LQR House Inc.

Current report

For the years ended December 31, 2025 and 2024, all of our revenue was derived from or directly related to our contractual relationship with CWS. Although we acquired the CWS Platform from Ssquared on November 1, 2023, and no longer rely on the Marketing Agreement for revenue, CWS continues to be our sole distribution channel for alcoholic beverage products. Our reliance on CWS creates significant concentration risk. If CWS is unwilling or unable to continue to distribute products sold through the CWS Platform, whether due to business, regulatory, financial, or operational reasons, our ability to generate revenue would be materially and adversely affected. In addition, KBROS, which is responsible for fulfillment and logistics for the CWS Platform, is affiliated with CWS through common ownership. As a result, potential conflicts of interest may arise. KBROS may decline to pursue opportunities, including alternative distribution arrangements or operational changes, that could benefit us but may not be in the best interests of CWS. We do not currently have alternative distribution arrangements in place. If our relationship with CWS were terminated or disrupted, or if KBROS were unable or unwilling to support a transition to a new distributor, we may not be able to secure a replacement distributor on acceptable terms, or at all, in a timely manner. Any such disruption could result in delays in product delivery, loss of customers, and a material adverse effect on our business, financial condition, and results of operations.

Current report

We have a limited operating track record for certain aspects of our business, which may make it difficult to evaluate our growth prospects

Current report

While we have generated revenue in recent periods, certain aspects of our business, including our SWOL Tequila brand and newer strategic initiatives, have a limited operating track record. As a result, our ability to successfully execute our business strategy, scale operations, and achieve sustained profitability is subject to significant uncertainty. Our future performance will depend on a number of factors, including our ability to expand distribution, maintain key commercial relationships, manage costs, and respond to competitive and regulatory developments. There can be no assurance that we will be successful in achieving these objectives. Any failure to effectively execute our business strategy could materially adversely affect our business, financial condition and results of operations.

Current report

Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern in its report on our consolidated financial statements. The accompanying financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred significant net losses and negative cash flows from operations. For the year ended December 31, 2025, we incurred net losses of $25,522,618, and as of December 31, 2025, we had an accumulated deficit of $67,829,421. We used $33,817,140 of cash in operating activities during the year ended December 31, 2025. We expect to continue to incur operating losses for the foreseeable future. Our ability to continue as a going concern depends on our ability to generate sufficient revenue and cash flows from operations and to raise additional capital. We have historically relied on equity financings, including proceeds from warrant exercises, at-the-market offerings, and registered direct offerings, to fund our operations. In March 2026, we entered into a sales agreement pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $50,273,610 in at-the-market transactions. There can be no assurance that we will be able to raise additional capital on acceptable terms, or at all. Any failure to obtain adequate financing when needed could require us to significantly reduce or discontinue operations, delay or abandon business initiatives, or otherwise materially adversely affect our business, financial condition, and results of operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Current report

Our pursuit of opportunistic investments outside our core business has resulted in significant capital outlays, and similar future investments may result in losses.

Current report

We have pursued opportunistic investments outside of our core alcohol e-commerce and tequila business, including investments in digital content monetization and related activities. These investments have required significant capital outlays and may not generate returns. We may continue to evaluate similar investment opportunities in the future.

Current report

For example, during the fiscal year ended December 31, 2025, we invested an aggregate of approximately $18.5 million in joint venture arrangements and paid approximately $3.3 million under certain distribution and marketing service arrangements. Although these arrangements were subsequently terminated and the invested amounts were returned, there can be no assurance that future investments will be similarly recoverable.

Current report

Investments outside our core business involve significant risks, including limited operational experience, reliance on third-party partners, unproven business models, and exposure to rapidly evolving market conditions. The deployment of capital in such investments may reduce our available liquidity, create opportunity costs, and divert management attention from our core operations. Future investments of a similar nature could result in permanent impairment of capital, losses, or other adverse financial consequences, which could materially adversely affect our business, financial condition and results of operations.

Current report

We are pursuing a significant acquisition in a new line of business, which may expose us to substantial risks and uncertainties.

Current report

We have entered into a Share Purchase Agreement to acquire up to 100% of Fusion Five Continents Securities Limited, a securities brokerage firm based in New Zealand, in a multi-step transaction that is subject to regulatory approvals and other closing conditions. There can be no assurance that we will complete the acquisition of the remaining interest or that the anticipated benefits of the transaction will be realized. This transaction represents an expansion into a new line of business that differs from our core alcohol e-commerce and tequila operations. As a result, we may face risks associated with limited experience in the securities brokerage industry, increased regulatory oversight, operational complexity, and integration challenges. In addition, the acquisition involves cross-border operations, which may expose us to additional legal, regulatory, and compliance risks. The initial purchase price is payable in digital assets (Tether, or USDT), which introduces additional risks, including volatility, regulatory uncertainty, and operational risks associated with the use of digital assets in transactions. If we are unable to successfully complete or integrate this acquisition, or if the acquired business does not perform as expected, our financial condition, results of operations, and business prospects could be materially adversely affected.

Current report

Our business may be adversely affected by political, trade, and regulatory developments, including changes in tariffs and international trade policies.

Current report

Our proposed initial public offering of SWOL may not be completed and, if completed, would reduce our ownership interest and may result in a loss of control over SWOL.

Current report

In January 2026, we filed a registration statement on Form S-1 with the Securities and Exchange Commission in connection with a proposed initial public offering of our subsidiary, SWOL. The registration statement has not yet been declared effective, and there can be no assurance that the offering will be completed on the terms currently contemplated, or at all. If the offering is not completed, we may not realize the anticipated benefits of the transaction, including access to additional capital to support SWOL’s growth. If the offering is completed, we expect to own approximately 41.40% of the outstanding equity of SWOL, which would significantly reduce our ownership interest and could result in a loss of control over SWOL. As a result, we may no longer be able to direct SWOL’s operations, strategy, or key decisions, and our interests may differ from those of other stockholders of SWOL. In addition, SWOL may operate independently and may enter into transactions or pursue strategies that are not aligned with our business objectives. Following the offering, our financial results may be impacted by changes in the accounting treatment of SWOL, including whether we continue to consolidate SWOL or account for our investment under the equity method. Any such changes could materially affect our reported revenues, expenses, and financial position. In addition, the offering could result in increased costs, including legal, accounting, and compliance expenses, and may require significant management attention. The proposed offering also exposes us to risks associated with market conditions and investor demand, which are outside of our control. Adverse market conditions or other factors could delay or prevent completion of the offering.

Previous report

In the years ended December 31, 2024 and 2023, all revenue was derived from or directly related to contractual relationship with CWS. Although we acquired the CWS Platform from Ssquared on November 1, 2023, and no longer rely on the Marketing Agreement for any revenue, CWS will continue to be for the foreseeable future our only source of distribution of alcoholic beverages. Additionally, because the President of CWS is also the 100% equity owner of KBROS, we could have opportunities in the future to expand the number of our distributors or even replace CWS with a distributor that offer terms more favorable. These opportunities could be declined by KBROS as it is responsible for the management of the fulfillment of sales orders that are generated by the CWS Platform. Because of the affiliate relationship between KBROS and CWS, KBROS would be conflicted if presented with opportunities for the CWS Platform that are against the interests of CWS and may decline such opportunities against our interest. While our relationship with CWS is ongoing and is expected to continue, we cannot be certain that CWS will be willing or able to continue to distribute the products sold on the CWS Platform and although under the Management Agreement it is KBROS’s responsibility to fulfill orders, if we could not or KBROS were not able or willing to secure a new distributor for the CWS Platform if necessary, the lack of a distributor would have material adverse consequences on our financial condition and prospects.

Previous report

The Company is an early, startup stage entity with little operating history. The Company only has nominal cash as of the date of this Annual Report on Form 10-K. The revenue and income potential of the Company’s business and market are unproven. The Company’s limited operating history makes an evaluation of the Company and its prospects difficult and highly speculative. There can be no assurances that: (a) the Company will be able to develop products or services on a timely and cost effective basis; (b) the Company will be able to generate any increase in revenues; (c) the Company will have adequate financing or resources to continue operating its business and to provide products and services to customers; (d) the Company will earn a profit; (e) the Company can raise sufficient capital to support operations by attaining profitability; or (f) the Company can satisfy future liabilities.

Previous report

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

Previous report

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company sustained net losses of $22,754,178 and $15,747,724 during the years ended December 31, 2024 and 2023, respectively, and had cash used in operations of $6,618,417 during the year ended December 31, 2024. The Company requires additional capital to operate and expects losses to continue for the foreseeable future. These factors raise substantial doubts about the Company’s ability to continue as a going concern.

Previous report

The Company’s ability to continue as a going concern until it reaches profitability is dependent upon its ability to generate cash from operating activities and to raise additional capital to fund operations. Management plans to raise additional capital to fund operations through debt and/or equity financings. The Company has raised funds from the IPO and an additional $16.6 million from its public offerings in October and November 2023. During the year ended December 31, 2024, the Company received net proceeds of $1,543,079 from the sale of an aggregate of 1,485,575 shares of common stock pursuant to an at-the-market public offering. In addition, the Company received gross proceeds of $350,020 from the sale of securities pursuant to the December Purchase Agreement, and gross proceeds of $3,000,000 from the sale of securities pursuant to Lazar Purchase Agreement. Our failure to raise additional capital in future could have a negative impact on not only our financial condition but also our ability to execute our business plan. No assurance can be given that the Company will be successful in these efforts. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company may not be able to obtain financing on acceptable terms, or at all.

Previous report

Significant political, trade, or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the change in U.S. federal administration, are difficult to predict and may have a material adverse effect on us. Similarly, changes in U.S. federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations. For example, in March 2025, the U.S. initially imposed a 25% tariff on imports from Canada and Mexico and imposed a 20% tariff on imports from China. The U.S. largely reversed course and goods eligible for treatment under the 2020 United States-Mexico-Canada Agreement (“USMCA”) can enter the U.S. tariff free until April 2, 2025. Historically, tariffs have led to increased trade and political tensions. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. In retaliation to the recent U.S. imposed tariffs, China imposed tariffs up to 15% on a wide array of U.S. farm exports, and Canada and Mexico have stated they will impose tariffs on the U.S. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. We import our SWOL Tequila from Mexico. We also sell out products in Canada. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition, results of operations or our industry. The impact of these potential tariffs on our financial condition, results of operations or industry, if any, is subject to a number of factors that are not yet known, including any countermeasures that the target countries may take in response to such tariffs. In light of these uncertainties, we can provide no assurance that any mitigating actions that may become available to us, such as our ability to pass along some or all of the costs of any tariffs to some or all of our customers, will be successful.