U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Securities registered pursuant to Section 12(b) of the Act:
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| (Title of Each Class) | (Trading Symbol) | (Name of Each Exchange on Which Registered) |
Securities registered pursuant to Section 12(g) of the Act: None
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by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934
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| Smaller
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| Emerging
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As of May 15, 2026, shares of our common stock were outstanding.
Documents Incorporated by Reference: None.
BEELINE HOLDINGS, INC.
FORM 10-Q
March 31, 2026
TABLE OF CONTENTS
| 2 |
PART I: FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
Beeline Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, 2026 and December 31, 2025
(Dollars in thousands, except share and per share amounts)
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Mortgage loans held for sale, net, at fair value | ||||||||
| Interest rate lock commitment derivative | ||||||||
| Accounts receivable, net
(includes related party receivables of $ | ||||||||
| Other receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Due from affiliate | ||||||||
| Total current assets | ||||||||
| Goodwill | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use assets | ||||||||
| Simple Agreements for Future Equity (“SAFEs”), related party | ||||||||
| Other assets, net | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Warehouse lines of credit and accrued interest | $ | $ | ||||||
| Loans committed for funding | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities | ||||||||
| Current portion of lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Lease liabilities, net of current portion | ||||||||
| Other noncurrent liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 15) | ||||||||
| Shareholders’ Equity: | ||||||||
| Common stock, $ par value; shares authorized and and shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | ||||||||
| Preferred stock, $ par value, authorized | ||||||||
| Preferred stock Series A; shares designated; shares and shares issued and outstanding as of March 31, 2026 and December 31, 2025 | ||||||||
| Preferred stock Series B; shares designated; shares issued and outstanding as of March 31, 2026 and December 31, 2025 | ||||||||
| Preferred stock Series F; shares designated; shares and shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | ||||||||
| Preferred stock Series F-1; shares designated; shares and shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | ||||||||
| Preferred stock Series G; shares designated; shares and shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity | ||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 3 |
Beeline Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
Three Months Ended March 31, 2026 and 2025
(Dollars in thousands, except share and per share amounts)
(Unaudited)
| 2026 | 2025 | |||||||
| Revenues | ||||||||
| Gain on sale of loans, net | $ | $ | ||||||
| Loan origination fees | ||||||||
| Interest income (expense) | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest income (expense), net | ( | ) | ||||||
| Title fees (includes related party revenues
of $ | ||||||||
| Fractional equity revenues, related party | ||||||||
| Other revenues (includes
related party revenues of $ | ||||||||
| Total net revenues | ||||||||
| Operating Expenses | ||||||||
| Compensation, commissions and benefits | ||||||||
| General and administrative expenses | ||||||||
| Depreciation and amortization | ||||||||
| Marketing and advertising | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense), net | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ||||||
| Loss on equity method investment | ( | ) | ( | ) | ||||
| Other income (expense), net | ||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Loss from discontinued operations | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Net loss attributable to non-controlling interests (related to discontinued operations) | ( | ) | ||||||
| Net loss attributable to common stockholders before preferred stock dividends | ( | ) | ( | ) | ||||
| Preferred stock dividends | ( | ) | ( | ) | ||||
| Deemed dividend - Preferred stock Series G and warrant price protection | ( | ) | ||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Comprehensive loss | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Unrealized foreign currency translation gain | ||||||||
| Total comprehensive loss | ( | ) | ( | ) | ||||
| Comprehensive loss attributable to non-controlling interests | ||||||||
| Comprehensive loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted net loss from continuing operations per common share | $ | ) | $ | ) | ||||
| Basic and diluted net loss from discontinued operations per common share | $ | $ | ) | |||||
| Basic and diluted net loss per common share attributable to common stockholders | $ | ) | $ | ) | ||||
| Basic and diluted weighted average common shares outstanding | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
Beeline Holdings, Inc. and Subsidiaries
Consolidated Statements of Changes in Equity
For the Three Months Ended March 31, 2026 and 2025
(Dollars in thousands, except share amounts)
(Unaudited)
| Common Stock | Series A Preferred Stock | Series B Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Series F Preferred Stock | Series F1 Preferred Stock | Series G Preferred Stock | Stock to be | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Non-Controlling | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Loss | Interest | Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for services by third parties | - | - | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock related to settlement | - | - | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services by employees | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series G Preferred Stock issued for cash, net of offering costs | - | - | - | ( | ) | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ELOC shares issued for cash, net of offering costs | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Note payable, related party converted to preferred shares | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deemed dividend-price protection, revaluation adjustment | - | - | - | - | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for option exercises | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock awards | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services by employees | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants exercised related to Series G Preferred Stock | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ELOC shares issued for cash, net of offering costs | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ATM shares issued for cash, net of offering costs | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred shares | ( | ) | ( | ) | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 5 |
Beeline Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2026 and 2025
(Dollars in thousands)
(Unaudited)
| 2026 | 2025 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss from discontinued operations | ||||||||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Gain on sale mortgage loans held for sale, net of direct costs | ( | ) | ( | ) | ||||
| Recovery for credit losses | ( | ) | ||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Stock compensation expense | ||||||||
| Issuance of restricted stock awards | ||||||||
| Preferred stock dividends | ( | ) | ( | ) | ||||
| Loss on equity method investment | ||||||||
| Issuance of common stock for services by third parties | ||||||||
| Issuance of common stock for services by related parties | ||||||||
| Noncash lease expense | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Proceeds from principal payments and sales of loans held for sale | ||||||||
| Originations and purchases of mortgage loans held for sale | ( | ) | ( | ) | ||||
| Interest rate lock commitment derivative | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts receivable, net - related party | ( | ) | ||||||
| Accounts receivables, net | ( | ) | ||||||
| Other receivable | ( | ) | ||||||
| Due from affiliate | ||||||||
| Other assets, net | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities | ||||||||
| Loans committed for funding | ||||||||
| Accrued interest, net | ||||||||
| Other noncurrent liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Net cash provided by operating activities of discontinued operations | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Purchase of internal-use software | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Net repayments/borrowings under warehouse lines of credit | ( | ) | ||||||
| ELOC shares issued for cash, net of offering costs | ||||||||
| ATM shares issued for cash, net of offering costs | ||||||||
| Proceeds from common stock issued, net of issuance costs | ||||||||
| Proceeds from warrant exercise | ||||||||
| Proceeds from issuance of stock for option exercises | ||||||||
| Payments of principal on secured credit facilities | ( | ) | ||||||
| Proceeds from notes payable, related party | ||||||||
| Payments of principal on notes payable, related party | ( | ) | ||||||
| Payments of principal on notes payable | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net (decrease) increase in cash | ( | ) | ||||||
| Effect of exchange rate changes on cash | ||||||||
| Cash and restricted cash at the beginning of the period | ||||||||
| Cash and restricted cash at the end of the period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash paid during the period for interest | $ | $ | ||||||
| Cash paid during the period for income taxes | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||||||||
| Note payable, related party converted to Preferred stock Series G | $ | $ | ||||||
| Conversion of preferred shares | $ | $ | ||||||
| Deemed dividend - Preferred stock Series G and warrant price protection | $ | $ | ||||||
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheet that sum to the same such amounts shown in the consolidated statement of cash flows:
| 2026 | 2025 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash and cash equivalents and restricted cash | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
1. NATURE OF BUSINESS
Beeline Holdings, Inc. together with its subsidiaries (collectively, the “Company”) was incorporated under the laws of Nevada in 2004. On March 12, 2025, the Company changed its name from Eastside Distilling, Inc. to Beeline Holdings, Inc., reflecting the Company’s current operations and focus as a fintech mortgage lender, fractional real estate equity purchase facilitator and title provider transforming the home ownership process into a shorter, easier path for millions of Americans seeking a digital experience. The Company has built a proprietary mortgage, equity purchase and title platform leveraging advanced technical tools with sophisticated language learning models and combining an appropriate amount of human interaction providing an efficient process for consumers to more easily access mortgage lending and financing using the Company’s online portal and services.
2. GOING CONCERN, LIQUIDITY, AND MANAGEMENT’S PLANS
These unaudited 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, regulatory uncertainty, 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, and is dependent on 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 in order to accomplish its business plan objectives, the Company will need to raise capital by the issuance of debt and/or equity; and that it will be successful in obtaining this additional financing based on its recent history of raising funds.
During 2026, the Company announced a strategic partnership with Structured Real Estate Group (“SRG”), a real estate developer, to directly integrate the Company’s mortgage platform into SRG’s proprietary AI-driven real estate platform. This will allow SRG’s homebuying customers to obtain loans through the Company generating loan revenues.
Despite this new partnership, there can be no assurances that these business plans and actions will be successful, that the Company will generate anticipated revenues or operating results, 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 unaudited 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”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements in accordance with GAAP have been condensed or eliminated as permitted under the SEC’s rules and regulations. In management’s opinion, the unaudited consolidated financial statements include all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly the Company’s financial position as of March 31, 2026, its operating results for the three months ended March 31, 2026 and 2025 and its cash flows for the three months ended March 31, 2026 and 2025. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Interim results are not necessarily indicative of the results that may be expected for an entire fiscal year.
| 7 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
PRINCIPLES OF CONSOLIDATION
The unaudited consolidated financial statements include the consolidated accounts of the Company and its wholly-owned subsidiaries, Beeline Financial Holdings, Inc., BeelineEquity, Inc. (“Beeline”), Beeline Title Holdings, Inc. (“Beeline Title Holdings”), Beeline Mortgage Holdings, Inc. (“Beeline Mortgage”), Beeline Labs, Inc., and Beeline Loans Pty Ltd. (“Australian Subsidiary”). Intercompany transactions and balances have been eliminated.
Beeline Title Holdings has four 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”).
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 investments, valuation of accounts receivable, valuation of derivative instruments, valuation of software, valuation of intangible assets, valuation of goodwill, valuation of lease liabilities and related right of use assets, contingent liability for loan repurchases, and valuation of non-cash equity grants and issuances, including but not limited to stock-based compensation. 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 both March 31, 2026 and December
31, 2025 was $
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 based on the investor commitment.
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.
| 8 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
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. Actual losses incurred are reflected as a reduction in gains on sale of loans, net in the consolidated statements of operations.
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”.
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.
Title Fees
Settlement fees and commissions are earned at loan settlement. Title fees also include service fees for providing title and escrow services related to fractional equity sales, see below.
Fractional Equity Revenues, Related Party
The
Company receives a transaction fee of
Other Revenues
The Company receives a consulting fee related to certain agreed upon services provided to TYTL. Revenue is recognized on a monthly basis as the services are performed. Other revenues also include fees received from a marketing partner.
| 9 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
Disaggregation of Revenues
The Company disaggregates its revenues as presented in its consolidated statements of operations.
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. The Company issues IRLCs to originate mortgage loans and the fair value of the IRLCs, adjusted for the probability that a given IRLC will close and fund, is recognized in gain on sale of loans, net on the consolidated statements of operations. Subsequent changes in the fair value of the IRLC are measured at each reporting period within gain on loans, net until the loan is funded. The Company accounts for all derivative instruments as free-standing derivative instruments and does not designate any for hedge accounting.
ACCOUNTS RECEIVABLE
Accounts receivable consists primarily of amounts due from customers for 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. The Company adopted ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets on January 1, 2026, which had no impact on the consolidated financial statements.
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 three months ended March 31, 2026.
| 10 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
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.
LEASE OBLIGATIONS
When the Company enters into lease arrangements, the lease is accounted for under ASC 842, Leases. At the lease commencement date, the Company recognizes a leased ROU asset and corresponding lease liability based on the present value of the lease payments over the lease term. The Company elected not to recognize lease assets and lease liabilities for leases with an initial term of 12 months or less.
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 to
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 is
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.
| 11 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
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 were no material items recorded at fair value on a nonrecurring basis as of March 31, 2026 and December 31, 2025.
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 March 31, 2026 and December 31, 2025.
DEBT DISCOUNT
The Company’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 loss for the three months ended March 31, 2026 and 2025 was $
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 for both the three months ended March 31, 2026 and 2025.
As of March 31, 2026 and December 31, 2025, the exchange rate used to translate balance sheet amounts from Australian dollars into U.S. dollars was $ and $, respectively. The average exchange rate used to translate operation amounts from Australian dollars into U.S. dollars was $ and $ for the three months ended March 31, 2026 and 2025, respectively.
| 12 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
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 offerings. 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.
INVESTMENTS IN EQUITY METHOD INVESTEE
On
July 31, 2024, the Company invested in a related party, MagicBlocks, Inc., by purchasing, at par value, million shares, representing
an ownership interest of
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. In addition, as of both March 31, 2026 and December 31, 2025, one lender of a warehouse line of credit requires
a $
MARKETING AND ADVERTISING COSTS
Marketing
and advertising costs are expensed as incurred. For the three months ended March 31, 2026 and 2025, marketing and advertising expenses
were $
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 non-employees 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.
| 13 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
The Company evaluates all significant tax positions as required by ASC 740. As of March 31, 2026 and December 31, 2025, 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 2023, 2024 and 2025 remain open for potential audit.
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 currently operates in
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The amendments simplify the accounting for internal-use software development costs by removing the existing project stage model and replacing it with a principles-based framework for determining when software development costs should be capitalized. Under the new guidance, capitalization of internal-use software costs begins when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform its intended function. ASU 2025-06 also incorporates guidance related to website development costs and clarifies the presentation and disclosure requirements for capitalized software development costs. This pronouncement is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and related disclosures.
| 14 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
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 or cash flows. The operating results of Nimble and Bridgetown Spirits Corp. (“Bridgetown Spirits”) have been classified as discontinued operations during the three months ended March 31 2025, respectively, see Note 4 – Discontinued Operations.
4. DISCONTINUED OPERATIONS
The Company reports discontinued operations by applying the following criteria in accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations: (1) Component of an entity; (2) Held for sale criteria; and (3) Strategic shift.
Bridgetown Spirits
On
July 25, 2025, the Company entered into a Debt Satisfaction Agreement (the “DSA”) with Bridgetown Spirits and three individuals
(the “Buyers”) including Geoffrey Gwin, the President of Bridgetown Spirits, pursuant to which the Company transferred to
the Buyers all shares of its Bridgetown Spirits common stock held by the Company in exchange for the satisfaction of outstanding
amounts payable by the Company to the Buyers totaling $
In
connection with the DSA, Bridgetown Spirits issued a Senior Secured Original Issue Discount Promissory Note and Security Agreement (the
“Note”) in the principal amount of $
The operating results of Bridgetown have been classified as discontinued operations during the three months ended March 31, 2025. The consolidated statement of operations for the prior period has been adjusted to reflect comparable information.
Income and expense related to Bridgetown Spirits were as follows for the three months ended March 31, 2025:
| (Dollars in thousands) | 2025 | |||
| Net sales, spirits | $ | |||
| Cost of sales, spirits (inclusive of depreciation) | ||||
| Compensation and benefits | ||||
| General and administrative expenses | ||||
| Depreciation and amortization | ||||
| Marketing and advertising | ||||
| Total operating expenses | ||||
| Net loss from discontinued operations | $ | ( | ) | |
There
was a
| 15 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
Nimble Title Holdings
On November 17, 2025, the Company and minority partners of Nimble entered into a Dissolution Agreement, whereby the relationships contemplated by the LLC Agreement were terminated and Nimble was subsequently dissolved on November 25, 2025.
The operating results of Nimble have been classified as discontinued operations during the three months ended March 31, 2025. The consolidated statement of operations for the prior period has been adjusted to reflect comparable information.
Income and expense related to Nimble and its subsidiaries were as follows for the three months ended March 31, 2025:
| (Dollars in thousands) | 2025 | |||
| Title fees | $ | |||
| Total net revenues | ||||
| Compensation and benefits | ||||
| General and administrative expenses | ||||
| Marketing and advertising | ||||
| Other operating expenses | ||||
| Total operating expenses | ||||
| Net income from discontinued operations | $ | |||
5. 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 these criteria, the CODM has determined that there are four reportable segments, consisting of Beeline Loans, Beeline Title Holdings, BeelineEquity and Corporate.
Beeline Loans is an AI-driven fintech mortgage lender that also develops proprietary software in the form of major enhancements and new developments to its lending platform. Corporate allocates a portion of compensation and benefits, and general and administrative expenses to Beeline Loans, which is included in the segments’ financial data below.
Beeline Title Holdings provides title and loan closing services for the Company’s mortgage origination business and other lenders; and title closing services for the Company’s fractional equity transactions.
BeelineEquity provides customer service, transaction processing and platform support to TYTL who offers a fractional equity product to homeowners.
Corporate primarily consists of general corporate expenses, including public company costs, executive compensation, legal and regulatory compliance, and other administrative functions that support the overall business. This segment also includes holding company expenses, such as financing costs, accounting, legal, insurance, investor relations, and strategic corporate initiatives that are not directly attributable to any operating segment.
The Company measures segment performance to allocate resources primarily based on revenues of Beeline Loans and Beeline Title Holdings and the general and administrative costs related to corporate. 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 Company in Note 3 - Summary of Significant Accounting Policies.
| 16 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
Segment information was as follows for the three months ended March 31, 2026 and 2025 (dollars in thousands):
| 2026 | 2025 | |||||||
| Beeline Loans | ||||||||
| Gain on sale of loans, net | $ | $ | ||||||
| Loan origination fees | ||||||||
| Interest income (expense) | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest income (expense), net | ( | ) | ||||||
| Other revenues | ||||||||
| Total net revenues | ||||||||
| Compensation, commissions and benefits | ||||||||
| General and administrative expenses | ||||||||
| Depreciation and amortization | ||||||||
| Marketing and advertising | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Interest expense | ( | ) | ||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) |
| 2026 | 2025 | |||||||
| Beeline Title Holdings | ||||||||
| Title fees
(includes related party revenues of $ | $ | $ | ||||||
| Total net revenues | ||||||||
| Compensation and benefits | ||||||||
| General and administrative expenses | ||||||||
| Marketing and advertising | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) |
| 2026 | 2025 | |||||||
| Beeline Equity | ||||||||
| Fractional equity revenues, related party | $ | $ | ||||||
| Total net revenues | ||||||||
| Compensation, commissions and benefits | ||||||||
| General and administrative expenses | ||||||||
| Marketing and advertising | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ |
| 17 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
| 2026 | 2025 | |||||||
| Corporate | ||||||||
| Other revenues, related party | $ | $ | ||||||
| Total net revenues | ||||||||
| Compensation and benefits | ||||||||
| General and administrative expenses | ||||||||
| Depreciation and amortization | ||||||||
| Marketing and advertising | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Interest income | ||||||||
| Interest expense | ( | ) | ||||||
| Loss on equity method investment | ( | ) | ( | ) | ||||
| Other income (expense), net | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Consolidated net loss from continuing operations | $ | ( | ) | $ | ( | ) |
6. FAIR VALUE MEASUREMENTS
Assets or liabilities measured at fair value on a recurring basis were as follows:
| (Dollars in thousands) | March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
| Mortgage loans held for sale | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Interest rate lock commitment derivative | ||||||||||||||||||||||||
A roll forward of the level 3 valuation financial instruments was as follows:
| (Dollars in thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Balance, beginning of year | $ | $ | ||||||
| Change in fair value in gain on sale of loans, net | ( | ) | ||||||
| Balance, end of period | $ | $ | ||||||
7. 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:
| (Dollars in thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Mortgage loans held for sale | $ | $ | ||||||
| Net fair value adjustment | ||||||||
| Total mortgage loans held for sale, at fair value | $ | $ | ||||||
| 18 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
8. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
| (Dollars in thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Internal-use software | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Leasehold improvements | ||||||||
| Computers and hardware | ||||||||
| Total | ||||||||
| Less accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation
expense related to property and equipment was $
Internal-use software consisted of the following:
| (Dollars in thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Internal-use software | $ | $ | ||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Total internal-use software, net | $ | $ | ||||||
The estimated future amortization expense of internal-use software as of March 31, 2026 was as follows:
| (Dollars in thousands) | ||||
| Remaining 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| $ | ||||
Beeline’s
internal developers created a new proprietary software and launched it in 2024. The most notable feature of the new software is the integration
of Beeline’s Chatbot “Bob”. The Company recorded $
9. INTANGIBLE ASSETS
Intangible assets consisted of the following:
| (Dollars in thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Beeline brand | $ | $ | ||||||
| Customer list | ||||||||
| Total | ||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Total intangible assets, net | $ | $ | ||||||
The Beeline brand has been determined to have an indefinite life and is not amortized. The Company, on an annual basis, tests the indefinite-lived asset 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 March 31, 2026, the Company determined that the Beeline brand was not impaired.
The
customer list has a useful life of
| 19 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
10. INVESTMENTS IN EQUITY METHOD INVESTEE
The Company’s investments in its related party equity method investee, MagicBlocks, include its equity method investment and its SAFEs on the consolidated balance sheets, which consisted of the following:
| (Dollars in thousands) | March 31, 2026 | December 31, 2025 | ||||||
| Balance, beginning of year | $ | $ | ||||||
| SAFE Investments | ||||||||
| Loss on equity method investment | ( | ) | ( | ) | ||||
| Balance, end of period | $ | $ | ||||||
Intercompany profits and losses resulting from transactions between the Company and MagicBlocks are eliminated with the resulting adjustments recorded to the carrying amount of the investment and the Company’s share of losses of MagicBlocks. See Note 18 – Related Party Transactions.
In
March 2025, the Company entered into a Master Services Agreement with MagicBlocks for a monthly service fee of $
11. WAREHOUSE LINES OF CREDIT
On
September 21, 2021, Beeline Loans entered into an agreement with a lender for a $
On
October 6, 2025, Beeline Loans entered into an agreement with a different lender for a $
| 20 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
On
October 7, 2025, Beeline Loans entered into an agreement with a different lender for a $
Loans
committed for funding represent loans that have closed as of the reporting date but have not yet been funded through the Company’s
warehouse lines of credit. These loans are typically funded within the first few days of the subsequent reporting period. The related
loans are included in mortgage loans held for sale, net, at fair value in the consolidated balance sheets. As of March 31, 2026 and December
31, 2025, loans committed for funding were $
The Company has $
Interest
expense on the warehouse lines of credit was $
12. LEASE OBLIGATIONS
Beeline
Financial 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. Terms of these leases include, in some instances, scheduled rent increases, renewals, purchase options and maintenance costs,
and vary by lease. Beeline Financial has leased approximately
As
the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate of
Lease
expense for operating leases is recognized on a straight-line basis over the lease term. Aggregate lease expense for the three months
ended March 31, 2026 and 2025 was $
Maturities of lease liabilities as of March 31, 2026 were as follows:
| (Dollars in thousands) | Operating Leases | Weighted-Average Remaining Term in Years | ||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| Total lease payments | ||||||||
| Less imputed interest
(based on | ( | ) | ||||||
| Present value of lease liability | ||||||||
| Less current portion | ||||||||
| Lease liabilities, net of current portion | $ | |||||||
| 21 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
13. STOCKHOLDERS’ EQUITY
Issuance of Common Stock
2026
In January 2026, the Company issued shares of restricted common stock valued at $ per share based on the 2025 grant date fair value to an employee under its Amended and Restated 2025 Equity Incentive Plan (the “2025 Plan”).
During
the three months ended March 31, 2026, the Company issued shares of common stock upon the exercise of stock options issued under
its 2025 Plan for proceeds of $
During
the three months ended March 31, 2026, the Company issued shares of common stock upon the exercise of Warrants related
to the Company’s Series G Preferred Stock offering for proceeds of $
During
the three months ended March 31, 2026, the Company issued shares of common stock for gross proceeds of $
During the three months ended March 31, 2026, the Company issued a total of shares of common stock as a result of various preferred stock conversions as noted below.
See Note 20 – Subsequent Events for issuances of common stock subsequent to March 31, 2026.
2025
On
March 12, 2025, the Company implemented a
As
of March 31, 2025, the Company had stock to be issued of shares of common stock in satisfaction of the former Chief Executive
Officer’s employment agreement and recorded $
In
February 2025, the Company issued shares of common stock related to a legal settlement agreed upon in October 2024 where $
The Company issued a total of shares of common stock as a result of various preferred stock conversions as noted 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 $
| 22 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
On
March 7, 2025,
Preferred Stock
The Company has million shares of preferred stock authorized at a par value of $ per share.
Issuance of Series A Preferred Stock
On July 23, 2025, the Company entered into an agreement with a holder of and effected the exchange of shares of Series F Preferred Stock and shares of Series F-1 Preferred Stock of the Company in exchange for the issuance to the holder of shares of a newly designated Series A Convertible Redeemable Preferred Stock (the “Series A Preferred Stock”).
On
July 23, 2025, the Company filed a Certificate of Designation, Preferences and Rights of the Series A Convertible Redeemable Preferred
Stock of the Company (the “Certificate of Designations”) with the Nevada Secretary of State designating and authorizing the
issuance of up to shares of Series A Preferred Stock. Each share of Series A Preferred Stock had a stated value of $. Beginning
on the initial issuance date of the Series A Preferred Stock, the holder may convert up to $
Beginning
on the issuance date of the Series A Preferred Stock on July 23, 2025 and for a period of one-year thereafter, the Company had the right
to redeem the shares of Series A Preferred Stock, other than the Special Conversion Amount, at a redemption price of $ per underlying
share of common stock (based on the $
Each
share of Series A Preferred Stock was convertible into common stock by a conversion ratio equal to the stated value of the Series A Preferred
Stock share divided by the Series A Preferred Stock conversion price. The Series A Preferred Stock was entitled to vote with the Company’s
common stock on an as-converted basis, subject to the
During the three months ended March 31, 2026, the remaining shares of Series A Preferred Stock were converted or exchanged into a total of shares of common stock resulting in no gain or loss being recognized.
In March 2026, the Certificate of Designation was withdrawn for the Series A Preferred Stock.
Issuance of Series B Preferred Stock
On
October 19, 2021, the Company entered into a securities purchase agreement (“Purchase Agreement”) with an accredited investor
for its purchase of million shares of Series B Convertible Preferred Stock (“Series B”) at a purchase price of $
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 of the Company with an initial conversion price of $
| 23 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
The
Series B accrues dividends at a rate of
Issuance of Series C Preferred Stock
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 $ 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 $
In
conjunction with the Senior Secured Notes entered into on November 14, 2024, the Company entered in two side letters with two institutional
investors to each convert $
During the three months ended March 31, 2025, shares of Series D Preferred Stock were converted into shares of common stock.
In January 2026, the Certificate of Designation was withdrawn for the Series D Preferred Stock.
Issuance of Series E Preferred Stock
Each
share of Series E Preferred Stock has a stated value of $ 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 $
| 24 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
On
October 21, 2025, the Company entered into a letter agreement with the investors pursuant to which they agreed to the redemption of their
shares of Series E Preferred Stock in exchange for payment of $ million. The Company redeemed the Series E Preferred Stock on November
12, 2025 and recorded a deemed dividend of $
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
million preferred shares of Series F and million preferred shares of Series F-1. Each share of Series F and F-1 Preferred Stock
has a stated value of $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 F and F-1 Preferred Stock with an initial conversion price of $
The
Series F and F-1 Preferred Stock was valued at $
During
the three months ended March 31, 2026, investors converted
and
shares of Series F and F-1 Preferred Stock, respectively, into
shares of common stock. During the three months ended March 31, 2025,
and
shares of Series F and F-1 Preferred Stock, respectively, were converted into
shares of common stock.
On July 23, 2025, the Company entered into an agreement with a holder of and effected the exchange of shares of Series F Preferred Stock and shares of Series F-1 Preferred Stock of the Company in exchange for the issuance to the holder of shares of Series A Preferred Stock.
In
conjunction with the Senior Secured Notes entered into on November 14, 2024, the Company entered in a side letter which permitted an
affiliate who invested $
Issuance of Series G Preferred Stock
Each
share of Series G Preferred Stock has a stated value of $ 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 $
| 25 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
On April 25, 2025, the Company filed with the Nevada Secretary of State a Certificate of Amendment to the Series G Preferred Stock Certificate of Designations. The Certificate of Amendment provides that (i) the beneficial ownership limitation on conversion set forth in the Certificate of Designation will not apply to a holder who is otherwise subject to Section 16(a) of the Securities Exchange Act of 1934 by virtue of being an executive officer or director of Company, and (ii) the anti-dilution price protection adjustment rights with respect to subsequent offerings or issuances of securities will not apply to an equity line of credit or at-the-market offering facility or as otherwise determined by the holder(s) of a majority of the Series G Preferred Stock.
During
the three months ended March 31, 2025, the Company sold
shares of Series G Preferred Stock and five-year
Warrants to purchase a total of
On
March 25, 2025 (“the trigger date”), the Company sold common stock under the ELOC Agreement at $per share, which was
less than the Series G Preferred Stock original conversion price of $
During
the three months ended March 31, 2026, shares of Series G Preferred Stock were converted into shares of common stock.
During the three months ended March 31, 2025, shares of Series G Preferred Stock were converted into shares of common
stock.
In
January 2025, the Company issued a consultant shares of Series G Preferred Stock that were issuable as of December 31, 2024.
In addition, in January 2025, the Company issued shares of Series G Preferred Stock for legal services of $
Warrants
During
three months ended March 31, 2026,
There were no new warrants issued during the three months ended March 31, 2026. A summary of all Warrant share activity as of and for the three months ended March 31, 2026 is presented below:
| Warrant Shares | Weighted-Average Remaining Life (Years) | Weighted-Average Exercise Price | Aggregate Intrinsic Value (in millions) | |||||||||||||
| Outstanding as of December 31, 2024 | $ | $ | ||||||||||||||
| Additions due to price protection adjustment | ||||||||||||||||
| Issued with Series G Preferred Stock units sold | ||||||||||||||||
| Granted | - | |||||||||||||||
| Exercised | ( | ) | - | - | ||||||||||||
| Expired | ( | ) | - | ( | ) | - | ||||||||||
| Outstanding as of December 31, 2025 | $ | |||||||||||||||
| Exercised | ( | ) | - | |||||||||||||
| Outstanding as of March 31, 2026 | $ | $ | ||||||||||||||
| 26 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
On
March 25, 2025, the Company sold shares under the ELOC at $ per share, which was less than the exercise price of the Warrants issued
in the Company’s Series G Preferred Stock offering, resulting in the reduction of the exercise price of the warrants to $ per
share and an increase in common shares issuable upon exercise of under the full price protection adjustment of the Warrants.
The Company recorded a deemed dividend related to the Warrants price protection of $
The
estimated fair value of the deemed dividend relating to the price protection adjustment is computed as the fair value of the warrants
with the reduced exercise price of $ less the fair value of the warrants at the original exercise price of $
| Volatility | % | |||
| Risk-free interest rate | % | |||
| Expected term (in years) | ||||
| Expected dividend yield | ||||
| Fair value of common stock | $ |
Beeline Warrants
In
the merger agreement, the Company agreed to assume
On September 8, 2016, the Company adopted the 2016 Equity Incentive Plan (the “2016 Plan”). As of March 31, 2026, there were options under the 2016 Plan. On February 6, 2025, the 2016 Plan was terminated and replaced with the 2025 Plan, and on August 1, 2025 the Board of Directors adopted the 2025 Plan.
2025 Equity Incentive Plan
The 2025 Plan initially authorized shares of common stock, which was equal to 15% of the outstanding shares of common stock on a fully-diluted basis available for award under the 2025 Plan.
| 27 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
Stock Options
| # of Options | Weighted-Average Remaining Life (Years) | Weighted-Average Exercise Price | Aggregate Intrinsic Value (in millions) | |||||||||||||
| Outstanding as of December 31, 2024 | $ | $ | ||||||||||||||
| Options granted | ||||||||||||||||
| Options forfeited from 2016 Plan | ( | ) | ||||||||||||||
| Outstanding as of December 31, 2025 | $ | $ | ||||||||||||||
| Options granted | ||||||||||||||||
| Options exercised | ( | ) | ( | ) | ||||||||||||
| Options forfeited | ( | ) | ( | ) | ||||||||||||
| Outstanding as of March 31, 2026 | $ | $ | ||||||||||||||
| Exercisable as of March 31, 2026 | $ | $ | ||||||||||||||
As of March 31, 2026, there were unvested options with an aggregate grant date fair value of $ million. As of December 31, 2025, there were unvested options with an aggregate grant date fair value of $million. The unvested options will vest in accordance with the vesting schedule in each respective option agreement, which is two years from the grant date. The aggregate intrinsic value of unvested options as of March 31, 2026 and December 31, 2025 was $ million and $ million, respectively. During the three months ended March 31, 2026, options 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.
To determine the fair value of stock options using the Black-Scholes valuation model, the calculation takes into consideration the effect of the following:
| ● | Exercise price of the option |
| ● | Fair value of the common stock on the date of grant |
| ● | Expected term of the option |
| ● | Expected volatility over the expected term of the option |
| ● | Risk-free interest rate for the expected term of the option |
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 following assumptions were used in the Black-Scholes valuation model for options granted during the three months ended March 31, 2026:
| Volatility | % | |||
| Risk-free interest rate | % | |||
| Expected term (in years) | ||||
| Expected dividend yield | ||||
| Exercise price of common stock | $ |
There were no options issued for the three months ended March 31, 2025 and all options had vested.
The weighted-average grant-date fair value per share of stock options granted during the three months ended March 31, 2026 was $ per share. The aggregate grant date fair value of the options granted during the three months ended March 31, 2026 was $million.
| 28 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
For
the three months ended March 31, 2026, net compensation expense related to stock options was $
See Note 20, Subsequent Events for stock option activity subsequent to March 31, 2026.
Restricted Stock Awards
Restricted stock awards (“RSAs”) represent issued shares of common stock that vest based on continued service. Compensation cost is measured based on the grant-date fair value of the Company’s common stock and recognized over the vesting period. Unvested RSAs are subject to forfeiture and are not considered outstanding for earnings per share purposes until vested.
| # of RSAs | Weighted-Average Fair Value | |||||||
| Unvested as of December 31, 2024 | $ | |||||||
| Granted | $ | |||||||
| Released | ( | ) | ( | ) | ||||
| Unvested as of December 31, 2025 | $ | |||||||
| Forfeited | ( | ) | ||||||
| Unvested as of March 31, 2026 | $ | |||||||
Stock-based compensation expense related to RSAs for the three months ended March 31, 2026 was $million and included in general and administrative expenses in the consolidated statements of operations. As of March 31, 2026 and December 31, 2025, total unrecognized compensation cost related to unvested RSAs was $ million and $ million, respectively, which is expected to be recognized over a weighted-average period of years and years, respectively, and included in additional paid-in capital on the consolidated balance sheets.
There were no RSAs grants for both the three months ended March 31, 2026 and 2025.
Restricted Stock Units
Restricted stock units (“RSUs”) generally vest based on performance targets or continued service over a period of time and represent the right to receive one share of the Company’s common stock for each RSU that vests. The grant-date fair value of RSUs is measured based on the closing price of the Company’s common stock on the grant date. The Company accounts for forfeitures as they occur.
| # of RSUs | Weighted-Average Fair Value | |||||||
| Unvested as of December 31, 2024 | $ | |||||||
| RSUs granted | ||||||||
| Unvested as of December 31, 2025 | $ | |||||||
| RSUs released | ( | ) | ||||||
| Unvested as of March 31, 2026 | $ | |||||||
| 29 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
Stock-based compensation expense related to RSUs for the three months ended March 31, 2026 of $ million was included in general and administrative expenses and $ was included in compensation, commissions and benefits in the consolidated statements of operations. The total value of RSU grants was $million for the three months ended March 31, 2026. As of March 31, 2026 and December 31, 2025, total unrecognized compensation cost related to unvested RSAs was $ million and $million, respectively.
There were no RSUs issued for the three months ended March 31, 2025.
RSUs are settled in shares of the Company’s common stock upon vesting. Shares withheld to satisfy employee tax withholding obligations are accounted for as equity transactions.
15. COMMITMENTS AND CONTINGENCIES
Legal Matters
Except as set forth below, 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.
On October 7, 2025, Mendez et. al. v. Optimal Blue, LLC, et. al. filed a class action complaint against 28 defendants, of which Beeline Loans is included as a defendant in the US District Court, Middle District of Tennessee. On February 23, 2026, the plaintiffs filed an amended complaint removing 17 defendants, adding new named plaintiffs and adding additional description of Optimal Blue’s products to the complaint. Beeline Loans remains a defendant in the amended complaint. The complaint alleges Beeline Loans’ use of Optimal Blue’s pricing software violated federal antitrust laws. The Company intends to defend the case vigorously.
Government Regulations Affecting Mortgage Loan Origination
Beeline Financial operates in a heavily regulated industry that is highly focused on consumer protection. The extensive regulatory framework to which Beeline Financial 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 Financial’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 Financial’s other lines of business title insurance. The CFPB has broad supervisory and enforcement powers with regard to non-depository institutions, such as Beeline Financial, that engage in the production and servicing of home loans.
The following discussion should be read in conjunction with the efforts of the Trump Administration to shut down the CFPB. Presently, there is a lower federal court order enjoining the efforts to eliminate the CFPB, which order has been overruled by a three judge panel. The full Court has elected to hear the appeal so the injunction remains in effect.
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.
| 30 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
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 Financial is also supervised by regulatory agencies under state law. From time-to-time, Beeline Financial receives examination requests from the states in which Beeline Financial 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 Financial’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 Financial to periodic reviews and audits. This broad and extensive supervisory and enforcement oversight will continue to occur in the future.
Beeline Financial 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.
16. CONCENTRATIONS
The
Company maintains cash balances with several regional banks. The deposits are insured by the Federal Deposit Insurance Corporation up
to $
The
Company relies on three lenders for the warehouse lines it uses to fund the mortgage loans it makes to its customers, which is limited
to a total maximum of $
The Company sold its mortgage loans to six and seven investors for the three months ended March 31, 2026 and 2025, respectively.
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 $
| 31 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
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 the conversion or exercise of preferred stock, stock options, and warrants. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. There were anti-dilutive common shares included in the calculation of income (loss) per common share for the three months ended March 31, 2026 and 2025. For the three months ended March 31, 2026, there were million shares of common stock equivalents that were antidilutive due to the Company’s net loss, including million under preferred stock, million under warrants, million stock options and million restricted stock units. For the three months ended March 31, 2025, there were million shares of common stock equivalents that were antidilutive due to the Company’s net loss, including million under preferred stock and million under warrants.
18. RELATED PARTY TRANSACTIONS
In
June 2025, the Company partnered with TYTL, whereby TYTL finances certain residential real estate transactions funded through the sale
of a cryptocurrency token which is backed by real property. In these transactions, TYTL purchases equity from homeowners seeking liquidity,
funding such purchases from the sale of the cryptocurrency tokens. The Company provides TYTL with certain services in connection with
these transactions, specifically through providing access to its platform through BeelineEquity, and providing title and escrow services
through Beeline Title Holdings in exchange for service fees. Other than providing its platform, and title and escrow services as noted
above, the Company is not involved in any cryptocurrency or other transactions of TYTL. During the three months ended March 31, 2026,
the Company recorded $
On
January 1, 2026, the Company entered into a one-year Master Services Agreement with TYTL for $
On
December 19, 2025, the Company advanced TYTL $ million, included in due from affiliate on its consolidated balance sheets as of December
31, 2025. During the three months ended March 31, 2026, the Company further advanced $
Mr. Liuzza is Chief Executive Officer of TYTL. In addition, Christopher Moe, the Company’s Chief Financial Officer, and Joseph Freedman, a director, are each TYTL shareholders.
During
March 2025, Mr. Liuzza purchased
In
February and March of 2025, Mr. Liuzza advanced the Company $
In
January 2025, Mr. Liuzza entered into a SAFE with MagicBlocks, an entity in which the Company also has a
Prior
to its acquisition by the Company, Beeline Financial 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 $
| 32 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
Jessica
Kennedy, Beeline Financial’s Chief Operating Officer, owns a
Beeline
Loans partnered with CredEvolv on February 26, 2025 to help declined borrowers improve their credit and secure mortgage approval. Steve
Romano is co-founder and President of CredEvolv. Beeline Financial engaged Mr. Romano to provide certain consulting services pursuant
to an agreement dated July 29, 2024 to continue until terminated by written notice. As of December 31, 2025, the Company paid Mr. Romano
$
Beeline
Loans is a member of The Mortgage Collaborative, which is an industry trade group founded by David Kittle. Beeline Loans pays membership
fees of $
19. 2025 INDEBTEDNESS
Notes Payable
On
May 13, 2025, the Company borrowed $
During
2023, Beeline Financial issued a note payable for proceeds of $
On
April 29, 2021, Beeline Financial and Beeline Loans entered into a term loan agreement with the Business Development Company of Rhode
Island (“BDCRI”) for $
Notes Payable-Related Parties
In
February and March of 2025, Nicholas Liuzza, the Company’s Chief Executive Officer, advanced the Company a total of $
On
December 31, 2024, Mr. Liuzza loaned $
In
July 2023, Beeline Financial issued a note to a private company in which Joseph Freedman, a Board member of the Company and Beeline Financial,
has an ownership interest. This note was for $
| 33 |
Beeline Holdings, Inc. Notes to Consolidated Financial Statements March 31, 2026 and 2025 (unaudited) |
Secured Credit Facilities
Purchase Agreement
On
November 14, 2024, the Company sold $
The
Notes had a maturity date of 120 days from issuance, were issued with a
In
March 2025, the Company and certain of the holders agreed to an extension of the maturity date to
On
May 12, 2025, the Company entered into an agreement with two Note holders to extend the maturity date to
On
May 14, 2025, the Company entered into an agreement with the two other Note holders to extend the maturity date of each Note to
The
Company also entered in three forms of side letters in 2024 with the investors which (i) permitted one investor which along with an affiliate
invested $
On
June 26, 2025, the Company amended the 120-day promissory note of $
Senior secured debentures
During
2024, Beeline Financial issued senior secured debentures of $
20. SUBSEQUENT EVENTS
Warehouse Line of Credit
On May 15, 2026, the Company entered
into a second amendment to the Master Repurchase Agreement dated October 6, 2025 with a warehouse lender, increasing the line of credit
to $
Stockholders’ Equity
Common Stock
Subsequent to March 31, 2026, the Company sold shares for gross
proceeds of $
Subsequent to March 31, 2026, the Company issued shares of common stock upon the exercise of Warrants related to the Company’s Series G Preferred Stock offering under the cashless exercise provision upon the exercise of Warrants.
ELOC Agreement
Subsequent to March 31, 2026, the Company sold and issued a total of
shares of common stock for an aggregate purchase price of $
2025 Equity Incentive Plan
Subsequent to March 31, 2026, the Company issued shares of common stock to a member of the board of directors under the 2025 Plan in lieu of cash compensation of $. In addition, the Company granted stock options to an employee.
Warrants
Subsequent to March 31, 2026, an investor exercised Warrants related to the Company’s Series G Preferred Stock offering under the cashless exercise provision and the Company issued shares of common stock.
Related Party Transactions
Subsequent
to March 31, 2026, Mr. Liuzza surrendered to the Company shares of the Company’s common stock in lieu of repaying cash of
$
In addition, Mr. Liuzza entered into an additional SAFE with MagicBlocks.
| 34 |
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
This Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our expectations for prospective future growth, operating results and financial condition, potential future trends and developments within our industry and the U.S. economy generally, expectations and plans with respect to our products and services including the potential market for, timing, features, and demand for such products and services, prospective future fractional sale of home real estate transactions, and liquidity and sources of capital. Forward-looking statements are prefaced by words such as “anticipate,” “expect,” “plan,” “could,” “may,” “will,” “should,” “would,” “intend,” “seem,” “potential,” “appear,” “continue,” “future,” believe,” “estimate,” “forecast,” “project,” “designed,” and similar words. We have based these forward-looking statements largely on our current expectations and assumptions regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, results of operations, and financial position. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. We caution you, therefore, against relying on any of these forward-looking statements.
Our actual results may differ materially from those contemplated by the forward-looking statements for a variety of reasons, including, without limitation, the possibility that estimates, projections and assumptions on which the forward-looking statements are based prove to be incorrect, central bank interest rates and future interest rate changes, the risks arising from the impact of affordability, inflation, tariffs, the war in the Middle East, the deterioration of the labor market of the United States, a recession which may result on the Company’s business, prospective customers, and on the national and global economy, our need for additional capital to meet future goals and milestone targets, our ability to attract homeowners to our products and services, the potential for regulatory changes regarding cryptocurrency and digital assets, artificial intelligence, and other areas that impact the Company’s business, and the ability of us and third parties on which we depend to comply with applicable regulatory requirements, the risk that software and technology infrastructure on which we depend fail to perform as designed or intended, and the Risk Factors contained in our Form 10-K filed March 31, 2026 and prospectus supplement dated March 10, 2026. Any forward-looking statement made by us in this presentation speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Our Business
We are a fintech mortgage lender, fractional real estate equity purchase facilitator, and title services provider focused on streamlining the homeownership process through a digital platform. We utilize a proprietary technology platform that incorporates advanced analytics and machine learning tools, combined with human oversight, to support mortgage origination, equity purchase, and title services. Our business model is designed to provide consumers with more efficient access to mortgage and related financing solutions through its online platform. Approximately 70% of our loans are primarily non-qualified mortgage (“Non-QM”) loans, which typically serve borrowers with non-traditional income sources, including self-employment, investment, rental, or other non-W-2 income, or borrowers with significant assets.
We primarily act as lender for our conventional loan originations, where we are responsible for underwriting. For Non-QM loans, we operate primarily as a non-delegated lender and, to a much lesser extent, as a mortgage broker with third-party lenders. We leverage our technology platform and industry expertise to provide an alternative to traditional, more manual mortgage origination processes for residential properties in the United States.
As cryptocurrency adoption accelerates and becomes regulated by federal and state governments, we are positioning ourself as a leader in this fast-moving ecosystem, offering trusted infrastructure to help lenders scale into a future where crypto and compliance go hand-in-hand. Through our technology platform, we offer a fractional equity product in collaboration with our partner, TYTL Holdings, LLC (“TYTL”), whereby TYTL purchases the equity from homeowners seeking liquidity and funds such purchases from the sale of the cryptocurrency tokens. We provide TYTL access to our platform through our subsidiary, BeelineEquity, and provide title and escrow services through Beeline Title Holdings. Other than providing our technology platform and title and escrow services, we are not involved in any cryptocurrency or other transactions of TYTL.
During 2026, we announced a strategic partnership with Structured Real Estate Group (“SRG”), a real estate developer, to directly integrate our mortgage platform into SRG’s proprietary AI-driven real estate platform that enables homebuyers to receive fully customized mortgage and title solutions within a single, unified platform to evaluate financing, understand total ownership costs, and initiate the mortgage process instantly without leaving the SRG platform. SRG’s platform is designed as a next-generation real estate environment, combining property selection, smart home infrastructure, and community-level technology into a single digital interface. By embedding our mortgage and title capabilities directly into this ecosystem, the partnership removes friction from the homebuying process and creates a more transparent, efficient path to homeownership. The initial deployment of this integrated platform will support the development of approximately 2,000 new homes in the Dallas/Fort Worth area over the next 36 months.
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Factors Affecting Our Performance
Interest Rate Sensitivity
Changes in interest rates significantly affect mortgage origination volumes. Lower interest rates generally increase refinancing activity, while higher rates tend to reduce both refinancing and purchase volumes, with refinancing being particularly sensitive to rate increases. However, rising rates may also reflect broader economic growth and inflation, which can support demand for cash-out refinancings, purchase loans, and home equity products, partially offsetting declines in rate-driven refinancing.
We are exposed to interest rate risk. Increases in interest rates typically reduce the fair value of our loans held for sale (“LHFS”) and interest rate lock commitments (“IRLCs”). Conversely, declining rates tend to increase the value of our LHFS and IRLCs. We utilize IRLCs to manage exposure to interest rate movements between loan origination and sale.
Our operating results are expected to remain sensitive to interest rate fluctuations and other macroeconomic factors as we continue to scale our operations and increase funded loan volumes, variability in results, including the potential for net losses, may continue.
Market and Economic Conditions
Mortgage lending activity is influenced by overall economic conditions, including interest rates, employment levels, home price trends, and consumer confidence. Purchase originations are affected by these factors as well as seasonal patterns, with higher activity typically occurring in the second and third quarters. Refinancing volumes are primarily driven by changes in mortgage interest rates.
While demand for consumer credit has generally remained resilient, elevated or volatile interest rates and broader economic uncertainty may cause borrowers to delay financing decisions. As a result, our revenues and operating results may fluctuate across reporting periods.
Housing Supply and Demand
The availability of housing inventory and home price levels are key drivers of purchase mortgage volume. Limited housing supply has constrained transaction activity and contributed to higher home prices, particularly in a higher interest rate environment, which reduces affordability. Over time, supply-demand imbalances may encourage increased residential construction, which could expand housing inventory and support future purchase mortgage activity.
Adoption of Digital Lending Solutions
Our growth depends in part on our ability to deliver an efficient and competitive customer experience. Consumers have increasingly adopted digital platforms for complex financial transactions, and this trend is expected to continue as younger demographics enter the housing market. Our platform is designed to streamline the loan process and improve accessibility relative to more traditional approaches.
In addition, participants across the homeownership ecosystem—including financial institutions, real estate professionals, and service providers—are increasingly seeking technology-enabled solutions to enhance efficiency and customer experience. This trend may support continued demand for digital lending platforms and related services.
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Technology and Product Expansion
We continue to invest in technology to automate and streamline loan origination processes, reduce costs, and improve execution speed and accuracy. Our platform is designed to support the introduction of new products and integration with partners with limited incremental cost.
We also expect to expand our home financing product offerings over time to address a broader range of customer needs. These efforts are intended to support customer acquisition, increase engagement, and enhance the overall value proposition.
Customer Acquisition and Growth
Our ability to grow depends on attracting and retaining customers in a cost-effective manner. This includes delivering a competitive digital experience and maintaining efficient marketing strategies. If customer acquisition efforts become less effective—due to market conditions, competition, or reduced visibility on lead generation platforms—we may need to increase spending on marketing, which could impact operating expenses.
Recent Developments
During 2025 and through early 2026, inflation moderated from the elevated levels experienced in 2022–2023, although progress remained uneven. Headline Consumer Price Index (“CPI”) increased to approximately 3.0% year-over-year by the end of 2025, compared to the mid-2% range earlier in the year. However, the war in the Middle East has created a spike in gas prices increasing 18.9% in March 2026 which led to an increase in inflation of 3.3 % in March 2026. Gas prices continued to increase in April 2026.
The ultimate impact of the war in the Middle East and U.S. and foreign tariff actions implemented during 2024–2025, as well as subsequent policy developments and geopolitical conditions, remains uncertain. These factors have the potential to affect supply chains, input costs, and pricing dynamics across certain sectors.
Housing and other services-related costs have continued to be primary contributors to overall inflation and constrain home purchase originations throughout 2025 and into 2026. While month-over-month increases in housing moderated at times, year-over-year measures remained elevated relative to historical levels, reflecting the lagged effects of prior rent increases and ongoing supply constraints. Higher financing costs have further exacerbated affordability challenges and suppressed transaction volumes. However, the Company believes that ongoing supply-demand imbalances may support increased residential construction over time, which could improve housing inventory and contribute to future mortgage market activity.
For the period from October 1, 2025 through early May 2026, U.S. residential mortgage interest rates, as measured by the MORTGAGE30US published by the Federal Reserve Bank of St. Louis, remained elevated but trended modestly lower.
At the beginning of October 2025, the average 30-year fixed-rate mortgage was in the low-to-mid 7% range, generally fluctuating between approximately 7.0% and 7.5% on a weekly basis. Rates reached periodic highs in the fourth quarter of 2025 within this range, reflecting continued macroeconomic uncertainty and elevated benchmark yields.
Beginning in late 2025 and continuing into the first quarter of 2026, mortgage rates declined gradually. Monthly averages decreased from approximately 6.19% in December 2025 to approximately 6.10% in January 2026 and 6.05% in February 2026, before modestly increasing to approximately 6.18% in March 2026. On a weekly basis, rates in April 2026 ranged from approximately 6.23% to 6.37%, with a reported level of approximately 6.30% for the week ending April 30, 2026.
Overall, mortgage rates during the period declined from peak levels in excess of 7% in the fourth quarter of 2025 to approximately the mid-6% range by early May 2026. Notwithstanding this improvement, the forward outlook for mortgage rates remains uncertain. In particular, the ongoing conflict involving Iran has introduced additional volatility into energy markets and inflation expectations, which have contributed to upward pressure on U.S. Treasury yields and, by extension, mortgage rates.
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As a result, while mortgage rates have moderated in early 2026, they may remain elevated or experience renewed upward pressure depending on the duration and economic impact of the conflict, including its effects on inflation, monetary policy expectations, and global financial markets.
The Company continues to monitor these macroeconomic conditions, including inflation trends, interest rate movements, and geopolitical developments, which may impact consumer demand, operating costs, and overall financial performance.
Results of Operations
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 or cash flows. The operating results of Nimble Title Holdings, LLC and its subsidiaries, and Bridgetown Spirits Corp. have been classified as discontinued operations during the three months ended March 31 2025.
Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025
| (Dollars in thousands, except per share amounts) | 2026 | 2025 | ||||||
| Revenues | ||||||||
| Gain on sale of loans, net | $ | 1,845 | $ | 814 | ||||
| Loan origination fees | 395 | 150 | ||||||
| Interest income (expense) | ||||||||
| Interest income | 177 | 71 | ||||||
| Interest expense | (189 | ) | (65 | ) | ||||
| Interest income (expense), net | (12 | ) | 6 | |||||
| Title fees (includes related party revenues of $13 for the three months ended March 31, 2026) | 380 | 273 | ||||||
| Fractional equity revenues, related party | 37 | - | ||||||
| Other revenues (includes related party revenues of $50 for the three months ended March 31, 2026) | 51 | 4 | ||||||
| Total net revenues | 2,696 | 1,247 | ||||||
| Operating Expenses | ||||||||
| Compensation, commissions and benefits | 3,016 | 2,087 | ||||||
| General and administrative expenses | 1,930 | 1,878 | ||||||
| Depreciation and amortization | 815 | 820 | ||||||
| Marketing and advertising | 1,042 | 525 | ||||||
| Other operating expenses | 1,060 | 694 | ||||||
| Total operating expenses | 7,863 | 6,004 | ||||||
| Loss from operations | (5,167 | ) | (4,757 | ) | ||||
| Other income (expense), net | ||||||||
| Interest income | 6 | 1 | ||||||
| Interest expense | - | (1,889 | ) | |||||
| Loss on equity method investment | (117 | ) | (75 | ) | ||||
| Other income (expense), net | - | 14 | ||||||
| Total other income (expense), net | (111 | ) | (1,949 | ) | ||||
| Net loss from continuing operations | $ | (5,278 | ) | $ | (6,706 | ) | ||
Net Revenues
Gain on sale of loans, net increased $1.0 million, or 125%, to $1.8 million for the three months ended March 31, 2026 compared to $0.8 million for the three months ended March 31, 2025 driven by increased loan originations and loan pricing.
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Loan origination fees increased $0.2 million, or 100%, to $0.4 million for the three months ended March 31, 2026 compared to $0.2 million for the three months ended March 31, 2025 driven by increased loan originations. The quantity of loan originations increased by 160, or 125%, to 288 for the three months ended March 31, 2026 compared to 128 for the three months ended March 31, 2025.
Title fees increased $0.1 million, or 33%, to $0.4 million for the three months ended March 31, 2026 compared to $0.3 million for the three months ended March 31, 2025 driven by increased title closings of 262 for the three months ended March 31, 2026 compared to 215 title closings for the three months ended March 31, 2025.
Operating Expenses
Compensation, commissions and benefits increased $0.9 million, or 43%, to $3.0 million for the three months ended March 31, 2026 compared to $2.1 million for the three months ended March 31, 2025 primarily driven by increased employee stock compensation expense of $0.6 million related to our 2025 Equity Incentive Plan, which was adopted in October of 2025, and an increase in commissions reflective of higher loan originations.
General and administrative expenses were $1.9 million for both the three months ended March 31, 2026 and 2025 primarily driven by increased vendor and board of directors stock compensation expense of $0.2 million related to our 2025 Equity Incentive Plan, which was adopted in October of 2025 offset by decreased accounting fees of $0.1 million.
Depreciation and amortization was $0.8 million for both the three months ended March 31, 2026 and 2025.
Marketing and advertising increased $0.5 million, or 100%, to $1.0 million for the three months ended March 31, 2026 compared to $0.5 million for the three months ended March 31, 2025 primarily due to increased leads reflective of higher loan originations.
Other operating expenses increased $0.4 million, or 57%, to $1.1 million for the three months ended March 31, 2026 compared to $0.7 million for the three months ended March 31, 2025 primarily due to increased fees charged by investors of our loans, which is directly related to higher loan originations, and increased software service fees.
Other Income (Expense)
Interest expense, exclusive of the warehouse line of credit, was $1.9 million for the three months ended March 31, 2025 related to interest on debt and the amortization of debt and warrant related expenses.
Non-GAAP Financial Measure
We report adjusted EBITDA, which is a financial measure not prepared in accordance with generally accepted accounting principles (“non-GAAP”) that supplements our financial results presented in accordance with GAAP. This non-GAAP financial measure should not be considered in isolation and is not intended to be a substitute for any GAAP financial measures, but rather provides supplemental information that we believe helps investors better understand our business, our business model, and how we analyze our performance.
Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning and are not prepared under any comprehensive set of accounting rules or principles. Accordingly, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
We include a reconciliation of adjusted EBITDA to GAAP net loss, its most closely comparable GAAP measure. We encourage investors and others to review our unaudited consolidated financial statements and notes thereto in their entirety included elsewhere in this Report, not to rely on any single financial measure, and to consider adjusted EBITDA only in conjunction with its respective most closely comparable GAAP financial measure.
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We believe this non-GAAP financial measure is useful to investors for supplemental period-to-period comparisons of our business and understanding and evaluating our operating results for the following reasons:
● Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization expense, interest and amortization on debt, income tax expense, stock-based compensation expense, and costs that are unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations, all of which can vary substantially from company to company depending on their financing and capital structures;
● We use adjusted EBITDA in conjunction with financial measures prepared in accordance with GAAP for adjusted purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance; and
● Adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our core operating results, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Further, although we use this non-GAAP measure to assess the financial performance of our business, it has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are, or may in the future be, as follows:
● Although depreciation and amortization expense is a non-cash charge, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
● Adjusted EBITDA excludes non-cash stock-based compensation expense which is a significant recurring expense for our business and an important part of our compensation strategy;
● Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
● Adjusted EBITDA does not include interest expense, or the cash requirements necessary to service interest or principal payments on our non-funding debt, which reduces cash available to us; and
● The expenses and other items that we exclude in the calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from similarly titled non-GAAP measures when they report their operating results, and we may, in the future, exclude other significant, unusual or non-recurring expenses or other items from these financial measures.
Because of these limitations, adjusted EBITDA should be considered along with other financial performance measures presented in accordance with GAAP, and not as an alternative or substitute for our financial results prepared and presented in accordance with GAAP.
Adjusted EBITDA
We calculate adjusted EBITDA as net income (loss) adjusted for the impact of interest expense, depreciation and amortization expense, (gain) loss on extinguishment of debt, net loss from discontinued operations, stock-based compensation expense, and other non-recurring or non-core operational expenses.
The following table presents a reconciliation of net income (loss) to adjusted EBITDA for the three months ended March 31, 2026 and 2025 (unaudited):
| (Dollars in thousands) | 2026 | 2025 | ||||||
| Net loss | $ | (5,278 | ) | $ | (6,927 | ) | ||
| Interest expense | - | 1,889 | ||||||
| Depreciation and amortization | 815 | 820 | ||||||
| Stock-based compensation expense | 977 | 150 | ||||||
| Non-recurring expenses | 468 | - | ||||||
| Net loss from discontinued operations | - | 221 | ||||||
| Adjusted EBITDA | $ | (3,018 | ) | $ | (3,847 | ) | ||
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Capital Resources and Liquidity
Statements of Cash Flows
Net cash used in operating activities of continuing operations increased from $1.4 million for the three months ended March 31, 2025 to $3.6 million for the three months ended March 31, 2026 primarily due to changes in working capital.
For the three months ended March 31, 2026 and 2025, net cash used in investing activities were flat at $0.1 million.
For the three months ended March 31, 2026, net cash provided by financing activities of continuing operations was $2.5 million primarily from $1.6 million raised from net equity transactions and borrowings of $0.9 million from the warehouse lines. For the three months ended March 31, 2025, net cash provided by financing activities of continuing operations was $1.8 million primarily from equity transactions, offset by repayments of our warehouse line and secured credit facilities.
Financial Policy. We intend to maintain a disciplined financial policy and improve our credit metrics, which are critical to our lending partners.
Liquidity Policy. We maintain a strong focus on liquidity and define our liquidity risk tolerance based on sources and uses to maintain a sufficient liquidity position to meet our business needs and financial obligations under both normal and stressed conditions. We believe that our consolidated liquidity and availability under our equity offerings will be sufficient to meet our liquidity needs.
Liquidity. Our primary sources of liquidity consist of cash and cash equivalents and equity offerings. Cash generation may fluctuate due to various factors, including seasonality, timing of loan originations and repayments, market conditions, and our ability to execute strategic asset sales or dispositions. As of May 8, 2026, the Company had approximately $1.2 million in cash, including $0.9 million we raised subsequent to March 31, 2026 as described below.
For the three months ended March 31, 2026, the Company sold 444,444 shares of common stock for gross proceeds of $1.0 million under the ELOC Agreement. Subsequent to March 31, 2026, the Company further sold 300,000 shares of common stock for gross proceeds of $0.6 million.
During three months ended March 31, 2026, the Company sold 163,112 shares for gross proceeds of $0.5 million under an at the market offering. Subsequent to March 31, 2026, the Company further sold 155,056 shares of common stock for gross proceeds of $0.3 million.
The Company does not have sufficient cash resources to meet its working capital needs for the next 12 months. The Company expects it needs to raise approximately $6 million to meet its internal cash requirements. The availability of additional financing will be largely dependent on our common stock price and liquidity as we utilize our ELOC and ATM Agreements as well as on our operating success, including improved margins as well as operational improvements, which will be necessary to attract investors. However, there can be no assurance that the Company will be successful in securing the necessary capital on favorable terms, or at all. The Company has no material off-balance sheet arrangements as of the date of this Report.
Critical Accounting Policies and Estimates
Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results, and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The critical accounting policies and practices used by the Company in the financial statements for the three months ended March 31, 2026 relate to the policies and practices the Company uses to account for:
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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 based on the investor commitment.
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. Actual losses incurred are reflected as a reduction in gains on sale of loans, net in the consolidated statements of operations.
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.”
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 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 net revenues. Other interest expense is included in other (income)/expense.
Title Fees
Settlement fees and commissions are earned at loan settlement. Title fees also include service fees for providing title and escrow services related to fractional equity sales, see below.
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Fractional Equity Revenues, Related Party
The Company receives a transaction fee of 3.5% of the amount of equity sold by homeowners to TYTL for customer service, transaction processing and platform support. Revenue is recognized at a point in time when the closing occurs between TYTL and the homeowner.
Other Revenues
The Company receives a consulting fee related to certain agreed upon services provided to TYTL. Revenue is recognized on a monthly basis as the services are performed. Other revenues also include fees received from a marketing partner.
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.
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. 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 is five 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.
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.
ITEM 4 – CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) that are designed to provide reasonable assurances that the information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
We conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act)), under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e)) as of the end of the period covered by this report. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that these disclosure controls and procedures were not effective as of March 31, 2026.
There were no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended March 31, 2026, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II: OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS
From time to time, the Company is a party to, or otherwise involved in, legal proceedings arising in the normal course of business. As of the date of this Report, except as set forth below, 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.
On October 7, 2025, Mendez et. al. v. Optimal Blue, LLC, et. al. filed a class action complaint in the US District Court, Middle District of Tennessee alleging the Company’s use of Optimal Blue’s pricing software violated federal antitrust laws against 28 defendants, including Beeline Loans, a subsidiary of the Company. On February 23, 2026, the plaintiffs filed an amended complaint removing 17 defendants, adding new named plaintiffs and adding additional description of Optimal Blue’s products to the complaint. Beeline Loans remains a defendant in the amended complaint. The Company intends to defend the case vigorously.
ITEM 1A – RISK FACTORS
Not applicable to smaller reporting companies.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On March 19, 2026 and April 22, 2026, two warrant holders exercised 241,393 Series G Warrants to purchase Common Stock and acquired an aggregate of 193,590 shares of common stock.
On April 20, 2026, the Company sold a total of 300,000 shares of common stock under the ELOC Agreement dated March 7, 2025.
The issuances and warrant exercises were exempt from registration under the Securities Act of 1933 pursuant to Section 4(a)(2) thereof and Rule 506(b) promulgated thereunder.
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 – OTHER INFORMATION
During
the quarter ended March 31, 2026, no director or officer
Warehouse Line of Credit
On May 15, 2026, the Company entered into a second amendment to the Master Repurchase Agreement dated October 6, 2025 with a warehouse lender, increasing the line of credit to $6 million through May 22, 2026 and reverting back to $5 million thereafter. In addition, certain financial covenants were amended through May 30, 2026 and thereafter will revert to the original thresholds.
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ITEM 6 – EXHIBITS
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| * | Filed herewith. |
| ** | This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, |
| in accordance with Item 601 of Regulation S-K. | |
| # | Indicates management compensatory plan, contract or agreement. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BEELINE HOLDINGS, INC. | ||
| Date: May 15, 2026 | By: | /s/ Nicholas R. Liuzza, Jr. |
| Nicholas R. Liuzza, Jr. | ||
| Chief Executive Officer | ||
| Date: May 15, 2026 | By: | /s/ Christopher R. Moe |
| Christopher R. Moe | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) | ||
| Date: May 15, 2026 | By: | /s/ Tiffany Milton |
| Tiffany Milton | ||
| Chief Accounting Officer | ||
| (Principal Accounting Officer) | ||
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