Beeline Holdings, Inc. current report, 15 January 2020

Full document

Business Context and Reporting Period

Company: Eastside Distilling, Inc. (Note: Request metadata listed "Beeline Holdings, Inc.", but the filing text identifies the registrant as Eastside Distilling, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: January 15, 2020
Reporting Period: Specific event date (January 15, 2020)
Business Context: The company entered into a material definitive loan agreement to refinance existing debt and fund general working capital.

Key Financial Metrics

Debt and Liquidity:

  • New Facility: Up to $8,000,000 aggregate principal amount, subject to a borrowing base of 85% of appraised eligible whisky inventory value less service fees.
  • Interest Rate: Prime rate plus 2.49% spread, adjusted quarterly.
  • Maturity Date: January 14, 2021.
  • Collateral: Substantially all assets of the Borrowers (subsidiaries), excluding accounts receivable and certain specified property.
  • Previous Debt: The TQLA Note (Secured Line of Credit) was repaid in full and terminated on January 16, 2020.
Revenue, Profit, Cash Flow, Margins:

The filing text does not provide a clear value for revenue, profit, cash flow, or margins as this is a current report regarding a specific financing event, not a periodic financial statement.

Material Changes Versus Prior Period

Debt Restructuring:

  • Replaced the TQLA Note (issued November 29, 2019) with a new loan from Live Oak Banking Company.
  • Terminated the Common Stock Purchase Warrant associated with the TQLA Note due to early repayment.
  • No prepayment or early termination penalties were incurred on the TQLA Note.
Equity Issuance:
  • Issued a warrant to the Lender to purchase up to 100,000 shares of common stock at an exercise price of $3.9425 per share, expiring January 15, 2025.

Guidance, Outlook, Risks, and Unusual Items

Management Commentary and Purpose:

The new loan is intended to refinance existing debt and provide funding for general working capital purposes.

Risks and Covenants:
  • Covenants: The agreement includes affirmative and negative covenants restricting the ability to incur indebtedness, grant liens, dispose of assets, merge, consolidate, make investments, or enter into restrictive agreements.
  • Events of Default: Includes non-payment, covenant defaults, inaccuracy of representations, cross-defaults, bankruptcy, insolvency, and change in control.
  • Default Interest: A default interest rate of 2.00% above the applicable rate applies during an event of default.
  • Repayment Terms: The Lender may demand repayment in whole or in part at any time, requiring repayment within 30 days of demand.

Important Facts for Investor Verification

  • Verify the current appraised value of eligible whisky inventory to determine the actual available borrowing capacity under the 85% borrowing base.
  • Confirm the status of the 100,000 share warrant issued to Live Oak Banking Company and its potential dilution impact.
  • Review the specific negative covenants to understand restrictions on future operational flexibility and capital raising.
  • Monitor the company's ability to meet monthly interest payments and the 30-day demand repayment clause.
  • Check the upcoming Form 10-K for the full text of the Loan Agreement and Warrant as referenced in the filing.