Beeline Holdings, Inc.

Beeline Holdings, Inc.

1. NATURE OF BUSINESS

Eastside Distilling (“Eastside”) was incorporated under the laws of Nevada in 2004 under the name of Eurocan Holdings, Ltd. 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. On March 12, 2025, Eastside changed its name to Beeline Holdings, Inc. (the “Company,” and together with its consolidated subsidiaries, “Beeline,” “we”, “us”, “our”), seeNote 4, Merger.

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. Beeline is an Artificial Intelligence (“AI”)-driven fintech mortgage lender that develops proprietary software in the form of major enhancements and new developments in its lending platform, introducing its Chat Application Programming Interface (“API”) “Bob” in July 2023.

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,see Note 5 - Debt Exchange Agreement and Note 6 - Discontinued Operations.

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, which manufactures, 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. Bridgetown Spirits sells products on a wholesale basis to distributors in open states and through brokers in control states. The Company owns 53% of Bridgetown Spirits as of December 31, 2024,see Note 5 - Debt Exchange Agreement.

Reverse Stock Split

All shares and per share information in these consolidated financial statements were adjusted to give effect to the 1-for-20 reverse stock split of the Company’s common stock effected on May 12, 2023 and has also been retrospectively adjusted to give effect to the one-for-ten reverse stock split of the Company’s common stock effected on March 12, 2025.

2. GOING CONCERN, LIQUIDITY, AND MANAGEMENT’S PLANS

These consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. The Company is subject to a number of risks common to emerging companies stemming from, among other things, a limited operating history, rapid technological change, uncertainty of market acceptance and products, uncertainty of regulatory approval, competition from substitute products and larger companies, the need to obtain additional financing, compliance with government regulation, protection of proprietary technology, interest rate fluctuations, product liability, and the dependence on key individuals. The Company has incurred recurring losses and negative cash flows from operations since its inception, has a working capital deficit as of December 31, 2024 and is dependent on debt and equity financing. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements. The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if assumes Company were unable to continue as a going concern.

Management believes that its available funds and cash flow from operations may not be sufficient to meet working capital requirements for the twelve months subsequent to the issuance of the financial statements. In order to accomplish its business plan objectives, the Company will need to either increase revenues or raise capital by the issuance of debt and/or equity.

Management believes that it will be successful in obtaining additional financing based on its limited history of raising funds; however, there can be no assurances that our business plans and actions will be successful, that we will generate anticipated revenues, or that unforeseen circumstances will not require additional funding sources in the future or effectuate plans to conserve liquidity. Future efforts to raise additional funds may not be successful or they may not be available on acceptable terms, if at all.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

These financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

PRINCIPLES OF CONSOLIDATION

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. (“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”).

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, see Note 5 - Debt Exchange Agreement.

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”).

USE OF ESTIMATES

Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Significant estimates and assumptions in these consolidated statements include: the fair value of mortgage loans held for sale, valuation of inventory, valuation of investments, valuation of accounts receivable, valuation of derivative instruments, valuation of software, valuation of intangible assets, valuation of goodwill, valuation of purchase price in the business combination, valuation of the fair value of the assets acquired and liabilities assumed in the business combination, valuation of lease liabilities and related right of use assets, contingent liability for loan repurchases, and valuation of non-cash equity grants and issuances. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

Beeline considers highly liquid investments purchased with a remaining maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents include money market accounts that are readily convertible into cash.

The Company maintains certain cash balances that are restricted under warehouse and/or master repurchase agreements, broker margin accounts associated with its derivative instruments and other restrictions. The restricted cash balance as of December 31, 2024 was $0.8 million,see Note 15 – Notes Payable-Related Parties.

MORTGAGE LOANS HELD FOR SALE AND GAINS ON SALE OF LOANS REVENUE RECOGNITION

Mortgage loans held for sale are carried at fair value under the fair value option in accordance with ASC 825,Financial Instruments, with changes in fair value recorded in gain on sale of loans, net on the consolidated statements of operations. The fair value of mortgage loans held for sale committed to investors is calculated using observable market information such as the investor commitment, assignment of trade or other mandatory delivery commitment prices. The fair value of mortgage loans held for sale not committed to investors is based on quoted best execution secondary market prices. If no such quoted price exists, the fair value is determined using quoted prices for a similar asset or assets, such as Mortgage-Backed Securities (“MBS”) prices, adjusted for the specific attributes of that loan, which would be used by other market participants. Mortgage loans held for sale not calculated using observable market information are based on third-party broker quotations or market bid pricing.

Gains and losses from the sale of mortgage loans held for sale are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale and are recorded in gain on sale of loans, net on the consolidated statements of operations. Sales proceeds reflect the cash received from investors through the sale of the loan and servicing release premium. Gain on sale of loans, net also includes the unrealized gains and losses associated with the changes in the fair value of mortgage loans held for sale, and the realized and unrealized gains and losses from derivative instruments.

Mortgage loans held for sale are considered sold when the Company surrenders control over the financial assets. Control is considered to have been surrendered when the transferred assets have been isolated from the Company, beyond the reach of the Company and its creditors; the purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and the Company does not maintain effective control over the transferred assets through either an agreement that both entitles and obligates the Company to repurchase or redeem the transferred assets before their maturity or the ability to unilaterally cause the holder to return specific financial assets. The Company typically considers the above criteria to have been met upon acceptance and receipt of sales proceeds from the purchaser.

Mortgage loans sold to investors by the Company, and which met investor underwriting guidelines at the time of sale, may be subject to repurchase in the event of specific default by the borrower or subsequent discovery that underwriting standards were not met. The Company may, upon mutual agreement, indemnify the investor against future losses on such loans. Additionally, reserves are established for estimated liabilities from the need to repay, where applicable, a portion of the premium received from investors on the sale of certain mortgage loans if such loans are repaid in their entirety within a specified period after the sale of the loans. The Company has established a reserve for potential losses related to these representations and warranties. In assessing the adequacy of the reserve, management evaluates various factors including actual write-offs during the period, historical loss experience, known delinquent and other problem loans, and economic trends and conditions in the industry. Actual losses incurred are reflected as write-offs against the loan indemnification reserve.

Since mortgage loans held for sale have maturity dates greater than one year from the balance sheet date but are expected to be sold in a short time frame (less than one year), they are recorded as current assets.

Changes in the balance of mortgage loans held for sale are included in cash flows from operating activities in the consolidated statements of cash flows in accordance with ASC 230-10-45-21,Statement of Cash Flows.

REVENUE RECOGNITION

Gains on Sale of Loans, Net

See discussion above under “Mortgage Loans Held for Sale and Gain on Sale of Loans Revenue Recognition” and below under “Derivative Financial Instruments and Revenue Recognition”.

Title Fees

Commissions earned at loan settlement on insurance premiums paid to title insurance companies.

Loan Origination Fees and Costs

Loan origination fees represent revenue earned from originating mortgage loans. Loan origination fees generally represent flat per-loan fee amounts based on a percentage of the original principal loan balance and are recognized as revenue at the time the mortgage loans are funded since the loans are held for sale. Loan origination costs are charged to operations as incurred.

Interest Income

Interest income on mortgage loans held for sale is recognized for the period from loan funding to sale based upon the principal balance outstanding and contractual interest rates. Revenue recognition is discontinued when loans become 90 days delinquent, or when, in management’s opinion, the recovery of principal and interest becomes doubtful and the mortgage loans held for sale are put on nonaccrual status. For loans that have been modified, a period of six payments is required before the loan is returned to an accrual basis.

Interest Expense

Interest expense relating to the warehouse lines of credit is included in revenues. Other interest expense is included in other (income)/expense.

Data and Tech

Fees received from a marketing partner who is embedded in the Company’s point-of-sale journey for investment property customers. The partner pays Beeline for leads they receive from a customer opting in to use their insurance company for landlord insurance during the application process.

Net Sales, Spirits

Net sales include product sales, less excise taxes and customer programs and incentives. Bridgetown Spirits recognizes revenue by applying the following steps in accordance with ASC 606 –Revenue from Contracts with Customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

Bridgetown Spirits recognizes spirits sales when merchandise is shipped from a warehouse directly to wholesale customers (except in the case of a consignment sale). For consignment sales, which include sales to the Oregon Liquor Control Commission, sales are recognized upon the consignee’s shipment to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related merchandise. Shipping terms are generally FOB shipping point, and title passes to the customer at the time and place of shipment or purchase by customers at a retail location. For consignment sales, title passes to the consignee concurrent with the consignee’s shipment to the customer. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return.

Excise Taxes**-**Bridgetown Spirits is responsible for compliance with the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) regulations, which includes making timely and accurate excise tax payments. Bridgetown Spirits is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcoholic beverages in varying amounts. Bridgetown Spirits calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws, and these amounts are recorded as reductions to net sales.

Customer Programs**-**Customer programs, which include customer promotional discount programs, are a common practice in the alcoholic beverage industry. Bridgetown Spirits reimburses wholesalers for an agreed amount to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs are recorded as reductions to net sales in accordance with ASC 606.

COST OF SALES, SPIRITS

Cost of sales consists of all direct costs for service, labor, overhead, packaging, and in-bound freight charges. Raw materials account for the largest portion of the cost of sales, followed by packaging and production costs.

DERIVATIVE FINANCIAL INSTRUMENTS AND REVENUE RECOGNITION

The Company holds and issues derivative financial instruments such as interest rate lock commitments (IRLCs). IRLCs are subject to price risk primarily related to fluctuations in market interest rates. To hedge the interest rate risk on certain IRLCs, the Company enters into best effort forward sale commitments with investors, whereby certain loans are locked with a borrower and simultaneously committed to an investor at a fixed price. If the best effort IRLC does not fund, the Company has no obligation to fulfill the investor commitment.

ASC 815-25,Derivatives and Hedging, requires that all derivative instruments be recognized as assets or liabilities on the consolidated balance sheets at their fair value. Changes in the fair value of the derivative instruments are recognized in gain on sale of loans, net on the consolidated statements of operations in the period in which they occur. The Company accounts for all derivative instruments as free-standing derivative instruments and does not designate any for hedge accounting.

INVENTORIES

Bridgetown Spirits’ inventories primarily consist of bulk and bottled liquor and merchandise and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out method. A portion of inventory is held by certain independent distributors on consignment until it is sold to a third party. Bridgetown Spirits regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory.

ACCOUNTS RECEIVABLE

Accounts receivable consist primarily of amounts due from customers for goods shipped or services provided. Accounts receivable are stated at their gross outstanding balance, net of an allowance for credit losses. The allowance for credit losses is based on a combination of factors, including historical loss experience, aging of receivables, specific customer creditworthiness, current economic conditions, and reasonable and supportable forecasts. The Company writes off accounts receivable when they are deemed uncollectible, and any recoveries of previously written-off balances are recorded as a reduction to the provision for credit losses.

ACCOUNTS RECEIVABLE FACTORING PROGRAM

The Company has an accounts receivable factoring program that had a zero balance as of December 31, 2024 and 2023. Under the program, the Company has the option to sell certain customer account receivables in advance of payment for 75% of the amount due. When the customer remits payment, the Company receives the remaining balance. Interest is charged on the advanced 75% payment at a rate of 2.4% for the first 30 days plus 1.44% for each additional ten-day period. Under the terms of the agreement, the factoring provider had full recourse against the Company should the customer fail to pay the invoice. In accordance with ASC Topic 860 –Transfers and Servicing, the Company has concluded that the agreement has met all three conditions identified in ASC Topic 860-10-40-5 (a) – (c) and have accounted for this activity as a sale. Given the quality of the factored accounts, the Company does not recognize a recourse obligation. In certain limited instances, the Company may provide collection services on the factored accounts but does not receive any fees for acting as the collection agent, and as such.

BUSINESS COMBINATION

The Company accounts for business combinations in accordance with ASC 805,Business Combinations. Under this guidance, the Company allocates the purchase price of an acquired business to the identifiable assets acquired and liabilities assumed at their estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair value of net assets acquired is recorded as goodwill.

Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in the business combination. The increases or decreases in the fair value of the Company’s assets and liabilities can result from changes in fair values as of the acquisition date as determined during the one-year measurement period under ASC 805.

GOODWILL

Goodwill is the excess of the purchase price over the estimated fair value of identifiable net assets acquired in business combinations. The Company tests goodwill for impairment annually in the fourth quarter, or more frequently when indications of potential impairment exist. The Company monitors the existence of potential impairment indicators throughout the fiscal year. The Company may elect to perform either a qualitative test or a quantitative test to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the estimated fair value of the Company exceeds its carrying value, then the Company concludes the goodwill is not impaired. If the carrying value of the Company exceeds its estimated fair value, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the amount of goodwill. Based on the Company’s impairment analysis, management determined that goodwill was not impaired for the period ended December 31, 2024.

INTANGIBLE ASSETS

The Company accounts for certain finite-lived intangible assets at amortized cost and other certain indefinite-lived intangible assets at cost. Management reviews all intangible assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value.

PROPERTY AND EQUIPMENT, NET

Property and equipment, including leasehold improvements and internal-use software, are recorded at cost, and are depreciated or amortized using the straight-line method over the estimated useful lives of the related assets, which range from three toseven years. Repair and maintenance costs are expensed as incurred. Leasehold improvements are amortized over the shorter of the lease term or the improvement’s estimated useful life. Depreciation is not recorded on projects-in-process until the project is complete and the associated assets are placed into service or are ready for the intended use. Impairment of property and equipment than the internal-use software is evaluated under ASC 360,Property, Plant, and Equipment.

Under ASC 350-40,Internal-Use Software, the Company capitalizes certain qualifying costs incurred during the application development stage in connection with the development of internal-use software. Costs related to preliminary project activities are expensed as incurred and post-implementation activities will be expensed as incurred. Capitalized software costs are amortized over the useful life of the software, which isfive years. Impairment of internal-use software is evaluated under ASC 350-40-35,*Subsequent Measurement,*on a qualitative basis and if indicators exist, then a quantitative analysis is performed under ASC 360.

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received if an asset were sold or the price that would be paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. Required disclosures include classification of fair value measurements within a three-level hierarchy (Level 1, Level 2, and Level 3). Classification of a fair value measurement within the hierarchy is dependent on the classification and significance of the inputs used to determine the fair value measurement. Observable inputs are those that are observed, implied from, or corroborated with externally available market information. Unobservable inputs represent the estimates of market participants’ assumptions.

Fair value measurements are classified in the following manner:

Level 1—Valuation is based on quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2—Valuation is based on either observable prices for identical assets or liabilities in inactive markets, observable prices for similar assets or liabilities, or other inputs that are derived directly from, or through correlation to, observable market data at the measurement date.

Level 3—Valuation is based on the internal models using assumptions at the measurement date that a market participant would use.

In determining fair value measurement, Beeline uses observable inputs whenever possible. The level of a fair value measurement within the hierarchy is dependent on the lowest level of input that has a significant impact on the measurement as a whole. If quoted market prices are available at the measurement date or are available for similar instruments, such prices are used in the measurements. If observable market data is not available at the measurement date, judgment is required to measure fair value.

The following is a description of measurement techniques for items recorded at fair value on a recurring basis. There was no material items recorded at fair value on a nonrecurring basis as of December 31, 2024 and 2023.

Mortgage loans held for sale: Loans held for sale that are valued using Level 2 measurements derived from observable market data, including market prices of securities backed by similar mortgage loans adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk. Loans held for sale for which there is little to no observable trading activity of similar instruments are valued using Level 3 measurements based upon dealer price quotes and internal models.

IRLCs: The fair value of IRLCs is based on current market prices of securities backed by similar mortgage loans (as determined above under mortgage loans held for sale), net of costs to close the loans, subject to the estimated loan funding probability, or “pull-through factor.” Given the significant and unobservable nature of the pull-through factor, IRLCs are classified as Level 3.

Forward commitments: Beeline’s forward commitments are valued based on quoted prices for similar assets in an active market with inputs that are observable and are classified within Level 2 of the valuation hierarchy. There were no open forward contracts as of December 31, 2024.

DEBT DISCOUNT

Beeline’s debt instruments are recorded net of issuance costs (debt discount). The resulting debt discount is amortized over the term of the term loan using the straight-line method, which approximates the effective interest method, and the amortization of debt discount is included in interest expense in the consolidated statements of operations and comprehensive loss.

FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

The reporting currency of the company is the U.S. dollar. Except for Beeline Loans Pty Ltd, the functional currency of the company is the U.S. dollar. The functional currency of Beeline Loans Pty Ltd is the Australian dollar. For Beeline Loans Pty Ltd, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts related to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive loss. The translation adjustment for the period October 8, 2024 through December 31, 2024 was $(33,570).

Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency included in the results of operations as incurred. These transactions were de minimis 2024.

As of December 31, 2024, the exchange rate used to translate balance sheet amounts from Australian dollars into U.S. dollars was $0.63, and the average exchange rate used to translate operation amounts from Australian dollars into U.S. dollars was $0.65.

DEFERRED OFFERING COSTS

The Company complies with the requirements of ASC 340,Other Assets and Deferred Costs, with regards to offering costs. Prior to the completion of an offering, offering costs are capitalized as non-current other assets in the consolidated balance sheets and consist principally of professional, underwriting and other expenses incurred through the consolidated balance sheet date that are directly related to the Company’s proposed public offering. The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed.

NON-CONTROLLING INTERESTS

Beeline follows ASC 810,Consolidation, governing the accounting for and reporting of non-controlling interests (“NCI”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCI be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than step acquisitions or dilution gains or losses, and that losses of a partially-owned subsidiary be allocated to non-controlling interests even when such allocation might result in a deficit balance. The net loss attributed to NCI was separately designated in the accompanying consolidated statements of operations and comprehensive loss. Losses attributable to NCI in a subsidiary may exceed NCI’s interests in the subsidiary’s equity. The excess attributable to NCI is attributed to those interests. NCI shall continue to be attributed their share of losses even if that attribution results in a deficit NCI balance. Net loss attributable to NCI for the year ended December 31, 2024 was $1.7 million.

INVESTMENT IN EQUITY METHOD INVESTEE

On February 7, 2024, MagicBlocks, Inc., a Delaware corporation, was incorporated by a third party. On July 31, 2024, the Company was issued 4.3 million shares of Magic Blocks representing 47.6% of ownership. The Company has determined that its investment in MagicBlocks is subject to the equity method of accounting in accordance with ASC 825-10,Financial Instruments. As of December 31, 2024, the Company had invested $0.1 million in MagicBlocks with a balance of $0.1 million, including the proportionate loss of $0.1 million.

DEPOSITS

Deposits are included in other assets, and include security deposits for leased office spaces, which are refundable to the Company upon expiration of the lease agreements.

MARKETING AND ADVERTISING COSTS

Marketing and advertising costs are expensed as incurred. For the years ending December 31, 2024 and 2023, marketing and advertising expenses were $0.8 million and $0.2 million, respectively.

STOCK-BASED COMPENSATION

The Company recognizes as compensation expense all stock-based awards issued to employees. The compensation cost is measured based on the grant-date fair value of the related stock-based awards and is recognized over the service period of stock-based awards, which is generally the same as the vesting period. The fair value of stock options is determined using the Black-Scholes valuation model, which estimates the fair value of each award on the date of grant based on a variety of assumptions including expected stock price volatility, expected terms of the awards, risk-free interest rate, and dividend rates, if applicable. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and recognized over the service periods.

INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740,Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company evaluates all significant tax positions as required by ASC 740. As of December 31, 2024, the Company does not believe that it has taken any positions that would require the recording of any additional tax liability, nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next year.

Any penalties and interest assessed by income taxing authorities are included in operating expenses.

The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed. Tax years 2021, 2022, and 2023 remain open for potential audit.

TROUBLED DEBT RESTRUCTURING

The Company evaluates all modifications to its debt agreements in accordance with ASC 470-60*, Debt – Troubled Debt Restructurings by Debtors*. A debt restructuring is considered a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider.

Concessions may include, but are not limited to:

When a debt restructuring qualifies as a TDR, the Company evaluates whether the restructuring represents a modification or an extinguishment of debt. If the future undiscounted cash flows of the restructured debt are less than the carrying amount of the original debt, a gain is recognized in the period of the restructuring. The restructured debt is subsequently measured based on the revised terms.

COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) includes all changes in equity during a period from non-owner sources and is presented in accordance with the provisions of ASC 220,Comprehensive Income. The Company reports comprehensive income in the consolidated statements of operations and comprehensive income (loss), which includes net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes foreign currency translation adjustments, including gains and losses from the translation of the Company’s foreign subsidiary whose functional currency is not the U.S. dollar.

OPERATING SEGMENTS

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s chief operating decision maker (“CODM”) and relied upon when making decisions regarding resource allocation and assessing performance. When evaluating the Company’s financial performance, the CODM reviews total revenues, total expenses, and expenses by functional classification, using this information to make decisions on a company-wide basis.

The Company operates in three reportable segments. The CODM for the Company is the Chief Executive Officer (the “CEO”). The Company’s CEO reviews operating results on an aggregate basis and manages the Company’s operations as a whole for the purpose of evaluating financial performance and allocating resources. Accordingly, the Company has determined that it has a three-reportable and operating segment structure. The CEO uses aggregate net loss to allocate resources in the annual budgeting and forecasting process and also uses that measure as a basis for evaluating financial performance regularly by comparing actual results with established budgets and forecasts. The measure of segment assets is reported on the consolidated balance sheets as total assets.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November 2024, the FASB issued ASU 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this new guidance to have a material impact on the financial statements.

RECLASSIFICATION OF PRIOR YEAR PRESENTATION

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. 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.

4. MERGER

On October 7, 2024, Eastside closed on the Merger with Beeline Financial. 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 Merger provided a viable opportunity to realign Eastside’s capital, growth trajectory, and potential returns for stakeholders and was structured as an all-stock transaction. The stockholders of Beeline received 69,482,229 preferred shares of Series F and 517,775 preferred shares of Series F-1 of Eastside,see Note 19- Stockholders’ Equity. 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. 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.

Beeline is a fintech mortgage lender and title provider aimed at transforming the home loan process into a shorter, easier path than conventional mortgage lending for millions of Americans seeking a digital experience. 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.

The purchase price was valued at $48.2 million based on the estimated fair value of the Series F and Series F-1 preferred stock issued on October 7, 2024. The allocation of the purchase price to the fair value of the assets acquired and liabilities assumed and to goodwill was as follows, subject to adjustment during a one-year measurement period from the Merger date:

The Company incurred acquisition related costs of $0.1 million during the year ended December 31, 2024 that have been recorded in general and administrative expenses in the consolidated statements of operations.

For income tax purposes, this is a non-taxable merger as it was an all-stock transaction and accordingly goodwill will not be deductible for tax purposes.

Pro Forma Financial Information

The following unaudited pro forma consolidated results of operations for the years ended December 31, 2024 and 2023 assume that the acquisition of Beeline was completed on January 1, 2023 and exclude the Craft C+P business operations that has been classified as discontinued operations:

Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at the beginning of the periods presented and is not intended to be a projection of future results.

5. DEBT EXCHANGE AGREEMENT

On September 4, 2024, Eastside and its then subsidiary, Craft Canning + Printing, LLC (“Craft C+P”) entered into the Debt Exchange Agreement with The B.A.D. Company, LLC (the “SPV”), Aegis Security Insurance Company (“Aegis”), Bigger, District 2, LDI Investments, LLC (“LDI”), William Esping ((“Esping”), WPE Kids Partners (“WPE”) and Robert Grammen (“Grammen”), a 2024 director of Eastside (collectively the “Investors”). On October 3, 2024, the Investors executed the First Amended and Restated Debt Exchange Agreement (the collectively “Debt Exchange Agreement”).

Subsequent to execution of the Debt Exchange Agreement, Eastside organized Bridgetown Spirits as a subsidiary and assigned to Bridgetown Spirits all of the assets held by Eastside in connection with its business of manufacturing and marketing spirits. Bridgetown Spirits issued 1.0 million shares of common stock to Eastside, which represented 100% ownership.

On October 7, 2024, a closing was held pursuant to the terms of the Debt Exchange Agreement and the following transactions were completed:

In accordance with the Debt Exchange Agreement, on November 7, 2024, Eastside transferred a total of 361,101 common shares of Bridgetown Spirits to Aegis, Bigger, District 2 and LDI, representing an additional 36%. In consideration for those shares, those four Investors surrendered to Eastside a total of 58,090 shares of Eastside common stock valued at $2.2 million, securing a total non-controlling interest of 47% valued at $2.8 million.

Upon completion of the transaction contemplated by the Debt Exchange Agreement, Eastside was no longer involved in the business of digital printing and mobile canning, and presently owns 53% of the common stock of Bridgetown Spirits, which is in the business of manufacturing and marketing spirits.

Effective on the completion of the Debt Exchange Agreement, all liabilities including accrued and unpaid interest due to the Investors were released.

The Company accounted for the asset and equity transfers associated with the various transactions described above at fair value in accordance with ASC 470-60. As a result, the Company recognized a gain on the transfer of assets of $4,271 and a gain of $4.5 million on TDR.

Letter Agreement

On September 27, 2024, the Company signed a Letter Agreement concerning amounts due and owing to a legal firm that provided the Company services under an engagement letter predating 2021. In anticipation of closing the Merger, the legal firm released the Company from prior invoiced amounts billed for services, late fees and adjustments of $0.6 million upon the closing of the Merger and Debt Exchange Agreement, and for payment of $0.1 million before October 7, 2024. The Company recorded $0.6 million to gain on extinguishment of debt in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2024.

6. DISCONTINUED OPERATIONS

Eastside 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. 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. 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 for the prior periods have been adjusted to reflect comparable information.

Assets and liabilities related to Craft C+P were as follows as of December 31:

Income and expense related to Craft C+P were as follows for the years ended December 31:

7. BUSINESS SEGMENTS

The Company’s CODM, the Chief Executive Officer, evaluates how the Company views and measures its performance. ASC 280,Segment Reporting establishes the standards for reporting information about segments in financial statements. After consideration of this criteria, the CODM has determined that there are three reportable segments, consisting of Beeline, Bridgetown Spirits and Corporate.

Beeline is an AI-driven fintech mortgage lender that develops proprietary software in the form of major enhancements and new developments in its lending platform, including Beeline’s Chat API “Bob.” Bridgetown Spirits brands span several alcoholic beverage categories, including whiskey, vodka, rum, and tequila and are sold on a wholesale basis to distributors in open states, and to brokers in control states. Corporate consists of key executive and accounting personnel and corporate expenses such as public company and board costs, as well as interest on debt.

The Company measures segment performance to allocate resources primarily based on revenues of Beeline and profit margin of Bridgetown. Total asset information by segment is not provided to, or reviewed by, the CODM as it is not used to make strategic decisions, allocate resources or assess performance. The accounting policies of the segments are the same as those described for the Companyin Note 3 - Summary of Significant Accounting Policies.

Segment information was as follows for the years ended December 31:

8. FAIR VALUE MEASUREMENTS

Assets or liabilities measured at fair value on a recurring basis were as follows as of December 31:

A roll forward of the level 3 valuation financial instruments was as follows for the period October 8, 2024 through December 31:

9. MORTGAGE LOANS HELD FOR SALE

Beeline sells substantially all of its originated mortgage loans to investors and adjusts adjusted its loan balance to the estimated fair value based on the eventual sales of loans. Mortgage loans held for sale, at fair value, consisted of the following as of December 31:

10. INVENTORIES

Inventories consisted of the following as of December 31:

The Company recorded an inventory provision of $0.1 million for the year ended December 31, 2024.

11. INTANGIBLE ASSETS

Intangible assets consisted of the following as of December 31:

The Beeline and Azuñia brands have been determined to have an indefinite life and are not amortized. The Company, on an annual basis, tests the indefinite lived assets for impairment. If the carrying value of an indefinite lived asset is found to be impaired, then the Company will record an impairment loss and reduce the carrying value of the asset. As of December 31, 2024, the Company determined that the Beeline asset was not impaired. As of December 31, 2024 and 2023, the Company determined that the Azuñia assets were impaired and recorded an impairment of $3.3 million and $0.4 million, respectively.

Customer data has a useful life offour years and amortization expense was $22,714 for the period October 8, 2024 through December 31. The permit and license was fully impaired during 2024.

12. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of December 31:

Depreciation expense related to property and equipment was $0.1 million for both the years ended December 31, 2024 and 2023. Amortization expense related to internal-use software was $0.7 million for the year ended December 31, 2024.

The estimated future amortization expense of internal-use software as of December 31, 2024 was as follows:

Beeline’s internal developers created a new proprietary software,Hive, and launched it in 2024. The most notable feature of the new software is the integration of Bob. The Company recorded $0.1 million of additional purchases of internal-use software for the period October 8, 2024 through December 31, 2024.

13. WAREHOUSE LINE OF CREDIT

On September 21, 2021, the Company entered into an agreement with a lender for a $10.0 million line of credit. The line automatically renews for successive one-year terms, unless terminated by the Company or lender upon 60 days notice. The line was renewed on September 30, 2023 with a reduction in available funding from $10.0 million to $5.0 million. The line has subsequently been renewed with the latest renewal through September 21, 2025 at the current $5.0 million limit subject to lender discretion. The interest rate is the greater of interest on the underlying loan or 4.25% -5.50%, depending on how many loans the Company closes per month. The Company is required to provide the lender with annual audited financial statements, quarterly unaudited financial statements, and monthly interim unaudited financial statements if requested. The Company is also subject to loan repurchase provisions as defined in the agreement and certain non-financial covenants. The Company grants to the lender a security interest in and to all of the Company’s right, title, and interest in and to each mortgage loan in which the lender has acquired a warehouse interest. As of December 31, 2024, the warehouse line of credit and accrued interest outstanding balance was $6.1 million. The lender allowed the draws to exceed the $5.0 million line of credit. Interest expense on the warehouse line of credit was $0.1 million for the period October 8, 2024 through December 31, 2024.

14. NOTES PAYABLE

Notes payable consisted of the following as of December 31:

On April 1, 2021, Eastside entered into promissory notes of $7.8 million with the Investors bearing interest of 6.0%. The notes had an original maturity of April 2024. Accrued interest was paid in accordance with a monthly amortization schedule. These notes were converted or exchanged as part of the Debt Exchange Agreement on October 7, 2024, further described above inNote 5 - Debt Exchange Agreement.

During 2024, the Company issued notes payable of $3.6 million maturing September 5, 2025 with payments made in nine equal monthly installments of $0.4 million beginning January 2025. As of December 31, 2024, the principal balance was $3.6 million, accrued interest was $0.2 million and unamortized debt discount were $0.6 million.

During 2023, the Company issued a note payable for proceeds of $0.5 million, net of offering costs. However, this balance is not included in the 2023 consolidated balance sheet due to the Merger closing October 7, 2024,see Note 4 – Merger. Interest accrues at 18.0% per annum and interest-only payments are made monthly. This loan matured December 2024. As of December 31, 2024, the principal balance was $0.5 million and accrued interest was $0.1 million. SeeNote 25 – Subsequent Events.

On April 29, 2021, the Company and Beeline Loans entered into a term loan agreement with the Business Development Company of Rhode Island for $0.3 million which was originally to mature on April 29, 2026 with an interest rate of 6.0%. The loan was amended in June 2024 to accelerate the maturity to June 21, 2024, and to change the personal guarantees from two guarantors to solely the Company’s Chief Executive Officer, as the guarantor. The Company made interest-only payments during 2024 and one principal payment of $25,000. As of December 31, 2024, the principal balance was $0.3 million, accrued interest was $2,529 and unamortized debt discount was $4,659. The Company is in current discussions with a lender to repay the note payable that became past due on June 21, 2024, seeNote 25 – Subsequent Events.This balance is not included in the 2023 consolidated balance sheet due to the Merger closing October 7, 2024, seeNote 4 – Merger.

15. NOTES PAYABLE – RELATED PARTIES

Notes payable, related parties consisted of the following as of December 31:

On December 31, 2024, Nicholas Liuzza, the Chief Executive Officer, loaned $0.7 million to Beeline Loans in exchange for a demand promissory note, which accrues interest at the rate of 8% per annum and is payable within 15 days of demand notice made by Mr. Liuzza. The funds were held in a restricted account to permit Beeline Loans to improve its ability to make real estate loans. Subsequent to December 31, 2024, the promissory note was converted to preferred equity, seeNote 25 – Subsequent Events.

On October 30, 2024, the Company entered into a promissory note with LDI for $0.3 million. A balloon payment of the entire outstanding principal balance of the indebtedness together with all accrued interest was due and paid in full on November 24, 2024 of $0.5 million.

In July 2023, the Company issued a note to a private company in which Joseph Freedman, a Board member of the Company, has an ownership interest. This note was for $0.1 million and accrued interest at 7% per annum and is due on demand. This note was subsequently repaid in January 2025, seeNote 25 – Subsequent Events.

On April 1, 2021, Eastside entered into a promissory note of $0.1 million with Robert Grammen, a former Board member of the Company, bearing interest of 6.0%. The note had an original maturity of April 2024. Accrued interest was paid in accordance with a monthly amortization schedule. This note was converted or exchanged as part of the Debt Exchange Agreement on October 7, 2024, further described above inNote 5 - Debt Exchange Agreement.

16. SECURED CREDIT FACILIITES

Secured credit facilities consisted of the following as of December 31:

Purchase Agreement

On November 14, 2024, the Company sold $1.9 million in aggregate principal amount of Senior Secured Notes (the “Notes”) and Pre-Funded Warrants to purchase a total of 36,360 shares of common stock (the “Warrants”) for total net proceeds of $1.6 million in a private placement offering (the “Offering”). As of December 31, 2024, debt issuance costs were $0.7 million.

The Notes have a maturity date of 120 days from issuance, were issued with a 20% original issue discount and do not bear interest unless and until one or more of the customary events of default set forth therein occurs, whereupon each Note will bear interest at a rate of 18% per annum. If the Note remains outstanding as of May 14, 2025, the Note also requires a special one-time interest payment of 30% which will increase the principal of each Note accordingly. Upon the occurrence of an event of default, each Investor also has the right to require the Company to pay all or any portion of the Note at a 25% premium. Further, the Company is required to prepay the Notes in connection with certain sales of securities or assets at each Investor’s election in an amount equal to 35% of the gross proceeds from such sales. The Company also has the right to prepay all, but not less than all, of the outstanding amounts under the Notes, at its election. The Notes contain certain restrictive covenants, including covenants precluding the Company and its subsidiaries from incurring indebtedness, transferring assets, changing the nature of its business, and engaging in certain other actions, subject to certain exceptions.

The Company also entered in three forms of side letters with the Investors which (i) permitted one Investor which along with an affiliate invested $0.4 million to exchange that amount of stated value of shares of Series F Preferred Stock for a $0.4 million 120-day promissory note to another affiliate, which note was issued immediately prior to the closing of the Offering and has substantially identical terms to the Notes issued therein, except it is subordinated with respect to its security interest, (ii) permit two Investors to convert Series D Preferred Stock beginning on April 7, 2025, and (iii) permit two Investors to receive a number of shares of Series F equal to 50% of their investment amount, or $0.1 million each, using the stated value of the Series F Preferred Stock, which is $0.50 per share, to determine the number of shares of Series F Preferred Stock. As of December 31, 2024, debt issuance costs related to the side letters were $0.4 million. The exchange of Series F Preferred Stock for a 120-day promissory note resulted in a gain of $44,833, which is included in gain on extinguishment of debt in the consolidated statements of operations.

In March 2025, the Company and certain of the holders agreed to an extension of the maturity date to April 14, 2025 in exchange for an increase to the principal of the notes by 10%, and two lenders were each paid their principal balance plus 2.5% interest of $0.3 million. On April 14, 2025, the Company and the remaining Note holders entered into an agreement for a second extension of the maturity dates of the Notes held by such holders to May 14, 2025. The terms of the recent extension are as follows: (i) if the Notes are paid off on or before April 29, 2025, then there will be no additional principal payment required; and (ii) if the principal of the applicable Notes are not paid off on or before April 29, 2025 but are paid on or before May 13, 2025, then an additional payment in an amount equal to 5% of the outstanding principal of the applicable Notes will be due. See Note 25 - Subsequent Events.

2024 Secured Notes

On May 15, 2024, Eastside entered into a Loan Agreement with the SPV, Aegis, Bigger, District 2, and LDI.

Pursuant to the Loan Agreement, Bigger, District 2 and LDI purchased from Eastside for $1.1 million cash promissory notes in the aggregate principal amount of $1.1 million (the “2024 Secured Notes”). The 2024 Secured Notes may be satisfied by payment of 110% of principal on or before November 29, 2024, by payment of 130% of principal on or before March 30, 2025 or by payment of 140% of principal on March 31, 2025.

With each 2024 Secured Note, Eastside issued Warrants to purchase a share of Eastside’s common stock for $50.00 exercisable forfive years after December 2, 2024 if on November 29, 2024 the 2024 Secured Note issued to the Warrant-holder remained unsatisfied. LDI received a Warrant to purchase 59,802 shares and each of Bigger and District 2 received a Warrant to purchase 29,901 shares resulting in a debt discount of $0.3 million, which were subsequently forgiven as part of the Debt Exchange Agreement and recorded to troubled debt restructuring in the consolidated statements of operations.

The Loan Agreement provided that if the 2024 Secured Notes had not been satisfied by November 29, 2024, then until March 31, 2025 each of the Subscribers would have the right to purchase a “Kicker Note” in the amount of $0.5 million for LDI or $0.3 million for each of Bigger and District 2 by surrendering debt or equity instruments specified in the Loan Agreement. The Kicker Notes did not bear interest, and could be satisfied by payment of their principal amounts on or before March 31, 2026.

Eastside’s obligations under the 2024 Secured Notes and the Kicker Notes (collectively, the “2024 Notes”) were secured by Eastside’s pledge of its assets, subject to certain specified exceptions. In connection with the Loan Agreement, Eastside, Aegis, Bigger and District 2 amended and restated the Intercreditor Agreement they had executed on September 29, 2023. In the Amended and Restated Intercreditor Agreement, Aegis, Bigger and District 2 subordinate their liens on any barrels of spirits owned by Eastside, and the parties agree that the net proceeds of any sale of barrels will be paid to the Subscribers in satisfaction of the 2024 Notes. Commencing when all barrels have been sold, the lien of the Subscribers under the 2024 Notes would become pari passu with the senior lien on the remaining collateral.

Subsequently in 2024, these notes were exchanged as part of the Debt Exchange Agreement, further described above inNote 5 - Debt Exchange Agreement.

6% Secured Convertible Promissory Notes

On April 19, 2021, Eastside entered into a securities purchase agreement (“Purchase Agreement”) with accredited investors (“Subscribers”) for their purchase of up to $3.3 million of principal amount of 6% secured convertible promissory notes of Eastside (“Note” or “Notes”), which notes were convertible into shares (“Conversion Shares”) of Eastside’s common stock, par value $0.0001 per share pursuant to the terms and conditions set forth in the Notes with an initial conversion price of $440.00. In connection with the purchase of such Notes, each Subscriber received a warrant (“Existing Warrant”), to purchase a number of shares of common stock (“Warrant Shares”) equal to 60% of the principal amount of any Note issued to such Subscriber divided by the conversion price of the Note issued to such Subscriber, at an exercise price equal to $520.00. In connection with the Purchase Agreement, Eastside entered into a Security Agreement under which it granted the Subscribers a security interest in certain assets of Eastside (the “Security Agreement”) and a Registration Rights Agreement under which Eastside agreed to register for resale the Conversion Shares and the Warrant Shares. Concurrently therewith, Eastside and the investors closed $3.3 million of the private offering.

Roth Capital, LLC acted as placement agent in the private offering, and Eastside paid the Placement Agent a cash fee of five percent (5%) of the gross proceeds therefrom. Eastside received $3.1 million in net proceeds from the closing, after deducting the fee payable to the Placement Agent and the legal fees of the Subscribers in connection with the transaction. Eastside used the proceeds to repay prior outstanding notes payable and for working capital and general corporate purposes.

Interest on the Notes accrued at a rate of 6% per annum and was payable either in cash or in shares of Eastside’s common stock at the conversion price in the Note on each of the six and twelve month anniversaries of the issuance date and on the maturity date of October 18, 2022.

All amounts due under the Notes are convertible at any time after the issuance date, in whole or in part (subject to rounding for fractional shares), at the option of the holders into Eastside’s common stock at a fixed conversion price, which is subject to adjustment as summarized below. The Notes were initially convertible into Eastside’s common stock at an initial fixed conversion price of $440.00 per share. This conversion price is subject to adjustment for stock splits, combinations, or similar events, among other adjustments. On April 1, 2022, Eastside and the holders agreed to a reduction of the conversion price of the 6% secured convertible promissory notes to $260.00 per share in connection with Eastside’s issuance of a common stock purchase warrant to TQLA covering its loan amount of $3.5 million with a common stock value of $240.00 per share.

The Notes contained customary triggering events including but not limited to: (i) failure to make payments when due under the Notes; and (ii) bankruptcy or insolvency of Eastside. If a triggering event occurs, each holder may require Eastside to redeem all or any portion of the Notes (including all accrued and unpaid interest thereon), in cash.

The Notes are secured by a subordinated security interest in Eastside’s assets pursuant to the terms of a Security Agreement entered into between Eastside and the Subscribers.

On October 13, 2022, Eastside entered into an Amendment Agreement with the holders of the 6% Secured Convertible Promissory Notes. The Amendment Agreement changed the Maturity Date of the Notes from October 18, 2022 to November 18, 2022. In consideration of the extension, Eastside issued 481 shares of its common stock to each of the Subscribers.

On September 29, 2023, Eastside entered into a Debt Satisfaction Agreement with the Subscribers and other creditors, pursuant to which the Maturity Date of the Notes was extended from November 18, 2022 to March 31, 2025 and interest accrues at 9% per annum. Principal and interest on the Notes of $3.3 million was exchanged for equity issued to the SPV, in which the Subscribers held a 50% ownership interest, and the Notes were then amended and restated.See Note 19 - Stockholders’ Equity: 2023 Debt Satisfaction Agreement. Subsequently in 2024, these notes were further converted or exchanged as part of the Debt Exchange Agreement, further described above inNote 5 - Debt Exchange Agreement.

17. SECURED CREDIT FACILITIES – RELATED PARTY

On October 7, 2022, Eastside entered into a Note Purchase Agreement dated as of October 6, 2022 with Aegis. Pursuant to the Note Purchase Agreement, Aegis purchased from Eastside a secured promissory note in the principal amount of $4.5 million (the “Aegis Note”). Aegis paid for the Aegis Note by paying $3.3 million to TQLA LLC to fully satisfy a secured line of credit promissory note that Eastside issued to TQLA on March 21, 2022; and the remaining $1.2 million was paid in cash to Eastside. The Aegis Note bore interest at 9.25% per annum, payable every three months. The principal amount of the Aegis Note was payable on March 31, 2025. Eastside pledged substantially all of its assets to secure its obligations to Aegis under the Aegis Note.

On September 29, 2023, Eastside entered into a Debt Satisfaction Agreement with Aegis and other creditors, pursuant to which the Aegis Note was amended and restated. Principal and interest of $1.9 million were exchanged for equity issued to the SPV, in which Aegis held a 29% interest.See Note 19 - Stockholders’ Equity: 2023 Debt Satisfaction Agreement. Subsequently in 2024, these notes were further converted or exchanged as part of the Debt Exchange Agreement, further described above inNote 5 - Debt Exchange Agreement.

18. LEASE OBLIGATIONS

Beeline leases office space under various operating lease agreements, including an office for its headquarters, for branch location and licensing purposes under non-cancelable lease arrangements that provide for payments on a graduated basis with various expiration dates. Bridgetown Spirits has an operating lease for its warehouse. Terms of these leases include, in some instances, scheduled rent increases, renewals, purchase options and maintenance costs, and vary by lease. The Company has leased approximately 27,381 square feet of space in Rhode Island, Australia and Oregon that expires at various dates through 2030. The Company does not have any financing leases.

As the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate of 6.1% based on information available at commencement to determine the present value of the lease payments. Right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet and are recognized on a straight-line basis over the lease term. As of December 31, 2024, the amount of right-of-use assets and lease liabilities were $1.7 million and $1.9 million, respectively. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Aggregate lease expense for the year ended December 31, 2024 was $0.3 million.

Maturities of lease liabilities as of December 31, 2024 were as follows:

19. STOCKHOLDERS’ EQUITY

Reverse Stock Split

All shares and per share information in these consolidated financial statements were adjusted to give effect to the 1-for-20 reverse stock split of the Company’s common stock effected on May 12, 2023 and has also been retrospectively adjusted to give effect to the one-for-ten reverse stock split of the Company’s common stock effected on March 12, 2025.

Increase in Authorized Shares

On January 27, 2025, a Special Meeting of the Stockholders of the Company was held and stockholders approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock, par value $0.0001 per share, to 100,000,000 from 6,000,000.

2023 Debt Satisfaction Agreement

On September 29, 2023, Eastside entered into a Debt Satisfaction Agreement (the “DSA”) with the SPV, Aegis, Bigger, District 2, LDI and TQLA, LLC. The SPV was a special purpose vehicle whose equity is shared 50% by Bigger and District 2 and 50% by Aegis and LDI.

Pursuant to the DSA, on September 29, 2023, Eastside issued to the SPV 29,672 shares of Eastside’s common stock and 200,000 shares of its Series C Preferred Stock, and executed a Registration Rights Agreement providing that Eastside will register for public resale that common stock and the common stock issuable upon conversion of the Series C Preferred Stock. In exchange for that equity, Eastside’s debts to the members of the SPV were reduced by a total of $6.5 million and Eastside recognized a loss on the conversion of $1.3 million for the year ended December 31, 2023. Specifically, the debt was reduced as follows:

Further pursuant to the DSA:

Issuance of Common Stock

During the year ended December 31, 2024, Eastside issued 176 shares of common stock to a director to settle $5,379 of accrued compensation. The shares were issued at a contractually agreed upon price of $30.50 per share. For accounting purposes, the shares were valued at $11.60 per share based upon the closing price on the date of grant for stock-based compensation of $2,046. During the year ended December 31, 2024, Eastside issued 5,574 shares of common stock to employees and a consultant for stock-based compensation of $0.1 million at $12.10 per share.

During November 2024, Eastside entered into Securities Purchase Agreements for the sale of securities consisting of 68,621 shares of common stock for gross proceeds of $0.4 million before deducting the expenses of the offering.

On October 15, 2024, Eastside issued 18,000 shares of common stock to its Chief Executive Officer at $5.00 per share in satisfaction of a bonus obligation and issued 40,000 shares of common stock.

Pursuant to the terms of the Debt Exchange Agreement on October 7, 2024, Eastside issued a total of 19,000 shares of common stock to Esping, WPE and Grammen, and Eastside was released from liability for $0.2 million of unsecured debt. In addition, Eastside converted 200,000 shares of its Series C Preferred Stock owned by the SPV to 183,784 shares of its common stock. The Investors of the SPV subsequently surrendered for cancellation to Eastside 98,777 shares of its common stock for Bridgetown Spirits and Craft C+P representing a net amount of (79,767) shares.See Note 5 – Debt Exchange Agreement.

On September 5, 2024, Eastside entered into a Securities Purchase Agreement with a single institutional investor for the sale of 9,282 shares of common stock for $10.00 per share, and the sale of pre-funded warrants for $9.99 per warrant. The warrants permitted the purchase of 34,920 shares of common stock for $0.001 per share. The warrants were exercised on September 6, 2024. Eastside used the net proceeds for working capital and general corporate purposes.

For the year ended December 31, 2024, Eastside issued dividends of 17,773 shares of common stock at $8.44 per share to its Series B Preferred stockholders. For the year ended December 31, 2023, Eastside issued dividends of 9,296 shares of common stock at a VWAP of $16.14 per share to its Series B Preferred stockholders.

As of December 31, 2024, the Company had stock to be issued of 13,115 shares of common stock related to a settlement and recorded $0.1 million of stock to be issued on the consolidated balance sheets as of December 31, 2024,see Note 20 – Commitments and Contingencies, Legal Matters.

During the year ended December 31, 2023, the Company issued 16,285 shares of common stock to directors and employees for stock-based compensation of $0.7 million. The shares were valued for accounting purposes using the closing share price of the Company’s common stock on the date of grant, within the range of $12.90 to $74.00 per share and issued within the range of $30.50 to $74.00 per share

During the year ended December 31, 2023, the Company sold 34,350 shares of common stock for net proceeds of $1.4 million in at-the-market public placements.

On September 29, 2023, pursuant to the DSA (see discussion above), the Company issued to the SPV 29,672 shares of common stock and 200,000 shares of its Series C Preferred Stock. In exchange for that equity, Eastside’s debts to the members of the SPV were reduced by a total of $6.5 million.

Preferred Stock

The Company has 100 million shares of preferred stock authorized.

Issuance of Series B Preferred Stock

On October 19, 2021, Company entered into a securities purchase agreement (“Purchase Agreement”) with an accredited investor for its purchase of 2.5 million shares (“Preferred Shares”) of Series B Convertible Preferred Stock (“Series B Preferred Stock”) at a purchase price of $1.00 per Preferred Share, which Preferred Shares are convertible into shares of the Company’s common stock pursuant to the terms and conditions set forth in a Certificate of Designation Establishing Series B Preferred Stock of Eastside with an initial conversion price of $620.00 per share.4,250 shares of common stock were reserved for issuance in the event of conversion of the Preferred Shares. The holder of Series B has voting rights on an as-converted basis.

The Series B Preferred Stock accrues dividends at a rate of 6% per annum, payable annually on the last day of December of each year. Dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Dividends are payable at Eastside’s option either in cash or “in kind” in shares of common stock; provided, however that dividends may only be paid in cash following the fiscal year in which Eastside has net income (as shown in its audited financial statements contained in its Annual Report on Form 10-K for such year) of at least $0.5 million. For “in-kind” dividends, holders will receive that number of shares of common stock equal to (i) the amount of the dividend payment due such stockholder divided by (ii) the volume weighted average price of the common stock for the 90 trading days immediately preceding a dividend date (“VWAP”). For the year ended December 31, 2024, Eastside issued dividends of 17,773 shares of common stock at $8.44 per share to its Series B Preferred stockholders. For the year ended December 31, 2023, Eastside issued dividends of 9,296 shares of common stock at a VWAP of $16.14 per share to its Series B Preferred stockholders. For both the years ended December 31, 2024 and 2023, Eastside accrued $0.2 million of preferred dividends.

Issuance of Series C Preferred Stock

Pursuant to the terms of the DSA on September 29, 2023, Eastside issued to the SPV 200,000 shares of its Series C Preferred Stock. Each share of Series C Preferred Stock has a stated value of $28.025 and is convertible into shares of the Company’s common stock pursuant to the terms and conditions set forth in a Certificate of Designation Establishing Series C Preferred Stock with an initial conversion price of $30.50 per share.

During 2024, the SPV converted 200,000 shares of its Series C Preferred Stock into 183,784 shares of common stock,see Note 5 – Debt Exchange Agreement. In January 2025, the Certificate of Designation was withdrawn for the Series C Preferred Stock.

Issuance of Series D Preferred Stock

Each share of Series D Preferred Stock has a stated value of $10.00 and is convertible into shares of the Company’s common stock pursuant to the terms and conditions set forth in a Certificate of Designation establishing Series D Preferred Stock with an initial conversion price of $18.00 per share. In the event that the Company declares a dividend payable in cash or stock to holders of any class of the Company’s stock (including the Series BPreferred Stock), the holder of a share of Series D Preferred Stock will be entitled to receive an equivalent dividend on an as-converted basis. In the event of a liquidation of the Company, the holders of Series D Preferred Stock will share in the distribution of the Company’s net assets on an as-converted basis equally with the Series C Preferred Stock and Series E Preferred Stock, subordinate only to the senior position of the Series B Preferred Stock. The number of shares of common stock into which a holder may convert Series D Preferred Stock is limited by a beneficial ownership limitation of 9.99%. The Series D Preferred Stock conversion price and the floor price will be subject to equitable adjustment in the event of stock splits, reverse splits and similar events. The Series D Preferred Stock is non-voting.

Pursuant to the terms of the Debt Exchange Agreement on October 7, 2024, Eastside issued a total of 255,474 shares of Series D Preferred Stock to Bigger and District 2, and they released the Company from liability for $2.6 million of unsecured debt.See Note 5 – Debt Exchange Agreement.

In conjunction with the Senior Secured Notes entered into on November 14, 2024, the Company entered in a side letters with Bigger and District 2 to each convert $0.3 million of Series D Preferred Stock beginning on April 7, 2025 at a conversion price equal to the lower of $5.00 per share or the five-day VWAP price ending on April 7, 2025, but not less than $2.50 per share.

Issuance of Series E Preferred Stock

Each share of Series E Preferred Stock has a stated value of $10.00 and is convertible into shares of the Company’s common stock pursuant to the terms and conditions set forth in a Certificate of Designation establishing Series E Preferred Stock with an initial conversion price of $20.00, subject to an automatic adjustment on October 31, 2025 equal to the average of the VWAPs for the five trading days immediately preceding the Measurement Date (390 days after the closing under the Debt Exchange Agreement), subject to a “Floor Price” of $2.50 per share. The Series E Preferred Stock conversion price and the floor price will be subject to equitable adjustment in the event of stock splits, reverse splits and similar events. The number of shares of common stock into which a holder may convert Series E Preferred Stock is limited by a beneficial ownership limitation, which restricts the number of shares of common stock that the holder and its affiliates may beneficially own after the conversion to 9.99%. The Series E Preferred Stock is non-voting.

Pursuant to the terms of the Debt Exchange Agreement on October 7, 2024, the Company issued a total of 200,000 shares of Series E Preferred Stock to Bigger and District 2, and they released Eastside from liability for $2.0 million of unsecured debt.See Note 5 – Debt Exchange Agreement.

Issuance of Series F and F-1 Preferred Stock

The Merger that closed on October 7, 2024, was structured as an all-stock transaction. The stockholders of Beeline Financial received 69,482,229 million preferred shares of Series F and 517,775 million preferred shares of Series F-1. Each share of Series F and F-1 Preferred Stock has a stated value of $0.50 and is convertible only upon shareholder approval into shares of the Company’s common stock pursuant to the terms and conditions set forth in a Certificate of Designation establishing Series F and F-1 Preferred Stock with an initial conversion price of $5.00 per share. The number of shares of Common Stock into which a holder may convert Series F and F-1 Preferred Stock will be limited by a beneficial ownership limitation, which restricts the number of shares of the Company’s common stock that the holder and its affiliates may beneficially own after the conversion to 4.99%. That beneficial ownership limitation does not, however, apply to holders who are subject to Section 16 of the Exchange Act by virtue of being an executive officer or director of the Company which presently only applies to the Company’s Chief Executive Officer.

The Series F and F-1 Preferred Stock was valued at $48.2 million,see Note 4 - Merger. The conversion of Series F and F-1 Preferred Stock was approved at a special meeting of stockholders on March 7, 2025,see Note 25 – Subsequent Events.

In conjunction with the Senior Secured Notes entered into on November 14, 2024, the Company entered in a side letters which permitted an affiliate who invested $0.4 million to exchange that amount of stated value of shares of Series F Preferred Stock for a $0.4 million 120-day promissory note and has substantially identical terms to the Senior Secured Notes, except it is subordinated with respect to its security interest. This affiliate exchanged 896,667 shares of Series F Preferred Stock. Additional side letters permitted two investors to each receive 250,000 shares of Series F Preferred Stock. The net amount of these side letters was (396,667) shares.See Note 16 – Secured Credit Facilities.

Issuance of Series G Preferred Stock

Each share of Series G Preferred Stock has a stated value of $0.51 and is convertible into shares of the Company’s common stock pursuant to the terms and conditions set forth in a Certificate of Designation establishing Series G Preferred Stock with an initial conversion price of $5.10 per share. Initial conversion price is subject to adjustment as provided therein including in the event of an issuance of common stock or common stock equivalents at a price per share that is less than the conversion price, subject to a floor price of 20% of the Nasdaq Minimum Price as of the initial closing date of the offering of such Series G Preferred Stock. The Series G Preferred Stock conversion price is subject to equitable adjustment in the event of a stock split, reverse split and similar events. The number of shares of Common Stock into which a holder may convert Series G Preferred Stock will be limited by a beneficial ownership limitation, which restricts the number of shares of the Company’s common stock that the holder and its affiliates may beneficially own after the conversion to 4.99%.The holder of Series G Preferred Stock has no conversion or voting rights prior to stockholder approval of such actions. In the event of a liquidation of the Company, the holders of Series G Preferred Stock will share in the distribution of the Company’s net assets on an as-converted basis, subordinate only to the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock. The conversion of Series G Preferred Stock was approved at a special meeting of stockholders on March 7, 2025,see Note 25 – Subsequent Events.

During 2024, the Company sold 4,484,314 shares of Series G Preferred Stock and 2,242,157 five-year Warrants to purchase a total of 448,431 shares of common stock for total gross proceeds of $2.3 million.

On December 31, 2024, the Company issued a consultant 250,000 shares of Series G Preferred Stock as consideration for the waiver and release of certain contractual rights under which the Company also paid $0.1 million.

On December 31, 2024 the Company entered into a Common Stock Purchase Agreement and related Registration Rights Agreement (collectively, the “ELOC Agreement”) and the Company issued the Purchaser 573,925 shares of Series G Preferred Stock as a commission fee and recorded $0.6 million of deferred offering costs included in other assets on the consolidated balance sheets as of December 31, 2024. See ELOC Agreement below.

As of December 31, 2024, the Company had stock to be issued of 245,098 shares of Series G Preferred Stock as payment for past legal services and recorded $0.1 million of stock to be issued on the consolidated balance sheets as of December 31, 2024.

Bridgetown Spirits Corp. and Non-Controlling Interests

Subsequent to the execution of the Debt Exchange Agreement, Bridgetown issued 1.0 million shares of common stock to Eastside, representing all of the issued and outstanding capital stock of Bridgetown. Pursuant to the terms of the Debt Exchange Agreement on October 7, 2024, Eastside transferred 108,899 shares, or 10.9%, of Bridgetown common stock to Bigger, District 2, Esping, WPE and Grammen, and Eastside was released from unsecured debt in the aggregate amount of $0.9 million.See Note 5 – Debt Exchange Agreement.

In accordance with the Debt Exchange Agreement, on November 7, 2024, the Company transferred 361,101 shares, or 36%, of Bridgetown common stock to Aegis, Bigger, District 2 and LDI. In consideration for those shares, those four lenders surrendered a total of 58,090 shares of the Company’s common stock.See Note 5 – Debt Exchange Agreement.

Stock-Based Compensation

On September 8, 2016, Eastside adopted the 2016 Equity Incentive Plan (the “2016 Plan”). Pursuant to the terms of the plan, on January 1, 2024 the number of shares available for grant under the 2016 Plan reset to 43,799 shares, equal to 8% of the number of outstanding shares of Eastside’s capital stock, calculated on an as-converted basis, on March 31 of the preceding calendar year, and then added to the prior year plan amount. As of December 31, 2024, there were 104 options and 34,935 restricted stock units (“RSUs”) fully vested and outstanding under the 2016 Plan. On February 6, 2025, the 2016 Plan was terminated and replaced with the 2025 Equity Incentive Plan.

A summary of all stock option activity as of and for the years ended December 31, 2024 and 2023 is presented below:

The aggregate intrinsic value of options outstanding as of December 31, 2024 was $0. As of December 31, 2024, all options had vested.

The Company uses the Black-Scholes valuation model to measure the grant-date fair value of stock options. The grant-date fair value of stock options issued to employees is recognized on a straight-line basis over the requisite service period. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest.

To determine the fair value of stock options using the Black-Scholes valuation model, the calculation takes into consideration the effect of the following:

The calculation includes several assumptions that require management’s judgment. The expected term of the options is calculated using the simplified method described in GAAP. The simplified method defines the expected term as the average of the contractual term and the vesting period. Estimated volatility is derived from volatility calculated using historical closing prices of common shares of similar entities whose share prices are publicly available for the expected term of the options. The risk-free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the options.

The Company did not issue any additional options during the years ended December 31, 2024 and 2023.

Warrants

During the fourth quarter of 2024, the Company sold shares of Series G Preferred Stock and in conjunction issued warrants to purchase a total of 224,216 shares of common stock. The warrants have a term offive years from issuance and are exercisable at an exercise price of $6.50 per share.

On November 22 and November 25, 2024, Eastside entered into Securities Purchase Agreements for the sale of 68,627 shares of common stock and warrants to purchase a total of 34,332 shares of common stock. Each warrant is exercisable to purchase common stock at a price per share of $6.50. The holder’s ability to exercise a warrant will terminate on the later of the third anniversary of the issue date for the warrant or the first anniversary of the stockholder approval of an increase in the authorized shares of common stock.

On November 14, 2024, the Company sold $1.9 million in aggregate principal amount of the Notes and the Warrants to purchase a total of 36,360 shares of common stock for net proceeds of $1.6 million in the Offering. The Warrants have a term offive years from issuance and are exercisable at an exercise price of $5.00 per share (of which all but $0.001 per share was pre-funded by each Investor). The Warrants will be exercisable beginning upon shareholder approval of the issuance of the common stock upon exercise of the Warrants and an increase in the authorized Common Stock of the Company. If at any time after exercising the Warrants, there is no effective registration statement registering, or the prospectus contained therein is not available for use, then the Warrants may also be exercised, in whole or in part, by means of a “cashless exercise.” The Company recorded a debt discount related to the warrants of $24,372 as of December 31, 2024,see Note 16 – Secured Credit Facilities.

On May 16, 2024, Eastside entered into a Loan Agreement with the SPV, Aegis, Bigger, District 2, and LDI. With each 2024 Secured Note, Eastside issued a Warrant to purchase a share of the Company’s common stock for $50.00 exercisable forfive years after December 2, 2024 if on November 29, 2024 the 2024 Secured Note issued to the Warrant-holder remains unsatisfied. LDI received a Warrant to purchase 59,802 shares and each of Bigger and District 2 received a Warrant to purchase 29,901 shares. Eastside recorded a debt discount of $0.3 million as of December 31, 2024. These warrants were cancelled as part of the Debt Exchange Agreement,see Note 5 - Debt Exchange Agreement.

The estimated fair value of the new warrants issued in 2024 was based on a combination of closing market trading price on the date of issuance for the public offering warrants, and the Black-Scholes option-pricing model, using the weighted average assumptions below:

On March 21, 2022, Eastside entered into a promissory note with TQLA LLC to accept a one year loan of $3.5 million. In addition, Eastside issued a common stock purchase warrant to TQLA covering the loan amount to purchase up to 14,583 shares of common stock at an exercise price of $240.00 per share. The note payable was fully repaid in October 2022. The common stock purchase warrant expires in March 2027. The warrants were amended pursuant to the Debt Satisfaction Agreement*(see discussion above)*to prevent any exercise that would result in the warrant-holder and affiliates acquiring cumulative voting power in excess of 9.99%. This Beneficial Ownership Limitation may be increased to 19.99% upon 61 days advance notice to Eastside.

From April 19, 2021 through May 12, 2021, Eastside issued in a private placement Existing Warrants to purchase up to 4,500 shares of common stock at an exercise price of $520.00 per Warrant Share. On July 30, 2021, Eastside entered into Inducement Letters with the holders of the Existing Warrants whereby such holders agreed to exercise for cash their Existing Warrants to purchase the 4,500 Warrant Shares in exchange for Eastside’s agreement to issue new warrants (the “New Warrants”) to purchase up to 4,500 shares of common stock (the “New Warrant Shares”). The New Warrants have substantially the same terms as the Existing Warrants, except that the New Warrants have an exercise price of $600.00 per share and are exercisable until August 19, 2026. On September 29, 2023, pursuant to the Debt Satisfaction Agreement (see above), the exercise price of the Existing Warrants was reduced to $330.80 per share and the term during which the Existing Warrants may be exercised was extended to June 23, 2028.

On January 15, 2020, Eastside and its subsidiaries entered into a loan agreement (the “Loan Agreement”) between Eastside and Live Oak Banking Company (“Live Oak”), a North Carolina banking corporation (the “Lender”) to refinance existing debt of Eastside and to provide funding for general working capital purposes In connection with the Loan Agreement, Eastside issued to the Lender a warrant to purchase up to 500 shares of the Company’s common stock at an exercise price of $788.00 per share (the “Warrant”). The Warrant expired on January 15, 2025. In connection with the issuance of the Warrant, Eastside granted the Lender piggy-back registration rights with respect to the shares of common stock issuable upon exercise of the Warrant, subject to certain exceptions.

A summary of all warrant activity as of and for the year ended December 31, 2024 is presented below:

ELOC Agreement

On December 31, 2024, the Company entered into entered into a Common Stock Purchase Agreement and related Registration Rights Agreement (collectively, the “ELOC Agreement”) with an institutional investor (the “Purchaser”) pursuant to which the Company agreed to sell, and the Purchaser agreed to purchase, up to $35 million of the Company’s common stock, subject to a sale limit of 19.99% of the outstanding shares of the Company’s common stock.See Note 25 – Subsequent Events for an amendment.

Beeline Warrants

In the Merger Agreement, the Company agreed to assume 58,680 outstanding Beeline warrants with an exercise price of $23.12 per share. The new warrants have not been issued as of April 15, 2025.

20. COMMITMENTS AND CONTINGENCIES

Legal Matters

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. The complaint sought damages of $245,000, plus a judicial declaration, due to Eastside’s failure to pay for the services. Eastside believes that it paid for services rendered. On October 28, 2024, Eastside signed a term sheet to settle the case for $0.1 million paid in 2024 and $0.1 million in stock to be paid of 13,115 shares of common stock that was subsequently issued in February 2025. These settlement expenses are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2024.

On December 15, 2020, Grover Wickersham filed a complaint in the United States District Court for the District of Oregon against Eastside. Mr. Wickersham, the former CEO and Chairman of the Board of Eastside, 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. During June 2024, this case was settled for $0.3 million that was subsequently paid in September 2024.

The Company is not currently subject to any other material legal proceedings; however, it could be subject to legal proceedings and claims from time to time in the ordinary course of its business, or legal proceedings it considered immaterial may in the future become material. Regardless of the outcome, litigation can, among other things, be time consuming and expensive to resolve, and can divert management resources.

Government Regulations Affecting Mortgage Loan Origination

Beeline operates in a heavily regulated industry that is highly focused on consumer protection. The extensive regulatory framework to which Beeline is subject includes U.S. federal and state laws and regulations.

Governmental authorities and various U.S. federal and state agencies have broad oversight and supervisory authority over all aspects of Beeline’s business.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Consumer Financial Protection Bureau (the “CFPB”) was established to ensure, among other things, that consumers receive clear and accurate disclosures regarding financial products and to protect consumers from hidden fees and unfair, deceptive or abusive acts or practices. The CFPB’s jurisdiction includes those persons producing or brokering residential mortgage loans. It also extends to Beeline’s other lines of business title insurance. The CFPB has broad supervisory and enforcement powers with regard to non-depository institutions, such as Beeline, that engage in the production and servicing of home loans.

As part of its enforcement authority, the CFPB can order, among other things, rescission or reformation of contracts, the refund of moneys or the return of real property, restitution, disgorgement or compensation for unjust enrichment, the payment of damages or other monetary relief, public notifications regarding violations, remediation of practices, external compliance monitoring and civil money penalties. The CFPB has been active in investigations and enforcement actions and has issued large civil money penalties since its inception to parties the CFPB determines have violated the laws and regulations it enforces.

Effective October 1, 2022, the CFPB revised the definition of a qualified mortgage (“QM”) which permits mortgage lenders to gain a presumption of compliance with the CFPB’s ability to repay requirements if a loan meets certain underwriting criteria. Lenders are now required to comply with a new QM definition in order to receive a safe-harbor or rebuttable presumption of compliance under the ability-to-repay requirements of the Truth in Lending Act (“TILA”) and its implementing Regulation Z. The revision to the QM definition created additional compliance burdens and removed some of the legal certainties afforded to lenders under the prior QM definition. Specifically, the revised QM rule eliminated the previous requirement limiting QMs to a 43% debt-to-income ratio (“DTI”) and replaced it with pricing-based thresholds. Loans at 150 basis points or less over the average prime offer rate (“APOR”) as of the date the interest rate is set, receive a safe harbor presumption of compliance, while loans between 151 and 225 basis points over the APOR benefit from a rebuttable presumption of compliance. The new rule also created new requirements for a lender to “consider” and “verify” a borrower’s income and debts and associated DTI, along with several other underwriting requirements. Additionally, the new QM definition eliminated a path to regulatory compliance that was available for originating loans that were eligible to be sold to GSEs, which was heavily relied upon by a large segment of the mortgage industry. Due to the transition to the new QM definition, there may be residual compliance and legal risks associated with the implementation of these new underwriting obligations.

The CFPB’s loan originator compensation rule prohibits compensating loan originators based on a term of a transaction, prohibits loan originators from receiving compensation directly from a consumer or another person in connection with the same transaction, imposes certain loan originator qualification and identification requirements, and imposes certain loan originator compensation recordkeeping requirements, among other things.

Beeline is also supervised by regulatory agencies under state law. From time-to-time, Beeline receives examination requests from the states in which Beeline is licensed. State attorneys general, state mortgage licensing regulators, state insurance departments, and state and local consumer protection offices have authority to investigate consumer complaints and to commence investigations and other formal and informal proceedings regarding Beeline’s operations and activities. In addition, the government-sponsored enterprises, or GSEs, the Federal Housing Authority (the “FHA”), the Federal Trade Commission (the “FTC”), and others subject Beeline to periodic reviews and audits. This broad and extensive supervisory and enforcement oversight will continue to occur in the future.

Beeline maintains dedicated staff on the legal and compliance team to ensure timely responses to regulatory examination requests and to investigate consumer complaints in accordance with regulatory regulations and expectations.

21. CONCENTRATIONS

The Company maintains cash balances with several regional banks. The deposits are insured by the Federal Deposit Insurance Corporation up to $250,000 per depositor per bank. At various times throughout the year, cash balances held within these accounts may exceed the maximum insured amounts. As of December 31, 2024, there was one account that exceeded the limit by $0.5 million. There wereno balances that exceeded insured limits as of December 31, 2023.

The Company relies on one lender for the warehouse line it uses to fund the mortgage loans it makes to its customers, which is limited to a maximum of $5.0 million.

The Company sold its mortgage loans to seven investors for the period October 8, 2024 – December 31, 2024.

Escrows Payable

As a service to its clients, the Company administers escrow deposits representing undisbursed amounts received for payment of settlement and title services. Escrow deposits held by the Company was $0.6 million as of December 31, 2024. The Company held $0.1 million in escrow as of December 31, 2024. These amounts are not considered assets of the Company and, therefore, are excluded from the consolidated balance sheets. The Company remains contingently liable for the disposition of these deposits.

Exclusive Supplier Agreement

The Company has a long-term exclusive agreement with Agaveros Unidos de Amatitan, SA. de CV (“Agaveros Unidos”) for the Azuñia Tequila brand. The termination of this relationship or an adverse change in the terms of this arrangement with Agaveros Unidos could have a negative impact on the Company’s business. If Agaveros Unidos increases its prices, the Company may not be able to secure alternative suppliers, and may not be able to raise the prices of its products to cover all or even a portion of the increased costs. Also, any failure by Agaveros Unidos to perform satisfactorily or handle increased orders, or delays in shipping, could cause the Company to fail to meet orders for its products, lose sales, incur additional costs and/or expose the Company to product quality issues. In turn, this could cause the Company to lose credibility in the marketplace and damage its relationships with distributors, ultimately leading to a decline in our business and results of operations. If the Company is not able to renegotiate these contracts on acceptable terms or find suitable alternatives, its business, financial condition or results of operations could be negatively impacted.

22. INCOME TAXES

The Company maintains deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax assets (liabilities) as of December 31, 2024 and 2023 consist of net operating loss carryforwards and differences in the book basis and tax basis of intangible assets, investments, and mortgage loans.

The items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes for the years ended December 31, 2024 and 2023 were as follows:

The Company’s approximate net deferred tax assets as of December 31, 2024 and 2023 were as follows:

The gross operating loss carryforward was $85.0 million as of December 31, 2024. The Company provided a valuation allowance equal to the net deferred income tax assets for the years ended December 31, 2024 and 2023 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward and other deferred tax assets.

Additionally, the future utilization of the net operating loss carryforward to offset future taxable income is subject to an annual limitation as a result of ownership or business changes that may occur in the future. The Company has not conducted a study to determine the limitations on the utilization of these net operating loss carryforwards. If necessary, the deferred tax assets will be reduced by any carryforward that may not be utilized or expires prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance.

The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2021, 2022, and 2023 Corporate Income Tax Returns are subject to Internal Revenue Service examination.

23. NET INCOME (LOSS) PER COMMON SHARE

Basic income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period, without considering any dilutive items. Potentially dilutive securities consist of the incremental common stock issuable upon exercise of preferred stock, stock options, and warrants. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. There wereno anti-dilutive common shares included in the calculation of income (loss) per common share as of December 31, 2024 and 2023. As of December 31, 2024, there were 8.5 million shares of common stock equivalents that were antidilutive due to the Company’s net loss.

24. RELATED PARTY TRANSACTIONS

The Company issued a note to a private company in which Joseph Freedman, a Board member of the Company, has an ownership interest. This note was for $0.1 million, accrues interest at 7% per annum and is due on demand. This note was subsequently repaid in January 2025.

Aegis Security Insurance Company

On October 7, 2022, the Company entered into a Note Purchase Agreement with Aegis. Pursuant to the Note Purchase Agreement, Aegis purchased from the Company a secured promissory note in the principal amount of $4.5 million (the “Aegis Note”). $3.3 million of the purchase price was paid to TQLA, LLC to satisfy a Note purchased from TQLA earlier in 2022.See Note 19 Stockholders’ Equity: 2023 Debt Satisfaction Agreement. Patrick Kilkenny is the principal owner of Aegis. TQLA LLC is owned by Stephanie Kilkenny, a member of the Company’s Board of Directors, and her husband, Patrick Kilkenny.

LD Investments LLC and Aegis Security Insurance Company

On September 29, 2023, the Company entered into a Secured Promissory Note with LDI in the principal amount of $1.4 million, representing advances made by LDI to the Company between December 2022 and August 2023. Patrick Kilkenny is the principal owner of LDI. Patrick Kilkenny is the spouse of Stephanie Kilkenny, a member of the Company’s Board of Directors.

On September 29, 2023, the Company entered into the DSA with LDI, Aegis Security Insurance Company (of which Patrick Kilkenny is the principal owned) and other creditors.See Note 19 – Stockholders’ Equity: Debt Satisfaction Agreement. The entire principal and interest on the LDI Note were exchanged for equity issued to theSPV, in which LDI holds a 21% interest.

2024 Secured Notes

During February 2024, LDI advanced the Company $0.6 million. On May 16, 2024, the Company entered into a Loan Agreement with LDI, see: Note 16 - Secured Credit Facilities: 2024 Secured Notes.

Other Related Parties

During December 2024, Mr. Liuzza purchased 1,960,784 shares of Series G Preferred Stock and five-year Warrants to purchase a total of 98,040 shares of common stock for total gross proceeds of $1.0 million,see Note 25 – Subsequent Events for additional purchases.

Jessica Kennedy, Chief Operating Officer, owns a 5% interest in Tower Title, which is a vendor to certain subsidiaries of the Company. During the year ended December 31, 2024, the Company had transactions of $7,457 with Tower Title.

25. SUBSEQUENT EVENTS

Special Meetings of the Stockholders

On January 27, 2025, a Special Meeting of the Stockholders of the Company was held and stockholders approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s common stock, par value $0.0001 per share, to 100,000,000 from 6,000,000.

On March 7, 2025, a special meeting of the shareholders of the Company was held and stockholders approved the following proposals, among others:

1.Merger Share Issuance - conversion, exercise and voting rights and issuances of shares of common stock underlying convertible securities in connection with the Merger and the issuance of 1,686,360 shares of common stock issuable upon conversion of Series G Preferred Stock and exercise of warrants issued or issuable primarily in financing transactions after the Merger.

2.Equity Line of Credit - the ELOC transaction pursuant to issue and sell up to $20 million of common stock to the purchaser or up to 3,921,569 shares of common stock which assumes the sale of common stock at $5.10 per share.

3.Name Change Proposal - an amendment to the Company’s Articles of Incorporation to change the name of the Company to Beeline Holdings, Inc.

Notes Payable

The Company is in current discussions with a lender to repay the note payable that was due December 31, 2024 for an additional six months.

The Company is in current discussions with a lender to repay the note payable that was due June 21, 2024. Subsequent to the year ended December 31, 2024, the Company paid $25,000 of principal on the note payable. The principal balance as of March 31, 2025 was $0.3 million.

Notes Payable – Related Parties

On February 17, 2025, the Company’s Chief Executive Officer increased his ownership of the Company’s securities by converting his $0.7 million bridge loan into $0.7 million of units comprised of 1,372,549 shares of Series G Preferred Stock and five-year Warrants to purchase a total of 68,628 shares.

The Company issued a note to a private company in which Mr. Freedman has an ownership interest. This note was for $0.1 million and was repaid in January 2025. In addition, Mr. Freedman purchased 238,418 shares of Series G Preferred Stock and five-year Warrants to purchase a total of 11,921 shares of common stock for $0.1 million in January 2025.

Secured CreditFacilities

In March 2025, the Company and certain of the holders agreed to an extension of the maturity date to April 14, 2025 in exchange for an increase to the principal of the notes by 10%, and two lenders were each paid their principal balance plus 2.5% interest of $0.3 million.

On April 14, 2025, the Company and the remaining Note holders entered into an agreement for a second extension of the maturity dates of the Notes held by such holders to May 14, 2025. The terms of the recent extension are as follows: (i) if the Notes are paid off on or before April 29, 2025, then there will be no additional principal payment required; and (ii) if the principal of the applicable Notes are not paid off on or before April 29, 2025 but are paid on or before May 13, 2025, then an additional payment in an amount equal to 5% of the outstanding principal of the applicable Notes will be due.

Stockholders’ Equity

In February 2025, the Company issued Sandstrom Partners 13,115 shares of common stock related to the settlement agreed upon in October 2024.

Common Stock

On March 12, 2025, the Company implemented aone-for-10 reverse stock split of its common stock and issued eight shares of common stock as a result of rounding.

ELOC Agreement

On March 7, 2025, the Company entered into an Amended ELOC Agreement. The amendment restated the original ELOC Agreement originally entered into on December 31, 2024 to, among other things,(i) reduce the maximum amount under the ELOC Agreement from $35 million to $10 million, and (ii) extend the filing deadline for the registration statement required under the ELOC Agreement to 30 days following the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. During March 2025, the Company sold and issued a total of 1,090,622 shares of common stock for an aggregate purchase price of $2.1 million to the purchaser.

Series D Preferred Stock

During 2025,255,474 shares of Series D Preferred Stock were converted into 371,559 shares of common stock.

Series F and F-1 Preferred Stock

During 2025,57,020,394 and 421,186 shares of Series F and F-1 Preferred Stock, respectively, were converted into 5,744,158 shares of common stock.

Series G Preferred Stock

On January 21, 2025, the Company amended its Articles of Incorporation to increase the number of authorized shares of the Company’s Series G Preferred Stock to 11,000,000. On February 25, 2025, the Company further amended its Articles of Incorporation to increase the number of authorized shares of the Company’s Series G Preferred Stock to 15,000,000.

During 2025, the Company sold 6,417,159 shares of Series G Preferred Stock and five-year 5 Warrants to purchase a total of 320,862 shares of common stock for total gross proceeds of $3.3 million. Of this, 4,308,155 shares of Series G Preferred Stock and five-year Warrants to purchase a total of 215,409 shares of common stock for total gross proceeds of $2.2 million were purchased by Mr. Liuzza. During 2025,4,080,664 shares of Series G Preferred Stock were converted into 408,066 shares of common stock.

In addition, Mr. Liuzza converted his $0.7 million bridge loan into $0.7 million of units comprised of 1,372,549 shares of Series G Preferred Stock and five-year Warrants to purchase a total of 68,628 shares

In January 2025, Mr. Freedman purchased 238,418 shares of Series G Preferred Stock and five-year Warrants to purchase a total of 11,921 shares of common stock for total gross proceeds of $0.1 million.

In January 2025, the Company issued a consultant 245,098 shares of Series G Preferred Stock as payment for past legal services included in stock to be issued on the consolidated balance sheets as of December 31, 2024, and 19,698 shares of Series G Preferred Stock as payment in 2025.

2025 Equity Incentive Plan

On February 10, 2025, the Company’s Board of Directors adopted the 2025 Equity Incentive Plan (the “2025 Plan”) and authorized the 2025 Plan to be submitted to stockholders of the Company for approval. The Company has not issued any awards under the 2025 Plan. Following approval from the stockholders of the conversion of the Company’s Series F and F-1 Preferred Stock into common stock on March 7, 2025, there are 1.2 million shares available for award under the 2025 Plan. The 2025 Plan provides for the issuance of incentive stock options, non-statutory stock options, share appreciation rights, restricted shares, restricted share units, and other share-based awards.