LQR House (YHC) Risk Analysis

We are required to publicly report on an ongoing basis as an "emerging growth company" (as defined in the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not emerging growth companies, including but not limited to: - not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;- being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and - being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an emerging growth company for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31. Because we are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, our stockholders could receive less information than they might expect to receive from more mature public companies. We cannot predict if investors will find our common stock less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our common stock.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our common stock or publishes inaccurate or unfavorable research about our business, the market price for our common stock would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our common stock to decline.

Although our common stock is currently listed on The Nasdaq Capital Market, we may not be able to continue to meet the exchange's minimum listing requirements or those of any other national exchange. If we are unable to maintain listing on Nasdaq or if a liquid market for our common stock does not develop or is sustained, our common stock may remain thinly traded. The listing rules of Nasdaq require listing issuers to comply with certain standards in order to remain listed on its exchange. If, for any reason, we should fail to maintain compliance with these listing standards and Nasdaq should delist our securities from trading on its exchange and we are unable to obtain listing on another national securities exchange, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our stockholders: - the liquidity of our common stock;- the market price of our common stock;- our ability to obtain financing for the continuation of our operations;- the number of institutional and general investors that will consider investing in our common stock;- the number of investors in general that will consider investing in our common stock;- the number of market makers in our common stock;- the availability of information concerning the trading prices and volume of our common stock; and - the number of broker-dealers willing to execute trades in shares of our common stock.

Our share price is highly volatile. Over the past 52 weeks ended April 9, 2026, the closing price of our common stock has ranged from approximately $10.73 per share to $0.65 per share. The stock market in general has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your common stock at or above the public offering price and you may lose some or all of your investment. In addition to the risks addressed above, our common stock may continue to be subject to rapid and substantial price volatility. Recently, companies with comparably small public floats and initial public offering sizes have experienced instances of extreme stock price run-ups followed by rapid price declines, and such stock price volatility was seemingly unrelated to the respective company's underlying performance. Although the specific cause of such volatility is unclear, our anticipated public float may amplify the impact the actions taken by a few stockholders have on the price of our stock, which may cause our stock price to deviate, potentially significantly, from a price that better reflects the underlying performance of our business. Our common stock may experience run-ups and declines that are seemingly unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common stock. In addition, investors of shares of our common stock may experience losses, which may be material, if the price of our common stock declines or if such investors purchase shares of our common stock prior to any price decline.

The stock market in general has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to operating performance of individual companies, particularly following a public offering of a company with a small public float. There is the potential for rapid and substantial price volatility of our common stock. Broad market factors may seriously harm the market price of our common stock, regardless of our actual or expected operating performance and financial condition or prospects, which may make it difficult for investors to assess the rapidly changing value of our common stock. Additionally, the price and volume of our common stock may fluctuate significantly as a result of the following factors: - quarterly variations in our operating results compared to market expectations;- adverse publicity about us, the industries we participate in or individual scandals;- announcements of new offerings or significant price reductions by us or our competitors;- fluctuations in stock market prices and volumes;- changes in senior management or key personnel;- changes in financial estimates by securities analysts;- the market's reaction to our reduced disclosure as a result of being an "emerging growth company" under the JOBS Act;- negative earnings or other announcements by us or our competitors;- defaults on indebtedness, incurrence of additional indebtedness, or issuances of additional capital stock;- global economic, legal and regulatory factors unrelated to our performance; and - the other factors listed in this "Risk Factors" section. Volatility in the market price of our common stock may prevent investors from being able to sell their shares at or above the initial public offering price. As a result, you may suffer a loss on your investment.

Although our shares are listed on The Nasdaq Stock Market LLC, the market for our shares has demonstrated varying levels of trading activity. The current level of trading may not be sustained in the future. The lack of an active market for our shares may impair investors' ability to sell their shares at the time they wish to sell them or at a price that they consider reasonable, may reduce the fair market value of their shares and may impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire additional assets by using our shares as consideration.

In the future, we may attempt to increase our capital resources by entering into additional debt or debt-like financing that is secured by all or up to all of our assets, or issuing debt or equity securities, which could include issuances of commercial paper, medium-term notes, senior notes, subordinated notes or shares. In the event of our liquidation, our lenders and holders of our debt securities would receive a distribution of our available assets before distribution to our stockholders. In addition, any additional preferred stock, if issued by our company, may have a preference with respect to distributions and upon liquidation, which could further limit our ability to make distributions to our stockholders. Because our decision to incur debt and issue securities in our future offerings will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings and debt financing. Further, market conditions could require us to accept less favorable terms for the issuance of our securities in the future. Thus, you will bear the risk of our future offerings reducing the value of your common stock and diluting your interest in our company.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity and/or debt financing and collaborations, licensing agreements or other strategic arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect your rights as a stockholder. To the extent that we raise additional capital through debt financing, it would result in increased fixed payment obligations and a portion of our operating cash flows, if any, being dedicated to the payment of principal and interest on such indebtedness. In addition, debt financing may involve agreements that include restrictive covenants that impose operating restrictions, such as restrictions on the incurrence of additional debt, the making of certain capital expenditures or the declaration of dividends.

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.

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.

Under Nasdaq rules, a "smaller reporting company," as defined in Rule 12b-2 under the Exchange Act, is not subject to certain corporate governance requirements otherwise applicable to companies listed on Nasdaq. For example, a smaller reporting company is exempt from the requirement of having a compensation committee composed solely of directors meeting certain enhanced independence standards, as long as the compensation committee has at least two members who do meet such standards. Although we do not currently rely on any of these exemptions, we may elect to rely on any or all of these exemptions in the future. By electing to utilize any such exemptions, our company may be subject to greater risks of poor corporate governance, poorer management decision-making processes, and reduced results of operations from problems in our corporate organization. Consequently, our stock price may suffer, and there is no assurance that we will be able to continue to meet all continuing listing requirements of Nasdaq from which we will not be exempt, including minimum stock price requirements.

Future sales in the public market of shares of our common stock or securities convertible into or exchangeable or exercisable for shares of common stock, shares held by our existing stockholders or shares issued upon exercise of our outstanding stock options or warrants, or the perception by the market that these sales could occur, could lower the market price of our common stock or make it difficult for us to raise additional capital.