LQR House Inc. Leases Disclosure
13. LEASES
SWOL Lease
In March 2025, SWOL Holdings Inc., a wholly-owned subsidiary of the Company, entered into a commercial lease agreement with CapMinds, a related party, for office space located at 6538 Collins Ave, Suite 344, Miami Beach, Florida, which also serves as the Company’s principal executive offices. CapMinds is an entity affiliated with Alexandra Hoffman, CEO of SWOL Holdings. See Note 11 - Related Party Transactions. The lease commenced on March 15, 2025 and expires on March 31, 2030, with a term of approximately years. Base rent is $1,200 per month, with all utilities and service charges borne by the landlord. The lease does not contain renewal options at a predetermined rate, variable lease payments, or residual value guarantees.
Upon commencement, the Company recognized a right-of-use asset and corresponding operating lease liability calculated using an incremental borrowing rate of 8.0% per annum. For the year ended December 31, 2025, the Company recognized lease expense of $10,800, included in general and administrative expenses in the consolidated statements of operations.
The following table summarizes the operating lease assets and liabilities as of December 31, 2025 and 2024:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating Leases | ||||||||
| Right-of-use assets | $ | 51,651 | $ | |||||
| Right of use liability, current portion | 10,628 | |||||||
| Right of use liability | 41,023 | |||||||
| Total lease liabilities | $ | 51,651 | $ | |||||
| Weighted Average Remaining Lease Term (years) | 4.25 | |||||||
| Weighted Average Discount Rate | 8 | % | ||||||
A summary of lease expense recognized in the consolidated statement of operations is as follows:
| Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating Leases | ||||||||
| Amortization of right-of-use asset | $ | 7,637 | $ | |||||
| Internet of lease liability | 3,163 | $ | ||||||
| Total operating lease expense | $ | 10,800 | $ | |||||
The following is the summary of future minimum payments:
| December 31, | ||||
| 2026 | 14,400 | |||
| 2027 | 14,400 | |||
| 2028 | 14,400 | |||
| 2029 | 14,400 | |||
| Thereafter | 3,600 | |||
| Total lease payments | 61,200 | |||
| Less: Imputed interest | (9,549 | ) | ||
| Total | $ | 51,651 | ||
Subsequent to December 31, 2025, the commercial lease agreement became ineffective. As a result of the lease going ineffective, the related right-of-use asset of $51,651 and operating lease liability of $51,651 recognized on the consolidated balance sheet as of December 31, 2025 will be derecognized in the period in which the lease was determined to be ineffective.
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.