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Item 1. Financial Statements

2024-05-15 compared with 2023-11-16 · 380 added, 591 removed, 112 unchanged (90% of the section changed)

ITEM 1 – FINANCIAL STATEMENTS

LQR HOUSE, INC.

BALANCE SHEETS

September 30,

1 – FINANCIAL STATEMENTS

CONSOLDIATED BALANCE SHEETS

Current assets:

2 unchanged sentences

Advances to related party

Deposits in escrow

Prepaid expenses

Marketable securities

Total current assets

10 unchanged sentences

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Common stock, $ 0.0001 par value, 350,000,000 shares authorized, 16,356,056 and 16,276,746 shares issued and outstanding as of September 30, 2023 and 9,200,405 shares issued and outstanding as December 31, 2022, respectively

Common stock, $ 0.0001 par value, 350,000,000 shares authorized, 4,829,438 and 4,638,810 shares issued and outstanding as of March 31, 2024 and 4,829,438 shares issued and outstanding as of December 31, 2023, respectively

Additional paid-in capital

5 unchanged sentences

Total liabilities and stockholders’ equity

See the accompanying notes to the unaudited financial

LQR HOUSE, INC.

STATEMENTS OF OPERATIONS

the accompanying notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

September 30,

Revenue - services

11 unchanged sentences

( 2,472,373 )

( 9,248,793 )

( 1,699,484 )

Other income (expense):

Interest expense

Total other expense

$ ( 5,541,228 )

$ ( 451,224 )

Other income:

Total other income

Provision for income taxes

$ ( 2,427,392 )

2 unchanged sentences

Net loss per common share - basic and diluted

See the accompanying notes to the unaudited financial

LQR HOUSE, INC.

OF STOCKHOLDERS’ EQUITY

the accompanying notes to the unaudited condensed consolidated financial statements

condensed consolidated STATEMENTS OF STOCKHOLDERS’ EQUITY

Treasury Stock

2 unchanged sentences

$ ( 3,804,901 )

Vesting of restricted stock units

Recapitalization

Balances at March 31, 2023

$ ( 4,126,975 )

Vesting of restricted stock units

Balances at June 30, 2022

Balances at December 31, 2023

$ ( 19,552,625 )

Vesting of restricted stock units

Balances at September 30, 2022

Repurchase of common stock

( 2,427,392 )

Balances at December 31, 2022

( 2,427,392 )

Recapitalization (Note 5)

Balances at March 31, 2024

$ ( 547,415 )

Issuance of common stock pursuant to private placement

Issuance of common stock for services

Repurchase of shares

$ ( 21,980,017 )

( 3,556,491 )

Balances at June 30, 2023

( 7,683,466 )

Issuance of common stock pursuant to IPO

Offering costs

( 1,255,843 )

Conversion of note payable into common stock

Issuance of common stock for services

Buyback of common shares

Vesting of restricted stock units

( 5,541,228 )

Balances at September 30, 2023

( 13,224,694 )

See the accompanying notes to the unaudited financial

LQR HOUSE, INC.

OF CASH FLOWS

Nine Months Ended

September 30,

the accompanying notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Month Ended

Cash flows from operating activities:

3 unchanged sentences

Vesting of restricted stock units

Issuance of common stock for services

Changes in operating assets and liabilities:

1 unchanged sentence

Prepaid expenses

( 1,296,422 )

Accounts payable

4 unchanged sentences

( 1,374,040 )

( 1,035,463 )

Cash flows from investing activities:

Purchase of marketable securities

( 4,030,986 )

Net repayments from (advances to) related party

Return of deposits in escrow

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from note payable

Issuance of common stock pursuant to private placement

Issuance of common stock pursuant to IPO, net of offering costs

Repurchase and buyback of shares

Net cash provided by financing activities

( 3,360,986 )

Cash flows from investing activities:

Repurchase of common stock

Deferred offering costs

Net cash used in financing activities

Net change in cash and cash equivalents

5 unchanged sentences

Cash paid for interest

Supplemental disclosure of non-cash financing activities:

Conversion of note payable and accrued interest into common stock

See the accompanying notes to the unaudited financial

LQR HOUSE, INC.

NOTES TO FINANCIAL STATEMENTS

the accompanying notes to the unaudited condensed consolidated financial statements

TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NATURE OF OPERATIONS

1 unchanged sentence

or the “Company”) was incorporated on January 11, 2021, in the state of Delaware.

The Company operates primarily in the beverage

alcohol industry owning specialty brands, providing marketing and distribution services.

As of September 30, 2023,

the Company has not achieved its planned level of operations.

The Company’s activities since inception have been limited and consisted

of formation activities, commencement of operations and capital raising activities.

To date, the Company has only generated limited amounts

of revenue and the Company is dependent on external capital, including funds from the initial public offering (described below) to execute

its planned operations.

Reorganization and Reverse

On February 3, 2023, the

Company changed its state of incorporation to the State of Nevada by merging into LQR House Inc., a Nevada corporation.

On February 3,

in accordance with our reincorporation to Nevada, the Company’s authorized capital stock changed from 100,000,000 shares of common

stock, $ 0.001 par value, to 350,000,000 shares, consisting of 300,000,000 shares of common stock, par value $ 0.0001 per share, and 50,000,000

shares of preferred stock, par value $ 0.0001 per share.

At the same time, the Company also completed a 6-for-1 reverse stock split of

its outstanding common stock through the merger by issuing one share of common stock for every six previously outstanding shares of common

stock of the predecessor Delaware company.

The accompanying financial statements and related disclosures have been presented to retroactively

reflect the Reorganization.

Initial Public Offering

On August 9, 2023, the Company

entered into an underwriting agreement (the “Underwriting Agreement”) with EF Hutton, division of Benchmark Investments, LLC

(“EF Hutton”), relating to the Company’s initial public offering (the “Offering” or “IPO”) of

1,150,000 shares (the “Shares”) of the Company’s common stock which included the exercise by the underwriters in full

of the over-allotment option to purchase an additional 150,000 shares of the Company’s common stock, at an offering price

of $ 5.00 per share.

The closing of the IPO took place on August 11, 2023.

Total gross proceeds, including the exercise of the over-allotment

option, was $ 5.75 million.

The aggregate net proceeds to the Company from the IPO were approximately

$ 4.5 million after deducting underwriting discounts and commissions and total offering expenses.

On February 3, 2023, the Company changed

its state of incorporation to the State of Nevada by merging into LQR House Inc., a Nevada corporation.

The Company operates primarily

in the beverage alcohol industry owning specialty brands, providing marketing and distribution services.

of March 31, 2024, the Company has not achieved its planned level of operations.

The Company’s activities since inception have

been limited and consisted of formation activities, commencement of operations and capital raising activities.

To date, the Company has

only generated limited amounts of revenue and the Company is dependent on external capital, including funds from the initial public offering

(described below) to execute its planned operations.

Wine & Spirits (“CWS”) Platform

November 1, 2023, LQR House Acquisition Corp.

(the “Buyer”), a subsidiary of the Company, and SSquared Spirits LLC (the

“Seller”) 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”, or “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 .

Company’s Chief Executive Officer, Sean Dollinger, owns 50 % of the equity of the Seller, and the other 50 % is owned by

a minority shareholder of the Company.

A Special Committee of the Company’s Board of Directors consisting of all independent directors

approved the terms of the Agreement on November 1, 2023.

Dividend in the Form of Stock Split

In February 2024, the Board

of Directors declared a 50 % stock dividend for distribution to all of the Company’s shareholders of record at the close of

business on February 12, 2024.

On March 1, 2024, 1,609,817 shares were issued per dividend.

As a result of the stock dividend,

a 3:2 stock split was effected.

Accordingly, all share and per share amounts for all periods presented in the accompanying financial

statements and notes thereto have been adjusted retroactively, where applicable, to reflect the stock split.

GOING CONCERN

The accompanying financial

statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities

in the normal course of business.

The Company has not generated profits since inception, has sustained net losses of $ 9,419,793 and has

negative cash flows from operations of $ 4,568,848 for the nine months ended September 30, 2023.

Management’s Plans

The Company has raised funds

from the IPO (Note 1) and an additional $ 15.0 million from its public offerings in October and November 2023 (see Note 9).

Company expects that its cash and cash equivalents as of the date of issuance of these unaudited interim condensed financial statements

may not be sufficient to fund its operating expenses and acquisition plans for at least one year.

The Company’s ability to continue

as a going concern for the next twelve months is dependent upon its ability to generate sufficient cash flows from operations to meet

its obligations, which it has not been able to accomplish to date, or to obtain additional capital financing to support current negative

cash flow trends.

No assurance can be given that the Company will be successful in these efforts.

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”).

Company’s 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.

Unaudited Interim Financial Information

The unaudited interim financial

statements and related notes have been prepared in accordance with U.S.

GAAP for interim financial information, within the rules and regulations

of the United States Securities and Exchange Commission (the “SEC”).

Certain information and disclosures normally included

in the annual financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted pursuant to such rules and regulations.

The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements and in the opinion

of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the results

for the interim periods presented and of the financial condition as of the date of the interim balance sheet.

The financial data and the

other information disclosed in these notes to the interim financial statements related to the nine-month periods are unaudited.

interim results are not necessarily indicative of the results for the full fiscal year.

Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about

the Company’s ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial

statements are issued.

The accompanying unaudited

interim condensed financial statements should be read in conjunction with the Company’s audited financial statements and the notes

thereto for the year ended December 31, 2022 included in the Company’s prospectus that forms a part of the Company’s

Registration Statement on Form S-1 ( File No.

333-272660 ) which was declared effective

on August 9, 2023.

Use of Estimates

condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets

and the satisfaction of liabilities in the normal course of business.

The Company has not generated profits since inception, has sustained

net losses of $ 2,427,392 and $ 322,074 for the three months ended March 31, 2024 and 2023, and has negative cash flows from operations

of $ 1,374,040 for the three months ended March 31, 2024.

The Company requires additional capital to operate and expects losses to continue

in the foreseeable future.

These factors raise substantial doubts about the Company’s ability to continue as a going concern.

Company’s ability to continue as a going concern until it reaches profitability is dependent upon its ability to generate cash

from operating activities and to raise additional capital to fund operations.

Management plans to raise additional capital to fund operations

through debt and/or equity financings.

The Company has raised funds from the initial public offering in August 2023 and an additional

$ 16.6 million from its public offerings in October and November 2023.

Our failure to raise additional capital could have a negative

impact on not only our financial condition but also our ability to execute our business plan.

No assurance can be given that the Company

will be successful in these efforts.

The unaudited condensed consolidated financial statements do not include any adjustments that might

result from the outcome of this uncertainty.

The Company may not be able to obtain financing on acceptable terms, or at all.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America

The Company’s fiscal year end is December 31.

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.

of Consolidation

consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, LQR House Acquisition Corp.

inter-company transactions and balances have been eliminated on consolidation.

Interim Financial Information

The unaudited condensed consolidated

interim financial statements and related notes have been prepared in accordance with U.S.

GAAP for interim financial information, within

the rules and regulations of the United States Securities and Exchange Commission (the “SEC”).

Certain information and disclosures

normally included in the annual financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted pursuant to

such rules and regulations.

The unaudited interim financial statements have been prepared on a basis consistent with the audited financial

statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the

fair presentation of the results for the interim periods presented and of the financial condition as of the date of the interim balance

The financial data and the other information disclosed in these notes to the interim financial statements related to the three-month

periods are unaudited.

Unaudited interim results are not necessarily indicative of the results for the full fiscal year.

accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited

financial statements and the notes thereto for the year ended December 31, 2023 included in the Form 10-K filed with the SEC on April

The preparation of the Company’s

3 unchanged sentences

Significant estimates and assumptions reflected in these financial statements

include, but are not limited to stock-based compensation.

The Company bases its estimates on historical experience, known trends and other

market-specific or other relevant factors that it believes to be reasonable under the circumstances.

On an ongoing basis, management evaluates

its estimates when there are changes in circumstances, facts and experience.

Changes in estimates are recorded in the period in which

they become known.

Actual results could differ from those estimates.

Significant Risks and Uncertainties

The Company is subject to

customary risks and uncertainties including, but not limited to, the need for protection of proprietary technology, dependence on key

personnel, costs of services provided by third parties and limited operating history.

Variable Interest Entities

The Company evaluates its

relationships with other entities to identify whether they are variable interest entities as defined by Financial Accounting Standards

Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”), and

to assess whether it is the primary beneficiary of such entities.

If the determination is made that the Company is the primary beneficiary,

then that entity is consolidated.

The Company evaluated whether it was the primary beneficiary in its common control asset acquisitions

and related party agreements and determined it is not the primary beneficiary of any entities.

Concentrations of Credit Risk

The Company maintains its

cash with a major financial institution located in the United States of America which it believes to be credit worthy.

insured by the Federal Deposit Insurance Corporation up to $ 250,000 .

At times, the Company maintains balances in excess of the

federally insured limits.

include, but are not limited to, the valuation of assets acquired and liabilities assumed pursuant to business combinations, and stock-based

compensation.

The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors

that it believes to be reasonable under the circumstances.

On an ongoing basis, management evaluates its estimates when there are changes

in circumstances, facts, and experience.

Changes in estimates are recorded in the period in which they become known.

Actual results could

differ from those estimates.

Concentrations

of Credit Risk

Company maintains its cash with a major financial institution located in the United States of America which it believes to be credit

Balances are insured by the Federal Deposit Insurance Corporation up to $ 250,000 .

At times, the Company maintains

balances in excess of the federally insured limits.

Concentrations

The Company’s ability

to derive revenue from marketing services is reliant on its relationship and marketing license agreement with Ssquared Spirits LLC, a

related party entity, and CWS who fulfills sales for the products sold by clientele using our marketing services.

The discontinuance of

such relationships or termination of the marketing license agreement would have a material negative impact on the Company’s operations.

Furthermore, the Company

relies and expects to continue to rely on a small number of vendors.

The loss of one of these vendors may have a negative short-term impact

on the Company’s operations.

However, the Company believes there are acceptable substitute vendors that can be utilized longer term.

Fair Value Measurements

Certain assets and liabilities

of the Company are carried at fair value under GAAP.

Fair value is defined as the exchange price that would be received for an asset or

paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction

between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable

inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are to be classified and disclosed

in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered

unobservable:

to derive revenue is reliant on its relationship with KBROS who currently handles product for the CWS Platform and fulfills the products

sold by clientele using our marketing services.

The discontinuance of such relationship or termination of the CWS Platform agreements

would have a material negative impact on the Company’s operations.

the Company relies and expects to continue to rely on a small number of vendors.

The loss of one of these vendors may have a negative

short-term impact on the Company’s operations.

However, the Company believes there are acceptable substitute vendors that can be

utilized longer term.

and Cash Equivalents

Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents.

Marketable Securities

Company has investments in mutual funds.

The investments are classified as available-for-sale and are held at fair value.

The investments

have a readily determinable fair value and as such, are recognized as a Level 1 instrument.

Value Measurements

assets and liabilities of the Company are carried at fair value under GAAP.

Fair value is defined as the exchange price that would be

received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability

in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize

the use of observable inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are

to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered

observable and the last is considered unobservable:

1—Quoted prices in active markets for identical assets or liabilities.

2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities,

quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can

be corroborated by observable market data.

3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of

the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying values of the

Company’s accounts receivable and accounts payable approximate their fair values due to the short maturity of these instruments.

The Company believes the carrying amount of its advances to related parties approximate fair value due to its short-term maturity.

Accounts Receivable

Accounts receivable are derived

from services and products delivered to customers and are stated at their net realizable value.

Each month, the Company reviews its receivables

on a customer-by-customer basis and evaluates whether an allowance for doubtful accounts is necessary based on any known or perceived

collection issues.

Any balances that are eventually deemed uncollectible are written off against the allowance after all means of collection

have been exhausted and the potential for recovery is considered remote.

Prepaid Expenses

Prepaid expenses consist

of prepaid advertising, marketing and investor relations costs.

The agreements have terms ranging from three months to one year.

are amortized to the respective expenses over the life of the agreements.

Related Parties

Related parties are any entities

or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management

and policies of the Company.

The Company discloses related party transactions that are outside of normal compensatory agreements, such

The Company follows ASC 850, Related Party Disclosures , for the identification of related parties and disclosure of

related party transactions.

Revenue Recognition

In accordance with FASB ASC

606, Revenue from Contracts with Customers ¸ the Company determines revenue recognition through the following steps:

2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active

markets for similar assets or liabilities, quoted prices in markets that are not active for

identical or similar assets or liabilities, or other inputs that are observable or can be

corroborated by observable market data.

3—Unobservable inputs that are supported by little or no market activity that are significant

to determining the fair value of the assets or liabilities, including pricing models, discounted

cash flow methodologies and similar techniques.

carrying values of the Company’s accounts receivable and accounts payable approximate their fair values due to the short maturity

of these instruments.

The Company believes the carrying amount of its advances to related parties approximate fair value due to its short-term

accordance with FASB ASC 606, Revenue from Contracts with Customers ¸ the Company determines revenue recognition through

the following steps:

● Identification

7 unchanged sentences

of revenue when or as the performance obligations are satisfied.

Revenue is recognized when

performance obligations are satisfied through the transfer of control of promised goods to the Company’s customers in an amount

that reflects the consideration expected to be received in exchange for transferring goods or services to customers.

Control transfers

once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the product.

This includes the

transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance.

The Company derives its revenue

from marketing services, distribution of its SWOL Tequila product to CWS, and subscription-based membership revenue.

Revenue is reported

net of discounts.

Marketing Services

The Company contracts with

third-party alcoholic beverage brands to utilize access to the CWS alcoholic beverage website (the “CWS Platform).

The Company and

the brands enter into a commercial relationship.

The Company performs services such as creating a marketing campaign strategy, developing

promotional materials and advertising promotional materials through the CWS Platform.

Revenue is recognized over a period time, as the

marketing services are being continually provided on a daily and monthly basis over the life of an agreed upon campaign.

Marketing campaigns

generally range from one to three months.

Product Sales

The Company wholly owns SWOL

Tequila, a tequila made in limited batches from a third-party producer located in Mexico.

The Company facilitates all efforts to get the

product delivered to CWS for retail distribution in the United States, including advancing costs for production, shipping and other importing

and delivery charges.

The Company is entitled to payment of cost plus an additional 20 % on each bottle of SWOL Tequila sold to CWS.

is recognized at the point in which the products are delivered to CWS, when LQR has fulfilled its performance obligation.

Due to certain

restrictions on the delivery and custodianship of alcoholic beverage, CWS is require to take ownership of the product at time of delivery,

and there is no recourse or right of return.

The Company records gross revenue as it’s the primary obligor in the transaction.

Vault is the exclusive membership

program for CWS customers.

Through the CWS Platform, users can sign up for membership where they will have access to all products available

through CWS combined with special membership benefits including discounted products, free shipping and promotional offers.

markets this membership program on the CWS Platform and is entitled to 50 % of the revenue from the subscriptions.

Members are charged

monthly membership fees, and the Company recognizes the 50 % fee it is entitled to from CWS as net revenue.

The Company records revenue

on transactions when the user initially subscribes or renews their membership, as the Company is the agent of the transaction and do not

typically provide significant post transaction services to the user or bear responsibility for the promised goods or services included

in the membership.

The Company records a reserve for chargebacks and cancellations at the time of the transaction based on historical

During the three and nine months ended September 30, 2023, revenue from Vault memberships totaled $ 7,489 and $ 24,401 ,

respectively.

Contract Balances

Accounts receivable represent

amounts owed from marketing and product sales invoiced, but not yet received.

Contract liabilities represent

obligations to transfer services to a customer for which the Company has already received consideration.

Payments for marketing services

are generally received upfront in advance of the Company satisfying the related performance obligation and are recorded as a deferred

revenue liability.

The deferred revenue is reduced as the services are performed and the revenue is recognized.

As of September 30, 2023

and December 31, 2022, the Company had $ 0 in deferred revenue.

Cost of Revenue

Cost of revenue consists

of all direct costs attributable to performing marketing services and the Company’s product sales.

Cost of revenue includes affiliate

payouts, contracted marketing services, direct advertising costs for marketing campaigns, product costs, packaging, shipping and other

importing and delivery charges.

Cost of revenue also includes customer service personnel and amortization of the Company’s marketing

license asset (see Note 4).

Sales and Marketing

Sales and marketing costs

primarily consist of advertising, promotional expenses and marketing consulting and advisory services.

Sales and marketing costs also

include sales commissions.

Deferred Offering Costs

The Company complies with

the requirements of FASB ASC 340-10-S99-1 with regards to offering costs.

Prior to the completion of an offering, offering costs are capitalized.

The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of

an offering or to expense if the offering is not completed.

As of September 30, 2023, the Company has no deferred offering costs.

Stock-Based Compensation

Stock-based compensation

is accounted for in accordance with ASC Topic 718-10, Compensation-Stock Compensation (“ASC 718-10”).

The Company measures

all equity-based awards granted to employees, independent contractors and advisors based on the fair value on the date of the grant and

recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective

The Company classifies equity-based

compensation expense in its statement of operations in the same manner in which the award recipient’s payroll or contractor costs

are classified or in which the award recipient’s service payments are classified.

Net Loss per Share

Net earnings or loss per

share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding

shares subject to redemption or forfeiture.

is recognized when performance obligations are satisfied through the transfer of control of promised goods to the Company’s customers

in an amount that reflects the consideration expected to be received in exchange for transferring goods or services to customers.

transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the product.

includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance.

The Company derives its revenue from marketing services, sales via

the CWS Platform, distribution of its SWOL Tequila product and subscription-based membership revenue.

Revenue is reported net of discounts.

Company contracts with third-party alcoholic beverage brands to utilize access to the CWS Platform.

The Company and the brands enter

into a commercial relationship.

The Company performs services such as creating a marketing campaign strategy, developing promotional

materials and advertising promotional materials through the CWS Platform.

Revenue is recognized over a period time, as the marketing

services are being continually provided on a daily and monthly basis over the life of an agreed upon campaign.

Marketing campaigns generally

range from one to three months.

Cwsspirits.com

is an e-commerce platform that sells in wine and spirits in the USA.

The Company is responsible for contracting with CWS and customers

to fulfill orders through the website.

The Company has the ability to direct customers to CWS to fulfill the order.

The Company, though

not legally able to own alcohol inventory, does take on financial inventory risk.

The Company is solely responsible for any risk of loss

of the end customer and paying to replenish the loss order.

Additionally, the Company enters into minimum guaranteed purchase commitments

with its vendor that require the Company to pay for any inventory not sold during the year.

The Company establishes the price and selection

of products to be sold on the CWS Platform, and directs all marketing activities pertaining to the Platform.

As such, the Company is

the primary obligor for transactions with customers on the CWS Platform and records gross revenue.

Revenue is recognized at the point

in time when products are delivered to the end customer, when LQR has fulfilled its performance obligation, net of returns.

Company wholly owns SWOL Tequila, a tequila made in limited batches from a third-party producer located in Mexico.

The Company facilitates

all efforts to get the product delivered to CWS for retail distribution in the United States, including advancing costs for production,

shipping and other importing and delivery charges.

The Company is entitled to payment of cost plus an additional 20 % on each bottle

of SWOL Tequila sold to CWS.

Revenue is recognized at the point in which the products are delivered to CWS, when LQR has fulfilled its

performance obligation.

Due to certain restrictions on the delivery and custodianship of alcoholic beverage, CWS is requires to take

ownership of the product at time of delivery, and there is no recourse or right of return.

The Company records gross revenue as it’s

the primary obligor in the transaction.

is the exclusive membership program for CWS Platform customers.

Through the CWS Platform, users can sign up for membership where they

will have access to all products available through CWS combined with special membership benefits including discounted products, free

shipping and promotional offers.

Prior to the acquisition of the CWS Platform, the Company marketed this membership program on the

CWS Platform and was entitled to 50 % of the revenue from the subscriptions as the agent of the transaction.

Upon the acquisition

of the CWS Platform, the Company records gross revenue as it is the principal in the transaction.

The Company records a reserve for chargebacks

and cancellations at the time of the transaction based on historical experience.

During the three months ended March 31, 2024 and 2023,

revenue from Vault memberships totaled $ 13,440 and $ 8,794 respectively.

Disaggregation

following is a summary of the disaggregation of revenue for the three months ended March 31, 2024 and 2023:

Three Months Ended

Disaggregation of Revenues

SWOL product sales

Revenue – product

Revenue – services

Total revenues

of revenue consists of all direct costs attributable to performing marketing services and the Company’s product sales.

revenue includes product costs, affiliate payouts, contracted marketing services, direct advertising costs for marketing campaigns, packaging,

shipping and other importing and delivery charges.

Cost of revenue also includes customer service personnel and amortization of the Company’s

marketing license asset in 2023.

and Marketing

and marketing costs primarily consist of advertising, promotional expenses and marketing consulting and advisory services.

marketing costs also include sales commissions.

compensation is accounted for in accordance with ASC Topic 718-10, Compensation-Stock Compensation (“ASC 718-10”).

The Company measures all equity-based awards granted to employees, independent contractors and advisors based on the fair value on the

date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting

period of the respective award.

Company classifies equity based compensation expense in its statement of operations in the same manner in which the award recipient’s

payroll or contractor costs are classified or in which the award recipient’s service payments are classified.

Loss per Share

earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during

the period, excluding shares subject to redemption or forfeiture.

The Company presents basic and diluted net earnings or loss per share.

Diluted net earnings

or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially

dilutive securities outstanding.

Potentially dilutive securities are excluded from the computation of the diluted net loss per share if

their inclusion would be anti-dilutive.

As all potentially dilutive securities are anti-dilutive as of September 30, 2023, diluted net

loss per share is the same as basic net loss per share.

Potentially dilutive items outstanding as of September 30, 2023 and 2022 are as

September 30,

Restricted stock units

Common stock warrants

Total potentially dilutive shares

Recently Issued and Adopted Accounting

Pronouncements

Management does not believe

that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial

Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period,

adjusted for potentially dilutive securities outstanding.

Potentially dilutive securities are excluded from the computation of the diluted

net loss per share if their inclusion would be anti-dilutive.

As all potentially dilutive securities are anti-dilutive as of March 31,

2024 and 2023, diluted net loss per share is the same as basic net loss per share for each year.

dilutive items outstanding as of March 31, 2024 include the Company’s outstanding restricted stock units (See Note 6).

Issued and Adopted Accounting Pronouncements

does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying

financial statements.

As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

INTANGIBLE ASSETS

CWS Exclusive Marketing

On April 1, 2021, the Company,

CWS, and another related entity, Ssquared Spirits LLC (“Ssquared”), entered into an exclusive marketing agreement (the “CWS

Pursuant to this agreement, CWS and Ssquared granted the Company the exclusive right to promote and market spirits

and other beverage products through the CWS website (cwspirtis.com) for sale to customers located within Canada, Mexico and the United

The Company has the sole right to manage and make decisions with regard to user facing content on the website, including the placement

and removal of products and the creation and management of promotional initiatives.

The term of the CWS Agreement is ten years.

to the agreement, the Company issued 1,666,667 shares of common stock to the members of Ssquared.

The Company capitalized the

fair value of the consideration transferred, $ 2,500,000 (or $ 1.50 per share), as an intangible asset which will be amortized over the

term agreement of ten ( 10 ) years.

During the three and nine months ended September 30, 2023 and 2022, the Company amortized $ 62,500 , $ 62,500 ,

$ 187,500 and $ 187,500 , respectively, which is included in cost of revenue – services in the statement of operations.

As of September

30, 2023 and December 31, 2022, the unamortized balance was $ 1,895,833 and $ 2,083,333 , respectively.

Annual amortization expense is expected

to be $ 250,000 .

In August and September 2023,

the Company entered into several loan agreements for aggregate proceeds of $ 950,000 .

The loans bore interest at 18 % and were payable on

demand, regardless of whether paid before the anniversary of the loan agreements.

On September 27, 2023, the Company entered into debt

settlement agreements with the noteholders in full settlement of the loan amounts, including interest, using the closing price of $ 0.4395

of the Company’s common stock on September 27, 2023.

As such, a total amount of $ 1,121,000 , including principal of $ 950,000 and

accrued interest of $ 171,000 , was converted into 2,550,622 shares of the Company’s common stock.

ACQUISITION OF CWS PLATFORM

November 1, 2023, LQR House Acquisition Corp.

(the “Buyer”), a subsidiary of the Company, and SSquared Spirits LLC (the

“Seller”, or “SSquared”) entered into a Domain Name Transfer Agreement (“Agreement”).

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”, or “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 .

Regulation S-X 3-05, management determined that the CWS Platform acquisition constituted a business combination as the revenue producing

activity (e-commerce sales) is expected to be similar both pre and post-domain name acquisition.

As such, the Company recorded

an intangible asset of $ 10,000 for the purchase price consideration of the domain name.

Management assessed the

fair value of the Domain Name and CWS Platform in determining to allocate the $ 10,000 to the domain name.

In making such

determination, management considered the related party nature of the transaction, the current environment for direct-to-consumer

alcoholic beverage companies and the related competition in which they operate, and the fact that the initial and continued

operation of the CWS Platform is completely dependent on the relationship between the Company, our CEO and a minority shareholder,

who co-owned SSquared and operates KBROS, LLC (“KBROS” or the “Product Handler”), the Company’s

contracted product handler.

Without such relationship, which can be terminated in certain circumstances, the underlying CWS Platform

would be unable to operate as intended until a suitable alterative product handler would be identified.

Therefore, no fair

value in excess of the consideration provided was considered.

Company has consolidated the results of operations of the CWS Platform since November 1, 2023.

Pro Forma Financial Information

following unaudited pro forma financial information presents the Company’s financial results as if the CWS Platform acquisition

had occurred as of January 1, 2023.

The unaudited pro forma financial information is not necessarily indicative of what the financial

results actually would have been had the acquisitions been completed on this date.

In addition, the unaudited pro forma financial information

is not indicative of, nor does it purport to project, the Company’s future financial results.

The pro forma information does

not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition:

Net loss per common share

of December 31, 2023, the Company had $ 5,470,000 in deposits held in escrow for potential investments.

In 2024, the Company received

$ 670,000 back from an investment it was no longer pursuing.

The remaining $ 4,800,000 at March 31, 2024 is subject to an escrow

share agreement for a potential investment into a third-party entity.

While the terms of the investment have not been finalized, the

agreement indicates the funds are to only be used for an investment in the target company and is not subject to return to the Company

unless otherwise agreed upon.

STOCKHOLDERS’ EQUITY

Reorganization

Prior to the Reorganization

described in Note 1, the Company was authorized to issue up to 100,000,000 shares of common stock, par value $ 0.001 per share.

Reorganization in the first quarter of 2023 (see Note 1), the Company was authorized to issue 300,000,000 shares of common stock and 50,000,000

shares of preferred stock, par value $ 0.0001 per share.

Amendment to Articles

of Incorporation

Dual Class Share

On March 29, 2023, the

Company amended its articles of incorporation to institute a dual class share structure consisting of Class A Common Stock, and Class B

Common Stock, and any number of classes of preferred stock.

Class A Common Stock was entitled to twenty (20) votes per share

on proposals requiring or requesting stockholder approval, and Class B Common Stock was entitled to one (1) vote on any such

A share of Class A Common Stock could have been voluntarily converted into a share of Class B Common Stock.

of a share of Class A Common Stock would have resulted in its automatic conversion into Common Stock upon such transfer, subject

to certain exceptions, including that the transfer of shares of Class A Common Stock to another holder of Class A Common Stock

would not have resulted in such automatic conversion.

Class B Common Stock was not convertible.

Other than as to voting and conversion

rights, Class A Common Stock and Class B Common Stock had the same rights and preferences and ranked equally, shared ratably

and were identical in all respects as to all matters.

Due to this amendment, the

Company’s authorized capital stock became 350,000,000 shares, consisting of:

(i) 300,000,000 shares of common stock,

par value $0.0001 per share, of which 20,000,000 shares were designated Class A Common Stock, $0.0001 par value per share, and

280,000,000 shares were designated as Class B Common Stock, $0.0001 par value per share;

and (ii) 50,000,000 shares

of preferred stock, $0.0001 par value per share.

All 9,200,434 shares of common stock issued and outstanding at the time of the amendment

became shares of Class B Common Stock.

Single Common Stock

On June 5, 2023, the

Company further amended its articles of incorporation to amend the share structure by (i) eliminating a dual class share structure

consisting of the Class A Common Stock and Class B Common Stock and establishing a single common stock structure consisting

of shares of common stock only, with 350,000,000 authorized shares being all designated as common stock with a par value of $0.0001 per

share (the “Single Common Stock Structure”), entitled to one (1) vote per share;

and by (ii) eliminating all authorized

shares of preferred stock.

All shares of Class B Common Stock issued and outstanding at the time of the amendment became shares of

common stock .

The accompanying financial statements reflect the single common stock structure in place as of September 30, 2023.

2023 Private Placement

From April to June 2023,

the Company conducted a private placement of and entered into certain subscription agreements with several accredited investors.

to the agreements, the Company issued 955,000 shares of common stock at $ 1.00 per share for a total of $ 955,000 .

Advisor and Consulting

In June 2023, the Company

entered into advisor agreements with certain advisors, pursuant to which the advisors will provide business and corporate advice in connection

with the Offering to the Company.

In consideration for the advisor’s services, the Company issued 500,000 shares of common

stock to six individuals and entities, for an aggregate of 3,000,000 shares.

The Company recorded an expense of $ 3,000,000 , or fair

value of $ 1.00 per share, pertaining to these issuances, which is included in general and administrative expense in the statements of

The fair value was determined based on recent sales of stock under the 2023 Private Placement disclosure noted above.

In August 2023, the board

of directors approved an issuance of and the Company issued an aggregate total of 2,500,000 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.

The Company recognized

stock-based compensation expense of $ 2,552,500 , or $ 1.02 per share based on the fair value of the Company’s common stock at the

time of the agreements, for the nine months ended September 30, 2023.

The amount was included in general and administrative expenses in

the statements of operations.

Initial Public Offering

the IPO, which closed on August 11, 2021, the Company issued and sold 1,150,000 shares of common stock, including the exercise of the

over-allotment option, at a public offering price of $ 5.00 per share.

Total gross proceeds to the Company from the IPO were $ 5.75 million.

The aggregate net proceeds to the Company from the IPO were approximately $ 4.5 million after deducting underwriting discounts and commissions

and total offering expenses.

connection to the IPO, the Company agreed to issue the underwriters five-year warrants to purchase an aggregate of 57,500 shares

of the Company’s common stock with an exercise price of $ 5.00 per share.

The warrants are immediately exercisable.

Debt Settlement for Shares

On September 27, 2023, the

Company issued 2,550,622 shares of common stock as settlement for outstanding principal on notes of $ 950,000 and accrued interest of $ 171,000

(see Note 5).

Cancellations

In June 2023, the Company

entered into a Cancellation Agreement with four stockholders, who each owned 750,000 shares of common stock or an aggregate of 3,000,000 shares.

The stockholders purchased these shares from the founder, Sean Dollinger, pursuant to a stock purchase agreement on January 12, 2023,

Dollinger and each of these four stockholders.

As of the date these financial statements were available to be issued

these shares were either cancelled or pending cancellation with the transfer agent.

The Company repurchased the shares for $ 18,000 .

Share Buyback

On September 1, 2023, the

board of directors of the Company authorized a share buyback program for up to 20 % or up to $ 2.0 million of the Company’s common

stock and approved an agreement entered by and between the Company and Dominari Securities LLC (“Dominari”) on August 28,

Company filed on February 13, 2024 a Certificate of Amendment to the Articles of Incorporation of the Company with the Secretary of State

of the State of Nevada increasing its authorized shares to 350,000,000 shares of common stock.

February 2024, the Board of Directors declared a 50 % stock dividend for distribution to all of the Company’s shareholders

of record at the close of business on February 12, 2024.

On March 1, 2024, 1,609,817 shares were issued per the dividend.

a result of the stock dividend, a 3:2 stock split was effected.

Accordingly, all share and per share amounts for all periods

presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the

September 1, 2023, the board of directors of the Company authorized a share buyback program for up to 20 % of the Company’s

common stock and approved an agreement entered by and between the Company and Dominari Securities LLC (“Dominari”) on August

28, 2023 to effect the share buyback program.

The Company confirmed the acquisition of 79,310 shares of common stock on September 8, 2023

for a total of $ 93,464 , which was recorded as treasury stock on the balance sheet and statement of changes in stockholders’ equity.

The repurchase of shares of common stock occurred in accordance with Rule 10b-18.

As of September 30, 2023,

the Company had 16,356,056 shares issued and 16,276,746 shares outstanding.

As of December 31, 2022, the Company had 9,200,405 shares

issued and outstanding.

Restricted Stock Units

In August 2023 the Company

granted 1,250,000 restricted stock units (the Director RSU’s) 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 on and was granted 20,000 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.

From September 8, 2023 through December 22, 2023, the Company confirmed the acquisition

of 865,070 shares of common stock for a total of $ 1,440,852 , which was initially recorded as treasury stock on the balance

sheet and statement of stockholders’ equity.

On December 22, 2023, the 865,070 shares were sent to the Company’s

transfer agent for retirement.

January 2024, the Company purchased a total of 190,628 shares of the Company’s common stock for $ 547,415 , which was recorded

as treasury stock on the balance sheet and statement of stockholders’ equity.

of March 31, 2024, the Company had 4,829,438 shares issued and 4,638,810 shares outstanding.

of December 31, 2023, the Company had 4,829,438 shares issued and outstanding.

August 2023 the Company granted 31,250 restricted stock units (the Director RSU’s) which were to vest in eight 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 were to vest in eight 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.

The RSUs had a grant-date fair value of $ 6,266,533 .

the nine months ended September 30, 2023, the Company recognized stock-based compensation expense of $ 88,378 , which is included in general

and administrative expenses in the statement of operations.

During the three months ended December 31, 2023, the Company recognized stock-based compensation expense of $ 720,843 , which is included

in general and administrative expenses in the statement of operations.

As of March 31, 2024 and December 31, 2023, there were 29,250 Director

RSUs outstanding after cancellations.

RELATED PARTY TRANSACTIONS

CWS and Ssquared Spirits

The Company’s founder

and controlling stockholder has an economic interest in Ssquared Spirits LLC, the e-commerce affiliate of CWS.

The spouse of the Company’s

former Chief Executive Officer and director, is the President and controlling stockholder of CWS and the managing member and director

of Ssquared Spirits LLC.

In 2022, the former Chief Executive Officer resigned from the Company.

As of September 30, 2023

and December 31, 2022, the Company had $ 116,884 and $ 224,692 , respectively, in accounts receivable, related party with CWS pertaining

to SWOL product revenues.

During the nine months ended

September 30, 2023, revenue from Vault memberships totaled $ 24,401 , which is included in accounts receivable, related party as of September

Advances to CWS

During the nine months ended

September 30, 2023 and 2022, the Company paid certain costs pertaining to alcoholic products on behalf of CWS in order finance the purchase

of brand product for which the Company was promoting through marketing services.

The advances totaled $ 7,340 and $ 59,068 , respectively,

during the nine months ended September 30, 2023 and 2022.

As of September 30, 2023 and December 31, 2022, $ 7,340 and $ 314,766 , respectively,

and Ssquared Spirits LLC

The Company’s founder 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

The spouse of the Company’s 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.

In 2022, the former Chief

Executive Officer resigned from the Company.

See Note 4 for the CWS Platform acquisition from Squared.

Country Wine & Spirits, Inc.

has 6 brick and mortar locations for the sale of beer, wine, spirits and create value in retail locations throughout Southern California

and specializes in logistics of shipping and helping brands reach customers.

To date CWS has distributed all of the alcohol (other than

SWOL Tequila) ordered by customers through the CWS Platform.

The President of CWS is also the 100 % owner of KBROS.

of March 31, 2024 and December 31,2023, the Company had $ 149,510 and $ 172,493 , respectively, in accounts receivable, related party with

CWS pertaining to SWOL product revenues.

the three months ended March 31, 2024 and 2023, revenue from Vault memberships totaled $ 13,440 and $ 8,794 , respectively.

During the year ended December

2023, the Company paid certain costs pertaining to alcoholic products on behalf of CWS in order finance the purchase of brand product

for which the Company was promoting through marketing services.

As of both March 31, 2024 and December 31, 2023,

$ 7,340 remained unpaid and outstanding from CWS.

The advances are non-interest bearing, unsecured and due on demand.

The advances owed as of

December 31, 2022 were collected in the nine months ended September 30, 2023.

Veg House Illinois

During the nine months ended

September 30, 2023, the Company paid $ 170,000 to a contractor for assistance in completion of the food hall bar owned by a related party

under common management with the Company’s CEO, Veg House Illinois, Inc.

Accounts Payable, Related

As of September 30, 2023

and December 31, 2022, the Company had accounts payable of $ 60,611 and $ 104,002 , respectively, with related parties, including the Company’s

founder and Chief Executive Officer, and officers and directors.

Board of Directors

In September 2023, two directors

resigned from the Board of Directors, and agreed to cancel 50,000 RSU’s each.

The cancellation was formalized in October 2023.

House Illinois

the year ended December 31, 2023, the Company paid $ 170,000 to a contractor for assistance in completion of the food hall bar owned

by a related party under common management with the Company’s CEO, Veg House Illinois, Inc., which stand outstanding as on March

Payable, Related Party

of March 31, 2024 and December 31, 2023, the Company had accounts payable of $ 45,000 and $ 58,589 , respectively, with related parties,

including KBROS, the Company’s founder and Chief Executive Officer, and officers and directors.

COMMITMENTS AND CONTINGENCIES

The Company may be subject

to pending legal proceedings and regulatory actions in the ordinary course of business.

The results of such proceedings cannot be predicted

with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matters will have a material

adverse effect on its business, financial condition or results of operations.

Underwriting Agreement

On December 1, 2022,

the Company entered into an engagement agreement with Boustead Securities, LLC to assist in the private placement of securities (“pre-IPO Financing”)

and the initial public offering or other registered securities offerings (“IPO”) in the United States listing on NASDAQ.

agreement was terminated on May 23, 2023.

In connection with the termination of Boustead Securities, LLC, the Company agreed to pay

Boustead Securities, LLC, $ 259,292 for out-of-pocket expenses.

SUBSEQUENT EVENTS

Follow-On Offering

On October 13, 2023, the

Company entered into an underwriting agreement with EF Hutton relating to the Company’s public offering of 28,421,053 shares of

the Company’s common stock pursuant to the Registration Statements on the Form S-1 (Registration Nos.

333-274903 and 333-274978)

(“Follow-on Offering”), at an offering price of $ 0.19 per share.

The closing of the Follow-on Offering took place on October

Total gross proceeds were $ 5.4 million.

The aggregate net proceeds to the Company from the Follow-on Offering were approximately

$ 4.9 million after deducting underwriting discounts and commissions and estimated offering expenses.

In connection with the Follow-on

Offering, the Company issued to the underwriters five-year warrants to purchase an aggregate of 1,421,053 shares of the Company’s

common stock with an exercise price of $ 0.19 per share.

Second Follow-On Offering

February 2023, the Company entered into a lease agreement for office space in Miami, Florida.

The agreement matures in February 2025

and requires monthly payments of $ 850 .

The Company adopted ASC 842 on January 1, 2022 and recognized a right of use asset and

liability of $ 19,007 using a discount rate of 8.0 %.

of March 31, 2024, the outstanding right of use liability was $ 7,462 .

Commitment Agreement

On November 1, 2023, the

Company entered into an underwriting agreement with EF Hutton relating to the Company’s public offering of 157,142,857 shares of

the Company’s common stock pursuant to the Registration Statement on the Form S-1 (Registration No.

333-275363) (“Second Follow-on

Offering”), at an offering price of $ 0.07 per share.

The closing of the Second Follow-on Offering took place on November 13, 2023.

Total gross proceeds were $ 11 million.

The aggregate net proceeds to the Company from the Second Follow-on Offering were approximately

$ 10.1 million after deducting underwriting discounts and commissions and estimated offering expenses.

In connection with the Second

Follow-on Offering, the Company issued to the underwriters five-year warrants to purchase an aggregate of 7,857,143 shares of the Company’s

common stock with an exercise price of $ 0.07 per share.

Domain Name Purchase

On November 1, 2023, LQR

Acquisition Corp.

(the “LQRAC”), a Nevada corporation and a wholly-owned subsidiary of the Company formed in October 2023,

and Ssquared entered into the Domain Name Transfer Agreement, pursuant to which, Ssquared irrevocably sold, assigned, transferred, and

conveyed to LQRAC (a) all right, title, and interest in and to the CWS Platform, including its current registration with GoDaddy.com,

and (b) any other rights (including, but not limited to, trademark rights associated with the CWS Platform in any jurisdiction, all internet

traffic through the CWS Platform and all Website Content (as defined in the Domain Transfer Agreement) Ssquared may have in the CWS Platform

for a purchase price of $ 10,000 .

Our Chief Executive Officer, Sean Dollinger, is a 50 % equity owner of Ssquared.

The terms of the Domain

Name Transfer Agreement were approved by the Special Committee of the Board (described below).

In connection with the transfer

of the CWS Platform as described above, on November 1, 2023 we also entered into the Management Agreement with KBROS which has a 10 -year

Pursuant to the Management Agreement, KBROS will provide us with management services for the CWS Platform relating to the sale of

spirits and other beverage products through the CWS Platform, including, but not limited to (1) performance of all functions necessary

for the operation of the CWS Platform other than the promotion and marketing of the products, which is our responsibility;

(2) procurement

and maintenance of all certificates, licenses, authorizations and registrations required to import, possess, promote, sell, distribute

and receive payment for the products and compliance with all laws, rules and regulations applicable thereto and to the operation of the

CWS Platform;

(3) fulfillment of orders placed through the CWS Platform;

(4) maintenance at its expense of an inventory of products sufficient

to fulfill all orders placed through the CWS Platform;

(5) maintenance of financial records;

and (6) other services set forth in the Management

In its turn, the Company shall provide marketing services;

and respond and handle all complaints, charge backs, refunds and

disputes for customers of the website.

In consideration for rendering

the services, the Company will pay KBROS a monthly fee of $ 40,000 .

KBROS is entitled to additional monthly payments in an amount equal

to $ 100,000 for each $ 1,000,000 of gross revenue generated through sales made on or through the CWS Platform (or any successor website)

(“Website Revenue”) for such calendar month;

provided, that, within fifteen (15) days of the filing of each of the Company’s

quarterly reports with the SEC, the Website Revenue will be subject to adjustment to reflect the actual amount reported in the applicable

quarterly report.

However, in no event shall the total amount of any additional payments paid to the KBROS exceed Five Million Dollars

($ 5,000,000 ) in any one fiscal year.

The Management Agreement

can be terminated by us at any time during the term with 30 days written notice and by either party in case of material breach by the

other party, the bankruptcy of the other party or other events described in the Management Agreement.

Special Board Committee

On October 18, 2023, the

Company’s board of directors established a Special Committee to assist in the evaluation, supervision and negotiation of all matters

relating to certain transactions and to consider and make recommendations to our board of directors with respect to potential transactions

between the Company and the entities owned and/or controlled by Sean Dollinger, its Chief Executive Officer.

The Special Committee consists

of Gary Herman, James Huber, and James O’Brien, and is created for a term of 6 months which is subject to extension by our board

of directors.

Amendment to the Bylaws

On November 13, 2023, the board of directors of

the Company approved an amendment to the by-laws of the Company changing the quorum requirement for any meetings of stockholders to a

minimum requirement of 33 1/3% of issued and outstanding shares as required in accordance with NASDAQ Listing Rule 5620.

Management has evaluated

subsequent events through November 16, 2023, the date the financial statements were available to be issued.

Based on this evaluation,

no additional material events were identified which require adjustment or disclosure in these financial statements.

Company entered into a Funding Commitment Agreement with KBROS, the Product Handler pursuant to the Product Handling Agreement dated November

1, 2023 (“Product Handling Agreement”).

Pursuant to this agreement, the Company commits 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.

Contingencies

Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business.

The results of such proceedings

cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matters

will have a material adverse effect on its business, financial condition or results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements