Notes Payable

6 Months Ended

12 Months Ended

Jun. 30, 2025

Dec. 31, 2024

Debt Disclosure [Abstract]

Notes Payable

11.

Notes Payable

As of June 30, 2025 and December 31, 2024 notes payable consisted of the following:

Schedule of Note Payable

	June 30, 2025			December 31, 2024

Secured promissory notes dated November 2018 through September 2024 issued to finance equipment acquisitions which mature from December 2023 through October 2030, and bear interest of 3.12% to 10.99% with principal and interest payments due monthly.	$	310,014		$	225,140
Small Business Administration loan which bears interest at 1% with interest payments due monthly.		11,000			11,000
Secured promissory note dated May 25, 2023, which matures in May 2028		5,343,627			4,846,714
Secured promissory note dated September 19, 2023, which matures in September 2028 and bears interest of 4%		4,199,000			4,199,000
Secured promissory note dated July 8, 2024, which matures in June 2025 and bears interest of 15%		-			249,900
Secured promissory note dated July 3, 2024, which matures in July 2026 and bears interest of 10%		1,000,000			1,000,000
Secured promissory note dated September 20, 2024, which matures on September 19, 2025 and bears interest of 19%		52,284			52,283
Secured promissory note dated April 2025, which matures in March 2026 and bears interest of 12%		199,577			-
Secured promissory note dated April 2025, which matures in August 2025 and bears interest of 15%		287,400			-
Secured promissory note dated April 2025, which matures in March 2026 and bears interest of 15%		148,230			-
Secured promissory note dated May 2025, which matures in April 2027 and bears interest of 16%		61,327			-
Total Notes payable	$	11,612,459		$	10,584,037
Less current portion		(1,798,783	)		(1,337,490	)

Total notes payable, net of current	$	9,813,676		$	9,246,547

A reconciliation of the beginning and ending balances of notes payable for six months ended June 30, 2025 and the year ended December 31, 2024 is as follows:

	June 30, 2025			December 31, 2024
Balance as of beginning of period	$	10,584,037		$	8,884,513
Proceeds from notes payable		-			1,325,574
Non-cash note additions		245,050			-
Financed equipment		433,112			-
Financing arrangements		-			241,898
Debt discount on notes payable
Amortization of debt discount		498,912			993,823
Resale of note payable to related party		-			(472,000	)
Interest classified to debt		67,500			80,058
Conversions and settlement of notes payable
Non-cash note repayment		(50,423	)		-
Cash repayments		(165,729	)		(469,829	)
Balance as of end of period	$	11,612,459		$	10,584,037

On September 30, 2023, the Company entered into a Loan Agreement with the Salisbury Canyon Ranch, LLC for a total of $4,199,000 which bears interest at 4% per annum. The Company will make interest-only payments for a period of three years at which point blended interest and principal payments will be made for an additional two years, with a balloon payment due at that time.

14.

Notes Payable

As of December 31, 2024 and 2023, notes payable consisted of the following:

Schedule of Note Payable

	2024			2023
Secured promissory notes dated November 2018 through September 2024 issued to finance equipment acquisitions which mature from December 2023 through October 2030, and bear interest of 3.12% to 10.99% with principal and interest payments due monthly.	$	225,140		$	18,183
Small Business Administration loan which bears interest at 1% with interest payments due monthly.		11,000			11,000
Secured promissory note dated May 25, 2023, which matures in May 2028		4,846,714			3,852,890
Secured promissory note dated September 19, 2023, which matures in September 2028 and bears interest of 4%		4,199,000			4,199,000
Secured promissory note dated July 8, 2024, which matures on March 31, 2025, and bears interest of 15%		249,900			-
Secured promissory note dated July 3, 2024, which matures in July 2026 and bears interest of 10%		1,000,000			-
Secured promissory note dated September 20,2024, which matures on March 31, 2025, and bears interest of 19%		52,283			-
Secured promissory note dated February 8 , 2023, which matures in November 2023, and bears interest of 10%		-			299,440
Secured promissory note dated July 1 ,2023, which matures in February 2024, and bears interest of 12%		-			504,000
Total notes payable	$	10,584,037		$	8,884,513
Less current portion		(1,337,490	)		(821,623	)

Total notes payable, net of current	$	9,246,547		$	8,062,890

A reconciliation of the beginning and ending balances of notes payable for the years ended December 31, 2024 and 2023, is as follows:

	2024			2023
Balance as of beginning of period	$	8,884,513		$	548,947
Proceeds from notes payable		1,325,574			12,002,440
Financing arrangements		241,898			-
Debt discount on notes payable		-			(3,809,659	)
Amortization of debt discount		993,823			662,549
Resale of note payable to related party		(472,000	)		-
Interest classified to debt		80,058			-
Conversions and settlement of notes payable		-			(485,459	)
Cash repayments		(469,829	)		(34,305	)
Balance as of end of period	$	10,584,037		$	8,884,513

On May 25, 2023, the Company entered into a Loan Agreement with ADSB for a total of $7,000,000 which is zero-interest bearing. The loan was issued in connection with 5,687,500 detached warrants which are immediately exercisable at a price of CAD$0.08 per share (USD $0.06) for a period of 60 months from the date of issuance. Upon full repayment of the loan, which is expected in February 2027 the Company will transfer 720,000 Class A Units of ADSB to the lender. Both the warrants and the ADSB transfer were determined to create a debt discount totaling $3,809,659 that is amortized over the term of the loan. During the years ended December 31, 2024 and 2023, amortization of the debt discount of $993,824 and $662,549, respectively, were recorded. In June 2023, the Company was advanced $300,000 of the stated loan balance with expectation to receive the remainder in future tranches per the funding schedule. In August, the Company received additional tranches of funding of $3.6 million, related to the ADSB Loan Agreement. The Company received the outstanding balance during the fourth quarter of calendar year 2023.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

Leef Brands Inc. S-1/A