Company: BLNE
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011724
Chunk: 85

Company: Beeline Holdings, Inc.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 85
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 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