PMGC Holdings Inc. Debt Disclosure

14.

Convertible debt under ELOC Agreement

 

On September 23, 2025, the Company entered into a securities purchase agreement, establishing an equity line of credit of up to $20,000,000 through one or more secured pre-paid purchases of the Company’s common stock (the “ELOC Agreement”). Under the ELOC Agreement, the Company may, from time to time, sell and issue common stock to the investor pursuant to individual pre-paid purchases, subject to the terms and conditions of the ELOC Agreement. The Company issued 2,363 shares of common stock to the investor as a commitment fee for the first pre-paid purchase (Note 16). The Company also issued 429 shares of common stock as pre-delivery shares for the first pre-paid purchase. The investor may request the Company to issue and sell common stock to the investor as to the outstanding balance on the first pre-paid purchase at a pre-delivery purchase price of $0.0001 per share, subject to an aggregate pre-delivery purchase cap of $25,000 (Note 16). When all of the Company’s obligations under the ELOC Agreement are settled and after the commitment period has ended, the Company may repurchase any pre-delivery shares outstanding at a purchase price of $0.001 per share. The share issuances under the first pre-paid purchase are subject to a 9.99% beneficial ownership limitation.

On September 26, 2025, the Company consummated the first pre-paid purchase under the equity line of credit with a principal amount of $5,000,000, bearing interest at 8.5% per annum and maturing three years from issuance (the “convertible debt”). The instrument included an original-issue discount of $425,000 and a $30,000 transaction expense allowance; the initial purchase price received at closing was $4,545,000, with net cash proceeds of approximately $3,990,000 after placement and closing costs.

 

The principal and accrued interest is convertible at any time during the three-year term at the option of the investor, in whole or in part, at a price that equals 88% of the lowest VWAP during the 10 trading days preceding the applicable measurement date. If that calculated price is below the floor price of $25.392 per share, the investor may elect to have the applicable purchase amount settled in cash rather than in shares.

 

The Company is accounting for the convertible debt host contract under ASC 470-20 at amortized cost and has determined that the conversion option meets the definition of an embedded derivative liability which is separately accounted for at fair value in accordance with ASC 815-15 Derivatives and Hedging — Embedded Derivatives (Note 15).

 

During the month of December 2025, the Company settled outstanding principal of $ $2,921,706 and accrued interest of $103,294 through the issuance of 49,693 shares of common stock pursuant to eleven purchase notices totaling $3,025,000. In connection with these settlements, the Company derecognized $1,853,134 of the convertible debt host liability and $467,186 of the related derivative liability, with $2,320,320 recorded to common stock and additional paid-in capital.

 

As of December 31, 2025, the remaining derivative liability associated with the conversion feature was $418,412 (Note 15), and the remaining balance of the convertible debt continues to be accounted for at amortized cost. The outstanding principal as of December 31, 2025 was $2,078,294 and accrued interest was $nil.

 

Subsequent to December 31, 2025, the Company settled the remaining outstanding principal of $2,078,294 through the issuance of 67,735 shares of common stock pursuant to the ELOC arrangement. In connection with this settlement, the Company derecognized the remaining convertible debt host liability of $1,254,479 and the related derivative liability of $418,412 associated with the conversion feature, with the total amount recorded to common stock and additional paid-in capital. (Note 22)

 

A continuity of the amortized cost of the convertible debt host contract is as follows:

 

		Convertible debt
Balance, January 1, 2025		$	-
Principal			5,000,000
Fair value of embedded derivative liability			(1,099,765	)
Allocation of original issue discount and issuance cost (1)			(1,026,682	)
Accretion			130,766
Interest expense			103,294
Repayment through common stock			(1,853,134	)
Balance, December 31, 2025		$	1,254,479

 

(1)	Total original issuance discount and issuance cost amounted to $1,316,180, of which $1,026,682 were allocated to the amortized cost of the convertible debt and $289,498 were allocated to the derivative liability and recorded as finance cost in the statement of operations.