Financial Analysis

5. ACQUISITION OF CWS PLATFORM On November 1, 2023, LQR House Acquisition Corp. (the Buyer), a wholly owned subsidiary of the Company, and SSquared Spirits LLC (the Seller, SSquared) entered into a Domain Name Transfer Agreement (Agreement). Pursuant to the Agreement, the Seller irrevocably sold, assigned, transferred, and conveyed to the Buyer (a) all right, title, and interest in and to the domain name www.cwspirits.com (the Domain Name, CWS Platform), including its current registration and (b) any other rights (including, but not limited to, trademark rights associated with the Domain Name in any jurisdiction, all Internet traffic through the Domain Name and all Website Content (as defined in the Agreement) the Seller may have in the Domain Name, together with any goodwill associated therewith in exchange for the payment by the Buyer of the purchase price of $10,000. In connection with the Companys purchase of the Domain Name, on November 1, 2023, the Company entered into a product handling agreement (Product Handling Agreement) with KBROS LLC (KBROS). Pursuant to the Product Handling Agreement: Commencing as of the Effective Date of this Agreement, Product Handler shall provide to the Company the following services relating to the purchase and delivery (Handling) of spirits and other beverage products (referred to herein as Product and the Products) purchased by customers of the Company through or in relation to websites associated with the Domain: - Purchase of Products …

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15. COMMITMENTS AND CONTINGENCIES Funding Commitment Agreement On November 1, 2023, the Company entered into a Funding Commitment Agreement with KBROS, the Product Handler pursuant to the Product Handling Agreement as defined in Note 5. Pursuant to this agreement, the Company committed to provide annual funding to the Product Handler from time to time in the minimum amount of $2,500,000 to enable the Product Handler to purchase inventory from Company-approved vendors (Vendors). The Company may, without notice to Product Handler, elect not to advance funding for any inventory sold by particular Vendors with respect to which the Company reasonably feels insecure. This Agreement concerns a funding commitment, and not the purchase of Products from Product Handler or Vendors. For further details regarding the settlement agreement, see Note 11. Legal Proceedings Kingbird Ventures, LLC On July 11, 2025, the Company, along with several of its current and former officers and directors and other parties, was named as a defendant in an action filed in the Eighth Judicial District Court, Clark County, Nevada, captioned Kingbird Ventures, LLC v. Sean Dollinger, et al. The complaint alleged, among other things, breach of fiduciary duties, violations of Nevada Revised Statutes Sections 78.650, 78.630, 207.400, 90.570, and 32.010, alter ego liability, and civil conspiracy. The complaint sought, among other things, unspecified monetary damages, a declaratory judgment, injunctive relief to fre …

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The following is a summary of the disaggregation of revenue for the years ended December 31, 2025 and 2024: Years Ended December 31, Disaggregation of Revenues 2025 2024 CWS Platform $ 1,251,543 $ 2,343,255 SWOL product sales 200,640 40,440 Revenue - product 1,452,183 2,383,695 Marketing 64,992 73,455 Vault 47,648 44,510 Revenue - services 112,640 117,965 Total revenues $ 1,564,823 $ 2,501,660 The following table presents the timing of recognition of revenue for the years ended December 31, 2025 and 2024: Years Ended December 31, Revenue recognized at a point in time 2025 2024 CWS Platform $ 1,251,543 $ 2,343,255 SWOL product sales 200,640 40,440 Revenue - product 1,452,183 2,383,695 Revenue recognized over time Marketing 64,992 73,455 Vault 47,648 44,510 Revenue - services 112,640 117,965 Total revenues $ 1,564,823 $ 2,501,660

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14. INCOME TAXES The Company accounts for income taxes under ASC 740, Income Taxes , using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Income Tax expense The income tax expense consisted of the following for the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Current: Federal $ - $ - State - - Foreign - - Total current - - Deferred: Federal - - State - - Foreign - - Total deferred - - Total income tax expense $ - $ - Effective Tax Rate Reconciliation The following table reconciles the U.S. federal statutory income tax rate to the Companys effective income tax rate: For the year ended December 31, For the year ended December 31, 2025 2025(%) 2024 2024(%) Tax benefit at statutory federal rate (7,134,082 ) -27.95 % (6,360,248 ) -27.95 % State income taxes - 0.0 % - 0.0 % Non-deductible M&E 43,044 0.2 % 18,446 0.08 % Non-deductible impairment charges and other 315, …

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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 Companys 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 five 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 % …

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Recently Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures , which requires enhanced disclosures about significant segment expenses and other segment items regularly provided to the chief operating decision maker, and expands interim disclosure requirements. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-07 for the fiscal year ended December 31, 2024, on a retrospective basis. The adoption affected disclosures only and did not have a material impact on the Companys consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures , which requires enhanced disclosures in the annual rate reconciliation, including specific categories of reconciling items, and disaggregation of income taxes paid by federal, state, and foreign jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 for the fiscal year ended December 31, 2025. The adoption affected disclosures only and did not have a material impact on the Companys consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 20 …

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11. RELATED PARTY TRANSACTIONS KBROS and Ssquared Spirits LLC The Companys founder and Chief Executive Officer, who is a stockholder and member of the board of directors has an economic interest in Ssquared Spirits LLC, the seller of the CWS Platform acquisition. The spouse of the Companys former Chief Executive Officer and director, is the President and controlling stockholder of KBROS, the managing member and director of Ssquared Spirits LLC, and a minority shareholder with the Company. See Note 5 for the CWS Platform acquisition from SSquared. KBROS serves as the Companys Product Handler pursuant to a Product Handling Agreement, under which KBROS provides product procurement, order fulfillment, and regulatory compliance services in connection with the CWS Platform. Under the agreement, KBROS is entitled to a monthly fee of $40,000 plus reimbursement of shipping and handling fees incurred in fulfilling customer orders, and a bonus upon reaching certain revenue milestones. The Company incurred product handling fees of $40,000 and $480,000 to KBROS for the years ended December 31, 2025 and 2024, respectively, recorded within cost of revenue in the consolidated statements of operations. In addition, for the years ended December 31, 2025 and 2024, the Company paid $100,000 and 200,000, respectively, in incentive compensation, which is included in sales and marketing expenses in the consolidated statements of operations. In October, 2024, the Company entered into a settlement an …

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12. SEGMENT AND GEOGRAPHIC INFORMATION The Company determines its operating segments in accordance with ASC 280, Segment Reporting , based on the information reviewed by the Chief Operating Decision Maker (CODM), who is the Companys Chief Executive Officer. The CODM reviews financial performance and allocates resources on the basis of consolidated net loss as presented in the consolidated statements of operations. Accordingly, the Company has determined that it operates as a single reportable segment in the beverage alcohol e-commerce and marketing industry. The financial information for this single segment is presented in the consolidated financial statements and accompanying notes contained herein. Geographic Information The Companys revenues are generated primarily in the United States. The Companys subsidiary, YHC Online Limited, is incorporated and operates in Hong Kong; however, it did not generate revenue during the years ended December 31, 2025 and 2024. Accordingly, substantially all revenues are attributable to the United States. …

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The Companys fiscal year end is December 31. The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act and has elected to comply with certain reduced public company reporting requirements, however, the Company may adopt accounting standards based on the effective dates for public entities when early adoption is permitted. Principles of Consolidation The consolidated financial statements include the accounts of LQR House Inc. and its wholly-owned subsidiaries, LQR House Acquisition Corp., SWOL Holdings Inc., and YHC Online Limited. A subsidiary is an entity in which the Company holds a controlling financial interest, which is generally evidenced by direct or indirect ownership of a majority of the outstanding voting shares or the power to govern the financial and operating policies of the entity in accordance with ASC 810, Consolidation . Subsidiaries are consolidated from the date on which control is obtained and are deconsolidated from the date on which control ceases. The results of operations of subsidiaries are included in the consolidated statements of operations from the effective date of acquisition or formation. All intercompany transactions, balances, revenues, and expenses between the Company and its subsidiari …

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10. STOCKHOLDERS EQUITY Reverse Stock Split On April 16, 2025, the Company filed a Certificate of Change to its Articles of Incorporation with the Secretary of State of the State of Nevada to effect a 1-for-35 reverse stock split (the Reverse Stock Split) of its common stock, par value $0.0001 per share, which became effective on April 21, 2025. Pursuant to the Reverse Stock Split, every 35 shares of the Companys issued and outstanding common stock were automatically converted into one share of common stock. No fractional shares were issued; fractional amounts were rounded up to the nearest whole share at the individual stockholder level. The par value per share remained unchanged at $0.0001. All share and per share amounts in these consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented. Increase in Authorized Shares On June 2, 2025, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to increase the number of authorized shares of common stock from 10,000,000 to 350,000,000 shares, par value $0.0001 per share. The increase was approved by the Companys stockholders at the Annual Meeting of Stockholders held on May 30, 2025. 2025 Stock Transactions At-the-Market Offering During the year ended December 31, 2025, the Company issued 13,434,601 shares of common stock pursuant to its at-the-market offering program under the At The Market Offering A …

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16. SUBSEQUENT EVENTS Reincorporation and Capital Structure Changes On March 2, 2026, the Companys stockholders approved the reincorporation of the Company from the State of Nevada to the State of Delaware, which was effected on the same date. In connection with the special meeting, stockholders also approved an increase in the number of authorized shares of common stock from 350,000,000 to 1,500,000,000 shares, and authorized the Board of Directors, at its discretion, to effect one or more reverse stock splits of the Companys common stock at a ratio ranging from 1-for-40 to 1-for-800 at any time prior to February 23, 2028. As of the date of these financial statements, no reverse stock split has been effected. At-the-Market Offering On March 11, 2026, the Company entered into a sales agreement with A.G.P./Alliance Global Partners, pursuant to which the Company may sell shares of its common stock having an aggregate offering price of up to $50,273,610 from time to time in at-the-market transactions. The sales agent is entitled to a commission of 3.0% of gross proceeds per share sold. Termination of Joint Venture Agreements In April 2026, all four joint venture agreements entered into in December 2025 by YHC Online Limited with Bancroft Equity Limited, Emerald Wealth Inc., Meridian Financial Solutions Inc., and Sequoia Equity Group Inc. were terminated. In connection with the terminations, all amounts previously funded under the agreements, aggregating $18,494,000, comprising $ …

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