Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this Form 10-K and in other documents incorporated herein, as well as in oral statements made by the Company, statements that are prefaced with the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “designed,” and similar expressions, are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, results of operations, and financial position. These statements are based on the Company’s current expectations and estimates as to prospective events and circumstances about which the Company can give no assurance. Further, any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect future events or circumstances. Forward-looking statements should not be relied upon as a prediction of actual future financial condition or results. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include the factors set forth above and the other information set forth in this Form 10-K.
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. which we refer to herein as “Beeline” or 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.
See Item 1A – Business for a description of our history including the Merger.
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 Loans, Beeline Title Holdings, Beeline Labs, and their subsidiaries, operate a full-service, direct-to-consumer digital mortgage lender specializing in conventional conforming and non-conforming residential first-lien mortgages, a title provider offering title, escrow, and closing services, and a technology platform licensing a proprietary software-as-a-service (“SaaS”) product.
Additionally, BeelineEquity, through its technology platform, supports a fractional equity product in partnership with TYTL, which is the issuer of Real World Asset tokens and the operator of the underlying platform. TYTL acquires, administers, and manages minority, deeded ownership interests in owner-occupied, single-family primary residences and operates the on-chain infrastructure used to record portfolio economics, valuation, and asset backing.
The Company’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 November 2023 and resulted in higher interest rates which remain at elevated levels as of the date of this Report, 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 the Company’s revenue and financial performance.
Limited housing supply has constrained home purchase activity. Rising interest rates have further exacerbated this issue by increasing home financing costs, reducing affordability, and discouraging transactions. However, the Company believes that persistent imbalances between supply and demand will ultimately drive greater home construction, expanding housing inventory and stimulating future mortgage activity.
The Company’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. The Company’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 interest on the rise, the Company anticipates continued growth in demand for digital mortgage solutions.
Technological innovation remains central to the Company’s strategy. The Company’s proprietary technology enhances efficiency, reduces costs, and improves loan processing quality. By automating key origination tasks and embracing task-based processing, the Company 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 mortgage production costs and enhance customer acquisition efforts.
Customer acquisition is another critical component of the Company’s success. The Company aims to expand its reach while providing a highly personalized digital experience. If traditional customer acquisition methods prove insufficient, especially in challenging market conditions, the Company may need to invest additional resources in sales and marketing to maintain growth. Increased digital marketing expenditures could elevate service costs, making it essential to balance customer acquisition efforts with cost efficiency.
In the ordinary course of the Company’s operations, it finances the majority of its loan volume on a short-term basis, typically less than 10 days, mainly utilizing three warehouse lines of credit with a combined borrowing capacity of $25.0 million. The repayments of the Company’s borrowings come from the revenue generated by selling its loans to a network of institutional investors.
In 2024, the Company 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 of 2025, a temporary decline in the 10-year Treasury rate drove a notable increase in loan originations, reinforcing the Company’s belief that interest rates, housing supply, and affordability will remain key factors influencing future volume. Additionally, the Company is expanding its focus on its B2B SaaS strategy, which is also subject to macroeconomic conditions.
To measure operational efficiency and growth, the Company tracks a range of performance metrics in its lending and title businesses, including production data. Beeline Loans, the principal operating subsidiary of the Company, uses data to track margin and net gain-on-sale of loans revenue. The title companies use data to track per file revenue. The Company uses industry tools to benchmark its margin and note rates against the broader mortgage origination market. The Company also evaluates key business drivers for its subsidiaries by monitoring originations, margin, unit sales, and pull through. Additionally, the Company assesses customer acquisition costs and revenue per loan to optimize financial performance. These key indicators help gauge progress toward our strategic and long-term growth objectives.
Recent Developments
Business Trends
Through year-end 2025, inflation continued to moderate compared with the peaks of 2022–2023, but progress proved uneven relative to 2024. After trending down through much of 2024 and into early 2025—supported by normalized supply chains, softer goods prices, and generally stable energy markets—the pace of disinflation slowed in the second half of 2025. By late summer and into September 2025, headline Consumer Price Index (“CPI”) moved back up to approximately 3.0% year-over-year, compared with readings closer to the mid-2% range earlier in the year and during parts of 2024. This reversal highlighted the continued stickiness of underlying price pressures.
Housing costs continued to carry significant weight in the index. Although the month-over-month increase in housing slowed meaningfully at times during 2025 (including modest monthly gains late in the year), the year-over-year rate remained elevated and a primary contributor to overall CPI.
The full economic impact of U.S. and foreign tariff actions implemented during 2024–2025 and subsequent developments relating thereto, as well as broader geopolitical developments, remains uncertain. Potential supply-side effects, retaliatory measures, and input-cost pass-through could introduce renewed volatility or upward pressure in select categories.
Given this mixed backdrop—continued moderation relative to prior peaks but persistent services inflation and episodic energy volatility—the Federal Reserve has signaled a cautious stance. Although the approximately 3.0% headline rate observed in 2025 represents substantial progress from the highs of 2022–2023, it remains above the Federal Reserve’s 2% longer-run target, suggesting that policy normalization is likely to proceed gradually and remain data-dependent.
In response to a softening labor market and concerns about economic growth amid high interest rates, the Federal Reserve implemented several interest rate cuts in late 2025, bringing the federal funds rate target range down to 3.50% to 3.75%. This shift in policy aimed to stimulate an economy showing signs of strain, particularly among some consumer segments, but ongoing uncertainty about trade policies and the full impact of tariffs, tariff refunds, and other developments related thereto on import costs meant businesses remained cautious. Companies were focused on integrating AI for efficiency and resilience in supply chains, while navigating complex and evolving expectations regarding cybersecurity and human capital management disclosures in their regulatory filings. Due to the current conflict with Iran, there may be an increase in interest rates to combat inflationary pressures.
BeelineEquity
On June 25, 2025, Beeline Title closed, what it believes to be one of the first-ever fractional sale of home real estate with TYTL who funds these transactions for us through the sale of a crypto token which is backed by real property. While neither the Company, nor its subsidiaries, mints or receives the token, Beeline Title handles the settlement and title portions of these transactions for TYTL, who is minting the token (see below for more information about TYTL). The June transaction marked a major milestone in the evolution of blockchain-driven real estate finance, bridging decentralized finance with traditional title and escrow services.
As cryptocurrency adoption accelerates and becomes regulated by federal and state governments, the Company is positioning itself as a leader in this fast-moving ecosystem, offering trusted infrastructure to help lenders scale into a future where crypto and compliance go hand-in-hand. The Company collaborates with TYTL in which the Company’s Chief Executive Officer, Nicholas Liuzza is a principal stockholder. TYTL funds the transactions through the sale of a cryptocurrency token which is backed by real property. See Note 24 – Related Party Transactions, in the footnotes to the financial statements contained in this Report.
Through December 31, 2025, the Company derived $22,009 of revenue from this business. The Company provides title insurance services and an owner’s title policy to TYTL as the buyer of the fractional equity. Beeline Title does not assume any unusual liability in favor of TYTL. Beeline Title simply transacts in the normal course of business on these purchase transactions, issuing the owner’s title insurance policy and acting as settlement/escrow agent. In any title transaction, the title agency will incur liability for potential losses under the title policy if the underlying title work is faulty for any reason or fraud or other errors exist that could not have been discovered at the time of policy issuance. Beeline Title has Errors and Omissions insurance in addition to other insurance coverages for any such issues.
Beeline Labs
In July 2025, the Company’s subsidiary, Beeline Labs, launched BlinkQC, a SaaS platform designed to automate pre-close “QC” reviews for mortgage loan files. Beeline Loans uses BlinkQC in its own operation for its pre-close QC. In late 2026, Beeline Labs plans to license BlinkQC as SaaS to other mortgage companies. BlinkQC uses artificial intelligence to ingest loan document packages, extract and validate data, apply customizable rule sets, and generate compliance reports. Critical data points are being collected from the Beeline Labs launch and integrations are set to start in late 2026 opening BlinkQC up to over 1,000 Banks and Independent Mortgage Banks. The Beeline Labs data and integrations are essential for a broader launch.
The initial release will support conventional loan packages and will be offered on a flat rate per package. Based on current cost estimates, the product is expected to achieve gross margins of approximately 50%. Future enhancements, including FHA/VA loan support and integrations with loan origination systems, are in development.
Management believes BlinkQC will improve QC efficiency for mortgage lenders and represents a potential source of incremental revenue for the Company.
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 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 the corporate segment and Beeline Financial’s results for the period October 8, 2024 to December 31, 2024.
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 Company will amortize $15.2 million related to internal-use software over a five-year period ending October 2029 and $0.4 million related to customer data over a four-year period ending October 2028. This Merger-related amortization is $0.8 million each quarter and is non-cash.
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.
On November 17, 2025, the Company and minority partners of Nimble Title Holdings, LLC (“Nimble”) entered into a Dissolution Agreement, whereby the relationships contemplated by the LLC Agreement were terminated and Nimble and its subsidiaries were subsequently dissolved on November 25, 2025.
The assets and liabilities of Nimble and its subsidiaries have been classified as held for sale as of December 31, 2024. The operating results of Nimble and its subsidiaries have been classified as discontinued operations during the years ended December 31, 2025 and 2024. The consolidated financial statements for the prior periods have been adjusted to reflect comparable information.
Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024
Consolidated Results
(Dollars in thousands, except per share amounts)
Revenues
Beeline Loans
Beeline Title Holdings
Total net revenues
Net loss from continuing operations
Net loss
Basic and diluted net loss per common share attributable to common stockholders
Due to the Merger, 2024 includes the corporate segment and Beeline’s results for the period October 8, 2024 to December 31, 2024.
For the years ended December 31, 2025 and 2024, net loss from continuing operations was $22.7 million and $2.4 million, respectively, reflecting the inclusion of Beeline’s results of operations for 2025.
Interest expense. Interest expense, exclusive of the warehouse lines of credit, was $2.3 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively, primarily related to the amortization of debt and warrant related expenses and interest on debt.
Gain (Loss) on extinguishment of debt. Loss on extinguishment of debt was $0.6 million for the year ended December 31, 2025 primarily related to the exchange of the Company’s 530,000 shares of its Bridgetown Spirits common stock for the satisfaction of outstanding amounts payable by the Company to the buyers of Bridgetown Spirits. Gain on extinguishment of debt was $0.6 million for the year ended December 31, 2024 related to prior invoiced amounts billed for services, late fees and adjustments from a legal firm that provided the Company services under an engagement letter predating 2021.
Gain on troubled debt restructuring. Gain on troubled debt restructuring was $4.5 million for the year ended December 31, 2024 related to the Debt Exchange Agreement.
Preferred stock dividends. Preferred stock dividends were $0.2 million for each of the years ended December 31, 2025 and 2024, respectively, representing the Series B preferred stock dividend of 6% per annum.
Deemed dividend - preferred stock Series G and warrant price protection. On March 25, 2025, the Company sold shares under the ELOC Agreement 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. On June 16, 2025, the Company sold shares under the ELOC Agreement at $0.66 per share, which was less than the exercise price of the Warrants adjusted in March 2025, resulting in the reduction of the exercise price of the warrants to $0.66 per share and an increase in common shares issuable upon exercise of 3,655,482 under the full price protection adjustment of the Warrants. The Company recorded a non-cash deemed dividend related to the price protection of $6.8 million for the year ended December 31, 2025.
Deemed dividend - Series E Preferred Stock redemption. On October 21, 2025, the Company entered into a letter agreement with the investors of the Series E Preferred Stock pursuant to which they agreed to the redemption of their shares in exchange for payment of $2.0 million. The Company redeemed the Series E Preferred Stock on November 12, 2025 and recorded a deemed dividend of $1.4 million.
Segment Reporting
The following discussion provides an analysis of the financial performance of each of our reportable segments consisting of Beeline Loans, Beeline Title Holdings 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 Loans 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 Chatbot “Bob.” Corporate allocates a portion of compensation and benefits, and general and administrative expenses to Beeline Loans, which is included in the segments’ financial data below.
Beeline Title Holdings provides title and loan closing services for Beeline’s mortgage origination business. It provides similar services with respect to the Company’s BeelineEquity product.
Corporate primarily consists of general corporate expenses, including public company costs, executive compensation, legal and regulatory compliance, and other administrative functions that support the overall business. This segment also includes holding company expenses, such as financing costs, accounting, legal, insurance, investor relations, and strategic corporate initiatives that are not directly attributable to any operating segment. 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.
(Dollars in thousands)
Revenues
Beeline Loans
Beeline Title Holdings
Total net revenues
Net Loss from Continuing Operations
Beeline Loans
Beeline Title Holdings
Corporate
Total net loss from continuing operations
Due to the Merger, 2024 includes the corporate segment and Beeline’s results for the period October 8, 2024 to December 31, 2024.
Beeline Loans (For the Year Ended December 31, 2025 and the Period October 8, 2024 – December 31, 2024)
(Dollars in thousands)
October 8, 2024 -
December 31, 2024
Gain on sale of loans, net
Loan origination fees
Interest income (expense)
Interest income
Interest expense
Interest income (expense), net
Other revenues
Total net revenues
Compensation, commissions and benefits
General and administrative expenses
Depreciation and amortization
Marketing and advertising
Other operating expenses
Total operating expenses
Loss from operations
Interest expense
Gain on extinguishment of debt
Other expense
Net loss from continuing operations
For the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, Beeline Loans originated $170.2 million and $57.0 million in residential mortgage loans, respectively; reported net revenues of $6.4 million and $0.9 million, respectively; and reported a net loss from continuing operations of $9.2 million and $1.9 million, respectively.
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 $5.4 million and $0.8 million for the year ended December 31,2025 and the period October 8, 2024 – December 31, 2024, respectively.
Loan origination fees. Loan origination fees generally include underwriting and processing fees, investor fees, and other related expenses. Loan origination fees were $1.0 million and $0.2 million for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
Loan interest income and expense. Interest income is interest earned on mortgage loans held for sale and interest expense is interest paid on our loan funding facilities. Net interest expense was $25,623 and $54,696 for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
Compensation, commissions and benefits. Compensation, commissions and benefits expenses were $6.7 million and $1.0 million for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
General and administrative expenses. General and administrative expenses consist primarily of rent and utilities and were $0.9 million and $0.3 million for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
Depreciation and amortization. Depreciation and amortization expenses consist primarily of amortization related to internal-use software and was $3.2 million and $0.7 million for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
Marketing and advertising. Marketing and advertising expenses were $2.7 million and $0.4 million for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
Other operating expenses. Other operating expenses consist of expenses directly related to the origination of loans and are charged by investors at the sale of loans excluding interest, and software service providers. Other operating expenses were $2.1 million and $0.4 million for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
Beeline Title Holdings (For the Year Ended December 31, 2025 and the Period October 8, 2024 – December 31, 2024)
(Dollars in thousands)
October 8, 2024-
December 31, 2024
Title fees
Total net revenues
Compensation and benefits
General and administrative expenses
Marketing and advertising
Other operating expenses
Total operating expenses
Loss from operations
Other expense
Net loss from continuing operations
For the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, Beeline Title Holdings reported net revenues of $1.4 million and $0.2 million, respectively; and reported a net loss from continuing operations of $0.7 million and $0.1 million, respectively.
Title fees. Title fees consist of title policy premiums and settlement fees charged to the borrower and seller on a transaction. Title fees were $1.4 million and $0.2 million for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
Compensation and benefits. Compensation and benefits expenses were $1.2 million and $0.2 million for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
General and administrative expenses. General and administrative expenses consist primarily of shipping costs and professional services and were $0.2 million and nil for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
Marketing and advertising. Marketing and advertising expenses were $0.1 million and nil for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
Other operating expenses. Other operating expenses consist primarily of expenses directly related to the settlement of loans and were $0.5 million and $44,559 for the year ended December 31, 2025 and the period October 8, 2024 – December 31, 2024, respectively.
Corporate (For the Years Ended December 31, 2025 and 2024)
(Dollars in thousands)
Compensation and benefits
General and administrative expenses
Depreciation and amortization
Marketing and advertising
Other operating expenses
Total operating expenses
Interest income
Interest expense
Gain (loss) on extinguishment of debt
Gain on troubled debt restructuring
Loss on equity method investment
Other income, net
Net loss from continuing operations
For the years ended December 31, 2025 and 2024, net loss from continuing operations was $12.7 million and $0.4 million, respectively, reflecting the inclusion of Beeline’s results of operations for 2025.
Compensation and benefits. Compensation and benefits expenses were $3.5 million and $1.3 million for the years ended December 31, 2025 and 2024, respectively.
General and administrative expenses. General and administrative expenses consist primarily of stock-based compensation, public company costs, professional fees, board compensation and rent. General and administrative expenses were $5.4 million and $1.8 million for the years ended December 31, 2025 and 2024, respectively.
Depreciation and amortization. Depreciation and amortization expenses consist primarily of amortization related to the intangible asset of the customer list and were $0.1 million and $22,714 for the years ended December 31, 2025 and 2024, respectively.
Marketing and advertising. Marketing and advertising expenses were $0.2 million and $10,365 for the years ended December 31, 2025 and 2024, respectively.
Other operating expenses. Other operating expenses consist of software service providers and were $0.4 million and $0.1 million for years ended December 31, 2025 and 2024, respectively.
Non-GAAP Financial Measure
We report adjusted EBITDA, which is a financial measure not prepared in accordance with generally accepted accounting principles (“non-GAAP”) that supplements our financial results presented in accordance with GAAP. This non-GAAP financial measure should not be considered in isolation and is not intended to be a substitute for any GAAP financial measures, but rather provides supplemental information that we believe helps investors better understand our business, our business model, and how we analyze our performance.
Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning and are not prepared under any comprehensive set of accounting rules or principles. Accordingly, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
We include a reconciliation of adjusted EBITDA to GAAP net loss, its most closely comparable GAAP measure. We encourage investors and others to review our consolidated financial statements and notes thereto in their entirety included elsewhere in this annual report on Form 10-K, not to rely on any single financial measure, and to consider adjusted EBITDA only in conjunction with its respective most closely comparable GAAP financial measure.
We believe this non-GAAP financial measure is useful to investors for supplemental period-to-period comparisons of our business and understanding and evaluating our operating results for the following reasons:
● Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization expense, interest and amortization on debt, income tax expense, stock-based compensation expense, and costs that are unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations, all of which can vary substantially from company to company depending on their financing and capital structures;
● We use adjusted EBITDA in conjunction with financial measures prepared in accordance with GAAP for adjusted purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance; and
● Adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our core operating results, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Further, although we use this non-GAAP measure to assess the financial performance of our business, it has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are, or may in the future be, as follows:
● Although depreciation and amortization expense is a non-cash charge, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
● Adjusted EBITDA excludes stock-based compensation expense which is a significant recurring expense for our business and an important part of our compensation strategy;
● Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
● Adjusted EBITDA does not include interest expense, or the cash requirements necessary to service interest or principal payments on our non-funding debt, which reduces cash available to us; and
● The expenses and other items that we exclude in the calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from similarly titled non-GAAP measures when they report their operating results, and we may, in the future, exclude other significant, unusual or non-recurring expenses or other items from these financial measures.
Because of these limitations, adjusted EBITDA should be considered along with other financial performance measures presented in accordance with GAAP, and not as an alternative or substitute for our financial results prepared and presented in accordance with GAAP.
Adjusted EBITDA
We calculate adjusted EBITDA as net income (loss) adjusted for the impact of interest expense, depreciation and amortization expense, (gain) loss on extinguishment of debt, gain on troubled debt restructuring, net loss from discontinued operations, stock-based compensation expense, and other non-recurring or non-core operational expenses.
The following table presents a reconciliation of net income (loss) to adjusted EBITDA for the years ended December 31, 2025 and 2024 (unaudited):
(Dollars in thousands)
Net loss
Interest expense
Depreciation and amortization
Stock-based compensation expense
(Gain) loss on extinguishment of debt
Gain on troubled debt restructuring
Net income (loss) from discontinued operations
Merger-related expenses
Adjusted EBITDA
Merger-related expenses include the costs related to the stockholder meeting on March 7, 2025 to approve the name changing to Beeline Holdings, Inc. and to approve the Series F and F-1 Preferred Stock (shares received in the merger) to convert to common shares, as well as costs related to the Nasdaq initial listing.
Capital Resources and Liquidity
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 years ended December 31, 2025 and 2024, net cash used in operating activities of continuing operations was $22.1 million and $4.3 million, respectively, primarily due to the inclusion of Beeline’s net loss from continuing operations of $22.7 million for the year ended December 31, 2025.
For the year ended December 31, 2025, net cash used in investing activities of continuing operations was $0.6 million related to internal-use software development costs and the investment in the SAFEs of a business partner. For the year ended December 31, 2024, net cash provided by investing activities of continuing operations was $0.1 million.
For the year ended December 31, 2025, net cash provided by financing activities of continuing operations was $24.9 million primarily from $22.8 million raised from net equity transactions and borrowings of $8.4 million from the warehouse line, offset by $6.3 million of net debt repayments. For the year ended December 31, 2024, net cash provided by financing activities of continuing operations was $4.6 million primarily from equity and debt transactions.
Financial Policy . We intend to maintain a disciplined financial policy and improve our credit metrics, which are critical to our lending partners.
Liquidity Policy . We maintain a strong focus on liquidity and define our liquidity risk tolerance based on sources and uses to maintain a sufficient liquidity position to meet our business needs and financial obligations under both normal and stressed conditions. We believe that our consolidated liquidity and availability under our equity offerings will be sufficient to meet our liquidity needs.
Liquidity . Our primary sources of liquidity consist of cash and cash equivalents and equity offerings. Cash generation may fluctuate due to various factors, including seasonality, timing of loan originations and repayments, market conditions, and our ability to execute strategic asset sales or dispositions. As of March 27, 2026, the Company had approximately $1.9 million in cash, including $1.5 million we raised in March 2026 under the ATM and ELOC Agreements as defined below.
On December 31, 2024, the Company entered into 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. On September 8, 2025, the Company again amended the ELOC Agreement to increase the commitment amount by $10 million, to maximum total sales of up to $20 million, and to remove minimum closing price conditions for effecting purchases under the ELOC Agreement. As a result, the Company may sell up to $12.5 million under the ELOC Agreement (after giving effect to prior sales) beginning after January 11, 2026. During the year ended December 31, 2025, the Company sold and issued to the Purchaser 5,694,515 shares of common stock for proceeds of $7.0 million, net of offering costs of $0.5 million. During 2026, the Company sold 444,444 shares of common stock for gross proceeds of $1.0 million under the ELOC 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 $12.0 million of shares of the Company’s common stock. During the year ended December 31, 2025, the Company sold 5,907,698 shares for proceeds of $7.9 million, net of offering costs of $0.4 million. During 2026, the Company sold 163,112 shares for gross proceeds of $0.5 million.
During the year ended December 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.
In October 2025, the Company expanded and diversified its warehouse lines to $25.0 million tripling its prior $5.0 million line and adding two new $5.0 million lines with new lenders in anticipation of rapid revenue growth and loan origination volume.
On November 11, 2025, the Company entered into a Securities Purchase Agreement with certain accredited investors, pursuant to which the Company sold to the Investors a total of 4,620,000 common shares at $1.60 per share, raising gross proceeds of $7.4 million.
The Company intends to continue raising capital through equity to meet its internal cash requirements. The availability of additional financing will be largely dependent on our operating success, including improved margins as well as operational improvements, which will be necessary to attract investors. However, there can be no assurance that the Company will be successful in securing the necessary capital on favorable terms, or at all. The Company has no material off-balance sheet arrangements as of the date of this filing.
Critical Accounting Policies and Estimates
Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results, and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The critical accounting policies and practices used by the Company in the financial statements for the year ended December 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 based on the investor commitment.
Gains and losses from the sale of mortgage loans held for sale are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale and are recorded in gain on sale of loans, net on the consolidated statements of operations. Sales proceeds reflect the cash received from investors through the sale of the loan and servicing release premium. Gain on sale of loans, net also includes the unrealized gains and losses associated with the changes in the fair value of mortgage loans held for sale, and the realized and unrealized gains and losses from derivative instruments.
Mortgage loans held for sale are considered sold when the Company surrenders control over the financial assets. Control is considered to have been surrendered when the transferred assets have been isolated from the Company, beyond the reach of the Company and its creditors; the purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and the Company does not maintain effective control over the transferred assets through either an agreement that both entitles and obligates the Company to repurchase or redeem the transferred assets before their maturity or the ability to unilaterally cause the holder to return specific financial assets. The Company typically considers the above criteria to have been met upon acceptance and receipt of sales proceeds from the purchaser.
Mortgage loans sold to investors by the Company, and which met investor underwriting guidelines at the time of sale, may be subject to repurchase in the event of specific default by the borrower or subsequent discovery that underwriting standards were not met. The Company may, upon mutual agreement, indemnify the investor against future losses on such loans. Actual losses incurred are reflected as a reduction in gains on sale of loans, net in the consolidated statements of operations.
Since mortgage loans held for sale have maturity dates greater than one year from the balance sheet date but are expected to be sold in a short time frame (less than one year), they are recorded as current assets.
Changes in the balance of mortgage loans held for sale are included in cash flows from operating activities in the consolidated statements of cash flows in accordance with ASC 230-10-45-21, Statement of Cash Flows .
Revenue recognition
Gains on Sale of Loans, Net
See discussion above under “Mortgage Loans Held for Sale and Gain on Sale of Loans Revenue Recognition” and below under “Derivative Financial Instruments and Revenue Recognition”.
Loan Origination Fees and Costs
Loan origination fees represent revenue earned from originating mortgage loans. Loan origination fees generally represent flat per-loan fee amounts and are recognized as revenue at the time the mortgage loans are funded since the loans are held for sale. Loan origination costs are charged to operations as incurred.
Interest Income
Interest income on mortgage loans held for sale is recognized for the period from loan funding to sale based upon the principal balance outstanding and contractual interest rates. Revenue recognition is discontinued when loans become 90 days delinquent, or when, in management’s opinion, the recovery of principal and interest becomes doubtful and the mortgage loans held for sale are put on nonaccrual status. For loans that have been modified, a period of six payments is required before the loan is returned to an accrual basis.
Interest Expense
Interest expense relating to the warehouse lines of credit is included in net revenues. Other interest expense is included in other (income)/expense.
Title Fees
Settlement fees and commissions earned at loan settlement on insurance premiums paid to title insurance companies.
Other Revenues
Fees received from a marketing partner that is embedded in the Company’s point-of-sale journey for investment property customers. The partner pays us for leads they receive from a customer opting in to use their insurance company for landlord insurance during the application process.
Goodwill. Goodwill is the excess of the purchase price over the estimated fair value of identifiable net assets acquired in business combinations. The Company tests goodwill for impairment annually in the fourth quarter, or more frequently when indications of potential impairment exist. The Company monitors the existence of potential impairment indicators throughout the fiscal year. The Company may elect to perform either a qualitative test or a quantitative test to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the estimated fair value of the Company exceeds its carrying value, then the Company concludes the goodwill is not impaired. If the carrying value of the Company exceeds its estimated fair value, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the amount of goodwill.
Intangible assets. The Company accounts for certain finite-lived intangible assets at amortized cost and other certain indefinite-lived intangible assets at cost. Management reviews all intangible assets for probable impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If there is an indication of impairment, management would prepare an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these estimated cash flows were less than the carrying amount of the asset, an impairment loss would be recognized to write down the asset to its estimated fair value.
Property and equity, net. Under ASC 350-40, Internal-Use Software , the Company capitalizes certain qualifying costs incurred during the application development stage in connection with the development of internal-use software. Costs related to preliminary project activities are expensed as incurred and post-implementation activities will be expensed as incurred. Capitalized software costs are amortized over the useful life of the software, which is five years. Impairment of internal-use software is evaluated under ASC 350-40-35, Subsequent Measurement, on a qualitative basis and if indicators exist, then a quantitative analysis is performed under ASC 360.
