Eastside Distilling(EAST) - 2025 Q2 - Quarterly Report

Mergers and Acquisitions - The Company completed a merger with Bridgetown Spirits Corp. and Beeline Financial Holdings, Inc. on October 7, 2024, resulting in a new name, Beeline Holdings, Inc.[228] - The merger's impact means that the consolidated results for 2025 are not directly comparable to 2024, as the prior year only reflects the corporate segment's performance[254] Financial Performance - Beeline Financial reported revenues of $1.7 million and $3.1 million for the three and six months ended June 30, 2025, respectively, compared to $0 for the same periods in 2024[259] - Net loss from continuing operations increased to $4.0 million and $10.7 million for the three and six months ended June 30, 2025, respectively, compared to $0.7 million and $1.3 million in 2024[259] - For the three months ended June 30, 2025, the company reported a net loss of $4.14 million compared to a net loss of $1.49 million for the same period in 2024, indicating a significant increase in losses[283] - Adjusted EBITDA for the six months ended June 30, 2025 was $(6.32) million, compared to $(0.55) million for the same period in 2024, reflecting a worsening operational performance[283] - Corporate segment reported a net loss of $2.4 million and $6.8 million for the three and six months ended June 30, 2025, respectively[275] Debt and Financing - A Debt Exchange Agreement was executed on September 4, 2024, leading to the assignment of 720 barrels of spirits and the deconsolidation of Craft Canning + Printing[230] - During the six months ended June 30, 2025, the company raised $10.9 million from financing activities, primarily from equity transactions totaling $15.8 million[296] - The company intends to continue raising capital through a combination of equity and debt financing to meet its internal cash requirements[292] - The company sold 5,018,437 shares of common stock for gross proceeds of $6.5 million under the ELOC Agreement during the six months ended June 30, 2025[287] - The company sold 6,417,159 shares of Series G Preferred Stock for total gross proceeds of $3.3 million during the six months ended June 30, 2025[290] - The company entered into an At The Market Offering Agreement allowing it to issue up to $7.0 million of common stock, successfully raising the full amount during the six months ended June 30, 2025[288] Operational Metrics - Beeline Financial originated $15.1 million and $54.9 million in residential mortgage loans for the three and six months ended June 30, 2025[266] - Total operating expenses for Beeline Financial were $3.3 million and $6.9 million for the three and six months ended June 30, 2025[266] - Interest expense was $0.4 million and $2.3 million for the three and six months ended June 30, 2025, respectively, up from $0.3 million and $0.6 million in 2024[260] - The company recorded a deemed dividend related to price protection of $2.2 million and $6.8 million for the three and six months ended June 30, 2025, respectively[262] Market Conditions - Beeline Financial's performance is significantly impacted by interest rate fluctuations, with rising rates since April 2021 leading to reduced mortgage market activity[238] - The Company reported that limited housing supply and rising interest rates have constrained home purchase activity, affecting overall mortgage origination volumes[241] - Inflation trends showed a decrease from 2.9% in January 2025 to approximately 2.4% in June 2025, influencing the economic environment for mortgage lending[248] Strategic Initiatives - Beeline Labs launched BlinkQC, a SaaS platform for automating pre-close quality control reviews, expected to achieve gross margins of approximately 50%[250][251] - The Company aims to expand its B2B SaaS strategy, which is subject to macroeconomic conditions, while tracking performance metrics to optimize financial performance[246][247] - The company plans to continue focusing on segment-level reporting to better evaluate performance amidst structural changes[257] Cryptocurrency and Blockchain - Beeline Title closed a fractional sale of home real estate transactions funded through cryptocurrency, marking a significant milestone in blockchain-driven real estate finance[253] - The Company is positioned to lead in the cryptocurrency ecosystem for real estate transactions, collaborating with a related party for compliance and transaction handling[253] Stock-Based Compensation - The company recognizes all stock-based awards issued to employees as compensation expense, measured based on grant-date fair value[319] - Stock-based compensation cost is recognized over the service period, typically aligned with the vesting period[319] - The fair value of stock options is determined using the Black-Scholes valuation model, considering factors like expected stock price volatility and risk-free interest rate[319] - Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and recognized over service periods[319] Transparency and Reporting - The company has no material off-balance sheet arrangements as of the date of this filing, indicating a focus on transparency in its financial reporting[292] - As a "smaller reporting company," the company is not required to provide detailed market risk information[320]