Armlogi Holding Corp. Leases Disclosure

7. Leases

 

As of June 30, 2025, the Company had operating and finance leases for office space, warehouse space, and forklifts. Lease terms expire at various dates through July 2025 to November 2034 with options to renew for varying terms at the Company’s sole discretion. The Company has not included these options to extend or terminate in the calculation of ROU assets or lease liabilities, as there is no reasonable certainty, as of the date of this report, that these options will be exercised. The Company had certain sublease contracts and recognized US$1,253,104 and US$2,850,368 lease income during the years ended June 30, 2025 and 2024, respectively.

 

During the year ended June 30, 2025, the Company recognized additional operating lease liabilities of US$27,857,474, as the result of entering into three new operating lease agreements. The ROU assets were recognized at the discount rate of 10.25%, resulting in US$27,857,474 on the commencement dates. For the year ended June 30, 2025 and 2024, the Company terminated certain operating lease agreements prior to the original expiration dates. As a result, the ROU assets were derecognized of US$1,861,834 and US$2,619,484, respectively.

The components of lease expenses were as follows:

 

		June 30, 2025				June 30, 2024
		US$				US$
Operating:
Operating lease expenses			34,402,300				27,056,232
Financing:
Accretion			96,507				47,649
Amortization – included in cost of service			376,368				169,488
Total			472,875				217,137
Cash paid for amounts included in the measurement of liabilities:
Operating cash flows used in operating leases			26,866,242				21,813,313
Operating cash flows used in finance leases			96,507				47,649
Financing cash flows used in finance leases			360,443				163,936
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases			27,857,474				81,927,507
Finance leases			819,155				-

 

The Company recorded operating lease expenses of US$34,402,300 and US$27,056,232 during the years ended June 30, 2025 and 2024, respectively. Specifically, US$31,677,864 and US$24,710,718 of the operating lease expenses were recorded in cost of service for the years ended June 30, 2025 and 2024, respectively. US$2,327,782 and US$351,201 of the operating lease expenses were recorded in general and administrative expenses for the years ended June 30, 2025 and 2024, respectively. US$396,654 and US$1,994,313 of the operating lease expenses were recorded in other expenses for the years ended June 30, 2025 and 2024, respectively.

 

As of June 30, 2025, aggregate annual lease obligations for each of the following fiscal years ending June 30 and thereafter were as follows:

 

		Operating				Finance
		US$				US$
2026			31,110,870				432,301
2027			36,578,138				312,731
2028			37,872,441				77,669
2029			25,804,167				67,226
2030 and beyond			39,734,608				-
Total minimum lease payment			171,100,224				889,927
Less: imputed interest			(42,879,765	)			(105,908	)
Total lease liabilities			128,220,459				784,019
Less: current potion			(29,280,907	)			(386,327	)
Non-current portion			98,939,552				397,692

 

Weighted average remaining lease term:

 

Operating leases			5.17 years
Finance leases			2.39 years

 

Weighted average discount rate:

 

Operating leases			10.32	%
Finance leases			11.25	%

 

During the year ended June 30, 2025, US$60,000 (2024: US$1,377,312) lease expense was recognized in cost of service under short-term leases.