Eastside Distilling(EAST) - 2025 Q1 - Quarterly Report

Financial Performance - For the three months ended March 31, 2025, total revenues increased to $1.83 million from $0.60 million in the same period of 2024, driven by Beeline Financial's contribution of $1.35 million[250]. - Net loss from continuing operations rose to $6.93 million in Q1 2025, compared to a loss of $0.70 million in Q1 2024, reflecting the inclusion of Beeline Financial's results[250]. - Total revenues for the company were $1.832 million, compared to $0.597 million for the same period in 2024[259]. - The total net loss from continuing operations was $6.927 million, significantly higher than the loss of $0.703 million in the prior year[259]. - For the three months ended March 31, 2025, Beeline Financial reported net revenues of $1.35 million and a net loss of $2.325 million[260][261]. - Bridgetown Spirits had net sales of $0.482 million, a decline of 12% from $0.597 million in the same period last year[270][271]. Expenses and Costs - Interest expense for Q1 2025 was $1.9 million, significantly higher than $0.2 million in Q1 2024, primarily due to debt amortization and warrant-related expenses[251]. - Salaries and benefits for Beeline Financial amounted to $1.167 million, while Bridgetown Spirits reported $0.162 million[266][273]. - The gross profit for Bridgetown Spirits was $0.064 million, with a gross margin of 13%, down from 23% in the previous year[272]. - The company recorded a deemed dividend of $4.6 million for Q1 2025 due to adjustments related to preferred stock and warrants[253]. Strategic Initiatives - Beeline Financial's platform investments in 2024 aimed to leverage mortgage origination opportunities despite lower volumes compared to 2020 and 2021[242]. - Bridgetown Spirits completed a restructuring in 2024, focusing on core activities and outsourcing non-core functions, leading to decreased overall expenses[245]. - The merger with Beeline Financial closed on October 7, 2024, resulting in a new consolidated financial structure for the company[222]. Market Outlook - The company anticipates that persistent supply-demand imbalances in housing will stimulate future mortgage activity[237]. - Beeline Financial's digital mortgage solutions are expected to grow in demand, particularly among Millennial and Generation Z homebuyers[238]. - Beeline Financial originated $39.8 million in residential mortgage loans during the quarter[261]. Liquidity and Cash Flow - As of March 31, 2025, the company had $1.5 million in cash, indicating liquidity challenges ahead[279]. - The company intends to raise up to $10 million through a Common Stock Purchase Agreement to improve liquidity[281]. - Net cash used in operating activities was $1.5 million for the three months ended March 31, 2025, compared to a net cash provided of $0.1 million in the same period last year[287]. Accounting Policies - Mortgage loans held for sale are recorded as current assets due to their expected short-term sale within one year[294]. - Loan origination fees are recognized as revenue at the time the mortgage loans are funded, based on a percentage of the original principal loan balance[298]. - Interest income on mortgage loans is recognized until loans become 90 days delinquent, at which point revenue recognition is discontinued[299]. - Bridgetown Spirits recognizes net sales by applying ASC 606, which includes identifying contracts and recognizing revenue when performance obligations are satisfied[302]. - The company accounts for business combinations under ASC 805, allocating the purchase price to identifiable assets and liabilities at fair value[310]. - Goodwill is tested for impairment annually, with potential impairment recognized if the carrying value exceeds estimated fair value[312]. - Property and equipment are recorded at cost and depreciated over useful lives ranging from three to seven years[315]. - Stock-based compensation is recognized as an expense based on the grant-date fair value of awards, measured using the Black-Scholes model[317]. - Bridgetown Spirits calculates excise tax expense based on units produced, which is recorded as a reduction to net sales[305]. - Customer programs, including promotional discounts, are recorded as reductions to net sales in accordance with ASC 606[306].