LQR House Announces 35-for-1 Reverse Stock Split as Part of Strategic Nasdaq Compliance Initiative

Rhea-AI Summary

LQR House (NASDAQ:YHC) has announced a 35-for-1 reverse stock split effective April 21, 2025. The strategic move aims to maintain Nasdaq listing compliance and strengthen the company's capital structure. The split will automatically convert every 35 shares of common stock into 1 share, reducing outstanding shares from 37,336,947 to approximately 1,066,770.

The company's stock will continue trading under the symbol 'YHC' with a new CUSIP number 50215C307. The reverse split will also affect stock options and warrants, with fractional shares being rounded up. Additionally, authorized shares will decrease from 350,000,000 to 10,000,000.

Positive

• Proactive measure to maintain Nasdaq listing compliance
• No loss of value for shareholders with fractional shares (rounded up)
• Potential for improved trading dynamics with higher share price

Negative

• Significant share consolidation indicates possible previous stock price decline
• May signal underlying financial challenges requiring listing compliance measures

Insights

Financial Analyst

LQR House's announcement of a 35-for-1 reverse stock split represents a significant red flag for investors. The extreme ratio of this split vastly exceeds typical reverse splits (commonly 1:5 or 1:10), suggesting severe underlying concerns about the company's market position.

While the company currently trades at $1.15 per share (above Nasdaq's minimum $1.00 requirement), the decision to pursue such a dramatic consolidation implies management anticipates continued price weakness or faces other compliance issues. Post-split, the theoretical share price would approach $40.25, though reverse splits typically trigger negative sentiment and selling pressure that often erodes this mathematical calculation.

The reduction from 37.3 million to just 1.06 million outstanding shares while maintaining the tiny $8.2 million market capitalization demonstrates the micro-cap nature of this enterprise. Critically, this financial maneuver does nothing to address fundamental business challenges - it merely repackages existing equity into fewer, higher-priced shares.

For context, studies show companies implementing reverse splits underperform the broader market by 50% on average in the following year, with larger ratio splits correlating to worse performance. This action essentially serves as a warning sign of financial distress rather than a strategic enhancement of shareholder value.

Corporate Governance Expert

This reverse split represents a concerning governance decision that prioritizes technical exchange compliance over addressing fundamental business challenges. The dramatic 35:1 ratio substantially reconfigures shareholder positions and typically signals severe underlying problems with the company's valuation model and growth trajectory.

The CEO's characterization of this as a "strategic initiative" appears to be reputation management rather than transparent communication about the company's Nasdaq compliance struggles. LQR House's board has chosen an extremely aggressive consolidation approach rather than pursuing operational improvements that might organically support share price.

Shareholders should note this action could trigger several problematic consequences:

• Increased stock price volatility due to the thinner post-split float
• Potential reduction in liquidity making positions harder to exit
• Higher percentage moves on lower volume
• Psychological barrier for retail investors who often avoid higher-priced shares

The reduced share count from 37.3 million to approximately 1.06 million shares concentrates ownership while reducing trading flexibility. While technically shareholders maintain the same percentage ownership, the market typically views such extreme consolidations as signs of fundamental weakness, often leading to valuation deterioration and potentially triggering a destructive cycle of future splits.

MIAMI BEACH, FLORIDA / ACCESS Newswire / April 16, 2025 / LQR House Inc. (the "Company" or "LQR House") (NASDAQ:YHC), a niche ecommerce platform specializing in the spirits and beverage industry, announces that its Board of Directors and Chief Executive Officer have approved a proposed reverse stock split of its common stock at a ratio of 35-for-1. The reverse stock split will become effective on April 21, 2025, at 12:01 a.m., Eastern Time. The Company's common stock will continue to trade on The Nasdaq Capital Market ("Nasdaq") under the existing symbol "YHC" and will begin trading on a split-adjusted basis when the market opens on April 21, 2024. The new CUSIP number for the common stock following the reverse stock split will be 50215C307.

At the effective time of the reverse stock split, every 35 shares of the Company's issued and outstanding common stock will be automatically reclassified and combined into 1 share of common stock. This will reduce the number of issued and outstanding shares of common stock from 37,336,947 shares to approximately 1,066,770 shares, without giving effect to rounding. The reverse stock split will reduce the number of authorized shares of the Company's common stock from 350,000,000 shares to 10,000,000 shares. The split will also apply to Company common stock issuable upon the exercise of the Company's outstanding stock options and warrants. No fractional shares will be issued; instead, any fractional entitlements will be rounded up to the next highest whole number at the participant level.

The reverse stock split is a proactive measure as part of LQR House's strategic plan to maintain compliance with Nasdaq's continued listing requirements, while also strengthening the Company's long-term capital structure.

Sean Dollinger, CEO of LQR House, commented "This decision reflects our commitment to our stockholders and to the future of LQR House. The reverse split is a critical step toward securing our position on Nasdaq, enhancing investor confidence, and positioning the Company for sustainable growth in the public markets."

LQR House remains focused on scaling its ecommerce platform, expanding its brand portfolio, and capitalizing on the evolving digital alcohol marketplace.

About LQR House Inc.

LQR House intends to become a prominent force in the wine and spirits e-commerce sector, epitomized by its flagship alcohol marketplace, cwspirits.com. This platform seamlessly delivers a diverse range of emerging, premium, and luxury spirits, wines, and champagnes from esteemed retail partners like Country Wine & Spirits. Functioning as a technology-driven hub, LQR House utilizes software, data analytics, and artificial intelligence to elevate consumer experience. CWSpirits.com stands out as the go-to destination for modern, convenience-oriented shoppers, providing a curated selection of alcohol products delivered to homes across the United States. Beyond its role in an e-commerce sector, LQR House is a marketing agency with a specialized focus on the alcohol industry. The Company measures campaign success by directly correlating it with sales on CWSpirits.com, demonstrating a return on investment. Backed by an influential network of around 460 figures in the alcohol space, LQR House strategically drives traffic to CWSpirits.com, enhancing brand visibility. LQR House intends to disrupt the traditional landscape of the alcohol industry, driven by its dedication to providing an unparalleled online purchasing experience and delivering tailored marketing solutions.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Shareholders can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "potential," "continue" or other similar expressions. Forward-looking statements contained in this press release are made only as of the date of this press release. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as may be required by law. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions, and other factors discussed in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and in other reports and documents that the Company files from time to time with the United States Securities and Exchange Commission (the "SEC"). You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the headings "Risk Factors". Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and in other reports and documents that the Company files from time to time with the SEC. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov. References and links to websites have been provided as a convenience, and the information contained on such websites has not been incorporated by reference into this press release.

Investor and Media Contact:

info@lqrhouse.com

SOURCE: LQR House

View the original press release on ACCESS Newswire

FAQ

What is the ratio of LQR House's reverse stock split announced in April 2025?

LQR House announced a 35-for-1 reverse stock split, meaning every 35 shares will be converted into 1 share.

How many shares will LQR House have outstanding after the April 2025 reverse split?

After the reverse split, LQR House's outstanding shares will reduce from 37,336,947 to approximately 1,066,770 shares.

When will LQR House's reverse stock split take effect?

The reverse stock split will become effective on April 21, 2025, at 12:01 a.m. Eastern Time.

What happens to fractional shares in LQR House's reverse split?

Fractional shares resulting from the reverse split will be rounded up to the next highest whole number at the participant level.

Why is LQR House implementing a reverse stock split in 2025?

LQR House is implementing the reverse split as a proactive measure to maintain Nasdaq listing compliance and strengthen its long-term capital structure.