Beeline Holdings, Inc. Debt Disclosure

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 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:

 

	●	Aegis, Bigger, District 2 and LDI transferred to Eastside a total of 31,234 shares of Eastside’s Series C Preferred Stock and 11,987 shares of Eastside’s common stock. The Investors also released Eastside from liability for $4.1 million of senior secured debt and $2.5 million of unsecured debt. In consideration of their surrender of stock and release of debt, Eastside caused Craft C+P to be merged into a limited liability company owned by the Investors.
	●	Eastside issued a total of 255,474 shares of Series D Preferred Stock to Bigger and District 2, and Bigger and District 2 released Eastside from liability for $2.6 million of unsecured debt.
	●	Eastside issued a total of 200,000 shares of Series E Preferred Stock to Bigger and District 2, and Bigger and District 2 released Eastside from liability for $2.0 million of unsecured debt.
	●	Eastside transferred a total of 108,899 common shares of Bridgetown Spirits to Bigger, District 2, Esping, WPE and Grammen, and those Investors released Eastside from unsecured debt in the aggregate amount of $0.9 million. The common shares of Bridgetown Spirits represented an initial investment of 10.9% valued at $0.6 million.
	●	Eastside issued a total of 19,000 shares of common stock to Esping, WPE and Grammen, and those Investors released Eastside from liability for $0.2 million of unsecured debt.

 

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 owned 53% of the common stock of Bridgetown 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 in 2024.

 

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.