What changed in this filing

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Item 1. Financial Statements

2026-08-19 compared with 2026-05-15 · 586 added, 156 removed, 427 unchanged (63% of the section changed)

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

LQR HOUSE INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

Current assets:

Cash and cash equivalents $ 144,642 $ 5,975,408

Cash held on behalf of clients 316,932 -

Accounts receivable 9,129 23,946

Accounts receivable, related party - 232,283

Short-term investment - Broker dealer 7,189,557 -

Digital assets 1,000,000 -

Digital assets - External trust company 409,340 -

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

2 unchanged sentences

Due from related party 260,272 2,364,450

Other receivable 143,544 -

Security deposit 19,450 19,450

1 unchanged sentence

Property and equipment, net - 312,163

Goodwill 130,154,809 -

Right- of- use asset - 51,651

2 unchanged sentences

Total assets $ 140,189,099 $ 31,232,458

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

3 unchanged sentences

Contract liabilities 11,251 10,423

Due to related party - 6,713

Payables - Client funds 316,932 -

Payable - Broker dealer 7,189,557 -

Payable - External trust company 409,340 -

Due to related parties 60,454 6,713

Lease liability - 21,428

Total current liabilities 10,117,162 1,858,797

Notes payable 40,000,000 -

Lease liability, non-current - 41,023

2 unchanged sentences

Stockholders’ equity:

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

Common stock, $ 0.0001 par value, 1,500,000,000 shares authorized, 215,335 and 213,717 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 21 21

Additional paid-in capital 97,875,452 97,709,453

1 unchanged sentence

Accumulated deficit ( 66,058,548 ) ( 67,829,421 )

Accumulated other comprehensive loss ( 1,171 ) -

Total LQR House Inc.

stockholders’ equity 31,268,339 29,332,638

Non-controlling interest 58,803,598 -

Total stockholders’ equity 90,071,937 29,332,638

Total liabilities and stockholders’ equity $ 140,189,099 $ 31,232,458

the accompanying notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

See the accompanying notes to the unaudited condensed consolidated financial statements

LQR HOUSE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Six Months Ended

Revenue - services $ 3,781 $ 15,319 $ 16,353 $ 92,675

Revenue - product 304,416 483,209 514,527 835,193

Revenue - brokerage 37,778 - 37,778 -

Total revenues 345,975 498,528 568,658 927,868

1 unchanged sentence

Cost of revenue - product 295,333 414,022 526,699 811,804

Cost of revenue - brokerage 4,740 - 4,740 -

Total cost of revenue 300,073 414,022 544,992 813,204

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

Gross profit 45,902 84,506 23,666 114,664

Operating expenses:

4 unchanged sentences

Other income (expense):

Interest expense ( 263,014 ) - ( 263,014 ) -

Loss on disposition of assets ( 25,136 ) - ( 25,136 ) -

Gain on remeasurement of previously held equity interest 4,206,055 - 4,206,055 -

Other income 1,237 1,400 1,994,404 11,606

1 unchanged sentence

Income tax expense - - - -

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

Net income (loss) 2,701,915 ( 2,202,382 ) 1,786,946 ( 4,592,032 )

Net income attributable to non-controlling interest 16,073 - 16,073 -

Net income (loss) attributable to LQR House Inc.

2,685,842 ( 2,202,382 ) 1,770,873 ( 4,592,032 )

Other comprehensive loss, net of tax:

Foreign currency translation adjustment ( 1,171 ) - ( 1,171 ) -

Total other comprehensive loss ( 1,171 ) - ( 1,171 ) -

Comprehensive income (loss) 2,700,744 ( 2,202,382 ) 1,785,775 ( 4,592,032 )

comprehensive income attributable to non-controlling interest 16,073 - 16,073 -

Comprehensive income (loss) attributable to LQR House Inc.

2,684,671 ( 2,202,382 ) 1,769,702 ( 4,592,032 )

Weighted average common shares outstanding - basic and diluted 214,148 19,988 213,905 13,135

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

the accompanying notes to the unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Net income (loss) per common share attributable to LQR House Inc.

- basic and diluted $ 12.54 $ ( 110.18 ) $ 8.28 $ ( 349.61 )

See the accompanying notes to the unaudited condensed consolidated financial statements

LQR HOUSE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Treasury Stock

Comprehensive

Stockholders’

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

Non-controlling

stockholders’

Balances as of December 31, 2024 4,358 $ 0 ( 54 ) $ ( 547,415 ) $ 42,336,256 $ ( 42,306,803 ) $ - $ ( 517,961 ) $ - $ ( 517,961 )

Vesting of restricted stock units 8 0 - - 695,508 - - 695,508 - 695,508

4 unchanged sentences

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

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

Balances as of March 31, 2025 10,668 0 ( 54 ) ( 547,415 ) 52,545,678 ( 44,696,453 ) - 7,301,811 - 7,301,811

Vesting of restricted stock units 8 0 - - 664,697 - - 664,697 - 664,697

Issuance of common stock pursuant to ATM 19,476 2 - - 6,380,246 - - 6,380,248 - 6,380,248

Issuance of common stock pursuant to consultant agreement 330 0 - - 47,520 - - 47,520 47,520

Net loss - - - - - ( 2,202,382 ) - ( 2,202,382 ) - ( 2,202,382 )

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

Cash flows from operating

Balances as of June 30, 2025 30,482 $ 2 ( 54 ) $ ( 547,415 ) $ 59,638,141 $ ( 46,898,835 ) $ - $ 12,191,894 $ - $ 12,191,894

Balances as of December 31, 2025 213,717 $ 21 ( 54 ) $ ( 547,415 ) $ 97,709,453 $ ( 67,829,421 ) $ - $ 29,332,638 $ - $ 29,332,638

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

Adjustments to reconcile net loss to net cash

used in operating activities:

Balances as of March 31, 2026 213,717 ’ 21 ( 54 ) ( 547,415 ) 97,709,453 ( 68,744,390 ) - 28,417,669 - 28,417,669

Issuance of common stock pursuant to ATM 1,619 - - 165,999 - - 165,999 - 165,999

Net income (loss) attributable to LQR House Inc.

- - - - - 2,685,842 - 2,685,842 - 2,685,842

Non-controlling interest recognized on acquisition of Fusion Five - - - - - - - - 58,787,525 58,787,525

Net income attributable to non-controlling interest - - - - - - - - 16,073 16,073

Foreign currency translation adjustment - - - - - - ( 1,171 ) ( 1,171 ) - ( 1,171 )

Balances as of June 30, 2026 215,335 $ 21 ( 54 ) $ ( 547,415 ) $ 97,875,452 $ ( 66,058,548 ) $ ( 1,171 ) $ 31,268,339 $ 58,803,598 $ 90,071,937

See the accompanying notes to the unaudited condensed consolidated financial statements

LQR HOUSE INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Cash flows from operating activities:

Net income (loss) $ 1,786,946 $ ( 4,592,032 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Stock based compensation - 220,200

Depreciation 17,027 -

Changes in operating assets

and liabilities:

Vesting of restricted stock units - 1,360,205

Loss on disposal of property and equipment 25,136 -

Gain on remeasurement of previously held equity interest ( 4,206,055 ) -

Changes in operating assets and liabilities:

Accounts receivable 14,817 ( 41,668 )

Accounts receivable, related party - ( 150,721 )

Prepaid expenses 32,720 115,157

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

Other receivable ( 143,544 )

Short-term investment - Broker dealer 1,067,610 -

Digital Assets - External trust company 211,081 -

Due to related party - 3,000

Accounts payable 267,153 510,093

3 unchanged sentences

Contract liabilities 828 -

Payables - Client funds ( 1,063,422 ) -

Payable - Broker dealer ( 1,067,610 ) -

Payable – External trust company ( 211,081 ) -

Lease liability, net ( 10,800 ) -

Net cash used in operating activities ( 3,004,669 ) ( 8,263,348 )

Cash flows from financing

Payment of deferred offering

Cash flows from investing activities:

Prepaid joint venture agreement - ( 8,166,988 )

Proceeds from disposal of property and equipment 270,000 -

Cash held on behalf of clients acquired in business combination 1,380,354 -

Purchases of digital assets ( 4,051,415 ) -

Proceeds from conversion of digital assets to cash 347,638 -

Net cash used in investing activities ( 2,053,423 ) ( 8,166,988 )

Cash flows from financing activities:

Deferred offering costs ( 80,000 ) -

Due from related party ( 540,570 )

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

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

Issuance of common stock pursuant to ATM 165,999 11,559,068

Net cash (used in) provided by financing activities ( 454,571 ) 15,610,483

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

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:

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1,171 ) -

Net change in cash, cash equivalents ( 5,513,834 ) ( 819,853 )

Cash, cash equivalents and cash held on behalf of clients at beginning of period 5,975,408 5,386,789

Cash, cash equivalents and cash held on behalf of clients at end of period $ 461,574 $ 4,566,936

Cash paid for income taxes $ - $ -

Cash paid for interest $ - $ -

Supplemental disclosure

of non-cash flow information:

Supplemental disclosure of non-cash flow information:

Proceeds from promissory note, received in digital assets (USDT) $ 40,000,000 $ -

Return of advance for investment in joint venture, received in USDT $ 3,824,000 $ -

Return of investment in joint venture, received in USDT $ 14,670,000 $ -

Return of advance payment to distributor, received in USDT $ 3,279,000 $ -

Collection of amounts due from related party, received in USDT $ 2,603,223 $ -

Digital assets (USDT) applied toward the acquisition of Fusion Five Continents Securities Limited $ 67,080,000 $ -

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

Subscription receivable $ - $ 108,054

the accompanying notes to the unaudited condensed consolidated financial statements

TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

See the accompanying notes to the unaudited condensed consolidated financial statements

LQR HOUSE INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NATURE OF OPERATIONS

8 unchanged sentences

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.

In April 2026, all joint venture agreements were terminated and all amounts previously funded were returned in the form of digital assets and, together with digital assets from other sources, applied toward the consideration for the acquisition of Fusion Five Continents Securities Limited.

See Note 8 — Investment in Joint Ventures and Note 4 — Business Combination.

On June 1, 2026, the Company obtained a controlling financial interest in Fusion Five Continents Securities Limited (“Fusion Five”), a New Zealand financial services company operating an AI-powered cross-border securities trading platform with proprietary USDT-based funding and settlement capabilities that enable clients internationally to buy and sell securities electronically and to fund their accounts using stablecoin deposits for the trading of Hong Kong and United States equities, through the acquisition of an aggregate 54 % of Fusion Five’s issued and outstanding shares.

The Company had held a 24 % non-controlling equity interest in Fusion Five since April 24, 2026, accounted for under the equity method.

Fusion Five’s results of operations, cash flows, and financial position have been consolidated with those of the Company beginning June 1, 2026, the date the Company obtained control.

See Note 4 — Business Combination.

Reincorporation and Increase in Authorized Shares

1 unchanged sentence

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.

Reverse Stock Split

On July 9, 2026, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a one-for-one hundred ( 1-for-100 ) reverse stock split of the Company’s issued and outstanding common stock (the “Reverse Stock Split”), which became effective at 12:01 a.m., Eastern Time, on July 13, 2026.

Every 100 shares of issued and outstanding common stock were automatically combined into one issued and outstanding share;

no fractional shares were issued, with any resulting fractional shares rounded up to the next whole share at the participant level.

The Reverse Stock Split occurred after June 30, 2026 but before the date these condensed consolidated financial statements were available to be issued.

In accordance with ASC 260, Earnings Per Share , all share and per-share amounts presented in these condensed consolidated financial statements and accompanying notes, for all periods presented, have been retroactively adjusted to reflect the Reverse Stock Split.

See Note 18 — Subsequent Events.

GOING CONCERN

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.

The Company has incurred net losses since inception.

For the six months ended June 30, 2026, the Company had net cash used in operating activities of $ 3,004,669 .

As of June 30, 2026, the Company had an accumulated deficit of $ 66,058,548 and net current liabilities of $ 10,117,162 .

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.

Between July 1, 2026 and July 8, 2026, the Company issued an aggregate of 1,088,503 shares of common stock pursuant to its at-the-market offering program for net proceeds of $ 7,316,687 .

Following these issuances, the Company had 130,383,799 shares of common stock issued and outstanding immediately prior to the Reverse Stock Split described below, equivalent to approximately 1,303,838 shares on a post-Reverse Stock Split-adjusted basis, before giving effect to the rounding of fractional shares at the participant level.

All share amounts in this Note are presented on a post-Reverse Stock Split basis.

LQR Company entered into an at-the-market Sales Agreement with A.G.P./Alliance Global Partners on March 11, 2026, under which it could offer and sell shares of common stock having an aggregate offering price of up to $ 50,273,610 , subject to market conditions and applicable securities law limitations and its plan to issue second round of ATM in the near future.

As of the date of this financial statement dated August 19, 2026, shares having an aggregate offering price of $ 41,455,175 remain available for LQR to offer and sell under this Sales Agreement after issued first round of ATM amounting to $ 8,818,435 providing LQR with additional capacity to support future equity financing.

Based on the above factors, management believes that the Company’s current cash position, together with 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 remaining closings of the acquisition of Fusion Five, obtain the required regulatory approvals, raise sufficient additional capital to fund the subsequent acquisition closings, or sustain profitability from its operations.

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

15 unchanged sentences

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.

The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, LQR House Acquisition Corp., SWOL Holdings Inc., and YHC Online Limited, and its majority-owned subsidiary, Fusion Five Continents Securities Limited, which has been consolidated from June 1, 2026, the date the Company obtained a controlling financial interest.

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.

Non-controlling interest represents the 46 % equity interest in Fusion Five not attributable to the Company and is presented as a separate component of equity in the unaudited condensed consolidated balance sheets.

The Company does not have any variable interest entities.

Fusion Five’s fiscal year ends March 31, which differs from the Company’s fiscal year end of December 31 by three months, within the threshold permitted by ASC 810-10-45-12 without adjustment.

The Company consolidates Fusion Five’s results using Fusion Five’s actual financial information for the calendar periods corresponding to the Company’s reporting periods, rather than Fusion Five’s own fiscal periods;

accordingly, no lag exists between the periods reflected in the accompanying condensed consolidated financial statements and the periods presented for the Company’s other operations.

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.

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, the fair value of equity instruments issued in connection with financing transactions, and the fair values of the consideration transferred, the identifiable assets acquired, the liabilities assumed, the previously held equity interest, and the non-controlling interest in connection with the business combination, including the fair value and useful life of the identifiable intangible asset.

Actual results could differ materially from those estimates.

3 unchanged sentences

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

Financial instruments that potentially expose the Company’s majority-owned subsidiary, Fusion Five Continents Securities Limited (“Fusion Five”), to concentrations of credit risk consist principally of cash held on behalf of clients, short-term investments – broker dealer, and digital assets – external trust company.

Fusion Five seeks to mitigate credit risk by maintaining balances with regulated financial institutions and intermediaries and by monitoring counterparty credit quality.

Such balances may exceed applicable deposit insurance limits and remain subject to the credit risk of the relevant institution or intermediary.

Cash held on behalf of clients is segregated and deposited in financial institutions as required by rules mandated by Fusion Five’s primary regulators.

These financial institutions are of sound credit ratings;

therefore, Fusion Five believes that there is no significant credit risk related to cash held on behalf of clients.

Fusion Five’s securities are transacted on a cash basis.

Fusion Five’s credit risk is limited in that substantially all of the contracts entered into are settled directly at securities clearing organizations.

In connection with its clearing activities, Fusion Five is obligated to settle transactions with brokers and other financial institutions even if its clients fail to meet their obligations to Fusion Five.

Clients are required to complete their transactions by the settlement date, generally one or two business days after the trade date.

Fusion Five has established procedures to reduce this risk by generally requiring that clients deposit sufficient cash and/or securities into their account prior to placing an order.

Fusion Five’s exposure to credit risk associated with its brokerage and other activities is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes.

There was no revenue from clients which individually represented greater than 10% of Fusion Five’s total revenue for the three or six months ended June 30, 2026.

Concentrations of credit risk can be affected by changes in political, industry, or economic factors.

Concentrations

1 unchanged sentence

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

Fusion Five’s operations depend on third-party service providers, including its Execution Broker, trustee, payment processor, and technology provider.

A termination or disruption of these relationships, failure by a service provider to comply with applicable laws and regulations, or deterioration in the financial condition of a material counterparty could adversely affect Fusion Five’s operations and its ability to provide trading access and process client transactions.

Substantially all of Fusion Five’s customer securities transactions are executed through a single third-party broker (the “Execution Broker”), and Fusion Five is dependent on this broker for execution services.

Stablecoin and Settlement Risk

Client funding and settlement processes at Fusion Five may involve USDT stablecoin before conversion to fiat currency by a third-party trust company.

This activity exposes Fusion Five to liquidity, redemption, custody, blockchain transfer, counterparty, regulatory, cybersecurity, and operational risks.

Fusion Five does not present USDT held for the benefit of clients as its own digital asset when it does not obtain beneficial ownership or control of the stablecoin.

Regulatory Requirements

Fusion Five is registered as a financial service provider on the New Zealand Financial Service Providers Register (“FSPR”).

Based on Fusion Five’s current registered activities and regulatory status, Fusion Five was not subject to a specific minimum regulatory capital requirement in New Zealand as of June 30, 2026.

Cash and Cash Equivalents

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.

Cash Held on Behalf of Clients

Cash held on behalf of clients represents cash maintained in segregated accounts for the benefit of clients of the Company’s majority-owned subsidiary, Fusion Five Continents Securities Limited (“Fusion Five”), in connection with securities trading and settlement activities.

Such funds are not available to finance the Company’s general operations.

Cash held on behalf of clients is separately presented on the condensed consolidated balance sheets.

The Company has classified clients’ monies as cash held on behalf of clients under the assets section of the condensed consolidated balance sheets and has recognized the corresponding obligation to the respective clients as a payable under the liabilities section.

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.

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

This conclusion was supported by the express terms of each joint venture agreement, which explicitly prohibited 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 was rebutted, the equity method of accounting was not applied, and the investments were carried at cost.

In April 2026, all joint venture agreements were terminated, and the amounts previously funded were returned to the Company in the form of USDT, a digital asset.

This USDT, together with USDT received from other sources, was subsequently applied toward the consideration for the acquisition of Fusion Five Continents Securities Limited.

See Note 8 — Investment in Joint Ventures, Note 9 — Digital Assets, and Note 4 — Business Combination.

Short-Term Investment – Broker Dealer and Payable – Broker Dealer

In accordance with ASC 321-10-35-1, Investments—Equity Securities , equity securities with readily determinable fair values are measured at fair value, with changes in fair value recognized in net income.

Fair value measurements are determined in accordance with ASC Topic 820, Fair Value Measurement .

ASC 820-10-35-37 establishes a three-level fair value hierarchy that gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1).

The short-term investment – broker dealer of the Company’s majority-owned subsidiary, Fusion Five Continents Securities Limited (“Fusion Five”), consists of marketable securities maintained in custody with Fusion Five’s third-party Execution Broker in connection with client securities trading activities.

The securities are held for the benefit of Fusion Five’s clients and are not maintained for Fusion Five’s proprietary investment purposes.

The securities are measured at fair value at each reporting date.

Securities valued using quoted prices for identical securities in active markets are classified as Level 1.

Realized and unrealized gains and losses on equity securities within the scope of ASC 321 are recognized in earnings and are not recognized in other comprehensive income.

Realized gains and losses are determined based on the difference between the proceeds received and the carrying amount of securities sold, while unrealized gains and losses represent changes in the fair value of securities held at the reporting date.

Short-term investment – Broker dealer represents amounts maintained for authorized client securities trading and settlement activities.

The corresponding Payable – Broker dealer represents Fusion Five’s obligation to return such funds to clients or apply the funds to authorized client transactions.

These investments are restricted for the benefit of clients, are not available for the Company’s general operating purposes, and do not represent revenue of the Company.

As of June 30, 2026 and December 31, 2025, Short-term investment – Broker dealer and the corresponding Payable – Broker dealer were $ 7,189,557 and nil, respectively.

Fusion Five’s short-term investment is subject to market risk arising from fluctuations in the market prices of securities.

The securities are maintained in custody with the Execution Broker, and Fusion Five is also exposed to custodial, concentration, and counterparty credit risk associated with the Execution Broker.

Property and Equipment

4 unchanged sentences

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.

The Company’s property and equipment consisted of a motor vehicle with an estimated useful life of five years, which was disposed of during the three months ended June 30, 2026.

See Note 5 — Property and Equipment, Net.

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

1 unchanged sentence

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.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations.

The cost of an acquisition comprises the consideration transferred, the fair value of any previously held equity interest in the acquiree, and the fair value of any non-controlling interest in the acquiree, and is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the acquisition date, with any excess recorded as goodwill.

For a business combination achieved in stages, the previously held equity interest is remeasured to its acquisition-date fair value and any resulting gain or loss is recognized in earnings.

Non-controlling interest is measured at fair value as of the acquisition date.

Acquisition-related costs are expensed as incurred.

The fair values assigned to the assets acquired and liabilities assumed are provisional and may be retrospectively adjusted during the measurement period, which ends no later than one year from the acquisition date.

See Note 4 — Business Combination.

The Company accounts for goodwill in accordance with ASC 350, Intangibles—Goodwill and Other .

Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable net assets acquired in a business combination and is not amortized.

Substantially all of the Company’s goodwill is attributable to its acquisition of Fusion Five Continents Securities Limited (“Fusion Five”) and is allocated to the Company’s financial services reporting unit.

See Note 4 — Business Combination.

The Company tests goodwill for impairment at the reporting unit level at least annually, or more frequently if events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is below its carrying amount.

Such events or circumstances could include, but are not limited to, a significant adverse change in legal factors or the business climate, an adverse regulatory action or assessment, unanticipated competition, a loss of key personnel, a significant decline in the Company’s stock price, or a determination that it is more likely than not that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of.

The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test, in accordance with ASC 350-20-35-3A.

If, based on that qualitative assessment, the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative impairment test, comparing the fair value of the reporting unit to its carrying amount, including goodwill.

If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit, in accordance with ASU 2017-04.

Determining the fair value of a reporting unit requires significant judgment, including estimates of future cash flows, discount rates, and other assumptions, which are inherently uncertain and could change materially in future periods.

No goodwill impairment was recognized during the three and six months ended June 30, 2026.

Because the Company’s goodwill is concentrated in a single reporting unit recently established through the acquisition of Fusion Five, and the fair values used in the acquisition’s purchase price allocation remain provisional, the Company will continue to monitor Fusion Five’s performance and the finalization of the purchase price allocation for indicators that could affect the recoverability of goodwill in future periods.

See Note 4 — Business Combination.

Digital Assets

The Company accounts for its holdings of digital assets in accordance with ASC 350-60, Intangibles—Goodwill and Other—Crypto Assets , as amended by ASU 2023-08, Accounting for and Disclosure of Crypto Assets .

Digital assets within the scope of ASC 350-60 are measured at fair value each reporting period, with changes in fair value recognized in net income.

The Company determines fair value using quoted prices for identical assets in an active market accessible by the Company as of the measurement date, without adjustment for contractual sale restrictions, which the Company has concluded represents a Level 1 measurement within the fair value hierarchy of ASC 820, Fair Value Measurement .

Realized gains and losses on the sale or disposition of digital assets, and unrealized gains and losses arising from the remeasurement of digital assets held at period end, are recognized within other income (expense) in the condensed consolidated statements of operations.

Digital assets are classified as current or non-current based on the Company’s intent and ability to convert such assets to cash within twelve months of the balance sheet date.

Digital Assets – External Trust Company and Payable – External Trust Company

In accordance with ASC 350-60-15-1, Crypto Assets , the Company evaluates digital asset holdings held by Fusion Five to determine whether they are within the scope of ASC Subtopic 350-60.

Fusion Five holds certain digital assets, principally U.S.

dollar-denominated stablecoins, with a third-party licensed trust company in connection with client funding and securities trading activities.

Such digital assets are held for the benefit of Fusion Five’s clients and are not maintained for Fusion Five’s proprietary investment purposes.

Digital assets held on behalf of clients are measured at fair value at each reporting date based on observable market prices available in the principal market for the digital asset.

The corresponding obligation to clients is presented separately as “Payable – External trust company.” Fusion Five does not pledge or use client digital assets for its own financing or proprietary investment activities.

As of June 30, 2026, none of the digital assets held on behalf of clients were pledged or otherwise subject to contractual restrictions.

The Company does not use client digital assets for its own proprietary investment or general corporate purposes.

The Company is exposed to custodial and counterparty risk associated with the third-party trust company, as well as liquidity, redemption, market, regulatory, operational, cybersecurity, and blockchain-network risks associated with digital assets.

As of June 30, 2026 and December 31, 2025, Digital Assets – External trust company and the corresponding Payable – External trust company were $ 409,340 and nil , respectively.

Foreign Currency Translation

The functional currency of Fusion Five is the New Zealand dollar.

The assets and liabilities of Fusion Five are translated into United States dollars at the exchange rate in effect at the balance sheet date, and revenues and expenses are translated at the average exchange rate for the period.

Equity accounts are translated at historical exchange rates.

The resulting translation adjustments are recorded in accumulated other comprehensive loss as a component of stockholders’ equity.

The exchange rates used to translate Fusion Five’s financial statements were as follows:

For the six months ended June 30, 2026, closing rate 0.568 US$:

NZD, applied to Fusion Five’s assets and liabilities.

For the six months ended June 30, 2026, average rate 0.578 US$:

NZD, applied to Fusion Five’s revenues and expenses.

For the three and six months ended June 30, 2026, the Company recorded a foreign currency translation adjustment of $ 1,171 , which is included within other comprehensive income (loss) in the condensed consolidated statements of operations.

No comparative amount is presented for the three and six months ended June 30, 2025, as Fusion Five was not consolidated during that period.

Fair Value Measurements

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

The carrying values of the Company’s 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 digital assets, including digital assets held on behalf of clients, are measured at fair value on a recurring basis.

The fair values of assets acquired, liabilities assumed, the previously held equity interest, and the non-controlling interest in a business combination are measured on a non-recurring basis, using the acquisition method described in Note 4 — Business Combination.

Transfers between levels of the fair value hierarchy, if any, are recognized as of the date of the event or change in circumstances giving rise to the transfer.

The carrying values of the Company’s cash and cash equivalents, cash held on behalf of clients, accounts receivable, short-term investment – broker dealer, due from/to related party, accounts payable, client funds payable, payable – broker dealer, and accrued and other payables approximate their fair values due to the short-term nature of these instruments.

The carrying value of the Company’s notes payable approximates fair value, as the Notes bear interest at a rate that approximates current market rates for instruments with similar terms and credit risk.

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.

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

All joint venture agreements were terminated in April 2026.

There were no transfers between Level 1, Level 2, or Level 3 fair value classifications during the three and six months ended June 30, 2026.

The fair values of the identifiable assets acquired, liabilities assumed, previously held equity interest, and non-controlling interest in connection with the acquisition of Fusion Five were measured on a non-recurring basis at the acquisition date using Level 3 inputs.

See Note 4 — Business Combination.

The following tables present the Company’s assets measured at fair value on a recurring basis:

Fair Value Measurements

as of June 30, 2026

Level 1 Level 2 Level 3

Digital assets, at fair value $ 1,000,000 - -

Digital assets, held on behalf of clients, at fair value 409,340 - -

$ 1,409,340 $ - $ -

Fair Value Measurements

as of December 31, 2025:

Level 1 Level 2 Level 3 Total

Digital assets, at fair value $ - $ - $ - $ -

Digital assets, held on behalf of clients, at fair value - - - -

$ - $ - $ - $ -

Digital assets, at fair value

Tether (USDT), including USDT held on behalf of clients, is traded in an active market on the Company’s principal exchange, providing unadjusted quoted prices for identical assets;

therefore, Tether (USDT) is classified as a Level 1 asset.

Accounts Receivable

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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.

As of June 30, 2026 and December 31, 2025, the Company recorded an allowance for credit losses of $ 67,948 and $ 67,948 , respectively.

Prepaid Expenses

Prepaid expenses represent costs paid in advance of receiving the related goods or services and are recognized as expense over the period in which the related benefit is received.

Prepaid expenses attributable to the Company’s majority-owned subsidiary, Fusion Five Continents Securities Limited (“Fusion Five”), consist of prepaid software subscription costs.

Fusion Five entered into a two-year agreement with a third-party technology service provider for access to a securities trading system and related mobile application used in connection with Fusion Five’s cross-border securities trading services.

Under the arrangement, the third-party service provider hosts, operates, and maintains the system and application;

Fusion Five does not have the contractual right to take possession of the underlying software and cannot operate the software independently or engage an unrelated third party to host the software.

The agreement has a contractual term of two years and requires annual subscription payments of HKD 440,000 , for total fixed subscription consideration of HKD 880,000 .

Fusion Five also incurred a one-time installation fee of RMB 50,000 , which was expensed as incurred.

Annual subscription fees paid in advance are recorded as prepaid software subscription costs and recognized as cost of revenue on a straight-line basis over the applicable annual service period.

The Company determined that classification within cost of revenue is appropriate because the system and application are directly used in providing securities trading access and related services to Fusion Five’s clients.

As of June 30, 2026 and December 31, 2025, prepaid expenses included $ 9,351 and nil , respectively, of prepayment for software subscription and related support services attributable to Fusion Five, out of total consolidated prepaid expenses of $ 257,474 and $ 276,157 , respectively.

Impairment of Long-Lived Assets

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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.

No impairment charge of long-lived assets was recorded for the three and six months ended June 30, 2026 and 2025.

Deferred Offering Costs

3 unchanged sentences

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.

As of June 30, 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

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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

The following table presents the activity in contract liabilities for the six months ended June 30, 2026 and 2025:

Six Months Ended

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

2 unchanged sentences

Balance, end of the period $ 11,251 $ -

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.

As of June 30, 2026 and December 31, 2025, the Company had contract liabilities of $ 11,251 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 June 30, 2026, as revenue within the next twelve months as the related performance obligations are satisfied.

Related Parties

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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.

The Company derives its revenue from marketing services, sales via the CWS Platform, distribution of its SWOL Tequila and subscription-based membership revenue, and, following the acquisition of Fusion Five Continents Securities Limited (“Fusion Five”) on June 1, 2026, brokerage commission and platform income.

Revenue is reported net of discounts.

37 unchanged sentences

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).

Brokerage Commission and Platform Income

Fusion Five earns commissions and platform income from securities brokerage services based on transaction volume and platform fees charged per transaction.

When a client executes a securities trading transaction, brokerage commission and platform fee is recognized at a point in time when the performance obligation has been satisfied by the completion of the trade and the service has been passed to the client.

Brokerage commission income and platform fee are accrued on a trade-date basis, as this is when the underlying financial instrument is identified, the pricing of the brokerage service is agreed upon, and the promised services are delivered to the client.

Commission fees and platform fees are charged directly from the client’s account when transactions are settled.

Securities trading transactions cannot be cancelled once executed and are not refundable.

The transaction price consists of the commission fees and platform fee charged to the client.

Because these services are provided together, are highly interdependent, and no separate allocation of the transaction price is required in accordance with ASC 606-10-25-19, they are accounted for as a single performance obligation, which is satisfied when the related trade is executed.

These activities are provided together as part of the Company’s trading service and are treated as one performance obligation.

The transaction price consists of the commission fees and platform fee charged to customers.

The Company determines the rates and fees charged to its customers.

Since the services are provided together, no separate allocation of the transaction price is required.

Revenue is recognized when the related service is provided and, for transaction-based fees, when the related trade is executed.

For each customer transaction, the Company provides access to the trading platform, helps process the customer’s trading instructions, and arranges for the trade to be executed through the Execution Broker.

These services are provided together as one overall trading service.

Therefore, the Company treats them as one performance obligation for each transaction.

Principal vs.

3 unchanged sentences

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.

The Company has determined it acts as principal for CWS Platform transactions and SWOL Tequila sales, and Fusion Five’s brokerage commission and platform income, and records revenue on a gross basis accordingly.

With respect to Fusion Five’s brokerage services, the Company is responsible for providing the trading platform and transaction facilitation services and for setting the commission and platform fees charged to clients;

accordingly, the Company has concluded it is the principal and recognizes these revenues on a gross basis.

Trade execution, custody, and settlement are provided by a third-party licensed securities broker (the “Execution Broker”), and fees paid to the Execution Broker are recorded as cost of revenue rather than deducted from revenue.

Disaggregation of Revenue

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

Three Months Ended

The following is a summary of the disaggregation of revenue for the three and six months ended June 30, 2026 and 2025:

Three Months Ended Six Months Ended

June 30, June 30,

Disaggregation of Revenues 2026 2025 2026 2025

4 unchanged sentences

Vault 3,781 4,819 8,053 19,773

Brokerage 37,778 - 37,778 -

Revenue - services 41,559 15,319 54,131 92,675

Total revenues $ 345,975 $ 498,528 $ 568,658 $ 927,868

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

The following table presents the timing of recognition of revenue for the three and six months ended June 30, 2026 and 2025:

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Revenue recognized at a point in time

1 unchanged sentence

SWOL product sales 10,747 178,997 13,225 200,640

Brokerage 37,778 - 37,778 -

Revenue - product 342,194 483,209 552,305 835,193

5 unchanged sentences

Cost of Revenue

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

Cost of revenue consists of all direct costs attributable to sales and performing marketing services, and, following the acquisition of Fusion Five Continents Securities Limited (“Fusion Five”) on June 1, 2026, direct costs attributable to providing securities trading access and related client 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.

Cost of revenue attributable to Fusion Five consists of fees paid or payable to the Execution Broker and other third parties for trade execution, clearing, settlement, regulatory, exchange, and similar services, as well as software subscription and related support service costs and software installation costs directly attributable to the provision of securities trading access to clients.

Such software subscription costs are recognized on a straight-line basis over the applicable service period as the related services are received, and installation costs are expensed as incurred.

General and Administrative Expenses

General and administrative expenses consist primarily of costs associated with the general management and administration of the Company’s business that are not directly attributable to the provision of goods or services to customers.

Such costs include administrative service costs, bank charges, professional and legal fees, and general corporate overhead.

Fusion Five Continents Securities Limited (“Fusion Five”) records within general and administrative expenses losses arising from the conversion and settlement of client funding balances, when such losses are borne by Fusion Five rather than its clients.

Fusion Five’s clients fund their accounts through an external trust company using USDT, a digital stablecoin, which the trust company converts into fiat currency before transferring the resulting funds to Fusion Five’s account with its Execution Broker.

Differences between the amount maintained with the trust company and the amount transferred to the Execution Broker, including conversion spreads and related settlement losses borne by Fusion Five, are recognized as general and administrative expenses when the conversion and settlement occur, measured based on the actual amount deducted or retained by the trust company.

Because Fusion Five bears these losses, the corresponding client deposit liability is not reduced;

instead, the loss is recognized in the condensed consolidated statements of operations, with a corresponding reduction in the amount due from the trust company.

Costs directly attributable to the provision of client trading services, including software subscription costs and software installation costs, are excluded from general and administrative expenses and are presented within cost of revenue.

Sales and Marketing

24 unchanged sentences

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 Income (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 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.

As there were no potentially dilutive securities outstanding as of June 30, 2026 and 2025, diluted net income (loss) per share is the same as basic net income (loss) per share for each period.

The Company had no dilutive instruments outstanding as of June 30, 2026.

Comprehensive Income (Loss)

FASB ASC 220, Comprehensive Income , establishes standards for the reporting and display of comprehensive income or loss, its components, and accumulated balances.

Comprehensive income or loss includes all changes in equity during a period from non-owner sources and consists of two components:

net income (loss) and other comprehensive income (loss) (“OCI”).

The Company’s OCI consists solely of foreign currency translation adjustments arising from the translation of the New Zealand dollar functional-currency financial statements of Fusion Five Continents Securities Limited into the Company’s U.S.

dollar reporting currency.

Resulting foreign currency translation adjustments are recognized in OCI, net of tax, where applicable, and accumulated in accumulated other comprehensive income (loss), a component of equity.

Segment Information

1 unchanged sentence

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.

The Company uses the management approach in determining its operating and reportable segments, which 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 is its Chief Executive Officer.

Following the acquisition of Fusion Five Continents Securities Limited (“Fusion Five”) on June 1, 2026 (see Note 4 — Business Combination), the Company has determined that it operates in two reportable segments:

(i) beverage alcohol, comprising the Company’s marketing services, e-commerce, and product distribution operations, and (ii) financial services, comprising Fusion Five’s securities brokerage operations.

These segments do not have similar economic characteristics — they operate under different regulatory regimes, serve different customer bases, and have fundamentally different revenue and margin structures — and are managed and evaluated separately by the CODM.

The Company accounts for income taxes in accordance with ASC 740, Income Taxes , using the asset and liability method.

Under this method, deferred tax assets and liabilities are recognized based on temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates expected to be in effect in the years in which those temporary differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company is subject to income taxes in the United States and Hong Kong, through its subsidiary YHC Online Limited, and, following the acquisition of Fusion Five Continents Securities Limited (“Fusion Five”) on June 1, 2026, in New Zealand.

Deferred tax assets and liabilities of Fusion Five are measured using the enacted New Zealand corporate income tax rate applicable to the periods in which the related temporary differences are expected to reverse.

The Company records a valuation allowance against deferred tax assets to the extent it is more likely than not that some or all of the deferred tax assets will not be realized based on available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and the history of operating losses.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authority based on the technical merits of the position.

The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

Interest and penalties related to uncertain tax positions, if any, are recognized as a component of income tax expense.

The Company adopted ASU 2023-09, Improvements to Income Tax Disclosures , for the fiscal year ended December 31, 2025.

ASU 2023-09 requires enhanced disclosures in the rate reconciliation and additional disaggregation of income taxes paid.

The adoption of ASU 2023-09 affected disclosures only and did not have an impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

34 unchanged sentences

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

BUSINESS COMBINATION

On April 11, 2026, the Company entered into a Share Purchase Agreement to acquire all of the issued and outstanding shares of Fusion Five, a New Zealand financial services cross-border securities trading intermediary, in multiple closings, for total consideration of $ 126,880,000 .

On April 24, 2026, the Company completed the initial closing, acquiring 2,400 ordinary shares representing 24 % of Fusion Five for $ 28,080,000 , payable in Tether (USDT).

On June 1, 2026, the Company completed an additional closing, acquiring a further 3,000 ordinary shares representing 30 % for $ 39,000,000 , payable in Tether (USDT), bringing its aggregate holding to 5,400 shares, or 54 %, of the issued and outstanding shares of Fusion Five.

The Company obtained control of Fusion Five on June 1, 2026, which is the acquisition date, and Fusion Five has been consolidated from that date.

The transaction is accounted for as a business combination achieved in stages under ASC 805.

The cost of the acquisition was $ 130,073,580 , comprising the consideration transferred for the additional 30 % interest of $ 39,000,000 , the fair value of the non-controlling interest of $ 58,787,525 , and the acquisition-date fair value of the Company’s previously held 24 % equity interest of $ 32,286,055 .

Amounts previously funded under the Company’s terminated joint venture agreements and distribution and marketing service agreements, aggregating $ 21,773,000 , together with USDT received from other sources, were applied towards the consideration.

In addition, the Company issued promissory notes in an aggregate principal amount of $ 40,000,000 pursuant to a Note Purchase Agreement with several third-party purchasers, the proceeds of which were used, together with other sources, to fund the acquisition.

The Notes are presented as notes payable on the unaudited condensed consolidated balance sheet.

See Note 12 — Notes Payable.

Accrued interest on the promissory notes of $ 263,014 is included in accrued and other payables, as of June 30, 2026, and the related interest expense of $ 263,014 is included in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2026.

The following table summarizes the cost of the acquisition:

Consideration transferred $ 39,000,000

Fair value of non-controlling interest 58,787,525

Fair value of previously held equity interest 32,286,055

Total cost of acquisition $ 130,073,580

The Company remeasured its previously held 24 % equity interest, which had a carrying amount of $ 28,080,000 , to its acquisition-date fair value of $ 32,286,055 , and recognized a gain on remeasurement of $ 4,206,055 in other income in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2026.

Acquisition-related costs of $ 100,000 were expensed as incurred and are included in general and administrative expenses.

The gain on remeasurement of the previously held equity interest was determined as follows:

Fair value of previously held equity interest at the acquisition date $ 32,286,055

carrying amount of previously held equity interest ( 28,080,000 )

Gain on remeasurement of previously held equity interest $ 4,206,055

The provisional fair values of the identifiable assets acquired and liabilities assumed at the acquisition date are summarized as follows:

Cash held on behalf of clients $ 1,380,354

Prepaid expenses 14,037

Short-term investment - Broker dealer 8,257,167

Digital Assets - External trust company 620,421

Goodwill 130,154,809

Payables - Client funds ( 1,380,354 )

Payable - Broker dealer ( 8,257,167 )

Payable – External trust company ( 620,421 )

Due to related parties ( 95,266 )

$ 130,073,580

The fair values above are provisional.

The Company has not finalized its measurement of the assets acquired and liabilities assumed and may retrospectively adjust the provisional amounts during the measurement period, which ends no later than one year from the acquisition date, in accordance with ASC 805.

Consistent with the nature of Fusion Five’s business — a customer-facing brokerage whose primary value derives from its regulatory licensure, client relationships, and operating platform rather than from any single separable, transferable technology asset — the Company has preliminarily determined that no identifiable intangible assets meet the separate recognition criteria of ASC 805-20-25.

Accordingly, the excess of the consideration transferred over the fair value of identifiable net tangible assets acquired has been preliminarily recorded as goodwill of $ 130,154,809 .

This determination remains subject to change during the measurement period.

The goodwill recognized is attributable to Fusion Five’s registration as a financial provider in New Zealand, its established client base, and expected synergies from access to global capital markets, and is not deductible for tax purposes.

The non-controlling interest was recognized at its acquisition-date fair value of $ 58,787,525 .

After the non-controlling interest’s share of the post-acquisition net income of Fusion Five of $ 16,073 , the non-controlling interest was $ 58,803,598 as of June 30, 2026.

The results of Fusion Five are included in the unaudited condensed consolidated statements of operations from the acquisition date.

From June 1, 2026 to June 30, 2026, Fusion Five contributed revenue of $ 37,778 and net income of $ 34,941 , of which $ 18,868 was attributable to LQR House Inc.

and $ 16,073 was attributable to the non-controlling interest.

Supplemental pro forma information (Unaudited)

The following unaudited supplemental pro forma financial information presents the combined revenue and net income (loss) attributable to LQR House Inc.

of the Company and Fusion Five as though the acquisition had occurred on January 1, 2025.

The gain on remeasurement of the previously held equity interest and acquisition-related costs, which are directly attributable to the transaction as it actually occurred in stages, have been eliminated from the pro forma results, as the pro forma presentation assumes the Company acquired a controlling financial interest in Fusion Five on January 1, 2025, with no intervening period during which the Company held a non-controlling equity-method interest.

The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have occurred had the acquisition actually occurred on January 1, 2025, nor is it indicative of future results.

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

Pro forma revenue $ 355,355 $ 498,528 $ 598,599 $ 927,868

Pro forma net income (loss) $ ( 1,425,159 ) $ ( 2,202,382 ) $ ( 2,380,391 ) $ ( 4,592,032 )

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

March 31, December 31,

June 30, December 31,

Motor Vehicle $ - $ 340,541

1 unchanged sentence

Property and equipment, net $ - $ 312,163

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

Depreciation expense for the six months ended June 30, 2026 and 2025 was $ 17,027 and nil , respectively.

No depreciation expense was recorded during the three months ended June 30, 2026 following the disposal of the motor vehicle.

During the three months ended June 30, 2026, the Company disposed of its motor vehicle, which had a net book value of $ 295,136 , for cash proceeds of $ 270,000 , and recognized a loss on disposition of assets of $ 25,136 in the unaudited condensed consolidated statements of operations.

As of June 30, 2026, property and equipment, net was nil .

ACQUISITION OF CWS PLATFORM

6 unchanged sentences

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 .

As of June 30, 2026, the carrying value of the CWS Platform intangible asset is nil .

INVESTMENTS, AT COST

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(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.

As of June 30, 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.

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totaled $ 4,800,000 .

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

No impairment charges were recognized during the three and six months ended June 30, 2026.

INVESTMENT IN JOINT VENTURES

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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.

Although YHC held a 20 % ownership interest in each joint venture entity, the Company determined that significant influence did not exist over the three formed joint venture entities, as the express terms of each joint venture agreement explicitly prohibited 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 was rebutted, the equity method of accounting was not applied, and the investments were 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.

Of the aggregate $ 24,000,000 total commitment, $ 18,494,000 had been funded prior to the terminations described below, 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.

No income or loss from the joint ventures was recognized during the six months ended June 30, 2026, as the investments were carried at cost and no dividends or distributions were declared by any joint venture entity prior to termination.

In April 2026, all four agreements were terminated, and the amounts previously funded, aggregating $ 18,494,000 , were returned to YHC in the form of USDT, a digital asset.

This USDT, together with USDT received from other sources, was subsequently applied toward the consideration for the acquisition of Fusion Five Continents Securities Limited, which completed its additional closing on June 1, 2026.

Following the terminations, the Company has no remaining joint venture commitments or obligations, and no investment in joint ventures is carried on the unaudited condensed consolidated balance sheet as of June 30, 2026.

See Note 9 — Digital Assets and Note 4 — Business Combination.

The movement in investments in joint ventures and advances during the period was as follows:

Investment in joint ventures at December 31, 2025 $ 14,670,000

Advance for investment in joint venture at December 31, 2025 3,824,000

Total funded at December 31, 2025 18,494,000

Returned in the form of USDT ( 18,494,000 )

Investment in joint ventures and advances at June 30, 2026 $ -

DIGITAL ASSETS

The Company’s digital assets consist of Tether (USDT), a stablecoin pegged to the U.S.

dollar, held to facilitate the acquisition of Fusion Five Continents Securities Limited (“Fusion Five”) and related funding activity described below, and USDT held by Fusion Five on behalf of its clients in connection with client funding and securities trading activities.

Digital assets are measured at fair value in accordance with ASC 350-60, Intangibles—Goodwill and Other—Crypto Assets , as updated by ASU 2023-08, Accounting for and Disclosure of Crypto Assets , with changes in fair value recognized in net income.

The Company determines fair value using quoted prices for identical assets in an active market accessible by the Company as of the measurement date, without adjustment, which the Company has concluded represents a Level 1 measurement within the fair value hierarchy of ASC 820, Fair Value Measurement.

No realized or unrealized gains or losses were recognized during the period, as USDT was received, held, and settled at $1.00 per token throughout.

The Company classifies its digital assets as current assets, as they are readily convertible to cash and the Company does not intend, nor is it restricted, to hold such assets beyond twelve months from the balance sheet date.

The Company holds no digital assets that are subject to contractual sale restrictions.

See Note 3 — Summary of Significant Accounting Policies, Digital Assets – External Trust Company and Payable – External Trust Company , for the Company’s accounting policy and disclosures related to digital assets held by Fusion Five on behalf of its clients.

The following table presents the Company’s digital asset holdings as of June 30, 2026.

USDT was the Company’s only significant individual crypto asset holding during the period, and the Company held no digital assets as of December 31, 2025.

June 30, 2026

Units Cost Basis Fair Value

Digital assets, at fair value 1,000,000 1,000,000 1,000,000

Digital assets, held on behalf of clients, at fair value 409,340 409,340 409,340

1,409,340 $ 1,409,340 $ 1,409,340

The following table presents the changes in the Company’s own digital assets, held for its general corporate purposes, and describes the nature of each addition and disposition, for the six months ended June 30, 2026 and 2025.

Digital assets held on behalf of clients are excluded from this table, as their movement corresponds directly to client-directed funding and withdrawal activity rather than the Company’s own treasury and acquisition-related transactions.

Six Months Ended

Beginning balance $ - $ -

USDT received in settlement of investments in and advances for joint ventures 18,494,000 -

USDT received in settlement of an advance payment to a distributor 3,279,000 -

USDT received in settlement of amounts due from a related party 2,603,223 -

USDT purchased with cash 4,051,415 -

USDT received as proceeds from a promissory note 40,000,000 -

Dispositions:

USDT transferred as consideration for the acquisition of Fusion Five ( 67,080,000 ) -

USDT converted to U.S.

dollars ( 347,638 ) -

Ending balance $ 1,000,000 $ -

ADVANCE PAYMENT TO DISTRIBUTOR

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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.

Through the dates of termination described below, no amortization had been recorded with respect to either arrangement, pending commencement of services.

In April 2026, both arrangements were terminated, and the amounts previously paid, aggregating $ 3,279,000 , were returned to the Company in the form of USDT, a digital asset.

This USDT, together with USDT received from other sources, was subsequently applied toward the consideration for the acquisition of Fusion Five.

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

See Note 15 — Subsequent Events.

See Note 9 — Digital Assets and Note 4 — Business Combination.

ACCRUED AND OTHER PAYABLES

Accrued and other payables consist of the following:

March 31, December 31,

June 30, December 31,

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

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Accrued deferred offering costs 95,000 115,000

Accrued interest payable 263,014 -

Accrued compensation 388,000 280,000

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Total accrued and other payables, related parties $ 393,906 $ 760,975

NOTES PAYABLE

On May 20, 2026, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) with several purchasers (collectively, the “Holders”), pursuant to which the Company issued 6 % promissory notes (the “Notes”) in an aggregate principal amount of $ 40,000,000 , in seven tranches ranging from $ 5,000,000 to $ 10,000,000 each.

The Notes are governed by substantially identical terms, as summarized below.

Each Note bears interest at a rate of 6.0 % per annum, computed on the basis of a 360-day year and actual days elapsed, and is payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, and on the Maturity Date.

The Notes mature on May 20, 2028 (the “Maturity Date”).

Upon the occurrence and during the continuance of an event of default, the applicable interest rate increases to 12.0 % per annum until such default is cured or waived in writing.

The Notes constitute direct, unconditional, and unsecured obligations of the Company and rank pari passu in right of payment with the Company’s other present and future unsecured and unsubordinated indebtedness, and senior in right of payment to the Company’s equity securities.

The Company may prepay the Notes, in whole or in part, at any time without penalty or premium, at a redemption price equal to 100 % of the outstanding principal amount being prepaid, plus accrued and unpaid interest thereon.

Payments of principal and interest under the Notes may be made, at the Company’s election, in United States dollars or in Qualified Digital Assets, as defined in the Purchase Agreement.

The Notes contain events of default customary for instruments of this type, including failure to make required payments of principal or interest, cross-default to other indebtedness of the Company in excess of $ 250,000 , certain bankruptcy and insolvency events, and certain events affecting the Company’s status as a publicly traded, reporting company under the Securities Exchange Act of 1934, as amended.

The Notes also contain affirmative covenants customary for instruments of this type, including covenants relating to maintenance of corporate existence and payment of taxes, but do not contain financial maintenance covenants.

During the six months ended June 30, 2026, the Company received aggregate advances of $ 40,000,000 under the Notes, funded in Qualified Digital Assets rather than cash, in connection with the acquisition of Fusion Five Continents Securities Limited.

See Note 9 — Digital Assets.

Interest expense on the Notes was $ 263,014 for both the three and six months ended June 30, 2026, and accrued and unpaid interest of $ 263,014 is included in accrued and other payables as of June 30, 2026.

No principal payments were made during the period.

As of June 30, 2026, the future contractual maturities of the Notes were as follows:

Year Ending December 31,

2026 (remaining six months) $ -

2028 40,000,000

Total $ 40,000,000

STOCKHOLDERS’ EQUITY

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Reverse Stock Split

On July 9, 2026, the Company effected a one-for-one hundred ( 1-for-100 ) reverse stock split of its issued and outstanding common stock, as described in Note 1.

All share and per-share amounts presented throughout this Note have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented, in accordance with ASC 260, Earnings Per Share .

2026 Stock Transactions

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

During the three months ended June 30, 2026, the Company issued 1,619 shares of common stock pursuant to its at-the-market offering program for net proceeds of $ 165,999 .

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.

During the six months ended June 30, 2025, the Company issued 23,611 shares of common stock pursuant to its at-the-market offering program for net proceeds of $ 11,559,068 , of which $ 108,054 was received in April 2025 and recorded as a subscription receivable as of March 31, 2025.

Additionally, the Company issued 2,105 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.

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

During the six months ended June 30, 2025, the Company issued 33 shares of common stock to Avraham Ben-Tzvi in recognition of his service as a former director, valued at $ 5,180 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.

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, in connection with which the Company issued 330 shares of common stock valued at $ 144 per share, resulting in a total non-cash expense of $ 47,520 recorded within general and administrative expenses for the three and six months ended June 30, 2025.

During the six months ended June 30, 2025, the Company issued 2,105 shares of common stock upon the exercise of warrants, resulting in aggregate gross proceeds of $ 4,051,415 .

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

Restricted Stock Units

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.

No RSU activity occurred during the six months ended June 30, 2026.

Stock-based compensation expense related to restricted stock units was $ 0 and $ 664,696 for the three months ended June 30, 2026 and 2025, respectively, and $ 0 and $ 1,360,205 for the six months ended June 30, 2026 and 2025, respectively.

RELATED PARTY TRANSACTIONS

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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.

During the three and six months ended June 30, 2026, the Company did not incur any product handling fees or incentive compensation payable to KBROS.

During the three and six months ended June 30, 2025, the Company incurred product handling fees of $ 0 and $ 40,000 , respectively, to KBROS, recorded within cost of revenue in the statements of operations, and $ 0 and $ 100,000 , respectively, 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.

As of June 30, 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 17 for funding commitment with KBROS.

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

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.

As of June 30, 2026 and December 31, 2025, accounts receivable, related party, with CWS was nil 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.

During the three and six months ended June 30, 2026, the Company did not pay its Chief Executive Officer a performance bonus.

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

As of June 30, 2026, the Company had $ 260,272 due from related parties on the balance sheet, representing amounts due from Sean Dollinger, the Company’s Chief Executive Officer.

As of December 31, 2025, the Company had $ 2,364,450 due from related parties, consisting of $ 50,000 due from Mr.

Dollinger and $ 2,314,450 due from Yilin Lu, then the 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.

On June 4, 2026, Mr.

Lu resigned from his position as President and as a member of the Board of Directors of the Company, effective immediately.

Lu’s resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices.

In April 2026, prior to his resignation, the Company received repayment of $ 2,603,223 from Mr.

Lu, received in USDT, in respect of amounts due from him, which is reflected as a related party transaction for the period during which the relationship existed, in accordance with ASC 850, Related Party Disclosures .

Lu is no longer an officer or director of the Company, and holds no other relationship that would cause him to be a related party as of June 30, 2026, the $ 143,544 due from Mr.

Lu as of that date is presented as other receivable rather than as due from a related party.

As of June 30, 2026, the Company had $ 3,001 due to related parties, payable to Mr.

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.

Fusion Five – Related Party

The Company’s majority-owned subsidiary, Fusion Five, has amounts due to a director of Fusion Five.

The amount is unsecured, non-interest bearing, and repayable on demand.

As of June 30, 2026, amounts due to related parties of Fusion Five were $ 57,453 .

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.

As of June 30, 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.

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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.

SEGMENT REPORTING

The Company has adopted ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires disclosure, on both an annual and interim basis, of significant segment expenses regularly provided to the chief operating decision maker (“CODM”) and other segment items.

The Company determines its operating segments in accordance with ASC 280, Segment Reporting , based on the information reviewed by the CODM, who is the Company’s Chief Executive Officer in allocating resources and assessing performance.

Prior to the acquisition of Fusion Five Continents Securities Limited (“Fusion Five”) on June 1, 2026, the Company operated as a single reportable segment in the beverage alcohol e-commerce and marketing industry.

Following the acquisition, the Company has determined that it operates in two reportable segments:

These segments have distinct regulatory environments, customer bases, and revenue and margin structures, and are evaluated separately by the CODM.

The CODM evaluates segment performance based on segment revenue and cost of revenue.

Other operating expenses, including general and administrative expenses and sales and marketing expenses, together with non-operating items, are reviewed by the CODM on a consolidated basis and are not regularly provided to the CODM disaggregated by segment;

accordingly, such amounts are presented below as “Other segment items, net” and are not allocated between segments.

The following table presents segment revenues, the significant expense categories regularly provided to the CODM, and segment net income (loss), which is also consolidated net income (loss):

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

Segment revenue:

Beverage alcohol $ 308,197 $ 498,528 $ 530,880 $ 927,868

Financial services 37,778 - 37,778 -

Total revenue 345,975 498,528 568,658 927,868

Segment cost of revenue:

Beverage alcohol 295,333 414,022 540,252 813,204

Financial services 4,740 - 4,740 -

Total cost of revenue 300,073 414,022 544,992 813,204

Segment gross profit 45,902 84,506 23,666 114,664

other segment items, net (unallocated)

General and administrative 1,263,129 2,207,612 4,044,029 4,230,773

Sales and marketing - 80,676 105,000 487,529

Other segment items, net (1) ( 3,919,142 ) ( 1,400 ) ( 5,912,309 ) ( 11,606 )

Segment and consolidated net income (loss) $ 2,701,915 $ ( 2,202,382 ) $ 1,786,946 $ ( 4,592,032 )

(1) Other segment items comprise interest expense, loss on disposition of assets, the gain on remeasurement of the previously held equity interest in Fusion Five, other income and income tax expense (benefit).

These items are not regularly provided to the CODM at a more disaggregated level.

The measure of segment assets reviewed by the CODM is consolidated total assets as presented on the condensed consolidated balance sheets, as segment-level asset information is not regularly provided to the CODM.

June 30, December 31,

Segment and consolidated total assets $ 140,189,099 $ 31,232,458

Geographic Information

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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.

however, it did not generate revenue during the three and six months ended June 30, 2026 and 2025.

Following the acquisition of Fusion Five, a New Zealand entity, on June 1, 2026, the Company generated revenue of $37,778 from Fusion Five’s brokerage operations during the three and six months ended June 30, 2026.

Substantially all other revenues are attributable to the United States.

Revenues are attributed to countries based on the location of the entity generating the revenue:

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

United States $ 308,197 $ 498,528 $ 530,880 $ 927,868

New Zealand (Fusion Five) 37,778 - 37,778 -

Total revenues $ 345,975 $ 498,528 $ 568,658 $ 927,868

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.

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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.

During the six months ended June 30, 2026, the commercial lease agreement for office spaced located at 6800 Indian Creek Dr.

Suite 1E Miami Beach, Florida 33141 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 six months ended June 30, 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.

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For further details regarding the settlement agreement, see Note 14.

Fusion Five — Remaining Purchase Commitment

Pursuant to the Share Purchase Agreement described in Note 4 — Business Combination, the Company has agreed to acquire the remaining 46 % of the issued and outstanding shares of Fusion Five Continents Securities Limited (“Fusion Five”) not already owned by the Company, in one or more subsequent closings, for an aggregate purchase price of $ 59,800,000 .

Completion of the remaining closings is subject to the receipt of required government regulatory approvals and is expected to be funded through additional equity or debt financing, proceeds from the Company’s at-the-market offering program, or other capital-raising transactions.

There can be no assurance that the required regulatory approvals will be obtained or that adequate financing will be available on terms acceptable to the Company, or at all.

See Note 4 — Business Combination and Note 18 — Subsequent Events.

Legal Proceedings — Kingbird Ventures, LLC

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SUBSEQUENT EVENTS

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

The Company has evaluated subsequent events through August 19, 2026, the date these unaudited condensed consolidated financial statements were available to be issued, and identified the following matters requiring disclosure.

Issuance of Common Stock

Between July 1, 2026 and July 8, 2026, the Company issued an aggregate of 1,088,503 shares of common stock pursuant to its at-the-market offering program for net proceeds of $ 7,316,687 .

All share amounts in this Note are presented on a post-Reverse Stock Split basis.

Reverse Stock Split

On July 9, 2026, the Company filed a Certificate of Amendment to its Certificate of Incorporation to effect a one-for-one hundred ( 1-for-100 ) reverse stock split of its issued and outstanding common stock, which became effective at 12:01 a.m., Eastern Time, on July 13, 2026.

As a result of the Reverse Stock Split, the Company’s 130,383,799 shares of common stock issued and outstanding immediately prior to the Reverse Stock Split were combined into approximately 1,303,879 shares;

fractional shares were rounded up to the next whole share at the participant level, resulting in 1,303,879 shares of common stock issued immediately following the Reverse Stock Split.

See Note 1 — Nature of Operations.

Subsequent to the Reverse Stock Split, the Company issued an additional 32 shares of common stock.

As of August 19, 2026, the Company had 1,303,911 shares of common stock issued, of which 54 shares were held as treasury stock, resulting in 1,303,857 shares of common stock outstanding.

PART I — FINANCIAL INFORMATION

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What changed 10-Q

Item 1. Financial Statements