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Item 1. Financial Statements

2026-05-15 compared with 2025-11-14 · 484 added, 732 removed, 99 unchanged (92% of the section changed)

ITEM 1 – FINANCIAL STATEMENTS

LQR HOUSE INC.

CONDENSED CONSOLDIATED BALANCE SHEETS

September 30,

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

Current assets:

2 unchanged sentences

Accounts receivable, related party - 232,283

Due from related party

Advance for investment in joint venture 3,824,000 3,824,000

Advance payment to distributor 3,279,000 3,279,000

Prepaid expenses 295,182 276,157

Due from related party 2,852,215 2,364,450

Security deposit 19,450 19,450

Total current assets 14,723,262 15,994,694

Investments, at cost

Intangible assets, net

Prepaid investments

LIABILITIES AND STOCKHOLDERS’ EQUITY

Property and equipment, net 295,136 312,163

Right- of- use asset - 51,651

Deferred offering costs 283,950 203,950

Investment in joint ventures 14,670,000 14,670,000

Total assets $ 29,972,348 $ 31,232,458

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

Accounts payable $ 135,464 $ 76,519

Accounts payable, related party

Accrued expenses

Accrued expenses, related party

Accrued and other payables 1,069,714 982,739

Accrued and other payables, related party 337,320 760,975

Contract liabilities 12,181 10,423

Due to related party - 6,713

Lease liability - 21,428

Total current liabilities 1,554,679 1,858,797

Lease liability, non-current - 41,023

Total liabilities 1,554,679 1,899,820

Commitments and contingencies (Note 14)

Stockholders’ equity:

Common stock, $ 0.0001 par value, 350,000,000 shares authorized, 14,121,684 and 14,116,237 shares issued and outstanding as of September 30, 2025 and 435,788 and 430,341 shares issued and outstanding as of December 31, 2024, respectively

Common stock, $ 0.0001 par value, 1,500,000,000 shares authorized, 21,371,656 and 21,366,209 shares issued and outstanding as of both March 31, 2026 and December 31, 2025 2,137 2,137

Additional paid-in capital 97,707,337 97,707,337

1 unchanged sentence

Accumulated deficit ( 68,744,390 ) ( 67,829,421 )

( 63,727,748 )

( 42,306,803 )

Total stockholders’ equity (deficit)

Total stockholders’ equity 28,417,669 29,332,638

Total liabilities and stockholders’ equity $ 29,972,348 $ 31,232,458

See the accompanying notes to the unaudited condensed

consolidated financial statements

LQR HOUSE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF OPERATIONS

Three Months Ended

Nine Months Ended

September 30,

the accompanying notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Revenue - services $ 12,572 $ 77,356

4 unchanged sentences

Total cost of revenue 244,919 399,182

Gross profit (loss)

Gross (loss) profit ( 22,236 ) 30,158

Operating expenses:

4 unchanged sentences

Other income (expense):

Realized gain/(loss) on securities

Legal settlement expense

Dividend income

Total other income (expense)

Provision for income taxes

Other income 1,993,167 10,206

Total other income 1,993,167 10,206

Income tax expense - -

Net loss $ ( 914,969 ) $ ( 2,389,650 )

Weighted average common shares outstanding - basic and diluted 21,366,209 621,437

Net loss per common share - basic and diluted $ ( 0.04 ) $ ( 3.85 )

See the accompanying notes to the unaudited condensed

consolidated financial statements

LQR HOUSE INC.

the accompanying notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Treasury Stock

Additional Paid-In

Total Shareholder’s

Balances at December 31, 2023

$ ( 19,552,625 )

Vesting of restricted stock units

Repurchase of common stock

( 2,427,392 )

Balances at March 31, 2024

( 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 )

Issuance of common stock pursuant to public offerings

Offering costs

Vesting of restricted stock units

( 3,363,380 )

Balances at September 30, 2024

$ ( 547,415 )

$ ( 27,552,690 )

Stockholders’

Balances at December 31, 2024 435,788 $ 44 ( 5,447 ) $ ( 547,415 ) $ 42,336,213 $ ( 42,306,803 ) $ ( 517,961 )

$ ( 547,415 )

$ ( 42,306,803 )

$ ( 517,961 )

Vesting of restricted stock units 808 - - - 695,508 - 695,508

Issuance of common stock pursuant to separation agreements

Issuance of common stock pursuant to directors agreement 6,191 1 - - 283,678 - 283,679

Issuance of common stock pursuant to ATM 413,520 41 - - 5,178,779 - 5,178,821

Issuance of common stock pursuant to exercise of warrants

Exercise of warrants 210,463 21 - - 4,051,394 - 4,051,415

Effect of stock split 28 - - - - - -

( 2,389,650 )

Net loss - - - - - ( 2,389,650 ) ( 2,389,650 )

Balances at March 31, 2025 1,066,798 $ 107 ( 5,447 ) $ ( 547,415 ) $ 52,545,573 $ ( 44,696,453 ) $ 7,301,812

( 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 )

Issuance of common stock pursuant to ATM

Vesting of restricted stock units

( 16,828,913 )

Balances at September 30, 2025

$ ( 547,415 )

$ ( 63,727,748 )

See the accompanying notes to the unaudited condensed consolidated financial statements

LQR HOUSE INC.

Balances at December 31, 2025 21,371,656 $ 2,137 ( 5,447 ) $ ( 547,415 ) $ 97,707,337 $ ( 67,829,421 ) $ 29,332,638

Net loss - - - - - ( 914,969 ) ( 914,969 )

Balances at March 31, 2026 21,371,656 $ 2,137 ( 5,447 ) $ ( 547,415 ) $ 97,707,337 $ ( 68,744,390 ) $ 28,417,669

the accompanying notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Cash flows from operating activities:

$ ( 21,420,945 )

$ ( 8,000,066 )

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

Cash flows from operating

Net loss $ ( 914,969 ) $ ( 2,389,650 )

Adjustments to reconcile net loss to net cash

used in operating activities:

Stock based compensation - 868,189

Gain on sale of marketable securities

Vesting of restricted stock units

Changes in operating assets and liabilities:

Depreciation 17,027 -

Changes in operating assets

and liabilities:

Accounts receivable 15,506 ( 20,700 )

Accounts receivable, related party

Prepaid expenses ( 19,025 ) ( 38,866 )

Due from related party

Due to/from related party ( 494,478 ) -

Accounts payable 58,945 ( 395,512 )

Accounts payable, related party - 7,236

Accrued expenses

Accrued expenses, related party

( 5,194,026 )

Right of use liability, net

Accrued and other payables 86,975 ( 533,462 )

Accrued and other payables, related party ( 191,372 ) ( 4,116,608 )

Contract liabilities 1,758 -

Lease liability, net ( 10,800 ) -

Net cash used in operating activities ( 1,450,433 ) ( 6,619,373 )

( 19,519,325 )

( 3,565,293 )

Cash flows from investing activities:

Prepaid investments

( 23,081,064 )

Purchases of marketable securities

( 7,727,850 )

Sales of marketable securities

Return of deposits in escrow

Net cash used in investing activities

( 23,081,064 )

( 2,688,227 )

Cash flows from financing activities:

Cash flows from financing

Payment of deferred offering

Issuance of common stock pursuant to exercise of warrants - 4,051,415

Issuance of common stock pursuant to ATM

Offering costs

Repurchase and buyback of common stock

Net cash provided by (used in) financing activities

Issuance of common stock pursuant to ATM offering - 5,070,767

Net cash (used in) provided by financing activities ( 80,000 ) 9,122,181

Net change in cash and cash equivalents ( 1,530,433 ) 2,502,808

( 6,816,435 )

Cash and cash equivalents at beginning of period 5,975,408 5,386,789

Cash and cash equivalents at end of period $ 4,444,975 $ 7,889,597

Supplemental disclosure of cash flow information:

Supplemental disclosure

of cash flow information:

Cash paid for income taxes $ - $ -

Cash paid for interest $ - $ -

Supplemental disclosure of non-cash financing activities:

Supplemental disclosure

of non-cash flow information:

Issuance of common stock for accrued expenses $ - $ 111,000

Common stock issued per investment in equity security

Subscription receivable $ - $ 108,054

Deposit in escrow used for investment in equity security

See the accompanying notes to the unaudited condensed consolidated financial statements

LQR HOUSE INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

the accompanying notes to the unaudited condensed consolidated financial statements

TO UNAUDITED CONDENSED CONSOLIDATED 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.

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

unaudited condensed consolidated 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.

(“LQR” 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.

On March 2, 2026, the Company reincorporated in the State of Delaware through a statutory conversion.

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

Through its wholly owned subsidiary LQR House Acquisition Corp., the Company operates CWSpirits.com (the “CWS Platform”), an e-commerce marketplace for spirits, wines, and champagnes serving customers throughout the United States through partnerships with licensed retail partners, including Country Wine & Spirits.

Through its wholly owned subsidiary SWOL Holdings Inc., incorporated in the State of Nevada on January 22, 2025, the Company develops and markets SWOL Tequila, a proprietary tequila brand.

The Company also provides digital marketing services to alcohol industry brands.

Through its wholly-owned subsidiary YHC Online Limited, incorporated in Hong Kong in July 2025, the Company entered into joint venture agreements in December 2025 to cooperate in the creation and monetization of multi-channel network (“MCN”) content for digital platforms.

Subsequent to March 31, 2026, all joint venture agreements were terminated and all amounts previously funded were returned to the Company in full.

See Note 7 — Investment in Joint Ventures and Note 15 — Subsequent Events.

Reincorporation and Increase in Authorized Shares

On March 2, 2026, the Company’s stockholders approved the reincorporation of the Company from the State of Nevada to the State of Delaware, which was effected on the same date.

In connection with the special meeting, stockholders also approved an increase in the number of authorized shares of common stock from 350,000,000 to 1,500,000,000 shares, par value $ 0.0001 per share.

GOING CONCERN

The Company has not generated

profits since inception and has sustained net losses of $ 21,420,945 and $ 8,000,066 for the nine months ended September 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 condensed consolidated financial statements do not include any

adjustments as a result of this uncertainty.

Through to the date the unaudited

condensed consolidated 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 future equity or debt financings,

its prior an at-the-market (“ATM”) offering program with H.C.

Wainwright & Co., LLC expired pursuant to its terms,

and there can be no assurance that the Company will be successful in obtaining additional financing on acceptable terms.

Management’s Plans

In January 2025, the Company

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

During the nine months ended

September 30, 2025, the Company received net proceeds of $ 43,201,415 from the issuance of 13,434,601 shares under its at-the-market (“ATM”)

equity offering program.

As of September 30, 2025, the Company held cash and cash equivalents of $ 10,039,230 .

Management believes that

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 unaudited condensed consolidated financial statements.

The Company’s ATM offering program with H.C.

& Co, LLC, expired pursuant to its terms in September 2025, and no additional sales will be made under the program.

Based on the current operational

outlook, the availability of additional potential capital sources, and existing cash on hand available as of September 30, 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 unaudited

condensed consolidated financial statements.

However, 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.

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The Company has incurred net losses since inception, including a net loss of $ 914,969 for the three months ended March 31, 2026.

As of March 31, 2026, the Company had an accumulated deficit of $ 68,744,390 and negative operating activities of $ 1,450,433 for the three months ended March 31, 2026.

Management Plans

Subsequent to March 31, 2026, the Company received aggregate proceeds of $ 21,773,000 from April 9, 2026 to April 13, 2026 in connection with the termination of its joint venture agreements and distribution and marketing service agreements.

These proceeds substantially strengthened the Company’s liquidity position following the balance sheet date.

See Note 15 — Subsequent Events.

On April 11, 2026, the Company entered into a share purchase agreement to acquire Fusion Five Continents Securities Limited (the “Target Company”), a New Zealand regulated brokerage enabling clients internationally to buy and sell securities electronically and to make stablecoin deposits for the trading of Hong Kong and United States equities, for total consideration of $ 126,880,000 .

Management believes this proposed acquisition would expand the Company’s operations into the financial services sector.

The acquisition of a controlling stake is subject to required government regulatory approvals.

See Note 15 — Subsequent Events.

On March 11, 2026, the Company entered into a sales agreement with A.G.P./Alliance Global Partners, pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 50,273,610 from time to time in at-the-market transactions, subject to market conditions and applicable securities law limitations.

In addition, on March 2, 2026, the Company’s stockholders approved an increase in the number of authorized shares of common stock from 350,000,000 to 1,500,000,000 , providing additional capacity to support future equity financings.

Based on the above factors, management believes that the Company’s current cash position, together with the proceeds received subsequent to March 31, 2026 and the availability of its at-the-market equity facility, will be sufficient to fund the Company’s operations and minimum obligations for at least the next 12 months from the date these unaudited condensed consolidated financial statements are available to be issued.

Notwithstanding the above, there can be no assurance that the Company will successfully complete the proposed acquisition of Fusion Five Continents Securities Limited, obtain the required regulatory approvals, raise sufficient additional capital to fund subsequent acquisition closings, or achieve profitability from its operations.

The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

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 unaudited condensed

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 accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”).

The Company’s fiscal year end is December 31.

The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act and has elected to comply with certain reduced public company reporting requirements;

however, the Company may adopt accounting standards based on the effective dates for public entities when early adoption is permitted.

Unaudited Interim Financial Information

The unaudited condensed consolidated

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 condensed consolidated 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 unaudited condensed consolidated financial statements

related to the nine-month periods are unaudited.

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

The accompanying unaudited

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

notes thereto for the year ended December 31, 2024 included in the Form 10-K filed with the SEC on March 31, 2025.

The unaudited condensed consolidated 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 condensed consolidated 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 unaudited condensed consolidated financial statements related to the three-month periods are unaudited.

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

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2025 included in the Form 10-K filed with the SEC on April 15, 2026.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of LQR House Inc.

and its wholly-owned subsidiaries, LQR House Acquisition Corp., SWOL Holdings Inc., and YHC Online Limited.

All intercompany transactions, balances, revenues, and expenses between the Company and its subsidiaries have been eliminated in consolidation.

The Company does not have any variable interest entities or non-controlling interests.

Use of Estimates

The preparation of the Company’s

unaudited condensed consolidated 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 unaudited

condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

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

cost method investments and stock-based compensation.

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

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

On an ongoing basis, management evaluates

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

Changes in estimates are recorded in the period in which

they become known.

Actual results could differ from those estimates.

The preparation of the Company’s unaudited condensed consolidated 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 unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, the allowance for credit losses on accounts receivable, the valuation allowance against deferred tax assets, stock-based compensation, and the fair value of equity instruments issued in connection with financing transactions.

Actual results could differ materially from those estimates.

Concentrations of Credit Risk

The Company maintains its

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

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

At times, the Company maintains balances in excess of the

federally insured limits.

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

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

At times, the Company maintains balances in excess of the federally insured limits.

Concentrations

The Company’s ability

to derive revenue 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.

The discontinuance of such relationship or termination of the

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

Furthermore, the Company

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

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

on the Company’s operations.

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

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.

The discontinuance of such relationship or termination of the CWS Platform agreements would have a material negative impact on the Company’s operations.

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.

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.

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

As of September 30, 2025,

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

an impairment expense of $ 4,500,000 recognized as of December 31, 2024.

That impairment was triggered by company-specific information

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 nine months ended September 30, 2025.

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

Cash and cash equivalents represent cash at bank and online payment platforms which are unrestricted as to withdrawal and use, and which have original maturities of three months or less.

The Company evaluated its investments in joint ventures under ASC 323, Investments — Equity Method and Joint Ventures.

Although YHC Online Limited, a wholly-owned subsidiary of the Company, holds a 20 % ownership interest in each joint venture entity, the Company has determined that significant influence does not exist.

This conclusion is supported by the express terms of each joint venture agreement, which explicitly prohibit YHC from appointing directors or officers of, or participating in the day-to-day management or operations of, any joint venture entity.

As the presumption of significant influence has been rebutted, the equity method of accounting has not been applied, and the investments are carried at cost.

Property and Equipment

Property and equipment, net are stated at cost less accumulated depreciation and impairment, if any, and depreciated on a straight-line basis over the estimated useful lives of the assets.

Cost represents the purchase price of the asset and other costs incurred to bring the asset into its intended use.

Depreciation expenses are included in general and administrative expenses.

Land is not depreciated since it has an indefinite useful life.

Estimated useful lives are as follows:

The Company’s property and equipment consists of a motor vehicle with an estimated useful life of five years.

Expenditure for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expenses as incurred.

Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized.

The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations.

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:

The Company follows ASC 820, Fair Value Measurement , which defines fair value 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 classified and disclosed in one of the following three levels of the fair value hierarchy:

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

1 unchanged sentence

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 nine months ended September 30, 2025.

The carrying values of the

Company’s accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to the short maturity

of these instruments.

The Company’s investments

are accounted at cost, less impairment.

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

The carrying values of the Company’s cash and cash equivalents, accounts receivable, due from/to related party, accounts payable, and accrued and other payables approximate their fair values due to the short-term nature of these instruments.

The Company’s cost method investments in equity securities are carried at cost, less impairment, and are not measured at fair value on a recurring basis.

The Company’s investments in joint ventures are carried at cost following rebuttal of the significant influence presumption under ASC 323, and are not measured at fair value on a recurring basis.

There were no transfers between Level 1, Level 2, or Level 3 fair value classifications during the three months ended March 31, 2026.

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.

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.

Accounts receivable are recorded at the gross billing amount less an allowance for any uncollectible accounts due from the customers.

Accounts receivable do not bear interest.

Since January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using the modified retrospective transition method.

ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses.

Upon adoption, the Company changed the impairment model to utilize a forward-looking current expected credit losses (CECL) model in place of the incurred loss methodology for financial instruments measured at amortized cost and receivables resulting from the application of ASC 606, including contract assets.

The Company maintains an allowance for credit losses and records the allowance for credit losses as an offset to accounts receivable and the estimated credit losses charged to the allowance is classified as “General and administrative expenses” in the unaudited condensed consolidated statements of comprehensive income.

The Group assesses collectability by reviewing accounts receivable on aging schedules because the accounts receivable were primarily consisted of receivables arising from provision of marketing services, product sales, CWS platform and vault .

In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the balances, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers.

Delinquent account balances are written-off against the allowance for expected credit loss after management has determined that the likelihood of collection is not probable.

As of March 31, 2026 and December 31, 2025, the Company recorded an allowance for credit losses of $ 67,948 and $ 67,948 , respectively.

Impairment of Long-Lived Assets

For long-lived assets the Company evaluates for impairment whenever events or changes indicate that the carrying amount of an asset may no longer be recoverable.

The Company assesses the recoverability of the long-lived assets by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to receive from use of the assets and their eventual disposition.

Such assets are considered to be impaired if the sum of the expected undiscounted cash flows is less than the carrying amount of the assets.

The impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

The Company tests impairment of long-lived assets at the reporting unit level when impairment indicator appeared and recognizes impairment in the event at the carrying value exceeds the fair value of each reporting unit.

No impairment charge of long-lived assets was recorded for the three months ended March 31, 2026 and 2025.

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.

Upon completion of an offering, deferred offering costs are reclassified to additional paid-in capital as a reduction of the offering proceeds.

If an offering is abandoned, the deferred offering costs are charged to expense in the period the offering is determined not to be completed.

As of March 31, 2026 and December 31, 2025, the Company had deferred offering costs of $ 283,950 and $ 203,950 , respectively, relating to the registration of securities of SWOL Holdings Inc., a wholly-owned subsidiary of the Company, in connection with its Form S-1 registration statement.

Contract Liabilities

The Company recognizes contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers .

A contract liability represents the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration before the related performance obligation has been satisfied.

Contract liabilities are recognized as revenue when the Company satisfies the related performance obligation.

Due to the generally short-term duration of the relevant contracts, all performance obligations are satisfied within one year.

Where transaction prices for marketing services, p roduct sales, CWS platform and vault are received upfront from the customers, such receipts are recorded as contract liabilities and recognized as revenues either over the contract period or point in time upon service rendered.

The following table presents the activity in contract liabilities for the three months ended March 31, 2026 and 2025:

Three Months Ended

Balance, beginning of the period $ 10,423 $ -

Additions - consideration received in advance 12,181 -

Revenue recognized ( 10,423 )

Balance, end of the period $ 12,181 $ -

As of March 31, 2026 and December 31, 2025, the Company had contract liabilities of $ 12,181 and $ 10,423 , respectively, representing advance payments received from customers for goods or services not yet delivered.

The Company expects to recognize the balance outstanding as of March 31, 2026, as revenue within the next twelve months as the related performance obligations are satisfied.

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 as salaries.

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

of related party transactions.

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

Related parties include principal owners, management, members of their immediate families, affiliates, and other parties that can significantly influence the management or operating policies of the Company, or that can be significantly influenced by the Company.

All material transactions with related parties are disclosed in the accompanying notes to the consolidated financial statements, with the exception of compensation arrangements that are established through the Company’s standard employment and compensation practices.

Revenue Recognition

In accordance with FASB ASC

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

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;

3 unchanged sentences

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

Revenue is recognized when

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

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

Control transfers

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

This includes the

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

The Company derives its revenue

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

Revenue is 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.

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

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 provides integrated marketing services to third-party alcoholic beverage brands through its CWS Platform, including campaign strategy development, creation of promotional materials, and digital advertising execution over a defined campaign period, generally ranging from one to three months.

In applying ASC 606-10-25-14, the Company has concluded that each contract contains a single performance obligation, as the promised services are not separately identifiable within the context of the contract and are combined to deliver a single integrated marketing campaign.

In accordance with ASC 606-10-25-19, the Company determined that the individual services are not distinct, as they are highly interrelated and interdependent and do not provide benefit to the customer on a standalone basis.

The services represent a series of distinct services that are substantially the same and have the same pattern of transfer.

Revenue is recognized over time in accordance with ASC 606-10-25-27, as the customer simultaneously receives and consumes the benefits of the services as they are performed.

The Company measures progress using a time-elapsed output method over the campaign period.

The Company has concluded that it acts as the principal under ASC 606-10-55-37A and 55-39, as it controls the services prior to transfer, maintains primary responsibility for fulfillment, and has discretion in directing third-party service providers.

Accordingly, revenue is recognized on a gross basis.

Revenue from marketing services is disaggregated and recognized over the campaign period, and contracts are generally short-term in nature;

therefore, the Company does not disclose remaining performance obligations pursuant to the practical expedient in ASC 606-10-50-14(a).

The Company sells wine and spirits directly to end customers through its CWSpirits.com platform.

Each transaction contains a single performance obligation under ASC 606-10-25-14, consisting of delivery of the product to the customer.

The Company determined that the product is distinct in accordance with ASC 606-10-25-19, as the customer can benefit from the product independently.

Revenue is recognized at a point in time in accordance with ASC 606-10-25-30, when control transfers to the customer upon delivery.

The Company has concluded that it acts as the principal in these arrangements under ASC 606-10-55-37A and 55-39, as it establishes pricing, directs marketing activities, and bears financial inventory risk, including risk of loss.

Accordingly, revenue is recognized on a gross basis.

Revenue is disaggregated as e-commerce product revenue and recognized upon delivery, and the Company does not have material remaining performance obligations due to the short-term nature of transactions in accordance with ASC 606-10-50-14(a).

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 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

program for CWS Platform customers.

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

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

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.

The Company generates wholesale revenue from the sale of SWOL Tequila, which is produced by a third-party manufacturer and delivered to CWS for retail distribution.

Each arrangement contains a single performance obligation under ASC 606-10-25-14, consisting of delivery of the product to the customer.

The Company determined that the product is distinct in accordance with ASC 606-10-25-19, as it can be consumed independently.

Revenue is recognized at a point in time in accordance with ASC 606-10-25-30, when control transfers upon delivery to the customer.

The Company has concluded that it acts as the principal under ASC 606-10-55-37A and 55-39, as it controls the product prior to transfer, establishes pricing, and bears inventory and production risk.

Accordingly, revenue is recognized on a gross basis.

Revenue is disaggregated as wholesale product revenue and recognized upon delivery.

Due to regulatory restrictions, ownership transfers upon delivery with no right of return.

Remaining performance obligations are not material in accordance with ASC 606-10-50-14(a).

The Company offers a subscription-based membership program that provides customers with access to exclusive benefits, including discounts, free shipping, and promotional offers.

Each subscription arrangement contains a single performance obligation under ASC 606-10-25-14, consisting of the provision of ongoing membership benefits over the subscription term.

In accordance with ASC 606-10-25-19, the Company determined that the membership services are not distinct individually but represent a series of services that are substantially the same and provided continuously over the subscription period.

Revenue is recognized over time in accordance with ASC 606-10-25-27, as the customer simultaneously receives and consumes the benefits of the membership.

Revenue is recognized on a straight-line basis over the subscription period.

The Company has concluded that it acts as the principal under ASC 606-10-55-37A and 55-39, as it controls the membership program and establishes pricing.

Accordingly, revenue is recognized on a gross basis.

Prior to the acquisition of the CWS Platform, the Company acted as an agent and recognized net revenue.

Revenue is disaggregated as subscription revenue and recognized over the subscription period.

The Company records reserves for chargebacks and cancellations based on historical experience, and remaining performance obligations are not disclosed for contracts with an original expected duration of one year or less in accordance with ASC 606-10-50-14(a).

Principal vs.

Agent Considerations

The Company evaluates whether it acts as a principal or an agent in each revenue arrangement in accordance with ASC 606-10-55-36 through 55-40, considering whether it controls the promised good or service before transfer to the customer, bears inventory risk, and has pricing discretion.

Where the Company is the principal, revenue is recorded gross.

Where the Company is the agent, revenue is recorded net.

The Company has determined it acts as principal for CWS Platform transactions and SWOL Tequila sales and records revenue on a gross basis accordingly.

Disaggregation of Revenue

The following is a summary

of the disaggregation of revenue for the three and nine months ended September 30, 2025 and 2024:

The following is a summary of the disaggregation of revenue for the three months ended March 31, 2026 and 2025:

Three Months Ended

Nine Months Ended

September 30,

Disaggregation of Revenues 2026 2025

CWS Platform $ 207,633 $ 330,341

SWOL product sales 2,478

Revenue - product 210,111 351,984

Marketing 8,300 62,402

Vault 4,272 14,954

Revenue - services 12,572 77,356

Total revenues $ 222,683 $ 429,340

The following table presents the timing of recognition of revenue for the three months ended March 31, 2026 and 2025:

Three Months Ended

Revenue recognized at a point in time

CWS Platform $ 207,633 $ 330,341

SWOL product sales 2,478 21,643

Revenue - product 210,111 351,984

Revenue recognized over time

Marketing 8,300 62,402

Vault 4,272 14,954

Revenue - services 12,572 77,356

Total revenues $ 222,683 $ 429,340

Cost of Revenue

Cost of revenue consists

of all direct costs attributable to sales and performing marketing services.

Cost of revenue includes product costs, packaging, shipping

and other importing and delivery charges, as well as contracted marketing services.

Cost of revenue also includes customer service personnel.

Cost of revenue consists of all direct costs attributable to sales and performing marketing services.

Cost of revenue includes product costs, packaging, shipping and other importing and delivery charges, as well as contracted marketing services.

Cost of revenue also includes customer service personnel costs.

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 and nine months ended September 30, 2025, advertising costs totaled $ 358,711 and $ 846,240 , respectively,

compared to $ 1,919,125 and $ 3,470,348 for the same period in 2024.

Stock-Based Compensation

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

Sales and marketing costs also include sales commissions.

Stock-Based Compensation

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

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.

ASC 718-10 requires that share-based payment transactions with employees and non-employees, such as share options, be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period, with a corresponding addition to equity.

Under this method, compensation cost related to employee share options or similar equity instruments is measured at the grant date based on the fair value of the award and is recognized over the period during which an employee is required to provide service in exchange for the award, which generally is the vesting period.

The Company leases certain office space from third parties.

Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense is recognized on a straight-line basis over the lease term.

For leases beginning in 2019 and later, at the inception of a contract management assesses whether the contract is, or contains, a lease.

The assessment is based on:

(1) whether the contract involves the use of a distinct identified asset, (2) whether the right to substantially all the economic benefit from the use of the asset throughout the period is obtained, and (3) whether the Company has the right to direct the use of the asset.

At the inception of a lease, management allocates the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments.

The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the non lease components (e.g., common-area maintenance costs).

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one year or more.

The exercise of lease renewal options is at the Company’s sole discretion.

Renewal periods are included in the lease term only when renewal is reasonably certain, which is a high threshold and requires management to apply judgment to determine the appropriate lease term.

The Company’s leases do not include options to purchase the leased property.

The depreciable life of assets and leasehold improvements are limited by the expected lease term.

Certain lease agreements include rental payments adjusted periodically for inflation.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

All of the Company’s leases are classified as operating leases.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less.

The effect of short-term leases and initial direct costs on our right-of-use asset and lease liability was not material.

ASC 842 requires the Company to make certain assumptions and judgments in applying the guidance, including determining whether an arrangement includes a lease, determining the term of a lease when the contract has renewal or cancellation provisions, and determining the discount rate.

As the rate implicit in the lease is not usually available, the Company used an incremental borrowing rate based on the information available at the adoption date of ASC 842 in determining the present value of lease payments for existing leases.

The Company will use information available at the lease commencement date to determine the discount rate for any new leases.

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 September 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 September 30, 2025

include the Company’s outstanding restricted stock units (See Note 8).

Recently Issued and

Adopted Accounting Pronouncements

Management does not believe

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

consolidated financial statements.

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

the circumstances.

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 loss per share.

As all potentially dilutive securities are anti-dilutive as of March 31, 2026 and 2025, diluted net loss per share is the same as basic net loss per share for each period.

The Company had no dilutive instruments outstanding as of March 31, 2026.

Segment Information

An operating segment is a component of the Company that engages in business activities from which it may earn revenue and incur expenses and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Company’s chief operating decision maker in order to allocate resources and assess performance of the segment.

In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the “CODM”) in deciding how to allocate resources and in assessing performance.

The Company’s revenue segments have similar economic characteristics, and they are managed as a single business unit.

The Company uses the “management approach” in determining reportable operating segments.

The management approach considers the internal organization and reporting used by the Company’s CODM for making operating decisions and assessing performance as the source for determining the Company’s reportable segments.

The Company’s CODM reviews results when making decisions about allocating resources and assessing performance of the Company.

The Company has determined that there is only one reportable operating segment.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures , which requires enhanced disclosures about significant segment expenses and other segment items regularly provided to the chief operating decision maker, and expands interim disclosure requirements.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023-07 for the fiscal year ended December 31, 2024, on a retrospective basis.

The adoption affected disclosures only and did not have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) — Improvements to Income Tax Disclosures , which requires enhanced disclosures in the annual rate reconciliation, including specific categories of reconciling items, and disaggregation of income taxes paid by federal, state, and foreign jurisdictions.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023-09 for the fiscal year ended December 31, 2025.

The adoption affected disclosures only and did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) , which requires public entities to disclose, in the notes to the financial statements, specified information about certain costs and expenses included in expense line items on the face of the income statement.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statements and disclosures.

In January 2025, the FASB issued ASU 2025-01, Income Statement — Reporting Comprehensive Income (Topic 220) — Clarifying the Effective Date , which clarifies the effective date of ASU 2024-03 for entities that do not have an issued interim financial statement before the issuance of ASU 2025-01.

ASU 2025-01 is effective upon issuance.

The adoption of ASU 2025-01 did not have a material impact on the Company’s consolidated financial statements.

In March 2025, the FASB issued ASU No.

2025-04, Compensation — Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606):

Clarifications to Share-Based Consideration Payable to a Customer , which clarifies the accounting for share-based payment awards granted to customers in connection with revenue arrangements, addressing the interaction between Topic 718 and Topic 606 with respect to measurement, classification, and recognition of such awards.

ASU 2025-04 is effective for the Company for the fiscal year beginning January 1, 2026.

The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets :

The ASU provides a practical expedient permitting entities to assume that conditions at the balance sheet date remain unchanged over the life of current accounts receivable and current contract assets when estimating expected credit losses.

The guidance is effective for annual and interim reporting periods beginning after December 15, 2025, with early adoption permitted.

The Company does not expect ASU 2025-05 to have a material impact on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements :

The ASU requires entities to disclose events occurring since the end of the last annual reporting period that have a material impact on the entity.

The amendments apply to all entities that present interim financial statements in accordance with GAAP.

The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted.

The amendments may be applied either prospectively or retrospectively.

The Company expects ASU 2025-11 to impact its disclosures only and does not expect it to affect its results of operations, financial condition or cash flows.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements , which makes various non-substantive technical corrections and clarifications to the FASB Accounting Standards Codification.

ASU 2025-12 is effective upon issuance.

The Company does not expect the adoption of ASU 2025-12 to have a material impact on its consolidated financial statements.

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

March 31, December 31,

Motor vehicle $ 340,541 $ 340,541

Accumulated depreciation ( 45,405 ) ( 28,378 )

Property and equipment, net $ 295,136 $ 312,163

Depreciation expense for the three months ended March 31, 2026 and 2025 was $ 17,027 and nil , respectively.

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:

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 Company;

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.

On November 1, 2023, LQR House Acquisition Corp.

(the “Buyer”), a wholly owned 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, KBROS provides services relating to the purchase and delivery of spirits and other beverage products purchased by customers of the Company through websites associated with the Domain, including procurement and maintenance of all certificates, licenses, authorizations and registrations required to import, possess, promote, sell, distribute and receive payment for such products.

Under Regulation S-X 3-05, management determined that the CWS Platform acquisition constituted a business combination, and the Company recorded an intangible asset of $ 10,000 for the purchase price consideration of the domain name.

During the year ended December 31, 2025, the Company determined that the CWS Platform intangible asset was fully impaired and recorded an impairment charge of $ 10,000 .

As of March 31, 2026, the carrying value of the CWS Platform intangible asset is nil .

INVESTMENTS, AT COST

The Company’s investments

at cost includes a minority stake in the common shares of Cannon Estate Winery Ltd and DRNK Beverage Corp.

These investments are primarily

held for strategic purposes.

Cannon Estate Winery

On May 19, 2024, the Company

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

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

Agreement”) between the Company and the Seller.

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

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

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

The Company recorded an investment

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

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”) 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 on the consolidated balance sheet.

As 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 of September 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 nine-month period ended September 30, 2025.

The Company continues to monitor this investment and will assess

the need for any future adjustments as conditions warrant.

PREPAID INVESTMENTS

The Company is in discussions

with parties regarding potential investments to expand the Company’s operations and growth.

When finalized, the Company

anticipates that it would develop and sign Multi-Channel Network (MCN) agency services contracts with MCN partners and expect to work

through MCN partners on TikTok to expand creator and audience engagement.

As a result, as of September

30, 2025, the Company had recorded $ 23,081,064 of prepaid investments.

Management expects these

discussions and agreements to be finalized, executed and operationalized in the fourth quarter of 2025, at which time the prepayments

will be reclassified to the appropriate investment and accounted for in accordance with ASC 321, 323 or 805.

ACCRUED EXPENSES

Accrued expenses consist

of the following:

September 30,

The Company held minority equity interests in Cannon Estate Winery Ltd.

and Chase Mocktails Ltd.

(f/k/a DRNK Beverage Corp.), each accounted for under the cost method of accounting.

As of March 31, 2026 and December 31, 2025, the carrying value of both investments was nil— following full impairment recognized during the years ended December 31, 2024 and 2025.

During the year ended December 31, 2025, the Company recognized impairment charges of $ 817,500 and $ 300,000 related to its investments in Cannon Estate Winery Ltd.

and Chase Mocktails Ltd., respectively.

The cumulative impairment recognized on Chase Mocktails Ltd.

totaled $ 4,800,000 .

No impairment charges were recognized during the three months ended March 31, 2026.

INVESTMENT IN JOINT VENTURES

In December 2025, YHC Online Limited (“YHC”), a wholly-owned subsidiary of the Company, entered into four separate joint venture agreements with Bancroft Equity Limited, Emerald Wealth Inc., Meridian Financial Solutions Inc., and Sequoia Equity Group Inc., to cooperate in the creation of multi-channel network (“MCN”) content for digital platforms, including TikTok.

Each joint venture is engaged in the creation and monetization of influencer-hosted content targeted at a specific geographic market.

Under each agreement, YHC holds a 20 % minority ownership interest and has no rights to appoint directors or officers of, or participate in the day-to-day management or operations of, any joint venture entity.

The majority partner in each joint venture retains full operational control.

None of the co-venturers is a related party of the Company.

The following table summarizes the key terms of each arrangement as of December 31, 2025 and March 31, 2026:

Co-Venturer Jurisdiction Target Market JV Entity Total Commitment Funded

Bancroft Equity Limited Hong Kong UK & Europe Crofty Network Limited $ 5,000,000 $ 3,590,000

Emerald Wealth Inc.

South Dakota Greater China EMYHC MCN Holdings Limited 6,000,000 4,380,000

Meridian Financial Solutions Inc.

Wyoming Southeast Asia Fastone Singapore Pte.

8,000,000 6,700,000

Sequoia Equity Group Inc.

South Dakota Middle East Not yet formed (1) 5,000,000 3,824,000

Total $ 24,000,000 $ 18,494,000

(1) As of March 31, 2026, the joint venture entity for the Middle East arrangement had not yet been formed.

The $ 3,824,000 advanced to Sequoia Equity Group Inc.

is presented as advance for investment in joint venture on the consolidated balance sheet.

The Company evaluated its investments under ASC 323, Investments — Equity Method and Joint Ventures.

Although YHC holds a 20 % ownership interest in each joint venture entity, the Company has determined that significant influence does not exist over the three formed joint venture entities, as the express terms of each joint venture agreement explicitly prohibit YHC from appointing directors or officers of, or participating in the day-to-day management or operations of, any joint venture entity.

As the presumption of significant influence has been rebutted, the equity method of accounting has not been applied, and the investments are carried at cost.

Each joint venture agreement provides YHC with a put right, exercisable at any time following the first anniversary of the respective agreement, pursuant to which YHC may require the co-venturer to repurchase YHC’s interest at a price equal to YHC’s total funded investment amount.

Of the aggregate $ 24,000,000 total commitment, $ 18,494,000 had been funded as of March 31, 2026, comprising $ 14,670,000 funded to the three formed joint venture entities and $ 3,824,000 advanced to Sequoia Equity Group Inc.

pending formation of the Middle East joint venture entity.

No income or loss from the joint ventures was recognized during the three months ended March 31, 2026, as the investments are carried at cost and no dividends or distributions were declared by any joint venture entity during the period.

No impairment indicators were identified with respect to any joint venture investment as of March 31, 2026.

Subsequent to March 31, 2026, in April 2026, all four agreements were terminated and all amounts previously funded, aggregating $ 18,494,000 , were returned to YHC in full.

Following the terminations, the Company has no remaining joint venture commitments or obligations.

See Note 15 — Subsequent Events.

ADVANCE PAYMENT TO DISTRIBUTOR

On March 25, 2025, the Company entered into a Distribution and Marketing Service Agreement with a Hong Kong entity pursuant to which the Company paid $ 529,000 for market access, brand development, and distribution services within the Asian market, excluding the Company’s SWOL Tequila product line.

The amount has been recorded as a prepaid distribution and marketing cost.

On April 1, 2025, the Company entered into a Distribution and Marketing Services Agreement with a Hong Kong entity pursuant to which the entity agreed to provide market access, promotional services, and distribution of the Company’s products and CWSpirits.com platform within the Asian market, excluding the Company’s SWOL Tequila product line.

The total fee paid by the Company under the agreement is $ 2,750,000 , which has been recorded as a prepaid distribution and marketing cost.

As of March 31, 2026, no amortization had been recorded with respect to either arrangement, pending commencement of services.

In April 2026, both arrangements were terminated and all amounts previously paid, aggregating $ 3,279,000 , were returned to the Company in full.

As a result, the Company does not anticipate recording any expense or loss in connection with these arrangements.

See Note 15 — Subsequent Events.

ACCRUED AND OTHER PAYABLES

Accrued and other payables consist of the following:

March 31, December 31,

Accrued retention and settlement payments $ 13,729 $ 13,729

Accrued professional and other fees

Legal settlement expense

Accrued consulting and other fees 210,582 231,435

Taxes payable 10,894 11,143

Accrued deferred offering costs 195,000 115,000

Accrued compensation 334,000 280,000

Accrued legal & professional fees 163,854 177,809

Other accrued 141,655 153,623

Total accrued expenses

Total accrued and other payables $ 1,069,714 $ 982,739

Other accrued expenses, related party 63,108 45,000

Accrued retention and settlement payments, related parties 274,212 715,975

Total accrued expenses, related parties

As of December 31,

2024, the Company had unpaid accrued expenses totaling $ 6,484,729 related to various settlements, bonus, and retention agreements executed

between October and December 2024.

During the nine months ended September 30, 2025, the Company paid approximately $ 5,805,025 of these

previously accrued balances.

The remaining balance of $ 679,704 remains accrued as of September 30, 2025, of which $ 665,975 relates to

related parties and $ 13,729 pertains to other parties.

The Company expects to settle these outstanding amounts in future periods.

STOCKHOLDERS’ EQUITY (DEFICIT)

Amendment to Articles of Incorporation or

On May 30, 2025, the Company’s stockholders approved a proposal

to increase the Company’s authorized shares of common stock from 10,000,000 to 350,000,000 shares, par value $ 0.0001 per share.

On June 2, 2025, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada,

and the increase in authorized shares became effective June 2, 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.

As a result of the Reverse

Split, the par value per share remained unchanged.

All share and per share amounts in these unaudited condensed consolidated financial

statements have been retroactively adjusted to reflect the Reverse Split for all periods presented, unless otherwise indicated.

Total accrued and other payables, related parties $ 337,320 $ 760,975

STOCKHOLDERS’ EQUITY

Reincorporation and Increase in Authorized Shares

On March 2, 2026, the Company’s stockholders approved the reincorporation of the Company from the State of Nevada to the State of Delaware, which was effected on the same date.

2026 Stock Transactions

During the nine months ended

September 30, 2025, the Company issued 13,434,601 shares of common stock (on a post-reverse split basis) pursuant to an at-the-market

public offering for net proceeds of $ 43,201,415 .

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.

Ben-Tzvi on January 2, 2025.

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

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

The total amount was recognized as general and administrative expense in the

Company’s consolidated statements of operations for the three and nine months ended September 30, 2025, in the amounts of $ 0 and

$ 172,679 , respectively.

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 nine months ended September 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 services.

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 $ 47,520 .

The total amount

was recognized as general and administrative expense in the Company’s consolidated statements of operations for the three and nine

months ended September 30, 2025, in the amounts of $ 0 and $ 47,520 , respectively.

During the nine months ended

September 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 September 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 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 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

remain in continuous service of the Company on such dates.

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

The Company recorded stock-based

compensation expense of $ 352,563 and $ 1,712,768 in the statements of operations for the three and nine months ended September 30, 2025,

respectively, related to vesting of restricted stock units.

As of September 30, 2025, total unrecognized compensation cost related to

unvested RSUs was $ 193,679 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 1.22

As of September 30, 2025, 3,568 RSUs remained unvested, net of 9 RSUs forfeited upon the resignation of a board member on May 30,

The following table summarizes

RSU activity for the nine months ended September 30, 2025:

During the three months ended March 31, 2026, the Company did not issue any shares of common stock.

2025 Stock Transactions

During the three months ended March 31, 2025, the Company issued 413,520 shares of common stock pursuant to its at-the-market offering program for net proceeds of $ 5,178,821 , of which $ 108,054 was received in April 2025 and recorded as a subscription receivable as of March 31, 2025.

Additionally, the Company issued 210,463 shares of common stock upon the cash exercise of outstanding warrants for aggregate gross proceeds of $ 4,051,415 .

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

During the three months ended March 31, 2025, the Company issued 3,334 shares of common stock to Avraham Ben-Tzvi in recognition of his service as a former director, valued at $ 51.80 per share based on the grant-date fair value of January 2, 2025, resulting in stock-based compensation expense of $ 172,679 recorded within general and administrative expenses in the statements of operations.

Restricted Stock Units

Unvested as of December 31, 2024

Unvested as of September 30, 2025

As of December 31, 2025, all restricted stock units had been fully vested or forfeited and no unrecognized compensation cost remained.

No RSU activity occurred during the three months ended March 31, 2026.

Stock-based compensation expense related to restricted stock units was $ 0 and $ 695,509 for the three months ended March 31, 2026 and 2025, respectively.

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 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.

Pursuant to Product Handing Agreement, the Company incurred $ 0 and $ 40,000 to KBROS for the three and nine

months ended September 30, 2025, respectively, which was included in cost of revenue in the consolidated statements of operations.

the three and nine months ended September 30, 2024, the Company incurred $ 120,000 and $ 360,000 , respectively, also included in cost of

In addition, during the

three and nine months ended September 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 nine months ended September 30, 2024, the Company

recorded $ 100,000 and $ 200,000 , respectively, 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, 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 September 30, 2025 and December 31, 2024, $ 296,711 and $ 3,600,000 , respectively, remained unpaid and were included in

accrued expenses, related party on the consolidated balance sheet.

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.

KBROS and Ssquared Spirits LLC

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

See Note 5 for the CWS Platform acquisition from SSquared.

KBROS serves as the Company’s Product Handler pursuant to a Product Handling Agreement.

Under the agreement, KBROS is entitled to a monthly fee of $ 40,000 plus reimbursement of shipping and handling fees incurred in fulfilling customer orders, and a bonus upon reaching certain revenue milestones.

During the three months ended March 31, 2026, the Company did not incur any product handling fees or incentive compensation payable to KBROS.

During the three months ended March 31, 2025, the Company incurred product handling fees of $ 40,000 to KBROS, recorded within cost of revenue in the statements of operations, and $ 100,000 in incentive compensation, recorded within sales and marketing expenses in the unaudited consolidated statements of operations.

In October 2024, the Company entered into a settlement and release agreement with KBROS and its controlling stockholder for an aggregate amount of $ 4,100,000 , recorded within general and administrative expenses in the statements of operations.

As of March 31, 2026 and December 31, 2025, $ 234,212 and $ 675,975 , respectively, remained unpaid and are included in accrued and other payables, related party on the balance sheet.

See Note 14 for funding commitment with KBROS.

Country Wine & Spirits, Inc.

CWS operates six brick-and-mortar locations for the sale of beer, wine, and spirits and specializes in logistics of shipping.

To date, CWS has distributed all of the alcohol ordered by customers through the CWS Platform, via the Company’s Product Handler agreement with KBROS.

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

As of September 30, 2025

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

event that CWS fails to repay the trade receivables, the Company believes it can offset the outstanding receivables against regular payables

and accrued payouts due to KBROS.

Payable, Related Party

As of September 30, 2025

and December 31, 2024, the Company had accounts payable of $ 65,151 and $ 21,175 , respectively, with related parties, including KBROS,

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

the three and nine months ended September 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 nine months ended September 30, 2024, the Company paid $ 100,000 and $ 200,000 each,

respectively.

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

As of March 31, 2026 and December 31, 2025, accounts receivable, related party, with CWS was $ 232,283 and $ 232,283 , respectively, included in accounts receivable, related party, on the unaudited condensed consolidated balance sheets.

Performance Bonus – Chief Executive Officer

During the three months ended March 31, 2026 and 2025, the Company paid its Chief Executive Office a performance bonus of nil and $ 100,000 , for achieving certain revenue levels through the CWS Platform, which is included under sales and marketing expense in the consolidated statements of operations.

Due to/from Related Parties

As of March 31, 2026, the Company had $ 2,852,215 due from related parties on the balance sheet, consisting of (i) $ 105,447 due from Sean Dollinger, the Company’s Chief Executive Officer;

and (ii) $ 2,746,768 due from President and member of the Board of Directors.

As of December 31, 2025, the Company had $ 2,364,450 due from related parties, consisting of $ 50,000 due from Sean Dollinger, the Company’s Chief Executive Officer, and $ 2,314,450 due from President and a member of the Board of Directors of the Company.

These amounts are unsecured, non-interest bearing, and have no fixed repayment terms.

As of March 31, 2026, there were no amounts due to related parties.

As of December 31, 2025, the Company had $ 6,713 due to related parties, consisting of $ 3,713 in reimbursable business expenses charged to a credit card held by Mr.

Dollinger and $ 3,000 payable directly to Mr.

The Company historically leased space, which is now month-to-month, from South Doll Limited Partnership, an entity affiliated with the Company’s Chief Executive Officer.

Pursuant to retention and settlement agreements entered into during the year ended December 31, 2024, the Company agreed to pay $ 40,000 to South Doll Limited Partnership, an entity affiliated with the Company’s Chief Executive Officer.

As of March 31, 2026 and December 31, 2025, this amount remained unpaid and is included in accrued and other payables, related party on the balance sheets.

During the three months ended March 31, 2026, SWOL Holdings Inc., a wholly owned subsidiary of the Company, terminated its commercial lease agreement with CapMinds for office space located at 6538 Collins Avenue, Suite 344, Miami Beach, Florida 33141.

CapMinds is an entity affiliated with Alexandra Hoffman, Secretary and Technical Writer of the Company and Chief Executive Officer of SWOL Holdings Inc.

The lease had commenced March 15, 2025 at a monthly base rent of $ 1,200 and was originally scheduled to expire March 31, 2030 .

No termination fees or penalties were incurred in connection with the termination.

SEGMENT AND GEOGRAPHIC INFORMATION

The Company determines its operating segments in accordance with ASC 280, Segment Reporting , based on the information reviewed by the Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer.

The CODM reviews financial performance and allocates resources on the basis of consolidated net loss as presented in the consolidated statements of operations.

Accordingly, the Company has determined that it operates as a single reportable segment in the beverage alcohol e-commerce and marketing industry.

The financial information for this single segment is presented in the consolidated financial statements and accompanying notes contained herein.

Geographic Information

The Company’s revenues are generated primarily in the United States.

The Company’s subsidiary, YHC Online Limited, is incorporated and operates in Hong Kong;

however, it did not generate revenue during the three months ended March 31, 2026 and 2025.

Accordingly, substantially all revenues are attributable to the United States.

In March 2025, SWOL Holdings Inc., a wholly-owned subsidiary of the Company, entered into a commercial lease agreement with CapMinds, a related party, for office space located at 6538 Collins Ave, Suite 344, Miami Beach, Florida, which also serves as the Company’s principal executive offices.

CapMinds is an entity affiliated with Alexandra Hoffman, CEO of SWOL Holdings.

See Note 11 - Related Party Transactions.

The lease commenced on March 15, 2025 and expires on March 31, 2030 , with a term of approximately five years.

Base rent is $ 1,200 per month, with all utilities and service charges borne by the landlord.

The lease does not contain renewal options at a predetermined rate, variable lease payments, or residual value guarantees.

During the three months ended March 31, 2026, the commercial lease agreement was terminated and determined to be ineffective.

Accordingly, the Company derecognized the related right-of-use asset of $ 51,651 and operating lease liability of $ 51,651 during the three months ended March 31, 2026, resulting in no net impact on the condensed consolidated statements of operations.

Following the termination, the Company has no remaining obligations under the lease agreement.

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

to which the Company reasonably feels insecure.

This Agreement concerns a funding commitment, and not the purchase of Products from Product

Handler or Vendors.

For further details regarding

the settlement agreement, see Note 9.

Settled Legal Matter

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.

Dollinger, et al.

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.

On September 22, 2025, the

Company entered into two settlement agreements with Kingbird Ventures and other parties named therein (the “Settlement Agreements”)

to resolve matters related to this litigation.

The First Settlement Agreement resolved the direct claims asserted by Kingbird Ventures

against the Company and other defendants and provides for (i) dismissal of all such direct claims with prejudice, (ii) mutual releases

among the parties, (iii) a cash payment obligation of $ 13,000,000 from the Nevada Defendants (as defined in the First Settlement

Agreement), and (iv) customary provisions, including no admission of liability and confidentiality.

The Second Settlement Agreement

resolved the stockholder derivative claims brought on behalf of the Company against certain current and former officers and directors.

The Second Settlement Agreement provides for (i) dismissal of the derivative action with prejudice, subject to court approval, (ii) mutual

releases among the parties, and (iii) customary provisions, including no admission of liability, cooperation undertakings, and confidentiality.

Pursuant to the Settlement

Agreements, a total payment of $ 7,500,000 has been made in September 2025, and as of September 30, 2025, a remaining balance of $ 5,500,000

is recorded under accrued expenses on the Company’s unaudited condensed balance sheet.

The entire settlement amount of $ 13,000,000

has been recognized as a legal settlement expense within “Other expense” in the statement of operations for the quarter ended

September 30, 2025.

The settlement represents a non-recurring, non-operational charge and is presented within “Other expense”

to distinguish it from the Company’s ongoing business operations.

As of the date of issuance

of these unaudited condensed consolidated financial statements, management believes that no additional material loss contingency exists

in connection with this matter.

The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course

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.

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 in Note 5.

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 to which the Company reasonably feels insecure.

This Agreement concerns a funding commitment, and not the purchase of Products from Product Handler or Vendors.

For further details regarding the settlement agreement, see Note 11.

Legal Proceedings — Kingbird Ventures, LLC

On July 11, 2025, the Company, along with several of its current and former officers and directors and other parties, was named as a defendant in an action filed in the Eighth Judicial District Court, Clark County, Nevada, captioned Kingbird Ventures, LLC v.

Sean Dollinger, et al.

The complaint alleged, among other things, breach of fiduciary duties, violations of Nevada Revised Statutes Sections 78.650, 78.630, 207.400, 90.570, and 32.010, alter ego liability, and civil conspiracy.

The complaint sought, among other things, unspecified monetary damages, a declaratory judgment, injunctive relief to freeze the assets of the Company and certain other defendants, and relief to prevent material corporate decisions by the Company.

On September 22, 2025, the Company entered into two settlement agreements with Kingbird Ventures and the other parties named therein to resolve all matters related to the litigation.

The First Settlement Agreement resolved the direct claims asserted by Kingbird Ventures against the Company and other defendants, providing for the dismissal of all direct claims with prejudice, mutual releases among the parties, a cash payment obligation of $ 13,000,000 from the Nevada Defendants (as defined in the First Settlement Agreement), and customary provisions including no admission of liability and confidentiality.

The Second Settlement Agreement resolved the stockholder derivative claims brought on behalf of the Company against certain current and former officers and directors, providing for the dismissal of the derivative action with prejudice, subject to court approval, mutual releases among the parties, and customary provisions including no admission of liability, cooperation undertakings, and confidentiality.

The Company recognized the full settlement amount of $ 13,000,000 as legal settlement expense in the consolidated statements of operations for the year ended December 31, 2025, presented as a separate line item within other expense to distinguish it from the Company’s ongoing operating results.

As of December 31, 2025, the settlement obligation has been paid in full and no remaining liability is recorded on the consolidated balance sheet in connection with this matter.

SUBSEQUENT EVENTS

On October 15, 2025, Dr.

Jing Lu resigned from

the Company’s Board of Directors and all associated committees.

The resignation was not due to any disagreement with the Company,

its management, or operations.

On October 20, 2025, the Board appointed Mr.

Kah Loong Randy Yeo as a new independent director.

was also designated as Chair of the Nominating and Corporate Governance Committee and as a member of the Audit and Compensation Committees.

The Company has evaluated subsequent events through May 15, 2026, the date these unaudited condensed consolidated financial statements were available to be issued, and identified the following matters requiring disclosure.

Termination of Joint Venture Agreements

In April 2026, all four joint venture agreements entered into in December 2025 by YHC Online Limited with Bancroft Equity Limited, Emerald Wealth Inc., Meridian Financial Solutions Inc., and Sequoia Equity Group Inc.

were terminated.

In connection with the terminations, all amounts previously funded under the agreements, aggregating $ 18,494,000 , comprising $ 14,670,000 funded to the three formed joint venture entities and $ 3,824,000 advanced to Sequoia Equity Group Inc., were returned to the Company in full.

Following the terminations, the Company has no remaining joint venture commitments or obligations.

Termination of Distribution and Marketing Service Agreements

In April 2026, both distribution and marketing service agreements entered into during 2025 with two Hong Kong entities were terminated.

In connection with the terminations, all amounts previously paid under the agreements, aggregating $ 3,279,000 , were returned to the Company in full.

Repayment of Amounts Due from Related Party

On April 10, 2026, the Company received $ 2,314,451 from the President of the Company in repayment of amounts previously included in due from related party on the unaudited condensed consolidated balance sheet as of March 31, 2026.

Fusion Five Continents Securities Limited Share Purchase Agreement

On April 11, 2026, the Company entered into a share purchase agreement with Fusion Five Continents Securities Limited, a New Zealand limited company (the “Target Company”), and with the Target Company’s controlling shareholder, pursuant to which the Company agreed to acquire all of the issued and outstanding shares of the Target Company in multiple closings, at a total consideration of $ 126,880,000 .

An initial payment of $ 28,080,000 in Tether (USDT) was to be made no later than April 24, 2026 for 24 % of the Target Company’s ordinary shares.

The acquisition of a controlling stake in the Target Company is subject to required government regulatory approvals, after which the Company will complete the purchase of the remaining Target Company shares in one or more subsequent closings for an aggregate purchase price of $ 98,800,000 .

The Target Company is a brokerage enabling clients internationally to buy and sell securities electronically and offering clients the ability to make stablecoin deposits for the trading of Hong Kong and U.S.

I — FINANCIAL INFORMATION

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