PMGC Holdings Inc. Leases Disclosure
| 13. | Operating Leases |
The Company’s subsidiaries, AGA and Pacific Sun, entered into non-cancelable operating leases for the office and warehouse spaces occupied to operate its business.
The Pacific Sun lease was executed on July 9, 2025, and the Company committed to monthly lease payments of $6,300 through June 30, 2026. Thereafter, monthly payments increase by 3% each year starting on July 1, 2026. The lease expires on June 30, 2030. On October 20, 2025, the lease was modified to expand the premises to the entire building. The modification revised the monthly base rent and shifted the remaining term to commence payments on January 1, 2026, and end on December 31, 2030. Modified monthly base rent is $7,415 for 2026, increasing 3% annually thereafter. The modification was accounted for as a lease remeasurement under ASC 842; the lease liability and right-of-use asset were adjusted using the incremental borrowing rate.
The AGA lease was executed on July 19, 2025, and the Company committed to monthly lease payments of $18,905 through August 31, 2026. Thereafter, monthly payments increase to $22,020 starting on September 1, 2026 and increase by 3% each year starting on September 1, 2027. The lease expires on August 31, 2029. The Company committed to paying common area maintenance cost which is currently $1,045 per month.
The Company used a discount rate of 8%, as the incremental cost of borrowing, to calculate the present value of the future lease payments and the resulting operating lease liabilities and right-of-use assets.
The Company recognized a total lease cost related to its non-cancelable operating leases of $165,091 for the year ended December 31, 2025, included in office and administrative expenses.
The Company recognizes right-of-use (“ROU”) assets and corresponding lease liabilities for operating leases in accordance with ASC 842, Leases. ROU assets represent the Company’s right to use underlying leased assets over the lease term and are initially measured at the amount of the lease liability, adjusted for initial direct costs, prepaid lease payments, and lease incentives.
As of December 31, 2025, the Company’s operating lease ROU assets had a carrying value of approximately $1,241,527. During the year ended December 31, 2025, additions to ROU assets were approximately $1,280,137, primarily related to a new lease for office space with an associated warehouse component. Lease modifications during the year resulted in an increase of approximately $82,147 to the ROU assets. Amortization of ROU assets for the year ended December 31, 2025 was approximately $120,757, which is included in operating expenses, primarily within office and administrative. The Company’s ROU assets relate primarily to office and warehouse facilities used in its operations.
As of December 31, 2025 and 2024, the Company recorded a security deposit of $81,757 and $, associated with these operating leases.
Future minimum lease payments under the Company’s operating leases that have an initial non-cancelable lease term in excess of one year at December 31, 2025, are as follows:
| As at December 31, 2025 | Lease payments ($) | |||
| 2026 | 332,480 | |||
| 2027 | 348,396 | |||
| 2028 | 358,464 | |||
| 2029 | 292,476 | |||
| 2030 and thereafter | 100,152 | |||
| Total future payments | $ | 1,431,968 | ||
| Less: imputed interest | (211,498 | ) | ||
| Operating lease liabilities | $ | 1,220,470 | ||
| Operating lease liabilities-current | $ | 247,627 | ||
| Operating lease liabilities- non-current | $ | 972,843 | ||
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.