Company: BLNE
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011724
Chunk: 14

Company: Beeline Holdings, Inc.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 14
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age 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.

    10

Beeline
Holdings, Inc.

Notes
to Consolidated Financial Statements

March
31, 2025

(Unaudited)

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