SCHEDULE: LQR House Investor Cedes Voting Rights to President

Diveroli Investment Group and Kingbird Ventures have granted an irrevocable proxy for their 7.1% stake in LQR House Inc. to the company's President, Yilin Lu, following the dismissal of a lawsuit.

Summary

• Diveroli Investment Group LLC and Kingbird Ventures LLC (Reporting Persons) beneficially own 737,000 shares of LQR House Inc. common stock.
• This represents approximately 7.1% of the Issuer's outstanding common stock, based on 10,378,084 shares outstanding as of August 12, 2025.
• The Reporting Persons purchased these shares for investment purposes using Kingbird's working capital, totaling $1,222,290.29, including brokerage fees.
• Kingbird Ventures LLC previously filed a lawsuit against LQR House Inc. on July 11, 2025, seeking the appointment of a neutral third-party receiver, which was dismissed on September 22, 2025.
• On September 22, 2025, Kingbird entered into a Voting Agreement and Irrevocable Proxy with LQR House Inc. and its President, Yilin Lu (the Proxyholder).
• Under this agreement, Kingbird granted Yilin Lu an irrevocable proxy and power of attorney over all 737,000 shares, giving him the sole right to vote or act by written consent.
• Kingbird is obligated to abstain from voting these shares and has assigned all rights to initiate or participate in derivative/direct claims and exercise appraisal/dissenters' rights to the Proxyholder.
• The Voting Agreement includes transfer restrictions, limiting Kingbird's ability to sell or transfer the shares, except in specific circumstances like ordinary-course open market sales not to affiliates, group members, or competitors.
• The Reporting Persons state they do not currently have plans to control or influence the corporate activities of LQR House Inc.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the dismissal of litigation is positive, the investor ceding all voting rights and control over a significant stake to management, coupled with dilution, presents a mixed picture. It removes an activist threat but also removes a potential check on management power.

Positives

• The dismissal of the lawsuit filed by Kingbird Ventures against LQR House Inc. removes a potential legal burden and uncertainty for the company.
• The Voting Agreement grants the Issuer's President, Yilin Lu, sole voting power over a significant 7.1% stake, potentially consolidating voting control and simplifying corporate decision-making.
• The Reporting Persons explicitly state they do not currently have plans or intentions to control or influence the corporate activities of the Issuer, which could reduce activist investor concerns.

Negatives

• The Reporting Persons, holding a 7.1% stake, have ceded all voting rights and rights to initiate claims to the Issuer's President, effectively losing their ability to influence corporate governance or challenge management decisions through their shares.
• The transfer restrictions imposed by the Voting Agreement limit the Reporting Persons' flexibility in disposing of their shares, potentially impacting liquidity or their ability to exit the investment freely.
• The decrease in the Reporting Persons' percentage of ownership from approximately 10.817% to 7.1% is due to an increase in the Issuer's total outstanding shares, indicating potential dilution for existing shareholders.

Risks

• The Reporting Persons' inability to vote their shares or initiate shareholder actions means a significant block of shares cannot be used to hold management accountable, potentially weakening corporate governance from a shareholder perspective.
• The transfer restrictions on the 737,000 shares could impact market liquidity if a large block of shares is subject to limitations, although ordinary-course open market sales are permitted.
• The increase in outstanding shares from 6,809,578 to 10,378,084 between July 16, 2025, and August 12, 2025, indicates significant dilution for existing shareholders, which could negatively impact share price.

Future Outlook

The Reporting Persons intend to periodically review their investment in LQR House Inc. based on various factors, including the Issuer's business, financial condition, and market conditions. They may acquire additional shares or dispose of existing shares in the future, but currently have no plans for extraordinary corporate transactions or changes to the Issuer's board or corporate structure.

Management Comments

• The Reporting Persons do not desire to continue to pursue the litigation.
• The Reporting Persons currently do not have any plans or intentions to control or influence the corporate activities of the Issuer.

Industry Context

This filing primarily concerns a change in beneficial ownership and voting rights for a specific investor in LQR House Inc. It does not provide information directly related to broader industry trends or competitive landscape, focusing instead on an internal corporate governance and shareholder rights matter.

Corporate Governance

Legal Proceedings

• Kingbird Ventures LLC filed a complaint against LQR House Inc. in Clark County, Nevada, on July 11, 2025, seeking the appointment of a neutral third-party receiver.
• On September 22, 2025, Kingbird Ventures LLC and LQR House Inc. filed a Notice of Entry of Stipulation & Order of Dismissal with the Court, agreeing to dismiss the lawsuit.

Stakeholder Impact

• Shareholders: The increase in outstanding shares (dilution) could negatively impact per-share value. The transfer of voting rights for a significant block to the President could reduce overall shareholder influence on corporate governance for other shareholders if this is seen as entrenching management.
• Management: The President, Yilin Lu, gains sole voting power over a 7.1% stake, consolidating control and potentially strengthening management's position. The dismissal of the lawsuit removes a significant legal challenge.

Next Steps

• The Voting Agreement terminates on the earliest of (i) written termination by the Issuer, (ii) Kingbird's disposition of all its shares in compliance with the agreement, or (iii) seven years from the agreement date (or longer as permitted by law).
• The Reporting Persons will continue to review their investment in LQR House Inc. and may acquire or dispose of shares in the future.

Key Dates

Recommendation

The dismissal of the lawsuit is a positive development, removing a legal overhang. However, the Reporting Persons' decision to cede all voting rights and shareholder claims for their 7.1% stake to the company's President, combined with significant share dilution, creates a mixed outlook. While it removes an activist threat, it also centralizes power with management, which could be viewed negatively by some investors seeking stronger independent shareholder oversight. The investment is now largely passive for the Reporting Persons, and the implications for other shareholders regarding governance and potential future dilution warrant a 'hold' as investors assess the long-term impact of these changes.

Keywords

LQR House Inc., Diveroli Investment Group, Kingbird Ventures, Schedule 13D/A, Beneficial Ownership, Voting Agreement, Irrevocable Proxy, Yilin Lu, Shareholder Activism, Corporate Governance, SEC Filing, Investment Firm, Common Stock, Dilution