What changed in this filing

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Item 9A. Controls and Procedures

2025-03-31 compared with 2024-04-01 · 1727 added, 1349 removed, 431 unchanged (88% of the section changed)

1 unchanged sentence

of Disclosure Controls and Procedures

maintain disclosure controls and procedures that are designed to provide reasonable assurance that the information required to be disclosed

by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods

specified in the rules and forms promulgated by the Securities and Exchange Commission, and that such information is accumulated and

communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely

decisions regarding required disclosure.

Because of the inherent limitations to the effectiveness of any system of disclosure controls

and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that all control issues and instances

of fraud, if any, with a company have been prevented or detected on a timely basis.

Even disclosure controls and procedures determined

to be effective can only provide reasonable assurance that their objectives are achieved.

maintain disclosure controls and procedures that are designed to provide reasonable assurance that the information required to be

disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the

time periods specified in the rules and forms promulgated by the U.S.

Securities and Exchange Commission (the “SEC”), and that such information

is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate

to allow timely decisions regarding required disclosure.

Because of the inherent limitations to the effectiveness of any system of

disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that all

control issues and instances of fraud, if any, with a company have been prevented or detected on a timely basis.

Even disclosure

controls and procedures determined to be effective can only provide reasonable assurance that their objectives are

of December 31, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our

4 unchanged sentences

assurance level.

size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation

Therefore, it is difficult to effectively segregate accounting duties which comprises a material weakness in internal controls.

This lack of segregation of duties leads management to conclude that the Company’s disclosure controls and procedures are effective

to give reasonable assurance that the information required to be disclosed in reports that the Company files under the Exchange Act is

recorded, processed, summarized and reported as and when required.

Our size has prevented us from being able to employ

sufficient resources to enable us to have an adequate level of supervision and segregation.

Therefore, it is difficult to effectively

segregate accounting duties which comprises a material weakness in internal controls.

We also lack effective board oversight and formal

accounting controls for the timely and accurate closing of financial information.

the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned weaknesses, including,

1 unchanged sentence

consistent across the organization and that we have adequate control over our Exchange Act reporting disclosures.

Management’s Report on Internal Controls

over Financial Reporting

Management is responsible for establishing and

maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management utilized the criteria established in

the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission

(COSO) to conduct an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024.

that evaluation, our Chief Executive Officer and Chief Financial Officer have identified a material weakness due to lack of segregation

of duties and have therefore concluded that our internal controls over financial reporting are not effective at the reasonable assurance

A material weakness is a deficiency, or combination of deficiencies, in our internal controls over financial reporting such that

there is a reasonable possibility that a material misstatement of our consolidated financial statements would not be prevented or detected

on a timely basis.

Our size has prevented us from being able to employ

sufficient resources to enable us to have an adequate level of supervision and segregation of duties.

Therefore, it is difficult to effectively

segregate accounting duties which comprises a material weakness in internal controls.

To the extent reasonably possible given our limited

resources, we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, increasing the capacity of

our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we

have adequate controls over our Exchange Act reporting disclosures.

As an emerging growth company, management’s

assessment of internal control over financial reporting was not subject to attestation by our independent registered public accounting

in Internal Control over Financial Reporting

have been no changes in our internal control procedures over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the

Exchange Act) during our fiscal quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

Exchange Act) during our year ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect,

our internal control over financial reporting.

OTHER INFORMATION

1 unchanged sentence

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

following table and biographical summaries set forth information, including principal occupation and business experience about our directors

and executive officers as of April 1, 2024:

Sean Dollinger

Chief Executive Officer and Director

Kumar Abhishek

Chief Financial Officer

Jaclyn Hoffman

Chief Marketing Officer

Alexandra Hoffman

Director and Technical Writer

James O’Brien

Dollinger has served as our Chief Executive Officer and as a member of our board of directors since January 2023, and

he founded our company in January 2021.

The following table and biographical summaries set forth information,

including principal occupation and business experience about our directors and executive officers as of March 31, 2025:

Executive Officer and Director

Financial Officer

Marketing Officer

and Technical Writer

Director, Chairman of the Board

Sean Dollinger has

served as our Chief Executive Officer and as a member of our Board since January 2023, and he founded our company in January 2021.

Dollinger has also been on the board of directors of Veg House Holdings Inc.

December 2022 and has served as its Chief Executive Officer since January 2023.

Since December 2019 to, Mr.

was involved in the founding and development of PlantX Life Inc.

since December 2022 and has served as its

Chief Executive Officer from January 2023 to July 2023.

Since December 2019 Mr.

Dollinger has been involved in the founding

and development of PlantX Life Inc.

VEGA), an exchange listed and public company in Canada.

June 2015 to February 2019, Mr.

Dollinger acted as the Founder, Chief Executive Officer, and President of Lifeist Wellness

(formerly Namaste Technologies Inc., or Namaste), a registered company under the Canadian securities laws that is a portfolio of

wellness companies, where he oversaw the day-to-day operations of the company and its growth strategies.

From June 2015 to February 2019,

Dollinger acted as the Founder, Chief Executive Officer, and President of Lifeist Wellness Inc.

(formerly Namaste Technologies

Inc., or Namaste), a registered company under the Canadian securities laws that is a portfolio of wellness companies, where he oversaw

the day-to-day operations of the company and its growth strategies.

In October 2018, Mr.

became a part of a British Columbia Securities Commission compliance review of Namaste, a Canadian class action lawsuit, and a United States

class action lawsuit, by way of his position as Chief Executive Officer and President of Namaste.

For more information, see the risk

factor that starts “ Our Chief Executive Officer and Director, Sean Dollinger, has been the subject of a compliance review that

was initiated by the British Columbia Securities Commission, and has not formally been concluded.

Dollinger has a

wealth of experience in e-commerce, where he has had success across numerous different digital markets.

We believe that Mr.

is qualified to serve on our board of directors due to his extensive operational experience, background in ecommerce, and international

capital markets experience.

Abhishek has served as our Chief Financial Officer since May 2023.

Prior to joining our company as Chief Financial

Abhishek was the owner and director of Boston Crest Private Limited, a knowledge processing output company located

in India, where he simultaneously oversaw multiple companies’ financial and daily operations and was responsible for managing a

team of 10+ accountants who assisted controllers and auditors in ensuring the financial success of each company.

Through his work at

Boston Crest, Mr.

Abhishek served as our director of finance and operations from January 2021 to May 2023, as the director

of finance and operations at PlantX Life Inc., a publicly listed company in Canada, from January 2020 to May 2023.

at Aspen Communications Pvt LTD, another knowledge processing output company in India, he served as director of finance and operations

at Lifeist Wellness Inc.

(formerly Namaste Technologies Inc.) from January 2015 to January 2020.

Abhishek holds a

Bachelor of Computer Applications degree from Ranchi University, Ranchi, Jharkhand, India.

Hoffman has served as the Chief Marketing Officer for LQR House since January 2021, where she oversees internal design

projects, as well as design projects for partnering brands.

She is also responsible for brand development, brand communication, and digital

Since October 2021, Jaclyn has worked as the Creative Director at PlantX Life Inc, where she oversees all creative projects

for PlantX and its subsidiaries.

This role includes working closely with teams of graphic designers, copywriters, web developers, and

email marketing specialists to support the overall marketing strategy with creative content.

From November 2019 until September 2021,

Hoffman worked as a Web Design and Development Manager for Falcon Marketing, LLC, a marketing and search engine optimization agency,

where she worked with graphic designers and web developers to create optimized websites for a wide range of clients.

From October 2018

to November 2019, Ms.

Hoffman worked as a Branding Consultant for Joyva Corp, a specialty candy company founded in 1907, where she

helped modernize the brand’s identity.

Dollinger became a part of a

British Columbia Securities Commission compliance review of Namaste, a Canadian class action lawsuit, and a United States class

action lawsuit, by way of his position as Chief Executive Officer and President of Namaste.

For more information, see the risk factor

in this Annual Report on Form 10-K that starts “ Our Chief Executive Officer and Director, Sean Dollinger, has been the subject

of a compliance review that was initiated by the British Columbia Securities Commission, and has not formally been concluded.

Dollinger has a wealth of experience in e-commerce, where he has had success across numerous different digital markets.

Dollinger is qualified to serve on our Board due to his extensive operational experience, background in ecommerce, and

international capital markets experience.

Kumar Abhishek has served as

our Chief Financial Officer since May 2023.

Prior to joining our company as Chief Financial Officer, Mr.

Abhishek was the owner

and director of Boston Crest Private Limited, a knowledge processing output company located in India, where he simultaneously oversaw

multiple companies’ financial and daily operations and was responsible for managing a team of 10+ accountants who assisted controllers

and auditors in ensuring the financial success of each company.

Through his work at Boston Crest, Mr.

Abhisek has served as the director

of finance and operations at PlantX Life Inc., a publicly listed company in Canada, since January 2020.

Through his work at Boston

Abhishek also served as our director of finance and operations from January 2021 to May 2023,.

Aspen Communications Pvt LTD, another knowledge processing output company in India, he served as director of finance and operations at

Lifeist Wellness Inc.

(formerly Namaste Technologies Inc.) from November 2015 to October 2020.

Abhishek holds a Bachelor

of Computer Applications degree from Ranchi University, Ranchi, Jharkhand, India.

Jaclyn Hoffman has served as

the Chief Marketing Officer for LQR House since January 2021, where she oversees internal design projects, as well as design projects

for partnering brands.

She is also responsible for brand development, brand communication, and digital campaigns.

Since October 2021,

Jaclyn has worked as the Creative Director at PlantX Life Inc, where she oversees all creative projects for PlantX and its subsidiaries.

This role includes working closely with teams of graphic designers, copywriters, web developers, and email marketing specialists to support

the overall marketing strategy with creative content.

From November 2019 until September 2021, Ms.

Hoffman worked as a Web Design

and Development Manager for Falcon Marketing, LLC, a marketing and search engine optimization agency, where she worked with graphic designers

and web developers to create optimized websites for a wide range of clients.

From October 2018 to November 2019, Ms.

worked as a Branding Consultant for Joyva Corp, a specialty candy company founded in 1907, where she helped modernize the brand’s

From September 2016 to August 2018, Ms.

Hoffman worked as a graphic designer for

Lakeside Photoworks, a print, photo and signage shop in New Orleans, LA, where she was responsible for building the brand identity of

several local businesses.

Hoffman holds a Bachelor of Arts from McGill University in Montreal, QC, and an Associate in Graphic Design

degree from Delgado Community College in New Orleans, LA.

Hoffman has served as a member of our board of directors since April 2023.

From January 2021 to May 2023

Hoffman provided the company with marketing and branding services.

Hoffman worked as a graphic designer for Lakeside Photoworks, a print, photo

and signage shop in New Orleans, LA, where she was responsible for building the brand identity of several local businesses.

holds a Bachelor of Arts from McGill University in Montreal, QC, and an Associate in Graphic Design degree from Delgado Community College

in New Orleans, LA.

Alexandra Hoffman has served

as a member of our Board since April 2023.

From January 2021 to May 2023 Ms.

Hoffman provided the Company with marketing

and branding services.

On May 1, 2023, Ms.

Hoffman entered into an employment agreement

with the Company as a Technical Writer.

Since January 2023, she has served as the Chief Marketing Officer of Veg House Holdings

where she oversees all marketing activities from branding to web design and messaging both print and digital.

Since August 2020,

Hoffman has served as Chief Marketing Officer and Director at PlantX Life Inc.

VEGA), where she oversees all marketing

activities, manages design & development teams, digital marketing teams, and PlantX Life’s overall branding and messaging

for all of its subsidiaries.

Additionally, since July 2018, Ms.

Hoffman has served as a Director of Marketing and Technical Writer

at Falcon Marketing LLC, a marketing and search engine optimization agency, where she oversees all marketing activities within the agency

and is responsible for Falcon Marketing’s overall strategy as well as tailored strategies for its clients.

From May 2017 to

July 2018, Ms.

Hoffman served as a technical Writer and Marketing Manager at Fabuwood Cabinetry Corporation, a kitchen cabinet fabrication

company, where she managed a team of designers and developers, wrote strategic content for marketing manuals and search engine optimization.

Hoffman holds a Bachelor of Commerce degree from Concordia University in Montreal, Quebec.

Hoffman entered into an employment agreement with the Company as a Technical Writer.

January to October 2023, she served as the Chief Marketing Officer of Veg House Holdings Inc.

where she oversaw all marketing activities

from branding to web design and messaging both print and digital.

Since March 2023, Ms.

Hoffman has serves as a member of the Board of

Directors and since October 2023 as the Chief Executive Officer of Veg House Holdings Inc.

Since April 2019, Ms.

Hoffman has served

as Chief Marketing Officer and Director at PlantX Life Inc.

VEGA), where she oversees all marketing activities, manages design &

development teams, digital marketing teams, and PlantX Life’s overall branding and messaging for all of its subsidiaries.

Additionally,

between June 2018 and June 2023, Ms.

Hoffman has served as a Director of Marketing and Technical Writer at Falcon Marketing LLC,

a marketing and search engine optimization agency, where she oversees all marketing activities within the agency and is responsible for

Falcon Marketing’s overall strategy as well as tailored strategies for its clients.

From May 2017 to June 2018, Ms.

served as a technical Writer and Marketing Manager at Fabuwood Cabinetry Corporation, a kitchen cabinet fabrication company, where she

managed a team of designers and developers, wrote strategic content for marketing manuals and search engine optimization.

holds a Bachelor of Commerce degree from Concordia University in Montreal, Quebec.

We believe that Ms.

Hoffman is qualified

to serve on our board of directors due to her background in branding and product/platform positioning as well as her previous experience

as a senior member of other public companies.

Herman was appointed to serve as a member of our Board on August 8, 2023.

Herman is a seasoned investor with

many years of investment and business experience.

From 2005 to 2020 he co-managed Strategic Turnaround Equity Partners, LP (Cayman)

and its affiliates.

From January 2011 to August 2013, he was a managing member of Abacoa Capital Management, LLC, which managed

Abacoa Capital Master Fund, Ltd., focused on a Global-Macro investment strategy.

From 2005 to 2020, Mr.

Herman was affiliated

with Arcadia Securities LLC, a New York-based broker-dealer.

From 1997 to 2002, he was an investment banker with Burnham Securities,

From 1993 to 1997, he was a managing partner of Kingshill Group, Inc., a merchant banking and financial firm with offices in New York

Since March 2005, Mr.

Herman has served as a managing member at GH Ventures, LLC.

Herman has a B.S.

from the University at Albany with a major in Political Science and minors in Business and Music.

Herman has many years

of experience serving on the boards of private and public companies.

He presently sits on the boards and is an Audit Committee member

of XS Financial, Inc.

XS) (a position he has held since September 2019), and SusGlobal Energy Corp.

(a position he has held since April 2021).

He also sits on the boards of SRM Entertainment, Inc.

SRM) (a position

he has held since March 2022) and Siyata Mobile, Inc.

SYTA) (a position he has held since August 2023).

Herman is qualified to serve on our board of directors due to his extensive background in investment services.

Huber was appointed to serve as a member of our board of directors effective as of August 9, 2023.

Starting in October 2021,

Huber has worked as a Senior Vice President of Strategic Accounts at Siemens.

From April 2014 to October 2021, Mr.

worked as a Vice President of Strategic Accounts at Siemens.

From January 2012 to April 2014, Mr.

Huber worked as an Executive

VP of Major Accounts at Caradigm, a GE Healthcare and Microsoft Joint Venture.

From August 2009 to January 2012, Mr.

worked as a Vice President of National Accounts at Microsoft Health Solutions Group.

From December 2006 — August 2009,

Huber Worked as an Account executive at Microsoft Health Solutions Group.

From April 2002 to November 2006, Mr.

worked as a Vice President of Enterprise IT Sales at GE Healthcare IT.

From November 2000 to April 2002, Mr.

Worked as an Account Manager of Clinical Systems at GE Healthcare.

From July 1999 to July 2004, Mr.

Huber owned his own

retail store in Vail, Colorado, named Brighton Collectibles.

From November 1993 to November 2000, Mr.

Huber worked in

the Western Territory Sales Department at Leegin Leather.

Huber has a Bachelor of Science in Marketing from DePaul University,

located in Chicago, Illinois.

Hoffman is qualified to serve on

our Board due to her background in branding and product/platform positioning as well as her previous experience as a senior member of

other public companies.

appointed to serve as a member of our Board and the President of the Company in October 2024.

Lazar has served as the Chief

Executive Officer of Titan Pharmaceuticals Inc.

listed on the Nasdaq (TTNP) since August 2022, where he also served as a

director and board chairman from August 2022 until October 2023.

On December 28, 2023, Mr.

Lazar was appointed

Chief Executive Officer and to the board of directors of Minim, Inc.

Lazar has successfully served as a

custodian to numerous public companies across a wide range of industries, including without limitation, C2E Energy, Inc.

OOGI), China Botanic Pharmaceutical Inc.

CBPI), One 4 Art Ltd., Romulus Corp., Moveix, Inc., Arax Holdings Corp.

ARAT), ESP Resources, Inc.

ESPIQ), Adorbs, Inc., Exobox Technologies Corp.

EXBX), Petrone Worldwide, Inc.

PFWIQ), Superbox, Inc.

SBOX), Sino Green Land Corp.

SGLA), SIPP International Industries, Inc.

SIPN), Cereplast, Inc.

CERPQ), Energy 1 Corp.

EGOC), ForU Holdings, Inc.

Yanyuan Yuhui National Education Group, Inc.

YYYH), Pan Global Corp.

PGLO), Shengtang International, Inc.

SHNL), Alternaturals, Inc.

ANAS), USA Recycling Industries, Inc.

USRI), Tele Group Corp., Xenoics

Holdings, Inc.

XNNHQ), Richland Resources International Group, Inc.

RIGG), AI Technology Group, Inc., Reliance

Global Group, Inc.

RELI), Melt, Inc., Ketdarina Corp., 3D MarkerJet, Inc.

MRJT), Lvpai Group Ltd., Gushen, Inc.,

FHT Future Technology Ltd., Inspired Builders, Inc., Houmu Holdings Ltd.

HOMU), Born, Inc.

BRRN), Changsheng

International Group Ltd., Sollensys Corp.

SOLS), Guozi Zhongyu Capital Holdings Co.

GZCC) and Cang Bao Tian Xia

International Art Trade Center, Inc.

Lazar also served as the Interim CEO of Cyclacel Pharmaceuticals, Inc.

(Nasdaq:CYCC) from January – March 2025.

From 2017 Mr.

Lazar serves as the CEO of Custodian Ventures LLC, a company focused on

buying and reselling public companies via court ordered custodianships.

We believe that Mr.

Huber is qualified to serve on our board of directors due to his experience in

sales, marketing and strategy and business planning.

O’Brien was appointed to serve as a member of our board of directors effective as of August 9, 2023.

Since January 2019,

O’Brien has been a partner at MLT Aikins LLP, one of Western Canada’s leading law firms, where he practices primarily

in the areas of corporate and commercial law with a specific focus on mergers and acquisitions and corporate finance and securities.

Lazar is qualified to serve on our

Board due to his extensive experience serving on the boards of other public companies.

James O’Brien was appointed

to serve as a member of our Board of Directors in August 2023.

O’Brien is a Founder of Oakridge Law Professional Corporation

(“Oakridge”), a boutique law firm based in Toronto, Ontario that specializes in M&A and Securities.

Oakridge will officially

open its doors January 6, 2025.

Since October of 2024, Mr.

O’Brien has operated Blackthorn Law Corporation, also specializing in M&A

and Securities.

From January 2019 to December 2023, Mr.

O’Brien has been a partner at MLT Aikins LLP, one of Western Canada’s

leading law firms, where he practices primarily in the areas of corporate and commercial law with a specific focus on mergers and acquisitions

and corporate finance and securities.

Before that, he joined MLT Aikins LLP as an associate attorney in 2012.

O’Brien received his Bachelor of Laws degree from

the University of Manitoba in 2010.

He also received his Bachelor of Science degree from the University of Manitoba in 2007.

is admitted to practice law in Manitoba, Canada and has passed Levels 1 and 2 of the Chartered Financial Analyst programs.

O’Brien is qualified to serve on our board of directors due to the combination of his extensive legal and finance

Dhaliwal was appointed to serve as a member of our board of directors effective as of August 21, 2023.

He has served

as interim CEO of Ravenquest Biomed Inc, a Canadian cannabis company since May 2020.

Since March 2019, Mr.

also served as CEO and director of Global Health Clinics Ltd, a business that engages in the cannabis industry and operates medical clinics

which guide patients through the process of becoming legal users of marijuana.

In addition, since January 2022, Mr.

has served as CEO and director of Binovi Technologies Corp, a healthcare company with a best-in-class neuro-visual performance platform

designed to test, analyze, track and report on individual cognitive performance.

O’Brien received

his Bachelor of Laws degree from the University of Manitoba in 2010.

He also received his Bachelor of Science degree from the University

of Manitoba in 2007.

O’Brien is admitted to practice law in Manitoba, Canada and has passed Levels 1 and 2 of the Chartered

Financial Analyst programs.

We believe that Mr.

O’Brien is qualified to serve on our Board due to the combination of his extensive

legal and finance background.

Yilin Lu has served as the

member of our Board of Directors since December 2024.

Since June 2023, Mr.

Dhaliwal has served as

independent director of Akanda Corp, an international medical cannabis and wellness platform company seeking to help people lead better

lives through improved access to high quality and affordable products.

Previously, Mr.

Dhaliwal served as a Pharmacy Manager from

July 2015 to November 2019 for Rexall Pharmacy Group, as director from August 2021 to March 2022 of Makara Mining

Corp, a junior mineral exploration company engaged in the business of acquiring, exploring, and evaluating natural resource properties,

as CEO and director from January 2020 to August 2022 of EGF Theramed Health Corp, a consumer technology company engaged in

the provision of biomedical on-line services for monitoring and treating common health problems, as director from November 2019

to January 2020 of Intact Gold Corp, a junior mineral exploration company, as CEO and director from August 2022 to May 2023

of Kiaro Holdings Corp, an independent, omnichannel cannabis retailer and distributor.

The Company believes that Mr.

is qualified to serve on its board of directors due to his wealth of knowledge with government bodies and proven track record in navigating

complex issues within the financial markets.

Lu has served as the Founder and CEO of Senchi Morgan

Capital Market and Senchi Morgan Asset Management, broker dealers and asset management firms.

Lu started his investment banking career

at Goldman Sachs in 2006.

He joined China International Capital Corporation (CICC) later and was named the responsible offer of CICC US

Securities (Hong Kong) Ltd in 2011.

He also held positions as managing director with Cantor Fitzgerald Capital Markets in Hong Kong, Which

he left to set up his own investment bank in 2016.

From July 2018 to June 2023, Mr.

Lu served as a Founder and the CEO of Cheung On Securities

Limited, a broker dealer and asset management firm.

He has over 15 years of experience in equity investment and trading.

Lu is a Chartered

Financial Analyst (CFA) and a Financial Risk Manager (FRM).

We believe that Mr.

Lu is qualified to serve on our Board due to his experience

in portfolio management, investment analysis, financial analysis and reporting as well as financial advisory services.

Hong Chun Yeung has served

as the member of our Board of Directors since December 2024.

Hong Chun Yeung has been serving as a Director of Zhonghui Anda CPA, a CPA

firm, specializing in audit and assurance, starting August 2014.

Prior to that, he had worked in international firm RSM Hong Kong for

over five years.

He has around 13-year experience in auditing and business consultation.

He has extensive experience in providing audit

and assurance service, M&A advisory service and pre-listing advisory service to listed and pre-listing companies operating in a variety

of industries including manufacturing, mining, logistics, engineering, etc.

Hong Chun Yeung holds a Bachelor of Business Administration

degree in Accounting from Hong Kong Baptist University.

He is a practicing member of the Hong Kong Institute of Certified Public Accountant.

We believe that Mr.

Hong Chun Yeung is qualified to serve on our Board due to his accounting experience as well as experience in providing

advisory services to listed company.

Lijun Chen has served as a

Chairman of our Board of Directors since December 2024.

Lijun Chen is a dedicated leader with a rich background in various

Chen graduated from the Central University of Finance and Economics with a Bachelor’s degree in Industrial

Economics in 1989.

He began his career at Shijiazhuang Changlu Trading Company, where he worked diligently as the Head of the Import

and Export Trade Department and later as General Manager, contributing to the company’s operations in coal trading and daily

necessities, from October 1989 to May 2004.

Chen co-founded Fuli Real Estate Development Co.

Ltd., where he served as

Executive Director until May 2014.

His efforts in this role helped shape the company’s growth in the real estate market

through thoughtful development and sales strategies.

Following this, he founded Hebei Jiujiukang Biotechnology Development Co.

in 2014, focusing on biotechnology research and pharmaceutical production, where Mr.

Chen served until July 2018.

Since August 2018,

Chen has been serving as the Chairman of Shenzhen Yihu Tea Technology Innovation Group Co.

Ltd., where he is involved in

e-commerce and technology promotion.

His journey reflects a commitment to learning and adapting across different industries, and he

remains grateful for the opportunities to contribute to each organization he has been part of.

We believe that Mr.

Chen is qualified

to serve on our Board of Directors due to his extensive experience in various sectors.

Lu has served as a member of our Board of Directors since December 2024.

From April 2023, Dr.

Lu serves as Chief

Financial Officer of Bowen Acquisition Corporation, a Nasdaq-listed SPAC company.

From August 2024, Dr.

Lu also serves as an

independent director of Autozi Internet Technology (Global) Ltd, auto-parts e-commerce company listed on Nasdaq.

From February 2021

to April 2024, she served as Chief Financial Officer of Keyarch Acquisition Corporation, also a Nasdaq-listed SPAC company, which

went successfully from independent IPO in 2022 to De-SPAC IPO in 2024.

Before that, from September 2019 to February 2021, Dr.

served as Chief Investment Officer of the New Hope Fertility Center in New York, sourcing and managing PE investments, bank loans

and government PPP loans.

Lu also served as a Managing Director and then Chief Operating Officer of China Bridge Capital

International Inc., a PE/VC investment advisory company specialized in innovative technologies from 2017 to 2019 and from March 2021

to January 2022.

Prior to that, Dr.

Lu was President of ACE AV Consulting Inc.

from 2005 to 2017.

Lu was an Executive Director

at CIBC World Markets in 2001 working on corporate securities.

Between 1998 and 2001, Dr.

Lu worked at the Federal Reserve Bank of

New York as a bank regulator and supervisor.

Before moving to New York, Dr.

Lu was a professor of economics at York University in

Canada for four years, specializing her teaching and research in Macroeconomics, Institutional Economics, and Econometrics.

received a Ph.D.

in Economics from Western University in Canada, a Graduate Certificate in Economics from the

People’s University in China, and a B.A in World Economy from Fudan University in China.

We believe that Dr.

Lu is qualified

to serve on our Board of Directors due to her extensive experience in the financial service industry.

Relationships

Hoffman, a member of our board of directors and a Technical Writer for the Company, and Jaclyn Hoffman, our Chief Marketing Officer,

Alexandra Hoffman, a member of our Board of Directors

and a Technical Writer for the Company, and Jaclyn Hoffman, our Chief Marketing Officer, are sisters.

in Certain Legal Proceedings

the best of our knowledge, none of our directors or executive officers has, during the past ten years:

convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding

traffic violations and other minor offences);

any bankruptcy petition filed by or against the business or property of the person, or of

any partnership, corporation or business association of which he was a general partner or

executive officer, either at the time of the bankruptcy filing or within two years prior

to that time;

subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated,

of any court of competent jurisdiction or federal or state authority, permanently or temporarily

enjoining, barring, suspending or otherwise limiting, his involvement in any type of business,

securities, futures, commodities, investment, banking, savings and loan, or insurance activities,

or to be associated with persons engaged in any such activity;

found by a court of competent jurisdiction in a civil action or by the Securities and Exchange

Commission or the Commodity Futures Trading Commission to have violated a federal or state

securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

the subject of, or a party to, any federal or state judicial or administrative order, judgment,

decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement

of a civil proceeding among private litigants), relating to an alleged violation of any federal

or state securities or commodities law or regulation, any law or regulation respecting financial

institutions or insurance companies including, but not limited to, a temporary or permanent

injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent

cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting

convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor

any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business

association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years

prior to that time;

subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction

or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in

any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be

associated with persons engaged in any such activity;

found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures

Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended,

the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently

reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged

violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions

or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution,

civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting

mail or wire fraud or fraud in connection with any business entity;

the subject of, or a party to, any sanction or order, not subsequently reversed, suspended

or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of

the Exchange Act (15 U.S.C.

78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of

the Commodity Exchange Act (7 U.S.C.

1(a)(29))), or any equivalent exchange, association,

entity or organization that has disciplinary authority over its members or persons associated

with a member.

the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization

(as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C.

78c(a)(26))), any registered entity (as defined in

Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.

1(a)(29))), or any equivalent exchange, association, entity

or organization that has disciplinary authority over its members or persons associated with a member.

Board’s Role in Risk Oversight

board of directors oversees that the assets of our company are properly safeguarded, that the appropriate financial and other controls

are maintained, and that our business is conducted wisely and in compliance with applicable laws and regulations and proper governance.

Included in these responsibilities is the board’s oversight of the various risks facing our company.

In this regard, our board

seeks to understand and oversee critical business risks.

The Board of Directors oversees that the assets

of our company are properly safeguarded, that the appropriate financial and other controls are maintained, and that our business is conducted

wisely and in compliance with applicable laws and regulations and proper governance.

Included in these responsibilities is the Board’s

oversight of the various risks facing our company.

In this regard, our Board seeks to understand and oversee critical business risks.

Our Board does not view risk in isolation.

Risks are considered in virtually

every business decision and as part of our business strategy.

Our board recognizes that it is neither possible nor prudent to eliminate

Indeed, purposeful and appropriate risk-taking is essential for our company to be competitive on a global basis and to achieve

its objectives.

the board oversees risk management, company management is charged with managing risk.

Management communicates routinely with the board

and individual directors on the significant risks identified and how they are being managed.

Directors are free to, and indeed often

do, communicate directly with senior management.

board administers its risk oversight function as a whole by making risk oversight a matter of collective consideration.

work has been delegated to committees, which will meet regularly and report back to the full board.

The audit committee oversees risks

related to our financial statements, the financial reporting process, accounting and legal matters, the compensation committee evaluates

the risks and rewards associated with our compensation philosophy and programs, and the nominating and corporate governance committee

evaluates risk associated with management decisions and strategic direction.

rules generally require that a majority of an issuer’s board of directors consist of independent directors.

Our board of directors

consists of six (6) directors, four (4) of whom are independent within the meaning of Nasdaq’s rules.

Sean Dollinger

and Alexandra Hoffman are not independent within the meaning of Nasdaq’s rules.

Risks are considered in virtually every business decision and as part of our business strategy.

Our Board recognizes that it is neither possible nor prudent to eliminate all risk.

Indeed, purposeful and appropriate risk-taking is

essential for our company to be competitive on a global basis and to achieve its objectives.

While the Board oversees risk management, company

management is charged with managing risk.

Management communicates routinely with the Board and individual directors on the significant

risks identified and how they are being managed.

Directors are free to, and indeed often do, communicate directly with senior management.

Our Board administers its risk oversight function

as a whole by making risk oversight a matter of collective consideration.

Much of this work has been delegated to committees, which will

meet regularly and report back to the full Board.

The audit committee oversees risks related to our financial statements, the financial

reporting process, accounting and legal matters, the compensation committee evaluates the risks and rewards associated with our compensation

philosophy and programs, and the nominating and corporate governance committee evaluates risk associated with management decisions and

strategic direction.

Nasdaq’s rules generally require that a

majority of an issuer’s board of directors consist of independent directors.

Our Board of Directors consists of eight (8) directors,

five (5) of whom are independent within the meaning of Nasdaq’s rules.

Sean Dollinger, David Lazar, and Alexandra Hoffman are

not independent within the meaning of Nasdaq’s rules.

of the Board of Directors

board has established an audit committee, a compensation committee, and a nominating and corporate governance committee, each with its

own charter approved by the board.

The committee charters have been filed as exhibits to this annual report on the form 10-K.

Each committee’s

charter is available on our website at www.lqrhouse.com .

addition, our board of directors may, from time to time, designate one or more additional committees, which shall have the duties and

powers granted to it by our board of directors.

Huber, James O’Brien, and Gary Herman, each of whom satisfies the “independence” requirements of Rule 10A-3 under

the Exchange Act and Nasdaq’s rules serve on our audit committee with James O’Brien serving as the chairman.

has determined that James O’Brien qualifies as an “audit committee financial expert.” The audit committee oversees

our accounting and financial reporting processes and the audits of the financial statements of our company.

audit committee is responsible for, among other things:

Our Board has established an audit committee,

a compensation committee, and a nominating and corporate governance committee, each with its own charter approved by the Board.

The committee

charters have been filed as exhibits to this Annual Report on the Form 10-K.

Each committee’s charter is available on our website

at www.lqrhouse.com .

In addition, our Board of Directors may, from

time to time, designate one or more additional committees, which shall have the duties and powers granted to it by our Board of Directors.

James O’Brien, Jing Lu and Lijun Chen, each

of whom satisfies the “independence” requirements of Rule 10A-3 under the Exchange Act and Nasdaq’s rules

serve on our audit committee with James O’Brien serving as the chairman.

Our Board has determined that James O’Brien qualifies

as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and

the audits of the financial statements of our company.

The audit committee is responsible for, among

other things:

(i) retaining and overseeing our independent accountants;

(ii) assisting

the board in its oversight of the integrity of our financial statements, the qualifications, independence and performance of our independent

auditors and our compliance with legal and regulatory requirements;

(iii) reviewing and approving the plan and scope of the internal

and external audit;

(iv) pre-approving any audit and non-audit services provided by our independent auditors;

(v) approving

the fees to be paid to our independent auditors;

(vi) reviewing with our chief executive officer and principal financial officer

and independent auditors the adequacy and effectiveness of our internal controls;

(ii) assisting the Board in its oversight of the integrity

of our financial statements, the qualifications, independence and performance of our independent auditors and our compliance with legal

and regulatory requirements;

(iii) reviewing and approving the plan and scope of the internal and external audit;

(iv) pre-approving

any audit and non-audit services provided by our independent auditors;

(v) approving the fees to be paid to our independent auditors;

(vi) reviewing with our chief executive officer and principal financial officer and independent auditors the adequacy and effectiveness

of our internal controls;

(vii) reviewing hedging transactions;

and (viii) reviewing

and assessing annually the audit committee’s performance and the adequacy of its charter.

Huber, James O’Brien, and Gary Herman, each of whom satisfies the “independence” requirements of Rule 10C-1 under

the Exchange Act and Nasdaq’s rules serve on our compensation committee, with James Huber serving as the chairman.

of the compensation committee are also “outside directors” as defined in Section 162(m) of the Internal Revenue

Code of 1986, as amended, or the Code, and “non-employee directors” within the meaning of Section 16 of the Exchange Act.

The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation

relating to our directors and executive officers.

compensation committee is responsible for, among other things:

and (viii) reviewing and assessing annually the audit committee’s

performance and the adequacy of its charter.

James O’Brien, and Jing Lu, each of whom

satisfies the “independence” requirements of Rule 10C-1 under the Exchange Act and Nasdaq’s rules serve on

our compensation committee, with James O’Brien serving as the chairman.

The members of the compensation committee are also “outside

directors” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, and “non-employee

directors” within the meaning of Section 16 of the Exchange Act.

The compensation committee assists the Board in reviewing

and approving the compensation structure, including all forms of compensation relating to our directors and executive officers.

The compensation committee is responsible for,

among other things:

(i) reviewing and approving the remuneration of our executive officers;

(ii) making recommendations to the board regarding the compensation of our independent directors;

(iii) making recommendations

to the board regarding equity-based and incentive compensation plans, policies and programs;

and (iv) reviewing and assessing annually

the compensation committee’s performance and the adequacy of its charter.

(ii) making recommendations to the

Board regarding the compensation of our independent directors;

(iii) making recommendations to the Board regarding equity-based and

incentive compensation plans, policies and programs;

and (iv) reviewing and assessing annually the compensation committee’s

performance and the adequacy of its charter.

and Corporate Governance Committee

Huber, James O’Brien, and Gary Herman, each of whom satisfies the “independence” requirements of Nasdaq’s rules,

serve on our nominating and corporate governance committee, with Gary Herman, serving as the chairman.

The nominating and corporate governance

committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition

of the board and its committees.

nominating and corporate governance committee is responsible for, among other things:

(i) identifying and evaluating individuals

qualified to become members of the board by reviewing nominees for election to the board submitted by stockholders and recommending to

the board director nominees for each annual meeting of stockholders and for election to fill any vacancies on the board;

(ii) advising

the board with respect to board organization, desired qualifications of board members, the membership, function, operation, structure

and composition of committees (including any committee authority to delegate to subcommittees), and self-evaluation and policies;

(iii) advising

on matters relating to corporate governance and monitoring developments in the law and practice of corporate governance;

(iv) overseeing

compliance with our code of ethics;

James O’Brien, Lijun Chen, and Jing Lu, each of whom satisfies

the “independence” requirements of Nasdaq’s rules, serve on our nominating and corporate governance committee, with

Jing Lu, serving as the chairman.

The nominating and corporate governance committee assists the Board of Directors in selecting individuals

qualified to become our directors and in determining the composition of the Board and its committees.

The nominating and corporate governance committee

is responsible for, among other things:

(i) identifying and evaluating individuals qualified to become members of the Board by reviewing

nominees for election to the Board submitted by stockholders and recommending to the Board director nominees for each annual meeting of

stockholders and for election to fill any vacancies on the Board;

(ii) advising the Board with respect to Board organization, desired

qualifications of Board members, the membership, function, operation, structure and composition of committees (including any committee

authority to delegate to subcommittees), and self-evaluation and policies;

(iii) advising on matters relating to corporate governance

and monitoring developments in the law and practice of corporate governance;

(iv) overseeing compliance with our code of ethics;

and (v) approving any related party transactions.

nominating and corporate governance committee’s methods for identifying candidates for election to our board of directors (other

than those proposed by our stockholders, as discussed below) include the solicitation of ideas for possible candidates from a number

of sources — members of our board of directors, our executives, individuals personally known to the members of our board

of directors, and other research.

The nominating and corporate governance committee may also, from time-to-time, retain one or more third-party

search firms to identify suitable candidates.

making director recommendations, the nominating and corporate governance committee may consider some or all of the following factors:

(i) the candidate’s judgment, skill, experience with other organizations of comparable purpose, complexity and size, and subject

to similar legal restrictions and oversight;

(ii) the interplay of the candidate’s experience with the experience of other

board members;

(iii) the extent to which the candidate would be a desirable addition to the board and any committee thereof;

or not the person has any relationships that might impair his or her independence;

and (v) the candidate’s ability to contribute

to the effective management of our company, taking into account the needs of our company and such factors as the individual’s experience,

perspective, skills and knowledge of the industry in which we operate.

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 the board with respect to potential

transactions of the Company with 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

stockholder may nominate one or more persons for election as a director at an annual meeting of stockholders if the stockholder complies

with the notice and information provisions contained in our bylaws.

Such notice must be in writing to our company not later than the

close of business on the ninetieth (90 th ) day nor earlier than the close of business on the one-hundred-twentieth (120 th ) day

prior to the first anniversary of the preceding year’s annual meeting;

provided, however, that in the event that the date of the

annual meeting is advanced more than thirty (30) days prior to or delayed by more than thirty (30) days after the anniversary

of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close

of business on the one hundred twentieth (120 th ) day prior to such annual meeting and not later than the close of business

on the later of the ninetieth (90 th ) day prior to such annual meeting or the tenth (10 th ) day following

the day on which public announcement of the date of such meeting is first made or as otherwise required by the Exchange Act.

In addition, stockholders furnishing such notice must be a holder of record on both (i) the date of delivering such notice and (ii) the

record date for the determination of stockholders entitled to vote at such meeting.

The nominating and corporate governance committee’s

methods for identifying candidates for election to our Board of Directors (other than those proposed by our stockholders, as discussed

below) include the solicitation of ideas for possible candidates from a number of sources — members of our Board of Directors,

our executives, individuals personally known to the members of our Board of Directors, and other research.

The nominating and corporate

governance committee may also, from time-to-time, retain one or more third-party search firms to identify suitable candidates.

In making director recommendations, the nominating

and corporate governance committee may consider some or all of the following factors:

(i) the candidate’s judgment, skill,

experience with other organizations of comparable purpose, complexity and size, and subject to similar legal restrictions and oversight;

(ii) the interplay of the candidate’s experience with the experience of other Board members;

(iii) the extent to which

the candidate would be a desirable addition to the Board and any committee thereof;

(iv) whether or not the person has any relationships

that might impair his or her independence;

and (v) the candidate’s ability to contribute to the effective management of our

company, taking into account the needs of our company and such factors as the individual’s experience, perspective, skills and knowledge

of the industry in which we operate.

have adopted a code of ethics that applies to all of our directors, officers and employees, including our principal executive officer,

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laws, and reporting of violations of the code.

copy of the code of ethics has been filed as an exhibit to this annual report on the form 10-K .

copy of the code of ethics has been filed as an exhibit to this Annual Report on Form 10-K.

It is also available on our website

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of any such amendment to, or waiver from, a provision of our code of ethics.

November 29, 2023, the Board of Directors (the “Board”) of the Company adopted the LQR House Inc.

Clawback Policy for the

recovery of erroneously awarded incentive-based compensation (the “Clawback Policy”), with an effective date of November

29, 2023, in order to comply with Section 10D of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”),

Rule 10D-1 of the Exchange Act (“Rule 10D-1”), and the listing rules adopted by The Nasdaq Stock Market, LLC (collectively,

the “Final Clawback Rules”).

The Board was designated as the administrator of the Clawback Policy.

On November 29, 2023,

the Board of Directors adopted the LQR House Inc.

Clawback Policy for the recovery of erroneously awarded incentive-based compensation

(the “Clawback Policy”), with an effective date of November 29, 2023, in order to comply with Section 10D of the United States

Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rule 10D-1 of the Exchange Act (“Rule 10D-1”),

and the listing rules adopted by The Nasdaq Stock Market, LLC (collectively, the “Final Clawback Rules”).

The Board was designated

as the administrator of the Clawback Policy.

Clawback Policy provides for the mandatory recovery of erroneously awarded incentive-based compensation from current and former executive

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lookback period of the three completed fiscal years preceding the date on which the Company is required to prepare an accounting restatement.

Insider Trading Policy

In March 2024, we adopted

an insider trading policy governing the purchase, sale, and/or other dispositions of our securities by our directors, officers, and employees,

to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards applicable to us.

insider trading policy, among other things, prohibits our directors, officers, and employees from holding our securities in a margin account

or pledging our securities as collateral for a loan.

In addition, our insider trading policy prohibits employees, officers, and directors

from engaging in put or call options, short selling, or similar hedging activities involving our stock.

Trading Policy

March 2024, we adopted an insider trading policy governing the purchase, sale, and/or other dispositions of our securities by our directors,

officers, and employees, to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards

applicable to us.

Our insider trading policy, among other things, prohibits our directors, officers, and employees from holding our securities

in a margin account or pledging our securities as collateral for a loan.

In addition, our insider trading policy prohibits employees,

officers, and directors from engaging in put or call options, short selling, or similar hedging activities involving our stock.

Section 16(a) Reports

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furnished to us, the following directors, executive officers and Ten Percent Holders did not comply with all Section 16(a) filing requirements

as of April 1, 2024 as follows:

Sean Dollinger, Ms.

Alexandra Hoffman, Ms.

Jaclyn Hoffman, Mr.

Kumar Abhishek, Mr.

Gary Herman, Mr.

James Huber, Mr.

James O’Brien,

Darren Collins, Mr.

Guy Dollinger filed their Form 3s late in 2023.

Jay Dhaliwal failed to file his form 3 in 2023.

We have requested that Mr.

Dhaliwal file his form 3 as soon as possible to comply

with the filing requirements.

as of March 31, 2025:

Alexandra Hoffman filed her form 4 regarding four (4) transactions

as of November 26, 2024, late in 2024.

EXECUTIVE COMPENSATION

Compensation Table

following summary compensation table provides information concerning all cash and non-cash compensation that have been or will be awarded

to, earned by or paid during our fiscal year ended December 31, 2023 and December 31, 2022 to our Chief Executive Officer (principal

executive officer) and our Chief Financial Officer.

The following summary compensation table provides information concerning

all cash and non-cash compensation that have been or will be awarded to, earned by or paid during our fiscal year ended December 31, 2024

and December 31, 2023 to our Chief Executive Officer (principal executive officer), our Chief Financial Officer, and our Chief Marketing

We refer to these individuals as our “named executive officers” (“NEO”).

None of our other executives received compensation in excess of $100,000 during 2023 or 2022.

and Principal Position

Name and Principal Position

Sean Dollinger,

Chief Executive Officer

5,000,100 (3)

Kumar Abhishek,

Chief Financial Officer

January 1, 2021, Sean Dollinger and the Company entered into an independent contractor agreement,

pursuant to which the Company pays Mr.

Dollinger $12,000 per month for consulting services.

This agreement was in effect until the consummation of the Company’s IPO.

January 1, 2021, the Company entered into an independent contractor agreement with Boston

Ltd, a private company limited organized under the laws of India owned by Kumar

Abhishek, our Chief Financial Officer as of May 2023, pursuant to which the Company

paid Boston Crest $5,200 per month for its business management consulting services.

agreement was in effect until May 1, 2023.

Jaclyn Hoffman,

Chief Marketing Officer

(1) In October 2024, the Company entered into a retention agreement with

its Chief Executive Officer, and entities affiliated with the CEO, whereby a retention bonus of $850,000 was awarded for continued services.

As of December 31, 2024, $800,000 remained unpaid and has been paid in January 2025.

In October 2024, the Company entered into a retention agreement with

its Chief Financial Officer whereby a retention bonus of $550,000 was awarded for continued services.

As of December 31, 2024, $250,000

remained unpaid and has been paid in 2025.

(3) Represents

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Dollinger in 2023.

have executed the following employment agreements and consulting agreements with our NEOs.

The material terms of each of those arrangements

are summarized below.

The summaries are not complete description of all provisions of the employment arrangements and are qualified in

their entirety by reference to the written employment arrangements, each filed as an exhibit to this Annual Report.

(4) In October 2024, the Company entered into a retention agreement

with its Chief Marketing Officer whereby a retention bonus of $285,000 was awarded for continued services.

As of December 31, 2024, $255,000

remained unpaid.

Of this amount, $100,000 was paid in January 2025, and $155,000 remains unpaid.

We have executed the following employment agreements

and consulting agreements with our NEOs.

The material terms of each of those arrangements are summarized below.

The summaries are not

complete description of all provisions of the employment arrangements and are qualified in their entirety by reference to the written

employment arrangements, each filed as an exhibit to this Annual Report on Form 10-K.

Sean Dollinger

our employment agreement dated March 29, 2023, as amended on November 1, 2023, with our Chief Executive Officer, Sean Dollinger,

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Dollinger will also be entitled to the following types of bonuses:

an annual incentive bonus as determined by the Board of Directors within thirty (30) days of the filing of the Company’s annual

reports with the U.S.

annual incentive bonus as determined by the Board of Directors within thirty (30) days of the filing of the Company’s annual reports

with the U.S.

Securities and Exchange Commission (the “SEC”);

a monthly performance bonuses (the “Bonuses”), payable on or before the fifteenth (15th) day of the calendar month immediately

monthly performance bonuses (the “Bonuses”), payable on or before the fifteenth (15th) day of the calendar month immediately

following the calendar month with respect to which the amount of the performance bonus is determined, commencing with the calendar month

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Five Million Dollars ($5,000,000.00).

is entitled to 3 weeks of paid vacation for the first year of his employment and 4 weeks of paid vacation for the second and

third years of his employment.

The Company also provides standard indemnification and directors’ and officers’ insurance

in addition to the ability to participate in standard employee benefits, such as health, medical, dental and visions insurance.

can be terminated without cause and upon death or disability.

Dollinger is also subject to certain confidentiality and non-competition

Company provides standard indemnification and directors’ and officers’ insurance in addition to the ability to participate

in standard employee benefits, such as health, medical, dental and visions insurance.

Dollinger can be terminated without cause

and upon death or disability.

Dollinger is also subject to certain confidentiality and non-competition provisions.

Dollinger’s employment agreement is terminated by the Company without cause, all compensation payable to Mr.

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as applicable) shall not receive the Base Salary but will receive all other sums.

Kumar Abhishek

our employment agreement dated May 1, 2023 with our Chief Financial Officer, Kumar Abhishek, effective as of May 1, 2023, we

41 unchanged sentences

as applicable) shall not receive the Base Salary but will receive all other sums.

Jaclyn Hoffman

Under our employment agreement dated May 1,

2023 with our Chief Marketing Officer, Jaclyn Hoffman effective as of May 1, 2023, we agreed that, for a 1-year term renewed automatically,

unless terminated earlier in accordance with its terms, we will pay Ms.

Hoffman an annual base salary (the “Base Salary”)

of $63,000, which will increase by no less than 5% on each anniversary of her employment.

Hoffman will be eligible to receive an annual

incentive bonus as determined by the Board of Directors within thirty (30) days of filing of the Company’s annual reports.

Hoffman is entitled to 3 weeks of paid vacation for the first year of her employment and 4 weeks of paid vacation for the

second and third years of her employment.

The Company also provides standard indemnification and directors’ and officers’

insurance in addition to the ability to participate in standard employee benefits, such as health, medical, dental and visions insurance.

Hoffman can be terminated without cause and upon death or disability.

Hoffman will also be entitled to certain severance payments

if her employment is terminated with or without cause and on death or disability.

Hoffman is also subject to certain confidentiality

and non-competition provisions.

Hoffman’s employment agreement is

terminated by the Company without cause, all compensation payable to Ms.

Hoffman shall cease as of the date of termination specified in

the Company’s notice (the “Termination Date”) and the Company shall pay Ms.

Hoffman, the following sums:

Base Salary on the Termination Date for the shorter of (x) six months and (y) the remainder of the term of the employment

agreement (the “Term”) (the applicable period being referred to as the “Severance Period”), payable in monthly

installments;

(ii) benefits under group health and life insurance plans in which Ms.

Hoffman participated prior to termination through

the Severance Period;

(iii) all previously earned, accrued, and unpaid benefits from the Company and its employee benefit plans,

including any such benefits under the Company’s pension, disability, and life insurance plans, policies, and programs;

long as the Company has achieved its budgeted EBITDA level for the period commencing with the end of the Company’s immediately previous

fiscal year through the Termination Date, an amount equal to the product of the bonus paid to Ms.

Hoffman in respect of the immediately

preceding fiscal year times the quotient obtained by dividing (x) the number of full calendar months occurring since the end

of the immediately previous fiscal year through the Termination Date, by (y) 12.

If, prior to the date on which the Company’s

obligations to pay Ms.

Hoffman the Base Salary on the Termination Date cease, Ms.

Hoffman certain covenants as listed in her Employment

Agreement, then the Company shall have no obligation to make any of the payments that remain payable by the Company in the form of Base

Salary or benefits on or after the date of such violation.

The payment of severance may be conditioned by the Company on the delivery

Hoffman of a release of any and all claims that Ms.

Hoffman may have against the Company.

If the employment agreement is terminated by the

Company for cause, death or disability, Ms.

Hoffman (or her estate or representative as applicable) shall not receive the Base Salary

but will receive all other sums.

Equity Awards at Fiscal Year-End

As of December 31, 2023, no NEO holds any options, however, Sean Dollinger,

our CEO, has 25,000 outstanding restricted stock units (“RSU”), none of which have vested, and have a grant-date fair value

of $5,000,100.

of December 31, 2024, no NEO holds any options, however, Sean Dollinger, our CEO, has 25,000 restricted stock units (“RSU”),

have a grant-date fair value of $5,000,100.

No other NEO holds any RSUs.

following summary board compensation table provides information regarding the board compensation paid during our fiscal year ended December

31, 2023 to our board members.

Only our independent directors received compensation for being directors during fiscal year 2023.

$ 249,900 (1)

Policies and Practices for Granting Certain

Equity Awards

Our policies and practices regarding the granting

of equity awards are carefully designed to ensure compliance with applicable securities laws and to maintain the integrity of our executive

compensation program.

The Compensation Committee is responsible for the timing and terms of equity awards to executives and other eligible

The timing of equity award grants is determined

with consideration to a variety of factors, including but not limited to, the achievement of pre-established performance targets, market

conditions and internal milestones.

The Company does not follow a predetermined schedule for the granting of equity awards;

instead, each

grant is considered on a case-by-case basis to align with the Company’s strategic objectives and to ensure the competitiveness of

our compensation packages.

In determining the timing and terms of an equity

award, the Board or the Compensation Committee may consider material nonpublic information to ensure that such grants are made in compliance

with applicable laws and regulations.

The Board’s or the Compensation Committee’s procedures to prevent the improper use of

material nonpublic information in connection with the granting of equity awards include oversight by legal counsel and, where appropriate,

delaying the grant of equity awards until the public disclosure of such material nonpublic information.

The Company is committed to maintaining transparency

in its executive compensation practices and to making equity awards in a manner that is not influenced by the timing of the disclosure

of material nonpublic information for the purpose of affecting the value of executive compensation.

The Company regularly reviews its

policies and practices related to equity awards to ensure they meet the evolving standards of corporate governance and continue to serve

the best interests of the Company and its shareholders.

Compensation Committee Interlocks and Insider

Participation

None of our executive officers serve as a member

of the Compensation Committee of our Board of Directors (or other committee performing equivalent functions) of any entity that has one

or more executive officers serving on our Board of Directors or Compensation Committee.

The following summary Board compensation table

provides information regarding the Board compensation paid during our fiscal year ended December 31, 2024 to our Board members.

independent directors received compensation for being directors during fiscal year 2024.

James O’Brien

of 1,250 RSUs, none of which has vested.

(2) Consists of 1,250 RSUs, none of which has vested.

of 1,250 RSUs, none of which has vested.

of 500 RSUs, none of which has vested.

Hong Chun Yeung (1)

Lijun Chen (1)

December 2024 Yilin Lu, Hong Chun Yeung, Lijun Chen and Jing Lu were appointed as directors of the Board.

Each of them is entitled

to receive annual cash fee of $36,000 to be paid in monthly installments.

In addition, each of these directors shall also receive equity

compensation in form of 50,000 RSUs vesting in eight (8) equal quarterly installments commencing in the first quarter of 2025.

compensation has a grant-date fair value of $79,500.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth certain information, as of April 1, 2024 with respect to the holdings of (1) each person, or group of affiliated

persons, who is the beneficial owner of more than 5% of Company voting stock, (2) each of our directors, (3) each executive officer,

and (4) all of our current directors and executive officers as a group.

have determined beneficial ownership in accordance with the rules and regulations of the SEC.

These rules generally provide that a person

is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct

the disposition thereof or has the right to acquire such powers within 60 days.

Shares of common stock subject to options that are currently

exercisable or exercisable within 60 days of March 30, 2022 are deemed to be outstanding and beneficially owned by the person holding

Shares issuable pursuant to stock options or warrants are deemed outstanding for computing the percentage ownership of the

person holding such options or warrants, but are not deemed outstanding for computing the percentage ownership of any other person.

as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the

table below will have sole voting and investment power with respect to all shares of common stock that they will beneficially own, subject

to applicable community property laws.

Our calculation

of the number of shares and percentage of beneficial ownership is based on 4,829,438 shares of common stock outstanding as of April 1,

and Address of Beneficial Owner (1)

The following table sets forth certain information,

as of March 28, 2025 with respect to the holdings of (1) each person, or group of affiliated persons, who is the beneficial owner of more

than 5% of Company voting stock, (2) each of our directors, (3) each executive officer, and (4) all of our current directors and executive

officers as a group.

We have determined beneficial ownership in accordance

with the rules and regulations of the SEC.

These rules generally provide that a person is the beneficial owner of securities if such person

has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire

such powers within 60 days.

Shares of common stock subject to options that are currently exercisable or exercisable within 60 days of

March 28, 2025 are deemed to be outstanding and beneficially owned by the person holding the options.

Shares issuable pursuant to stock

options or warrants are deemed outstanding for computing the percentage ownership of the person holding such options or warrants, but

are not deemed outstanding for computing the percentage ownership of any other person.

Except as indicated by the footnotes below, we

believe, based on the information furnished to us, that the persons and entities named in the table below will have sole voting and investment

power with respect to all shares of common stock that they will beneficially own, subject to applicable community property laws.

Our calculation of the number of shares and percentage

of beneficial ownership is based on 36,400,709 shares of common stock outstanding as of March 28, 2025.

Name and Address of Beneficial Owner (1)

Officers and Directors

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Director and Technical Writer

Gary Herman (4)

James Huber (5)

James O’Brien (4)

Jay Dhaliwal (7)

Officers and Directors as a Group (total of 8 persons)

5% Beneficial Owners of

a Class of Voting Stock

otherwise indicated, the address of each beneficial owner listed in the table below is c/o

our Company, LQR House Inc., 6800 Indian Creek Dr.

Suite 1E, Miami Beach, FL 33141.

Based on 4,829,438 shares of common stock issued and outstanding as of April 1, 2024.

Our board of directors determined it was in the best interest of the

Company and its stockholders to grant Sean Dollinger an award of 25,000 RSUs, under the Company’s 2021 Plan, to compensate him for

his employment with the Company.

Dollinger was granted an award of 25,000 RSUs under the Company’s 2021 Plan, with one

(1) RSU corresponding to one (1) share of common stock.

The RSUs will only start vesting once the 2021 Plan has been amended

to increase the number of shares reserved under the 2021 Plan to cover the issuance of the shares of common stock underlying the RSUs.

Accordingly, these 25,000 RSUs are not reflected in this table.

Under the independent director agreement between Gary Herman and the Company, Mr.

Herman was granted an award of 1,250 RSUs under the Company’s 2021 Plan, with one (1) RSU corresponding to one (1) share of common stock.

The RSUs will only start vesting once the 2021 Plan has been amended to increase the number of shares reserved under the 2021 Plan to cover the issuance of the common shares underlying the RSUs.

Accordingly, these 1,250 RSUs are not reflected in this table.

Under the independent director agreement between James Huber and the Company, Mr.

Huber was granted an award of 1,250 RSUs under the Company’s 2021 Plan, with one (1) RSU corresponding to one (1) share of common stock.

The RSUs will only start vesting once the 2021 Plan has been amended to increase the number of shares reserved under the 2021 Plan to cover the issuance of the common shares underlying the RSUs.

Accordingly, these 1,250 RSUs are not reflected in this table.

Under the independent director agreement between James O’Brien and the Company, Mr.

O’Brien was granted an award of 1,250 RSUs under the Company’s 2021 Plan, with one (1) RSU corresponding to one (1) share of common stock.

The RSUs will only start vesting once the 2021 Plan has been amended to increase the number of shares reserved under the 2021 Plan to cover the issuance of the common shares underlying the RSUs.

Accordingly, these 1,250 RSUs are not reflected in this table.

Under the independent director agreement between Jay Dhaliwal and the Company, Mr.

Dhaliwal was granted an award of 500 RSUs under the Company’s 2021 Plan, with one (1) RSU corresponding to one (1) share of common stock.

The RSUs will only start vesting once the 2021 Plan has been amended to increase the number of shares reserved under the 2021 Plan to cover the issuance of the common shares underlying the RSUs.

Accordingly, these 500 RSUs are not reflected in this table.

Hong Chun Yeung (6)

Lijun Chen (7)

All Officers and Directors as a Group (total of 8 persons)

5% Beneficial Owners of a Class of Voting Stock

Unless otherwise indicated, the address of each beneficial owner listed

in the table below is c/o our Company, LQR House Inc., 6538 Collins Ave.

Suite 344, Miami Beach, FL 33141.

Based on 36,400,709 shares of common stock outstanding as of March 28, 2025.

Consists of (i) 15,625 shares of common stock issued upon vesting of RSUs granted to Mr.

Dollinger under the 2021 Plan and (ii) 3,125 RSUs scheduled to vest and convert into shares of common stock of the Company within 60 days of March 31, 2025.

Consists of (i) 780 shares of common stock issued upon vesting of RSUs

granted to Mr.

O’Brien under the 2021 Plan and (ii) 156 RSUs scheduled to vest and convert into shares of common stock of the Company

within 60 days of March 31, 2025.

Consists of 6,250 RSUs, scheduled to vest and convert into shares of common stock of the Company within 60 days of March 31, 2025, in accordance with the terms of independent director agreement signed by the Company and the director on December 19, 2024.

Pursuant to the agreement Mr.

Yilin Lu is entitled to receive equity compensation in form of 50,000 RSUs vesting in eight (8) equal quarterly installments commencing in first quarter of 2025.

Pursuant to the agreement Mr.

Yeung is entitled to receive equity compensation in form of 50,000 RSUs vesting in eight (8) equal quarterly installments commencing in first quarter of 2025.

Chen is entitled to receive equity compensation in form of 50,000 RSUs vesting in eight (8) equal quarterly installments commencing in first quarter of 2025.

Jing Lu is entitled to receive equity compensation in form of 50,000 RSUs vesting in eight equal quarterly installments commencing in first quarter of 2025.

Equity Plan Information

See Part II, Item 5 “Market for Registrant’s Common Equity,

Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Annual Report on Form 10-K.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

We, as buyer, and Dollinger Holdings LLC, Dollinger Innovations Inc., and Sean Dollinger, our Chief Executive Officer and a director, as sellers, are parties to an asset purchase agreement, dated March 19, 2021.

Dollinger Holdings LLC and Dollinger Innovations Inc.

are wholly owned by Sean Dollinger.

Pursuant to the asset purchase agreement, the purchase price was equal to $4,000,000 (in addition to the assumption of assumed liabilities) and consisted of (i) 266,667 shares of our common stock (66,666 shares on a post-split basis) and (ii) US$220,000 in cash payable to Dollinger Holdings, LLC, and we obtained ownership of the assets and liabilities that constitute the SWOL brand and SWOL Tequila branding.

The assets and liabilities constituting the SWOL Brand and SWOL Tequila branding were held in part by Dollinger Holdings LLC and Dollinger Innovations Inc.

Related Party Transactions

Set forth below is a description of certain relationships

and related person transactions since January 1, 2023, between us or our subsidiaries, and our directors, executive officers and holders

of more than 5% of our voting securities that involve the lower of $120,000 or 1% of the average of total assets in the last two fiscal

We believe that all of the following transactions were entered into with terms as favorable as could have been obtained from unaffiliated

third parties.

We, CWS, and Ssquared are parties to an Exclusive Marketing Agreement dated April 1, 2021.

Pursuant to that agreement, CWS and Ssquared granted us exclusive marketing rights regarding any of CWS and Ssquared’s products.

Pursuant to that agreement, Sean Dollinger, our Chief Executive Officer and a director, and 50% owner of Ssquared, received 33,333 shares of our common stock (8,334 shares of common stock on a post-split basis), and KBROS, LLC, the owner of CWS and 50% owner of Ssquared, received 133,333 shares of our common stock (33,333 shares on a post-split basis).

We and Dollinger Holdings LLC are parties to an asset purchase agreement, the Soleil Vino Asset Purchase Agreement, dated May 31, 2021.

Pursuant to that agreement, we purchased the assets and liabilities associated with the Soleil Vino wine club and its products, and Dollinger Holding LLC, wholly owned by Sean Dollinger, received $100,000 in cash, Sean Dollinger received 63,333 shares of our common stock (15,834 shares of common stock on a post-stock split basis), and Andrea Cooke received 3,333 shares of our common stock (834 shares of common stock on a post-stock split basis).

In conjunction with the acquisition the Company entered into a finder’s fee agreement with a third party in which 6,667shares of our common stock were issued (1,667 shares of common stock on a post-stock split basis).

Gregory Hoffman, a brother of Ms.

Alexandra Hoffman, our director, entered into an advisor agreement with the Company on June 1, 2023, pursuant to which the Company issued to Mr.

Pursuant to that agreement, Sean Dollinger, our Chief Executive Officer and Director, and 50% owner of Ssquared, received 33,333 shares of our common stock (8,334 shares of common stock on a post-split basis), and KBROS, LLC, the owner of CWS and 50% owner of Ssquared, received 133,333 shares of our common stock (33,333 shares of common stock on a post-split basis).

Hoffman, a brother of Ms.

Alexandra Hoffman, our director, entered into an advisor agreement with the Company on June 1, 2023,

pursuant to which the Company issued to Mr.

Hoffman 12,500 shares of common stock.

We and 1226053 B.C.

Ltd, our shareholder, are parties to a debt settlement agreement, dated September 27, 2023, pursuant to which the Company issued to 1226053 B.C.

Ltd, our shareholder, are parties to a debt settlement

agreement, dated September 27, 2023, pursuant to which the Company issued to 1226053 B.C.

Ltd 19,130 shares of common stock.

1 unchanged sentence

Avtar Dhaliwal, a brother of Mr.

Jay Dhaliwal, our director.

Jay Dhaliwal, a former Director on our Board.

In August 2023, the Company entered into an independent

contractor agreement with Catalyst LLC, for investor relations and advisory services with an entity for up to $1,000,000, for which the

Company paid $500,000 through December 31, 2023.

The contractor co-owns a company with the Company’s Chief Executive Officer, which

is not controlled by LQR.

Therefore, the contractor and his related entities are considered affiliates.

● On November 1, 2023, LQR House Acquisition Corp.

(the “Buyer”), a wholly owned subsidiary of the Company, and Ssquared entered into a Domain Name Transfer Agreement pursuant

to which, Ssquared sold to the Buyer all right, title, and interest in and to the domain name www.cwspirits.com and trademark rights associated

with the domain name in any jurisdiction, all Internet traffic through the domain name and all website content, 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

and Director, Sean Dollinger, owns 50% of the equity of Ssquared, and the other 50% is owned by a minority shareholder of the

Company, who is considered a related party.

● On November 1, 2023, the Company entered into

the Product Handling Agreement with KBROS.

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 milestones.

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, and a minority shareholder with the Company.

● On November 1, 2023, the Company entered into

the Funding Commitment Agreement with KBROS.

Pursuant to this agreement, the Company committed to provide annual funding to the Product

Handler from time to time in the minimum amount of $2,500,000 to enable the Product Handler to purchase inventory from Company-approved

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, and a minority shareholder with the Company.

On October 15, 2024, we entered into a Securities Purchase Agreement with David E.

Lazar, our President and Director, pursuant to which he acquired 1,101,818 shares of common stock (which represented approximately 19.99% of our outstanding stock on October 15, 2024) at a price of $0.55 per share for proceeds of $606,000.

October 2024, the Company entered into a settlement and release agreement with KBROS, and its controlling stockholder, for an aggregate

amount equal to $4,100,000.

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, and a minority shareholder with the Company.

● In October 2024, the Company entered into a retention

agreement with its Chief Financial Officer whereby a retention bonus of $550,000 was awarded for continued services.

● In October 2024, the Company entered into a retention

agreement with its Chief Executive Officer, and entities affiliated with the CEO, whereby a retention bonus of $850,000 was awarded for

continued services.

● In October 2024, the Company entered into a retention

agreement with its Chief Marketing Officer, Jaclyn Hoffman, whereby a retention bonus of $285,000 was awarded for continued services.

● In October 2024, the Company entered into a retention

agreement with its Director, Alexandra Hoffman, whereby a retention bonus of $600,000 was awarded for continued services.

● In October 2024, the Company entered into a settlement

agreement with South Doll LP, its former landlord, pursuant to which the Company agreed to pay this entity $40,000.

Sean Dollinger our

Chief Executive Officer and Director, owns an entity that acts as a general partner of South Doll LP.

● In October 2024, the Company entered into settlement

agreement and general and mutual release with its independent director, James O’Brien, pursuant to which the Company settled outstanding

liabilities amongst the parties in the amount of $30,000.

● In October 2024, the Company

entered into settlement agreement and general and mutual release with each of the following former independent directors of the Company:

James Huber and Jay Dhaliwal, pursuant to which the Company settled outstanding liabilities with each of the directors for a amount of

Independence of the Board of Directors

Our Board of Directors has determined that a majority

of the members of our Board of Directors, including Yilin Lu, Hong Chun Yeung, James O’Brian, Lijun Chen, and Ling Lu, are “independent”

as that term is defined under applicable SEC rules and regulations.

In addition, each of the members of each of the Audit Committee, the

Compensation Committee and the Nominating and Corporate Governance Committee are independent, as determined in accordance with the applicable

independence requirements for such committee.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

6 unchanged sentences

All other fees

the above tables, “audit fees” are fees billed for services provided related to the audit of our annual financial statements,

quarterly reviews of our interim financial statements, and services normally provided by the independent accountant in connection with

regulatory filings or engagements for those fiscal periods.

“Audit-related fees” are fees not included in audit fees that

are billed by the independent accountant for assurance and related services that are reasonably related to the performance of the audit

or review of our financial statements.

These audit-related fees also consist of the review of our registration statements filed with

the SEC and related services normally provided in connection with regulatory filings or engagements.

“All other fees” are

fees billed by the independent accountant for products and services not included in the foregoing categories.

All audit fees are pre-approved

by the audit committee.

In the above tables, “audit fees”

are fees billed for services provided related to the audit of our annual financial statements, quarterly reviews of our interim financial

statements, and services normally provided by the independent accountant in connection with regulatory filings or engagements for those

fiscal periods.

“Audit-related fees” are fees not included in audit fees that are billed by the independent accountant for

assurance and related services that are reasonably related to the performance of the audit or review of our financial statements.

other fees” are fees billed by the independent accountant for products and services not included in the foregoing categories.

audit fees are pre-approved by the audit committee.

EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

(a) Financial

Statements and Financial Statement Schedules are set forth under Part II, Item 8 of this

See the Exhibit

Index immediately preceding the signature page of this Annual Report.

Statements and Financial Statement Schedules are set forth under Part II, Item 8 of this report.

See the Exhibit Index immediately preceding the signature page of this

Annual Report on Form 10-K.

Form 10-K Summary

EXHIBIT INDEX

of Conversion of LQR House Inc., dated as of January 26, 2023 (incorporated by reference to Exhibit 2.1 of the Company’s

Registration Statement on Form S-1 (File No.

Plan of Conversion of LQR House Inc., dated as of January 26, 2023 (incorporated by reference to Exhibit 2.1 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Incorporation of LQR House Inc.

filed on February 3, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s

Registration Statement on Form S-1 (File No.

Articles of Incorporation of LQR House Inc.

filed on February 3, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Amendment to Articles of Incorporation of LQR House Inc.

filed on March 29, 2023 (incorporated by reference to Exhibit 3.2

of the Company’s Registration Statement on Form S-1 (File No.

Certificate of Amendment to Articles of Incorporation of LQR House Inc.

filed on March 29, 2023 (incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Amendment to Articles of Incorporation of LQR House Inc.

filed on June 5, 2023 (incorporated by reference to Exhibit 3.3

of the Company’s Registration Statement on Form S-1 (File No.

Certificate of Amendment to Articles of Incorporation of LQR House Inc.

filed on June 5, 2023 (incorporated by reference to Exhibit 3.3 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Correction to the Certificate of Amendment to Articles of Incorporation filed on April 11, 2023(incorporated by reference to Exhibit

3.4 of the Company’s Registration Statement on Form S-1 (File No.

Certificate of Correction to the Certificate of Amendment to Articles of Incorporation filed on April 11, 2023(incorporated by reference to Exhibit 3.4 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of LQR House Inc.

Certificate of Change Pursuant to NRS 78.209 of LQR House filed on November 28, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s current report on the form 8-K filed with the SEC on December 1, 2023)

Amendment to Articles of Incorporation of LQR House Inc.

filed on February 13, 2024 (incorporated by reference to Exhibit 3.8 of the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024)

Bylaws of LQR House Inc.

(incorporated by reference to Exhibit 3.5 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

First Amendment to the By-laws of the Company dated November 13, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s

quarterly report on the form 10-Q filed with the SEC on November 16, 2023)

of Change Pursuant to NRS 78.209 of LQR House filed on November 28, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s

current report on the form 8-K filed with the SEC on December 1, 2023)

to Articles of Incorporation of LQR House Inc.

filed on February 13, 2024

First Amendment to the By-laws of the Company dated November 13, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s quarterly report on the form 10-Q filed with the SEC on November 16, 2023)

Description of Registrant’s securities

of Private Placement Subscription Agreement 2021 (incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement

on Form S-1 (File No.

Form of Warrant dated December 30, 2024 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 3, 2025)

Packaging of Origin Co-Responsibility Agreement dated July 6, 2020, between Leticia Hermosillo Ravelero and Sean Dollinger (incorporated by reference to Exhibit 10.3 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Private Placement Subscription Agreement 2023 (incorporated by reference to Exhibit 10.2 of the Company’s Registration Statement

on Form S-1 (File No.

Shared Responsibility & Bonding Agreement dated March 19, 2021, between Leticia Hermosillo Ravelero and Dollinger Innovations Inc.

(incorporated by reference to Exhibit 10.4 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Origin Co-Responsibility Agreement dated July 6, 2020, between Leticia Hermosillo Ravelero and Sean Dollinger (incorporated

by reference to Exhibit 10.3 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as

of June 15, 2023).

Responsibility & Bonding Agreement dated March 19, 2021, between Leticia Hermosillo Ravelero and Dollinger Innovations

Exclusive License Agreement dated May 18, 2020 by and between Dollinger Holdings and Dollinger Innovations (incorporated by reference to Exhibit 10.5 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Product Distribution Agreement, dated July 1, 2020, between Dollinger Holdings and Country Wine & Spirits Inc.

(incorporated by reference to Exhibit 10.6 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed

with the SEC as of June 15, 2023).

License Agreement dated May 18, 2020 by and between Dollinger Holdings and Dollinger Innovations (incorporated by reference

to Exhibit 10.5 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Distribution Agreement, dated July 1, 2020, between Dollinger Holdings and Country Wine & Spirits Inc.

(incorporated

by reference to Exhibit 10.6 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as

of June 15, 2023).

Purchase Agreement, dated May 31, 2021, between LQR House Inc.

and Dollinger Holdings LLC (incorporated by reference to Exhibit

10.7 of the Company’s Registration Statement on Form S-1 (File No.

Asset Purchase Agreement, dated May 31, 2021, between LQR House Inc.

and Dollinger Holdings LLC (incorporated by reference to Exhibit 10.7 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Purchase Agreement, dated March 19, 2021, among LQR House Inc.

and Dollinger Innovations Inc., Dollinger Holdings LLC and Sean

Dollinger (incorporated by reference to Exhibit 10.8 of the Company’s Registration Statement on Form S-1 (File No.

Asset Purchase Agreement, dated March 19, 2021, among LQR House Inc.

and Dollinger Innovations Inc., Dollinger Holdings LLC and Sean Dollinger (incorporated by reference to Exhibit 10.8 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Marketing Agreement, dated April 1, 2021, by and among Country Wine & Spirits, Inc., Ssquared Spirits, LLC, and LQR

Exclusive Marketing Agreement, dated April 1, 2021, by and among Country Wine & Spirits, Inc., Ssquared Spirits, LLC, and LQR House, Inc.

(incorporated by reference to Exhibit 10.9 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Agreement between LQR House Inc.

and Sean Dollinger, dated March 29, 2023 (incorporated by reference to Exhibit 10.10 of the

Company’s Registration Statement on Form S-1 (File No.

Employment Agreement between LQR House Inc.

and Sean Dollinger, dated March 29, 2023 (incorporated by reference to Exhibit 10.10 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Agreement between LQR House Inc.

and Kumar Abhishek, dated May 1, 2023 (incorporated by reference to Exhibit 10.11 of the Company’s

Registration Statement on Form S-1 (File No.

Employment Agreement between LQR House Inc.

and Kumar Abhishek, dated May 1, 2023 (incorporated by reference to Exhibit 10.11 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Agreement between LQR House Inc.

and Jaclyn Hoffman, dated May 1, 2023 (incorporated by reference to Exhibit 10.12 of the Company’s

Registration Statement on Form S-1 (File No.

Employment Agreement between LQR House Inc.

and Jaclyn Hoffman, dated May 1, 2023 (incorporated by reference to Exhibit 10.12 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Agreement between LQR House Inc.

and Alexandra Hoffman, dated May 1, 2023 (incorporated by reference to Exhibit 10.13 of the

Company’s Registration Statement on Form S-1 (File No.

Employment Agreement between LQR House Inc.

and Alexandra Hoffman, dated May 1, 2023 (incorporated by reference to Exhibit 10.13 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Independent Director Agreement between LQR House Inc.

and each director nominee (incorporated by reference to Exhibit 10.14 of

the Company’s Registration Statement on Form S-1 (File No.

Form of Independent Director Agreement between LQR House Inc.

and each director nominee (incorporated by reference to Exhibit 10.14 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Non-Independent Director Agreement between LQR House Inc.

and Non-Independent Director (incorporated by reference to Exhibit 10.15

of the Company’s Registration Statement on Form S-1 (File No.

Form of Non-Independent Director Agreement between LQR House Inc.

and Non-Independent Director (incorporated by reference to Exhibit 10.15 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Director and Officer Indemnification Agreement between LQR House Inc.

and each officer or director (incorporated by reference

to Exhibit 10.16 of the Company’s Registration Statement on Form S-1 (File No.

Form of Director and Officer Indemnification Agreement between LQR House Inc.

and each officer or director (incorporated by reference to Exhibit 10.16 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

2021 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.17 of the Company’s Registration Statement

on Form S-1 (File No.

LQR House Inc.

2021 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.17 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Amendment No.

1 to the LQR House Inc.

2021 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.18 of the Company’s

Registration Statement on Form S-1 (File No.

2021 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.18 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Incentive Stock Option Agreement (included in Exhibit 10.17) (incorporated by reference to Exhibit 10.19 of the Company’s

Registration Statement on Form S-1 (File No.

Amendment No.

2 to the LQR House Inc.

2021 Stock Option and Incentive Plan

Form of Incentive Stock Option Agreement (included in Exhibit 10.17) (incorporated by reference to Exhibit 10.19 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Non-Qualified Stock Option Agreement for Non-Employee Directors (included in Exhibit 10.17) (incorporated by reference to

Exhibit 10.20 of the Company’s Registration Statement on Form S-1 (File No.

Form of Non-Qualified Stock Option Agreement for Non-Employee Directors (included in Exhibit 10.17) (incorporated by reference to Exhibit 10.20 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Non-Qualified Stock Option Agreement for Company Employees (included in Exhibit 10.17) (incorporated by reference to Exhibit

10.21 of the Company’s Registration Statement on Form S-1 (File No.

Form of Non-Qualified Stock Option Agreement for Company Employees (included in Exhibit 10.17) (incorporated by reference to Exhibit 10.21 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Non-Qualified Stock Option Agreement for Non-Employee Consultants (included in Exhibit 10.17) (incorporated by reference

to Exhibit 10.22 of the Company’s Registration Statement on Form S-1 (File No.

Form of Non-Qualified Stock Option Agreement for Non-Employee Consultants (included in Exhibit 10.17) (incorporated by reference to Exhibit 10.22 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Restricted Stock Award Agreement (included in Exhibit 10.17) (incorporated by reference to Exhibit 10.23 of the Company’s

Registration Statement on Form S-1 (File No.

Form of Restricted Stock Award Agreement (included in Exhibit 10.17) (incorporated by reference to Exhibit 10.23 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Restricted Stock Unit Award Agreement for Non-Employee Directors (included in Exhibit 10.17) (incorporated by reference to

Exhibit 10.24 of the Company’s Registration Statement on Form S-1 (File No.

Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (included in Exhibit 10.17) (incorporated by reference to Exhibit 10.24 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Restricted Stock Unit Award Agreement for Company Employees (included in Exhibit 10.17) (incorporated by reference to Exhibit

10.25 of the Company’s Registration Statement on Form S-1 (File No.

Form of Restricted Stock Unit Award Agreement for Company Employees (included in Exhibit 10.17) (incorporated by reference to Exhibit 10.25 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Advisor Agreement, dated June 1, 2023 (incorporated by reference to Exhibit 10.26 of the Company’s Registration Statement

on Form S-1 (File No.

Form of Advisor Agreement, dated June 1, 2023 (incorporated by reference to Exhibit 10.26 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Lease Agreement (incorporated by reference to Exhibit 10.27 of the Company’s Registration Statement on Form S-1 (File No.

Commercial Lease Agreement (incorporated by reference to Exhibit 10.27 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

of Advisor Agreement, dated June 30, 2023 (incorporated by reference to Exhibit 10.28 of the Company’s Registration Statement

on Form S-1 (File No.

333-272660) filed with the SEC as of July 14, 2023).

Assignment of the Bonding Agreement, dated July 7, 2023 (incorporated by reference to Exhibit 10.29 of the Company’s Registration

Statement on Form S-1 (File No.

Ratification Assignment of the Bonding Agreement, dated July 7, 2023 (incorporated by reference to Exhibit 10.29 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of July 14, 2023).

Agreement of the Packaging of Origin and Co-Responsibility Agreement, dated June 30, 2023, between Dollinger Innovations Inc.,

Dollinger Holdings LLC, and LQR House Inc.

(incorporated by reference to Exhibit 10.30 of the Company’s Registration Statement

on Form S-1 (File No.

Assignment Agreement of the Packaging of Origin and Co-Responsibility Agreement, dated June 30, 2023, between Dollinger Innovations Inc., Dollinger Holdings LLC, and LQR House Inc.

(incorporated by reference to Exhibit 10.30 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of July 14, 2023).

at Origin Joint Responsibility Agreement, dated July 11, 2023 (incorporated by reference to Exhibit 10.31 of the Company’s

Registration Statement on Form S-1 (File No.

Bottled at Origin Joint Responsibility Agreement, dated July 11, 2023 (incorporated by reference to Exhibit 10.31 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of July 14, 2023).

obtained in connection with registering the Bottled at Origin Joint Responsibility Agreement with the Mexican Institute of Industrial

property, dated July 13, 2023 (incorporated by reference to Exhibit 10.32 of the Company’s Registration Statement on Form

S-1 (File No.

Writ obtained in connection with registering the Bottled at Origin Joint Responsibility Agreement with the Mexican Institute of Industrial property, dated July 13, 2023 (incorporated by reference to Exhibit 10.32 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of July 24, 2023).

obtained in connection with registering the Shared Responsibility & Bonding Agreement with the Mexican Institute of Industrial

property, dated July 12, 2023 (incorporated by reference to Exhibit 10.33 of the Company’s Registration Statement on Form

S-1 (File No.

Writ obtained in connection with registering the Shared Responsibility & Bonding Agreement with the Mexican Institute of Industrial property, dated July 12, 2023 (incorporated by reference to Exhibit 10.33 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of July 24, 2023).

of Independent Director Agreement between LQR House Inc.

and Jay Dhaliwal (incorporated by reference to Exhibit 10.2 to the Company’s

Form 8-K/A filed with the Commission on August 23, 2023).

of Independent Contractor Agreement 2023 (incorporated by reference to Exhibit 10.35 of the Company’s Registration Statement

on Form S-1 (File No.

Form of Independent Director Agreement between LQR House Inc.

and Jay Dhaliwal (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K/A filed with the Commission on August 23, 2023).

Form of Independent Contractor Agreement 2023 (incorporated by reference to Exhibit 10.35 of the Company’s Registration Statement on Form S-1 (File No.

333-274903) filed with the SEC as of October 6, 2023).

Repurchase Program (the “Program”) Letter of Engagement with Dominari Securities (incorporated by reference to Exhibit

10.1 of the Company’s quarterly report on the form 10-Q filed with the SEC on September 21, 2023)

Agreement between LQR House Inc.

and 1226053 B.C.

Ltd., dated August 30, 2023 (incorporated by reference to Exhibit 10.2 of the Company’s

quarterly report on the form 10-Q/A filed with the SEC on September 29, 2023)

Agreement between LQR House Inc.

and Mercantile Holdings Inc., dated August 30, 2023 (incorporated by reference to Exhibit 10.3 of

the Company’s quarterly report on the form 10-Q/A filed with the SEC on September 29, 2023)

Agreement between LQR House Inc.

and 1226053 B.C.

Ltd., dated September 21, 2023 (incorporated by reference to Exhibit 10.4 of the

Company’s quarterly report on the form 10-Q/A filed with the SEC on September 29, 2023)

Agreement between LQR House Inc.

and Mercantile Holdings Inc., dated September 21, 2023 (incorporated by reference to Exhibit 10.5

of the Company’s quarterly report on the form 10-Q/A filed with the SEC on September 29, 2023)

Agreement between LQR House Inc.

and 2200049 AB Inc., dated September 21, 2023 (incorporated by reference to Exhibit 10.6 of the

Company’s quarterly report on the form 10-Q/A filed with the SEC on September 29, 2023)

Agreement, dated October 15, 2023, by and between X-Media Inc.

10b-18 Repurchase Program (the “Program”) Letter of Engagement with Dominari Securities (incorporated by reference to Exhibit 10.1 of the Company’s quarterly report on the form 10-Q filed with the SEC on September 21, 2023)

Services Agreement, dated October 15, 2023, by and between X-Media Inc.

and LQR House Inc.

(incorporated by reference to Exhibit 10.1 of the

Company’s current report on the form 8-K filed with the SEC on October 17, 2023)

Agreement between the Company and IR Agency LLC dated October 27, 2023 (incorporated by reference to Exhibit 10.1 of the Company’s

current report on the form 8-K filed with the SEC on November 2, 2023)

Name Transfer Agreement between LQR House Acquisition Corp.

and SSquared Spirits LLC dated November 1, 2023 (incorporated by reference

to Exhibit 10.1 of the Company’s current report on the form 8-K filed with the SEC on November 6, 2023)

to the Employment Agreement by and between the Company and Sean Dollinger dated November 1, 2023 (incorporated by reference to Exhibit

10.2 of the Company’s current report on the form 8-K filed with the SEC on November 6, 2023)

Agreement between the Company and KBROS, LLC dated November 1, 2023 (incorporated by reference to Exhibit 10.3 of the Company’s

current report on the form 8-K filed with the SEC on November 6, 2023)

of Independent Contractor Agreement 2023 (incorporated by reference to Exhibit 10.35 of the Company’s Registration Statement

on Form S-1 (File No.

(incorporated by reference to Exhibit 10.1 of the Company’s current report on the form 8-K filed with the SEC on October 17, 2023)

Consulting Agreement between the Company and IR Agency LLC dated October 27, 2023 (incorporated by reference to Exhibit 10.1 of the Company’s current report on the form 8-K filed with the SEC on November 2, 2023)

Domain Name Transfer Agreement between LQR House Acquisition Corp.

and SSquared Spirits LLC dated November 1, 2023 (incorporated by reference to Exhibit 10.1 of the Company’s current report on the form 8-K filed with the SEC on November 6, 2023)

Amendment to the Employment Agreement by and between the Company and Sean Dollinger dated November 1, 2023 (incorporated by reference to Exhibit 10.2 of the Company’s current report on the form 8-K filed with the SEC on November 6, 2023)

Form of Independent Contractor Agreement 2023 (incorporated by reference to Exhibit 10.35 of the Company’s Registration Statement on Form S-1 (File No.

333-274903) filed with the SEC as of October 6, 2023).

Agreement, dated October 15, 2023, by and between X-Media Inc.

Services Agreement, dated October 15, 2023, by and between X-Media Inc.

and LQR House Inc.

(incorporated by reference to Exhibit 10.1 of the

Company’s current report on the form 8-K filed with the SEC on October 17, 2023)

Agreement between the Company and IR Agency LLC dated October 27, 2023 (incorporated by reference to Exhibit 10.1 of the Company’s

current report on the form 8-K filed with the SEC on November 2, 2023)

Name Transfer Agreement between LQR House Acquisition Corp.

and SSquared Spirits LLC dated November 1, 2023 (incorporated by reference

to Exhibit 10.1 of the Company’s current report on the form 8-K filed with the SEC on November 6, 2023)

to the Employment Agreement by and between the Company and Sean Dollinger dated November 1, 2023 (incorporated by reference to Exhibit

10.2 of the Company’s current report on the form 8-K filed with the SEC on November 6, 2023)

Agreement between the Company and KBROS, LLC dated November 1, 2023 (incorporated by reference to Exhibit 10.3 of the Company’s

current report on the form 8-K filed with the SEC on November 6, 2023)

of Warrant Cancellation Agreement for warrants issued on August 11, 2023 and October 16, 2023 (incorporated by reference to Exhibit

10.1 of the Company’s current report on the form 8-K filed with the SEC on December 21, 2023)

of Warrant Cancellation Agreement for a warrant issued on November 13, 2023 (incorporated by reference to Exhibit 10.2 of the Company’s

current report on the form 8-K filed with the SEC on December 21, 2023)

Handling Agreement by and between the Company and KBROS, LLC dated November 1, 2023

Commitment Agreement by and between the Company and KBROS, LLC dated November 1, 2023

of Ethics and Business Conduct (incorporated by reference to Exhibit 14.1 of the Company’s Registration Statement on Form S-1

(incorporated by reference to Exhibit 10.1 of the Company’s current report on the form 8-K filed with the SEC on October 17, 2023)

Product Handling Agreement by and between the Company and KBROS, LLC dated November 1, 2023 (incorporated by reference to Exhibit 10.55 of the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024)

Funding Commitment Agreement by and between the Company and KBROS, LLC dated November 1, 2023 (incorporated by reference to Exhibit 10.56 of the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024)

Form of the Share Exchange Agreement between the Company and the Seller dated May 19, 2024 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 23, 2024)

Form of the Subscription Agreement between the Company and DRNK dated June 7, 2024 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on June 13, 2024)

Form of Director Agreement by and between the Company and Avraham Ben Tzvi, dated October 15, 2024 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 18, 2024)

Form of Amendment No.

1 to Director Agreement by and between the Company and Avraham Ben Tzvi, dated October 17, 2024 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on October 18, 2024)

Form of the Securities Purchase Agreement between the Company and David Lazar dated October 15, 2024 (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on October 18, 2024)

Form of a Warrant Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the SEC on October 18, 2024)

Form of Director Settlement Agreement (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed with the SEC on October 18, 2024)

Form of Settlement Agreement (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed with the SEC on October 18, 2024)

Form of KBROS Settlement Agreement (incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed with the SEC on October 18, 2024)

Form of Independent Director Agreement, dated December 19, 2024 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on December 26, 2024)

Form of Purchase Agreement dated December 30, 2024 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 3, 2025)

Supplier Agreement between the Company and Of The Earth Distribution Corp., dated June 28, 2024.

Code of Ethics and Business Conduct (incorporated by reference to Exhibit 14.1 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Insider Trading Policy, dated March 28, 2024

of subsidiaries (incorporated by reference to Exhibit 21.1 of the Company’s Registration Statement on Form S-1 (File No.

filed with the SEC as of November 7, 2023).

of dbbmckennon

Certification

of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

Certification

of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

Certification

of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act

Certification

of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act

LQR House Inc.

Clawback Policy

Committee Charter (incorporated by reference to Exhibit 99.1 of the Company’s Registration Statement on Form S-1 (File No.

Insider Trading Policy, dated March 28, 2024 (incorporated by reference to Exhibit 19.1 of the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024)

List of subsidiaries (incorporated by reference to Exhibit 21.1 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2024).

Consent of dbbmckennon

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act

Audit Committee Charter (incorporated by reference to Exhibit 99.1 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

Committee Charter (incorporated by reference to Exhibit 99.2 of the Company’s Registration Statement on Form S-1 (File No.

Compensation Committee Charter (incorporated by reference to Exhibit 99.2 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

and Corporate Governance Committee Charter (incorporated by reference to Exhibit 99.3 of the Company’s Registration Statement

on Form S-1 (File No.

Nominating and Corporate Governance Committee Charter (incorporated by reference to Exhibit 99.3 of the Company’s Registration Statement on Form S-1 (File No.

333-272660) filed with the SEC as of June 15, 2023).

LQR House Inc.

Clawback Policy (incorporated by reference to Exhibit 97.1 of the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024)

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension

Schema Document

Inline XBRL Taxonomy Extension

Calculation Linkbase Document

Inline XBRL Taxonomy Extension

Definition Linkbase Document

Inline XBRL Taxonomy Extension

Label Linkbase Document

Inline XBRL Taxonomy Extension

Presentation Linkbase Document

Cover Page Interactive

Data File (formatted as Inline XBRL and contained in Exhibit 101)

Executive compensation

plan or arrangement.

Exhibits 32.1 and 32.2

are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise

subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement

or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated

in such filing.

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Executive compensation plan or arrangement.

Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing.

accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,

thereunto duly authorized.

March 31, 2025

Sean Dollinger

3 unchanged sentences

Sean Dollinger

Chief Executive Officer

Sean Dollinger

(Principal Executive Officer)

Kumar Abhishek

Chief Financial Officer

Executive Officer

Executive Officer)

Kumar Abhishek

(Principal Financial and

Accounting Officer)

Alexandra Hoffman

Financial Officer

Financial and Accounting Officer)

Alexandra Hoffman

James O’Brien

Hong Chun Yeung

James O’Brien

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2023 AND 2022

March 31, 2025

/s/ David Lazar

March 31, 2025

LQR HOUSE, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 AND 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID # 3501 ) F-2

1 unchanged sentence

CONSOLIDATED STATEMENTS OF OPERATIONS F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY F-5

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ( DEFICIT) F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

on the Financial Statements

have audited the accompanying consolidated balance sheets of LQR House, Inc., and subsidiary (the “Company”) as of December

31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then

ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements

referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and

the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted

in the United States of America.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

The Board of Directors and Stockholders

LQR House, Inc.

Opinion on the Financial Statements

We have audited the

accompanying consolidated balance sheets of LQR House, Inc., and subsidiary (the “Company”) as of December 31, 2024 and

2023, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years

then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the

financial statements referred to above present fairly, in all material respects, the financial position of the Company as of

December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with

accounting principles generally accepted in the United States of America

Going Concern

accompanying financial statements have been prepared assuming the Company will continue as a going concern.

2 unchanged sentences

to operate, which raises substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these

Management’s plans in regards to these

matters are also described in Note 2.

The financial statements do not include any adjustments that might result from the outcome of this

Emphasis of Matter

As discussed in Notes 7 and

9 to the financial statements, the Company entered into certain retention and settlement agreements, primarily with related parties.

has disclosed the nature, terms and financial impact of these transactions.

Basis for Opinion

financial statements are the responsibility of the Company’s management.

14 unchanged sentences

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

2 unchanged sentences

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

We believe that our audits provide

a reasonable basis for our opinion.

/s/ dbb mckennon

have served as the Company’s auditor since 2021

Beach, California

I – FINANCIAL INFORMATION

– FINANCIAL STATEMENTS

Balance Sheets

of December 31, 2023 and 2022

We have served as the Company’s auditor since 2021

Newport Beach, California

March 31, 2025

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

LQR House, Inc.

Consolidated Balance Sheets

Current assets:

Cash and cash equivalents

Accounts receivable

Accounts receivable, related party

3 unchanged sentences

Total current assets

Investments, at cost

Intangible assets, net

Right of use asset

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

2 unchanged sentences

Accrued expenses

Accrued expenses, related party

Right of use liability, current portion

3 unchanged sentences

Commitments and contingencies (Note 11)

Stockholders’ equity:

Common stock, $ 0.0001 par value, 350,000,000 shares authorized, 4,829,438 and 230,011 shares issued and outstanding as of December 31, 2023, and 2022, respectively

Stockholders’ equity (deficit):

Common stock, $ 0.0001 par value, 350,000,000 shares authorized, 15,252,580 and 15,061,952 shares issued and outstanding as of December 31, 2024 and 4,829,438 shares issued and outstanding as of December 31, 2023, respectively

Additional paid-in capital

Treasury stock, at cost ( 190,628 shares)

Accumulated deficit

1 unchanged sentence

( 19,552,625 )

Total stockholders’ equity

Total liabilities and stockholders’ equity

the accompanying notes to the unaudited financial statements.

Statements Of Operations

the Years Ended December 31, 2023 and 2022

Total stockholders’ equity (deficit)

Total liabilities and stockholders’

equity (deficit)

See the accompanying notes to the audited financial

LQR House, Inc.

Consolidated Statements of Operations

Revenue - services

8 unchanged sentences

Sales and marketing

Impairment expense

Impairment of intangible asset

Total operating expenses

4 unchanged sentences

Interest expense

Total other expense

Impairment of investment

Gain on sale of marketable securities

Total other income (expense)

( 4,266,859 )

Provision for income taxes

$ ( 22,754,178 )

$ ( 15,747,724 )

Weighted average common shares outstanding - basic and diluted

Net loss per common share - basic and diluted

the accompanying notes to the unaudited financial statements.

STATEMENTS STOCKHOLDERS’ EQUITY

the Years Ended December 31, 2023 and 2022

See the accompanying notes to the audited financial

LQR House, Inc.

STATEMENTS STOCKHOLDERS’ EQUITY (DEFICIT)

Treasury Stock

Stockholders’

Balances at December 31, 2021

$ ( 1,962,726 )

Vesting of restricted stock units

( 1,842,175 )

Shareholder’s

Balances at December 31, 2022

21 unchanged sentences

$ ( 19,552,625 )

the accompanying notes to the unaudited financial statements.

Vesting of restricted stock units

Repurchase of common stock

Corrective issuance from stock dividend

Common stock issued for investment

Issuance of common stock pursuant to public offerings

Issuance of common stock pursuant to private placement

Exercise of warrants

Offering costs

( 22,754,178 )

Balances at December 31, 2024

$ ( 547,415 )

$ ( 42,306,803 )

$ ( 517,961 )

See the accompanying notes to the audited financial

LQR House, Inc.

STATEMENTS OF CASH FLOWS

2 unchanged sentences

$ ( 15,747,724 )

to reconcile net loss to net cash used in operating activities:

of restricted stock units

of common stock for services

in operating assets and liabilities:

receivable, related party

Adjustments to reconcile net loss to net cash used in operating activities:

Write off of advances to related party

Impairment of investment

Impairment of intangible asset

Vesting of restricted stock units

Gain on sale of marketable securities

Issuance of common stock for services

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable, related party

Prepaid expenses

( 2,189,955 )

payable, related party

of use liability, net

cash used in operating activities

Accounts payable

Accounts payable, related party

Accrued expenses

Accrued expenses, related party

Right of use liability, net

Net cash used in operating activities

( 6,618,417 )

flows from investing activities:

Net repayments

from (advances to) related party

of CWS Platform

( 9,113,855 )

cash used in investing activities

Cash flows from investing activities:

Purchases of marketable securities

( 7,758,523 )

flows from financing activities:

from note payable

of common stock pursuant to private placement

of common stock pursuant to IPO, net of offering costs

of common stock pursuant to public offerings, net of offering costs

of common stock

Sales of marketable securities

Acquisition of CWS Platform

Net repayments from related party

Deposits in escrow

( 5,470,000 )

cash provided by financing activities

change in cash and cash equivalents

Return of deposits in escrow

Net cash provided by (used in) investing activities

( 5,342,574 )

and cash equivalents at beginning of year

and cash equivalents at end of year

disclosure of cash flow information:

paid for income taxes

paid for interest

disclosure of non-cash financing activities:

of note payable including accrued interest into common stock

the accompanying notes to the unaudited financial statements.

TO CONSOLDATED FINANCIAL STATEMENTS

OF OPERATIONS

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

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

Reorganization

and Reverse Stock Split

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 1-for-6

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.

November 30, 2023, the Company effected a 1-for-60 reverse stock split of its outstanding common stock.

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 reverse stock split.

There was no effect on the number of shares of common stock or preferred stock

authorized for issuance under the Company’s certificate of incorporation or the par value of such securities.

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

28,750 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 2,500 shares of the Company’s common stock, at an offering price of

$ 300 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.

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”, “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.

Cash flows from financing activities:

Proceeds from note payable

Issuance of common stock and pursuant to private placement

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

Issuance of common stock and pursuant to public offerings, net of offering costs

Repurchase and buyback of common stock

( 1,458,852 )

Cancellation of warrants

Offering costs

Net cash provided by financing activities

Net change in cash and cash equivalents

( 1,677,559 )

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Supplemental disclosure of cash flow information:

Cash paid for income taxes

Cash paid for interest

Supplemental disclosure of non-cash financing activities:

Common stock issued for investment

Reclassification of deposit in escrow to investment

Conversion of note payable and accrued interest into common stock

See the accompanying notes to the audited financial

LQR House, Inc.

NOTES TO CONSOLDATED FINANCIAL STATEMENTS

NATURE OF OPERATIONS

LQR House Inc.

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

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.

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, who is considered a related party.

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

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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 the dividend (see Note 11).

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.

As a result of the stock dividend,

2 stock split was effected.

a 3:2 stock split was effected.

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

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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 consolidated financial statements

accompanying 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 sustained net losses of $ 15,747,724 and $ 1,842,175

during the years ended December 31, 2023 and 2022, respectively, and had cash used in operations of $ 9,113,855 during the year ended

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 consolidated financial statements are issued.

The accompanying

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 sustained net losses of $ 22,754,178 and $ 15,747,724 during

the years ended December 31, 2024 and 2023, respectively, and had cash used in operations of $ 6,618,417 during the year ended

December 31, 2024.

The Company requires additional capital to operate and expects losses to continue for the foreseeable future.

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 IPO (Note 1) and an additional $ 16.6 million from its public

offerings in October and November 2023 (see Note 7).

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 financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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

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.

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.

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

See Note 12 for capital

raised subsequent to December 31, 2024.

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.

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

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.

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.

Changes in estimates

are recorded in the period in which they become known.

Actual results could differ from those estimates.

Risks and Uncertainties

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.

Interest Entities

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

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 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

Company’s ability to derive revenue is reliant on its relationship with CWS who currently handles product for the CWS Platform

The Company’s ability

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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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.

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:

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

The Company held investments

in mutual funds.

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

The investments have a readily determinable

fair value and as such, were recognized as Level 1 financial instruments.

Investments, at Cost

In accordance with FASB

ASC Subtopic 321, Investments – Others – Cost Method Investments , investments where the Company does not have a

significant influence are accounted for at cost.

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

In the event the fair value of the investment declines below the cost basis, the Company records an impairment.

As of December 31, 2024, the Company recognized

an impairment expense of $ 4,500,000 related to its investment in DRNK Beverage Corp, which was recorded within other income (expense)

in the consolidated statements of operations.

This impairment was triggered by company specific information and progress

of the investee against expectations.

The impairment also reflects the ongoing challenges in the

marketplace and the reduced prospects for recovery of the carrying value of the investment.

The Company continues to monitor the situation

and will assess the need for any further adjustments in future periods.

See Note 6 for further detail.

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:

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

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.

assets are amortized over the respective estimated lives on a straight-line basis, unless the lives are determined to be indefinite and

reviewed for impairment whenever events or other changes in circumstances indicate that the carrying amount may not be recoverable.

Company owns domain names indefinitely.

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.

The Company’s investments

are accounted for under the cost method.

See above and Note 6.

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.

Intangible Assets

Intangible assets are amortized

over the respective estimated lives on a straight-line basis, unless the lives are determined to be indefinite and reviewed for impairment

whenever events or other changes in circumstances indicate that the carrying amount may not be recoverable.

The Company owns domain names

indefinitely.

Costs to renew domains are expensed as incurred.

of Long-Lived Assets

Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be

When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by

determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.

of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess

of the carrying amount over the fair value of the assets.

Assets to be disposed of are reported at the lower of the carrying amount or

the fair value less costs to sell.

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 as salaries.

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

parties and disclosure of related party transactions.

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

the following steps:

Impairment of Long-Lived

The Company continually monitors

events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable.

When such events

or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying

value of such assets will be recovered through undiscounted expected future cash flows.

If the total of the future cash flows is less

than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the

fair value of the assets.

Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

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:

● Identification

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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.

Company derives its revenue from marketing services, sales via the CWS Platform, distribution of its SWOL Tequila product to CWS 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

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 and subscription-based membership revenue.

is reported net of discounts.

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 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

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 years ended December 31, 2023 and 2022,

revenue from Vault memberships totaled $ 31,386 and $ 20,524 , respectively.

Disaggregation

following is a summary of the disaggregation of revenue for the years ended December 31, 2023 and 2022:

Disaggregation

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.

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.

Product Sales

The Company wholly owns SWOL

Tequila, a tequila produced in limited batches by a third-party manufacturer in Mexico.

The Company handles all logistics to deliver the

product to CWS for retail distribution in the United States, including advancing production, shipping, and other import-related expenses.

Under historical agreements, the Company is entitled to receive payment for these costs, plus an additional 20 % for each bottle of SWOL

Tequila sold via wholesale channels.

Revenue is recognized when the product is delivered, fulfilling the Company’s performance obligation.

Due to regulatory restrictions surrounding the delivery and custodianship of alcoholic beverages, CWS assumes ownership at the time of

delivery, with no recourse or right of return.

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 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.

Disaggregation of Revenue

The following is a summary

of the disaggregation of revenue for the years ended December 31, 2024 and 2023:

Disaggregation of Revenues

SWOL product sales

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Revenue - services

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

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

for marketing services are generally received upfront in advance of the Company satisfying the related performance obligation and are

recorded as accrued expenses.

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

As of December

31, 2023 and 2022, the Company had nominal amounts in accrued expenses.

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 (see Note 4).

and Marketing

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

marketing costs also include sales commissions.

Offering Costs

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 December 31, 2023 and 2022, the Company has

no deferred offering costs.

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.

Company uses the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes.

Under the liability method, deferred

taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using

tax rates expected to be in effect during the years in which the basis differences reverse.

A valuation allowance is recorded when it

is unlikely that the deferred tax assets will not be realized.

We assess our income tax positions and record tax benefits for all years

subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date.

In accordance

with ASC 740-10, for those tax positions where there is a greater than 50 % likelihood that a tax benefit will be sustained, our policy

will be to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing

authority that has full knowledge of all relevant information.

For those income tax positions where there is less than 50 % likelihood

that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements.

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.

Total revenues

Cost of Revenue

Cost of revenue consists

of all direct costs attributable to prost sales and performing marketing services.

Cost of revenue includes product costs, packaging,

shipping and other importing and delivery charges, as well contracted marketing services.

Cost 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.

Advertising costs were approximately $ 628,000 in 2024, and nominal in 2023.

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 December 31, 2024 and 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.

Segment Information

In accordance with ASC 280,

Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and

ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services,

geographic areas, and major customers.

Operating segments are defined as components of an enterprise for which separate financial

information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), or group,

in deciding how to allocate resources and assess performance.

The CODM has been identified

as the Chief Executive Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources

and assessing financial performance.

Accordingly, management has determined that the Company only has one operating and reportable segment.

The key measures of segment

profit or loss reviewed by our CODM are revenue and operating costs.

These metrics are reviewed and monitored by the CODM to manage and

forecast cash.

The CODM also reviews operating costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned

with all agreements and budget.

The Company uses the liability

method of accounting for income taxes as set forth in ASC 740, Income Taxes.

Under the liability method, deferred taxes are determined

based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to

be in effect during the years in which the basis differences reverse.

A valuation allowance is recorded when it is unlikely that the deferred

tax assets will not be realized.

We assess our income tax positions and record tax benefits for all years subject to examination based

upon our evaluation of the facts, circumstances and information available at the reporting date.

In accordance with ASC 740-10, for those

tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy will be to record the largest

amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge

of all relevant information.

For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained,

no tax benefit will be recognized in the financial statements.

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 December

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 December 31, 2024 and December

31, 2023, diluted net loss per share is the same as basic net loss per share.

Potentially dilutive items outstanding as of December 31,

2023 include the Company’s outstanding restricted stock units (See Note 7).

Issued and Adopted Accounting Pronouncements

June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

This standard establishes an impairment model (known

as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses.

new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which is intended to result in a timelier

recognition of losses.

Under the CECL model, entities will estimate credit losses over the entire contractual term of the instrument

(considering estimated prepayments, but not expected extensions or modifications) from the date of initial recognition of the financial

Measurement of expected credit losses are to be based on relevant forecasts that affect collectability.

The scope of financial

assets within the CECL methodology is broad and includes trade receivables from certain revenue transactions and certain off-balance

sheet credit exposures.

Different components of the guidance require modified retrospective or prospective adoption.

April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives

and Hedging, and Topic 825, Financial Instruments, which amends and clarifies several provisions of Topic 326.

In May 2019, the FASB

issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326):

Targeted Transition Relief, which amends Topic 326 to allow the

fair value option to be elected for certain financial instruments upon adoption.

ASU 2019-10 extended the effective date of ASU 2016-13

until December 15, 2022.

The Company adopted this new guidance, including the subsequent updates to Topic 326, on January 1, 2023 and

the adoption did not have a material impact on the Company’s financial statements and related disclosures.

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

financial statements.

2024 include the Company’s outstanding restricted stock units and warrants to purchase common stock (See Note 8).

Recently Issued and Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic

280) - Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim

basis, primarily disclosure of significant segment expense categories and amounts for each reportable segment.

The new standard is effective

for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

adopted ASU 2023-07 in the annual financial statements for the year ended December 31, 2024, and for interim periods beginning in 2025.

The adoption of ASU 2023-07 did not have a significant impact on the Company’s consolidated financial statements.

Management does not believe

that any 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.

OF CWS PLATFORM

November 1, 2023, LQR House Acquisition Corp.

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

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

Pursuant to the Agreement, the Seller

irrevocably sold, assigned, transferred, and conveyed to the Buyer (a) all right, title, and interest in and to the domain name www.cwspirits.com

(the “Domain Name”, “CWS Platform”), including its current registration and (b) any other rights (including,

but not limited to, trademark rights associated with the Domain Name in any jurisdiction, all Internet traffic through the Domain Name

and all Website Content (as defined in the Agreement) the Seller may have in the Domain Name, together with any goodwill associated therewith

in exchange for the payment by the Buyer of the purchase price of $ 10,000 .

connection with the Company’s purchase of the Domain Name, on November 1, 2023, the Company entered into a product handling agreement

(“Product Handling Agreement”) with KBROS LLC (“KBROS”).

ACQUISITION OF CWS PLATFORM

On November 1, 2023, LQR

House Acquisition Corp.

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

entered into a Domain Name Transfer Agreement (“Agreement”).

Pursuant to the Agreement, the Seller irrevocably sold, assigned,

transferred, and conveyed to the Buyer (a) all right, title, and interest in and to the domain name www.cwspirits.com (the “Domain

Name”, “CWS Platform”), including its current registration and (b) any other rights (including, but not limited to,

trademark rights associated with the Domain Name in any jurisdiction, all Internet traffic through the Domain Name and all Website Content

(as defined in the Agreement) the Seller may have in the Domain Name, together with any goodwill associated therewith in exchange for

the payment by the Buyer of the purchase price of $ 10,000 .

In connection with the Company’s

purchase of the Domain Name, on November 1, 2023, the Company entered into a product handling agreement (“Product Handling Agreement”)

with KBROS LLC (“KBROS”).

Pursuant to the Product Handling Agreement:

as of the Effective Date of this Agreement, Product Handler shall provide to the Company the following services relating to the purchase

and delivery (“Handling”) of spirits and other beverage products (referred to herein as “Product” and the “Products”)

purchased by customers of the Company through or in relation to websites associated with the Domain:

of Products to be delivered to customers of the Company, delivery of such Products, and related

receipt of returns of Products and delivery of replacements of the Products from time to

time, necessary for the operation of the Business by the Company, pursuant to orders for

the Products by the Company’s customers generated as the result of sales, promotion

and marketing of the Products through the Website (sale, promotion and marketing of the Products

through the Website is collectively referred to herein as “Processing”);

- 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 Website

and conduct of sales and Processing of the Products, as reasonably deemed necessary by the

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 as acquired assets and liabilities were nominal.

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, 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.

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, 2022.

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:

( 16,037,213 )

Commencing as of the Effective

Date of this Agreement, Product Handler shall provide to the Company the following services relating to the purchase and delivery (“Handling”)

of spirits and other beverage products (referred to herein as “Product” and the “Products”) purchased by customers

of the Company through or in relation to websites associated with the Domain:

- Purchase of Products to be delivered to customers of the Company, delivery of such Products, and related

receipt of returns of Products and delivery of replacements of the Products from time to time, necessary for the operation of the Business

by the Company, pursuant to orders for the Products by the Company’s customers generated as the result of sales, promotion and marketing

of the Products through the Website (sale, promotion and marketing of the Products through the Website is collectively referred to herein

as “Processing”);

- 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 Website and conduct of sales and Processing of the Products, as reasonably deemed necessary by the

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) was 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:

( 16,037,213 )

Net loss per common share

Exclusive Marketing Agreement

April 1, 2021, the Company, CWS Platform, and another related entity, 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 had 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 was ten years.

Pursuant to the agreement, the Company issued 41,667 shares of common stock to the members of Ssquared.

Company capitalized the fair value of the consideration transferred, $ 2,500,000 (or $ 60 per share), as an intangible asset which was

to be amortized over the term agreement of ten ( 10 ) years.

During the years ended December 31, 2023 and 2022, the Company amortized

$ 208,333 and $ 250,000 , respectively, which is included in cost of revenue – services in the statement of operations.

the acquisition of the CWS Platform (see Note 4), the Company determined that the license under the CWS Agreement was no longer applicable

as the Company now maintained ownership over the CWS Platform and the relevant marketing efforts.

As such, the Company recorded an impairment

of the remaining carrying value of $ 1,875,000 , which is included in operating expenses in the consolidated statements of operations.

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

In 2024, the Company received

Prepaid Expenses

The Company determined it

was no longer pursuing the website development services as per its October 2023 agreement with X-Media.

As such, the Company recognized

an expense of $ 1,350,000 as of December 31, 2024, representing the remaining unamortized prepaid amount.

The amount was included

in sales and marketing expenses in the consolidated statements of operations.

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 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.

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 $ 17.58 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 63,766 shares of the Company’s common stock.

STOCKHOLDERS’

Reorganization

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

Upon the 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.

to Articles of Incorporation

Class Share Structure

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 matter.

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

Common Stock.

A transfer 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.

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

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

which became Chase Mocktails Ltd.

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

Cannon Estate Winery Ltd.

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, 2024.

Company 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 influence.

Chase Mocktails Ltd (f/k/a DRNK Beverage Corp.)

On June 7, 2024, the Company

consummated an acquisition of approximately 8.58 % of common shares of DRNK Beverage Corp.

(“DRNK”) which became Chase

Mocktails Ltd., 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 $ 2.50 per share for an aggregate amount of $ 4,800,000 .

Upon the closing of the DRNK Agreement, the Company reclassified $ 4,800,000 which was held as a deposit in escrow to investments.

of December 31, 2024, the Company recognized an impairment expense of $ 4,500,000 related to its investment in DRNK based on

impairment indicators on DRNK’s financial performance and DRNK’s progress as compared to initial expectations.

In determining the impairment, management used a market approach using

projected revenue information obtained from DRNK and market multiples for companies in similar industry segments.

As a result of this

adjustment, the carrying value of the investment has been reduced to $ 300,000 , and the impairment charge of $ 4,500,000 has been

recorded within other income (expense) in the consolidated statements of operations.

ACCRUED EXPENSES

Accrued expenses consist of the following:

Accrued retention and settlement payments

Accrued professional and other fees

Taxes payable

Other accrued

Total accrued expenses

Accrued retention and settlement payments, related parties

Total accrued expenses, related parties

From October to December

2024, the Company entered into several settlement, bonus and retention agreements, of which $ 6,484,729 were accrued and unpaid as of December

Through the issuance date of these financial statements, approximately $ 5,600,000 of the accrued balances have been paid.

The following is a summary

of the amounts incurred, paid and accrued with respect to the agreements noted above:

Retention and settlement expenses, related parties

Retention and settlement expenses

Total expenses (general and administrative)

2024 payments, related parties

( 1,100,000 )

2024 payments

Total payments in 2024

( 1,536,271 )

Accrued retention and settlement payments, related parties

Accrued retention and settlement payments

Total accrued retention and settlement payments

The Company entered into

bonus and retention agreements reflect to retain key talent and incentivize critical personnel, including executives, directors, other

related entities (see Note 9) and vendors.

These were designed to ensure continuity in leadership, governance and support the Company’s

long-term goals with key consultants and vendors, even though the Company is not currently profitable

STOCKHOLDERS’ EQUITY (DEFICIT)

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.

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.

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;

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 153,340 shares of common stock issued and outstanding at the time of the amendment

became shares of Class B Common Stock.

Common Stock Structure

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 December

Company filed on November 28, 2023 a Certificate of Change to the Articles of Incorporation of the Company with the Secretary of State

of the State of Nevada (the “Certificate of Change”) that provides for a 1-for-60 reverse stock split (the “Split”)

of its shares of common stock, par value $ 0.0001 per share (the “Common Stock”) that became effective on November 30, 2023.

No fractional shares were issued in connection with the Split and fractional amounts were rounded up to one whole share.

The 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.

All 153,340 shares of common stock issued and outstanding at the time

of the amendment became shares of Class B Common Stock.

Single Common Stock Structure

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;

(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 December 31, 2024 and 2023.

The Company filed on November

28, 2023 a Certificate of Change to the Articles of Incorporation of the Company with the Secretary of State of the State of Nevada (the

“Certificate of Change”) that provides for a 1-for-60 reverse stock split (the “Split”) of its shares of common

stock, par value $ 0.0001 per share (the “Common Stock”) that became effective on November 30, 2023.

No fractional shares

were issued in connection with the Split and fractional amounts were rounded up to one whole share.

2024 Stock Transactions

In May 2024, the Company

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

On October 15, 2024, the

Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with David E.

Lazar (“Lazar”), pursuant to which the Company issued 1,101,818 shares of common stock at a price of $ 0.55 per share for proceeds of $ 606,000 .

In December 2024, the

Company issued 4,352,727 shares of common stock to several accredited investors at a price of $ 0.55 per share and five-year warrants to

purchase an aggregate of 10,909,090 shares of common stock at the exercise price of $ 0.55 per share (the “Warrant”) pursuant

to the Securities Purchase Agreement (“Lazar Purchase Agreement”), dated October 15, 2024 by and between the Company and David

These investors obtained the rights to the issuance of such securities pursuant to the assignment of rights of a purchaser

by David Lazar as provided for in the Lazar Purchase Agreement.

The Company received net proceeds of $ 2,394,000 pursuant to the transaction.

In December 2024, the Company

entered into a Securities Purchase Agreement with various investors, pursuant to which the Company issued 636,400 shares of common stock

at a price of $ 0.55 per share for aggregate gross proceeds of $ 350,020 .

In December 2024, the Company

issued 2,077,800 shares of common stock pursuant to the cashless exercise of warrants.

During the year ended December 31, 2024, the Company issued an

aggregate of 1,485,575 shares of common stock pursuant to an at-the-market public offering for net proceeds of $ 1,543,079 .

As of December 31, 2024, the Company had 15,252,580 shares issued and

15,061,952 shares outstanding.

2023 Stock Transactions

2023 Private Placement

April to June 2023, the Company conducted a private placement of and entered into certain subscription agreements with several accredited

Pursuant to the agreements, the Company issued 23,875 shares of common stock at $ 60 per share for a total of $ 955,000 .

and Consulting Agreements

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

12,500 shares of common stock to six individuals and entities, for an aggregate of 75,000 shares.

The Company recorded an expense

of $ 3,000,000 , or fair value of $ 40 per share, pertaining to these issuances, which is included in general and administrative expense

in the statements of operations.

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

August 2023, the board of directors approved an issuance of and the Company issued an aggregate total of 62,501 shares of the Company’s

common stock under the LQR House Inc.

Stock Option and Incentive Plan (“2021 Plan”) to certain consultants with whom the

Company entered into independent contractor agreements, in consideration for their providing consulting services to the Company.

Company recognized stock-based compensation expense of $ 2,552,500 , or $ 40.80 per share based on the fair value of the Company’s

common stock at the time of the agreements, for the year ended December 31, 2023.

The amount was included in general and administrative

expenses in the statements of operations.

Public Offering

the IPO, which closed on August 11, 2021, the Company issued and sold 28,750 shares of common stock, including the exercise of the over-allotment

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 23,875 shares of common stock at $ 60 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 12,500 shares of common

stock to six individuals and entities, for an aggregate of 75,000 shares.

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

fair value of $ 40 per share, pertaining to these issuances, which is included in general and administrative expense in the statements

of operations.

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 the issuance of an aggregate total of 62,501 shares of the Company’s common stock under the LQR

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 $ 40.80 per share based on the fair value of the Company’s common stock at the time of the agreements,

for the year ended December 31, 2023.

The amount was included in general and administrative expenses in the statements of operations.

Initial Public Offering

In the IPO, which closed

on August 11, 2021, the Company issued and sold 28,750 shares of common stock, including the exercise of the over-allotment

option, at a public offering price of $ 200 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 1,437 shares

of the Company’s common stock with an exercise price of $ 200 per share.

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

and total offering expenses.

In connection to the IPO,

the Company agreed to issue the underwriters five-year warrants to purchase an aggregate of 1,437 shares of the Company’s common stock

with an exercise price of $ 200 per share.

The warrants are immediately exercisable.

Public Offerings

October 16, 2023, the Company completed a subsequent closing of the public offering and issued 710,526 shares of common stock for gross

proceeds of $ 5.4 million, or $ 7.60 per share.

Follow-On Public Offerings

On October 16, 2023, the

Company completed a subsequent closing of the public offering and issued 710,526 shares of common stock for gross proceeds of

$ 5.4 million, or $ 7.60 per share.

The Company received $ 4.9 million in net proceeds.

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common stock with an exercise price of $ 7.60 per share.

November 13, 2023, the Company completed an additional closing of the public offering and issued 3,928,572 shares of common stock for

gross proceeds of $ 11.0 million, or $ 2.80 per share.

On November 13, 2023, the

Company completed an additional closing of the public offering and issued 3,928,572 shares of common stock for gross proceeds

of $ 11.0 million, or $ 2.80 per share.

The Company received $ 5.3 million in net proceeds, as $ 4.8 million of the gross

1 unchanged sentence

In connection with the November follow-on offering, the Company issued

to the underwriters five-year warrants to purchase an aggregate of 196,428 shares of the Company’s common stock with an exercise

price of $ 2.80 per share.

December 27, 2023, the underwriters exercised their over-allotment option from the November offering and the Company issued an additional

589,286 shares of common stock for gross proceeds of $ 1.65 million, or $ 2.80 per share.

to the underwriters five-year warrants to purchase an aggregate of 196,428 shares of the Company’s common stock with an

exercise price of $ 2.80 per share.

On December 27, 2023, the

underwriters exercised their over-allotment option from the November offering and the Company issued an additional 589,286 shares

of common stock for gross proceeds of $ 1.65 million, or $ 2.80 per share.

The Company received $ 1.56 million in net proceeds.

Settlement for Shares

September 27, 2023, the Company issued 63,766 shares of common stock as settlement for outstanding principal on notes of $ 950,000 and

accrued interest of $ 171,000 (see Note 5).

Cancellations

Debt Settlement for Shares

On September 27, 2023, the

Company issued 63,766 shares of common stock as settlement for outstanding principal on notes of $ 950,000 and accrued interest

of $ 171,000 (see Note 5).

Cancellations

June 2023, the Company entered into a Cancellation Agreement with four stockholders, who each owned 18,750 shares of common stock

or an aggregate of 75,000 shares.

The stockholders purchased these shares from the founder, Sean Dollinger, pursuant to a stock

purchase agreement on January 12, 2023, between Mr.

Stock cancellations

In June 2023, the Company

entered into a Cancellation Agreement with four stockholders, who each owned 18,750 shares of common stock or an aggregate of 75,000 shares.

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

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.

repurchased the shares for $ 18,000 .

cancellations

December 16, 2023, the Company cancelled all outstanding warrants issued to the underwriter for consideration of $ 60,000 .

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.

From September 8, 2023 through December 22, 203 , 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.

The Company repurchased the shares for $ 18,000 .

Warrant cancellations

On December 16, 2023, the

Company cancelled all outstanding warrants issued to the underwriter for consideration of $ 60,000 .

Share Buyback

On 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.

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 (deficit).

On December 22, 2023, the 865,070 shares were sent to the Company’s transfer agent for retirement.

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

As of December 31, 2022, the Company had 230,011 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.

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 (deficit).

On December 30, 2024, the Company issued five-year warrants to several

accredited investors to purchase an aggregate of 10,909,090 shares of common stock at the exercise price of $ 0.55 per share (the “Warrant

The warrants are immediately exercisable.

These warrants can also be exercised, in whole or in part, by means of a “cashless

exercise” in which the holder shall be entitled to receive the number of Warrant Shares equal to the quotient obtained by dividing

a) the volume weighted-average price of the stock on the trading day preceding the exercise notice less the exercise price multiplied

by the Warrant Shares by b) the volume weighted-average price.

On December 30, 2024, 2,077,800

shares were issued pursuant to the immediate cashless exercise of the warrants.

As of December 31, 2024, 7,366,209 warrants remained outstanding.

Restricted Stock Units

In 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 30, 2023, the Board authorized deferring the vesting of the Director RSUs until such date that the 2021 Plan

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

the year ended December 31, 2023, the Company recognized stock-based compensation expense of $ 1,091,648 , which is included in general

and administrative expenses in the statement of operations.

As of December 31, 2023, there were 29,250 Director RSUs outstanding after

cancellations.

PARTY TRANSACTIONS

and Ssquared Spirits LLC

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 acquisition.

During the year ended December 31, 2023, the Company recognized stock-based

compensation expense of $ 1,091,648 , which is included in general and administrative expenses in the statement of operations.

As of December

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

On December 19, 2024, the

Company granted 50,000 restricted stock units (the 2024 Director RSU’s) to each newly elected independent director (see Note 8)

which shall vest in eight (8) equal quarterly installments commencing in the first quarter of 2025, provided that such directors remain

in continuous service of the Company on such dates.

The RSUs had a grant-date fair value of $ 318,000 .

During the year ended December

31, 2024, 3,000 restricted stock units were forfeited following the resignation of three directors.

During the year ended December

31, 2024, the Company recognized stock-based compensation expense of $ 2,533,256 in the statement of operations pertaining to the vesting

of director RSUs.

Total unrecognized compensation cost related to non-vested restricted stock units amounted to $ 1,953,482 as of December

31, 2024, which is expected to be recognized over approximately 2 years.

As of December 31, 2024, 209,845 RSUs remained unvested.

The following table summarizes RSU activity for the year ended December

Restricted Stock Units

Unvested of December 31, 2023

Unvested as of December 31, 2024

RELATED PARTY TRANSACTIONS

KBROS and Ssquared Spirits

The 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 CWS, 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.

of December 31, 2023 and 2022, the Company had $ 172,493 and $ 224,692 , respectively, in accounts receivable, related party with CWS pertaining

to SWOL product revenues.

the years ended December 31, 2023 and 2022, revenue from Vault memberships totaled $ 31,386 and 20,524 as of December 31, 2023 and 2022,

respectively.

the years ended December 31, 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

$ 190,340 , respectively, during the years ended December 31, 2023 and 2022.

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

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 year ended December 31, 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.

Payable, Related Party

of December 31, 2023 and 2022, the Company had accounts payable of $ 58,589 and $ 104,002 , respectively, with related parties, including

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

September 2023, two directors resigned from the Board of Directors, and agreed to cancel 1,250 RSU’s each.

The cancellation was

formalized in October 2023.

Contractor Agreement

August 2023, the Company entered into an independent contractor agreement for investor relations and advisory services with an entity

for up to $ 1,000,000 , for which the Company paid $ 500,000 through December 31, 2023.

The contractor co-owns a Company with the Company’s

Chief Executive Officer, which is not controlled by LQR.

Therefore the contractor and his related entities are considered affiliates.

the years ended December 31, 2023 and 2022, the Company did not record a current or deferred income tax expense or benefit due to

current and historical losses incurred by the Company.

The Company’s losses before income taxes consist solely of losses from domestic

taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.

The following table presents the deferred tax assets and liabilities by source:

and controlling stockholder of KBROS, the managing member and director of Ssquared Spirits LLC, and a minority shareholder with the Company.

See Note 4 for the CWS Platform acquisition from SSquared.

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 milestones.

Pursuant to the Product Handling Agreement, the Company incurred $ 480,000 ,

to KBROS for the year ended December 31, 2024, which is included in cost of revenue in the consolidated statements of operations.

the year ended December 31, 2024, the Company paid $ 200,000 in incentive compensation, which is included in sales and marketing expenses

in the consolidated statements of operations.

October, 2024, the Company entered into a settlement and release agreement with KBROS, and its controlling stockholder, for an aggregate

amount equal to $ 4,100,000 , which is included in general and administrative expenses in the consolidated statements of operations.

of December 31, 2024, $ 3,600,000 remained unpaid and was included as accrued expenses on the consolidated balance sheet.

Of this amount,

$ 1,800,000 was paid in 2025 and $ 1,800,000 remained unpaid as of issuance date of these consolidated financial statements.

See Note 11 for funding commitment

Country Wine & Spirits,

CWS 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 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 December 31, 2024 and

2023, the Company had $ 149,510 and $ 172,493 , respectively, in accounts receivable, related party with CWS pertaining to product revenues .

In the event that CWS fails to repay the trade receivables, the Company believes it can offset the outstanding receivables against regular

payables due to KBROS.

Accounts Payable, Related

As of December 31, 2024 and

2023, the Company had accounts payable of $ 21,175 and $ 58,589 , respectively, with related parties, including KBROS, the Company’s

founder and Chief Executive Officer, and officers and directors.

Board of Directors

In October 2024, Jay Dhaliwal

resigned from the Board of Directors, and pursuant to his resignation 500 RSU’s were cancelled which were unvested at time of resignation.

In December 2024, two directors,

James Huber and Gary Herman resigned from the Board of Directors, and pursuant to their resignation unvested 1,250 RSU’s to each

director, were cancelled.

On December 19, 2024, after

the Annual Meeting, the Board appointed Mr.

Lijun Chen and Dr.

Jing Lu to fill the vacancies on the Board resulting from the resignations

Huber and Mr.

Herman, effective as of December 19, 2024.

The initial terms as director for Mr.

Lu will expire at the

Company’s 2025 annual meeting of stockholders.

Chen was also appointed to serve as the Chairman of the Board, a member of the

Audit Committee of the Board and a member of the Nominating and Corporate Governance Committee of the Board.

Lu was appointed to serve

as a member of the Compensation Committee of the Board, a Chairperson of the Nominating and Corporate Governance Committee of the Board

and a Member of the Audit Committee of the Board.

On December 19, 2024 and

immediately after the Annual Meeting, the Board appointed newly elected director James O’Brien to serve as Chairman of the Compensation

Committee of the Board.

In connection with such director

appointments and the election of Mr.

Yilin Lu and Mr.

Hong Chun Yeung as directors of the Company on December 19, 2024, the Company entered

into an independent director agreement with each of the newly elected and appointed directors:

Yilin Lu, Mr.

Hong Chun Yeung, Mr.

Lijun Chen and Dr.

Jing Lu (each, the “Director Agreement”).

Pursuant to the Director Agreement, each of the abovementioned

directors will be entitled to receive from the Company an annual cash fee of $ 36,000 , to be paid in monthly installments, for their services

as a director of the Board.

Each of these directors shall also receive equity compensation in the form of 50,000 restricted stock units

(“RSUs”), vesting in eight (8) equal quarterly installments commencing in the first quarter of 2025, provided that such directors

remain in continuous service of the Company on such dates.

Performance Bonus

During the year ended December

31, 2024, the Company paid its Chief Executive Officer and KBROS a performance bonus of $ 200,000 each for achieving certain revenue

levels through the CWS Platform.

Retention Agreements

See Note 7 for a summary

reconciliation of related and non-related party retention agreements.

See below for a detailed description.

In October 2024, the Company entered into a retention agreement with

its Chief Financial Officer whereby a retention bonus of $ 550,000 was awarded for continued services.

This amount was included in general

and administrative expenses in the consolidated statements of operations.

As of December 31, 2024, $ 250,000 remained unpaid and was included

within accrued expenses, related party on the consolidated balance sheet, which has been paid as of the date of issuance of these consolidated

financial statements.

In October 2024, the Company

entered into a retention agreement with its Chief Executive Officer, and entities affiliated with the CEO, whereby a retention bonus of

$ 850,000 was awarded for continued services.

This amount was included in general and administrative expenses in the consolidated statements

of operations.

As of December 31, 2024, $ 800,000 remained unpaid and was included within accrued expenses, related party on the consolidated

balance sheet, which has been paid in January 2025.

In October 2024, the Company entered into a retention agreement with

its Chief Marketing Officer, Jaclyn Hoffman, whereby a retention bonus of $ 285,000 was awarded for continued services.

This amount was

included in general and administrative expenses in the consolidated statements of operations.

As of December 31, 2024, $ 255,000 remained

unpaid and was included within accrued expenses, related party on the consolidated balance sheet.

Of this amount, $ 100,000 was paid in

January 2025, and $ 155,000 remained unpaid as of issuance date of these consolidated financial statements.

In October 2024, the Company entered into a retention agreement with

its director Alexandra Hoffman whereby a retention bonus of $ 600,000 was awarded for continued services.

This amount was included in general

and administrative expenses in the consolidated statements of operations.

As of December 31, 2024, $ 500,000 remained unpaid and was included

within accrued expenses, related party on the consolidated balance sheet.

This amount was paid in January 2025.

During the year ended December

31, 2024, the Company paid an aggregate of $ 120,000 to four former directors as per their respective settlement agreements.

The Company historically

leased space from a related party entity, which is now month-to-month.

As part of the retention and settlement agreements above, the Company

agreed to pay this entity $ 40,000 .

For the years ended December 31,

2024 and 2023, the Company did not record a current or deferred income tax expense or benefit due to current and historical losses incurred

by the Company.

The Company’s losses before income taxes consist solely of losses from domestic operations.

Deferred taxes are recognized

for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.

The following table

presents the deferred tax assets and liabilities by source:

Deferred tax assets:

Net operating

loss carryforwards

Net operating loss carryforwards

Valuation allowance

( 7,213,981 )

deferred tax assets

Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized.

such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable

temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

The Company assessed

the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required due, cumulative

losses through December 31, 2023, and no history of generating taxable income.

Therefore, valuation allowances of $ 2,714,847 and $ 765,808 ,

respectively, were recorded as of December 31, 2023 and 2022.

Valuation allowance increased by $ 1,949,039 and $ 356,192 during the years

ended December 31, 2023 and 2022, respectively.

Deferred tax assets were calculated using the Company’s combined effective tax

rate, which it estimated to be approximately 28.0 %.

The effective rate is reduced to 0 % for 2023 and 2022 due to the full valuation allowance

on its net deferred tax assets.

Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income.

At December 31, 2023 and 2022, the Company had net operating loss carryforwards available to offset future taxable income in the amounts

of approximately $ 9,712,000 and $ 2,740,000 , respectively, which can be carried forward indefinitely.

Certain changes in ownership can

result in a limitation on the amount of net operating loss and tax credit carryovers that can be utilized each year.

As of December 31,

2023, management has not determined the extent of any such limitations, if any.

Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions.

The Company will

recognize interest and penalties related to any uncertain tax positions through its income tax expense.

Company is subject to taxation in the U.S.

( 2,714,847 )

Net deferred tax assets

The Company recognizes deferred

tax assets to the extent that it believes that these assets are more likely than not to be realized.

In making such a determination, the

Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences,

projected future taxable income, tax-planning strategies, and results of recent operations.

The Company assessed the need for a valuation

allowance against its net deferred tax assets and determined a full valuation allowance is required due, cumulative losses through December

31, 2024, and no history of generating taxable income.

Therefore, valuation allowances of $ 7,213,981 and $ 2,714,847 , respectively, were

recorded as of December 31, 2024 and 2023.

Valuation allowance increased by $ 4,499,134 and $ 1,949,039 during the years ended December

31, 2024 and 2023, respectively.

Deferred tax assets were calculated using the Company’s combined effective tax rate, which it estimated

to be approximately 28.0 %.

The effective rate is reduced to 0 % for 2024 and 2023 due to the full valuation allowance on its net deferred

The Company’s ability

to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income.

At December 31, 2024

and 2023, the Company had net operating loss carryforwards available to offset future taxable income in the amounts of approximately $ 25,808,400

and $ 9,712,000 , respectively, which can be carried forward indefinitely.

Certain changes in ownership can result in a limitation on the

amount of net operating loss and tax credit carryovers that can be utilized each year.

As of December 31, 2024, management has not determined

the extent of any such limitations, if any.

The Company has evaluated

its income tax positions and has determined that it does not have any uncertain tax positions.

The Company will recognize interest and

penalties related to any uncertain tax positions through its income tax expense.

The Company is subject to

taxation in the U.S.

and various state jurisdictions.

The Company is not presently subject to any income tax audit

in any taxing jurisdiction, though all tax years from 2021 on remain open to examination.

AND CONTINGENCIES

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 December 31, 2023,

the outstanding right of use liability was $ 9,858 , including a current portion of $ 7,324 and a non-current liability of $ 2,534 .

As of December 31, 2023,

there are future annual minimum payments totaling $ 10,200 through January 2024.

Commitment Agreement

November 1, 2023, the Company entered into a Funding Commitment Agreement with KBROS, the Product Handler pursuant to the Product Handling

Agreement as defined in Note 4.

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 is not presently subject to any income tax audit in any taxing jurisdiction,

though all tax years from 2021 on remain open to examination.

COMMITMENTS AND CONTINGENCIES

Funding Commitment Agreement

On November 1, 2023, the

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

Pursuant to this agreement, the Company committed to provide annual funding to the Product Handler from time to time in the

minimum amount of $ 2,500,000 to enable the Product Handler to purchase inventory from Company-approved vendors (“Vendors”).

The Company may, without notice to Product Handler, elect not to advance funding for any inventory sold by particular Vendors with respect

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Handler or Vendors.

For further details regarding

the settlement agreement, see Note 9.

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.

January 2024, the Company purchased a total of 190,628 shares of the Company’s common stock at an average price of $ 2.90 per share.

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.

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.

The 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.

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

Through the issuance date,

the Company has issued common shares pursuant to the exercise of 7,366,209 warrants for proceeds of approximately $ 4,050,000 .

Through the issuance date,

the Company has issued 13,816,082 shares of common stock pursuant to its ATM Agreement for net proceeds of $ 5,014,022 .

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-K

Item 9A. Controls and Procedures