Item 5. Market for Registrant’s Common Equity
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market
Information
Our
common stock is trading on the Nasdaq Capital Market under the symbol “LQR.”
Holders
As
of April 1, 2024, we had approximately 25 individual shareholders of record of our common stock. We believe that the number of beneficial
owners of our common stock is greater than the number of record holders, because a number of our shares of our are held through
brokerage firms in “street name.”
Dividend
Policy
We
have never declared or paid any cash dividend on our common stock. We do not intend to pay cash dividends to our stockholders in the
foreseeable future. We currently intend to retain all our available funds and future earnings, if any, to finance the growth and development
of our business. Any future determination related to our dividend policy will be made at the discretion of our Board of Directors and
will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions,
business prospects and other factors our Board of Directors may deem relevant.
Securities
Authorized for Issuance under Equity Compensation Plans
On February, 2021, our board of directors and
our stockholders approved our 2021 Equity Incentive Plan (the “2021 Plan”) as amended by Amendment No. 1 which was approved
by our board of directors and stockholders on March 10, 2023. The 2021 Plan governs equity awards to our employees, directors, officers,
consultants and other eligible participants. The maximum number of shares of our common stock that may be subject to awards under the
2021 Plan is 2,850,000 (or 71,250 on a post-reverse split basis).
The
types of awards permitted under the 2021 Plan includes nonqualified stock options, incentive stock options, stock appreciation rights,
restricted stock, restricted stock units, performance shares, performance units and other awards. Each option shall be exercisable at
such times and subject to such terms and conditions as the Board may specify.
The
2021 Plan is administered by our Compensation Committee who shall have the power and authority to grant awards consistent with the terms
of the 2021 Plan, including the power and authority: (i) to select the individuals to whom awards may from time to time be granted;
(ii) to determine the time or times of grant, and the extent, if any, of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock awards, restricted stock units, unrestricted stock awards, cash-based awards, and dividend equivalent
rights, or any combination of the foregoing, granted to any one or more grantees; (iii) to determine the number of shares of stock
to be covered by any award; (iv) to determine and modify from time to time the terms and conditions, including restrictions, not
inconsistent with the terms of the 2021 Plan, of any award, which terms and conditions may differ among individual awards and grantees,
and to approve the forms of award certificates; (v) to accelerate at any time the exercisability or vesting of all or any portion
of any award; (vi) subject to the provisions of the 2021 Plan to extend at any time the period in which stock options may be exercised;
and (vii) at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the 2021 Plan and for
its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the 2021 Plan and any award (including
related written instruments); to make all determinations it deems advisable for the administration of the 2021 Plan; to decide all disputes
arising in connection with the 2021 Plan; and to otherwise supervise the administration of the 2021 Plan. All decisions and interpretations
of the administrator shall be binding on all persons, including the Company and the 2021 Plan grantees.
36
The
table below sets forth information as of December 31, 2023.
Plan Category
Number of
securities to
be issued
upon
exercise of
outstanding
options,
warrants
and rights
Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column
Equity compensation plans approved by security holders
29,250
$ 197.16
42,000
Equity compensation plans not approved by security holders
-
-
-
Total
29,250
$ 197.16
42,000
Recent
Sales of Unregistered Securities
From April to September 2023, the Company conducted
a private placement of and entered into certain subscription agreements with several accredited investors with a number of (i) accredited
investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, or (ii) non-U.S. persons made in
compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, the Company issued 23,875 shares
of common stock at $40 per share for a total of $955,000.
In June 2023, the Company entered into advisor
agreements with certain advisors, pursuant to which the advisors provided business and corporate advice in connection with the initial
public offering to the Company. In consideration for the advisor’s services, the Company issued 12,500 shares of common stock
to six individuals and entities, for an aggregate of 75,000 shares. The Company recorded an expense of $3,000,000, or fair value
of $40 per share, pertaining to these issuances, which is included in general and administrative expense in the statements of operations.
In June 2023, the Company entered into a Cancellation
Agreement with four stockholders, who each owned 18,750 shares of common stock or an aggregate of 75,000 shares. The stockholders
purchased these shares from the founder, Sean Dollinger, pursuant to a stock purchase agreement on January 12, 2023, between Mr. Dollinger
and each of these four stockholders. The Company repurchased the shares for $18,000.
In August 2023, the board of directors approved
an issuance of and the Company issued an aggregate total of 62,501 shares of the Company’s common stock under the LQR House Inc.
Stock Option and Incentive Plan (“2021 Plan”) to certain consultants with whom the Company entered into independent contractor
agreements, in consideration for their providing consulting services to the Company.
In August, 2023 the Company granted 31,250 restricted
stock units (the “Director RSUs”) to directors Sean Dollinger, Darren Collins, Guy Dollinger, Holiday Russell, James Huber,
and James O’Brien which were to vest in eight (8) equal quarterly installments commencing on October 1, 2023. On August 21, 2023,
Jay Dhaliwal was added to the Board and was granted 500 Director RSUs which Director RSUs were to vest in eight (8) equal quarterly installments
commencing on October 1, 2023. On August 30, 2023, the Board authorized deferring the vesting of the Director RSUs until such date that
the 2021 Plan is amended. Following Darren Collins’ and Guy Dollinger’s resignations, effective, September 25, 2023, they
consented to the cancelation of 1,250 Director RSUs each that they were granted and the Company effected such cancelation on October 6,
2023. As of December 31, 29,250 Director RSUs were outstanding after the cancellations.
On September 28, 2023, the Company issued 63,766
shares of common stock as settlement for outstanding principal on notes of $950,000 and accrued interest of $171,000. These shares were
issued in reliance upon the exemption contained in Regulation S.
Unless otherwise stated
above, the issuances of the securities listed above were made in reliance upon exemptions provided by Section 4(a)(2) of the
Securities Act and/or Rule 506(b) of Regulation D and/or Regulation S thereunder for the offer and sale of securities not
involving a public offering.
No underwriter was engaged
in connection with the foregoing sales of securities. The Company has reason to believe that all of the foregoing purchasers were familiar
with or had access to information concerning the operations and financial condition of the Company, and all of those individuals or entities
purchasing securities represented that they were accredited investors, acquiring the shares for investment and without a view to the distribution
thereof. At the time of issuance, all of the foregoing securities were deemed to be restricted securities for purposes of the Securities
Act and the certificates representing such securities bore legends to that effect.
37
Purcha ses
of Equity Securities by Issuer and Its Affiliates
In August 2023, the Company’s Board approved
a share buyback program under which the Company can repurchase up to 20% of its common stock in open market and privately negotiated purchases,
in compliance with Rule 10b-18 under the Exchange Act. The Company engaged and entered into an agreement with Dominari Securities LLC
(“Dominari”) on August 28, 2023, to effect the share buyback program. The share buyback program is expected to commence on,
or about, September 8, 2023. Dominari shall determine, in its sole discretion, the timing, amount, prices and manner of purchase of securities
during such period. The share buyback program does not obligate the Company to acquire any particular amount of common stock, and the
program may be suspended or discontinued at any time. During the year ended December 31, 2023, 576,713 shares of the Company were purchased
at a cost average of $2.5 per share in accordance with Rule 10b-18.
Period
(In millions, except share and per share data)
Total
number
of shares
purchased
(1)
Average
price paid
per share
(2)
September 8 – December 19, 2023
865,070
$ 1.7
January 4 – January 5, 2024
190,628
2.9
Total
1,055,698
$ 1.9
(1) On
August 25, 2023 the Company announced that the Board authorized an
up to 20% share buyback program, which does not have an expiration date. From the inception of the share buyback program on September
8, 2023, through December 19, 2023, the Company has purchased a total of 865,070 shares of the Company’s common stock at an average
price of $1.7 per share for a total purchase price of $1,440,852. In January 2024, the Company purchased a total of 190,628 shares
of the Company’s common stock at an average price of $2.9 per share.
(2) Average
price paid per share excludes costs associated with the repurchases.
Use
of Proceeds from our Initial Public Offering of Common Stock
On August 11, 2023, we closed our initial public
offering (the “IPO”), in which we sold and issued 28,750 shares of our common stock (on a post-stock split basis), which included
the exercise by the underwriters in full of the over-allotment option, at a price to the public of $200 per share. We received $4.5 million
in aggregate net proceeds from our IPO after deducting underwriting discounts and commissions and other offering expenses. EF Hutton,
division of Benchmark Investments, LLC was the underwriter of our IPO.
The offer and sale of all of the shares of our
common stock in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333- 272660),
which was declared effective by the SEC on August 9, 2023.
The net proceeds from our IPO have been used as
follows: (i) for acquisitions of alcoholic beverage brands; (ii) to invest in marketing of existing brands, including SWOL; (iii) for
working capital and general corporate purposes; and (iv) to compensate certain executive officers.
There has been no material change in our planned use of the net proceeds
from our IPO as described in our final prospectus filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on August 10,
2023.
38
ITEM
6. RESERVED