Company: BLND
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001855747-25-000041
Chunk: 464

Company: Blend Labs, Inc.
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 3
Chunk 464
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 and Section 383 of the Internal Revenue Code of 1986 (as amended, the “Code”), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs and other tax attributes, including research and development tax credits, to offset its post-change income or taxes may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5 percent stockholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Our ability to use NOLs and other tax attributes to reduce future taxable income and liabilities may be subject to annual limitations as a result of ownership changes that may occur in the future (which may be outside our control).

Federal NOLs arising in tax years beginning after December 31, 2017 are generally subject to an 80% of taxable income limitation (as calculated before taking the NOLs into account). Our state NOLs and our tax credits may also be subject to limitations. For example, California legislation enacted in June 2024 limits the use of California state net operating loss carryforwards and tax credits for tax years beginning on or after January 1, 2024 and before January 1, 2027, which may adversely affect us if we earn taxable income in the impacted tax years. In future years, if and when a net deferred tax asset is recognized related to our NOLs, the changes in the carryforward/carryback periods as well as the new limitation on use of NOLs may significantly impact our valuation allowance assessments for NOLs and tax credits. 

Risks Related to Our Title365 Business

Our review of potential strategic alternatives for our Title365 business may not result in an executed or consummated transaction or other strategic alternative, and the process of reviewing strategic alternatives or the outcome could adversely affect our business. There is no guarantee that any transaction resulting from the strategic review will ultimately benefit our shareholders.

In the first quarter of 2025, we announced that we were undertaking review of strategic and operational alternatives that may be available to us with respect to our Title365 business, including potential sale, merger, spin-off, joint-venture and financing transactions, as well as a range of other strategic and operational opportunities for improved value-creation. In the first quarter of fiscal year 2025, we classified our Title365 business as discontinued operations.  There is no assurance that the process will result in the