Business Combination |
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| Acquisition of CWS Platform [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS COMBINATION | 4. 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:
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:
The provisional fair values of the identifiable assets acquired and liabilities assumed at the acquisition date are summarized as follows:
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.
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