Thank you for standing by. This is the conference operator. Welcome to Beeline Holdings Incorporated Second Quarter 2025 Earnings Conference Call. As a reminder, all participants are in listen-only mode. The conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Tiffany Milton, Chief Accounting Officer. Please go ahead.

Thank you. Good evening, everyone, and thank you for joining us today to discuss Beeline's financial results for 2025. I'm Tiffany Milton, Beeline's Chief Accounting Officer. Joining us on today's call to discuss these results is Nick Laousa, our Chief Executive Officer, and Chris Moe, our Chief Financial Officer. Following our remarks, we will open the call to your questions. Now before we begin with prepared remarks, we submit for the record the following statement. This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Including, but not limited to, statements regarding Beeline Holdings' expected future growth, expected future operating results and financial condition, including projections concerning our ability to be cash flow positive, profitable, and debt-free within a specified time frame, expected lower interest rates and the impact on our business, the anticipated Beeline equity closings, the future development and potential of our technology offering, creation of long-term shareholders' value, and the timing of and the eliminating of our indebtedness. Forward-looking statements are typically identified by words such as believe, expect, anticipate, plan, intend, seek, estimate, will, would, could, may, continue, forecast, target, potential, project, undertake, and similar expressions. These statements are based on management's current assumptions, beliefs, and expectations and are not guarantees of future performance. Actual results may differ materially from those described in forward-looking statements, due to various risks and uncertainties. These include, without limitation, the risk factors we provided in our 2024 Form 10-Ks and the prospective supplements. In addition, there is a risk that our new technologies we are developing may not work as expected. We caution investors not to place undue reliance on any forward-looking statements made during this call. All forward-looking statements speak only as of the date of this presentation and are based on information available to Beeline as of today. We undertake no obligation to publicly update or revise these statements to reflect events or circumstances occurring after today's date, except as required by law. Now with that said, I'd like to turn the call over to Nick Laousa. Nick, please proceed.

Good afternoon, everyone, and thank you for joining us today. I'm Nick Laousa, co-founder and CEO of Beeline Holdings. With me is our CFO, Chris Moe. We appreciate you spending time with us on our second quarter 2025 earnings call. The quarter marks a pivotal moment for Beeline. By successfully divesting one of our final spirits assets, we are now fully focused on our core mission operating as a digital mortgage lender with a proprietary SaaS platform, unencumbered by non-core operations. We want to thank our friends at Bridgetown as they embark on their own journey to grow their business now that we have formally separated. Our efforts in Q2 have been both inspiring and productive, furthering our mission of building repeatable, predictable, and scalable products and services to drive higher volumes. We are an emerging high-growth story driving innovation at scale. And when stripping out the Bridgetown business, we saw a 27% increase in revenue and a decrease of 40% in expenses, in 2025 versus 2025. We believe my execution in Q2 will be looked back upon as the foundation for much stronger growth in future quarters, due primarily to the introduction of a new equity product, stronger execution of a top-of-the-funnel conversions through enhancements implemented with Bob, our AI sales agent. A stronger balance sheet, a heightened discipline in the management of expenses, the elimination of distractive non-core service lines. These are facets of the business we can control. Yes, the market has been challenging due to higher interest rates, affecting both refinance and purchase transactions. Going into Q2, our goal was to position Beeline for much faster growth for future quarters without relying on interest rate cuts, while improving our financial condition with a clear strategy to cash flow positive operations. Rate cuts could be on the…

Thanks, Nick. As a reminder, due to pro forma accounting adjustments, and GAAP purchase accounting rules, our income statement reflects the impact of our 2024 forward merger transaction and as such certain periods are not directly comparable. Additionally, MagicBlocks, our AI product technology company in which we hold a significant minority stake, is not consolidated in our income statement under GAAP. Additionally, our legacy spirits business, Bridgetown Spirits Corporation, has been reclassified during Q2 as discontinued operations and was subsequently sold early in Q3. Let me now walk you through the Q2 2025 financial highlights. Total net revenues were $1,700,000 for Q2 driven primarily by Beeline's mortgage activities, accounted for over 74% of revenue with the remainder from the Beeline title business and a small amount from Data and Tech. In terms of growth rates for our mortgage and title businesses, Q2 2024 versus Q2 2025, we saw a 6% increase in originations and an 11% increase in average revenue per loan and a 64% increase in title revenue. Comparing Q1 2025 versus Q2 2025, we saw a 44% increase in originations, a 5% decrease in average revenue per loan, and a 24% increase in title revenue. On the operating expense side, expenses totaled $5,600,000 for Q2 reflecting costs associated with staffing, and marketing and advertising. For Q2, there were $2,200,000 in salaries and benefits, $1,200,000 in professional fees, $800,000 in marketing and advertising, and $800,000 in depreciation and amortization. This resulted in a loss from operations of $3,900,000 driven largely by scaling our mortgage platform combined with transaction expenses. Below the line, we incurred $400,000 in interest expense, and we reported a net loss from continuing operations of $4,000,000 for the quarter. While this loss was significant, it represents an improvement over our Q1 loss from continuing operations of $6,700,000 and again reflects deliberate investments and one-time capital structure effects. Our core mortgage operations are scaling well and we are confident these investments will position us for a step change in performance in the quarters ahead. We're also seeing rapid customer revenue growth from our AI sales agent spin-out, MagicBlocks. These results are not reflected in these figures. Turning to the balance sheet, we ended the quarter with $6,300,000 in cash, up from $1,500,000 in cash in Q1. We made debt repayments of $5,800,000. Total equity at period end was $55,500,000, up from $48,100,000 in Q1. Regarding cash flow, net cash used in operating activities was $5,600,000. Net cash provided by investing activities was $59,000. Net cash provided by financing activities was $10,900,000. For a net increase in cash of $5,400,000 for the period. While I won't provide firm Q3 or H2 guidance, due largely to the rapid pace of transformation of the business, I agree with Nick that Beeline expects to see continuous improvement in introducing new products, growing revenues, and controlling expenses with a goal of achieving operating profitability and positive cash flow by year-end. With that, I turn it over to the operator for questions.

We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing any keys. The first question comes from Glenn Mattson with Ladenburg Thalmann. Please go ahead.

Yes. Hi, thanks for taking the questions and congrats on the result. First, I wanted to get a little more detail around the home equity cash-out product, the innovative solution that you've introduced to the market. Can you you know, and you it looks like you're progressing along the path of starting to do some early transactions and and and things, but it it seems that, maybe you pushed out a little bit the timing on the broader launch. Can you just give us some more understanding of of what your thought process is there?

Yeah. Hey, Glenn. How are you doing? Good to talk to you again. Look. We had discussed, I think, in previous course communication that we were going to launch the product in late August, early September. And we pushed that out a bit for a couple of reasons. Number one, I mean, the opportunity is massive. There's so much untapped equity in the US market. And the demand is, in our opinion, gonna be off the charts. There are a lot of individuals out there who can't qualify for a cash-out refi or need liquidity or even qualify for a HELOC. And as a result of that, you know, we have a solution that meets their needs. And so with the Genius Act passing a little more clarity in terms of you know, how regulation is gonna come down on this particular side of the business with the crypto. We felt like it was important for us to get this product right. You know, we are very early to the market with this. I don't see anyone else doing what we're doing here. So you know, in our view, there are a lot of moving parts. Primarily around turning the crypto into cash quickly at scale. And we wanted to make sure we didn't fumble that. We didn't make any mistakes at scale. You know, doing 10, 20, 30 transactions is certainly different than doing, you know, several thousand. So for the next thirty to forty-five days, we're gonna slow play it a bit. We're gonna do a select number of transactions which have already been identified. We've already started the title work on those transactions. And we're gonna, you know, we're gonna do them properly. And we're gonna get feedback from the customers that we do them with to make sure that when it's time to scale, you know, we meet the mark. And that's really the key reason is just to be careful, do it right, and make sure we have the consumer's best interest in mind.

Yeah. Thanks for that color. Makes sense that big opportunities you wanna get it right. Moving on to the financials for a minute. The you know, good progress on the profitability this quarter, especially sequentially, and you kinda highlighted pointed to breakeven by late this year, early next year. Can you don't know if this is for Chris or Nick, but can you just give us some more details around your assumptions and how you think you'll get there?

Yeah. Look. I'll take that just because I like to talk. And you know? But look. I mean, we're feeling really good about a lot of things over here. Right? Our software is starting to mature, starting to, you know, to materialize. I mean, we're seeing the fruits of our labor pay off. We've been spending a lot of money creating a really good mousetrap, and we feel good about where we're headed. And so it just made sense to kind of buckle down a bit and make sure that we are really ready. I guess, to calm before the storm. We're expecting a better market next year. And so we put a lot of focus on getting to profitability as fast as we can. And that includes, you know, cutting about $225,000 at about a month recurring expense, which we've already done. Fully realize that in September. Our locks are, you know, our locks are way up. And, you know, we cut our marketing budget by about $40,000 a month. And, you know, we're still seeing really strong walk performance as a result of that. Also, when you look at the Q2 numbers, we had about $500,000 in those numbers of one-time nonrecurring expense. So, you know, when you take that out, when you look at the fact that we're locking much higher loans, much many more loans on a reduced budget. And then you take into consideration that we cut $225,000 of recurring cost out, we feel really good about the ability of being profitable by our net cash positive. I'm sorry. By January 2026. Interest rate cuts would just fuel the momentum. A big giant launch of our new product, a real line equity product, will just fuel the momentum. More cattle business, we'll just fuel the momentum. At the end of the day, we kinda took a really modest approach to those points. And, you know, we feel good about it. We also, you know, we'll be debt-free on November 1. So heading into next year, we'll be debt-free. We will be cash flow positive. And we'll be positioned for greatness.

Thanks for that color. Yeah. No one knows the future, but you do fed candidates all seem to be outdoing each other in terms of how aggressive they wanna be on the cutting rate side. So looks like trend is going in your favor. Thanks for the call, guys. Appreciate that.

The next question is from Derek Greenberg with Maxim Group. Please go ahead.

Hi, thanks for taking my questions. Wanted to just follow-up on the fractional product you guys are rolling out. Was wondering if you could just remind us the economics of that business that's similar to the core of mortgage or if it's a little bit different. And then I was wondering once it's fully at scale, you mentioned, you know, there's a lot of difference in thousands of transactions versus, you know, dealing with TED. But I was wondering what's fully at scale what the volumes you expect to flow through that funnel look like?

Yeah. Look. From an economic standpoint, our margins will be a little higher than on our mortgage products. And, you know, the amount of work that we're gonna do will be a little less. So we're pretty excited about that. You know, we're underwriting the property and we're not underwriting the consumer as much. So that's the reason why there's less work. So the expense associated with the product is less and we expect about 33% on average more revenue per file than we see on the mortgage side. I think it's not like a disjointment.

I'm also gonna add to this. That, you know, we spend heavily in marketing to bring in the loan business. In this case and I don't think it's appropriate right now to go into the details. But we basically have in the model next to no margin expense because our partner in this thing is gonna drive the business. We're just processing it. So the margins are pretty high.

Yeah. And I don't think we're quite ready to talk about the projections of the business. But I will say this. We have denied about a thousand people over the last twelve months that would qualify for this product instantly. That's, you know, that's not even trying to drive the business. So yeah, look, we're not in a position to project or talk about projections at this point. Think that might be something for a later call.

Got it. Thank you. That's helpful. And then just looking into '26 you had mentioned that even without rate cuts, you're expecting significant growth. Is that largely coming from this new product, or is it across all the different products? What do you think will be the main driver of growth exclusive of rate cuts?

Yeah. That's a good question. You know, I think that we are gonna see really strong demand for Beeline equity, the equity product. Because we're infusing liquidity into the market that really, you know, in a market that is where liquidity is needed. And, you know, again, the qualification is based on, you know, the equity in the home and not the individual. And as a result of that, I mean, there's just a massive amount of equity that's sitting on the sidelines that a lot of people can't do anything with. I mean, in terms of getting a cash-out refi. Right? I mean, baby boomers are living longer. They wanna stay in their homes longer. A lot of them aren't working, and they don't, you know, they don't wanna do necessarily do a reverse mortgage. And so you know, when you start thinking through that and you start thinking through the fact you know, there are no payments here. Right? I mean, you're basically are selling a sale of equity, and, you know, there's no repayment until the house is sold. So, you know, if you are an individual that can't qualify for a cash-out refi and need cash, you know, this is an option for you. If you don't wanna do a HELOC, this is an option for you. If you, you know, don't want monthly payments and interest payments, this is an option for you. If you're looking at a reverse mortgage, this is an option for you. You know, there's just so much potential for this product. So I do think this product is gonna grow very quickly. At the same time, you know, we've been in the trenches a really bad market perfecting our model. For a long time on the mortgage side. And, you…

Okay. Got it. And then just my last question. One might be a little difficult to answer, but I was wondering obviously, with rate cuts, that'd be a huge catalyst for the industry overall. But I was wondering if you have, like, a sensitivity analysis in place in terms of you know, how much percent basis point cut could potentially fuel growth in loan volume for you guys and revenue for you guys or if that's kind of two in the weeds and you know, it's just broader great opportunity. I was wondering if you quantified it at all.

Yeah. Look. I mean, I don't think we're prepared to provide that sort of information. At a high level, I can tell you that a 25 basis point cut will have a significant impact on our business. We are a centralized digital lender. We're not a retail lender. The retail models tend to perform better. You know, everyone performs better in a low rate environment. Right? But when rates are higher, the digital models they on a percentage basis, they don't perform as well as the retail models do. When rates come down, digital models tend to do very well. And so, you know, we're a digital centralized model, and so a 25 basis point cut will have a big impact on our business. One point impact will have a tremendous impact on our business. I mean, we'll grow incredibly fast when that happens.

Yeah. I also just wanna add a non-quantitative comment to your quantitative question. So it's interesting when you think about it. You know, a 25 or 50 basis point cut in theory equals x. But the longer rates reduced, the more buildup effect it has on the number. Think of it as kind of a dam and the water is filling up behind the dam. So if the dam opens up and the lake is only half full, we get the x amount of water rushing through the gate. The dam is almost at the top, and you open the dam a lot you know, twice the volume rushes to the gate. So I guess what I'm trying to say is this rate that sort of know, they came down a little bit last September and nothing since then. It's been almost a year. I think a 25 basis point rate cut will be more significant than it would be otherwise.

Yeah. That makes sense. Definitely makes sense. Thank you.

Appreciate the color. Welcome.

Once again, if you have a question, please press star then 1. Showing no further questions, this concludes the question and answer session. I would like to turn the conference back over to Nick Laousa for any closing remarks.

Thanks, operator. To wrap up, Q2 marks yet another inflection point for Beeline. We have fully transitioned into a fintech mortgage company. We operate in a 2 plus trillion dollar mortgage market. Yes, we've invested heavily. But these are intentional foundational investments aimed at capturing meaningful market share over time. We are confident the long-term payoff will be significant. We improved our balance sheet and reduced our expenses, at a time when our software costs are starting to pay off. We believe that 2025 has been inspirational and productive. And will set the foundation for faster growth in the future.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.