Company: BLNE
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004793
Chunk: 250

Company: Beeline Holdings, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1A
Chunk 250
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 for Audit Quality

F-2

Business
Combination

As
described in footnote 3 “Business Combinations” and in footnote 4 “Merger”, to the consolidated financial statements,
the Company closed on a business acquisition in October 2024. The determination of fair values for assets acquired and liabilities assumed
and the fair value of the equity-based purchase consideration involved significant judgement from management. This included the selection
of appropriate valuation methodologies and the development of key assumptions and estimates within the selected methodology.

Management
utilized the Option Pricing Model (OPM) method to determine the fair value of the equity-based purchase consideration. The application
of the OPM required the use of significant estimates and assumptions including volatility, probability estimates, and expected term.
In addition, the fair value of certain identifiable intangible assets acquired were determined using various valuation methodologies
including the cost approach, multi-period excess earnings method, and relief-from-royalty method. These methods required significant
estimates and assumptions by management including projected future cash flows, discount rates, royalty rates and attrition rates. Changes
in these estimates and assumptions could have a significant impact on the fair values.

We
identified the business combination as a critical audit matter. Auditing management’s judgments regarding the above estimates and
assumptions involved a high degree of subjectivity.

The
primary procedures we performed to address this critical audit matter included (a) evaluated management’s process for developing
its estimates, (b) evaluated if the valuation method used by management was appropriate, (c) evaluated the reasonableness of management’s
cash flow forecasts by comparing them to historical information, and/or other supporting contracts or information, (d) assessed the reasonableness
of the asset volatility, probability estimates, expected term, discount rates royalty rates and attrition rates used, (e) evaluated other
estimates and assumptions as applicable, and (f) recomputed the valuation estimates. We agreed with management’s estimates.

Intangible
Asset Impairment Assessment

As
described in footnote 3, “Intangible Assets” and in footnote 11, “Intangible Assets” to the consolidated financial
statements, the Company’s Intangible Assets included, among others, the Azuñia brand. Intangibles are tested for impairment
if there are indicators of impairment, but at least annually. To assess whether impairment existed for the Azuñia brand, management
performed a quantitative impairment test using the Relief from Royalty method. Determination of