What changed in this filing

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Item 1. Financial Statements

2025-08-12 compared with 2025-05-13 · 411 added, 345 removed, 397 unchanged (66% of the section changed)

6 unchanged sentences

Accounts receivable, related party

Subscription receivable

Prepaid expenses

2 unchanged sentences

Intangible assets, net

Prepaid joint venture agreements

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accounts payable, related party

Due to related party

Accrued expenses

3 unchanged sentences

Stockholders’ equity:

Common stock, $ 0.0001 par value, 10,000,000 shares authorized, 1,066,798 and 1,061,351 shares issued and outstanding as of March 31, 2025 and 435,788 and 430,341 shares issued and outstanding as of December 31, 2024, respectively

Common stock, $ 0.0001 par value, 350,000,000 shares authorized, 3,048,195 and 3,042,748 shares issued and outstanding as of June 30, 2025 and 435,788 and 430,341 shares issued and outstanding as of December 31, 2024, respectively

Additional paid-in capital

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( 42,306,803 )

Total stockholders’ equity

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity

5 unchanged sentences

Three Months Ended

Six Months Ended

Revenue - services

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( 2,274,392 )

( 4,603,638 )

( 4,746,765 )

Other income (expense):

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$ ( 2,209,293 )

$ ( 4,592,032 )

$ ( 4,636,685 )

Weighted average common shares outstanding - basic and diluted

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Additional Paid-In

Total Stockholders’

Total Shareholder’s

Balances at December 31, 2023

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( 21,980,017 )

Corrective issuance from stock dividend

Vesting of restricted stock units

Common stock issued per investment in equity security

( 2,209,293 )

Balances at June 30, 2024

$ ( 547,415 )

$ ( 24,189,310 )

Balances at December 31, 2024

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Vesting of restricted stock units

Issuance of common stock pursuant to directors agreements

Issuance of common stock pursuant to ATM agreement

Exercise of warrants

Issuance of common stock pursuant to separation agreements

Issuance of common stock pursuant to ATM

Issuance of common stock pursuant to exercise of warrants

Effect of stock split

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( 44,696,453 )

Vesting of restricted stock units

Issuance of common stock pursuant to ATM

Issuance of common stock pursuant to consultant agreement

( 2,202,382 )

Balances at June 30, 2025

$ ( 547,415 )

$ ( 46,898,835 )

See the accompanying notes to the unaudited condensed

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

Cash flows from operating activities:

$ ( 4,592,032 )

$ ( 4,636,685 )

Adjustments to reconcile net loss to net cash used in operating activities:

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Accounts payable, related party

Due to related party

Accrued expenses

Accrued expenses, related party

( 5,181,608 )

Right of use liability, net

Net cash used in operating activities

( 8,263,348 )

( 2,548,366 )

Cash flows from investing activities:

Prepaid joint venture agreements

( 8,166,988 )

Purchases of marketable securities

( 4,015,742 )

Return of deposits in escrow

Net cash used in investing activities

( 8,166,988 )

( 3,345,742 )

Cash flows from financing activities:

Issuance of common stock pursuant to exercise of warrants

Issuance of common stock pursuant to ATM agreement

Issuance of common stock pursuant to ATM

Repurchase and buyback of common stock

1 unchanged sentence

Net change in cash and cash equivalents

( 6,441,523 )

Cash and cash equivalents at beginning of period

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Supplemental disclosure of non-cash financing activities:

Subscription receivable

Issuance of common stock for accrued expenses

Common stock issued per investment in equity security

Deposit in escrow used for investment in equity security

See the accompanying notes to the unaudited condensed

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LQR HOUSE INC.

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

UNAUDITED CONDENSED CONSOLIDATED NOTES TO FINANCIAL

NATURE OF OPERATIONS

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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 .

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

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Reverse Stock Split

On April 16, 2025, the Company filed a Certificate of Change to its Articles of Incorporation with the Secretary of

State of the State of Nevada to effect a 1-for-35 reverse stock split (the “Reverse Split”) of its common stock, par value

$ 0.0001 per share.

The Reverse Split became effective on April 21, 2025.

In connection with Reverse Split, the Company amended its Articles

of Incorporation to reduce the number of authorized shares of common stock to 10,000,000 .

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

On April 16, 2025, the Company

filed a Certificate of Change to its Articles of Incorporation with the Secretary of State of the State of Nevada to effect a 1-for-35 reverse

stock split (the “Reverse Split”) of its common stock, par value $ 0.0001 per share.

The Reverse Split became effective

on April 21, 2025.

In connection with Reverse Split, the Company amended its Articles of Incorporation to reduce the number of authorized

shares of common stock to 10,000,000 .

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

Amendment to Articles

of Incorporation

On June 2, 2025, the Company

filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to increase the number of authorized

shares of common stock from 10,000,000 to 350,000,000 shares, par value $ 0.0001 per share.

The increase was approved by the Company’s

stockholders at the Annual Meeting held on May 30, 2025.

GOING CONCERN

The Company has evaluated

whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability

to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued.

The accompanying unaudited condensed consolidated financial statements

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

course of business.

The Company sustained net losses of $ 2,389,650 and $ 2,427,392 for the three months ended March 31, 2025 and 2024,

and has negative cash flows from operations of $ 6,619,373 and $ 1,374,040 for the three months ended March 31, 2025 and March 31, 2024,

respectively.

The Company requires additional capital to operate and expects losses to continue for the foreseeable future.

These factors

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

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.

The Company has not generated

profits since inception and has sustained net losses of $ 4,592,032 and $ 4,636,685 for the six months ended June 30, 2025 and 2024, respectively.

The Company also incurred negative cash flows from operations for the same periods.

The Company expects to continue to generate operating

losses for the foreseeable future.

The accompanying unaudited consolidated financial statements do not include any adjustments as a result

of this uncertainty.

Through the date the financial

statements were available to be issued, the Company has been primarily financed through the issuance of capital stock.

In the event that

the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses, or obtain financing

through the sale of debt and/or equity securities, which it has done.

The issuance of additional equity would result in dilution to existing

shareholders.

If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable

to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would

have a material, adverse effect on the business, financial condition and results of operations.

While the Company has several potential

sources of cash including the ability to initiate an at-the-market (“ATM”) offering under its current shelf registration statement,

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.

Management’s Plans

In January, 2025, the Company

raised $ 4,051,415 through exercise of warrants, which were converted into shares of common stock.

As of August 12, 2025, the

date these unaudited condensed consolidated financial statements were issued, the Company had cash and cash equivalents of $ 4,566,936

as of June 30, 2025.

In addition, the Company received net proceeds of approximately $ 26,000,000 from its ATM offering in July 2025.

believes these funds will be sufficient to meet the Company’s operating and capital expenditure requirements for at least 12 months

from the date of issuance of these financial statements.

Throughout the next twelve

months, the Company intends to fund its operations from the funds raised through the July 2025 offering.

To further support its operations

and growth, the Company may also pursue additional capital through public or private equity offerings, debt financing, or other strategic

funding sources, including continued use of ATM equity offerings.

Based on the current state

of operations, the July 2025 ATM offering, the additional capital sources available to the Company, and the cash on hand at August 12,

2025, the Company believes that the substantial doubt about the Company’s ability to continue as a going concern has been alleviated.

Management believes that the Company has sufficient capital to meet its financial obligations for the next 12 months as of the date

of these financial statements.

There can be no assurance as to the availability or terms upon which

such financing and capital might be available in the future.

If the Company is unable to secure additional funding, it may be forced to

curtail or suspend its business plans.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Unaudited Interim Financial Information

The unaudited condensed consolidated

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

GAAP for interim financial information, within

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

Certain information and disclosures

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

GAAP have been condensed or omitted pursuant to

such rules and regulations.

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

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

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

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

periods are unaudited.

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

The unaudited condensed

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

GAAP for interim financial information,

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

Certain information

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

GAAP have been condensed or omitted

pursuant to such rules and regulations.

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

audited financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments,

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

the interim balance sheet.

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

related to the six-month periods are unaudited.

Unaudited interim results are not necessarily indicative of the results for the full

The accompanying unaudited

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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.

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

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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.

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

Cash and Cash Equivalents

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

Marketable Securities

The Company has investments

in mutual funds.

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

The investments have a readily determinable

fair value and as such, are recognized as Level 1 financial instruments.

Investments, at Cost

In accordance with FASB ASC

Subtopic 321-10-35-2, Investments – Others – Cost Method Investments , investments where the Company does not have

a significant influence are accounted 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 investment.

event the fair value of the investment declines below the cost basis, the Company records an impairment.

As of March 31, 2025, the

Investment at cost

In accordance with FASB

ASC Subtopic 321-10-35-2, Investments – Others – Cost Method Investments , investments where the Company does

not have a significant influence are accounted 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 investment.

In the event the fair value of the investment declines below the cost basis, the Company records an impairment.

As of June 30, 2025, the

Company’s investment in DRNK Beverage Corp continues to be recorded at its impaired carrying value of $ 300,000 , after reflecting

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That impairment was triggered by company-specific information

and the investee’s performance relative to expectations, as well as general market challenges.

No additional impairments or observable

price changes were identified during the three months ended March 31, 2025.

The Company continues to monitor the situation and will assess

the need for any further adjustments in future periods.

and the investee’s performance relative to expectations, as well as general market challenges and reduced prospects for recovery

of the carrying value of the investment.

No additional impairments were identified during the six months ended June 30, 2025.

continues to monitor the situation and will assess the need for any further adjustments in future periods.

Fair Value Measurements

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of the Company are carried at fair value under GAAP.

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

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

between market participants on the measurement date.

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

inputs and minimize the use of unobservable inputs.

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

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

unobservable:

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

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

There were no transfers between

Level 1, Level 2, or Level 3 fair value classifications during the three months ended March 31, 2025.

Available-for-sale investments

are classified as Level 1, as they are valued based on quoted prices in active markets for identical instruments.

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.

There were no transfers

between Level 1, Level 2, or Level 3 fair value classifications during the six months ended June 30, 2025.

The carrying values of the

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of these instruments.

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

The Company’s investments

are accounted for under the cost method.

are accounted at cost, less impairment.

See above and Note 5 to our unaudited condensed consolidated financial statements.

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.

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

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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.

The Company continually

monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable.

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

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

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 as salaries.

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

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Revenue Recognition

In accordance with FASB ASC

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

Identification of a contract with a customer;

Identification of the performance obligations in the contract;

Determination of the transaction price;

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

Recognition of revenue when or as the performance obligations are satisfied.

In accordance with FASB

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

Identification

of a contract with a customer;

Identification

of the performance obligations in the contract;

Determination

of the transaction price;

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

of revenue when or as the performance obligations are satisfied.

Revenue is recognized when

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

The Company derives its revenue

from marketing services, sales via the CWS Platform, distribution of its SWOL Tequila product and subscription-based membership revenue.

The Company derives its

revenue from marketing services, sales via the CWS Platform, distribution of its SWOL Tequila product and subscription-based membership

Revenue is reported net of discounts.

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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 shortfalls in minimum purchases.

The Company establishes the

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

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.

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 shortfalls in minimum purchases.

The Company establishes

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

As such, the Company is the primary obligor for transactions with customers on the CWS Platform and records gross revenue.

recognized at the point in time when products are delivered to the end customer, when LQR has fulfilled its performance obligation, net

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

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.

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 fixed premium 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

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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.

Upon the acquisition of the CWS Platform, the Company records

gross revenue as it is the principal in the transaction.

The Company records a reserve for chargebacks and cancellations at the time

of the transaction based on historical experience.

Disaggregation of Revenue

The following is a summary

of the disaggregation of revenue for the three and nine months ended September 30, 2024 and 2023:

of the disaggregation of revenue for the three and six months ended June 30, 2025 and 2024:

Three Months Ended

Six Months Ended

Disaggregation of Revenues

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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.

For the three months ended March 31, 2025 and 2024, Advertising costs were approximately $ 206,000 and $ 167,000 , respectively.

Sales and marketing costs

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

Sales and marketing costs also

include sales commissions.

For the three and six months ended June 30, 2025, advertising costs totaled $ 80,676 and $ 487,529 , respectively,

compared to $ 764,807 and $ 1,551,222 for the same period in 2024.

Stock-Based Compensation

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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

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.

The Company classifies equity-based

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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.

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

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dilutive securities outstanding.

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

their inclusion would be anti-dilutive.

As all potentially dilutive securities are anti-dilutive as of March 31, 2025 and 2024, diluted

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

if their inclusion would be anti-dilutive.

As all potentially dilutive securities are anti-dilutive as of June 30, 2025 and 2024, diluted

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

Potentially dilutive items

outstanding as of March 31, 2025 include the Company’s outstanding restricted stock units (See Note 7).

Potentially dilutive items outstanding as of June 30, 2025

include the Company’s outstanding restricted stock units (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.

The Company 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

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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 Company;

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”);

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 Company;

Under Regulation S-X 3-05,

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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.

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.

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.

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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.

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

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,

The 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

12 unchanged sentences

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 of March 31, 2025, the

used a market approach using projected revenue information obtained from DRNK and market multiples for companies in similar industry

As of June 30, 2025, the

investment continues to be carried at its impaired value of $ 300,000 .

No further impairment indicators or observable price changes were

identified during the three-month period ended March 31, 2025.

identified during the six-month period ended June 30, 2025.

The Company continues to monitor this investment and will assess the need

for any future adjustments as conditions warrant.

PREPAID JOINT VENTURE AGREEMENTS

As of June 30, 2025, the

Company had recorded $ 8,166,988 in prepaid joint venture agreements related to payments made in anticipation of entering into joint venture

The agreements will represent a strategic collaboration with TikTok.

Under the proposed agreements, the Company’s newly

formed subsidiary, YHC Online Ltd., has signed a Multi-Channel Network (MCN) agency services contracts to develop, manage, and monetize

creator-led content on the TikTok platform.

The Company expects that

in addition to direct monetization through TikTok, the collaboration will enable broader cross-platform campaign execution across TikTok,

Meta, and Google to create a foundation for a vertically integrated digital marketing operation that will support the Company's future

growth initiatives.

As of June 30, 2025, the

agreements had not been finalized.

Accordingly, the Company classified these amounts as prepaid joint venture agreements on the consolidated

balance sheet.

Management expects these agreements to be executed and operationalized in subsequent periods, at which time the prepayments

will be reclassified to the appropriate investment and accounted for in accordance with ASC 323.

ACCRUED EXPENSES

Accrued expenses consist

of the followings:

of the following:

Accrued retention and settlement payments

5 unchanged sentences

Total accrued expenses, related parties

As of December 31, 2024, the Company had accrued

expenses totaling $ 6,484,729 related to various settlement, bonus, and retention agreements executed between October and December 2024.

During the three months ended March 31, 2025, the Company paid approximately $ 4,687,000 of these previously accrued balances.

The remaining

balance of approximately $ 1,797,000 remains accrued as of March 31, 2025, and is expected to be settled in future periods.

As of December 31, 2024,

the Company had accrued expenses totaling $ 6,484,729 related to various settlement, bonus, and retention agreements executed between

October and December 2024.

During the six months ended June 30, 2025, the Company paid approximately $ 5,292,600 of these previously accrued

The remaining balance of $ 678,392 remains accrued as of June 30, 2025, and is expected to be settled in future periods.

STOCKHOLDERS’ EQUITY (DEFICIT)

Amendment to Articles of Incorporation or

April 16, 2025, the Company filed a Certificate of Change to its Articles of Incorporation with the Secretary of State of the State of

Nevada to effect a 1-for-35 reverse stock split (the “Reverse Split”) of its common stock, par value $ 0.0001 per share.

Reverse Split became effective on April 21, 2025.

to the Reverse Split, every 35 shares of the Company’s authorized, issued and outstanding common stock were automatically converted

into one share of common stock.

Amendment to Articles of Incorporation

On June 2, 2025, the Company

further filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to increase the number

of authorized shares of common stock from 10,000,000 to 350,000,000 shares, par value $ 0.0001 per share.

The increase was approved by

the Company’s stockholders at the Annual Meeting held on May 30, 2025.

On April 16, 2025, the Company

filed a Certificate of Change to its Articles of Incorporation with the Secretary of State of the State of Nevada to effect a 1-for-35

reverse stock split (the “Reverse Split”) of its common stock, par value $ 0.0001 per share.

The Reverse Split became effective

on April 21, 2025.

Pursuant to the Reverse

Split, every 35 shares of the Company’s authorized, issued and outstanding common stock were automatically converted into one share

of common stock.

No fractional shares were issued as a result of the Reverse Split;

instead, fractional shares were rounded

up to the nearest whole share at the individual stockholder level.

instead, fractional shares were rounded up to the

nearest whole share at the individual stockholder level.

As a result of the Reverse

2 unchanged sentences

adjusted to reflect the Reverse Split for all periods presented, unless otherwise indicated.

In connection with Reverse

Split, the Company amended its Articles of Incorporation to reduce the number of authorized shares of common stock to 10,000,000 .

2025 Stock Transactions

During the three months ended

March 31, 2025, the Company issued 413,520 shares of common stock (on a post-reverse split basis) pursuant to an at-the-market public

During the six months ended

June 30, 2025, the Company issued 2,361,112 shares of common stock (on a post-reverse split basis) pursuant to an at-the-market public

offering for net proceeds of $ 11,559,068 .

Of the total proceeds, $ 108,054 was received in April 2025.

As of March 31, 2025, the Company recorded

a subscription receivable in respect of this issuance.

Issuance of shares in pursuance of director’s

On October 15, 2024, the Company entered into

a Director Agreement with Avraham Ben-Tzvi, a then-member of the Board of Directors.

Ben-Tzvi ceased to serve on the Board effective

December 19, 2024.

In recognition of his service, the Company issued 3,334 shares of its common stock, par value $ 0.0001 per share (on

a post-reverse split basis), to Mr.

On October 15, 2024, the

Company entered into a Director Agreement with Avraham Ben-Tzvi, a then-member of the Board of Directors.

Ben-Tzvi ceased to serve

on the Board effective December 19, 2024.

In recognition of his service, the Company issued 3,334 shares of its common stock, par value

$ 0.0001 per share (on a post-reverse split basis), to Mr.

Ben-Tzvi on January 2, 2025.

On January 28, 2025, Mr.

Ben-Tzvi entered into a Lock-Up Agreement with

the Company in connection with the share issuance, under which he agreed not to transfer, sell, pledge, or otherwise dispose of the shares

for a period of twelve (12) months.

The Lock-Up Agreement also prohibits hedging transactions, registration demands, and deposit of the

shares into depositary facilities during the lock-up period.

The Company has instructed its transfer agent to enforce applicable restrictions.

For the three months ended March 31, 2025, the Company recognized $ 172,679 of stock-based compensation expense related to this issuance.

The fair value of the shares was measured as of the grant date, January 2, 2025, in accordance with ASC 718, Compensation – Stock

Compensation .

On April 2, 2025, David Lazar resigned as President

and as a member of the Company’s Board of Directors, effective the same date (the “Separation Date”).

In connection

with his resignation, the Company entered into a Separation Agreement with Mr.

Lazar, pursuant to which the Company agreed to pay $ 415,000

in cash and issue 2,857 shares of the Company’s common stock, par value $ 0.0001 per share (on a post-split basis), as consideration

for the covenants and agreements set forth therein.

As of December 31, 2024, the Company recorded a total expense of $ 526,000 related

to this agreement, consisting of $ 415,000 in accrued cash compensation and $ 111,000 in non-cash stock-based compensation, based on the

fair value of the Shares as of the measurement date.

The shares were issued on April 2, 2025, and are subject to a Lock-up Agreement under

Lazar has agreed not to transfer, sell, pledge, or otherwise dispose of the shares for a period of one year from the date of

The shares were valued at a fair value of $ 172,679 ,

or $ 51.80 per share, based on the post-split share count.

The full amount was recognized as a general and administrative expense in the

consolidated statement of operations for the six months ended June 30, 2025.

On April 2, 2025, David Lazar

resigned as President and as a member of the Company’s Board of Directors, effective the same date (the “Separation Date”).

In connection with his resignation, the Company entered into a Separation Agreement with Mr.

Lazar, pursuant to which the Company agreed

to pay $ 415,000 in cash and issue 2,857 shares of the Company’s common stock, par value $ 0.0001 per share (on a post-split basis),

as consideration for the covenants and agreements set forth therein.

As of December 31, 2024, the Company recorded a total expense of

$ 526,000 related to this agreement, consisting of $ 415,000 in accrued cash compensation and $ 111,000 in non-cash stock-based compensation,

based on the fair value of the Shares as of the measurement date.

The shares were issued on April 2, 2025, and are subject to a lock-up

The expense associated with the issuance of the Shares was fully recognized in the year ended December 31, 2024.

No additional

expense related to this agreement was recognized during the three months ended March 31, 2025.

During the three months ended March 31, 2025, the Company issued 210,463

shares of common stock (on a post-reverse split basis) upon the exercise of warrants, resulting in aggregate gross proceeds of $ 4,051,415 .

expense related to this agreement was recognized during the six months ended June 30, 2025.

Issuance of shares in pursuance of consultant’s

On June 3, 2025, the

Company entered into an Advisory Services Agreement with a third party to provide capital markets and investor relations advisory

In connection with this agreement, the Company issued 33,000 shares of its common stock as consideration for services.

These shares were valued at a fair value of $ 1.44 per share based on the agreement date, resulting in a total non-cash expense of

This amount was recorded in the consolidated statement of operations for the three and six months ended June 30, 2025,

under general and administrative expenses.

During the six months ended

June 30, 2025, the Company issued 210,463 shares of common stock (on a post-reverse split basis) upon the exercise of warrants, resulting

in aggregate gross proceeds of $ 4,051,415 .

As of June 30, 2025, no warrants remain outstanding.

Restricted Stock Units

In August 2023, the Company granted 893 restricted

stock units (the Director RSU’s) on post-split basis, which were to vest in eight equal quarterly installments commencing on October

On August 30, 2023, the Board authorized deferring the vesting of the Director RSUs until such date that the 2021 Plan is amended.

In August 2023, the Company

granted 893 restricted stock units (the Director RSU’s) on post-split basis, which were to vest in eight equal quarterly installments

commencing on October 1, 2023.

On August 30, 2023, the Board authorized deferring the vesting of the Director RSUs until such date that

the 2021 Plan is amended.

The amendment to the plan was approved on December 19, 2024 and vesting resumed thereafter.

In December, 2024, the Company granted 1,429 restricted

stock units (the 2024 Director RSU’s) on post-split basis to each four newly elected independent director, for a total of 5,716

In December, 2024, the Company

granted 1,429 restricted stock units on post-split basis to each four newly elected independent director, for a total of 5,716

RSUs, which shall vest in eight (8) equal quarterly installments commencing in the first quarter of 2025, provided that such directors

1 unchanged sentence

The RSUs had a grant-date fair value of $ 318,000 .

The Company recorded stock-based compensation

expense of $ 695,509 in the statements of operations for the three months ended March 31, 2025.

Total unrecognized compensation cost related

to non-vested restricted common stock amounted to $ 1,257,881 as of March 31, 2025, which is expected to be recognized over weighted average

remaining vesting period of 1.67years.

As of March 31, 2025, 5,188 RSUs remained unvested.

The following table summarizes RSU activity for the three months ended

March 31, 2025:

The Company recorded stock-based

compensation expense of $ 695,508 and $ 1,360,205 in the statements of operations for the three and six months ended June 30, 2025, respectively.

As of June 30, 2025, total unrecognized compensation cost related to unvested RSUs was $ 546,242 , which is expected to be recognized over

a weighted-average remaining vesting period of approximately 1.44 years.

As of June 30, 2025, 4,374 RSUs remained unvested, net of 9

RSUs forfeited upon the resignation of a board member on May 30, 2025.

The following table summarizes

RSU activity for the six months ended June 30, 2025:

Restricted Stock Units

Number of shares

Weighted Average Fair Value

Unvested as of December 31, 2024

Unvested as of March 31, 2025

In January 2024, the Company purchased a total of 5,447 shares

of the Company’s common stock (on post-split basis) for $ 547,415 , which was recorded as treasury

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

As of March 31, 2025, no warrants remain outstanding.

Unvested as of June 30, 2025

RELATED PARTY TRANSACTIONS

and Ssquared Spirits LLC

KBROS and Ssquared Spirits

The Company’s founder

2 unchanged sentences

The spouse of the Company’s former Chief Executive Officer and director, is the President

and controlling stockholder of KBROS, the managing member and director of Ssquared Spirits LLC, and a minority shareholder with the Company.

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, for the three month ended

March 31, 2025 and 2024, the Company incurred $ 40,000 through January 2025 and $ 120,000 , respectively, to KBROS, which is included in

cost of revenue in the consolidated statements of operations.

During the three months ended March 31, 2025, the Company paid $ 100,000 in

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

and controlling stockholder of KBROS, the managing member and director of Ssquared Spirits LLC.

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.

For the three and six months ended June 30, 2025, the Company incurred $ 0 and $ 40,000 , respectively, in handling

fees under this agreement, which were included in cost of revenue in the consolidated statements of operations.

For the three and six

months ended June 30, 2024, the Company incurred $ 120,000 and $ 240,000 , respectively, also included in cost of revenue.

In addition, during the

three and six months ended June 30, 2025, the Company paid $ 0 and $ 100,000 , respectively, in incentive compensation to KBROS, which was

recorded in sales and marketing expenses.

During the same period for the three and six months ended June 30, 2024, the Company recorded

$ 100,000 in incentive compensation, under sales and marketing expenses.

In October, 2024, the Company

entered into a settlement and release agreement with KBROS, and its controlling stockholder.

As of December 31, 2024, $ 3,000,000 remained

unpaid and was included as accrued expenses on the consolidated balance sheet.

Of this amount, $ 1,800,000 was paid during the three

months ended March 31, 2025 and $ 1,200,000 remained unpaid as of March 31, 2025.

See Note 9 for funding commitment

Wine & Spirits, Inc.

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

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

To date CWS has distributed all of the alcohol 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.

of March 31, 2025 and December 31, 2024, the Company had $ 149,510 , in accounts receivable, related party with CWS pertaining to product

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 Party

of March 31, 2025 and December 31, 2024, the Company had accounts payable of $ 28,411 and $ 21,175 , respectively, with related parties,

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

the three months ended March 31, 2025, the Company paid its Chief Executive Officer and KABROS a performance bonus of $ 100,000 each.

entered into a settlement and release agreement with KBROS, and its controlling stockholder, for an aggregate amount equal to $ 4,100,000 ,

which was included in general and administrative expenses in the consolidated statements of operations for the year ended December 31,

As of June 30, 2025 and December 31, 2024, $ 678,392 and $ 3,600,000 , respectively, respectively, remained unpaid and were included

in accrued expenses on the consolidated balance sheet.

See Note 10 for funding

commitment with KBROS.

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

As of June 30, 2025 and

December 31, 2024, the Company had $ 300,231 , in accounts receivable, related party with CWS pertaining to product revenues.

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 Party

As of June 30, 2025 and

December 31, 2024, the Company had accounts payable of $ 57,511 and $ 21,175 , respectively, with related parties, including KBROS, the

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

the three and six months ended June 30, 2025, the Company paid its Chief Executive Officer and KBROS a performance bonus of $ 0 and $ 100,000

each, respectively.

For the three and six months ended June 30, 2024, the Company paid $ 0 and $ 100,000 each, respectively.

Company historically leased space from a related party entity, which is now month-to-month.

12 unchanged sentences

Contingencies

On or about July 11, 2025,

the Company, along with over two dozen parties including several officers and directors of the Company, has been named as a defendant

in an action before the Eight Judicial District, Clark County, Nevada titled Kingbird Ventures, LLC (“Kingbird”) v.

Sean Dollinger,

The complaint alleges, among other things, breach of fiduciary duties, violations of the Nevada Revised Statutes 78.650,

78.630, 207.400 90.570 and 32.010, alter ego liability, civil conspiracy (the “Complaint”).

The Complaint seeks, among other

things, damages in an unspecified amount, a declaratory judgment, a temporary restraining order and preliminary injunction freezing

the Company’s assets, the assets of the Company’s Chief Executive Officer, Sean Dollinger, the assets of any of the other

defendants controlled by Sean Dollinger and others, injunctive relief to prevent any further material corporate decisions by the Company, for the

court to restrain the Company, its directors, officers and stockholders from making any significant changes to the Company’s

governance or capital structures to further entrench the Company’s Chief Executive Officer.

The Complaint was filed by Kingbird

Ventures, LLC, recent stockholder of the Company, on July 11, 2025, The Company intends on vigorously defending the litigation.

The Company may be subject

4 unchanged sentences

SUBSEQUENT EVENTS

Reverse Stock Split

On April 16, 2025, the Company

filed a Certificate of Change to the Articles of Incorporation with the Secretary of State of the State of Nevada that provides for a 1-for-35 reverse stock split of its shares of common stock, par value

$ 0.0001 per share that became effective at 12:01 a.m.

on April 21, 2025.

Supplementary distribution agreement

On April 1, 2025, the Company

entered into a Supplementary Distribution Agreement (the “Supplementary Distribution Agreement”) with Of The Earth Distribution

Corp., a Canadian corporation (the “Distributor”), pursuant to which the Company granted to Distributor the exclusive right

to distribute, market, and sell SWOL Tequila products within Thailand and Greece until June 28, 2029.

The Supplementary Distribution Agreement

also amends Supplier Agreement between the Company and the Distributor, dated June 28, 2024, by providing the Distributor exclusive distribution

rights to sell SWOL Tequila in all of Canada without any territorial limitations.

The Supplementary Distribution Agreement does not impose

any minimum purchase requirements.

Change in Independent Registered Public Accounting

On April 23, 2025, the Board

of Directors and Audit Committee of the Company accepted the resignation of dbbmckennon “Former Auditor”) as the Company’s

independent registered public accounting firm, effective immediately.

The Former Auditor’s reports on the Company’s consolidated

financial statements for the fiscal years ended December 31, 2024 and 2023 did not contain an adverse opinion or a disclaimer of opinion,

nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except for an explanatory paragraph relating

to substantial doubt about the Company’s ability to continue as a going concern and an emphasis of matter paragraph.

During the fiscal years ended

December 31, 2024 and 2023, and through the date of resignation, there were no disagreements with the Former Auditor on any matter of

accounting principles or practices, financial statement disclosure, or auditing scope or procedures that, if not resolved to the satisfaction

of the Former Auditor, would have caused it to make reference to the subject matter of the disagreement in connection with its reports.

There were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K, except for the material weaknesses in internal control

over financial reporting previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Also on April 23, 2025, the

Company engaged Enrome LLP (“New Auditor”) as its independent registered public accounting firm for the fiscal year ending

December 31, 2025.

During the two most recent fiscal years and through the date of engagement, neither the Company nor anyone on its behalf

consulted with Enrome LLP regarding the application of accounting principles to a specific transaction or the type of audit opinion that

might be rendered on the Company’s financial statements.

At-the-Market Offering

Subsequent to June 30, 2025, the Company issued an aggregate of 7,329,889

shares of common stock pursuant to its at-the-market offering agreement (the “ATM Agreement”) with H.C.

Wainwright & Co.,

LLC, as sales agent.

In July 2025, the Company received net proceeds of approximately $ 26 million from such sales.

The Company intends

to use the proceeds for working capital, general corporate purposes, and to support ongoing strategic initiatives.

On August 6, 2025, the Company appointed Yilin

Lu as its President.

In connection with this appointment, Mr.

Lu was replaced on the Compensation Committee and the Nominating Committee

by Hong Chun Yeung, effective the same day.

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

What changed 10-Q

Item 1. Financial Statements