What changed in Beeline Holdings, Inc.'s 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of Beeline Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+689 added−196 removedSource: 10-K (2025-04-15) vs 10-K (2024-04-01)
Top changes in Beeline Holdings, Inc.'s 2024 10-K
689 paragraphs added · 196 removed · 60 edited across 7 sections
- Item 1A. Risk Factors+368 / −95 · 29 edited
- Item 1. Business+171 / −38 · 17 edited
- Item 7. Management's Discussion & Analysis+137 / −41 · 11 edited
- Item 1C. Cybersecurity+5 / −14 · 1 edited
- Item 3. Legal Proceedings+2 / −4
Item 1. Business
Business — how the company describes what it does
17 edited+154 added−21 removed7 unchanged
Item 1. Business
Business — how the company describes what it does
17 edited+154 added−21 removed7 unchanged
2023 filing
2024 filing
Biggest changeThrough our internal sales team, we have established relationships for our brands with wholesale distributors in the states where we sell our products, and our products are sold in the U.S. by these wholesale distributors, as well as by various state beverage alcohol control agencies. 6 Significant Customers Sales to one customer, the Oregon Liquor Control Commission, accounted for approximately 19% and 18% of our consolidated sales for the years ended December 31, 2023 and 2022, respectively.
Biggest changeOur largest distribution channel is in the state of Oregon through the Oregon Liquor Control Commission. Sales to the Oregon Liquor Control Commission, accounted for approximately 75% and 55% of our consolidated sales for the years ended December 31, 2024 and 2023, respectively.
We source fair-trade, single-origin Arabica coffee beans from the Finca El Paternal Estate in Huehuetenango, Guatemala that are lightly roasted for us by Portland Coffee Roasters. ● Azuñia Tequilas – Smooth, clean, additive-free tequilas crafted by Rancho Miravalle, a second generation, family-owned-and-operated estate, bursting with authentic flavor from the local terroir of Tequila Valley, Mexico. 100% pure Weber Blue Agave is harvested by hand, roasted in traditional clay hornos, and finished with a natural, open-air fermentation process.
We source fair-trade, single-origin Arabica coffee beans from the Finca El Paternal Estate in Huehuetenango, Guatemala that are lightly roasted for us by Portland Coffee Roasters. 14 ● Azuñia Tequilas – Smooth, clean, additive-free tequilas crafted by Rancho Miravalle, a second generation, family-owned-and-operated estate, bursting with authentic flavor from the local terroir of Tequila Valley, Mexico. 100% pure Weber Blue Agave is harvested by hand, roasted in traditional clay hornos, and finished with a natural, open-air fermentation process.
Our portfolio includes originals like the Quercus garryana barrel-finished Burnside Whiskey family, Portland Potato Vodka, Hue-Hue Coffee Rum, and Azuñia Tequilas. ● Burnside Whiskey Family – Our Burnside Whiskey Family celebrates the unique attributes of the native Oregon Oak tree ( Quercus garryana ).
Spirits’ portfolio includes originals like the Quercus garryana barrel-finished Burnside Whiskey family, Portland Potato Vodka, Hue-Hue Coffee Rum, and Azuñia Tequilas ● Burnside Whiskey Family – The Burnside Whiskey Family celebrates the unique attributes of the native Oregon Oak tree (Quercus garryana).
Our spirits business has been repositioned to compete regionally in key markets where we have the greatest competitive advantage. Government Regulation We are subject to the jurisdiction of the Federal Alcohol Administration Act, U.S. Customs laws, and the Alcoholic Beverage Control laws of the states where our products are distributed, among many other regulations. The U.S.
Spirits has been repositioned to compete regionally in key markets where we believe we have the greatest competitive advantage. Government Regulation Applicable to Spirits We are subject to the jurisdiction of the Federal Alcohol Administration Act, U.S. Customs laws, and the Alcoholic Beverage Control laws of the states where our products are distributed, among many other regulations. The U.S.
Spirits Since 2014 we have developed or acquired award-winning spirits while evolving to meet the growing demand for quality products and services associated within the burgeoning craft and premium beverage trade.
Since 2014, Spirits has developed or acquired award-winning spirits while evolving to meet the growing demand for quality products and services associated within the burgeoning craft and premium beverage trade.
Today, we believe seven major companies dominate the market: Diageo PLC, Pernod Ricard S.A., Bacardi Limited, Brown-Forman Corporation, Beam Suntory Inc., Davide Campari-Milano S.p.A., and Rémy Cointreau S.A. These competitors have substantially greater resources than we do due to their scale and ability to more effectively leverage the three-tier distribution system.
Today, large major companies dominate the market: Diageo PLC, Pernod Ricard S.A., Bacardi Limited, Brown-Forman Corporation, Beam Suntory Inc., Davide Campari-Milano S.p.A., and Rémy Cointreau S.A. These competitors have substantially greater resources than we have due to their scale and ability to more effectively leverage the national distribution system.
In the 17 control states, the states themselves function as the distributor, and regulate suppliers, including our Company. In control states, producers and importers sell their products directly to state liquor authorities, which distribute the products and either operate retail outlets or license the retail sales function to private companies, while maintaining strict control over pricing and profit.
We operate in one control state, Oregon, where the state functions as the distributor, and regulates suppliers, including our Company. In control states, producers and importers sell their products directly to state liquor authorities, which distribute the products and either operate retail outlets or license the retail sales function to private companies, while maintaining strict control over pricing and profit.
Our inventory is maintained in offsite bonded warehouses at our producers, our bonded warehouse in Milwaukie, Oregon, and at bonded warehouses managed by Park Street, our fulfillment and logistics partner. We also typically have inventory in transit that we ship nationally through our network of licensed and bonded carriers.
Our inventory is maintained in offsite bonded warehouses at our producers, our bonded warehouse in Milwaukie, Oregon, and at bonded warehouses managed by Park Street, our fulfillment and logistics partner. We also typically have inventory in transit that we ship nationally through our network of licensed and bonded carriers. Spirits Intellectual Property Trademarks are an important aspect of our business.
We are also required to conduct business in the U.S. only with holders of licenses to import, warehouse, transport, distribute and sell spirits. 7 We are subject to U.S. regulations on spirits, marketing, and advertising, such as style, media and messages.
We are also required to conduct business in the U.S. only with holders of licenses to import, warehouse, transport, distribute and sell spirits. The distribution of alcohol-based beverages is also subject to extensive federal and state taxation. We are subject to U.S. regulations on spirits marketing and advertising, such as style, media and messages.
Our largest distribution channel is in the state of Oregon through the Oregon Liquor Control Commission. We hold the federal importer and wholesaler license required by the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury Department and the requisite state licenses within the states in which we conduct business.
We hold the federal importer and wholesaler license required by the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury Department and the requisite state licenses within the states in which we conduct business.
Intellectual Property Trademarks are an important aspect of our business. We sell our products under a number of trademarks which we own. Our brands are protected by trademark registrations or are the subject of pending applications for trademark registration in the U.S. where we distribute our brands. The trademarks may be registered in the names of our subsidiaries.
We sell our products under a number of trademarks which we own. Our brands are protected by trademark registrations or are the subject of pending applications for trademark registration in the U.S. where we distribute our brands. The trademarks may be registered in the names of our subsidiaries. In the U.S., trademark registrations need to be renewed every 10 years.
In the 33 open states, the distributors are generally large, privately held companies. The distributors and wholesalers in turn sell to individual retailers, such as liquor stores, restaurants, bars, supermarkets and other outlets licensed to sell alcoholic beverages. We primarily focus our distribution efforts in six open states; California, Arizona, Colorado, Texas, Washington and Florida.
The distributors and wholesalers in turn sell to individual retailers, such as liquor stores, restaurants, bars, supermarkets and other outlets licensed to sell alcoholic beverages. Through our internal sales team, we have established relationships for our brands with wholesale distributors in six open states: California, Arizona, Colorado, Texas, Washington and Florida.
We do not have long-term, written agreements with any of our other suppliers for the production of raw materials. However, we believe that we have consistent and reliable third-party sources for the needed materials. Distribution Network U.S. Distribution Producers and importers of beverage alcohol in the U.S. must sell their products through a three-tier distribution system.
In 2024, we entered into production agreement with Rose City Distilling. We do not have long-term, written agreements with any of our other suppliers for the production of raw materials. However, we believe that we have consistent and reliable third-party sources for the needed materials.
Wholesalers and Distributors In the United States, we are required by law to use state-licensed distributors or, in the control states, state-owned agencies performing this function, to sell our brands to retail outlets. As a result, we depend on distributors for sales, product placement and retail store penetration.
Distribution Network In the United States, we are required by law to use state-licensed distributors or, in the control states, state-owned agencies performing this function, to sell our brands to retail outlets. In the 14 open states, the distributors are generally large, privately held companies.
Recently, the growth of craft beer startups has slowed and this has affected the competition in our market and our ability to achieve adequate pricing. Over the past ten years, the U.S. wine and spirits industry has undergone dramatic consolidation and realignment of brands and brand ownership. The number of major importers in the U.S. has declined significantly.
We expect to register our trademarks in additional markets as we expand our distribution territories. 15 Spirits Competition Over the past 10 years, the U.S. wine and spirits industry has undergone dramatic consolidation and realignment of brands and brand ownership. The number of major importers in the U.S. has declined significantly.
Consumers may purchase products not selected for listings only through special orders, if at all. The distribution of alcohol-based beverages is also subject to extensive federal and state taxation in the U.S. and internationally.
Consumers may purchase products not selected for listings only through special orders, if at all. We are currently subject to newly implemented U.S. import tariffs, which are expected to have the greatest impact on two key areas: the importation of European ethanol and tequila from Mexico.
It is bottled on-site in small batches using a consistent process to deliver consistent field-to-bottle quality and exclusively exported by Agaveros Unidos de Amatitán. ● Eastside Brands – Craft inspired high-quality limited-edition products, which focus on innovation, craftsmanship and curiosity, and creativity. 5 Production and Supply Digital printing customers must make a significant investment and bear substantial risks when converting their supply chain to digital printed cans.
It is bottled on-site in small batches using a consistent process to deliver consistent field-to-bottle quality and exclusively exported by Agaveros Unidos de Amatitán. Production and Supply Spirits’ production and supply chain involves several important stages, including bottle and label design, raw materials procurement, production and packaging in various configurations for shipment.
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Item 1. BUSINESS Overview Eastside Distilling, Inc. (the “Company,” “Eastside Distilling,” “we,” “us,” or “our,” below) was incorporated under the laws of Nevada in 2004 under the name of Eurocan Holdings, Ltd. In December 2014, we changed our corporate name to Eastside Distilling, Inc. to reflect our acquisition of Eastside Distilling, LLC. We operate in two segments.
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Item 1. BUSINESS We are a Nevada corporation organized in 2004.
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Our Craft Canning + Printing (“Craft C+P”) segment provides digital can printing to customers in the craft beverage industry operating throughout the Pacific Northwest as well as other states. We also provide mobile canning services to the craft beverage industry in Oregon. In addition to these services we offer co-packing services from a single fixed site in Portland, Oregon.
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Prior to October 7, 2024, we operated two businesses, the business which Spirits is now engaged in as a subsidiary and our digital printing can operation which we called our “craft business.” As we were negotiating the acquisition of Old Beeline, we understood that we had to eliminate the substantial debt on our balance sheet.
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Our Spirits segment manufactures, blends, bottles, markets and sells a wide variety of alcoholic beverages under recognized brands in 23 U.S. states. Across both businesses we employ 47 people in the United States. Mission and Strategy Our mission is to offer great products and services in the craft beverage space.
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This led to discussions with our creditor where the craft business would be sold and 47% of the Spirits business would also be sold to these creditors and other third parties. On September 4, 2024, we entered into a Merger Agreement with Old Beeline and ultimately closed the merger on October 7, 2024.
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This includes advanced digital can printing decoration with custom graphics and co-packing services with distinct capability and craftsmanship serving the craft beer, cider, and kombucha among other beverage segments. Craft C+P offers digital can printing to customers and co-packing services. Our spirits brands span several alcoholic beverage categories, including whiskey, vodka, rum and tequila.
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The merger occurred immediately after the closing of the Debt Exchange Agreement described below. In the merger, we issued the shareholders of Old Beeline 517,771 shares of Series F-1 Preferred Stock (“Series F-1”) and 69,482,229 shares of Series F Preferred Stock (“Series F), both of which were non-voting and convertible only upon a post-merger shareholder approval.
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We sell our products on a wholesale basis to distributors through open states, and brokers in control states. Our strategy is to expand our two distinct businesses – Craft C+P and Spirits in our regional market where our brand equity and concentration of investment will have the greatest return.
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Because the merger would ultimately result in a change of control upon post-merger shareholder approval, we were required to obtain approval from the Nasdaq Stock Market, LLC (“Nasdaq”) and our shareholders before more than 19.99% of our Common Stock could be issued to the former Old Beeline shareholders as well as investors who provided financing during the following six months.
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Our spirits portfolio is to be positioned as a leading regional craft spirits provider that develops brands, expands geographic presence growing revenue and cash flow. These two segments are detailed below.
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Those approvals subsequently occurred with our shareholders approving the voting and conversion of the Series F and Series F-1 on March 7, 2025 and Nasdaq approving the change of control on March 5, 2025.
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Segments Craft Canning + Printing Digital Can Printing In April 2022, we initiated operations of an innovative digital can printing facility that allows us to digitally print high quality graphics on aluminum beverage cans.
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Due to the Nasdaq rules, Old Beeline appointed two directors out of the six directors serving following the merger and our Chief Executive Officer remained as Chief Executive Officer until March 7, 2025. Old Beeline’s Chief Financial Officer became our Chief Financial Officer since our Chief Executive Officer had been serving in both roles prior October 7, 2024.
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This technology offers greater flexibility than traditional decoration methods and initially was directed toward smaller craft beverage manufacturers seeking custom graphics of limited releases, vintages, partnerships, and special events.
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Debt Exchange Agreement On September 4, 2024, the Company and its new subsidiary, Craft, entered into a Debt Exchange Agreement, which closed on October 7, 2024, resulting in the assignment by the Company of 720 barrels of spirits to Craft, followed by the merger of Craft into a limited liability company owned by certain creditors of the Company.
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This investment in digital printing at Craft C+P allows the Company the ability to offer unparalleled customization and flexibility to craft beverage producers seeking direct printing for canning projects of all sizes, while having an annual production capacity of over 20 million cans.
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Subsequent to the execution of the Debt Exchange Agreement, the Company organized Spirits and assigned the Company’s business of manufacturing and marketing spirits to Spirits, which manufactures, acquires, blends, bottles, imports, markets and sells a wide variety of alcoholic beverages. Spirits’ brands span several alcoholic beverage categories, including whiskey, vodka, rum, and tequila.
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One of Craft C+P’s many goals for 2024 is to significantly increase its production capacity. 4 Co-packing Facility We offer co-packing services for non-alcoholic canned beverages including CBD soda waters in Portland, Oregon through a mobile co-packing network and one fixed co-packing location. Mobile Canning Our mobile canning business is located in Portland, Oregon.
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Spirits sells products on a wholesale basis to distributors in open states and through brokers in control states. Our business fundamentally changed on October 7, 2024, when we acquired Old Beeline and simultaneously sold our craft business which was our largest business and a large minority ownership interest in Spirits.
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We use extensive proprietary and data-driven quality control measures and a robust clean-in-place procedure in order to provide the best packaging service for our customers. We take great pride in helping local beverage producers expand their distribution reach by using our service to offer industry-top quality and branding.
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The Company’s business lines entail the following: (1) Beeline Financial Holdings, Inc., a wholly-owned subsidiary which in turn owns subsidiaries which operate as a fintech mortgage lender and title provider and (2) Spirits in which the Company owns 53%.
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Customers rely on our ability to produce and supply critical components on a timely basis . Likewise, Craft C+P has made significant investments in technology, processes and its supply chain to deliver digitally printed cans ready for co-packing.
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Following shareholder approval, we changed our name from our former name of Eastside Distilling, Inc. to Beeline Holdings, Inc., and appointed Nicholas Liuzza, Jr., Old Beeline’s Chief Executive Officer, as the Company’s Chief Executive Officer, in the furtherance of our shifted focus towards the Beeline business. In addition, Geoffrey Gwin, Stephanie Kilkenny and Robert Grammen resigned as directors and Mr.
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We have a limited number of contracts with both equipment and material suppliers as well as logistics providers that form the core of our supply chain. Our Spirits business production and supply chain involves several important stages, including bottle and label design, raw materials procurement, filling the bottles, and packaging the bottles in various configurations for shipment.
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Gwin resigned as Chief Executive Officer of the Company, and Nicholas Liuzza, Jr. and Stephen Romano were appointed as directors to fill two vacancies on the Board of Directors, following which there is one vacancy existing on the Board of Directors. Geoffrey Gwin was also appointed as Chief Executive Officer of Spirits.
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All of the distributors with whom we currently work also distribute our competitors’ products and brands. As a result, we must foster and maintain our relationships with our distributors.
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The following are descriptions of each of our new Beeline business and our legacy Spirits business. Beeline’s Business Beeline Overview and History Beeline is a fintech mortgage lender and title provider transforming the home loan process into a shorter, easier path than conventional mortgage lending for millions of Americans seeking a digital experience.
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In the U.S., trademark registrations need to be renewed every ten years. We expect to register our trademarks in additional markets as we expand our distribution territories. Seasonality Our Craft C+P business typically has peak sales mid to late summer.
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Beeline has built a proprietary mortgage and title platform leveraging advanced technical tools with sophisticated language learning models and combining an appropriate amount of human interaction to create a better outcome for mortgage borrowers. Beeline was founded in 2019 with principal offices located in Providence, Rhode Island. An Australian subsidiary has offices in Burleigh Heads, Australia.
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Our spirits business has historically followed the spirits industry seasonality trends with peak sales generally occurring in the fourth calendar quarter in spirits, primarily due to seasonal holiday buying. Competition We are the only digital can printing business in the United States operating in the Pacific Northwest.
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Beeline also has executive office suites in three locations in the United States. Beeline’s business model is focused on providing an efficient process for consumers to more easily access mortgage lending using our online portal and services.
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However, we compete with other digital can decorating companies in other regional markets and other can decorating companies that offer different decorating technologies. These alternative suppliers can produce can decorations at lower costs than our technology as well as at greater volumes. The mobile canning and bottling industry is highly fragmented and very competitive.
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In 2024, approximately 59% of the loans Beeline originated and brokered through December 31, 2024, were Non-QM loans where the consumer, for example, lacked traditional income from full-time employment in contrast to investment, rental income or other 1099 income or where the consumer has sufficient assets to support the loan.
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The threat of new entrants is high. Moreover, we compete at the hyper-local scale, where we have a customer base concentrated in the craft beer segment. One of our greatest threats associated with losing customers is the customer’s own growth and success. As new brewers grow, they are able to afford the investment in their own canning line.
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Beeline primarily serves as the lender for its conventional loans, where it is also fully responsible for the underwriting. Beeline is the lender on a non-delegated underwriting basis on most of its Non-QM loans. Beeline also serves as a mortgage broker for certain loans with third party lenders - primarily for the remainder of Non-QM loans.
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Most foreign countries impose excise duties on wines and distilled spirits, although the form of such taxation varies from a simple application on units of alcohol by volume to intricate systems based on the imported or wholesale value of the product. Several countries impose additional import duty on distilled spirits, often discriminating between categories in the rate of such tariffs.
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In 2024, Beeline has acted as lender in 62% of its loan transactions, and as mortgage broker in 38% of its loan transactions.
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If we begin distributing our products internationally, import and excise duties could have a significant effect on our sales, both through reducing the consumption of alcohol and through encouraging consumer switching into lower-taxed categories of alcohol.
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Beeline leverages its industry-specific knowledge and infrastructure, using a combination of licensed and proprietary technology, to provide an alternative to a more manual, non-technology focused lending process for residential properties in the United States. 4 Beeline’s Mortgage Lending Business Beeline is licensed to operate in 28 states including California, Florida and Texas.
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Employees As of April 1, 2024, we have 47 employees, 7 of whom are in sales and marketing, 33 in printing/production/canning/bottling, and 7 of whom are in administration. We will continue to monitor our staffing while streamlining our operations for working capital needs. Geographic Information Craft C+P operates in one state. Spirits currently sells its products in 23 states.
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Beeline’s services and platform are designed to address the evolving US real estate market, including the increasing use of online and digital means of financing access as well as a trend away from conventional lending qualification practices, in part by placing consumers in front of financing opportunities that may not be available from lenders using the conventional approach to loan qualification processing.
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Its focus is on residential properties. However, a small portion of Beeline’s originated loans (less than 10%) are for commercial properties. Beeline can generate mortgage approvals that are more reliable than traditional pre-approvals and in as little as 7 to 10 minutes.
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Beeline’s unique customer experience was built for digital-first consumers and property investors who grew up in the gig economy and who desire a frictionless, digital experience.
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Beeline offers a unique variety of mortgage products when compared to other mortgage lenders, including the “top 50” lenders, allowing borrowers a higher probability of home ownership or to take cash out of their property through a refinance transaction.
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Most top 50 lenders will deny a borrower if they are not approved for a conventional mortgage backed by Freddie Mac or Fannie Mae, the two government-sponsored enterprises (“GSEs”) that back a majority of mortgages in the U.S. (“QM loans”).
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In this instance, Beeline will re-route the borrower to a non-traditional mortgage process offering solutions not offered by larger lending institutions. Combining QM loans and Non-QM loans through a single streamlined platform available any time provides strong differentiation and provides additional options for Beeline’s customers.
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As the real estate industry has evolved, Non-QM loans have become more popular, relying on a different set of underwriting criteria which are more suited to borrowers whose situations do not line up with more stringent guidelines created for and based on the previous generations and less flexible economy.
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Beeline is one of the few direct-to-consumer digital mortgage lenders that offer both QM loans and Non-QM loans from a single platform, allowing Beeline to better serve the 100 million Millennials and Gen Z quickly emerging as home buyers and currently representing approximately 60% of the home purchase market.
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In 2024, 25% of Beeline’s loan originations were home purchases, and 75% were refinance transactions. As described elsewhere in this section, Beeline’s business is multi-faceted, and Beeline can serve multiple roles in the home lending process. In addition to the lending operation, Beeline also has two title agencies in its umbrella.
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One title agency is wholly owned and the other title agency is a joint venture with an asset manager in which Beeline holds 50.9% of the ownership. Beeline also has a minority investment in a subsidiary focused on the development of artificial intelligence (“AI”) that Beeline’s lending operation leverages in text chat on its website.
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Beeline breaks down the legacy role-based mortgage process into tasks for faster processing. Beeline has built automation to satisfy underwriting conditions in the loan file in real time. This expedites the time to close while minimizing headcount and expense for Beeline.
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Beeline expects that its technology and systems will continue to evolve, which will permit growth over the next three to five years. However, there are no assurances that Beeline will grow during this period. Beeline generates its leads exclusively online relying heavily on Google advertising, which generated over 49% of its leads in 2024.
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One other source accounted for more than 10% of Beeline’s leads. Its marketing processes and strategies are further described under “Marketing” below.
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Beeline’s Services Beeline is a digital mortgage operation leveraging proprietary AI, streamlined task-based processing, data integrations and human capital for originating, evaluating, approving and closing a mortgage. ● Marketing and Sales : Beeline uses an AI chatbot called Bob 2.0 to enable cost-effective communication with prospective borrowers to respond to inquiries and answer questions about our lending offerings, enhance borrower engagement and introduce new borrowers to our platform.
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This AI product is powered by MagicBlocks, Inc.
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(“MagicBlocks”), a company in which Beeline currently owns a 47.6% interest. ● Application and Pre-Qualification : When borrowers are ready to apply, they are taken through a seven-to-ten-minute journey through a series of conversational-style questions, collecting the information required to complete a loan application. ● Document Collection and Verification : The system automatically asks for required documents, such as bank statements, tax returns, and employment information based on the loan type and purpose.
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Many platforms utilize a secure application programming interface to link directly to borrowers’ financial accounts, making it easier to verify income, assets, and employment information without manual uploads. ● Approval and Closing : Once underwriting is completed, the borrower receives a conditional approval.
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Where legally permissible under state law, Beeline schedules online closings, further reducing the need for physical paper and cuts down on signing errors and time to post-close review a loan file.
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Where that is not possible, the loans close in-person. ● Post-Closing and Servicing : After closing, loans are sold to aggregators who handle all servicing. ● Title and Closing Services . Beeline offers title and closing services to its borrowers. These operations are tightly integrated, providing a seamless customer experience.
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Beeline acts as the agent in its title and closing services business, selling title insurance policies for some of the largest title underwriters, including First American National Title Insurance Company, Fidelity National Title Insurance Company and Westcor Land Insurance Company. 5 Sources of Revenue Beeline generates revenue from three key sources, listed below.
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The numbers reflect the approximate percentages of Beeline’s 2024 revenue through December 31, 2024: ● Net gain on sale of loans: Once Beeline closes a loan, it then sells that loan to an aggregator at a predetermined price. The proceeds are recorded as a gain on sale of loans.
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This source accounted for approximately 64% of revenue. ● Loan origination fees: This is a fee charged to a borrower to offset the costs of origination. This source accounted for approximately 16% of revenue. ● Title fees: Fees associated with closing a mortgage for a lender, which averages approximately $1,700 per closed file.
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Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
29 edited+339 added−66 removed26 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
29 edited+339 added−66 removed26 unchanged
2023 filing
2024 filing
Biggest changeIf we are successful in acquiring additional brands or related service businesses, we may still fail to achieve our target margins or maintain profitability levels that would justify our investment in those additional brands or services or fail to realize operating and economic efficiencies or other planned benefits with respect to those additional brands or services. 11 The addition of new products or businesses entails numerous risks with respect to integration and other operating issues, any of which could have a detrimental effect on our results of operations and/or the value of our equity.
Biggest changeThe addition of new products or businesses entails numerous risks with respect to integration and other operating issues, any of which could have a detrimental effect on our results of operations and/or the value of our equity.
Also, our inventory may become obsolete as we introduce new products, cease to produce old products or modify the design of our products’ packaging, which would increase our operating losses and negatively impact our results of operations. We have been unsuccessful in launching new products and recent launches have negatively impacted the rate of loss.
Also, our inventory may become obsolete as we introduce new products, cease to produce old products or modify the design of our products’ packaging, which would increase our operating losses and negatively impact our results of operations. 37 We have been unsuccessful in launching new products and recent launches have negatively impacted the rate of loss.
Many of our competitors have longer operating histories and have substantially greater financial, sales, marketing and other resources than we do, as well as larger installed customer bases, greater name recognition and broader product offerings. Some of these competitors can devote greater resources to the development, promotion, sale and support of their products.
Many of our competitors have longer operating histories and have substantially greater financial, sales, marketing and other resources than we do, as well as larger installed customer bases, greater name recognition and broader product offerings. These large competitors can devote financial and other greater resources to the development, promotion, sale and support of their products.
Failure to maintain adequate inventory levels would negatively impact operational profitability. We maintain inventories of our product aging in barrels, as well as, to meet customer delivery requirements. We have used our barreled spirits inventory at market value as collateral in our financing.
Failure to maintain adequate inventory levels would negatively impact operational profitability. We maintain inventories of our product aging in barrels, as well as inventory needed to meet customer delivery requirements. We have used our barreled spirits inventory at market value as collateral in the Company’s financing.
Costs of compliance with changes in regulations could be significant and could harm our business, as we could find it necessary to raise our prices in order to maintain profit margins, which could lower the demand for our products and reduce our sales and profit potential.
Costs of compliance with changes in regulations could be significant and could harm our business, as we could find it necessary to raise our prices in order to maintain profit margins, which could lower the demand for our products and reduce our sales and increase our losses.
These risks include, but are not limited to, the following: ● difficulties in assimilating acquired operations or products, including failure to realize synergies; ● failure to realize or anticipate benefits or to execute on our planned strategy for the acquired brand or business; ● unanticipated costs that could materially adversely affect our results of operations; ● negative effects on reported results of operations from acquisition-related charges and amortization of acquired intangibles; ● diversion of management’s attention from other business concerns; ● adverse effects on existing business relationships with suppliers, distributors and retail customers; ● risks of entering new markets or markets in which we have limited prior experience; and ● the potential inability to retain and motivate key employees of acquired businesses.
These risks include, but are not limited to, the following: ● difficulties in assimilating acquired operations or products, including failure to realize synergies; ● unanticipated costs that could materially adversely affect our results of operations; ● negative effects on reported results of operations from acquisition-related charges and amortization of acquired intangibles; ● diversion of management’s attention from other business concerns; ● adverse effects on existing business relationships with suppliers, distributors and retail customers; ● risks of entering new markets or markets in which we have limited prior experience; and ● the potential inability to retain and motivate key employees of acquired businesses.
We are required by law to use state-licensed distributors or, in 17 states known as “control states,” state-owned agencies performing this function, to sell our products to retail outlets, including liquor stores, bars, restaurants and national chains in the United States. We have established relationships for our brands with a limited number of wholesale distributors.
We are required by law to use state-licensed distributors or, in certain states known as “control states,” state-owned agencies to sell our products to retail outlets, including liquor stores, bars, restaurants and national chains in the United States. We have established relationships for our brands with a limited number of wholesale distributors.
We are susceptible to cybersecurity breaches and cyber-related fraud. We depend on information technology (“IT”) systems, networks, and services, encompassing internet sites, data hosting and processing facilities, as well as hardware (including laptops and mobile devices), along with software and technical applications and platforms.
Risks Relating to our Spirits Business We are susceptible to cybersecurity breaches and cyber-related fraud. We depend on information technology (“IT”) systems, networks, and services, encompassing internet sites, data hosting and processing facilities, as well as hardware (including laptops and mobile devices), along with software and technical applications and platforms.
In the past two years at least one distribution has significantly reduced its investment in our spirits brands which has had an adverse effect our business, sales and growth. This could continue into the future. We have engaged new distributors, however they do not have the same scale as the former distributor.
In the past two years, at least one distributor has significantly reduced its investment in our spirits brands, which had an adverse effect our business, sales and growth. We have engaged new distributors; however they do not have the same scale as the former distributor.
We currently distribute our spirits in 23 states. 10 Over the past decade there has been increasing consolidation in production, distribution, and retail (the three tiers of the current system) that challenges the growth of small businesses in the marketplace. Our distributors also distribute competitive brands for much larger companies with significant pricing power.
Over the past decade, there has been increasing consolidation in production, distribution, and retail (the three tiers of the current system) that challenges the growth of small businesses in the marketplace. Our distributors also distribute competitive brands for much larger companies with significant pricing power.
Also, its failure to perform satisfactorily or handle increased orders, or delays in shipping could cause us to fail to meet orders for our products, lose sales, incur additional costs and/or expose us to product quality issues.
Also, any failure by Agaveros Unidos to perform satisfactorily or handle increased orders, or delays in shipping, could cause us to fail to meet orders for our products, lose sales, incur additional costs and/or expose us to product quality issues.
A component of our growth strategy has been the addition of other brands that are complementary to our existing portfolio. In addition, we have launched new services and acquired new assets. Future growth requires we continue to invest in the newly acquired businesses or our growth will be limited.
A component of our growth strategy has been the addition of other brands that are complementary to our existing portfolio. Toward this end, during recent years we have launched new services and acquired new assets. Future growth requires we continue to invest in the newly acquired businesses.
Further, any contractual indemnification and insurance coverage we have from parties supplying our products is limited, as a practical matter, to the creditworthiness of the indemnifying party and the insured limits of any insurance provided by these suppliers.
Further, any contractual indemnification and insurance coverage we have from parties supplying our products is limited, as a practical matter, to the creditworthiness of the indemnifying party and the insured limits of any insurance provided by these suppliers. Extensive product liability claims could be costly to defend and/or costly to resolve and could harm our reputation or business.
Any class action or other litigation asserted against us could be expensive and time-consuming to defend against, depleting our cash and diverting our personnel resources and, if the plaintiffs in such actions were to prevail, our business could be harmed significantly. 13 We face substantial regulatory risks including compliance with local and national laws, legal, regulatory and tax changes.
Any class action or other litigation asserted against us could be expensive and time-consuming to defend against, depleting our cash and diverting our personnel resources and, if the plaintiffs in such actions were to prevail, our business could be harmed significantly.
Failure of our distributors to distribute our products adequately within their territories or “under-invest” in our brands could result in deteriorating operating performance.
Failure of our distributors to distribute our products adequately within their territories or any “under-investment” by our distributors in our brands could result in deteriorating operating performance. We currently distribute our Spirits products in seven states.
An increase in taxation or in import or excise duties could also significantly harm our sales revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol.
An increase in taxation or in import or excise duties could also significantly harm our sales revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol. We are exposed to product liability or other related liabilities which could have significant negative financial repercussions on Spirits’ solvency.
In any event, extensive product liability claims could be costly to defend and/or costly to resolve and could harm our reputation or business. We could face issues including the risk of contamination of our products and/or counterfeit or confusingly similar products. The success of our brands depends upon the positive image that consumers have of them.
We could face issues including the risk of contamination of our products and/or counterfeit or confusingly similar products. The success of our brands depends upon the positive image that consumers have of them.
Also, acquisitions could result in the recording of significant goodwill and intangible assets on our financial statements, the amortization or impairment of which would reduce reported earnings in subsequent years. Failure to protect our customer relationships, trademarks and trade secrets from competitors would result in increased competition.
Also, acquisitions could result in the recording of significant goodwill and intangible assets on our financial statements, the amortization or impairment of which would reduce reported earnings in subsequent years. We face substantial competition in the spirits industry and have limited financial resources compared to other competitors.
This may result in reputational, competitive, and/or business harm, potentially adversely impacting our business operations and financial condition. Furthermore, such incidents could lead to the unauthorized disclosure of critical confidential information, causing financial and reputational damage due to the loss or misappropriation of confidential information belonging to us, our partners, employees, customers, suppliers, or consumers.
Furthermore, such incidents could lead to the unauthorized disclosure of critical confidential information, causing financial and reputational damage due to the loss or misappropriation of confidential information belonging to us, our partners, employees, customers, suppliers, or consumers, particularly with Beeline’s storage of confidential consumer information including social security numbers.
We cannot assure you that these and other governmental regulations applicable to our industry will not change or become more stringent. Moreover, because these laws and regulations are subject to interpretation, we may not be able to predict when and to what extent liability may arise.
Moreover, because these laws and regulations are subject to interpretation, we may not be able to predict when and to what extent liability may arise.
Some of these are overseen, hosted, supplied, and/or utilized by third parties or their vendors, supporting us in the administration of our business. 12 The escalation of IT security threats and the increasing sophistication of cyber-crime pose a potential hazard to the security of our IT systems, networks, and services, as well as to the confidentiality, availability, and integrity of our data.
The escalation of IT security threats and the increasing sophistication of cyber-crime pose a potential hazard to the security of our IT systems, networks, and services, as well as to the confidentiality, availability, and integrity of our data.
It is also possible that governments could assert that the use of alcohol has significantly increased government-funded healthcare costs. Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our suppliers, could be named in litigation of this type.
Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our suppliers, could be named in litigation of this type. 38 Lawsuits have been brought in a number of states alleging that beverage alcohol manufacturers and marketers have improperly targeted underage consumers in their advertising.
Our business is subject to extensive government regulation. This includes regulations regarding production, distribution, marketing, advertising and labeling of beverage alcohol products. We are required to comply with these regulations and to maintain various permits and licenses. We are also required to conduct business only with holders of licenses to import, warehouse, transport, distribute and sell beverage alcohol products.
We are required to comply with these regulations and to maintain various permits and licenses. We are also required to conduct business only with holders of licenses to import, warehouse, transport, distribute and sell beverage alcohol products. We cannot assure you that these and other governmental regulations applicable to our industry will not change or become more stringent.
This could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our sales and operations. 14 In addition, we also provide contract bottling, canning, and packaging services for existing and emerging beer, wine and spirits producers.
This could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our sales and operations. 39 Recent and threatened tariffs imposed by the U.S. and other countries could materially adversely affect our Spirits business.
Our profitability depends in part on achieving scale. We will need to achieve wider market acceptance of our brands and materially increase sales to achieve profitability. We must maintain adequate terms from our supply partner Agaveros Unidos de Amatitan, SA. de CV, which if not done, will likely result in deteriorating performance of our Azuñia brand.
In such scenarios, significant financial and other resources might be required to rectify the damage caused by a security breach or to repair and replace networks and IT systems. 36 We must maintain adequate terms from our supply partner Agaveros Unidos de Amatitan, SA. de CV, which if not done, will likely result in deteriorating performance of our Azuñia brand.
We will need to raise additional capital, which might be in the form of an equity offering. Future sales of substantial amounts of our common or preferred stock, including shares that we may issue upon exercise of warrants or conversion of preferred stock, could adversely affect the market price of our common stock.
Our ability to raise debt, however, is subject to complying the Nasdaq Stockholders’ Equity Rule. Common stock eligible for future sale may adversely affect the market. We have a substantial number of shares of common stock issuable upon conversion or exercise of our outstanding preferred stock and warrants.
Further, if we raise additional funds through the issuance of equity, the percentage ownership of our stockholders will be reduced and cause substantial dilution to current stockholders. We pay certain of our directors, consultants and business partners in our common stock or other securities linked to our common stock, and sometimes settle debts with common stock.
Because we must raise capital principally through the sale of equity including securities convertible into common stock, if we are successful our existing stockholders’ percentage ownership will decrease, and these stockholders may experience substantial dilution. Additionally, the issuance of additional shares of common stock or other securities could result in a decline in our stock price.
Our ability to meet our debt service obligations depends upon our operating and financial performance, which is subject to general economic and competitive conditions and to financial, business, and other factors affecting our operations, many of which are beyond our control.
This ability, to some extent, is subject to market, economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control.
For the foreseeable future, it is anticipated that earnings, if any, that may be generated from our operations will be used to finance our operations and that cash dividends will not be paid to holders of common stock. By issuing preferred stock, we may adversely affect the market price and voting rights of common shareholders.
Except for dividends we are required to pay on our preferred stock. We intend to retain earnings, if any, to finance the growth and development of our business and do not intend to pay cash dividends on shares of our common stock in the foreseeable future.
Removed
Item 1A. RISK FACTORS The statements in this section describe the most significant risks to our business and should be considered carefully in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Notes to Consolidated Financial Statements” to this Annual Report on Form 10-K, as well as our other disclosures in this Annual Report.
Added
Item 1A. RISK FACTORS Summary Risk Factors Our business and an investment in our Common Stock are subject to numerous risks and uncertainties, including those highlighted in the “Item 1A - Risk Factors” section below.
Removed
We may have other risks that we have not yet identified or that we currently believe are immaterial but may become material. RISKS RELATING TO OUR BUSINESS We expect to continue to produce net operating losses in 2024. We believe that we will continue to incur net losses in 2024.
Added
Some of these risks include: Financial Risks Related to the Company ● There is substantial doubt as to our ability to continue as a going concern. ● We have substantial indebtedness which becomes due and payable now and in the near future. ● We have a very limited operating history since we acquired Old Beeline. ● Old Beeline has a history of operating losses since inception, and if it fails to generate operating cash flow, you may lose all or most of your investment. 17 Risks Related to Beeline’s Business ● Beeline depends on third party partners and vendors to maintain and grow its business, the loss of some or all of these third parties may have a material adverse effect. ● Beeline depends on its ability to sell loans and mortgage service rights (“MSRs”) in the secondary market the impairment of which would materially harm its business. ● A recession or economic downturn could halt or limit its ability to sell Beeline’s loans and lend money to future borrowers. ● Similarly, higher interest rates adversely affect Beeline’s business. ● Beeline is required to comply with many financial, legal, and regulatory laws and regulations, and any failure to comply could have a material adverse effect. ● Beeline faces intense competition that could materially and adversely affect it. ● Beeline’s loans to customers originated outside of GSE guidelines or other guidelines involve a high degree of business and financial risk. ● Beeline relies on highly-skilled personnel with knowledge of the mortgage industry, the loss of whom may negatively impact its business. ● Beeline is exposed to interest rate volatility, which could have a material adverse effect. ● Material fraud could result in significant financial losses and reputational harm. ● Beeline markets its services through advertising via online sources, and it may need to incur substantial costs to drive future sales and may be unsuccessful in doing so. ● New TCPA regulations which went into effect in early 2025 will impact Beeline’s compliance costs and give rise to new regulatory and legal risks.
Removed
We also anticipate that our operating and investing cash needs may exceed our income from sales in 2024. Results of operations will depend upon numerous factors, some of which are beyond our control, including but not limited to new entrants, competitive activity, government regulations and increase in tax.
Added
Risks Related to Beeline’s Operations and Financial Results ● Old Beeline has a history of operating losses and has not yet been able to maintain profitability, and it may not achieve or maintain profitability in the future. ● If the United States experiences rising mortgage interest rates, it may continue to negatively impact Beeline’s business and loan origination volumes. ● Beeline’s business is subject to underwriting limitations and the potential of mortgage defaults. ● Failure to comply with underwriting guidelines of aggregators or GSEs could materially and adversely impact Beeline’s business. ● Changes in the GSEs’, the FHA’s or the VA’s requirements or guidelines could materially and adversely affect Beeline’s business.
Removed
We also incur substantial operating expenses at the corporate level, including costs directly related to being a reporting company with the SEC. We may be unsuccessful monetizing spirits assets in 2024. On December 14, 2022, we announced the intent to pursue the sale of one or more of our spirits assets.
Added
Risks Related to Beeline’s Debt and Warehouse Credit Lines ● Beeline relies on indebtedness to fund its operations and growth objectives, which subjects it to numerous risks arising from its incurring this indebtedness. ● Beeline relies on warehouse lines to fund the loans it originates and without these lines, Beeline would be unable to originate loans as a correspondent lender to its investors who purchase its loans.
Removed
Although the process is ongoing, there is a possibility that we may not successfully sell a spirit asset and generate significant cash from the sale.
Added
Risks Related to Beeline’s Products, Technology, and Intellectual Property ● Beeline’s business relies on technology infrastructure, which exposes it to cybersecurity and technology infrastructure risks. ● If Beeline is not able to protect the privacy, use, and security of customer information, it could sustain damages. ● Beeline heavily relies on third-party software to operate its business. ● Beeline faces risks with respect to its ability to protect its intellectual property rights. 18 Regulatory Risks ● We and Beeline each operate in a heavily regulated industry, and our business operations expose it to risks of noncompliance, including due to any future changes in the regulations applicable to it. ● Future artificial intelligence (“AI”) or technology characteristics and regulations could negatively impact our business. ● Beeline is subject to various telecommunications, data protection and privacy laws. ● Federal and state laws regulate Beeline’s strategic relationships which could result in harm to its business.
Removed
Completion of a sale on favorable terms, including the modification of certain debt provisions to allocate a portion of the proceeds for purposes other than debt repayment, may also prove challenging. 8 We may fail to secure additional capital and achieve adequate liquidity to grow and compete.
Added
Risks Relating to our Spirits Business ● We are susceptible to cybersecurity breaches and cyber-related fraud. ● We must maintain adequate terms from our supply partner, and any failure to do so will likely result in deteriorating performance of our Azuñia brand. ● Failure of our distributors to distribute our products adequately could result in deteriorating operating performance. ● Failure of our products to secure and maintain listings in the control states would result in a decline in revenue. ● Failure to maintain adequate inventory levels would negatively impact operational profitability. ● We have been unsuccessful in launching new products. ● We face substantial competition in the spirits industry and compete with many better capitalized competitors. ● We face unique risks relating to class actions or other litigation relating to alcohol. ● We face substantial regulatory risks in connection with the marketing and sale of alcohol. ● We are exposed to product liability or other related liabilities ● Since its acquisition Azunia has sustained substantial operating losses and as a result the company has written down the value of the brand over the past three years.
Removed
Historically, we have not generated sufficient cash from operations to finance additional capital needs, and thus we have used external sources of capital to fund operations. The source of these funds has included both private and public equity and/or debt financing. We have also raised cash from the bulk sale of whiskey.
Added
Additional write downs could further reduce the value of the intangible assets carried on the balance sheet.
Removed
We cannot assure that additional financing will be available to us on acceptable terms or at all. If additional capital is either unavailable or cost prohibitive, our operations and growth may be limited, and we may need to change our business strategy to slow the rate of, or eliminate, our expansion or to reduce or curtail our operations.
Added
Risks Relating to Our Common Stock ● The market price of our shares of common stock and our ability to raise capital as and when needed are subject to fluctuation including based on external forces and events which are beyond our control. ● Existing shareholders face substantial additional dilution and the potential for downward price pressure, including based on capital raising transactions underway or planned in the near term and outstanding derivative securities. ● If we fail to maintain our listing on Nasdaq, investors’ ability to sell our common stock will be diminished. ● Our failure to maintain effective disclosure controls and internal controls over financial reporting could have an adverse impact on us. ● Outstanding preferred stock and any new preferred stock that may be issued could harm our existing stockholders. ● If we raise capital in the future, it may dilute our existing stockholders’ ownership and/or have other adverse effects on us, our securities or our operations. ● Common stock eligible for future sale may adversely affect the market. ● A lack of securities or industry analyst coverage on our business or negative reports could negatively impact the market price and trading volume of our common stock. ● We have never paid dividends, and we do not expect to pay dividends for the foreseeable future.
Removed
Also, any additional financing we undertake could impose covenants upon us that restrict our operating flexibility. If we issue equity securities to raise capital, our existing shareholders may experience dilution and the new securities may have rights, preferences and privileges senior to those of our common stock. We may be unable to effectively service and refinance debt.
Added
Investing in our common stock involves a high degree of risk. Investors should carefully consider the following Risk Factors before deciding whether to invest in the Company. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations or our financial condition.
Removed
We have incurred significant debt under promissory notes and rely on payment terms from key customers. Much of our debt is secured by our bulk spirits inventory and other assets, including assets in Craft C+P.
Added
If any of the events discussed in the Risk Factors below occur, our business, consolidated financial condition, results of operations or prospects could be materially and adversely affected.
Removed
If we are unable to service our debt, we may need to sell inventory and other material assets, restructure or refinance our debt, or seek additional equity capital. Prevailing economic conditions and global credit markets could adversely impact our ability to do so.
Added
In such case, the value and marketability of our securities could decline. 19 Following our acquisition of Old Beeline on October 7, 2024, our focus is on, and our future revenue and operating results are anticipated to be derived both from, the Beeline mortgage business and the Spirits business.
Removed
Our debt agreements contain limits on our ability to, among other things, incur additional debt, grant liens, undergo certain fundamental changes, make investments, and dispose of inventory.
Added
As such, the following risks, as they relate to our business, are divided among financial risks, Beeline-related risks, Spirits-related risks, and risks related to our combined Company as a whole.
Removed
In 2023, we refinanced debt, which include substantial restrictions that could have important consequences, including the following: ● We may be more limited in our ability to execute on our strategy and have flexibility to operate or restructure our business; ● Our cash flow from operations may be allocated to the payment of outstanding debt and not to developing and growing our brands; ● We might not generate sufficient cash flow from operations or other sources to enable us to meet our payment obligations under the facility and to fund other liquidity needs; ● We may be more vulnerable to economic downturns, less able to withstand competitive pressures, and less flexible in responding to changing business and economic conditions; or ● We may be unable to incur additional debt, including for working capital, acquisitions, or other needs.
Added
Financial Risks Related to the Company Because there is substantial doubt as to the Company’s ability to continue as a going concern, we may not be successful and our ability to continue our operations is in doubt unless we can access sufficient working capital within the timeframe needed.
Removed
If we breach a loan covenant or miss a payment, the lenders could accelerate the repayment of debt and foreclose on our inventory and other assets. We might not have sufficient assets to repay our debt upon acceleration.
Added
The Company has limited capital and substantial accumulated deficit as of the date of this Report. We do not have sufficient working capital and cash flows for continued operations for at least the next 12 months, which raises a risk of our potential inability to continue as a going concern.
Removed
If we are unable to repay or refinance the debt upon acceleration or at maturity, the lenders could initiate a bankruptcy proceeding against us or collection proceedings with respect to our assets securing the facility, which could materially decrease the value of our common stock.
Added
Our continued existence is dependent upon our obtaining the necessary capital to meet our expenditures, and we can provide no assurance that we will be able to raise adequate capital to meet our future working capital needs.
Removed
In 2023, we issued preferred equity to satisfy a significant amount of debt, which included interest expense. Our secured creditors also granted the Company exemptions on paying certain interest and fees and lengthened the maturities of some debt.
Added
We have substantial indebtedness which becomes due and payable in the near future, and if we are unable to repay this indebtedness as and when it comes due, it could materially adversely affect our business and your investment in us.
Removed
There are no assurances we will be able to secure additional debt exchanges or that they may be offered at terms that enable us to sustain operations. 9 Failure to retain and recruit executive management and to build morale and improve performance could negatively impact our business.
Added
We presently have a total of $8.2 million of current outstanding indebtedness, not including amounts due under its warehouse line to place mortgage loans, whereby mortgage loans are then resold to third parties.
Removed
Eastside Distilling’s success depends upon the efforts and abilities of our executive management team, key senior management, and a high-quality employee base, as well as our ability to attract, motivate, reward, and retain them.
Added
Our Spirits assets secure $1.3 million of this outstanding indebtedness and if we are unable to repay it as it comes due, we could lose the Spirits business.
Removed
If one of our executive officers or critical senior management terminates his or her employment, we may not be able to replace their expertise, fully integrate new personnel or replicate the prior working relationships. The loss of critical employees might significantly delay or prevent the achievement of our business objectives.
Added
Further, if we are unable to repay these notes as of May 14, 2025, the notes will accrue a special one-time interest payment of 30% which will increase the principal of each note in addition to 18% default interest.
Removed
Qualified individuals with the breadth of skills and experience in our industry that we require are in high demand, and we may incur significant costs to attract them. Difficulties in hiring or retaining key executive or employee talent, or the unexpected loss of experienced employees could have an adverse impact on our business performance.
Added
In January 2025, we began to make monthly installment payments of $0.4 million and will continue through September 2025 under certain indebtedness, which is secured by Beeline’s assets, and if we are unable to meet these obligations, it could jeopardize that business.
Removed
In addition, we could experience business disruption and/or increased costs related to organizational changes, reductions in workforce, or other cost-cutting measures. Currently, Eastside has one executive employee, Mr. Gwin who functions as both Chief Executive Officer and Chief Financial Officer. Mr. Gwin has no employment contract with the Company.
Added
If we are unable to meet these obligations with respect to the indebtedness described above, it would have a material adverse effect on our business and financial condition, and you could lose all or most of your investment as a result. Further, we have relied heavily upon capital infusions from our Chief Executive Officer and principal shareholder.
Removed
Failure of our brands to achieve anticipated consumer acceptance would impact sales and profitability. Most of our brands are relatively new and have not achieved national brand recognition. In addition, financial constraints facing the Company has resulted in underinvestment in the Company’s spirits brands, which has had a negative impact on sales.
Added
As of the date of this Report, he has directly invested $3.9 million in purchases of securities from the Company since December 2024. If he is unable or unwilling to continue to fund us in the future, your investment could be materially and adversely affected.
Removed
We have not yet had success growing a brand to a sufficient level to realize corporate wide profitability. Also, brands we may develop and/or acquire in the future may not establish widespread brand recognition. Accordingly, if consumers do not accept our brands at scale, our sales will be limited, and we will not be able to penetrate our markets.
Added
We have a very limited operating history since our merger with Old Beeline in October 2024 which makes it difficult to forecast our future results, making any investment in us highly speculative. While Old Beeline commenced operations in 2020, we have a limited operating history as a combined company following the merger from which to evaluate our prospects.
Removed
In addition, our entry into and expansion of our contract bottling, canning, and packaging services may not be successful, and we may not realize the benefits of these co-packing operations and may face certain risks, including safety concerns, product contamination, and equipment malfunctions or breakdowns, among other things associated with our manufacturing operations.
Added
Importantly, our executive officers come from Beeline, so our operations going forward are subject to ordinary integration risks where two companies and two cultures are combined.
Removed
Our business and prospects depend in part on our ability to develop and retain customers as well as cultivate favorable consumer recognition of our brands and trademarks. Although we apply for registration of our brands and trademarks, they could be imitated in ways that we cannot prevent. Also, we rely on trade secrets and proprietary know-how, concepts and formulas.
Added
Further, our limited personnel could pose challenges to us in our integration efforts and operations moving forward, including due to our lack of liquidity, the highly competitive and regulated industries in which each of Beeline and Spirits operate in addition to our status as a public company required to prepare and file reports with the SEC.
Removed
Our methods of protecting this information may not be adequate. Moreover, we may face claims of misappropriation or infringement of third parties’ rights that could interfere with our use of this information.
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
1 edited+4 added−13 removed0 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
1 edited+4 added−13 removed0 unchanged
2023 filing
2024 filing
Biggest changeWe face risks from cybersecurity threats that, if realized, are likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
Biggest changeWe can provide no assurance that there will not be incidents in the future or that past or future attacks will not materially affect us, including our business strategy, results of operations, or financial condition.
Removed
Item 1C. CYBERSECURITY We have developed and implemented a cybersecurity risk management program that is designed to protect the confidentiality, integrity, and availability of the Company’s data and systems. Our cybersecurity risk management program includes a cybersecurity incident response plan.
Added
Item 1C. CYBERSECURITY Risk Management and Strategy Like all companies that utilize electronic technology, we are subject to threats of breaches of our technology systems. To mitigate the threat to our business, we will take a comprehensive approach to cybersecurity risk management. Our Board and our management actively oversee our risk management program, including the management of cybersecurity risks.
Removed
Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Added
We intend to have established policies, standards, processes and practices for assessing, identifying, and managing material risks from cybersecurity threats, including those discussed in our Risk Factors.
Removed
Our cybersecurity risk management program includes: ● A risk assessment process designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise IT environment; ● A security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; ● The use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; ● Cybersecurity awareness training of our employees, incident response personnel, and senior management; and ● A cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents.
Added
We intend to have devoted financial and personnel resources to implement and maintain security measures to meet regulatory requirements and shareholder expectations, and we intend to continue to make investments to maintain the security of our data and cybersecurity infrastructure. We intend to establish and maintain a Cybersecurity Maturity Model Certification compliance program and work to meet all applicable deadlines.
Removed
Additionally, the Company assesses and manages cybersecurity threats associated with its third-party service providers’ information technology systems that could compromise the Company’s information security or data. Identified cybersecurity threats are communicated to management for review, response and mitigation as appropriate.
Added
While there can be no guarantee that our policies and procedures will be properly followed in every instance or that those policies and procedures will be effective, we believe that the Company’s sustained investment in people and technologies will have contributed to a culture of continuous improvement that has put the Company in a position to protect against potential compromises and we do not believe that risks from prior cybersecurity threats have materially affected our business to date.
Removed
As of the date of this filing, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.
Removed
For additional information, see Part I, Item 1A: Risk Factors— Risks Relating to our Business: We are susceptible to cybersecurity breaches and cyber-related fraud. 17 Cybersecurity: Governance Our Board of Directors considers cybersecurity risk within the Board’s risk oversight function.
Removed
The Board of Directors has charged management with the responsibility for oversight of cybersecurity risks and incidents and any other risks and incidents relevant to the Company’s computerized information system controls and security. The Board and its Audit Committee oversee management’s implementation of our cybersecurity risk management program.
Removed
Implementation and maintenance of our IT systems has been outsourced to a third-party contractor: Tyler Melton Technologies, LLC (“TMT”), which has over ten years of experience in support of cybersecurity for business enterprises.
Removed
Supervision of the services provided by TMT for the Company is the responsibility of our Corporate Controller, who is charged with the role of assessing and managing our material risks from cybersecurity threats.
Removed
Our Corporate Controller reviews the efficacy of our cybersecurity program from time to time as circumstances make it appropriate and annually in connection with the annual audit of the Company’s financial statements. Our Corporate Controller renders to the auditor a written report regarding IT general controls, including cybersecurity systems, risk assessment and monitoring practices.
Removed
The auditor reviews the report in connection with its assessment of the Company’s internal controls over financial reporting, and advises Company management if the report reveals flaws in the Company’s internal controls. Copies of the Corporate Controller’s report are also given to the CEO/CFO and made available to members of the Board of Directors.
Removed
Copies of the auditor’s report are delivered to the members of the Board of Directors, which reviews and is responsible to cause a remediation of any material inadequacies in the controls environment. Our Corporate Controller reports to our CEO/CFO on matters of cybersecurity, and together they carry responsibility for our overall cybersecurity risk management program.
Removed
Our CEO/CFO provides prompt reports to the Board regarding cybersecurity risks and incidents as they are revealed, as well as periodic reports, as appropriate, regarding the Company’s cybersecurity program.
Item 2. Properties
Properties — owned and leased real estate
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Item 2. Properties
Properties — owned and leased real estate
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2023 filing
2024 filing
Removed
PROPERTIES We leased the following properties as of December 31, 2023: Location Principal Activities Sq Ft Lease Termination 1601 South 92nd Place, Suite A, Seattle, WA 98108 Craft C+P Operation 9,300 10/01/2025 10100 SE Main St., Milwaukie, OR 97222 Distilling, Blending, Bottling, Warehousing 17,971 10/01/2026 4736 SE 24 th Street, Portland, OR 97202 CBD Co-packing Operations 9,000 05/31/2026 2321 NE Argyle, Unit D, Portland, OR 97211 Craft C+P Operation / Corporate Headquarters 50,380 03/01/2027
Added
Item 2. PROPERTIES Beeline’s principal office is located at 188 Valley Street, Suite 225, in Providence, Rhode Island where it has a long-term lease of 9,282 square feet with current rent of $19,561 per month. The lease expires in 2030.
Added
Beeline’s other key facility is located in Burleigh Heads, Australia where an Australian subsidiary leases 3,455 square feet at a rent of $12,456 per annum U.S. dollars based on exchange rates as of March 20, 2025.
Added
In addition, Beeline leases small offices in executive suites at three business offices and three virtual Regus offices in Virginia, Texas, Louisiana, Massachusetts, and California. The total monthly cost for these facilities is $3,650. Spirits carries on its operations at 2150 SE Hanna Harvester Drive, Milwaukie OR. At that location, blending, bottling and warehousing are conducted within 14,644 square feet.
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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2023 filing
2024 filing
Removed
Item 3. LEGAL PROCEEDINGS On March 1, 2023, Sandstrom Partners, Inc. filed a complaint in the Circuit Court of the State of Oregon for the County of Multnomah alleging the Company failed to pay for its services pursuant to an agreement entered into on October 16, 2019.
Added
Item 3. LEGAL PROCEEDINGS From time to time, the Company is a party to, or otherwise involved in, legal proceedings arising in the normal course of business.
Removed
The complaint seeks damages of $285,000, plus a judicial declaration, due to the Company’s failure to pay for the services. The Company believes that it paid for services rendered, and if any balance is outstanding it is minimal. The Company intends to defend the case vigorously.
Added
As of the date of this Report, the Company is not aware of any pending legal proceedings to which the Company or any of its subsidiaries is a party which, if determined adversely, would have a material effect on its business, results of operations, cash flows or financial position. Item 4. MINE SAFETY DISCLOSURES Not applicable. 44 PART II
Removed
On December 15, 2020, Grover Wickersham filed a complaint in the United States District Court for the District of Oregon against the Company. Mr.
Removed
Wickersham, the former CEO and Chairman of the Board of the Company, has asserted causes of action for fraud in the inducement, breach of contract, breach of the implied covenant of good faith and fair dealing, defamation, interference with economic advantage, elder financial abuse, and dissemination of false and misleading proxy materials The Company disputes the allegations and intends to defend the case vigorously.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
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Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
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2023 filing
2024 filing
Biggest changeItem 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the Nasdaq Capital Market (“Nasdaq”) under the symbol “EAST.” Shareholders Our shares of common stock are issued in registered form.
Biggest changeItem 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on The Nasdaq Capital Market under the symbol “BLNE.” Shareholders The registrar and transfer agent for our shares of common stock is Transfer Online, Inc. 512 SE Salmon Street, Portland, Oregon 97214 (Telephone: (503) 227-2950)).
Dividend Policy We have not paid cash dividends on our common stock since our inception, and we do not contemplate paying dividends in the foreseeable future. Recent Sales of Unregistered Securities None. Repurchase of Securities None.
Dividend Policy We have not paid cash dividends on our common stock since our inception, and we do not contemplate paying dividends in the foreseeable future. Recent Sales of Unregistered Securities All recent sales of unregistered securities have been disclosed. Repurchase of Securities None. Item 6. [Reserved]
Removed
The registrar and transfer agent for our shares of common stock is Transfer Online, Inc. 512 SE Salmon Street, Portland, Oregon 97214 (Telephone: (503) 227-2950). As of April 1, 2024, there were 1,705,987 shares of our common stock outstanding, which were held by 76 record stockholders.
Added
As of April 15, 2025, there were 8,096,479 shares of our common stock outstanding, which were held by 203 record stockholders.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
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Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
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2023 filing
2024 filing
Biggest changeOur cash flow results for the year ended December 31, 2023 and 2022 were as follows: (Dollars in thousands) 2023 2022 Net cash flows provided by (used in): Operating activities $ (1.8 ) $ (0.9 ) Investing activities $ 0.1 $ (2.3 ) Financing activities $ 1.4 $ 0.6 23 Operating Activities Total cash used in operating activities was $1.8 million during the year ended December 31, 2023 compared to cash used of $0.9 million during the year ended December 31, 2022.
Biggest changeFor the year ended December 31, 2024, net cash used in operating activities of continuing operations was $3.2 million compared to $1.5 million for the year ended December 31, 2023 primarily due to the inclusion of Beeline’s net loss of $2.0 million for the period October 8, 2024 through December 31, 2024.
Net Income (Loss) Net loss was $7.5 million and $16.3 million for the years ended December 31, 2023 and 2022, respectively, and included $0.4 million and $7.5 million for an impairment charge related to the Azuñia assets for the years ended December 31, 2023 and 2022, respectively.
Impairment loss $3.3 million and $0.4 million for the years ended December 31, 2024 and 2023, respectively, related to its Azuñia assets.
Further, any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect future events or circumstances. Forward-looking statements should not be relied upon as a prediction of actual future financial condition or results.
These statements are based on the Company’s current expectations and estimates as to prospective events and circumstances about which the Company can give no assurance. Further, any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect future events or circumstances.
These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include the factors set forth above and the other information set forth in this Form 10-K. 19 Recent Developments During 2023, we grew sales at Craft C+P and printed over 14 million cans.
Forward-looking statements should not be relied upon as a prediction of actual future financial condition or results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include the factors set forth above and the other information set forth in this Form 10-K.
Spirits Cost of sales decreased for the year ended December 31, 2023 due to lower bulk spirits and distributor sales, in addition to lower tequila volumes and a shift to a higher mix of vodka sales. Gross Profit Gross profit is calculated by subtracting the cost of products sold and services rendered from net sales.
C ost of sales declined to $2.1 million for the year ended December 31, 2024 from $2.6 million for the year ended December 31, 2023 related to the decrease in net sales. Gross profit and Gross margin. Gross profit is calculated by subtracting the cost of products sold and services rendered from net sales.
Gross profit was $1.1 million and $2.4 million for the years ended December 31, 2023 and 2022, respectively. Bulk sales gross profit was $0.6 million and $2.4 million for the years ended December 31, 2023 and 2022, respectively. Gross margin is gross profit stated as a percentage of net sales.
Gross profit was $0.5 million for the year ended December 31, 2024 and $1.2 million for the year ended December 31, 2023; and gross margin as a percentage of sales was 19% for the year ended December 31, 2024 and 31% for the year ended December 31, 2023 primarily due to lower sales volume. Salaries and benefits.
In exchange for that equity, our debts to the members of the SPV were reduced by a total of $6.5 million. During the year ended December 31, 2023, we recognized a loss on the debt to equity conversion of $1.3 million.
Gain on troubled debt restructuring was $4.5 million for the year ended December 31, 2024 related to the Debt Exchange Agreement. Loss on debt to equity conversion. During the year ended December 31, 2023, the Company recognized a loss on the debt to equity conversion of $1.3 million that occurred on September 29, 2023. Impairment loss.
General and Administrative Expenses General and administrative expenses were $4.6 million and $6.4 million for the years ended December 31, 2023 and 2022, respectively, primarily due to decreased professional fees and reduced headcount. 22 Interest Expense Interest expense was $1.1 million and $2.2 million for the years ended December 31, 2023 and 2022, respectively.
Interest Expense. Interest expense, exclusive of the warehouse line of credit, was $2.2 million and $1.1 million for the years ended December 31, 2024 and 2023, respectively, primarily related to debt and warrant related expenses. Gain on extinguishment of debt.
The increase in cash used was primarily attributable to our continued net losses and decreased accrued interest. Investing Activities Total cash provided by investing activities was $0.1 million during the year ended December 31, 2023 representing net proceeds from purchases and sales of fixed assets.
For the year ended December 31, 2024, net cash provided by investing activities of continuing operations was $0.1 million. For the year ended December 31, 2023, investing activities were nil.
Spirits Gross margin decreased for the year ended December 31, 2023 primarily due to lower sales of bulk spirits in 2023 compared to the prior year and a greater mix of lower margin products such as vodka.
Net sales were $2.6 million and $3.8 million for the years ended December 31, 2024 and 2023, respectively, due to less bulk spirits sales and lower sales of spirits. In 2024, Spirits sold 23,261 9-liter equivalent cases compared to 26,004 cases in the prior year, a decline of 11%.
Our ability to meet our ongoing operating cash needs over the next 12 months depends on asset sales, external financing and improving operating results. The availability of external financing will be largely dependent on improvement in performance, including higher digital can printing revenues and improved gross margins at Craft C+P as well as operational improvements in our Spirits segment.
We do not have sufficient capital to meet our working capital and debt obligations for the next 12 months, including debt obligations which come due in 2025. The availability of additional financing will be largely dependent on the operating success of Old Beeline, including improved gross margins as well as operational improvements, which will be necessary to attract investors.
Removed
Examples include those statements set forth above prior to “Item 1. Business - Cautionary Note Regarding Forward-Looking Statements.” These statements are based on the Company’s current expectations and estimates as to prospective events and circumstances about which the Company can give no assurance.
Added
Objective The following discussion provides an analysis of the Company’s financial condition, cash flows and results of operations from management’s perspective and should be read in conjunction with the consolidated financial statements and notes thereto included in Part II, Item 8 of this Report.
Removed
Digital can printing represents the majority of our revenue as our customer base and excitement grows. Mobile canning sales continue to decrease as we focus on our digital can printing opportunity. We have undertaken a restructuring of our spirits business decreasing overhead costs and unproductive sales activities.
Added
Our objective is to provide discussion of events and uncertainties known to management that are reasonably likely to cause the reported financial information not to be indicative of future operating results or of future financial condition and to also offer information that provides an understanding of our financial condition, cash flows and results of operations.
Removed
During 2023, we supplemented cash flow with bulk spirit sales, as we have in other periods. The decline in spirits sales was partially offset by direct sales of 300 barrels for $0.8 million during 2023 and nearly 1,500 barrels for $4.4 million during 2022.
Added
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. 45 Overview Eastside Distilling, Inc., which for operations and financial results through October 7, 2024 (the date on which we acquired Beeline Financial) we refer to in this Report as “Eastside,” was incorporated under the laws of Nevada in 2004 under the name of Eurocan Holdings, Ltd.
Removed
At the beginning of 2023, we started a restructuring plan to lower costs and prepare the brands for reinvestment. While a substantial amount of our raw materials, such as our whiskey, is owned and not susceptible to price inflation, the inflated prices of shipping and other materials, such as glass, are expected to continue through 2024.
Added
In December 2014, Eastside changed its corporate name to Eastside Distilling, Inc. to reflect the acquisition of Eastside Distilling, LLC. Merger On September 4, 2024, Eastside entered into an Agreement and Plan of Merger and Reorganization (the “Merger”) with Bridgetown Spirits Corp. (“Bridgetown Spirits”) and Beeline Financial Holdings, Inc. (“Beeline Financial”). The Merger closed on October 7, 2024.
Removed
Results of Operations Overview Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 (Dollars in thousands) 2023 2022 Variance Sales $ 10,798 $ 14,327 $ (3,529 ) Less customer programs and excise taxes 299 444 (145 ) Net sales 10,499 13,883 (3,384 ) Cost of sales 9,438 11,442 (2,004 ) Gross profit 1,061 2,441 (1,380 ) Sales and marketing expenses 1,599 2,625 (1,026 ) General and administrative expenses 4,646 6,407 (1,761 ) (Gain) loss on disposal of property and equipment (364 ) 58 (422 ) Total operating expenses 5,881 9,090 (3,209 ) Loss from operations (4,820 ) (6,649 ) 1,829 Interest expense (1,108 ) (2,216 ) 1,108 Impairment loss (364 ) (7,453 ) 7,089 Loss on debt to equity conversion (1,321 ) - (1,321 ) Other income 78 52 26 Net loss (7,535 ) (16,266 ) 8,731 Preferred stock dividends (150 ) (150 ) - Net loss attributable to common shareholders $ (7,685 ) $ (16,416 ) $ 8,731 Gross margin 10 % 18 % -8 % 20 Segment information is as follows for the years ended December 31, 2023 and 2022: (Dollars in thousands) 2023 2022 Variance Craft C+P Sales $ 6,817 $ 5,626 $ 1,191 Net sales 6,712 5,526 1,186 Cost of sales 6,829 6,341 488 Gross profit (117 ) (815 ) 698 Total operating expenses 2,637 3,494 (857 ) Net loss $ (2,749 ) $ (4,249 ) $ 1,500 Spirits Sales $ 3,981 $ 8,701 $ (4,720 ) Net sales 3,787 8,357 (4,570 ) Cost of sales 2,609 5,101 2,492 Gross profit 1,178 3,256 (2,078 ) Total operating expenses 1,476 2,532 1,056 Impairment loss 364 7,453 (7,089 ) Net loss $ (601 ) $ (6,781 ) $ 6,180 Corporate Total operating expenses $ 1,768 $ 3,064 $ 1,296 Loss on debt to equity conversion 1,321 - 1,321 Net loss $ (4,185 ) $ (5,236 ) $ 1,051 Corporate consists of key executive and accounting personnel and corporate expenses such as public company and board costs, as well as interest on debt.
Added
On March 12, 2025, Eastside changed its name to Beeline Holdings, Inc. (the “Company”), see Note 4, Merger in the Notes to Consolidated Financial Statements . Beeline Financial was incorporated in Delaware on July 1, 2020 via a merger with Beeline Financial Holdings, Inc., a Rhode Island corporation founded on September 20, 2018.
Removed
Sales Sales were $10.8 million and $14.3 million for the years ended December 31, 2023 and 2022, respectively. Craft C+P Sales increased for the year ended December 31, 2023 attributable to growth in digital can printing sales. Craft C+P has made substantial investments in digital printing de-emphasizing legacy businesses, including mobile canning.
Added
Debt Exchange Agreement On September 4, 2024, Eastside and its subsidiary, Craft Canning + Printing (“Craft C+P”), entered into a Debt Exchange Agreement (the “Debt Exchange Agreement”), which closed on October 7, 2024, resulting in the assignment by Eastside of 720 barrels of spirits to Craft C+P, followed by the merger of Craft C+P into a limited liability company owned by certain creditors of the Company and the deconsolidation of Craft C+P.
Removed
During the year, lower mobile canning sales reduced mobile service revenues and the sales of undecorated cans were replaced with digital printing sales. Spirits Spirits sales decreased for the year ended December 31, 2023. The primary reason for the reduction was significant bulk spirits sales that we completed during 2022.
Added
The Company accounted for the asset and equity transfers associated with the various transactions at fair value in accordance with ASC 470-60, Debt - Troubled Debt Restructurings by Debtors . See Note 5 - Debt Exchange Agreement and Note 6 - Discontinued Operations in the Notes to Consolidated Financial Statements .
Removed
For the year ended December 31, 2023, we sold 300 barrels for gross proceeds of $0.8 million. For the year ended December 31, 2022, we sold nearly 1,500 barrels for gross proceeds of $4.4 million. Sales of tequila decreased during 2023, as we redirected investment into our higher margin Oregon brands.
Added
Subsequent to the execution of the Debt Exchange Agreement, the Company organized a subsidiary, Bridgetown Spirits, which was incorporated on October 3, 2024, and assigned Eastside’s business of manufacturing and marketing spirits to Bridgetown Spirits. S ee Note 5 - Debt Exchange Agreement in the Notes to Consolidated Financial Statements.
Removed
Lower, but more profitable tequila sales substantially reduced revenue in the spirits segment. 21 Customer programs and excise taxes Customer programs and excise taxes were $0.3 million and $0.4 million for the years ended December 31, 2023 and 2022, respectively. Spirits discounts were lower for the year ended December 31, 2023 due to lower sales volumes.
Added
Upon completion of the Debt Exchange Agreement, Eastside was no longer involved in the business of digital printing and mobile canning. The Company reports discontinued operations by applying the following criteria in accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations : (1) Component of an entity; (2) Held for sale criteria; and (3) Strategic shift.
Removed
During the second quarter of 2022, as part of Craft’s asset acquisition, we offered a discount of $0.1 million to the beverage maker for our printing and canning services. Cost of Sales Cost of sales consists of all direct costs related to both spirits and canning for raw materials, service, labor, overhead, packaging, and in-bound freight charges.
Added
Given that the effect of the Debt Exchange Agreement meets all the criteria for classification of held for sale, the assets and liabilities of Craft C+P have been classified as held for sale as of December 31, 2023 and were disposed of on October 7, 2024.
Removed
Cost of sales were $9.4 million and $11.4 million for the years ended December 31, 2023 and 2022, respectively. Craft C+P Cost of sales increased for the year ended December 31, 2023 due to growth in printing sales volumes and related inventory costs and scrap related to the printer, partially offset by decreased labor costs.
Added
The operating results of Craft C+P have been classified as discontinued operations during the years ended December 31, 2024 and 2023. The consolidated financial statements include the consolidated accounts of Beeline Holdings, Inc. and its wholly-owned subsidiaries, Beeline Financial Holdings, Inc., Beeline Title Holdings, Inc. (“Beeline Title Holdings”), Beeline Mortgage Holdings, Inc. (“Beeline Mortgage”), and Beeline Loans Pty Ltd.
Removed
Cost of sales decreased for the year ended December 31, 2023 due to reduced labor costs and an adjustment to depreciation based on the digital can printer’s hours of production, offset by increased scrap related to the printer.
Added
(“Australian Subsidiary”). Intercompany transactions and balances have been eliminated. Beeline Title Holdings has five subsidiaries, Beeline Title, LLC (“Beeline Title”), Beeline Texas Title, LLC (“Beeline Texas Title”), Beeline Settlement Services, LLC (“Beeline Settlement Services”), and Beeline Title Agency, LLC (“Beeline Title Agency”). Beeline Mortgage Holdings has one subsidiary, Beeline Loans, Inc. (“Beeline Loans”).
Removed
Our gross margin was 10% and 18% for the years ended December 31, 2023 and 2022, respectively. Craft C+P Craft C+P’s gross margin increased for the year ended December 31, 2023 primarily due to continued growth in can printing activities.
Added
The Company has two majority-owned subsidiaries, Nimble Title Holdings, Inc. (“Nimble Title Holdings”) and Bridgetown Spirits. Nimble Title Holdings is 50.1% owned by the Company and 49.9% owned by a former non-controlling shareholder of Beeline Financial. Bridgetown Spirits is 53% owned by the Company .
Removed
Sales and Marketing Expenses Sales and marketing expenses were $1.6 million and $2.6 million for the years ended December 31, 2023 and 2022, respectively, due to lower sponsorship costs and reduced headcount as part of spirits restructuring.
Added
Nimble Title Holdings has four subsidiaries, Nimble Title, LLC (“Nimble Title”), Nimble Title Agency, LLC (“Nimble Title Agency”), Nimble Texas Title, LLC (“Nimble Texas Title”), and Nimble Settlement Services, LLC (“Nimble Settlement Services”).
Removed
The decrease was primarily due to the amortization of debt issuance costs on agreements that matured during 2022. Loss on Debt to Equity Conversion On September 29, 2023, as part of the debt to equity transaction referred to below, we issued 296,722 shares of common stock and 200,000 shares of Series C Preferred Stock.
Added
The discussion which follows should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements contained in this Report. 46 Our Business Beeline is a full service direct-to-consumer lender specializing in conventional conforming and non-conforming residential first-lien mortgages and providing title services.
Removed
Preferred Stock Dividends Preferred stock dividends were $0.2 million for both years ended December 31, 2023 and 2022, respectively, representing the Series B preferred stock dividend of 6% per annum. Liquidity and Capital Resources Our primary capital requirements are for cash used in operating activities and the repayment of debt.
Added
Beeline also has an emerging business in anonymized data sales and technology licensing. Bridgetown Spirits manufactures (through sub-contractors), acquires, blends, bottles, imports, markets and sells a wide variety of alcoholic beverages under recognized brands. Bridgetown Spirits’ brands span several alcoholic beverage categories, including whiskey, vodka, rum, and tequila.
Removed
We had an accumulated deficit of $82.7 million as of December 31, 2023, having incurred a net loss of $7.5 million during the year ended December 31, 2023. On September 29, 2023 we entered into a Debt Satisfaction Agreement with our four principal creditors (the “DSA”).
Added
Bridgetown Spirits sells products on a wholesale basis to distributors in open states and through brokers in control states. Beeline Beeline’s performance is influenced by several key factors, including fluctuations in interest rates, economic conditions, housing supply, technological advancements, and its ability to acquire and retain customers.
Removed
Pursuant to the DSA, $6.5 million of secured debt classified as current liabilities was cancelled in exchange for the issuance of 296,722 shares of common stock and 200,000 shares of Series C Preferred Stock.
Added
Interest rate changes have a direct impact on mortgage loan refinancing and overall mortgage loan volume. In a declining interest rate environment, refinancing activity typically increases, whereas rising interest rates tend to reduce refinancing and home purchase transactions. However, higher rates can also drive demand for cash-out refinancings and home equity loans.
Removed
As a result, as of December 31, 2023, we had $0.4 million of cash on hand with working capital of $0.3 million, an increase of $6.7 million from negative working capital of $(6.4) million as of December 31, 2022.
Added
Following a prolonged period of historically low rates, interest rates began to rise in April 2021 due to inflation, increases in the federal funds rate, and other monetary policies. This upward trend, which continued through 2023, significantly reduced mortgage market activity and the pool of borrowers who could benefit from refinancing.
Removed
Total cash used in investing activities was $2.3 million during the year ended December 31, 2022 representing our investment in digital can printing equipment. Financing Activities Total cash provided by financing activities was $1.4 million during the year ended December 31, 2023 primarily consisted of proceeds from the issuance of stock.
Added
Additionally, higher rates discourage homebuyers from entering the market and lead to a more competitive lending environment, compressing margins and reducing origination volumes. The broader economic environment plays a crucial role in mortgage lending activity. Interest rate movements, employment trends, home price appreciation, and consumer confidence all affect mortgage origination volumes.
Removed
Total cash provided by financing activities was $0.6 million during the year ended December 31, 2022 primarily consisted of net proceeds from sale of a note payable to a related party of $4.5 million and the issuance of common stock of $0.2 million, offset by $2.8 million of principal payments to our secured credit facilities and $1.2 million of payments on principal of notes payable.
Added
Typically, home sales peak in the second and third quarters, but in 2022 and 2023, rising interest rates and ongoing housing supply constraints disrupted these seasonal trends. Despite steady consumer demand for credit, high interest rates and economic uncertainty may cause borrowers to delay financing decisions, leading to fluctuations in Beeline’s revenue and financial performance.
Removed
Critical Accounting Policies The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles.
Added
Limited housing supply has constrained home purchase activity. Rising interest rates have further exacerbated this issue by increasing home prices, reducing affordability, and discouraging transactions. However, Beeline believes that persistent imbala nces between supply and demand will ultimately drive greater home construction, expanding housing inventory and stimulating future mortgage activity.
Removed
The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future.
Added
Beeline’s ability to attract and retain customers depends on delivering a seamless and competitive digital mortgage experience. The shift toward digital transactions, accelerated by the COVID-19 pandemic, has increased consumer willingness to engage in high-value online purchases, including mortgage applications. Beeline’s platform is designed to provide a convenient and efficient digital experience, positioning it favorably against traditional mortgage origination methods.
Removed
Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.
Added
With Millennial and Generation Z homeownership rates on the rise, Beeline anticipates continued growth in demand for digital mortgage solutions. Technological innovation remains central to Beeline’s strategy. Beeline’s proprietary technology enhances efficiency, reduces costs, and improves loan processing quality. By automating key origination tasks, Beeline streamlines interactions for consumers, employees, and partners.
Removed
In connection with the preparation of our financial statements for the year ended December 31, 2023, there was one accounting estimate we made that was subject to a high degree of uncertainty and was critical to our results, as follows: Intangible Assets On September 12, 2019, we purchased the Azuñia brand, the direct sales team, existing product inventory, supply chain relationships and contractual agreements from Intersect Beverage, LLC, an importer and distributor of tequila and related products.
Added
Its intuitive digital interface minimizes reliance on paper applications and manual processes, enabling faster and more efficient loan transactions. Continued investment in automation and technology development will further reduce production costs and enhance customer acquisition efforts. Customer acquisition is another critical component of Beeline’s success. Beeline aims to expand its reach while providing a highly personalized digital experience.
Removed
The Azuñia brand has been determined to have an indefinite life and will not be amortized. We do, however, on an annual basis, test the indefinite life assets for impairment.
Added
If traditional customer acquisition methods prove insufficient, especially in challenging market conditions, Beeline may need to invest additional resources in sales and marketing to maintain growth. Increased marketing expenditures could elevate service costs, making it essential to balance customer acquisition efforts with cost efficiency.
Removed
If the carrying value of the indefinite life assets are found to be impaired, then we will record an impairment loss and reduce the carrying value of the asset’s estimate the useful life of the brand and amortize the asset over the remainder of its useful life.
Added
In the ordinary course of Beeline’s operations, it finances the majority of its loan volume on a short-term basis, typically less than 10 days, mainly utilizing a warehouse line of credit with a capacity of $5.0 million.
Removed
We estimate the brand’s fair value using market information to estimate future cash flows and will impair it when its carrying amount exceeds its estimated fair value, in which case we will write it down to its estimated fair value. We consider market values for similar assets when available.
Added
The repayments of Beeline’s borrowings come from the revenue generated by selling its loans to a network of purchasers. 47 In 2024, Beeline made significant investments in its platform to leverage mortgage origination opportunities, despite overall lower volumes compared to 2020 and 2021 due to fluctuating interest rates.
Removed
Considerable management judgment is necessary to estimate fair value, including making assumptions about future cash flows, net sales and discount rates. We have the option, before quantifying the fair value, to evaluate qualitative factors to assess whether it is more likely than not that our brand is impaired.
Added
In the fourth quarter, a temporary decline in the 10-year Treasury rate drove a notable increase in loan originations, reinforcing our belief that interest rates, housing supply, and affordability will remain key factors influencing future volume. Additionally, Beeline has expanded its focus on its B2B SaaS strategy, which is also subject to macroeconomic conditions.
Removed
If we determine that is not the case, then we are not required to quantify the fair value. That assessment also takes considerable management judgment. As of December 31, 2023, as a result of the review described above, we found the Azuñia brand to be impaired and reduced its carrying cost by $0.4 million.
Added
To measure operational efficiency and growth, we track a range of performance metrics in our lending and title businesses, including production data. Beeline Loans, the principal operating subsidiary of Beeline, uses data to track margin and gain-on-sale revenue. The title companies use data to track file revenue.
Added
Beeline uses industry tools to benchmark its margin and note rates against the broader mortgage origination market. We also evaluate key business drivers for Beeline subsidiaries, such as Beeline Labs, by monitoring revenue, unit sales, and SaaS (B2B) growth potential. Additionally, we assess customer acquisition costs and profitability per loan to optimize financial performance.
Added
These key indicators help gauge progress toward our strategic and long-term growth objectives. Bridgetown Spirits Bridgetown Spirits operates in a highly competitive, heavily regulated industry across multiple states, where both operations and distributor importance vary by location. Following a period of declining distribution, Bridgetown Spirits has focused on refining its distribution strategy.
Added
While Bridgetown Spirits has lost distribution in some key states, it has strengthened its presence in others. Restoring and optimizing distribution remains a critical challenge, impacting volumes and future sales. In 2024, Bridgetown Spirits completed a restructuring aimed at streamlining operations by focusing on core business activities while outsourcing non-core functions, including production.
Added
As a result, its overall expenses decreased related to manufacturing, distribution, and sales activities. To further enhance efficiency, Bridgetown Spirits established key partnerships with external resources to achieve lower costs and improved sales performance. The impact of these changes was partially reflected in the fourth quarter of 2024, but full-year results do not yet capture their complete effect.
Added
Results of Operations For the year ended December 31, 2024, the Company reported total revenue of $3.8 million on a consolidated basis, consistent with the prior year’s revenue. The Company recorded a net loss of $13.1 million for 2024, compared to a net loss of $7.5 million in 2023.
Added
The Merger was structured and accounted for as a business combination with Eastside as the acquirer of 100% of the controlling equity interests of Beeline Financial and subsidiaries. The Company’s consolidated financial statements for the year ended December 31, 2024 include Beeline’s results of operations from October 8, 2024 through December 31, 2024.
Added
The Company’s consolidated financial statements reflect the final purchase accounting adjustments in accordance with ASC 805, Business Combinations , whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date.
Added
Due to the Merger, management believes that the consolidated results of operations for 2024 are not directly comparable to those of 2023, as the prior year primarily reflects the performance of Bridgetown Spirits. Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
Added
As a result of the merger, the statement of operations has been restructured to represent the new consolidation of both businesses and is reflected for 2023. The 2023 consolidated balance sheet and statement of operations have been reclassified to retrospectively present discontinued operations. Given these structural changes, management believes that segment-level reporting provides a more meaningful basis for evaluating performance.
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