In the ordinary course of business, the Company may be party to legal proceedings which include claims for monetary damages asserted against the Company. The adequacy of provisions is regularly assessed as new information becomes available.

Leases

Leases requires lessees to discount lease payments using the rate implicit in the lease if that rate is readily available. If that rate cannot be readily determined, the lessee is required to use its incremental borrowing rate. The Company generally uses the incremental borrowing rate when initially recording real estate leases as the implicit rates are not readily available as information from the lessor regarding the fair value of underlying assets and initial direct costs incurred by the lessor related to the leased assets is not available.

The Company determines the incremental borrowing rate as the interest rate the Company would pay to borrow over a similar term the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The Company used an incremental borrowing rate between $12\% - 15\%$.

7. CRITICAL ACCOUNTING ESTIMATES (Continued)

Leases requires lessees to estimate the lease term. In determining the period which the Company has the right to use an underlying asset, management considers the non-cancellable period along with all facts and circumstances that create an economic incentive to exercise an extension option, or not to exercise a termination option.

Fair values

The individual fair values attributed to the different components of a financing transaction, notably derivative financial instruments, convertible debentures and loans, are determined using valuation techniques. The Company uses judgment to select the methods used to make certain assumptions and derive estimates. Significant judgment is also used when attributing fair values to each component of a transaction upon initial recognition, measuring fair values for certain instruments on a recurring basis and disclosing the fair values of financial instruments subsequently carried at amortized cost. These valuation estimates could be significantly different because of the use of judgment and the inherent uncertainty in estimating the fair value of instruments that are not quoted or observable in an active market.

Allowance for doubtful accounts

The Company makes estimates for allowances that represent its estimate of potential losses in respect of trade receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that may have been incurred but not yet specifically identified. The Company's allowance is determined by historical experiences, and considers factors including the aging of the balances, the customer's creditworthiness, current economic conditions, expectation of bankruptcies and the economic volatility in the markets/locations of customers.

8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The carrying values of the Company's financial instruments carried at amortized cost approximate fair values due to their short duration.

Financial Risk Management Objectives and Policies

The Company is exposed to various financial risks resulting from both its operations and its investments activities. The Company's management, with the Board of Directors oversight, manages financial risks. Where material, these risks will be reviewed and monitored by the Board of Directors.

Financial Risks

The Company's main financial risk exposure and its financial risk management policies are as follows:

Credit risk

Credit risk is the risk of loss associated with a counter-party's inability to fulfill its payment obligations. The credit risk is limited to the carrying value amount carried on the statement of financial position. Credit risk associated with cash and receivables arises from the possibility that the principal and/or interest due may become uncollectible. The Company mitigates this risk by managing and monitoring the underlying business relationship. The Company is currently exposed to moderate credit risk associated with its trade receivable.

Market and Other Risks

Market risk is the risk of uncertainty arising primarily from possible commodity market price movements and their impact on the future economic viability of the Company's projects and ability of the Company to raise capital. These market risks are evaluated by monitoring changes in key economic indicators and market information on an on-going basis and adjusting operating and exploration budgets accordingly.

8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

Liquidity Risk

Liquidity needs are monitored in various time bands, including 30-day, 180-day and 360-day lookout periods. As at September 30, 2025 the Company had a working capital deficit of $17,874,649 and may require additional financing to meet its short term obligations.

Currency risk

The Company is exposed to currency risk related to the fluctuation of foreign exchange rates and the degree of volatility of those rates. Currency risk is limited to the portion of the Company's business transactions and balances denominated in currencies other than the United States dollar.

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. Cash bear interest at market rates. The Company's financial liabilities have fixed rates of interest and therefore expose the Company to a limited interest rate fair value risk.

9. OUTSTANDING SHARE DATA

The following table summarizes the Company's outstanding share data as of the date of this MD&A:

	Number of shares issued or issuable
Common shares	185,801,734
Stock options	13,733,125
Restricted stock units	6,081,052
Warrants	50,138,103

10. RISK FACTORS

Investing in the common shares of the Company involves risk. Prospective investors should carefully consider the risks described below, together with all of the other information included in this MD&A before making an investment decision. If any of the following risks actually occurs, the business, financial condition or results of operations of the Company could be harmed. In such an event, the trading price of the common shares could decline, and prospective investors may lose part or all of their investment.

Risks Related to the United States Regulatory Regime

Marijuana is illegal under U.S. federal law

The cultivation, manufacture, distribution, and possession of marijuana is illegal under U.S. federal law. The Supremacy Clause of the United States Constitution establishes that the United States Constitution and federal laws made pursuant to it are paramount and, in case of conflict between federal and state law, the federal law must be applied. Accordingly, federal law applies even in those states in which the use of marijuana has been legalized. Enforcement of federal law regarding marijuana would harm the Company's business, prospects, results of operation, and financial condition.

10. RISK FACTORS (Continued)

Under the Controlled Substances Act, 21 U.S.C., § 801 et seq. (the "CSA"), it is a felony to manufacture, distribute, dispense or possess with intent to manufacture, distribute or dispense a controlled substance, including marijuana (a Schedule I controlled substance under the CSA); to use a communication facility, which includes the mail, telephone, wire, radio, and all other means of communication, to cause or facilitate a violation of the CSA; and to place an advertisement knowing that the advertisement is intended to offer to sell or buy marijuana, or to use the internet to advertise the sale of marijuana. It is also a federal misdemeanor to knowingly or intentionally possess marijuana and a felony to attempt or conspire to violate the CSA. The CSA does not apply to conduct that takes place entirely outside the United States if the conduct involves cannabis that never reaches, and is never intended to reach, the United States.

Since the possession and use of marijuana and any related paraphernalia is illegal under U.S. federal law, the Company may be deemed to be aiding and abetting illegal activities. Its subsidiaries plan to manufacture and/or distribute medical and adult-use cannabis. As a result, U.S. law enforcement authorities, in their attempt to regulate the illegal use of marijuana and any related paraphernalia, may seek to bring an action or actions against the Company or its subsidiaries, including, but not limited to, a claim regarding the possession, use and sale of cannabis, and/or aiding and abetting another's criminal activities. The U.S. federal aiding and abetting statute provides that anyone who "commits an offense or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal." As a result, the U.S. Department of Justice could allege that the Company has "aided and abetted" violations of federal law by providing financing and services to its subsidiaries.

Under these circumstances, the federal prosecutor could seek to seize the assets of the Company, and to recover the "illicit profits" previously distributed to shareholders resulting from any of the foregoing. In these circumstances, the Company's operations would cease, shareholders may lose their entire investment and directors, officers and/or shareholders may be left to defend any criminal charges against them at their own expense and, if convicted, be sent to federal prison. Such an action would result in a material adverse effect on the Company. Violations of federal law could result in significant fines, penalties, administrative sanctions, criminal prosecution, including arrest, pre-trial incarceration, and sentences including monetary fines or incarceration, disgorgement of profits, cessation of business activities or divestiture, and forfeiture of real and personal property. The federal government can seek, (i) civil forfeiture of property involved in or traceable to certain crimes, including money laundering and violations of the CSA; and (ii) prosecution of the Company's employees, directors, officers, managers and investors for criminal violations of the CSA, federal anti-money laundering laws, or the Travel Act. Even when the government does not bring criminal charges, it may use the threat of an investigation or charges to incentivize civil settlements.

This could have a material adverse effect on the Company, including its reputation and ability to conduct business, its holding (directly or indirectly) of cannabis licenses in the United States, the listing of its securities on various stock exchanges, its financial position, operating results, profitability or liquidity or the market price of its publicly traded Common Shares. It is difficult to estimate the time or resources needed to respond to a government investigation or prosecution of such matters without knowing the nature and extent of any information requested by the applicable authorities involved. Such time or resources could be substantial.

10. RISK FACTORS (Continued)

Marijuana is strictly regulated in those states which have legalized it for medical or recreational use

U.S. states and territories that have medical and/or adult-use markets impose substantial regulatory and licensing burdens on marijuana businesses. The legal and regulatory framework applicable to cannabis businesses is different in each state and territory. Obtaining a license or permit to grow, distribute, or dispense marijuana can be a difficult, costly, and lengthy process. Violations of a state's legal and regulatory framework can result in revocation of licenses, civil penalties, and other punishments. No assurance can be given that the Company will receive the requisite licenses, permits, or cards to operate its businesses.

Local laws and ordinances could restrict the Company's business activity. Local governments may have the ability to limit or ban cannabis businesses from operating within their jurisdiction, or impose requirements in addition to those imposed by state law. Land use, zoning, local ordinances, and similar laws could be adopted or changed, which may have a material adverse effect on the Company's business.

The Company currently operates only in the State of California, but may consider opportunities in other jurisdictions as deemed appropriate by management. The Company is aware that multiple states are considering special taxes or fees on businesses in the marijuana industry. Other states may be in the process of reviewing such additional fees and taxation, or may impose them in the future. This could have a material adverse effect upon the Company's business, results of operations, financial condition, or prospects.

Newly established legal regime

The Company business activities will rely on newly established and/or developing laws and regulations in the states in which it operates. These laws and regulations are rapidly evolving and subject to change with minimal notice. Regulatory changes may adversely affect the Company's profitability or cause it to cease operations entirely. The cannabis industry may come under the scrutiny or further scrutiny by the FDA, Securities and Exchange Commission, the Department of Justice, the Financial Industry Regulatory Advisory or other federal or applicable state or nongovernmental regulatory authorities or self-regulatory organizations that supervise or regulate the production, distribution, sale or use of cannabis for medical or nonmedical purposes in the United States.

It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any proposals will become law. The regulatory uncertainty surrounding the industry may adversely affect the business and operations of the Company, including without limitation, the costs to remain compliant with applicable laws and the impairment of its business or the ability to raise additional capital.

Restricted access to banking

The Company may have limited or no access to banking or other financial services in the United States. Federal anti-money laundering statutes and regulations discourage financial institutions from working with marijuana businesses, regardless of whether marijuana is legal in the state in which the financial institution or its customers are located. The inability or limitation in the Company's ability to open or maintain bank accounts, obtain other banking services, or accept credit card and debit card payments may make it difficult for the Company to operate and conduct its business as planned or to operate efficiently.

10. RISK FACTORS (CONTINUED)

Federally chartered financial institutions are subject to federal regulation, including oversight by the FinCEN bureau of the U.S. Treasury Department. Because marijuana is illegal under federal law, financial institutions may subject themselves to federal civil or criminal liability for banking the proceeds of marijuana businesses, and there are relatively few financial institutions who provide banking services to marijuana businesses.

The FinCEN Guidance does not provide any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the U.S. Department of Justice, FinCen or other federal regulators. Thus, most banks and other financial institutions in the United States do not appear to be comfortable providing banking services to cannabis-related businesses, or relying on this guidance, which can be amended or revoked at any time.

Financial institutions which do provide financial services to marijuana businesses may charge increased fees to or impose additional requirements on marijuana businesses. Some financial institutions refuse to process debit or credit card payments to marijuana businesses. Financial institutions which do process such transactions may also charge fees higher than those imposed on other businesses. The Company may experience increased costs, or decreased profits, as a result of its inability to accept debit or credit card payments, or as a result of increased fees it pays to the financial institutions processing such transactions.

Further, because the manufacture, distribution, and dispensation of cannabis remains illegal under the CSA, banks and other financial institutions providing services to cannabis-related businesses risk violation of federal anti-money laundering statutes (18 U.S.C. §§ 1956 and 1957), the unlicensed money-remitter statute (18 U.S.C. § 1960) and the U.S. Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended and the rules and regulations thereunder, the Criminal Code (Canada) and other related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the United States and Canada.

In July 2023, Mastercard, Inc. ("MasterCard") issued a statement they have communicated to financial institutions to refrain from allowing marijuana transactions on its debit cards. In accordance with Mastercard's policies, they have instructed the financial institutions that offer payment services to cannabis merchants and connects them to MasterCard to terminate the activity since the federal government considers cannabis sales illegal, and these purchases are not allowed on their systems.

Participating in transactions involving proceeds derived from cannabis may constitute criminal money laundering. It is a federal crime to engage in certain transactions involving the proceeds of "Specified Unlawful Activities" ("SUA") when those transactions are designed to promote an underlying SUA, or conceal the source of the funds. Violations of the CSA and violations of a foreign state's laws are both SUA. It is a federal crime in the United States to engage in an international transaction into or out of the United States if the transaction is intended to promote an SUA, irrespective of the source of the funds. It is a federal crime to engage in a transaction in property worth greater $10,000 knowing that the property is derived from a SUA. In the event that any of the Company's investments, or any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such investments in the United States were found to be in violation of anti-money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the statutes of the United States or any other applicable legislation. This could restrict or otherwise jeopardize the ability of the Company to declare or pay dividends, effect other distributions or subsequently repatriate such funds back to Canada and other foreign jurisdictions from the United States.

10. RISK FACTORS (CONTINUED)

Heightened scrutiny by Canadian and U.S. regulatory authorities

The Company's existing operations in the United States, and any future operations or investments, may become the subject of heightened scrutiny by regulators, stock exchanges and other authorities in Canada and the United States. As a result, the Company may be subject to significant direct and indirect interaction with public officials. There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on the Company's ability to operate or invest in the United States or any other jurisdiction, in addition to those described herein. On February 8, 2018, following discussions with the Canadian Securities Administrators and recognized Canadian securities exchanges, the TMX Group announced the signing of a Memorandum of Understanding (the "MOU") with Aequitas NEO Exchange Inc., the CSE, the Toronto Stock Exchange, and the TSXV.1. The MOU outlines the parties' understanding of Canada's regulatory framework applicable to the rules, procedures, and regulatory oversight of the exchanges and CDS Clearing and Depository Services Inc. ("CDS") as it relates to issuers with cannabis-related activities in the United States. The MOU confirms, with respect to the clearing of listed securities, that CDS relies on the exchanges to review the conduct of listed issuers. As a result, there is no CDS ban on the clearing of securities of issuers with cannabis-related activities in the United States. However, there can be no guarantee that this approach to regulation will continue in the future. If such a ban were to be implemented, it would have a material adverse effect on the ability of holders of common shares to make and settle trades. In particular, common shares would become highly illiquid until an alternative was implemented, investors would have no ability to effect a trade of the common shares through the facilities of the applicable stock exchange.

Foreign investors in Icanic Brands Company Inc. and its directors, officers, and employees may be subject to entry bans into the United States

It is a federal crime to engage in interstate or foreign travel or commerce with the intent to distribute the proceeds of or promote a SUA. News media have reported that United States immigration authorities have increased scrutiny of people who are crossing the United States-Canada border with respect to persons involved in cannabis businesses in the United States.

Those employed at or investing in legal and licensed Canadian cannabis companies could face detention, denial of entry or lifetime bans from the United States for their business associations with U.S. cannabis businesses. Entry happens at the sole discretion of CBP officers on duty, and these officers have wide latitude to ask questions to determine the admissibility of a non-US citizen or foreign national. The government of Canada has started warning travelers on its website that previous use of cannabis, or any substance prohibited by U.S. federal laws, could mean denial of entry to the United States. Business or financial involvement in the legal cannabis industry in Canada or in the United States could also be reason enough for U.S. border guards to deny entry. On September 21, 2018, CBP released a statement outlining its current position with respect to enforcement of the laws of the United States. It stated that Canada's legalization of cannabis will not change CBP enforcement of United States laws regarding controlled substances and because cannabis continues to be a controlled substance under United States law, working in or facilitating the proliferation of the legal marijuana industry in the United States. States where it is deemed legal or Canada may affect admissibility to the United States. As a result, CBP has affirmed that, employees, directors, officers, managers and investors of companies involved in business activities related to cannabis in the United States or Canada (such as the Company), who are not U.S. citizens face the risk of being barred from entry into the United States for life. On October 9, 2018, CBP released an additional statement regarding the admissibility of Canadian citizens working in the legal Canadian cannabis industry. CBP stated that a Canadian citizen working in or facilitating the proliferation of the legal cannabis industry in Canada coming into the United States for reasons unrelated to the cannabis industry will generally be admissible to the United States; however, if such person is found to be coming into the United States for reasons related to the cannabis industry, such person may be deemed inadmissible.

10. RISK FACTORS (CONTINUED)

Accordingly, the Company's directors, officers or employees traveling to the United States for the benefit of the Company may encounter enhanced scrutiny by United States immigration authorities that may result in the employee not being permitted to enter the United States for a specified period of time. If this happens to the Company's directors, officers or employees, then this may reduce the Company's ability to manage its business effectively in the United States.

Constraints on developing and marketing products

The development of the Company's business and operating results may be hindered by applicable restrictions on development, sales and marketing activities imposed by government regulatory bodies. The legal and regulatory environment in the United States limits the Company's ability to compete for market share in a manner similar to other industries. The Company cannot predict the time required to secure all appropriate regulatory approvals for its products, or the extent of testing and documentation that may be required by government authorities. Any delays in obtaining, or failure to obtain regulatory approvals would significantly delay the development of markets and products and could have a material adverse effect on the Company's business, results of operation and financial condition.

If the Company is unable to effectively market its products and compete for market share, or if the costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices for its products, the Company's sales and operating results could be adversely affected.

Unfavorable tax treatment of cannabis businesses

Under Section 280E of the United States Internal Revenue Code of 1986 as amended ("Section 280E"), "no deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any state in which such trade or business is conducted". This provision has been applied by the U.S. Internal Revenue Service to cannabis operations, prohibiting them from deducting expenses directly associated with the sale of cannabis. Although the U.S. Internal Revenue Service issued a clarification allowing the deduction of certain expenses that can be categorized as cost of goods sold, the scope of such items is interpreted very narrowly and include the cost of seeds, plants, and labor related to cultivation, while the bulk of operating costs and general administrative costs are not permitted to be deducted. Section 280E therefore has a significant impact on the retail side of cannabis, but a lesser impact on cultivation, processing, production and packaging operations. A result of Section 280E is that an otherwise profitable business may, in fact, operate at a loss, after taking into account its U.S. income tax expenses.

Risk of civil asset forfeiture

United States federal law enforcement officials are empowered to seize property they allege has been involved in certain criminal activity. Because marijuana remains illegal under U.S. federal law, property owned by marijuana businesses could be subject to seizure and subsequent civil asset forfeiture by law enforcement, whether or not the owner is charged with a crime. Property can be seized and forfeited through criminal, civil, and administrative proceedings. Property owners seeking the return of their property must establish that the property was not involved in criminal activity, which can be a substantial burden.

10. RISK FACTORS (CONTINUED)

Proceeds of crime statutes

The Company is subject to a variety of laws and regulations in Canada and in the United States relating to money laundering, financial recordkeeping, and proceeds of crime, including the BSA, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended and the rules and regulations thereunder, the Criminal Code (Canada) and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the United States and Canada. In the event that any of the Company's license agreements in the United States are found to be illegal, proceeds of those licensing transactions may be viewed as proceeds of crime under one or more of the statutes noted above or any other applicable legislation. This could be materially adverse to the Company and, among other things, could restrict or otherwise jeopardize the ability of the Company to declare or pay dividends, effect other distributions or subsequently repatriate such funds back to Canada.

Limited intellectual property protection

The Company's ability to compete may depend on the superiority, uniqueness and value of any intellectual property and technology that it may develop. To the extent the Company is able to do so, to protect any proprietary rights of the Company, the Company intends to rely on a combination of patent, trademark, copyright and trade secret laws, confidentiality agreements with its employees and third parties, and protective contractual provisions. Despite these efforts, there may be occurrences or impediments that may reduce the value of any of the Company's intellectual property, including the following:

the Company will not be able to register any United States federal trademarks for its cannabis products. Because producing, manufacturing, processing, possessing, distributing, selling, and using cannabis is a crime under the CSA, the United States Patent and Trademark Office will not permit the registration of any trademark that identifies cannabis products. As a result, the Company likely will be unable to protect its cannabis product trademarks beyond the geographic areas in which it conducts business. The use of its trademarks outside the states in which it operates by one or more other persons could have a material adverse effect on the value of such trademarks.
Patents in the cannabis industry involve complex legal and scientific questions and patent protection may not be available for some or any products and as a result the Company may have to rely on goodwill associated with its trademarks, trade names and proprietary cannabis strains.
the Company may be exposed to infringement or misappropriation claims by third parties, which, if determined adversely to the Company, could subject the Company to significant liabilities and other costs.

The Company's success may likely depend on its ability to use and develop new extraction technologies, recipes, know-how and new strains of cannabis without infringing the intellectual property rights of third parties. The Company cannot assure that third parties will not assert intellectual property claims against it. The Company is subject to additional risks if entities licensing to it intellectual property do not have adequate rights in any such licensed materials. If third parties assert copyright or patent infringement or violation of other intellectual property rights against the Company, it will be required to defend itself in litigation or administrative proceedings, which can be both costly and time consuming and may significantly divert the efforts and resources of management personnel. An adverse determination in any such litigation or proceedings to which the Company may become a party could subject it to significant liability to third parties, require it to seek licenses from third parties, to pay ongoing royalties or subject the Company to injunctions prohibiting the development and operation of its applications.

10. RISK FACTORS (CONTINUED)

Lack of access to U.S. bankruptcy protections

Because the use of cannabis is illegal under federal law, many courts have denied cannabis businesses bankruptcy protections, thus making it very difficult for lenders to recoup their investments in the cannabis industry in the event of a bankruptcy. If the Company were to experience a bankruptcy, there is no guarantee that U.S. federal bankruptcy protections would be available to the Company, which would have a material adverse effect.

Competition

There is potential that the Company will face intense competition from other companies, some of which can be expected to have longer operating histories and more financial resources and production and marketing experience than the Company.

Potential FDA regulation

Should the federal government legalize cannabis, it is possible that the FDA, would seek to regulate it under the Food, Drug and Cosmetics Act of 1938. Additionally, the FDA may issue rules and regulations including good manufacturing practices, related to the growth, cultivation, harvesting and processing of medical cannabis. Clinical trials may be needed to verify efficacy and safety. It is also possible that the FDA would require that facilities where medical-use cannabis is grown register with the FDA and comply with certain federally prescribed regulations. In the event that some or all of these regulations are imposed, the impact they would have on the cannabis industry is unknown, including what costs, requirements and possible prohibitions may be enforced. If the Company is unable to comply with the regulations or registration as prescribed by the FDA it may have an adverse effect on the Company's business, operating results and financial condition.

Legality of contracts

The Company's contracts involve cannabis and other activities that are not legal under U.S. federal law and in some jurisdictions, the Company may face difficulties in enforcing its contracts in U.S. federal and certain state courts. The inability to enforce any of the Company's contracts could have a material adverse effect on its business, operating results, financial condition, or prospects.

Risks Related to Icanic Brands Company Inc.

Limited operating history

There is no guarantee that the Company's products will be attractive to potential consumers or that the revenues generated from such products will meet the Company's projections. In addition, the Company is subject to all of the business risks and uncertainties associated with any early- stage enterprise, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources, and lack of revenues. The Company has been incurring operating losses. The Company may not be able to achieve or maintain profitability and may continue to incur significant losses in the future. Furthermore, the Company expects to continue to increase operating expenses as it implements initiatives to grow its business. There is no assurance that the Company will be successful in achieving a return on shareholders' investments and the likelihood of success must be considered in light of the early stage of the Company's operations.

10. RISK FACTORS (CONTINUED)

Financial condition, liquidity, and requirements outlook

The Company's cash balance and working capital position are not adequate to sustain the Company's existing operations. If the Company is unable to continue to raise capital from issuances of shares, loans or by other means, its cash and working capital position could be affected.

Product recalls

Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure. If any of the Company's products are recalled due to an alleged product defect or for any other reason, the Company could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. The Company may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention. Although the Company has detailed procedures in place for testing its products, there can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. Additionally, if one of the Company's significant brands were subject to recall, the image of that brand and the Company could be harmed. A recall for any of the foregoing reasons could lead to decreased demand for the Company's products and could have a material adverse effect on the results of operations and financial condition of the Company. Additionally, product recalls may lead to increased scrutiny of the Company's operations by the U.S. Food and Drug Administration, or other regulatory agencies, requiring further management attention and potential legal fees and other expenses. Furthermore, any product recall affecting the cannabis industry more broadly could lead consumers to lose confidence in the safety and security of the products sold by Cannabis license holders generally, which could have a material adverse effect on the Company's business, financial condition and results of operations.

Product liability

The Company faces an inherent risk of exposure to product liability claims, regulatory action and litigation if its products are alleged to have caused significant loss or injury. In addition, the sale of the Company's products would involve the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Previously unknown adverse reactions resulting from human consumption of the Company's products alone or in combination with other medications or substances could occur. The Company may be subject to various product liability claims, including, among others, that the Company's products caused injury or illness or death, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances. A product liability claim or regulatory action against the Company could result in increased costs, could adversely affect the Company's reputation with its clients and consumers generally, and could have a material adverse effect on the business, results of operations and financial condition of the Company. There can be no assurances that the Company will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all.

The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of the Company's potential products.

10. RISK FACTORS (CONTINUED)

General economic and political risks

The Company may be affected by possible political or economic instability. The risks include, but are not limited to, terrorism, military repression, extreme fluctuations in currency exchange rates, high rates of inflation or unemployment, consumer trends and spending. Changes in medicine and agricultural development or investment policies or shifts in political attitude in certain countries may adversely affect the Company's business. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, distribution, price controls, export controls, income taxes, expropriation of property, maintenance of assets, environmental legislation, land use, land claims of local people and water use. The effect of these factors cannot be accurately predicted.

Internal controls

Effective internal controls are necessary for the Company to provide reliable financial reports and to help prevent fraud. Although the Company has undertaken a number of procedures and implemented a number of safeguards, in each case, in order to help ensure the reliability of its financial reports, including those imposed on the Company under Canadian securities law, the Company cannot be certain that such measures will ensure that the Company will maintain adequate control over financial processes and reporting. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company's results of operations or cause it to fail to meet its reporting obligations. If the Company or its auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market's confidence in the Company's consolidated financial statements and materially adversely affect the trading price of common shares.

Crypto Currency Risk

We hold Bitcoin as part of our treasury assets. The value of Bitcoin is highly volatile and can be influenced by various factors, including market demand, regulatory developments, technological changes, and broader economic conditions. A significant decline in Bitcoin's market price could adversely affect our financial condition and results of operations. Additionally, the evolving regulatory landscape for digital assets may impose new compliance requirements or restrictions, potentially impacting our ability to hold or transact in Bitcoin. Security risks, such as cyberattacks or loss of private keys, could also result in the loss of our Bitcoin holdings. These factors collectively pose risks to our business and financial performance.

11. CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as "forward-looking statements"). These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements. Forward looking statements include, but are not limited to: statements concerning the completion of, and matters relating to, the various proposed transactions discussed by the Company herein and the expected timing related thereto; the expected operations, financial results and condition of the Company; general economic trends; expectations of market size and growth in the United States and the States the Company operates; additional funding requirements; the Company's future objectives and strategies to achieve those objectives; the Company's estimated cash flow and capitalization and adequacy thereof; and other

11. CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION (Continued)

statements with respect to management's beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts.

Inherent in forward-looking statements are risks, uncertainties, and other factors beyond the Company's ability to predict or control. Factors that could cause such differences include, but are not limited to: cannabis is a controlled substance under applicable legislation; the enforcement of cannabis laws could change; differing regulatory requirements across State jurisdictions may hinder economies of scale; legal, regulatory or other political change; the unpredictable nature of the cannabis industry; regulatory scrutiny; the impact of regulatory scrutiny on the ability to raise capital; anti-money laundering laws and regulations; any reclassification of cannabis or changes in U.S. controlled substances and regulations; restrictions on the availability of favorable locations; enforceability of contracts; general regulatory and licensing risks; California regulatory regime and transfer and grant of licenses; limitations on ownership of licenses; regulatory action from the Food and Drug Administration; competition; ability to attract and retain customers; unfavorable publicity or consumer perception; limited market data and difficulty to forecast; constraints on marketing products; execution of the Company's business strategy; reliance on management; ability to establish and maintain effective internal control over financial reporting; competition from synthetic production and technological advances; fraudulent or illegal activity by employees, contractors and consultants; product liability and recalls; risks related to product development and identifying markets for sale; dependence on suppliers, manufacturers, and contractors; reliance on inputs; reliance on equipment and skilled labor; service providers; litigation and any unexpected outcomes thereof; intellectual property risks; information technology systems, cyber-attacks, security, and privacy breaches; bonding and insurance coverage; transportation; energy costs; risks inherent in an agricultural business; management of growth; risks of leverage; future acquisitions or dispositions; difficulty attracting and retaining personnel; and past performance not being indicative of future results.

Readers are cautioned that the factors outlined herein are not an exhaustive list of the factors or assumptions that may affect the forward-looking statements, and that the assumptions underlying such statements may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether because of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law.

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Leef Brands Inc. — Management Reports 2025

47135_rns_2025-11-04_cf100554-763f-4673-b39a-b2b91fd9c029.pdf

1. BACKGROUND

Reverse recapitalization

Non-GAAP Financial Measures

1. BACKGROUND (Continued)

1. BACKGROUND (Continued)

Adjusted EBITDA (non-GAAP) (Unaudited)

2. COMPANY HIGHLIGHTS

During the nine months ended September 30, 2025 and 2024, and subsequent:

2. COMPANY HIGHLIGHTS (Continued)

The Leaf Business Combination

Share Consolidation Plan

Operational update

2. COMPANY HIGHLIGHTS (Continued)

SELECTED FINANCIAL INFORMATION

3. RESULTS OF OPERATIONS

3.1 Results of operations for the three months ended September 30, 2025 and 2024

Revenue

Cost of sales and gross profit

3. RESULTS OF OPERATIONS (Continued)

Total operating expenses

3.2 Results of operations for the nine months ended September 30, 2025 and 2024

Revenue

Cost of sales and gross profit

Total operating expenses

3. RESULTS OF OPERATIONS (Continued)

3.3 Cash flows for the nine months ended September 30, 2025 and 2024

Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

3. RESULTS OF OPERATIONS (Continued)

3.4 Revenue and cost of sales analysis

3.5 Financial position

3. RESULTS OF OPERATIONS (Continued)

3.6 Summary of Quarterly Results

4. LIQUIDITY AND CAPITAL RESOURCES

5. OFF BALANCE SHEET ARRANGEMENTS

6. RELATED PARTY TRANSACTIONS

Key Management Compensation

Related Party Balances

7. CRITICAL ACCOUNTING ESTIMATES

Significant accounting judgments and estimates

7. CRITICAL ACCOUNTING ESTIMATES (Continued)

Critical accounting estimates

Business combinations and asset acquisitions

Functional Currency Translations

Inventory

Estimated useful life of long-lived assets

7. CRITICAL ACCOUNTING ESTIMATES (Continued)

Impairment of long-lived assets

Valuation of share-based payments

Income taxes

Provisions

Leases

7. CRITICAL ACCOUNTING ESTIMATES (Continued)

Fair values

Allowance for doubtful accounts

8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial Risk Management Objectives and Policies

Financial Risks

Credit risk

Market and Other Risks

8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

Liquidity Risk

Currency risk

Interest rate risk

9. OUTSTANDING SHARE DATA

10. RISK FACTORS

Risks Related to the United States Regulatory Regime

Marijuana is illegal under U.S. federal law

10. RISK FACTORS (Continued)

10. RISK FACTORS (Continued)

Newly established legal regime

Restricted access to banking

10. RISK FACTORS (CONTINUED)

10. RISK FACTORS (CONTINUED)

Heightened scrutiny by Canadian and U.S. regulatory authorities

Foreign investors in Icanic Brands Company Inc. and its directors, officers, and employees may be subject to entry bans into the United States

Leef Brands Inc. Management Reports 2025