What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-15 · 446 added, 319 removed, 173 unchanged (82% of the section changed)

1 – FINANCIAL STATEMENTS

CONSOLDIATED BALANCE SHEETS

ITEM 1 – FINANCIAL STATEMENTS

LQR HOUSE INC.

CONDENSED CONSOLDIATED BALANCE SHEETS

Current assets:

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Prepaid expenses

Marketable securities

Marketable securities, at fair value

Total current assets

Investments, at cost

Intangible assets, net

11 unchanged sentences

Stockholders’ equity:

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

Common stock, $ 0.0001 par value, 350,000,000 shares authorized, 5,581,855 and 5,391,227 shares issued and outstanding as of June 30, 2024 and 4,829,438 shares issued and outstanding as of December 31, 2023

Additional paid-in capital

5 unchanged sentences

Total liabilities and stockholders’ equity

the accompanying notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

See the accompanying notes to the unaudited condensed

consolidated financial statements

LQR HOUSE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF OPERATIONS

Three Months Ended

Six Months Ended

Revenue – services

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( 2,274,392 )

( 3,556,491 )

( 4,746,765 )

( 3,878,565 )

Other income:

Dividend income

Total other income

2 unchanged sentences

$ ( 3,556,491 )

$ ( 4,636,685 )

$ ( 3,878,565 )

Weighted average common shares outstanding - basic and diluted

Net loss per common share - basic and diluted

the accompanying notes to the unaudited condensed consolidated financial statements

See the accompanying notes to the unaudited condensed

consolidated financial statements

LQR HOUSE INC.

condensed consolidated STATEMENTS OF STOCKHOLDERS’ EQUITY

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( 4,126,975 )

Issuance of common stock pursuant to private placement

Issuance of common stock for services

Repurchase of shares

( 3,556,491 )

Balances at June 30, 2023

$ ( 7,683,466 )

Balances at December 31, 2023

6 unchanged sentences

( 21,980,017 )

Corrective issuance from stock dividend

Vesting of restricted stock units

Common stock issued per investment in equity security

( 2,209,293 )

the accompanying notes to the unaudited condensed consolidated financial statements

( 2,209,293 )

Balances at June 30, 2024

$ ( 547,415 )

$ ( 24,189,310 )

See the accompanying notes to the unaudited condensed

consolidated financial statements

LQR HOUSE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Month Ended

Six Months 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:

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Cash flows from investing activities:

Purchase of marketable securities

Net purchases of marketable securities

( 4,015,742 )

Net repayments from (advances to) related party

Net repayments from related party

Return of deposits in escrow

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( 3,345,742 )

Cash flows from investing activities:

Cash flows from financing activities:

Repurchase of common stock

Deferred offering costs

Net cash used in financing activities

Issuance of common stock and pursuant to private placement

Subscription liability

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

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Cash paid for interest

the accompanying notes to the unaudited condensed consolidated financial statements

TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental disclosure of non-cash financing activities:

Common stock issued per investment in equity security

Deposit in escrow used for investment in equity security

Subscription receivable

See the accompanying notes to the unaudited condensed

consolidated financial statements

LQR HOUSE INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NATURE OF OPERATIONS

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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

Country Wine & Spirits

(“CWS”) Platform

On 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 .

The 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.

Stock Dividend in the

Form of Stock Split

In February 2024, the Board

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business on February 12, 2024.

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

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

As a result of the stock dividend,

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GOING CONCERN

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 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

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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.

net losses of $ 4,636,685 and $ 3,878,565 for the six months ended June 30, 2024 and 2023, and has negative cash flows from operations of

$ 2,548,366 for the six months ended June 30, 2024.

The Company requires additional capital to operate and expects losses

to continue for the foreseeable future.

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

The 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

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.

Principles of Consolidation

These consolidated financial

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

All inter-company transactions

and balances have been eliminated on consolidation.

Unaudited Interim Financial Information

The unaudited condensed consolidated

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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

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

financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of

assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported

amounts of revenues and expenses during the reporting period.

Significant estimates and assumptions reflected in these financial statements

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.

The 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 1, 2024.

Use of Estimates

The preparation of the Company’s financial statements in conformity

with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure

of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during

the reporting period.

Significant estimates and assumptions reflected in these financial statements include, but are not limited to the

cost method investments 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

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.

Concentrations

The Company’s ability

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

to derive revenue is reliant on its relationship with KBROS, LLC (“KBROS”) who currently handles product for the CWS Platform and fulfills the products

sold by clientele using our marketing services.

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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.

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.

Cash and Cash Equivalents

The 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 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.

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

of a contract with a customer;

● Identification

of the performance obligations in the contract;

● Determination

of the transaction price;

of the transaction price to the performance obligations in the contract;

● Recognition

of revenue when or as the performance obligations are satisfied.

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.

The investments have a readily determinable

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

Investments at Cost

In accordance with FASB ASC Subtopic 321-10-35-2, Investments

– Others – Cost Method Investments , investments where the Company does not have a significant influence are accounted

The Company reviews all material investments on an annual basis to determine whether a significant event or change in circumstances

has occurred that may have an adverse effect on the fair value of the investment.

In the event the fair value of the investment declines

below the cost basis, the Company records an impairment.

As of June 30, 2024, the

Company determined that its investments were accounted using the cost method, and there were no other-than-temporary declines in fair

value below their respective carrying values.

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:

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

Level 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.

Level 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, accounts

payable, and accrued expenses 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.

The Company’s investments

are accounted for under the cost method.

See above and Note 6.

Revenue Recognition

In accordance with FASB ASC

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

Identification of a contract with a customer;

Identification of the performance obligations in the contract;

Determination of the transaction price;

Allocation of the transaction price to the performance obligations in the contract;

Recognition 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, 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.

Marketing Services

The 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 wine and spirits.

The Company is responsible for contracting with CWS and customers to fulfill orders made through the website.

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:

with its vendor that require the Company to pay for shortfalls in minimum purchases.

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 shipped to the end customer, when LQR has fulfilled its performance obligation, net of returns.

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.

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

to certain restrictions on the delivery and custodianship of alcoholic beverage, CWS is required 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 Platform customers.

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

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.

Disaggregation of Revenue

The following is a summary

of the disaggregation of revenue for the three and six months ended June 30, 2024 and 2023:

Three Months Ended

Six Months Ended

Disaggregation of Revenues

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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.

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 product

costs, packaging, shipping and other importing and delivery charges, as well as affiliate payouts and contracted marketing services.

of revenue also includes customer service personnel and amortization of the Company’s marketing license asset in 2023.

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.

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.

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 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.

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 June 30, 2024 and 2023, diluted

net loss per share is the same as basic net loss per share for each year.

Potentially dilutive items

outstanding as of June 30, 2024 include the Company’s outstanding restricted stock units (See Note 7).

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

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

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:

On 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”).

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 .

Under 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 “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.

The Company has consolidated

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

Unaudited Pro Forma Financial Information

The following unaudited pro

forma financial information presents the Company’s financial results as if the CWS Platform acquisition had occurred as of January

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:

( 4,011,711 )

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

Deposits in Escrow

As of December 31, 2023,

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

In the first quarter of 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.

The remaining $ 4,800,000 was transferred to an investment in the common

stock of a third-party entity, DRNK Beverage Corp.

INVESTMENTS, AT COST

The Company’s investments at cost includes a minority stake in

the common shares of Cannon Estate Winery Ltd and DRNK Beverage Corp.

These investments are primarily held for strategic purposes.

Cannon Estate Winery

On May 19, 2024, the Company

and a majority shareholder and a director (the “Seller”) of Cannon Estate Winery Ltd., a British Columbia corporation (“Cannon”)

consummated an acquisition of approximately 9.99 % of common shares of Cannon by the Company pursuant to a Share Exchange Agreement (“Cannon

Agreement”) between the Company and the Seller.

Pursuant to the Cannon Agreement, the Seller transferred and delivered to the Company

113,085 of the common shares of Cannon (the “Cannon Shares”), and in exchange the Company issued and delivered to the Seller

750,000 shares of the Company’s common stock.

The Company recorded an investment

of $ 817,500 , which is the fair value of the 750,000 shares issued to Cannon at a fair value per share of $ 1.09 on May 19.

accounted for the investment in Cannon under the cost method as it owns 9.99 % of Cannon’s common shares and does not exert significant

DRNK Beverage Corp.

On June 7, 2024, the Company consummated an acquisition of approximately

8.58 % of common shares of DRNK Beverage Corp.

(“DRNK”) pursuant to a Subscription Agreement (“DRNK Agreement”).

Pursuant to the Agreement, the Company subscribed for and purchased from DRNK 1,920,000 common shares of DRNK at a price of USD$ 2.50 per

share for an aggregate amount of $ 4,800,000 .

Upon the closing of the DRNK Agreement, the Company converted $ 4,800,000 which was held as

a deposit in escrow to investments in equity securities on the consolidated balance sheet.

The Company accounted for

the investment in DRNK under the cost method as it owns 8.58 % of DRNK’s common shares and does not exert significant influence.

STOCKHOLDERS’ EQUITY

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 February 13, 2024, the

Company filed 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

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.

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

2 unchanged sentences

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

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.

In 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.

In May 2024, the Company

issued 750,000 shares of common stock pursuant to the Cannon Agreement for a fair value of $ 817,500 .

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

3 unchanged sentences

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

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.

During the three and six months ended June 30, 2024, the Company recognized stock-based compensation expense of $ 720,842 and $ 1,441,684

which is included in general and administrative expenses in the consolidated statement of operations.

As of June 30, 2024 and December

31, 2023, there were 29,250 Director RSUs outstanding after cancellations.

RELATED PARTY TRANSACTIONS

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.

Company’s 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 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.

KBROS acts as the Company’s Product Handler, whereby they are entitled to compensation of $ 40,000 per month plus reimbursement

for shipping and handling fees incurred by them for orders fulfilled through the CWS Platform, and bonus for reaching certain revenue

Pursuant to the Product Handling Agreement, the Company incurred $ 120,000 and $ 240,000 , respectively, to KBROS for the three

and six months ended June 30, 2024, which is included in cost of revenue in the consolidated statements of operations.

the three and six months ended June 30, 2024, the Company paid $ 100,000 in

incentive compensation, which is included in sales and marketing expenses in the consolidated statements of operations.

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 June 30, 2024 and December 31, 2023,

$ 7,340 remained unpaid and outstanding from CWS.

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

See Note 9 for funding commitment with KBROS.

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,

To date CWS has distributed all of the alcohol ordered by

customers through the CWS Platform, via our Product Handler agreement with KBROS.

The President of CWS is also the 100 % owner of

KBROS, the Product Handler.

As of June 30, 2024 and December 31, 2023, the Company had $ 166,753

and $ 172,493 , respectively, in accounts receivable, related party with CWS pertaining to product revenues.

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 June 30, 2024 and December 31, 2023,

$ 7,340 remained unpaid and outstanding from CWS.

2 unchanged sentences

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

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

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,

of June 30, 2024 and December 31, 2023, the Company had accounts payable of $ 0 and $ 58,589 , respectively, with related parties,

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

During the six months ended June 30, 2024, the Company paid its Chief

Executive Officer a performance bonus of $ 100,000 for achieving certain revenue levels through the CWS Platform.

COMMITMENTS AND CONTINGENCIES

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

In 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

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 %.

As of June 30, 2024, the

outstanding right of use liability was $ 5,021 .

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 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.

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

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”).

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.

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.

SUBSEQUENT EVENTS

On August 12, 2024, the Company

received a letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) therein stating that

for the 30 consecutive business days period between June 28, 2024 through August 9, 2024, the common stock of the Company had not maintained

a minimum closing bid price of $ 1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing

Rule 5550(a)(2) (the “Bid Price Rule”).

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial

period of 180 calendar days, or until February 10, 2025 (the “Compliance Period”), to regain compliance with the Bid Price

If the Company does not regain

compliance with the Bid Price Rule by February 10, 2025, the Company may be eligible for an additional 180-day period to regain compliance.

To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other

initial listing standards for The Nasdaq Capital Market, with the exception of the Bid Price Rule, and would need to provide written notice

of its intention to cure the bid price deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

If the Company cannot regain

compliance during the Compliance Period or any subsequently granted compliance period, the common stock of the Company will be subject

to delisting.

At that time, the Company may appeal the delisting determination to a Nasdaq hearings panel.

The notice from Nasdaq has no

immediate effect on the listing of the Company’s common stock and its common stock will continue to be listed on The Nasdaq Capital

Market under the symbol “LQR”.

The Company is currently evaluating its options for regaining compliance.

There can be no assurance

that the Company will regain compliance with the Bid Price Rule or maintain compliance with any of the other Nasdaq continued listing

requirements.

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