U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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As of May 19, 2025, shares of our common stock were outstanding.
Documents Incorporated by Reference: None.
BEELINE HOLDINGS, INC.
FORM 10-Q
March 31, 2025
TABLE OF CONTENTS
| 2 |
PART I: FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
Beeline Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
| March 31, 2025 | December 31, 2024 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Mortgage loans held for sale, net, at fair value | ||||||||
| Inventories | ||||||||
| Interest rate lock commitment derivative | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts receivables, net | ||||||||
| Total current assets | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use assets | ||||||||
| Property and equipment, net | ||||||||
| Equity method investment | ||||||||
| Other assets, net | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Warehouse line of credit | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued liabilities | ||||||||
| Current portion of secured credit facilities, net of debt discount | ||||||||
| Current portion of note payable and accrued interest, related parties | ||||||||
| Current portion of notes payable and accrued interest, net of debt discount | ||||||||
| Current portion of lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Lease liabilities, net of current portion | ||||||||
| Other noncurrent liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 17) | ||||||||
| Equity: | ||||||||
| Common stock, $ par value; shares authorized and and shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Preferred stock Series B, $ par value; shares authorized; shares issued and outstanding as of March 31, 2025 and December 31, 2024 | ||||||||
| Preferred stock Series D, $ par value; shares authorized; and shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Preferred stock Series E, $ par value; shares authorized; shares issued and outstanding as of March 31, 2025 and December 31, 2024 | ||||||||
| Preferred stock Series F, $ par value; shares authorized; and shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Preferred stock Series F-1, $ par value; shares authorized; and shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Preferred stock Series G, $ par value; shares authorized; and shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Common stock to be issued, shares and shares as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Preferred stock Series G to be issued, shares and shares as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Equity attributable to stockholders of Beeline Holdings, Inc. | ||||||||
| Non-controlling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and 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, 2025 and 2024
(Dollars in thousands, except shares and per share amounts)
(Unaudited)
| 2025 | 2024 | |||||||
| Revenues | ||||||||
| Gain on sale of loans, net | $ | $ | ||||||
| Title fees | ||||||||
| Loan origination fees | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ||||||
| Data and tech services | ||||||||
| Net sales, spirits | ||||||||
| Total net revenues | ||||||||
| Operating Expenses | ||||||||
| Salaries and benefits | ||||||||
| Marketing and advertising | ||||||||
| Professional fees | ||||||||
| General and administrative expenses | ||||||||
| Depreciation and amortization | ||||||||
| Other operating expenses | ||||||||
| Cost of sales, spirits (includes depreciation of $ | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense), net | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Loss on equity method investment | ( | ) | ||||||
| Other income | ||||||||
| Other expense | ( | ) | ||||||
| Total other expense, net | ( | ) | ( | ) | ||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Net loss from discontinued operations | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Net loss attributable to non-controlling interests | ||||||||
| Net loss attributable to common stockholders | ( | ) | ( | ) | ||||
| Preferred stock dividends | ( | ) | ( | ) | ||||
| Deemed dividend - Preferred stock Series G and warrant price protection | ( | ) | ||||||
| Net loss available to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Comprehensive loss | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Unrealized foreign currency translation loss | ||||||||
| Total comprehensive loss | ( | ) | ( | ) | ||||
| Comprehensive loss attributable to non-controlling interests | ||||||||
| Comprehensive loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Basic net loss from continuing operations per common share | $ | ) | $ | ) | ||||
| Basic net loss from discontinued operations per common share | $ | $ | ) | |||||
| Basic net loss per common share available to common stockholders | $ | ) | $ | ) | ||||
| Basic 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 (Deficit)
Three Months Ended March 31, 2025 and 2024
(Dollars in thousands, except share amounts)
(Unaudited)
| Common Stock | Series
B Preferred Stock | Series
C 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 Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Issued | Capital | Deficit | Loss | Interest | (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for services by third parties | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | - | - | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2025 and 2024
(Dollars in thousands)
(Unaudited)
| 2025 | 2024 | |||||||
| 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 of credit losses | ( | ) | ||||||
| Depreciation and amortization | ||||||||
| Inventory provision | ( | ) | ||||||
| Amortization of debt discount | ||||||||
| Preferred stock dividends | ( | ) | ( | ) | ||||
| Equity method loss | ||||||||
| 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 | ( | ) | ||||||
| Inventories | ||||||||
| Interest rate lock commitment derivative | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts receivables, net | ( | ) | ||||||
| Other assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities | ||||||||
| Accrued interest | ||||||||
| Other liabilities, related party | ||||||||
| Other noncurrent liabilities | ( | ) | ||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| Net cash used in 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 of continuing operations | ( | ) | ||||||
| Net cash used in investing activities of discontinued operations | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Net repayments under warehouse line of credit | ( | ) | ||||||
| Shares issued for cash, net of debt discount costs | ||||||||
| Proceeds from notes payable, related party | ||||||||
| Payments of principal on secured credit facilities | ( | ) | ||||||
Payments of principal on notes payable, related party | ( | ) | ||||||
| Payments of principal on notes payable | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) 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 | $ | $ | ||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| 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:
| 2025 | 2024 | |||||||
| 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, 2025
(Unaudited)
1. NATURE OF BUSINESS
Beeline Holdings, Inc. (the “Company”) was incorporated under the laws of Nevada in 2004. On March 12, 2025, the Company changed its name from Eastside Distilling, Inc.
Merger
On September 4, 2024, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger”) with Bridgetown Spirits Corp. (“Bridgetown Spirits”) and Beeline Financial Holdings, Inc. (“Beeline Financial”), a Delaware corporation. The Merger closed on October 7, 2024 and Beeline Financial became a wholly-owned subsidiary of the Company.
Beeline Financial was incorporated in Delaware on July 1, 2020 and is the successor to a Rhode Island corporation organized in 2018. Beeline Financial is an Artificial Intelligence (“AI”)-driven fintech mortgage lender that develops proprietary software in the form of major enhancements and new developments in its lending platform, introducing its Chat Application Programming Interface (“API”) “Bob” in July 2023.
Debt Exchange Agreement
On September 4, 2024, the Company and its subsidiary, Craft Canning + Printing (“Craft C+P”), entered into a Debt Exchange Agreement (the “Debt Exchange Agreement”), which closed on October 7, 2024, resulting in the assignment by the Company of 720 barrels of spirits to Craft C+P, followed by the merger of Craft C+P into a limited liability company owned by certain creditors of the Company and the deconsolidation of Craft C+P, see Note 4 - Discontinued Operations.
Subsequent to the execution of the Debt Exchange Agreement, the Company organized a subsidiary, Bridgetown Spirits, which was incorporated on October 3, 2024, and assigned the Company’s business of manufacturing and marketing spirits to Bridgetown Spirits, which manufactures (through sub-contractors), acquires, blends, bottles, imports, markets and sells a wide variety of alcoholic beverages under recognized brands. Bridgetown Spirits’ brands span several alcoholic beverage categories, including whiskey, vodka, rum, and tequila. Bridgetown Spirits sells products on a wholesale basis to distributors in open states and through brokers in control states. The Company owns 53% of Bridgetown Spirits as of March 31, 2025.
2. GOING CONCERN, LIQUIDITY, AND MANAGEMENT’S PLANS
These consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. The Company is subject to a number of risks common to emerging companies stemming from, among other things, a limited operating history, rapid technological change, uncertainty of market acceptance and products, uncertainty of regulatory approval, competition from substitute products and larger companies, the need to obtain additional financing, compliance with government regulation, protection of proprietary technology, interest rate fluctuations, product liability, and the dependence on key individuals. The Company has incurred recurring losses and negative cash flows from operations since its inception, has a working capital deficit as of March 31, 2025 and is dependent on debt and equity financing. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements. The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if assumes Company were unable to continue as a going concern.
Management believes that its available funds and cash flow from operations may not be sufficient to meet working capital requirements for the twelve months subsequent to the issuance of the financial statements. In order to accomplish its business plan objectives, the Company will need to either increase revenues or raise capital by the issuance of debt and/or equity.
Management believes that it will be successful in obtaining additional financing based on its limited history of raising funds; however, there can be no assurances that our business plans and actions will be successful, that we will generate anticipated revenues, or that unforeseen circumstances will not require additional funding sources in the future or effectuate plans to conserve liquidity. Future efforts to raise additional funds may not be successful or they may not be available on acceptable terms, if at all.
| 7 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) 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, 2025, its operating results for the three months ended March 31, 2025 and 2024 and its cash flows for the three months ended March 31, 2025 and 2024. 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, 2024. Interim results are not necessarily indicative of the results that may be expected for an entire fiscal year. All intercompany balances and transactions have been eliminated on consolidation.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the consolidated accounts of the Company and its wholly-owned subsidiaries, Beeline Financial Holdings, Inc., 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”).
The
Company has two majority-owned subsidiaries, Nimble Title Holdings, Inc. (“Nimble Title Holdings”) and Bridgetown Spirits.
Nimble Title Holdings is
Nimble Title Holdings has four subsidiaries, Nimble Title, LLC (“Nimble Title”), Nimble Title Agency, LLC (“Nimble Title Agency”), Nimble Texas Title, LLC (“Nimble Texas Title”), and Nimble Settlement Services, LLC (“Nimble Settlement Services”).
USE OF ESTIMATES
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Significant estimates and assumptions in these consolidated statements include: the fair value of mortgage loans held for sale, valuation of inventory, valuation of investments, valuation of accounts receivable, valuation of derivative instruments, valuation of software, valuation of intangible assets, valuation of goodwill, valuation of lease liabilities and related right of use assets, contingent liability for loan repurchases, and valuation of non-cash equity grants and issuances. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties.
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Beeline considers highly liquid investments purchased with a remaining maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents include money market accounts that are readily convertible into cash.
The
Company maintains certain cash balances that are restricted under warehouse and/or master repurchase agreements, broker margin accounts
associated with its derivative instruments and other restrictions. The restricted cash balance as of March 31, 2025 was $
| 8 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
MORTGAGE LOANS HELD FOR SALE AND GAINS ON SALE OF LOANS REVENUE RECOGNITION
Mortgage loans held for sale are carried at fair value under the fair value option in accordance with ASC 825, Financial Instruments, with changes in fair value recorded in gain on sale of loans, net on the consolidated statements of operations. The fair value of mortgage loans held for sale committed to investors is calculated using observable market information such as the investor commitment, assignment of trade or other mandatory delivery commitment prices. The fair value of mortgage loans held for sale not committed to investors is based on quoted best execution secondary market prices. If no such quoted price exists, the fair value is determined using quoted prices for a similar asset or assets, such as Mortgage-Backed Securities (“MBS”) prices, adjusted for the specific attributes of that loan, which would be used by other market participants. Mortgage loans held for sale not calculated using observable market information are based on third-party broker quotations or market bid pricing.
Gains and losses from the sale of mortgage loans held for sale are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale and are recorded in gain on sale of loans, net on the consolidated statements of operations. Sales proceeds reflect the cash received from investors through the sale of the loan and servicing release premium. Gain on sale of loans, net also includes the unrealized gains and losses associated with the changes in the fair value of mortgage loans held for sale, and the realized and unrealized gains and losses from derivative instruments.
Mortgage loans held for sale are considered sold when the Company surrenders control over the financial assets. Control is considered to have been surrendered when the transferred assets have been isolated from the Company, beyond the reach of the Company and its creditors; the purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and the Company does not maintain effective control over the transferred assets through either an agreement that both entitles and obligates the Company to repurchase or redeem the transferred assets before their maturity or the ability to unilaterally cause the holder to return specific financial assets. The Company typically considers the above criteria to have been met upon acceptance and receipt of sales proceeds from the purchaser.
Mortgage loans sold to investors by the Company, and which met investor underwriting guidelines at the time of sale, may be subject to repurchase in the event of specific default by the borrower or subsequent discovery that underwriting standards were not met. The Company may, upon mutual agreement, indemnify the investor against future losses on such loans. Additionally, reserves are established for estimated liabilities from the need to repay, where applicable, a portion of the premium received from investors on the sale of certain mortgage loans if such loans are repaid in their entirety within a specified period after the sale of the loans. The Company has established a reserve for potential losses related to these representations and warranties. In assessing the adequacy of the reserve, management evaluates various factors including actual write-offs during the period, historical loss experience, known delinquent and other problem loans, and economic trends and conditions in the industry. Actual losses incurred are reflected as write-offs against the loan indemnification reserve.
Since mortgage loans held for sale have maturity dates greater than one year from the balance sheet date but are expected to be sold in a short time frame (less than one year), they are recorded as current assets.
Changes in the balance of mortgage loans held for sale are included in cash flows from operating activities in the consolidated statements of cash flows in accordance with ASC 230-10-45-21, Statement of Cash Flows.
REVENUE RECOGNITION
Gains on Sale of Loans, Net
See discussion above under “Mortgage Loans Held for Sale and Gain on Sale of Loans Revenue Recognition” and below under “Derivative Financial Instruments and Revenue Recognition”.
Title Fees
Commissions earned at loan settlement on insurance premiums paid to title insurance companies.
| 9 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
Loan Origination Fees and Costs
Loan origination fees represent revenue earned from originating mortgage loans. Loan origination fees generally represent flat per-loan fee amounts based on a percentage of the original principal loan balance and are recognized as revenue at the time the mortgage loans are funded since the loans are held for sale. Loan origination costs are charged to operations as incurred.
Interest Income
Interest income on mortgage loans held for sale is recognized for the period from loan funding to sale based upon the principal balance outstanding and contractual interest rates. Revenue recognition is discontinued when loans become 90 days delinquent, or when, in management’s opinion, the recovery of principal and interest becomes doubtful and the mortgage loans held for sale are put on nonaccrual status. For loans that have been modified, a period of six payments is required before the loan is returned to an accrual basis.
Interest Expense
Interest expense relating to the warehouse lines of credit is included in revenues. Other interest expense is included in other (income)/expense.
Data and Tech
Fees received from a marketing partner who is embedded in the Company’s point-of-sale journey for investment property customers. The partner pays Beeline for leads they receive from a customer opting in to use their insurance company for landlord insurance during the application process.
Net Sales, Spirits
Net sales include product sales, less excise taxes and customer programs and incentives. Bridgetown Spirits recognizes revenue by applying the following steps in accordance with ASC 606 – Revenue from Contracts with Customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
Bridgetown Spirits recognizes spirits sales when merchandise is shipped from a warehouse directly to wholesale customers (except in the case of a consignment sale). For consignment sales, which include sales to the Oregon Liquor Control Commission, sales are recognized upon the consignee’s shipment to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related merchandise. Shipping terms are generally FOB shipping point, and title passes to the customer at the time and place of shipment or purchase by customers at a retail location. For consignment sales, title passes to the consignee concurrent with the consignee’s shipment to the customer. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return.
Excise Taxes - Bridgetown Spirits is responsible for compliance with the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) regulations, which includes making timely and accurate excise tax payments. Bridgetown Spirits is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcoholic beverages in varying amounts. Bridgetown Spirits calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws, and these amounts are recorded as reductions to net sales.
Customer Programs - Customer programs, which include customer promotional discount programs, are a common practice in the alcoholic beverage industry. Bridgetown Spirits reimburses wholesalers for an agreed amount to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs are recorded as reductions to net sales in accordance with ASC 606.
| 10 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
COST OF SALES, SPIRITS
Cost of sales consists of all direct costs for service, labor, overhead, packaging, and in-bound freight charges. Raw materials account for the largest portion of the cost of sales, followed by packaging and production costs.
DERIVATIVE FINANCIAL INSTRUMENTS AND REVENUE RECOGNITION
The Company holds and issues derivative financial instruments such as interest rate lock commitments (IRLCs). IRLCs are subject to price risk primarily related to fluctuations in market interest rates. To hedge the interest rate risk on certain IRLCs, the Company enters into best effort forward sale commitments with investors, whereby certain loans are locked with a borrower and simultaneously committed to an investor at a fixed price. If the best effort IRLC does not fund, the Company has no obligation to fulfill the investor commitment.
ASC 815-25, Derivatives and Hedging, requires that all derivative instruments be recognized as assets or liabilities on the consolidated balance sheets at their fair value. Changes in the fair value of the derivative instruments are recognized in gain on sale of loans, net on the consolidated statements of operations in the period in which they occur. The Company accounts for all derivative instruments as free-standing derivative instruments and does not designate any for hedge accounting.
INVENTORIES
Bridgetown Spirits’ inventories primarily consist of bulk and bottled liquor and merchandise and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out method. A portion of inventory is held by certain independent distributors on consignment until it is sold to a third party. Bridgetown Spirits regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory.
ACCOUNTS RECEIVABLE
Accounts receivable consist primarily of amounts due from customers for goods shipped or services provided. Accounts receivable are stated at their gross outstanding balance, net of an allowance for credit losses. The allowance for credit losses is based on a combination of factors, including historical loss experience, aging of receivables, specific customer creditworthiness, current economic conditions, and reasonable and supportable forecasts. The Company writes off accounts receivable when they are deemed uncollectible, and any recoveries of previously written-off balances are recorded as a reduction to the provision for credit losses.
ACCOUNTS RECEIVABLE FACTORING PROGRAM
The
Company has an accounts receivable factoring program that had a zero balance as of March 31, 2025 and December 31, 2024.
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.
| 11 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
GOODWILL
Goodwill is the excess of the purchase price over the estimated fair value of identifiable net assets acquired in business combinations. The Company tests goodwill for impairment annually in the fourth quarter, or more frequently when indications of potential impairment exist. The Company monitors the existence of potential impairment indicators throughout the fiscal year. The Company may elect to perform either a qualitative test or a quantitative test to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the estimated fair value of the Company exceeds its carrying value, then the Company concludes the goodwill is not impaired. If the carrying value of the Company exceeds its estimated fair value, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the amount of goodwill. Based on the Company’s impairment analysis, management determined that goodwill was not impaired for the period ended March 31, 2025.
INTANGIBLE ASSETS
The Company accounts for certain finite-lived intangible assets at amortized cost and other certain indefinite-lived intangible assets at cost. Management reviews all intangible assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value.
PROPERTY AND EQUIPMENT, NET
Property
and equipment, including leasehold improvements and internal-use software, are recorded at cost, and are depreciated or amortized using
the straight-line method over the estimated useful lives of the related assets, which range from three
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.
| 12 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
Fair value measurements are classified in the following manner:
Level 1—Valuation is based on quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2—Valuation is based on either observable prices for identical assets or liabilities in inactive markets, observable prices for similar assets or liabilities, or other inputs that are derived directly from, or through correlation to, observable market data at the measurement date.
Level 3—Valuation is based on the internal models using assumptions at the measurement date that a market participant would use.
In determining fair value measurement, Beeline uses observable inputs whenever possible. The level of a fair value measurement within the hierarchy is dependent on the lowest level of input that has a significant impact on the measurement as a whole. If quoted market prices are available at the measurement date or are available for similar instruments, such prices are used in the measurements. If observable market data is not available at the measurement date, judgment is required to measure fair value.
The following is a description of measurement techniques for items recorded at fair value on a recurring basis. There was no material items recorded at fair value on a nonrecurring basis as of March 31, 2025 and December 31, 2024.
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, 2025.
DEBT DISCOUNT
Beeline’s debt instruments are recorded net of issuance costs (debt discount). The resulting debt discount is amortized over the term of the term loan using the straight-line method, which approximates the effective interest method, and the amortization of debt discount is included in interest expense in the consolidated statements of operations and comprehensive loss.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
The
reporting currency of the company is the U.S. dollar. Except for Beeline Loans Pty Ltd, the functional currency of the Company is the
U.S. dollar. The functional currency of Beeline Loans Pty Ltd is the Australian dollar. For Beeline Loans Pty Ltd, results of operations
and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate
at the end of the period, and equity is translated at historical exchange rates. As a result, amounts related to assets and liabilities
reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets.
Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included
in determining comprehensive loss. The translation adjustment for the three months ended March 31, 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 the three months ended March 31, 2025.
As
of March 31, 2025, the exchange rate used to translate balance sheet amounts from Australian dollars into U.S. dollars was $
| 13 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 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 offering. The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed.
NON-CONTROLLING INTERESTS
Beeline
follows ASC 810, Consolidation, governing the accounting for and reporting of non-controlling interests (“NCI”) in
partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among
other things, that NCI be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s
ownership interest that leave control intact be treated as equity transactions rather than step acquisitions or dilution gains or losses,
and that losses of a partially-owned subsidiary be allocated to non-controlling interests even when such allocation might result in a
deficit balance. The net loss attributed to NCI was separately designated in the accompanying consolidated statements of operations and
comprehensive loss. Losses attributable to NCI in a subsidiary may exceed NCI’s interests in the subsidiary’s equity. The
excess attributable to NCI is attributed to those interests. NCI shall continue to be attributed their share of losses even if that attribution
results in a deficit NCI balance. Net loss attributable to NCI for the three months ended March 31, 2025 was $
INVESTMENT IN EQUITY METHOD INVESTEE
On
February 7, 2024, MagicBlocks, Inc., a Delaware corporation, was incorporated by a third party. On July 31, 2024, the Company was
issued
million shares of Magic Blocks representing 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.
MARKETING AND ADVERTISING COSTS
Marketing
and advertising costs are expensed as incurred. For the three months ended March 31, 2025 and 2024, 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 nonemployees are recorded at fair value on the measurement date and recognized over the service periods.
| 14 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
INCOME TAXES
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company evaluates all significant tax positions as required by ASC 740. As of March 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 2022, 2023, and 2024 remain open for potential audit.
TROUBLED DEBT RESTRUCTURING
The Company evaluates all modifications to its debt agreements in accordance with ASC 470-60, Debt – Troubled Debt Restructurings by Debtors. A debt restructuring is considered a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider.
Concessions may include, but are not limited to:
| ● | A reduction in the stated interest rate, | |
| ● | An extension of the maturity date, | |
| ● | A reduction in the principal amount or accrued interest, or | |
| ● | A combination of the above. |
When a debt restructuring qualifies as a TDR, the Company evaluates whether the restructuring represents a modification or an extinguishment of debt. If the future undiscounted cash flows of the restructured debt are less than the carrying amount of the original debt, a gain is recognized in the period of the restructuring. The restructured debt is subsequently measured based on the revised terms.
COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) includes all changes in equity during a period from non-owner sources and is presented in accordance with the provisions of ASC 220, Comprehensive Income. The Company reports comprehensive income in the consolidated statements of operations and comprehensive income (loss), which includes net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes foreign currency translation adjustments, including gains and losses from the translation of the Company’s foreign subsidiary whose functional currency is not the U.S. dollar.
OPERATING SEGMENTS
Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s chief operating decision maker (“CODM”) and relied upon when making decisions regarding resource allocation and assessing performance. When evaluating the Company’s financial performance, the CODM reviews total revenues, total expenses, and expenses by functional classification, using this information to make decisions on a company-wide basis.
The Company operates in three reportable segments. The CODM for the Company is the Chief Executive Officer (the “CEO”). The Company’s CEO reviews operating results on an aggregate basis and manages the Company’s operations as a whole for the purpose of evaluating financial performance and allocating resources. Accordingly, the Company has determined that it has a three-reportable and operating segment structure. The CEO uses aggregate net loss to allocate resources in the annual budgeting and forecasting process and also uses that measure as a basis for evaluating financial performance regularly by comparing actual results with established budgets and forecasts. The measure of segment assets is reported on the consolidated balance sheets as total assets.
| 15 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this new guidance to have a material impact on the financial statements.
RECLASSIFICATION OF PRIOR YEAR PRESENTATION
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations or cash flows. As a result of the merger, the statement of operations for the three months ended March 31, 2024 represents the new structure and retrospectively reclassifies discontinued operations. In addition, the senior secured debentures were reclassed from notes payable to secured credit facilities and stock to be issued related to common stock and preferred stock Series G was presented separately as of December 31, 2024.
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. The operating results of Craft C+P have been classified as discontinued operations during the three months ended March 31, 2024. The consolidated financial statements for the prior periods have been adjusted to reflect comparable information.
Income and expense related to Craft C+P were as follows for the three months ended March 31:
| (Dollars in thousands) | 2024 | |||
| Sales | $ | |||
| Less customer programs and excise taxes | ||||
| Net sales | ||||
| Cost of sales | ||||
| Gross profit | ||||
| Operating expenses: | ||||
| Sales and marketing expenses | ||||
| General and administrative expenses | ||||
| Gain on disposal of property and equipment | ( | ) | ||
| Total operating expenses | ||||
| Loss before income taxes | ( | ) | ||
| Provision for income taxes | ||||
| Net loss from discontinued operations | $ | ( | ) | |
| 16 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
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 this criteria, the CODM has determined that there are three reportable segments, consisting of Beeline, Bridgetown Spirits and Corporate.
Beeline is an AI-driven fintech mortgage lender that develops proprietary software in the form of major enhancements and new developments in its lending platform, including Beeline’s Chat API “Bob.” Bridgetown Spirits brands span several alcoholic beverage categories, including whiskey, vodka, rum, and tequila and are sold on a wholesale basis to distributors in open states, and to brokers in control states. Corporate consists of key executive and accounting personnel and corporate expenses such as public company and board costs, as well as interest on debt.
The Company measures segment performance to allocate resources primarily based on revenues of Beeline and profit margin of Bridgetown. Total asset information by segment is not provided to, or reviewed by, the CODM as it is not used to make strategic decisions, allocate resources or assess performance. The accounting policies of the segments are the same as those described for the Company in Note 3 - Summary of Significant Accounting Policies.
Segment information was as follows for the three months ended March 31:
| (Dollars in thousands) | 2025 | 2024 | ||||||
| Beeline | ||||||||
| Gain on sale of loans, net | $ | $ | ||||||
| Title fees | ||||||||
| Loan origination fees | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ||||||
| Data and tech services | ||||||||
| Total net revenues | ||||||||
| Salaries and benefits | ||||||||
| Marketing and advertising | ||||||||
| Professional fees | ||||||||
| General and administrative expenses | ||||||||
| Depreciation and amortization | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ||||||
| Interest expense | ( | ) | ||||||
| Other expense | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ||||
| Bridgetown Spirits | ||||||||
| Net sales, spirits | $ | $ | ||||||
| Cost of sales, spirits (inclusive of depreciation) | ||||||||
| Salaries and benefits | ||||||||
| Marketing and advertising | ||||||||
| Professional fees | ||||||||
| General and administrative expenses | ||||||||
| Depreciation and amortization | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Gross profit | $ | $ | ||||||
| Gross margin | % | % |
| Corporate | ||||||||
| Salaries and benefits | $ | $ | ||||||
| Marketing and advertising | ||||||||
| Professional fees | ||||||||
| General and administrative expenses | ||||||||
| Depreciation and amortization | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Loss on equity method investment | ( | ) | ||||||
| Other income | ||||||||
| Other expense | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| 17 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
6. FAIR VALUE MEASUREMENTS
Assets or liabilities measured at fair value on a recurring basis were as follows:
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| 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, 2025 | December 31, 2024 | ||||||
| Balance, beginning of year | $ | $ | ||||||
| Change in fair value in gain on sale of loans, net | ( | ) | ||||||
| Balance, end of year | $ | $ | ||||||
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, 2025 | December 31, 2024 | ||||||
| Mortgage loans held for sale | $ | $ | ||||||
| Net fair value adjustment | ||||||||
| Mortgage loans held for sale, at fair value | $ | $ | ||||||
8. INVENTORIES
Inventories consisted of the following:
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Total inventories | $ | $ | ||||||
| 18 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
9. INTANGIBLE ASSETS
Intangible assets consisted of the following:
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||||
| Beeline brand | $ | $ | ||||||
| Azuñia brand | ||||||||
| Customer list | ||||||||
| Total | ||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets | $ | $ | ||||||
The
Beeline and Azuñia brands have been determined to have an indefinite life and are not amortized. The Company, on an annual
basis, tests the indefinite-lived assets for impairment. If the carrying value of an indefinite-lived asset is found to be impaired,
then the Company will record an impairment loss and reduce the carrying value of the asset. As of March 31, 2025, the Company
determined that the Beeline asset was
Customer
data that was acquired in the merger, has a useful life of
10. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||||
| Internal-use software | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Leasehold improvements | ||||||||
| Computers and hardware | ||||||||
| Vehicle | ||||||||
| Total | ||||||||
| Less accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation
expense related to property and equipment was $
The estimated future amortization expense of internal-use software as of March 31, 2025 was as follows:
| (Dollars in thousands) | ||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| $ | ||||
Beeline’s
internal developers created a new proprietary software, Hive, and launched it in 2024. The most notable feature of the new software
is the integration of Bob. The Company recorded $
| 19 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
11. WAREHOUSE LINE OF CREDIT
On
September 21, 2021, Beeline Financial entered into an agreement with a lender for a $
12. NOTES PAYABLE
Notes payable consisted of the following:
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||||
| Note payable - 2023 | $ | $ | ||||||
| Term loan agreement | ||||||||
| Total | ||||||||
| Accrued interest | ||||||||
| Debt discount | ( | ) | ( | ) | ||||
| Notes payable, net | $ | $ | ||||||
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 for $
| 20 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
13. NOTES PAYABLE – RELATED PARTIES
Notes payable, related parties consisted of the following:
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||||
| Chief Executive Officer | $ | $ | ||||||
| Board member | ||||||||
| Total | ||||||||
| Accrued interest | ||||||||
| Total notes payable, related parties | $ | $ | ||||||
In
February and March of 2025, Mr. Liuzza advanced the Company a total of $
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 $
14. SECURED CREDIT FACILIITES
Secured credit facilities consisted of the following:
| (Dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||||
| Purchase agreement | $ | $ | ||||||
Side letter | ||||||||
Senior secured debentures | ||||||||
| Total | ||||||||
| Accrued interest | ||||||||
| Debt issuance costs | ( | ) | ( | ) | ||||
| Total secured credit facilities, net | $ | $ | ||||||
Purchase Agreement
On
November 14, 2024, the Company sold $
On
April 14, 2025, the Company and the remaining Note holders entered into an agreement for a second extension of the maturity dates of
the Notes held by such holders to May 14, 2025.
| 21 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
The
Notes had a maturity date of 120 days from issuance, were issued with a
The
Company also entered in three forms of side letters with the investors which (i) permitted one investor which along with an affiliate
invested $
Senior secured debentures
During
2024, Beeline Financial issued senior secured debentures of $
15. 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. Bridgetown Spirits has an operating lease for its warehouse. Terms of these leases include, in some instances, scheduled rent
increases, renewals, purchase options and maintenance costs, and vary by lease. Beeline Financial has leased approximately
As
the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate of 10% based on information
available at commencement to determine the present value of the lease payments. Right-of-use assets and lease liabilities are recognized
at commencement date based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less
(“short-term leases”) are not recorded on the balance sheet and are recognized on a straight-line basis over the lease term.
As of March 31, 2025, the amount of right-of-use assets and lease liabilities were $
Maturities of lease liabilities as of March 31, 2025 were as follows:
| (Dollars in thousands) | Operating Leases | Weighted-Average Remaining Term in Years | ||||||
| 2025 | $ | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| Thereafter | ||||||||
| Total lease payments | ||||||||
| Less imputed interest (based on | ( | ) | ||||||
| Present value of lease liability | ||||||||
| Less current portion | ||||||||
| Lease liabilities, net of current portion | $ | |||||||
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Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
16. STOCKHOLDERS’ EQUITY
Issuance of Common Stock
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 cumulative
During the three months ended March 31, 2024, the Company issued shares of common stock to a director to settle $ of accrued compensation. The shares were issued at a contractually agreed upon price of $ per share. For accounting purposes, the shares were valued at $ per share based upon the closing price on the date of grant for stock-based compensation of $.
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 $
On
March 7, 2025,
| 23 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
Preferred Stock
The Company has million shares of preferred stock authorized.
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 (“Preferred Shares”) of Series B Convertible Preferred Stock (“Series B Preferred
Stock”) 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 Preferred Stock of
the Company with an initial conversion price of $
The
Series B Preferred Stock 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 $
| 24 |
Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
During the three months ended March 31, 2025, shares of Series D Preferred Stock were converted into shares of common 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 $
Pursuant
to the terms of the Debt Exchange Agreement on October 7, 2024, the Company issued a total of shares of Series E Preferred Stock
to certain lenders, and they released the Company from liability for $
Issuance of Series F and F-1 Preferred Stock
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 conversion of Series F and F-1 Preferred Stock was approved at a special meeting of stockholders on March 7, 2025. 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.
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 $
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.
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Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
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 shares under the ELOC at $per
share, which was less than the Series G Preferred Stock original conversion price of $
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 as payment for past legal services of $
Stock-Based Compensation
On September 8, 2016, the Company adopted the 2016 Equity Incentive Plan (the “2016 Plan”). As of March 31, 2025, there were options and restricted stock units (“RSUs”) fully vested and outstanding under the 2016 Plan. On February 6, 2025, the 2016 Plan was terminated and replaced with the 2025 Equity Incentive Plan (the “2025 Plan”).
2025 Equity Incentive Plan
On February 10, 2025, the Company’s Board of Directors adopted the 2025 Plan and authorized the 2025 Plan to be submitted to stockholders of the Company for approval. There are million shares available for award under the 2025 Plan. The 2025 Plan provides for the issuance of incentive stock options, non-statutory stock options, share appreciation rights, restricted shares, restricted share units, and other share-based awards. The Company has not issued any awards under the 2025 Plan.
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Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
| # of Options | Weighted-Average Exercise Price | |||||||
| Outstanding as of December 31, 2023 | $ | |||||||
| Options forfeited | ( | ) | ||||||
| Outstanding as of December 31, 2024 | $ | |||||||
| Options forfeited | ( | ) | ||||||
| Outstanding and exercisable as of March 31, 2025 | $ | |||||||
The aggregate intrinsic value of options outstanding as of March 31, 2025 was $ and all options had vested.
The Company uses the Black-Scholes valuation model to measure the grant-date fair value of stock options. The grant-date fair value of stock options issued to employees is recognized on a straight-line basis over the requisite service period. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest.
To determine the fair value of stock options using the Black-Scholes valuation model, the calculation takes into consideration the effect of the following:
| ● | 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 Company did not issue any additional stock options during the three months ended March 31, 2025 and 2024.
Warrants
During
the three months ended March 31, 2025, the Company sold shares of Series G Preferred Stock and in conjunction issued warrants to purchase
a total of
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 | $ |
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Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
A summary of all Warrant activity as of and for the three months ended March 31, 2025 is presented below:
| Warrants | Weighted-Average Remaining Life (Years) | Weighted-Average Exercise Price | Aggregate Intrinsic Value (in millions) | |||||||||||||
| Outstanding as of December 31, 2023 | $ | $ | - | |||||||||||||
| Granted | ||||||||||||||||
| Expired | ( | ) | - | |||||||||||||
| Outstanding as of December 31, 2024 | ||||||||||||||||
Additions due to price protection adjustment | - | |||||||||||||||
| Issued with Series G Preferred Stock units sold | ||||||||||||||||
| Expired | ( | ) | - | ( | ) | |||||||||||
| Outstanding as of March 31, 2025 | $ | $ | ||||||||||||||
Beeline Warrants
In
the Merger Agreement, the Company agreed to assume
17. COMMITMENTS AND CONTINGENCIES
Legal Matters
The Company is not currently subject to any material legal proceedings; however, it could be subject to legal proceedings and claims from time to time in the ordinary course of its business, or legal proceedings it considered immaterial may in the future become material. Regardless of the outcome, litigation can, among other things, be time consuming and expensive to resolve, and can divert management resources.
Government Regulations Affecting Mortgage Loan Origination
Beeline 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, although the order has been appealed.
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.
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Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 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.
18. 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 one lender for the warehouse line it uses to fund the mortgage loans it makes to its customers, which is limited to
a maximum of $
The Company sold its mortgage loans to seven investors for the three months ended March 31, 2025.
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 $
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Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
Exclusive Supplier Agreement
The Company has a long-term exclusive agreement with Agaveros Unidos de Amatitan, SA. de CV (“Agaveros Unidos”) for the Azuñia Tequila brand. The termination of this relationship or an adverse change in the terms of this arrangement with Agaveros Unidos could have a negative impact on the Company’s business. If Agaveros Unidos increases its prices, the Company may not be able to secure alternative suppliers, and may not be able to raise the prices of its products to cover all or even a portion of the increased costs. Also, any failure by Agaveros Unidos to perform satisfactorily or handle increased orders, or delays in shipping, could cause the Company to fail to meet orders for its products, lose sales, incur additional costs and/or expose the Company to product quality issues. In turn, this could cause the Company to lose credibility in the marketplace and damage its relationships with distributors, ultimately leading to a decline in our business and results of operations. If the Company is not able to renegotiate these contracts on acceptable terms or find suitable alternatives, its business, financial condition or results of operations could be negatively impacted.
Basic income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period, without considering any dilutive items. Potentially dilutive securities consist of the incremental common stock issuable upon exercise of preferred stock, stock options, and warrants. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. There were anti-dilutive common shares included in the calculation of income (loss) per common share as of March 31, 2025 and December 31, 2024. As of March 31, 2025, there were million shares of common stock equivalents that were antidilutive due to the Company’s net loss.
20. RELATED PARTY TRANSACTIONS
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 $
During
March 2025, the Company’s Chief Executive Officer, Nicholas Liuzza, purchased
Jessica
Kennedy, Beeline Financial’s Chief Operating Officer, owns a 5% interest in Tower Title, which is a vendor to certain subsidiaries
of the Company. During the three months ended March 31, 2025, the Company had transactions of $
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. Mr. Romano also serves on the Company’s Board of Directors.
Beeline Loans is a member of The Mortgage Collaborative, which is an industry trade group founded by David Kittle. Beeline Loans pays membership fees to The Mortgage Collaborative. Mr. Kittle was appointed as Special Advisor to the Company and Board of Directors on March 12, 2025.
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Beeline Holdings, Inc.
Notes to Consolidated Financial Statements
March 31, 2025
(Unaudited)
21. SUBSEQUENT EVENTS
Advances
During April 2025, Mr. Liuzza and a consultant each advanced the Company $
Notes Payable
The Company is in current discussions with a lender to extend the note payable that was due December 31, 2024 for an additional six months.
The
Company is in current discussions with a lender to extend the note payable that was due June 21, 2024. The principal balance as of March
31, 2025 was $
Secured Credit Facilities
On May 12, 2025, the Company entered into an agreement
with certain secured lenders pursuant to which such lenders agreed to extend the maturity date of their respective Senior Secured Notes
(the “Notes”) which were issued on November 14, 2024 pursuant to the Purchase Agreement having an aggregate principal amount
of $
On May 13, 2025, the Company borrowed $
On May 14, 2025, the Company entered into an
agreement with two secured lenders pursuant to which the parties agreed to an extension to the Notes and certain related
transactions on the following terms and conditions. Specifically, the Company paid
Stockholders’ Equity
ATM Agreement
On
April 30, 2025, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with Ladenburg Thalmann
& Co., Inc., pursuant to which the Company may issue and sell over time and from time to time, to or through Ladenburg, up to $
million of shares of the Company’s common stock. During
May 2025, the Company sold
shares at a weighted average of $
per share for gross proceeds of $
ELOC Agreement
Subsequent
to March 2025, the Company sold and issued a total of shares of common stock for an aggregate purchase price of $
Series D Preferred Stock
Subsequent to March 2025, shares of Series D Preferred Stock were converted into shares of common stock.
Series G Preferred Stock and Warrants
Subsequent to March 31, 2025, shares of Series G Preferred Stock were converted into shares of common stock. However, due to price protection provisions applicable to the Series G Preferred Stock, the Company may be required to issue up to an additional common shares.
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.
The Company also entered into a letter agreement
with Mr. Liuzza providing that the same amendments to the Series G as are described above with respect to his beneficial ownership
limitation shall also apply to Mr. Liuzza’s Warrants of
On
April 30, 2025, the Company sold shares under the ELOC at $
per share, which was less than the exercise price of the Warrants which were issued in connection with the Series G Preferred Stock
offering, resulting in a decrease in the exercise price of the Warrants to $
under the full price protection adjustment of the Warrants and an increase in the shares of common stock issuable upon exercise of
such Warrants by an additional
On May 16, 2025, Mr. Liuzza agreed that the exercise price of the Warrants which were issued to him in connection with the Series G Preferred Stock offering would be amended to be exercisable at $ per share. The Company is in the process of requesting from the other Warrant holders that their exercise price be amended to be $ per share as well. This will be treated for accounting purposes as a warrant modification, which is not expected to have an accounting effect.
Additionally
on May 16, 2025, the Company sold shares under the ELOC at $
per share, which was less than the exercise price of the Warrants which were issued in connection with the Series G Preferred Stock
offering, resulting in a decrease in the exercise price of the Warrants to $
under the full price protection adjustment of the Warrants and an increase in the shares of common stock issuable upon exercise of
such Warrants by an additional
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This section of the Quarterly Report includes “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events about the company or our outlook and involve uncertainties that could significantly impact results. You can identify forward-looking statements by the fact they do not relate to historical or current facts and by the use of words indicating anticipation or speculation such as “believe,” “expect,” “estimate,” “anticipate,” “will be,” “should,” “plan,” “project,” “intend,” “could” and similar words or expressions.
You should not place undue certainty on these forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Factors that could cause our expectations to be unfulfilled include those discussed in Item 1A of Part I of our annual report on Form 10-K for the year ended December 31, 2024 entitled “Risk Factors” as well as factors we have not yet anticipated.
Objective
The following discussion provides an analysis of the financial condition, cash flows and results of operations from management’s perspective of Beeline Holdings, Inc. (the “Company”). Our objective is to provide discussion of events and uncertainties known to management that are reasonably likely to cause the reported financial information not to be indicative of future operating results or of future financial condition and to also offer information that provides an understanding of our financial condition, cash flows and results of operations.
Overview
The Company was incorporated under the laws of Nevada in 2004.
Merger
On September 4, 2024, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger”) with Bridgetown Spirits Corp. (“Bridgetown Spirits”) and Beeline Financial Holdings, Inc. (“Beeline Financial”). The Merger closed on October 7, 2024. On March 12, 2025, the Company changed its name to Beeline Holdings, Inc. (the “Company).
Beeline Financial was incorporated in Delaware on July 1, 2020 via a merger with Beeline Financial Holdings, Inc., a Rhode Island corporation founded on September 20, 2018.
Debt Exchange Agreement
On September 4, 2024, the Company and its subsidiary, Craft Canning + Printing (“Craft C+P”), entered into a Debt Exchange Agreement (the “Debt Exchange Agreement”), which closed on October 7, 2024, resulting in the assignment by the Company of 720 barrels of spirits to Craft C+P, followed by the merger of Craft C+P into a limited liability company owned by certain creditors of the Company and the deconsolidation of Craft C+P. The Company accounted for the asset and equity transfers associated with the various transactions at fair value in accordance with ASC 470-60, Debt - Troubled Debt Restructurings by Debtors.
Subsequent to the execution of the Debt Exchange Agreement, the Company organized a subsidiary, Bridgetown Spirits, which was incorporated on October 3, 2024, and assigned the Company’s business of manufacturing and marketing spirits to Bridgetown Spirits.
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Upon completion of the Debt Exchange Agreement, the Company was no longer involved in the business of digital printing and mobile canning. 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. Given that the effect of the Debt Exchange Agreement meets all the criteria for classification of held for sale, the assets and liabilities of Craft C+P were disposed of on October 7, 2024. The operating results of Craft C+P have been classified as discontinued operations during the three months ended March 31, 2024.
The consolidated financial statements include the consolidated accounts of the Company and its wholly-owned subsidiaries, Beeline Financial Holdings, Inc. (“Beeline Financial”), Beeline Title Holdings, Inc. (“Beeline Title Holdings”), Beeline Mortgage Holdings, Inc. (“Beeline Mortgage”), Beeline Labs, Inc., and Beeline Loans Pty Ltd. (“Australian Subsidiary”).
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”).
The Company has two majority-owned subsidiaries, Nimble Title Holdings, Inc. (“Nimble Title Holdings”) and Bridgetown Spirits. Nimble Title Holdings is 50.1% owned by the Company and 49.9% owned by a former non-controlling shareholder of Beeline Financial. Bridgetown Spirits is 53% owned by the Company.
Nimble Title Holdings has four subsidiaries, Nimble Title, LLC (“Nimble Title”), Nimble Title Agency, LLC (“Nimble Title Agency”), Nimble Texas Title, LLC (“Nimble Texas Title”), and Nimble Settlement Services, LLC (“Nimble Settlement Services”).
The discussion which follows should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements contained in this Report.
Our Business
Beeline Financial is a full service direct-to-consumer lender specializing in conventional conforming and non-conforming residential first-lien mortgages and providing title services. Beeline Financial also has an emerging business in anonymized data sales and technology licensing.
Bridgetown Spirits manufactures (through sub-contractors), acquires, blends, bottles, imports, markets and sells a wide variety of alcoholic beverages under recognized brands. Bridgetown Spirits’ brands span several alcoholic beverage categories, including whiskey, vodka, rum, and tequila. Bridgetown Spirits sells products on a wholesale basis to distributors in open states and through brokers in control states.
Beeline Financial
Beeline Financial’s performance is influenced by several key factors, including fluctuations in interest rates, economic conditions, housing supply, technological advancements, and its ability to acquire and retain customers. Interest rate changes have a direct impact on mortgage loan refinancing and overall mortgage loan volume. In a declining interest rate environment, refinancing activity typically increases, whereas rising interest rates tend to reduce refinancing and home purchase transactions. However, higher rates can also drive demand for cash-out refinancings and home equity loans. Following a prolonged period of historically low rates, interest rates began to rise in April 2021 due to inflation, increases in the federal funds rate, and other monetary policies. This upward trend, which continued through 2023, significantly reduced mortgage market activity and the pool of borrowers who could benefit from refinancing. Additionally, higher rates discourage homebuyers from entering the market and lead to a more competitive lending environment, compressing margins and reducing origination volumes.
The broader economic environment plays a crucial role in mortgage lending activity. Interest rate movements, employment trends, home price appreciation, and consumer confidence all affect mortgage origination volumes. Typically, home sales peak in the second and third quarters, but in 2022 and 2023, rising interest rates and ongoing housing supply constraints disrupted these seasonal trends. Despite steady consumer demand for credit, high interest rates and economic uncertainty may cause borrowers to delay financing decisions, leading to fluctuations in Beeline’s revenue and financial performance.
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Limited housing supply has constrained home purchase activity. Rising interest rates have further exacerbated this issue by increasing home prices, reducing affordability, and discouraging transactions. However, Beeline believes that persistent imbalances between supply and demand will ultimately drive greater home construction, expanding housing inventory and stimulating future mortgage activity.
Beeline Financial’s ability to attract and retain customers depends on delivering a seamless and competitive digital mortgage experience. The shift toward digital transactions, accelerated by the COVID-19 pandemic, has increased consumer willingness to engage in high-value online purchases, including mortgage applications. Beeline Financial’s platform is designed to provide a convenient and efficient digital experience, positioning it favorably against traditional mortgage origination methods. With Millennial and Generation Z homeownership rates on the rise, Beeline Financial anticipates continued growth in demand for digital mortgage solutions.
Technological innovation remains central to Beeline Financial’s strategy. Beeline Financial’s proprietary technology enhances efficiency, reduces costs, and improves loan processing quality. By automating key origination tasks, Beeline Financial streamlines interactions for consumers, employees, and partners. Its intuitive digital interface minimizes reliance on paper applications and manual processes, enabling faster and more efficient loan transactions. Continued investment in automation and technology development will further reduce production costs and enhance customer acquisition efforts.
Customer acquisition is another critical component of Beeline Financial’s success. Beeline Financial aims to expand its reach while providing a highly personalized digital experience. If traditional customer acquisition methods prove insufficient, especially in challenging market conditions, Beeline Financial may need to invest additional resources in sales and marketing to maintain growth. Increased marketing expenditures could elevate service costs, making it essential to balance customer acquisition efforts with cost efficiency.
In the ordinary course of Beeline Financial’s operations, it finances the majority of its loan volume on a short-term basis, typically less than 10 days, mainly utilizing a warehouse line of credit with a capacity of $5.0 million. The repayments of Beeline Financial’s borrowings come from the revenue generated by selling its loans to a network of purchasers.
In 2024, Beeline Financial made significant investments in its platform to leverage mortgage origination opportunities, despite overall lower volumes compared to 2020 and 2021 due to fluctuating interest rates. In the fourth quarter, a temporary decline in the 10-year Treasury rate drove a notable increase in loan originations, reinforcing our belief that interest rates, housing supply, and affordability will remain key factors influencing future volume. Additionally, Beeline Financial has expanded its focus on its B2B SaaS strategy, which is also subject to macroeconomic conditions.
To measure operational efficiency and growth, we track a range of performance metrics in our lending and title businesses, including production data. Beeline Loans, the principal operating subsidiary of Beeline Financial, uses data to track margin and gain-on-sale revenue. The title companies use data to track file revenue. Beeline uses industry tools to benchmark its margin and note rates against the broader mortgage origination market. We also evaluate key business drivers for Beeline Financial subsidiaries, such as Beeline Labs, by monitoring revenue, unit sales, and SaaS (B2B) growth potential. Additionally, we assess customer acquisition costs and profitability per loan to optimize financial performance. These key indicators help gauge progress toward our strategic and long-term growth objectives.
Bridgetown Spirits
Bridgetown Spirits operates in a highly competitive, heavily regulated industry across multiple states, where both operations and distributor importance vary by location. Following a period of declining distribution, Bridgetown Spirits has focused on refining its distribution strategy. While Bridgetown Spirits has lost distribution in some key states, it has strengthened its presence in others. Restoring and optimizing distribution remains a critical challenge, impacting volumes and future sales.
In 2024, Bridgetown Spirits completed a restructuring aimed at streamlining operations by focusing on core business activities while outsourcing non-core functions, including production. As a result, its overall expenses decreased related to manufacturing, distribution, and sales activities. To further enhance efficiency, Bridgetown Spirits established key partnerships with external resources to achieve lower costs and improved sales performance. The impact of these changes was partially reflected in the fourth quarter of 2024, but full-year results do not yet capture their complete effect.
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Results of Operations
The Merger was structured and accounted for as a business combination with the Company as the acquirer of 100% of the controlling equity interests of Beeline Financial and its subsidiaries. The Company’s consolidated financial statements for the three months ended March 31, 2024 do not include Beeline Financial’s results of operations. The Company’s consolidated financial statements reflect the final purchase accounting adjustments in accordance with ASC 805, Business Combinations, whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. Due to the Merger, management believes that the consolidated results of operations for 2025 are not directly comparable to those of 2024, as the prior year reflects the performance of Bridgetown Spirits.
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., the statement of operations was restructured to represent the new consolidation of both businesses for 2024. In addition, the 2024 consolidated statement of operations has been reclassified to retrospectively present discontinued operations.
Given these structural changes, management believes that segment-level reporting provides a more meaningful basis for evaluating performance. Accordingly, a comparative analysis of the Company’s operating segments is presented below, which more accurately reflects the ongoing composition of the business.
Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024
Consolidated Results
| (Dollars in thousands, except per share amounts) | 2025 | 2024 | ||||||
| Revenues | ||||||||
| Beeline Financial | $ | 1,350 | $ | - | ||||
| Bridgetown Spirits | 482 | 597 | ||||||
| Total Revenues | $ | 1,832 | $ | 597 | ||||
| Net Loss and Loss per Share | ||||||||
| Net loss from continuing operations | $ | (6,927 | ) | $ | (703 | ) | ||
| Net loss | (6,927 | ) | (1,293 | ) | ||||
| Basic and diluted net loss per common share available to common stockholders | $ | (6.14 | ) | $ | (7.80 | ) | ||
For the three months ended March 31, 2025, net loss from continuing operations increased to $6.9 million from $0.7 million for the three months ended March 31, 2024, reflecting the inclusion of Beeline’s results of operations for 2025.
Interest Expense. Interest expense, exclusive of the warehouse line of credit, was $1.9 million and $0.2 million for the three months ended March 31, 2025 and 2024, respectively, primarily related to the amortization of debt and warrant related expenses.
Preferred stock dividends. Preferred stock dividends for 2025 were unchanged compared to 2024 at $37,500.
Deemed dividend - preferred stock Series G and warrant price protection. On March 25, 2025, the Company sold shares under the ELOC at $1.67 per share, which was less than the Series G Preferred Stock original conversion price of $5.10 per share, resulting in the reduction of the conversion price of the Series G Preferred Stock to $1.67 per share as a result of the price protection adjustment related to the conversion of the Series G Preferred Stock. Additionally, the Warrants issued in the Series G Preferred Stock offering had their exercise price reduced to $1.67 and resulted in an increase in common shares issuable upon exercise of 1,774,986 under the full price protection adjustment of the Warrants. The Company recorded a deemed dividend of $4.6 million for the three months ended March 31, 2025.
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Segment Reporting
The following discussion provides an analysis of the financial performance of each of our reportable segments consisting of Beeline Financial, Bridgetown Spirits and Corporate. We evaluate segment performance based on key financial and operational metrics, including revenue, operating income, and margin trends. The results of each segment are presented in accordance with our internal management reporting structure.
Beeline Financial is a full service Direct-to-Consumer lender specializing in conventional conforming and non-conforming residential first-lien mortgages and providing title services. Beeline Financial also has an emerging business in anonymized data sales and technology licensing.
Bridgetown Spirits manufactures (through sub-contractors), acquires, blends, bottles, imports, markets and sells a variety of alcoholic beverages under recognized brands. Bridgetown Spirits’ brands span several alcoholic beverage categories, including whiskey, vodka, and tequila. Bridgetown Spirits sells products on a wholesale basis to distributors in one open states and through brokers in control states.
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, investor relations, and strategic corporate initiatives that are not directly attributable to any operating segment. As this segment does not generate revenue, its financial results primarily reflect overhead, and governance-related expenditures incurred to support the company’s publicly traded status and corporate infrastructure.
| Three Months Ended March 31, | ||||||||
| (Dollars in thousands) | 2025 | 2024 | ||||||
| Beeline Financial | $ | 1,350 | $ | - | ||||
| Bridgetown Spirits | 482 | 597 | ||||||
| Total Revenues | $ | 1,832 | $ | 597 | ||||
| Beeline Financial | $ | (2,325 | ) | $ | - | |||
| Bridgetown Spirits | (224 | ) | (92 | ) | ||||
| Corporate | (4,378 | ) | (611 | ) | ||||
| Total net loss from continuing operations | $ | (6,927 | ) | $ | (703 | ) | ||
Beeline Financial (for the three months ended March 31)
| (Dollars in thousands) | 2025 | |||
| Gain on sale of loans, net | $ | 814 | ||
| Title fees | 376 | |||
| Loan origination fees | 150 | |||
| Interest income | 71 | |||
| Interest expense | (65 | ) | ||
| Data and tech services | 4 | |||
| Total net revenues | 1,350 | |||
| Salaries and benefits | 1,167 | |||
| Marketing and advertising | 527 | |||
| Professional fees | 35 | |||
| General and administrative expenses | 495 | |||
| Depreciation and amortization | 795 | |||
| Other operating expenses | 643 | |||
| Total operating expenses | 3,662 | |||
| Loss from operations | (2,312 | ) | ||
| Interest expense | (10 | ) | ||
| Other expense | (3 | ) | ||
| Net loss | $ | (2,325 | ) | |
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For the three months ended March 31, 2025, Beeline Financial originated $39.8 million in residential mortgage loans, reported net revenues of $1.4 million and a net loss of $2.3 million.
Gain on sale of loans, net. Gain on sale of loans, net consists of all components related to the origination and sale of mortgage loans, including (1) net gain on sale of loans, which represents the premium we receive in excess of the loan principal amount and certain fees charged by investors upon sale of loans into the secondary market, (2) loan origination fees, credits, points and certain costs, (3) provision for or benefit from investor reserves, and (4) the change in fair value of interest rate lock commitment (“IRLCs” or “rate lock”) and mortgage loans held for sale.
When the mortgage loan is sold into the secondary market (i.e., funded), any difference between the proceeds received and the current fair value of the loan is recognized in current period earnings in gain on sale of loans. Gain on sale of loans, net was $0.8 million for the three months ended March 31, 2025.
Title fees. Title fees consist of title policy premiums and settlement fees charged to the borrower and seller on a transaction. Title fees were $0.4 million for the three months ended March 31, 2025.
Loan origination fees. Loan origination fees generally include underwriting and processing fees, recording taxes, investor fees, and other related expenses. Loan origination fees were $0.2 million for the three months ended March 31, 2025.
Loan interest income and expense. Interest income is interest earned on mortgage loans held for sale and interest expense is paid on our loan funding facilities. Net interest expense was nil for the three months ended March 31, 2025.
Salaries and benefits. Salaries and benefits were $1.2 million for the three months ended March 31, 2025.
Marketing and advertising. Marketing and advertising were $0.5 million for the three months ended March 31, 2025.
General and administrative expenses. General and administrative expenses consist primarily of software service providers and were $0.5 million for the three months ended March 31, 2025.
Depreciation and amortization. Depreciation and amortization expenses consist primarily of amortization related to internal-use software and was $0.8 million for the three months ended March 31, 2025.
Other operating expenses. Other operating expenses consist of expenses directly related to the origination of loans and is charged by investors at the sale of loans excluding interest. Other operating expenses were $0.6 million for the three months ended March 31, 2025.
Bridgetown Spirits
| Three Months Ended March 31, | ||||||||
| (Dollars in thousands) | 2025 | 2024 | ||||||
| Net sales, spirits | $ | 482 | $ | 597 | ||||
| Cost of sales, spirits (inclusive of depreciation) | 418 | 460 | ||||||
| Salaries and benefits | 162 | 147 | ||||||
| Marketing and advertising | 61 | 87 | ||||||
| Professional fees | 9 | - | ||||||
| General and administrative expenses | 52 | - | ||||||
| Depreciation and amortization | 4 | - | ||||||
| Total operating expenses | 706 | 694 | ||||||
| Loss from operations | (224 | ) | (97 | ) | ||||
| Other income | - | 5 | ||||||
| Net loss | $ | (224 | ) | $ | (92 | ) | ||
| Gross profit | $ | 64 | $ | 137 | ||||
| Gross margin | 13 | % | 23 | % | ||||
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Net sales. Net sales were $0.5 million and $0.6 million for the three months ended March 31, 2025 and 2024, respectively. In 2025, Spirits sold 4,995 9-liter equivalent cases compared to 5,684 cases in the prior year, a decline of 12%.
Cost of sales. Cost of sales declined to $0.4 million for the three months ended March 31, 2025 from $0.5 million for the three months ended March 31, 2024 related to the decrease in net sales.
Gross profit and Gross margin. Gross profit is calculated by subtracting the cost of products sold and services rendered from net sales. Gross margin is gross profit stated as a percentage of net sales.
Gross profit was $0.1 million for both the three months ended March 31, 2025 and 2024; and gross margin as a percentage of sales was 13% for the three months ended March 31, 2025 and 23% for the three months ended March 31, 2024 primarily due to lower sales volume.
Salaries and benefits. Salaries and benefits were $0.2 million and $0.1 million for the three months ended March 31, 2025 and 2024, respectively.
Marketing and advertising. Marketing and advertising were $0.1 million for both the three months ended March 31, 2025 and 2024.
Corporate
| Three Months Ended March 31, | ||||||||
| (Dollars in thousands) | 2025 | 2024 | ||||||
| Salaries and benefits | $ | 1,002 | $ | 203 | ||||
| Marketing and advertising | 3 | - | ||||||
| Professional fees | 1,131 | 45 | ||||||
| General and administrative expenses | 218 | 102 | ||||||
| Depreciation and amortization | 24 | 14 | ||||||
| Other operating expenses | 8 | - | ||||||
| Total operating expenses | 2,386 | 364 | ||||||
| Interest income | 1 | - | ||||||
| Interest expense | (1,879 | ) | (248 | ) | ||||
| Loss on equity method investment | (75 | ) | - | |||||
| Other income | 14 | 1 | ||||||
| Other expense | (53 | ) | - | |||||
| Net loss | $ | (4,378 | ) | $ | (611 | ) | ||
Capital Resources and Liquidity
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 revolving credit facilities will be sufficient to meet our liquidity needs.
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Liquidity. Our primary sources of liquidity consist of cash and cash equivalents, cash flow from our operating businesses, proceeds from asset sales and dispositions, and short-term borrowing facilities, including revolving credit lines. 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 March 31, 2025, we have $1.5 million in cash.
We do not have sufficient cash resources to meet our working capital needs for the next 12 months. Our ability to meet our ongoing operating cash needs over the next 12 months will depend, in part, on the success of Beeline Financial in expanding sales and achieving cash-positive operations. In large part, our ability to meet near-term operating cash needs will depend on our success in securing debt and/or equity financing as needed.
On December 31, 2024, the Company entered into entered into a Common Stock Purchase Agreement and related Registration Rights Agreement (collectively, the “ELOC Agreement”) with an institutional investor (the “Purchaser”) pursuant to which the Company agreed to sell, and the Purchaser agreed to purchase, up to $35 million of the Company’s common stock, subject to a sale limit of 19.99% of the outstanding shares of the Company’s common stock. On March 7, 2025, the Company entered into an Amended ELOC Agreement to reduce the amount from $35 million to $10 million. During March 2025, the Company sold and issued to the Purchaser 1,090,622 shares of common stock for a purchase price of $2.1 million. Subsequent to March 31, 2025, the Company sold and issued to the Purchaser 912,644 shares of common stock for a purchase price of $1.0 million to the Purchaser.
On April 30, 2025, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with Ladenburg Thalmann & Co., Inc., pursuant to which the Company may issue and sell over time and from time to time, to or through Ladenburg, up to $7.0 million of shares of the Company’s common stock. During May 2025, the Company sold 22,295 shares at a weighted average of $1.37 per share for gross proceeds of $30,542.
During the three months ended March 31, 2025, the Company sold 6,417,159 shares of Series G Preferred Stock and five-year Warrants to purchase a total of 320,862 shares of common stock for total gross proceeds of $3.3 million.
We do not have sufficient capital to meet our working capital and debt obligations for the next 12 months, including debt obligations which come due in 2025. The availability of additional financing will be largely dependent on our operating success, including improved gross margins as well as operational improvements, which will be necessary to attract investors.
The Company intends to continue raising capital through a combination of equity and debt financing to meet its internal cash requirements and to refinance its existing obligations. 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 filing.
Statements of Cash Flows. For 2025, our primary capital requirements have been for cash used in operating activities and for the repayment of debt. Funds for our cash and liquidity needs have historically not been generated from operations but rather from short-term credit in the form of extended payment terms from suppliers as well as proceeds from loans and the sale of convertible debt and equity. We have been dependent on raising capital from debt and equity financing to meet our operating needs.
For the three months ended March 31, 2025, net cash used in operating activities of continuing operations was $1.5 million compared to net cash provided by operating activities of $0.1 million for the three months ended March 31, 2024 primarily due to the inclusion of Beeline’s net loss of $2.3 million for the three months ended March 31, 2025.
For the three months ended March 31, 2025, net cash used in investing activities of continuing operations was $0.1 million. For the three months ended March 31, 2024, investing activities were nil.
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 and repayments of warehouse line and secured credit facilities. For the three months ended March 31, 2024, financing activities were nil.
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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 three months ended March 31, 2025 relate to the policies and practices the Company uses to account for:
Mortgage loans held for sale and gains on sale of loans revenue recognition. Mortgage loans held for sale are carried at fair value under the fair value option in accordance with ASC 825, Financial Instruments, with changes in fair value recorded in gain on sale of loans, net on the consolidated statements of operations. The fair value of mortgage loans held for sale committed to investors is calculated using observable market information such as the investor commitment, assignment of trade or other mandatory delivery commitment prices. The fair value of mortgage loans held for sale not committed to investors is based on quoted best execution secondary market prices. If no such quoted price exists, the fair value is determined using quoted prices for a similar asset or assets, such as Mortgage-Backed Securities (“MBS”) prices, adjusted for the specific attributes of that loan, which would be used by other market participants. Mortgage loans held for sale not calculated using observable market information are based on third-party broker quotations or market bid pricing.
Gains and losses from the sale of mortgage loans held for sale are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale and are recorded in gain on sale of loans, net on the consolidated statements of operations. Sales proceeds reflect the cash received from investors through the sale of the loan and servicing release premium. Gain on sale of loans, net also includes the unrealized gains and losses associated with the changes in the fair value of mortgage loans held for sale, and the realized and unrealized gains and losses from derivative instruments.
Mortgage loans held for sale are considered sold when the Company surrenders control over the financial assets. Control is considered to have been surrendered when the transferred assets have been isolated from the Company, beyond the reach of the Company and its creditors; the purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and the Company does not maintain effective control over the transferred assets through either an agreement that both entitles and obligates the Company to repurchase or redeem the transferred assets before their maturity or the ability to unilaterally cause the holder to return specific financial assets. The Company typically considers the above criteria to have been met upon acceptance and receipt of sales proceeds from the purchaser.
Mortgage loans sold to investors by the Company, and which met investor underwriting guidelines at the time of sale, may be subject to repurchase in the event of specific default by the borrower or subsequent discovery that underwriting standards were not met. The Company may, upon mutual agreement, indemnify the investor against future losses on such loans. Additionally, reserves are established for estimated liabilities from the need to repay, where applicable, a portion of the premium received from investors on the sale of certain mortgage loans if such loans are repaid in their entirety within a specified period after the sale of the loans. The Company has established a reserve for potential losses related to these representations and warranties. In assessing the adequacy of the reserve, management evaluates various factors, including actual write-offs during the period, historical loss experience, known delinquent and other problem loans, and economic trends and conditions in the industry. Actual losses incurred are reflected as write-offs against the loan indemnification reserve.
Since mortgage loans held for sale have maturity dates greater than one year from the balance sheet date but are expected to be sold in a short time frame (less than one year), they are recorded as current assets.
Changes in the balance of mortgage loans held for sale are included in cash flows from operating activities in the consolidated statements of cash flows in accordance with ASC 230-10-45-21, Statement of Cash Flows.
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Revenue recognition
Gains on Sale of Loans, Net
See discussion above under “Mortgage Loans Held for Sale and Gain on Sale of Loans Revenue Recognition” and below under “Derivative Financial Instruments and Revenue Recognition”.
Title Fees
Commissions earned at loan settlement on insurance premiums paid to title insurance companies.
Loan Origination Fees and Costs
Loan origination fees represent revenue earned from originating mortgage loans. Loan origination fees generally represent flat per-loan fee amounts based on a percentage of the original principal loan balance and are recognized as revenue at the time the mortgage loans are funded since the loans are held for sale. Loan origination costs are charged to operations as incurred.
Interest Income
Interest income on mortgage loans held for sale is recognized for the period from loan funding to sale based upon the principal balance outstanding and contractual interest rates. Revenue recognition is discontinued when loans become 90 days delinquent, or when, in management’s opinion, the recovery of principal and interest becomes doubtful and the mortgage loans held for sale are put on nonaccrual status. For loans that have been modified, a period of six payments is required before the loan is returned to an accrual basis.
Interest Expense
Interest expense relating to the warehouse lines of credit is included in net revenues. Other interest expense is included in other (income)/expense.
Data and Tech
Fees received from a marketing partner that is embedded in the Company’s point-of-sale journey for investment property customers. The partner pays Beeline for leads they receive from a customer opting in to use their insurance company for landlord insurance during the application process.
Net Sales, Spirits
Net sales include product sales, less excise taxes and customer programs and incentives. Bridgetown Spirits recognizes revenue by applying the following steps in accordance with ASC 606 – Revenue from Contracts with Customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
Bridgetown Spirits recognizes spirits sales when merchandise is shipped from a warehouse directly to wholesale customers (except in the case of a consignment sale). For consignment sales, which include sales to the Oregon Liquor Control Commission, sales are recognized upon the consignee’s shipment to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related merchandise. Shipping terms are generally FOB shipping point, and title passes to the customer at the time and place of shipment or purchase by customers at a retail location. For consignment sales, title passes to the consignee concurrent with the consignee’s shipment to the customer. The customer has no cancellation privileges after shipment or upon purchase at retail locations, other than customary rights of return.
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Excise Taxes - Bridgetown Spirits is responsible for compliance with the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) regulations, which includes making timely and accurate excise tax payments. Bridgetown Spirits is subject to periodic compliance audits by the TTB. Individual states also impose excise taxes on alcoholic beverages in varying amounts. Bridgetown Spirits calculates its excise tax expense based upon units produced and on its understanding of the applicable excise tax laws, and these amounts are recorded as reductions to net sales.
Customer Programs - Customer programs, which include customer promotional discount programs, are a common practice in the alcoholic beverage industry. Bridgetown Spirits reimburses wholesalers for an agreed amount to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs are recorded as reductions to net sales in accordance with ASC 606.
Derivative financial instruments and revenue recognition. The Company holds and issues derivative financial instruments such as IRLCs. IRLCs are subject to price risk primarily related to fluctuations in market interest rates. To hedge the interest rate risk on certain IRLCs, the Company enters into best effort forward sale commitments with investors, whereby certain loans are locked with a borrower and simultaneously committed to an investor at a fixed price. If the best effort IRLC does not fund, the Company has no obligation to fulfill the investor commitment.
ASC 815-25, Derivatives and Hedging, requires that all derivative instruments be recognized as assets or liabilities on the consolidated balance sheets at their fair value. Changes in the fair value of the derivative instruments are recognized in gain on sale of loans, net on the consolidated statements of operations in the period in which they occur. The Company accounts for all derivative instruments as free-standing derivative instruments and does not designate any for hedge accounting.
Inventories. Bridgetown Spirits’ inventories primarily consist of bulk and bottled liquor and merchandise and are stated at the lower of cost or market. Cost is determined using an average costing methodology, which approximates cost under the first-in, first-out method. A portion of the inventory is held by certain independent distributors on consignment until it is sold to a third party. Bridgetown Spirits regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based primarily on the estimated forecast of product demand and production requirements. Such write-downs establish a new cost basis of accounting for the related inventory.
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.
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.
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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 seven years. Repair and maintenance costs are expensed as incurred. Leasehold improvements are amortized over the shorter of the lease term or the improvement’s estimated useful life. Depreciation is not recorded on projects-in-process until the project is complete and the associated assets are placed into service or are ready for the intended use. Impairment of property and equipment than the internal-use software is evaluated under ASC 360, Property, Plant, and Equipment.
Under ASC 350-40, Internal-Use Software, the Company capitalizes certain qualifying costs incurred during the application development stage in connection with the development of internal-use software. Costs related to preliminary project activities are expensed as incurred and post-implementation activities will be expensed as incurred. Capitalized software costs are amortized over the useful life of the software, which 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.
Stock-based compensation. The Company recognizes as compensation expense all stock-based awards issued to employees. The compensation cost is measured based on the grant-date fair value of the related stock-based awards and is recognized over the service period of stock-based awards, which is generally the same as the vesting period. The fair value of stock options is determined using the Black-Scholes valuation model, which estimates the fair value of each award on the date of grant based on a variety of assumptions including expected stock price volatility, expected terms of the awards, risk-free interest rate, and dividend rates, if applicable. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and recognized over the service periods.
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 effective as of March 31, 2025.
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, 2025, 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
We are not currently subject to any other material legal proceedings; however, we could be subject to legal proceedings and claims from time to time in the ordinary course of our business, or legal proceedings we 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 divert management resources.
ITEM 1A – RISK FACTORS
There have been no material changes in our risk factors from those previously disclosed in our annual report on Form 10-K for the year ended December 31, 2024.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
From March 10, 2025 through May 16, 2025, the Company issued 2,562,875 shares of the Company’s common stock to an investor pursuant to an Amended and Restated Common Stock Purchase Agreement dated as of March 7, 2025 for various fixed purchases. To the extent that the sales were deemed to be part of a non-public offering, which the Company does not concede, the issuance of shares was except from registration pursuant to Section 4(a)(2) of the Securities Act of 1933 (the “Securities Act”) and Rule 506(b) promulgated thereunder since the investor is reasonably believed to be an accredited investor and the investor acquired the shares for investment subject to selling under an effective registration statement.
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 – OTHER INFORMATION
During
the quarter ended March 31, 2025, no director or officer
On May 14, 2025, the Company entered into an agreement with two secured lenders pursuant to which the parties agreed to an extension to the Notes and certain related transactions on the following terms and conditions. Specifically, the Company agreed to pay, and paid, 50% of the outstanding principal balance of each such Note on May 14, 2025, and the maturity date of each Note was extended to May 26, 2025. Pursuant to such agreement the Company’s obligations under these Notes, which after giving effect to the payments made on the date of the agreement have a combined outstanding principal balance of $462,000, may be satisfied in one of the following manners as mutually determined by the lenders: (i) the Company shall pay the remaining principal balance of the Notes, plus a premium equal to 3% of such amount, in cash, on or before May 26, 2025; or (ii) the lenders may collectively exchange the outstanding principal balance of their Notes for the shares of common stock of Bridgetown Spirits, the Company’s majority owned subsidiary, which is held by the Company (which represents approximately 53% of Bridgetown Spirits’ outstanding common stock as of the date hereof) in an amount equal to each such lender’s pro rata portion of the principal balance of the Notes held by such lenders. If such exchange option is selected by the lenders, the Company additionally agreed to pay 50% of the current salary of Geoffrey Gwin, Bridgetown Spirits’ Chief Executive Officer, as in effect as of the date thereof (or $14,583 per month, payable in accordance with the Company’s current employee payroll practices) for a 60-day period beginning May 26, 2025.
In connection with the extension referred to above, the Company repaid $462,000 in principal of the applicable Notes.
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ITEM 6 – EXHIBITS
| * | 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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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 20, 2025 | By: | /s/ Nicholas R. Liuzza, Jr. |
| Nicholas R. Liuzza, Jr. | ||
| Chief Executive Officer | ||
| Date: May 20, 2025 | By: | /s/ Christopher R. Moe |
| Christopher R. Moe | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) | ||
| Date: May 20, 2025 | By: | /s/ Tiffany Milton |
| Tiffany Milton | ||
| Chief Accounting Officer | ||
| (Principal Accounting Officer) |
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