AIRE 8-K/A
reAlpha Tech Corp. (AIRE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 23, 2026 (
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices and zip code)
(
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
| The |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Introductory Note
This Amendment No. 1 on Form 8-K/A (this “Form 8-K/A”) is being filed to amend Item 9.01(a) and (b) of the Current Report on Form 8-K filed by the Company on August 25, 2026 to include the historical financial statements of InstaMortgage required by Item 9.01(a) of Form 8-K and the unaudited pro forma condensed combined financial information required by Item 9.01(b) of Form 8-K. This Form 8-K/A also furnishes under Item 7.01 a press release issued by the Company on September 23, 2026 relating to the financial information included herein.
1
Item 7.01 Regulation FD Disclosure.
On September 23, 2026, the Company issued a press release announcing certain historical financial information of InstaMortgage and unaudited pro forma condensed combined financial information giving effect to the Merger, which information is filed as Exhibits 99.1, 99.2 and 99.3 to this Form 8-K/A. A copy of the press release is furnished as Exhibit 99.4 to this Form 8-K/A and is incorporated by reference herein.
The information provided under this Item 7.01 of this Form 8-K/A, including Exhibit 99.4 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses or funds acquired.
The audited financial statements of InstaMortgage for the year ended December 31, 2025, the period of August 1, 2024 to December 31, 2025, and the year ended July 31, 2024, are filed as Exhibit 99.1 to this Form 8-K/A and are incorporated by reference herein.
The unaudited condensed financial statements of InstaMortgage for the six months ended June 30, 2026 and 2025, are filed as Exhibit 99.2 to this Form 8-K/A and are incorporated by reference herein.
(b) Pro forma financial information.
The unaudited pro forma condensed combined financial information identified below giving effect to the Merger is filed as Exhibit 99.3 to this Form 8-K/A and is incorporated by reference herein:
| ● | Unaudited pro forma condensed combined balance sheet as of June 30, 2026; |
| ● | Unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2026; and |
| ● | Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025. |
(d) Exhibits.
2
| Exhibit Number | Exhibit Title or Description | |
| 23.1* | Consent of FM Financial Services LLC. | |
| 99.1* | Audited financial statements of InstaMortgage Inc. for the year ended December 31, 2025, the period of August 1, 2024 to December 31, 2025, and the year ended July 31, 2024. | |
| 99.2* | Unaudited condensed financial statements of InstaMortgage Inc. for the six months ended June 30, 2026 and 2025. | |
| 99.3* | Unaudited pro forma condensed combined financial information of reAlpha Tech Corp. giving effect to the Merger. | |
| 99.4** | Press release, dated September 23, 2026. | |
| 104 | The cover page from this Form 8-K/A, formatted in Inline XBRL. |
| * | Filed herewith. |
| ** | Furnished herewith. |
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: September 23, 2026 | reAlpha Tech Corp. | |
| By: | /s/ Michael J. Logozzo | |
| Michael J. Logozzo | ||
| Chief Executive Officer | ||
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Exhibit 23.1
CONSENT OF INDEPENDENT AUDITOR
We hereby consent to the inclusion in this Current Report on Form 8-K/A of reAlpha Tech Corp. of the following reports of this firm relating to the financial statements of InstaMortgage Inc., to the extent such reports are included in Exhibit 99.1 to this Form 8-K/A.
| ● | our report dated October 22, 2024, on the financial statements as of July 31, 2024 and for the year then ended; |
| ● | our report dated March 2, 2026, on the financial statements as of December 31, 2025 and for the year then ended; and |
| ● | our report dated March 2, 2026, on the financial statements as of December 31, 2025 and for the period from August 1, 2024 to December 31, 2025. |
This consent extends to the reports identified above and to no other report or period.
We also consent to the incorporation by reference of said reports relating to the financial statements of InstaMortgage Inc. in the Registration Statements on Form S-8 (No. 333-291057 and No. 333-278102), Form S-1 (No. 333-289704 and No. 333-288571), and Form S-3 (No. 333-287009, No. 333-284234, and No. 333-283284), of reAlpha Tech Corp.
We also consent to the reference to our firm under the heading “Experts” in such filings, if applicable.
/s/
FM Financial Services LLC
Sugar Land, Texas
September 23, 2026
Exhibit 99.1
Independent Auditor’s Report
To the Board of Directors and Stockholder
InstaMortgage, Inc.
San Jose, California
Opinion
We have audited the accompanying financial statements of InstaMortgage, Inc., which comprise the balance sheet as of December 31, 2025, and the related statements of income, stockholder’s equity, and cash flows for the year then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of InstaMortgage, Inc. as of December 31, 2025, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of InstaMortgage, Inc., and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibility of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the InstaMortgage, Inc.’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
F-1
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the InstaMortgage, Inc.’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the InstaMortgage, Inc.’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matter that we identified during the audit.
/s/ FM Financial Services LLC
FM Financial Services LLC
Sugar Land, Texas
March 2, 2026
F-2
INSTAMORTGAGE, INC
Balance Sheet
As of December 31, 2025
| Assets | ||||
| Current Assets | ||||
| Cash | 516,690 | |||
| Restricted cash | 51,000 | |||
| Prepaid Expenses | 46,405 | |||
| Mark to Market Value | 286,752 | |||
| Loans held for sale, at fair value | 9,944,973 | |||
| Total Current Assets | $ | 10,845,820 | ||
| Non-Current Assets | ||||
| Furniture and Equipment | 53,616 | |||
| Laptop | 17,113 | |||
| Vehicle | 49,514 | |||
| Accumulated Depreciation | (120,243 | ) | ||
| Total Non-Current Assets | $ | - | ||
| Other Assets | ||||
| Security deposits | 19,560 | |||
| Notes Receivable | 405,000 | |||
| Right to Use Asset | 102,047 | |||
| Total Other Assets | $ | 526,607 | ||
| Total Assets | $ | 11,372,427 | ||
| Liabilities and Stockholder’s Equity | ||||
| Current Liabilities | ||||
| Accounts payable and accrued expenses | 207,054 | |||
| Warehouse line of credit, UPB | 9,794,470 | |||
| Operating lease liabilities - current portion | 67,642 | |||
| Total Current Liabilities | $ | 10,069,166 | ||
| Long-Term Liabilities | ||||
| Operating lease liabilities – non-current Portion | 34,405 | |||
| Total Long-Term Liabilities | $ | 34,405 | ||
| Stockholder’s Equity | ||||
| Common stock ($.01 par, 100,000 shares authorized, issued and outstanding) | 1,000 | |||
| Additional paid-in capital | 2,750,378 | |||
| Retained earnings | (1,482,522 | ) | ||
| Total Stockholder’s Equity | $ | 1,268,856 | ||
| Total Liabilities and Stockholder’s Equity | $ | 11,372,427 | ||
The accompanying notes are an integral part of these financial statements.
F-3
INSTAMORTGAGE, INC
Statement of Income
For the Year Ended December 31, 2025
| Revenues | ||||
| Loan origination income | $ | 7,262,815 | ||
| Total Revenues | $ | 7,262,815 | ||
| Cost of Revenues | $ | 1,989,218 | ||
| Gross Profit | $ | 5,273,597 | ||
| Operational Expenses | ||||
| Legal and Professional Charges | $ | 115,197 | ||
| Bank Charges and Fees | $ | 3,327 | ||
| Donations | $ | 500 | ||
| Occupancy expense | $ | 162,346 | ||
| Interest expense | $ | 19,635 | ||
| Marketing Expenses | $ | 65,847 | ||
| Office Expenses | $ | 1,356 | ||
| Branch Expenses | $ | 745,450 | ||
| Other General and Administrative Expenses | $ | 29,872 | ||
| Software, memberships and subscriptions | $ | 235,352 | ||
| Meals and Entertainment | $ | 4,144 | ||
| Membership fee | $ | 2,564 | ||
| Other business Expenses | $ | 16,288 | ||
| Postage and delivery | $ | 1,367 | ||
| Payroll Expenses | $ | 3,620,289 | ||
| Utilities Expenses | $ | 7,628 | ||
| Texas and Licenses | $ | 183,748 | ||
| Travel Expenses | $ | 9,138 | ||
| Total Expenses | $ | 5,224,048 | ||
| Income (Loss) before taxes | $ | 49,549 | ||
| Other Income | $ | 41,921 | ||
| Net Income | $ | 91,470 | ||
| Equity Beginning of the year | $ | 908,634 | ||
| Change in Equity, Fair Value adjustment | $ | 268,752 | ||
| Equity at end of the year | $ | 1,268,856 | ||
The accompanying notes are an integral part of these financial statements.
F-4
INSTAMORTGAGE, INC
Statement of Cash Flows
For the Year Ended December 31, 2025
| Cash Flows from Operating Activities | ||||
| Net income (loss) | $ | 91,470 | ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
| Depreciation Expense | $ | 9,793 | ||
| Accounts payable | $ | 9,141 | ||
| Mark to Market Value Revenue | $ | (286,752 | ) | |
| Loans held for sale | $ | (8,228,889 | ) | |
| Security Deposit | $ | 1,910 | ||
| Other prepaid Expenses | $ | 57,774 | ||
| Total adjustments to reconcile net income (loss) to net cash provided by operating activities: | $ | (8,437,023 | ) | |
| Cash flow from operating activities | $ | (8,345,553 | ) | |
| Cash Flows from Financing Activities | ||||
| Repayment of warehouse lines-of-credit | $ | 8,200,566 | ||
| Notes Receivable | $ | (405,000 | ) | |
| Changes in additional paid in capital | $ | 912,051 | ||
| Net Cash from Financing Activities | $ | 8,707,617 | ||
| Net Increase (Decrease) in Cash and Restricted Cash | $ | 362,065 | ||
| Cash and Restricted Cash, Beginning of Year | $ | 205,625 | ||
| Cash and Restricted Cash, End of Year | $ | 567,690 | ||
The accompanying notes are an integral part of these financial statements.
F-5
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
January 1, 2025 to December 31, 2025
INSTAMORTGAGE, INC.
NOTES TO THE FINANCIAL STATEMENTS
Purpose and Organization
InstaMortgage, Inc. derives income primarily from fees charged for services related to the origination and processing of mortgage loans for financial institutions. The Company was incorporated on April 18, 2008, under the laws of the State of California. Initially The Company has adopted a July 31 year-end for financial reporting and income tax purposes, however, during 2025, it has changed it’s year end to December 31, 2025. The Company had elected and been approved to be taxed as a Subchapter S Corporation effective January 1, 2009. As of January 1, 2020, the Company changed its elected status to a C Corporation. The Company changed its name from Arcus Lending, Inc. to InstaMortgage, Inc. and filed the name change with the Secretary of State of California on February 18, 2022.
Change in Accounting Principle
Effective December 31, 2018, management adopted ASU 2016-18, Statement of Cash Flows (Topic 230), related to restricted cash. This change did not affect net income or retained earnings. The presentation of restricted cash in the balance sheet and statement of cash flows was updated to include a combined description of cash and restricted cash balances.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents. The reconciliation of cash and restricted cash reported within the balance sheet is as follows:
| Account Type | Amount | |||
| Unrestricted cash-in-demand deposit accounts | 516,690 | |||
| Restricted cash-in-demand deposit accounts | 51,000 | |||
| Total | $ | 567,690 | ||
F-6
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
January 1, 2025 to December 31, 2025
Mark to Market Value Revenue
Loan points and revenues related to loan origination are recorded as revenue when the related loans are sold to investors and yet to be funded. Management reviews outstanding receivables periodically, and as of December 31, 2025, no allowance for doubtful accounts has been recorded as all accounts are deemed collectible.
As of December 31, 2025 total Mark to Market Value Revenue was 286,752.
Revenue Recognition
Gains or losses resulting from sales of mortgage loans are recognized at the date of settlement and are based on the difference between the sales price and the asset retained by the Company, if any, and the carrying value of the related loans sold less related transaction costs. Since the Company sells its loan on a servicing-released basis, gains are increased by the amount of any servicing-released premiums received.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Material estimates for which a change is reasonably possible in the near term relate to the determination of the fair value of loans held for sale. The significant assumptions used by the Company to estimate the liability for losses on loans sold include consideration of the Company’s experienced losses on loans repurchased, the likelihood of an error or omission that results in a breach of standard representation and warranties included in the loan sale agreements and the anticipated expense, if any, that may be incurred by the Company in resolving any repurchased loans. Actual results could materially differ from management’s estimates.
Note B - Loans Held for Sale
Mortgage loans held for sale are stated at fair value as determined by outstanding commitments from investors or quoted market prices for securities backed by similar types of loans when quotes are available. Interest on mortgage loans held for sale is credited to income as earned. Interest is accrued only if deemed collectible. During the year ended December 31, 2025, the Company sold loans to twenty-one different investors. The Company monitors its relationships with its investors and, from time to time, makes adjustments in the amount it sells to any one investor based upon a number of factors, including but not limited to, price, loan review time and funding turnaround, underwriting guidelines and the overall efficiency of its relationship with the investors.
On December 31, 2025, loans held for sale consisted of mortgage loans recorded at fair value in the amount of $ 9,944,973. Loans are typically sold to investors on a servicing-released basis.
F-7
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
January 1, 2025 to December 31, 2025
Note C - Property and Equipment
Property and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the improvements.
| Non-Current Assets | Amount | |||
| Furniture and Equipment | 53,616 | |||
| Laptop | 17,113 | |||
| Vehicles | 49,514 | |||
| Total | 120,242 | |||
| Less Accumulated depreciation | (120,242 | ) | ||
| Net book value | $ | - | ||
Note D - Transfers of Financial Assets
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
Note E - Advertising
Advertising costs are expensed as incurred. Advertising expenses amounted to $65,847 for the year ended December 31, 2025, and are included in operating expenses in the statement of income.
Note F - Concentration of Risk
The Company originates mortgage loans on property located in twenty-three states throughout the United States. Originations in California, New York, and Georgia made up approximately 70% of all originations for the year ended December 31, 2025. Due to the nature of the mortgage industry, interest rate increases, and a depressed housing market may severely impact revenue from services related to originating and processing mortgages, which are the primary source of income for the Company.
The Company has concentrated its credit risk for cash by maintaining deposits in several financial institutions, which may at times exceed amounts covered by insurance provided by the Federal Deposit Insurance Corporation (FDIC). The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk to cash.
F-8
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
January 1, 2025 to December 31, 2025
Note G - Fair Value
The Company measures its financial assets based on a hierarchy that prioritizes the use of observable inputs in the valuation techniques used to measure fair value.
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability.
Level 3: Unobservable inputs.
The fair value of mortgage loans held for sale as of December 31, 2025, was $9,944,973 which is classified as a Level 2 input.
Note H - Warehouse Line of Credit
The Company funds loans through multiple warehouse lines of credit. These lines are used to finance the origination of loans for which a takeout commitment from an approved investor exists. As of December 31, 2025, $9,794,470 was advanced on the warehouse line of credit. The total available credit was $21,000,000.
Note I - Income Tax
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently payable plus deferred taxes arising from temporary differences in the bases of assets and liabilities for financial reporting and income tax purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. The components of the deferred tax asset and liability are classified as current and noncurrent based on their characteristics. Valuation allowances are recorded to reduce deferred tax assets to the amounts management concludes are more likely than not to be realized.
Income tax benefits are recognized and measured based upon a two-step model: 1) a tax position must be more likely than not to be sustained based solely on its technical merits to be recognized, and 2) the benefit is measured as the largest dollar amount of that position that is more-likely-than-not to be sustained upon settlement. The difference between the benefit recognized and the tax benefit claimed on a tax return is referred to as an unrecognized tax benefit (UTB).
The Company’s income tax returns are subject to examination by the federal taxing authorities for three years and by the California
F-9
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
January 1, 2025 to December 31, 2025
Note J - Leasing Arrangements
The Company leases its operating facility under a non-cancelable operating lease with various expiry dates. While all of the agreements provide for minimum lease payments, some include payments adjusted for inflation or variable payments based on a certain criterion. Variable payments are not determinable at the lease commencement and are not included in the measurement of the lease assets and liabilities. The lease agreements do not include any material residual value guarantees or restrictive covenants.
| Operating lease - right-of-use assets | $ | 102,047 | ||
| Operating lease liabilities - current portion | $ | 67,642 | ||
| Operating lease liabilities - less the current portion | $ | 34,405 |
There are no components of initial direct costs related to the operating lease that are included in general and administrative expenses in the statement of income for the year ended December 31, 2025
The following is a schedule by year of the future minimum lease payments required under this lease:
| Year Ending December 31 | Amount | |||
| 2026 | $ | 67,642 | ||
| 2027 | $ | 34,405 | ||
| Total | $ | 102,047 | ||
Note K - Capital And Liquidity Requirements
The Company is subject to various capital requirements in connection with seller and warehouse lending agreements that the Company has entered into with secondary market investors and warehouse lenders. Failure to maintain minimum capital requirements could result in the Company’s inability to originate loans for the respective investor or borrow funds from their warehouse lenders and, therefore, could have a direct material effect on the Company’s financial statements.
The Company’s adjusted net worth and minimum capital requirements by investor and warehouse lender are listed below.
| Category | Adjusted Net Worth ($) | Minimum Capital Requirement($) | ||||||
| HUD | 1,268,856 | 1,000,000 | ||||||
| Warehouse Lenders | ||||||||
| Lender 1 | 1,200,000 | 500,000 | ||||||
| Lender 2 | 500,000 | 500,000 | ||||||
| Lender 3 | 500,000 | 500,000 | ||||||
F-10
Note L - New Accounting Guidance Implementation
As of January 1, 2022, the Company changed its accounting method for leases as a result of implementing the requirements in the Financial Accounting Standard Board’s Accounting Standards Codification (ASC) 842, Leases, using the modified retrospective transition method. There was no cumulative effect adjustment to the Company’s balance sheet as of January 1, 2022. Prior Year information has not been restated and continues to be reported under the accounting standards in effect for the prior period.
The new lease guidance requires the recognition of a right-of-use asset and a lease liability for operating leases. The Company elected the package of practical expedients, which allowed, among other things, for not reassessing the lease classification or initial direct costs for existing leases. The Company has not elected the hindsight practical expedient.
As of December 31, 2025, approximately $102,047 in operating lease right-of-use assets and corresponding lease liabilities were recognized. Adoption of the new guidance did not have a significant impact on the statement of income or cash flows for the year ended December 31, 2025.
Note M - Subsequent Events
Management evaluated subsequent events through March 2, 2026, the date the financial statements were available to be issued.
There were no events requiring adjustment or disclosure.
NOTE N - MERGER AGREEMENT AND SUBSEQUENT CHANGE IN OWNERSHIP
On December 19, 2025, InstaMortgage Inc. (the “Company”) entered into a definitive Agreement and Plan of Merger with reAlpha Tech Corp. (“reAlpha”), reAlpha Merger Sub I, Inc., a wholly owned subsidiary of reAlpha, and the Company’s existing stockholders. Under the agreement, reAlpha agreed to acquire all outstanding shares of the Company through a merger in which the Company would continue as the surviving corporation and become a wholly owned subsidiary of reAlpha.
The original agreement provided for aggregate merger consideration of approximately $8.5 million, subject to certain closing adjustments. The consideration consisted of $500,000 in cash, $1.5 million in reAlpha common stock, and $6.5 million payable in six equal semiannual installments over three years following the closing date. The deferred installments could be settled in cash or reAlpha common stock, at reAlpha’s discretion, provided that at least $1.5 million of those installments would be paid in cash. The cash consideration was subject to adjustments for the Company’s cash and cash equivalents, indebtedness and unpaid selling expenses, as specified in the agreement.
As of December 31, 2025, the merger had not been consummated and remained subject to customary closing conditions, including applicable regulatory approvals. Accordingly, no merger consideration or gain from the contemplated transaction was recognized in the Company’s financial statements for the year ended December 31, 2025.
F-11
Independent Auditor’s Report
To the Board of Directors and Stockholder
InstaMortgage, Inc.
San Jose, California
Opinion
We have audited the accompanying financial statements of InstaMortgage, Inc., which comprise the balance sheet as of December 31, 2025, and the related statements of income, stockholder’s equity, and cash flows for the period from August 1, 2024 to December 31, 2025 then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of InstaMortgage, Inc. as of December 31, 2025, and the results of its operations and its cash flows for the period then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of InstaMortgage, Inc., and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibility of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the InstaMortgage, Inc.’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
F-12
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the InstaMortgage, Inc.’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the InstaMortgage, Inc.’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matter that we identified during the audit.
FM Financial Services,
Sugar Land, Texas
Date: March 2, 2026
F-13
INSTAMORTGAGE, INC
Balance Sheet
As of December 31, 2025
| Assets | ||||
| Current Assets | ||||
| Cash | 516,690 | |||
| Restricted cash | 51,000 | |||
| Prepaid Expenses | 46,405 | |||
| Mark to Market Value | 286,752 | |||
| Loans held for sale, at fair value | 9,944,973 | |||
| Total Current Assets | $ | 10,845,820 | ||
| Non-Current Assets | ||||
| Furniture and Equipment | 53,616 | |||
| Laptop | 17,113 | |||
| Vehicle | 49,514 | |||
| Accumulated Depreciation | (120,243 | ) | ||
| Total Non-Current Assets | $ | - | ||
| Other Assets | ||||
| Security deposits | 19,560 | |||
| Notes Receivable | 405,000 | |||
| Right to Use Asset | 102,047 | |||
| Total Other Assets | $ | 526,607 | ||
| Total Assets | $ | 11,372,427 | ||
| Liabilities and Stockholder’s Equity | ||||
| Current Liabilities | ||||
| Accounts payable and accrued expenses | 207,054 | |||
| Warehouse line of credit, UPB | 9,794,470 | |||
| Operating lease liabilities - current portion | 67,642 | |||
| Total Current Liabilities | $ | 10,069,166 | ||
| Long-Term Liabilities | ||||
| Operating lease liabilities – non-current Portion | 34,405 | |||
| Total Long-Term Liabilities | $ | 34,405 | ||
| Stockholder’s Equity | ||||
| Common stock ($.01 par, 100,000 shares authorized, issued and outstanding) | 1,000 | |||
| Additional paid-in capital | 2,750,378 | |||
| Retained earnings | (1,482,522 | ) | ||
| Total Stockholder’s Equity | $ | 1,268,856 | ||
| Total Liabilities and Stockholder’s Equity | $ | 11,372,427 | ||
The accompanying notes are an integral part of these financial statements.
F-14
INSTAMORTGAGE, INC
Statement of Income
For the Period Ended December 31, 2025
| Revenues | ||||
| Loan origination income | $ | 9,697,852 | ||
| Total Revenues | $ | 9,697,852 | ||
| Cost of Revenues | $ | 2,668,534 | ||
| Gross Profit | $ | 7,029,318 | ||
| Operational Expenses | ||||
| Legal and Professional Charges | $ | 145,153 | ||
| Bank Charges and Fees | $ | 3,764 | ||
| Donations | $ | 1,700 | ||
| Occupancy expense | $ | 220,289 | ||
| Interest expense | $ | 39,760 | ||
| Marketing Expenses | $ | 118,389 | ||
| Office Expenses | $ | 2,227 | ||
| Branch Expenses | $ | 1,038,943 | ||
| Other General and Administrative Expenses | $ | 44,893 | ||
| Software, memberships and subscriptions | $ | 357,736 | ||
| Meals and Entertainment | $ | 4,531 | ||
| Membership fee | $ | 2,888 | ||
| Other business Expenses | $ | 17,243 | ||
| Poatage and delivery | $ | 2,582 | ||
| Payroll Expenses | $ | 4,757,597 | ||
| Depreciation | $ | 9,793 | ||
| Texas and Licenses | $ | 213,993 | ||
| Travel Expenses | $ | 11,203 | ||
| Total Expenses | $ | 6,992,683 | ||
| Income (Loss) before taxes | $ | 36,635 | ||
| Other Income | $ | 58,435 | ||
| Net Income | $ | 95,069 | ||
| Equity Beginning of the Period | $ | 905,035 | ||
| Change in Equity, Fair Value adjustment | $ | 268,752 | ||
| Equity at end of the Period | $ | 1,268,856 | ||
The accompanying notes are an integral part of these financial statements.
F-15
INSTAMORTGAGE, INC
Statement of Cash Flows
For the Period Ended December 31, 2025
| Cash Flows from Operating Activities | ||||
| Net income (loss) | $ | 95,069 | ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
| Depreciation Expense | $ | 9,793 | ||
| Accounts payable | $ | 46,454 | ||
| Mark to Market Value Revenue | $ | (117,573 | ) | |
| Loans held for sale | $ | (3,125,714 | ) | |
| Security Deposit | $ | 1,910 | ||
| Other prepaid Expenses | $ | (46,405 | ) | |
| Total adjustments to reconcile net income (loss) to net cash provided by operating activities: | $ | (3,231,534 | ) | |
| Cash flow from operating activities | $ | (3,136,465 | ) | |
| Cash Flows from Financing Activities | ||||
| Loan from warehouse lines-of-credit | $ | 3,274,087 | ||
| Notes Receivable | $ | (405,000 | ) | |
| Changes in additional paid in capital | $ | (29,859 | ) | |
| Net Cash from Financing Activities | $ | 2,839,228 | ||
| Net Increase (Decrease) in Cash and Restricted Cash | $ | (297,237 | ) | |
| Cash and Restricted Cash, Beginning of Period | $ | 864,927 | ||
| Cash and Restricted Cash, End of Period | $ | 567,690 | ||
The accompanying notes are an integral part of these financial statements.
F-16
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
August 1, 2024 to December 31, 2025
INSTAMORTGAGE, INC.
NOTES TO THE FINANCIAL STATEMENTS
Purpose and Organization
InstaMortgage, Inc. derives income primarily from fees charged for services related to the origination and processing of mortgage loans for financial institutions. The Company was incorporated on April 18, 2008, under the laws of the State of California. Initially The Company has adopted a July 31 year-end for financial reporting and income tax purposes, however, during 2025, it has changed it’s year end to December 31, 2025. The Company had elected and been approved to be taxed as a Subchapter S Corporation effective January 1, 2009. As of January 1, 2020, the Company changed its elected status to a C Corporation. The Company changed its name from Arcus Lending, Inc. to InstaMortgage, Inc. and filed the name change with the Secretary of State of California on February 18, 2022.
Change in Accounting Principle
Effective December 31, 2018, management adopted ASU 2016-18, Statement of Cash Flows (Topic 230), related to restricted cash. This change did not affect net income or retained earnings. The presentation of restricted cash in the balance sheet and statement of cash flows was updated to include a combined description of cash and restricted cash balances.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents. The reconciliation of cash and restricted cash reported within the balance sheet is as follows:
| Account Type | Amount | |||
| Unrestricted cash-in-demand deposit accounts | 516,690 | |||
| Restricted cash-in-demand deposit accounts | 51,000 | |||
| Total | $ | 567,690 | ||
F-17
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
August 1, 2024 to December 31, 2025
Mark to Market Value Revenue
Loan points and revenues related to loan origination are recorded as revenue when the related loans are sold to investors and yet to be funded. Management reviews outstanding receivables periodically, and as of December 31, 2025, no allowance for doubtful accounts has been recorded as all accounts are deemed collectible.
As of December 31, 2025, total Mark to Market Value Revenue was 286,752.
Revenue Recognition
Gains or losses resulting from sales of mortgage loans are recognized at the date of settlement and are based on the difference between the sales price and the asset retained by the Company, if any, and the carrying value of the related loans sold less related transaction costs. Since the Company sells its loan on a servicing-released basis, gains are increased by the amount of any servicing-released premiums received.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Material estimates for which a change is reasonably possible in the near term relate to the determination of the fair value of loans held for sale. The significant assumptions used by the Company to estimate the liability for losses on loans sold include consideration of the Company’s experienced losses on loans repurchased, the likelihood of an error or omission that results in a breach of standard representation and warranties included in the loan sale agreements and the anticipated expense, if any, that may be incurred by the Company in resolving any repurchased loans. Actual results could materially differ from management’s estimates.
Note B - Loans Held for Sale
Mortgage loans held for sale are stated at fair value as determined by outstanding commitments from investors or quoted market prices for securities backed by similar types of loans when quotes are available. Interest on mortgage loans held for sale is credited to income as earned. Interest is accrued only if deemed collectible. During the period ended December 31, 2025 the Company sold loans to twenty-one different investors. The Company monitors its relationships with its investors and, from time to time, makes adjustments in the amount it sells to any one investor based upon a number of factors, including but not limited to, price, loan review time and funding turnaround, underwriting guidelines and the overall efficiency of its relationship with the investors.
On December 31, 2025, loans held for sale consisted of mortgage loans recorded at fair value in the amount of $ 9,944,973. Loans are typically sold to investors on a servicing-released basis.
F-18
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
August 1, 2024 to December 31, 2025
Note C - Property and Equipment
Property and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the improvements.
| Non-Current Assets | Amount | |||
| Furniture and Equipment | 53,616 | |||
| Laptop | 17,113 | |||
| Vehicles | 49,514 | |||
| Total | 120,242 | |||
| Less Accumulated depreciation | (120,242 | ) | ||
| Net book value | $ | - | ||
Note D - Transfers of Financial Assets
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
Note E - Advertising
Advertising costs are expensed as incurred. Advertising expenses amounted to $65,847 for the period ended December 31, 2025, and are included in operating expenses in the statement of income.
Note F - Concentration of Risk
The Company originates mortgage loans on property located in twenty-three states throughout the United States. Originations in California, Maryland, Virginia and Texas made up approximately 60% of all originations for the period ended December 31, 2025. Due to the nature of the mortgage industry, interest rate increases, and a depressed housing market may severely impact revenue from services related to originating and processing mortgages, which are the primary source of income for the Company.
The Company has concentrated its credit risk for cash by maintaining deposits in several financial institutions, which may at times exceed amounts covered by insurance provided by the Federal Deposit Insurance Corporation (FDIC). The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk to cash.
F-19
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
August 1, 2024 to December 31, 2025
Note G - Fair Value
The Company measures its financial assets based on a hierarchy that prioritizes the use of observable inputs in the valuation techniques used to measure fair value.
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability.
Level 3: Unobservable inputs.
The fair value of mortgage loans held for sale as of December 31, 2025, was $9,944,973 which is classified as a Level 2 input.
Note H - Warehouse Line of Credit
The Company funds loans through multiple warehouse lines of credit. These lines are used to finance the origination of loans for which a takeout commitment from an approved investor exists. As of December 31, 2025, $9,794,470 was advanced on the warehouse line of credit. The total available credit was $21,000,000.
Note I - Income Tax
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently payable plus deferred taxes arising from temporary differences in the bases of assets and liabilities for financial reporting and income tax purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. The components of the deferred tax asset and liability are classified as current and noncurrent based on their characteristics. Valuation allowances are recorded to reduce deferred tax assets to the amounts management concludes are more likely than not to be realized.
Income tax benefits are recognized and measured based upon a two-step model: 1) a tax position must be more likely than not to be sustained based solely on its technical merits to be recognized, and 2) the benefit is measured as the largest dollar amount of that position that is more-likely-than-not to be sustained upon settlement. The difference between the benefit recognized and the tax benefit claimed on a tax return is referred to as an unrecognized tax benefit (UTB).
The Company’s income tax returns are subject to examination by the federal taxing authorities for three years and by the California
F-20
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
August 1, 2024 to December 31, 2025
Note J - Leasing Arrangements
The Company leases its operating facility under a non-cancelable operating lease with various expiry dates. While all of the agreements provide for minimum lease payments, some include payments adjusted for inflation or variable payments based on a certain criterion. Variable payments are not determinable at the lease commencement and are not included in the measurement of the lease assets and liabilities. The lease agreements do not include any material residual value guarantees or restrictive covenants.
| Operating lease - right-of-use assets | $ | 102,047 | ||
| Operating lease liabilities - current portion | $ | 67,642 | ||
| Operating lease liabilities - less the current portion | $ | 34,405 |
There are no components of initial direct costs related to the operating lease that are included in general and administrative expenses in the statement of income for the period ended December 31, 2025
The following is a schedule by period of the future minimum lease payments required under this lease:
| Period Ending December 31 | Amount | |||
| 2026 | $ | 67,642 | ||
| 2027 | $ | 34,405 | ||
| Total | $ | 102,047 | ||
Note K - Capital and Liquidity Requirements
The Company is subject to various capital requirements in connection with seller and warehouse lending agreements that the Company has entered into with secondary market investors and warehouse lenders. Failure to maintain minimum capital requirements could result in the Company’s inability to originate loans for the respective investor or borrow funds from their warehouse lenders and, therefore, could have a direct material effect on the Company’s financial statements.
The Company’s adjusted net worth and minimum capital requirements by investor and warehouse lender are listed below.
| Category | Adjusted Net Worth ($) | Minimum Capital Requirement($) | ||||||
| HUD | 1,268,856 | 1,000,000 | ||||||
| Warehouse Lenders | ||||||||
| Lender 1 | 1,200,000 | 500,000 | ||||||
| Lender 2 | 500,000 | 500,000 | ||||||
| Lender 3 | 500,000 | 500,000 | ||||||
F-21
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
August 1, 2024 to December 31, 2025
Note L - New Accounting Guidance Implementation
As of January 1, 2022, the Company changed its accounting method for leases as a result of implementing the requirements in the Financial Accounting Standard Board’s Accounting Standards Codification (ASC) 842, Leases, using the modified retrospective transition method. There was no cumulative effect adjustment to the Company’s balance sheet as of January 1, 2022. Prior Period information has not been restated and continues to be reported under the accounting standards in effect for the prior period.
The new lease guidance requires the recognition of a right-of-use asset and a lease liability for operating leases. The Company elected the package of practical expedients, which allowed, among other things, for not reassessing the lease classification or initial direct costs for existing leases. The Company has not elected the hindsight practical expedient.
As of December 31, 2025, approximately $102,047 in operating lease right-of-use assets and corresponding lease liabilities were recognized. Adoption of the new guidance did not have a significant impact on the statement of income or cash flows for the period ended December 31, 2025.
Note M - Subsequent Events
Management evaluated subsequent events through March 2, 2026, the date the financial statements were available to be issued.
There were no events requiring adjustment or disclosure.
Note N - Merger Agreement And Subsequent Change In Ownership
On December 19, 2025, InstaMortgage Inc. (the “Company”) entered into a definitive Agreement and Plan of Merger with reAlpha Tech Corp. (“reAlpha”), reAlpha Merger Sub I, Inc., a wholly owned subsidiary of reAlpha, and the Company’s existing stockholders. Under the agreement, reAlpha agreed to acquire all outstanding shares of the Company through a merger in which the Company would continue as the surviving corporation and become a wholly owned subsidiary of reAlpha.
The original agreement provided for aggregate merger consideration of approximately $8.5 million, subject to certain closing adjustments. The consideration consisted of $500,000 in cash, $1.5 million in reAlpha common stock, and $6.5 million payable in six equal semiannual installments over three years following the closing date. The deferred installments could be settled in cash or reAlpha common stock, at reAlpha’s discretion, provided that at least $1.5 million of those installments would be paid in cash. The cash consideration was subject to adjustments for the Company’s cash and cash equivalents, indebtedness and unpaid selling expenses, as specified in the agreement.
As of December 31, 2025, the merger had not been consummated and remained subject to customary closing conditions, including applicable regulatory approvals. Accordingly, no merger consideration or gain from the contemplated transaction was recognized in the Company’s financial statements for the year ended December 31, 2025.
F-22
InstaMortgage, Inc.
Financial Statements
As of July 31, 2024
With Independent Auditor’s opinion
Auditor(s)
FAIZA MEHMOOD
FM Financial Services LLC
77 Sugar Creek blvd, Suite 600, Sugar Land
Texas, United States, 77478
Email: [email protected]
F-23
Independent Auditor’s Report
To the Board of Directors and Stockholder
InstaMortgage, Inc.
San Jose, California
Opinion
We have audited the accompanying financial statements of InstaMortgage, Inc., which comprise the balance sheet as of July 31, 2024, and the related statements of income, stockholder’s equity, and cash flows for the year then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of InstaMortgage, Inc. as of July 31, 2024, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of InstaMortgage, Inc., and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about InstaMortgage, Inc.’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
F-24
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of InstaMortgage, Inc.’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about InstaMortgage, Inc.’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
| /s/ Faiza Mehmood | |
| FAIZA MEHMOOD | |
| Managing Partner of | |
| FM Financial Services LLC | |
| Sugar Land, Texas | |
| October 22, 2024 |
F-25
INSTAMORTGAGE, INC
Balance Sheet
As of July 31, 2024
| Assets | ||||
| Current Assets | ||||
| Cash | $ | 758,232 | ||
| Restricted cash | $ | 100,774 | ||
| Accounts Receivable | $ | 57,376 | ||
| Receivable from Officer | $ | 45,000 | ||
| Loans held for sale, at fair value | $ | 8,421,583 | ||
| Total Current Assets | $ | 9,382,965 | ||
| Non-Current Assets | ||||
| Furniture nd Equipment | $ | 62,426 | ||
| Laptop | $ | 17,113 | ||
| Vehicle | $ | 49,514 | ||
| (Accumulated Depreciation) | $ | (109,318 | ) | |
| Total Non-Current Assets | $ | 19,735 | ||
| Other Assets | ||||
| Security deposits | $ | 21,470 | ||
| Right to Use Asset | $ | 217,989 | ||
| Provision for Defer Tax Assets | $ | 331,801 | ||
| Total Other Assets | $ | 571,260 | ||
| Total Assets | $ | 9,973,960 | ||
| Liabilities and Stockholder’s Equity | ||||
| Current Liabilities | ||||
| Accounts payable and accrued expenses | $ | 47,900 | ||
| Warehouse line of credit, UPB | $ | 8,050,316 | ||
| Operating lease liabilities - current portion | $ | 102,049 | ||
| Total Current Liabilities | $ | 8,200,265 | ||
| Long-Term Liabilities | ||||
| Operating lease liabilities - non current Portion | $ | 115,940 | ||
| Total Long-Term Liabilities | $ | 115,940 | ||
| Stockholder’s Equity | ||||
| Common stock, $.01 par value, 100,000 shares authorized, 100,000 shares issued and outstanding | $ | 1,000 | ||
| Additional paid-in capital | $ | 2,814,368 | ||
| Retained earnings | $ | (1,157,612 | ) | |
| Total Stockholder’s Equity | $ | 1,657,756 | ||
| Total Liabilities and Stockholder’s Equity | $ | 9,973,960 | ||
Footnotes are the integral part of the financial statements
F-26
INSTAMORTGAGE, INC
Statement of Income
For the Year Ended July 31, 2024
| 2024 | ||||
| Revenues | ||||
| Loan origination income | $ | 4,996,089 | ||
| Change in fair value of loans held for sale | $ | 189,788 | ||
| Total Revenues | $ | 5,185,878 | ||
| Cost of Revenues | $ | 1,806,570 | ||
| Gross Profit | $ | 3,379,308 | ||
| Expenses | ||||
| Personnel expense | $ | 3,407,660 | ||
| Occupancy expense | $ | 182,586 | ||
| Operating expense | $ | 1,118,387 | ||
| Interest expense | $ | 32,194 | ||
| Professional fees | $ | 218,485 | ||
| Total Expenses | $ | 4,959,311 | ||
| Income (Loss) before taxes | $ | (1,580,003 | ) | |
| Other Income | $ | 37,116 | ||
| Provision for income taxes | $ | 331,801 | ||
| Net Income | $ | (1,211,086 | ) | |
Footnotes are the integral part of the financial statements
F-27
INSTAMORTGAGE, INC
Statement of Cash Flows
For the Year Ended July 31, 2024
| Cash Flows From Operating Activities | ||||
| Net income (loss) | $ | (1,211,086 | ) | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
| Depreciation | $ | 23,157 | ||
| Provision for income Tax | $ | (331,801 | ) | |
| Increase in Accounts Payable | $ | (57,376 | ) | |
| Decrease in Security Deposit | $ | 6,208 | ||
| Right to use assets | $ | (188,302 | ) | |
| Loans held for sale | $ | (3,146,549 | ) | |
| Accounts payable | $ | (218,204 | ) | |
| operating lease liabilities | $ | 188,302 | ||
| Net Cash Provided (Used) by Operating Activities | $ | (4,935,652 | ) | |
| Cash Flows from Financing Activities | ||||
| Repayment of warehouse lines-of-credit | $ | 2,977,772 | ||
| Receivable from Founder | $ | (45,000 | ) | |
| Capital contributions | $ | 1,362,172 | ||
| Net Cash from Financing Activities | $ | 4,294,944 | ||
| Net Increase (Decrease) in Cash and Restricted Cash | $ | (640,708 | ) | |
| Cash and Restricted Cash, Beginning of Year | $ | 1,499,712 | ||
| Cash and Restricted Cash, End of Year | $ | 859,004 | ||
Footnotes are the integral part of the financial statements
F-28
INSTAMORTGAGE, INC
Statement of Stockholder’s Equity
For the year ended July 31, 2024
| Common
Stock | Additional Paid-In Capital | Retained Earnings | Total | |||||||||||||
| Balance as of July 31, 2022 | $ | 1,000 | $ | 1,108,789 | $ | 1,403,502 | $ | 2,513,291 | ||||||||
| Net Income | $ | - | $ | - | $ | (1,350,028 | ) | $ | (1,350,028 | ) | ||||||
| Contributions | $ | - | $ | 343,407 | $ | - | $ | 343,407 | ||||||||
| Balance as of July 31, 2023 | $ | 1,000 | $ | 1,452,196 | $ | 53,474 | $ | 1,503,670 | ||||||||
| Net Income | $ | (1,211,086 | ) | $ | (1,211,086 | ) | ||||||||||
| Contributions | $ | 1,362,172 | $ | 1,362,172 | ||||||||||||
| Balance - Juy 31, 2024 | $ | 1,000 | $ | 2,814,368 | $ | (1,157,612 | ) | $ | 1,657,756 | |||||||
Footnotes are the integral part of the financial statements
F-29
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
AUGUST 1st, 2023 TO JULY 31, 2024
INSTAMORTGAGE, INC.
NOTES TO THE FINANCIAL STATEMENTS
Purpose and Organization
InstaMortgage, Inc. derives income primarily from fees charged for services related to the origination and processing of mortgage loans for financial institutions. The Company was incorporated on April 18, 2008, under the laws of the State of California. The Company has adopted a July 31 year-end for financial reporting and income tax purposes. The Company had elected and been approved to be taxed as a Subchapter S Corporation effective January 1, 2009. As of January 1, 2020, the Company changed its elected status to a C Corporation. The Company changed its name from Arcus Lending, Inc. to InstaMortgage, Inc. and filed the name change with the Secretary of State of California on February 18, 2022.
Change in Accounting Principle
Effective December 31, 2018, management adopted ASU 2016-18, Statement of Cash Flows (Topic 230), related to restricted cash. This change did not affect net income or retained earnings. The presentation of restricted cash in the balance sheet and statement of cash flows was updated to include a combined description of cash and restricted cash balances.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents. The reconciliation of cash and restricted cash reported within the balance sheet is as follows:
| Account Type | Amount | |||
| Unrestricted cash-in-demand deposit accounts | 758,232 | |||
| Restricted cash-in-demand deposit accounts | 100,774 | |||
| Total | 859,006 | |||
| FM Financial Services LLC | 77 Sugar Creek Blvd, Suite 600 Sugar Land, Texas, 77478 | [email protected] |
F-30
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
AUGUST 1st, 2023 TO JULY 31, 2024
Accounts Receivable
Loan points and revenues related to loan origination are recorded as revenue when the related loans are sold to investors. Management reviews outstanding receivables periodically, and as of July 31, 2024, no allowance for doubtful accounts has been recorded as all accounts are deemed collectible.
As of July 31, 2024, Total outstanding receivables were $57,376. The receivables were paid in full during August 2024.
Revenue Recognition
Gains or losses resulting from sales of mortgage loans are recognized at the date of settlement and are based on the difference between the sales price and the asset retained by the Company, if any, and the carrying value of the related loans sold less related transaction costs. Since the Company sells its loan on a servicing-released basis, gains are increased by the amount of any servicing-released premiums received.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Material estimates for which a change is reasonably possible in the near term relate to the determination of the fair value of loans held for sale. The significant assumptions used by the Company to estimate the liability for losses on loans sold include consideration of the Company’s experienced losses on loans repurchased, the likelihood of an error or omission that results in a breach of standard representation and warranties included in the loan sale agreements and the anticipated expense, if any, that may be incurred by the Company in resolving any repurchased loans. Actual results could materially differ from management’s estimates.
Note B - Loans Held for Sale
Mortgage loans held for sale are stated at fair value as determined by outstanding commitments from investors or quoted market prices for securities backed by similar types of loans when quotes are available. Interest on mortgage loans held for sale is credited to income as earned. Interest is accrued only if deemed collectible. During the year ended July 31, 2024, the Company sold loans to twenty-one different investors. The Company monitors its relationships with its investors and, from time to time, makes adjustments in the amount it sells to any one investor based upon a number of factors, including but not limited to, price, loan review time and funding turnaround, underwriting guidelines and the overall efficiency of its relationship with the investors.
On July 31, 2024, loans held for sale consisted of mortgage loans recorded at fair value in the amount of $ 8,421,583. Loans are typically sold to investors on a servicing-released basis.
| FM Financial Services LLC | 77 Sugar Creek Blvd, Suite 600 Sugar Land, Texas, 77478 | [email protected] |
F-31
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
AUGUST 1st, 2023 TO JULY 31, 2024
Note C - Property and Equipment
Property and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the improvements.
| Non-Current Assets | Amount | |||
| Furniture and Equipment | 62,426 | |||
| Laptop | 17,113 | |||
| Vehicles | 49,514 | |||
| Total | 129,053 | |||
| Less Accumulated depreciation | (109,318 | ) | ||
| Net book value | 19,735 | |||
The Company charged $23,159 of depreciation expense to operations during the year ended July 31, 2024.
Note D - Transfers of Financial Assets
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
Note E - Advertising
Advertising costs are expensed as incurred. Advertising expenses amounted to $144,476 for the year ended July 31, 2024, and are included in operating expenses in the statement of income.
Note F - Concentration of Risk
The Company originates mortgage loans on property located in twenty-three states throughout the United States. Originations in California, New York, and Georgia made up approximately 70% of all originations for the year ended July 31, 2024. Due to the nature of the mortgage industry, interest rate increases, and a depressed housing market may severely impact revenue from services related to originating and processing mortgages, which are the primary source of income for the Company.
The Company has concentrated its credit risk for cash by maintaining deposits in several financial institutions, which may at times exceed amounts covered by insurance provided by the Federal Deposit Insurance Corporation (FDIC). The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk to cash.
| FM Financial Services LLC | 77 Sugar Creek Blvd, Suite 600 Sugar Land, Texas, 77478 | [email protected] |
F-32
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
AUGUST 1st, 2023 TO JULY 31, 2024
Note G - Related Party Transactions
During the year ending July 31, 2024, a short-term loan of $45,000 was issued to the officer of the entity. The loan was repaid in full as of the date of this report.
Note H - Fair Value
The Company measures its financial assets based on a hierarchy that prioritizes the use of observable inputs in the valuation techniques used to measure fair value.
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability.
Level 3: Unobservable inputs.
The fair value of mortgage loans held for sale as of July 31, 2024, was $8,421,583 which is classified as a Level 2 input.
Note I - Warehouse Line of Credit
The Company funds loans through multiple warehouse lines of credit. These lines are used to finance the origination of loans for which a takeout commitment from an approved investor exists. As of July 31, 2024, $8,050,315.62 was advanced on the warehouse line of credit. The total available credit was $21,000,000.
Note J - Income Tax
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently payable plus deferred taxes arising from temporary differences in the bases of assets and liabilities for financial reporting and income tax purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. The components of the deferred tax asset and liability are classified as current and noncurrent based on their characteristics. Valuation allowances are recorded to reduce deferred tax assets to the amounts management concludes are more likely than not to be realized.
Income tax benefits are recognized and measured based upon a two-step model: 1) a tax position must be more likely than not to be sustained based solely on its technical merits to be recognized, and 2) the benefit is measured as the largest dollar amount of that position that is more-likely-than-not to be sustained upon settlement. The difference between the benefit recognized and the tax benefit claimed on a tax return is referred to as an unrecognized tax benefit (UTB).
During the year ended July 31, 2024, the Corporation recorded deferred tax assets of $331,801.
The Company’s income tax returns are subject to examination by the federal taxing authorities for three years and by the California
| FM Financial Services LLC | 77 Sugar Creek Blvd, Suite 600 Sugar Land, Texas, 77478 | [email protected] |
F-33
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
AUGUST 1st, 2023 TO JULY 31, 2024
Note K - Leasing Arrangements
The Company leases its operating facility under a non-cancelable operating lease with various expiry dates. While all of the agreements provide for minimum lease payments, some include payments adjusted for inflation or variable payments based on a certain criterion. Variable payments are not determinable at the lease commencement and are not included in the measurement of the lease assets and liabilities. The lease agreements do not include any material residual value guarantees or restrictive covenants.
| Operating lease - right-of-use assets | 217,989 | |||
| Operating lease liabilities - current portion | 115,942 | |||
| Operating lease liabilities - less the current portion | 102,047 |
There are no components of initial direct costs related to the operating lease that are included in general and administrative expenses in the statement of income for the year ended July 31, 2024.
The following summarizes the cash flow information related to operating leases for the year ended July 31, 2023:
Cash paid for amounts included in the measurement of lease liabilities:
| Operating cash flows for operating leases: | $ | 182,585 |
Lease assets obtained in exchange for lease liabilities in the current year:
| Operating leases: | $ | 182,585 |
The following is a schedule by year of the future minimum lease payments required under this lease:
| Year Ending July 31 | Amount | |||
| 2025 | $ | 102,049 | ||
| 2026 | $ | 67,642 | ||
| 2027 | $ | 34,405 | ||
| Total | $ | 217,989 | ||
Note L - Capital and Liquidity Requirements
The Company is subject to various capital requirements in connection with seller and warehouse lending agreements that the Company has entered into with secondary market investors and warehouse lenders. Failure to maintain minimum capital requirements could result in the Company’s inability to originate loans for the respective investor or borrow funds from their warehouse lenders and, therefore, could have a direct material effect on the Company’s financial statements.
| FM Financial Services LLC | 77 Sugar Creek Blvd, Suite 600 Sugar Land, Texas, 77478 | [email protected] |
F-34
INSTAMORTGAGE, INC.
AUDITED FINANCIAL STATEMENTS
AUGUST 1st, 2023 TO JULY 31, 2024
The Company’s adjusted net worth and minimum capital requirements by investor and warehouse lender are listed below.
| Minimum | ||||||||
| Adjusted | Capital | |||||||
| Net Worth | Requirement | |||||||
| HUD | $ | 1,657,756 | $ | 1,000,000 | ||||
| Warehouse Lenders: | ||||||||
| Lender 1 | $ | 1,657,756 | $ | 500,000 | ||||
| Lender 2 | $ | 758,232 | $ | 700,000 | ||||
| Lender 3 | $ | 758,232 | - | |||||
The Company’s liquidity requirement for HUD is listed below:
| Cash & cash equivalents | $ | 758,232 | ||
| Trading account securities | ||||
| Total liquid assets | $ | 758,232 | ||
| Adjusted net worth | $ | 1,506,670 | ||
| Liquidity requirement | $ | 331,551 | ||
| Liquidity ABOVE the program requirements | $ | 426,681 | ||
| Liquidity BELOW the program requirements | - |
Note M - New Accounting Guidance Implementation
As of January 1, 2022, the Company changed its accounting method for leases as a result of implementing the requirements in the Financial Accounting Standard Board’s Accounting Standards Codification (ASC) 842, Leases, using the modified retrospective transition method. There was no cumulative effect adjustment to the Company’s balance sheet as of January 1, 2022. Prior Year information has not been restated and continues to be reported under the accounting standards in effect for the prior period.
The new lease guidance requires the recognition of a right-of-use asset and a lease liability for operating leases. The Company elected the package of practical expedients, which allowed, among other things, for not reassessing the lease classification or initial direct costs for existing leases. The Company has not elected the hindsight practical expedient.
As of July 31, 2024, approximately $217,989 in operating lease right-of-use assets and corresponding lease liabilities were recognized. Adoption of the new guidance did not have a significant impact on the statement of income or cash flows for the year ended July 31, 2024.
Loans to Officers
The entity has provided a short-term loan of $45,000 to its officer. The loan was repaid in full during September and October 2024.
Note N - Subsequent Events
Management evaluated subsequent events through October 21, 2024, the date the financial statements were available to be issued. There were no events requiring adjustment or disclosure.
| FM Financial Services LLC | 77 Sugar Creek Blvd, Suite 600 Sugar Land, Texas, 77478 | [email protected] |
F-35
Exhibit 99.2
INSTAMORTGAGE, INC.
Interim Financial Statements
For the Six Months Ended June 30, 2026
(Unaudited)
INDEX
S. No. |
Financial Statement | Page | ||
| 1 | Condensed Balance Sheet | 1 | ||
| 2 | Condensed Statement of Operations | 2 | ||
| 3 | Condensed Statement of Cash Flows | 3 | ||
| 4 | Notes to Accounts | 4 |
i
Condensed Balance Sheet
June 30, 2026 (Unaudited) and December 31, 2025
| June 30, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | 453,888 | 516,690 | ||||||
| Restricted cash | 51,000 | 51,000 | ||||||
| Prepaid expenses | 46,405 | 46,405 | ||||||
| Mark to market value | 436,273 | 286,752 | ||||||
| Loans held for sale, at fair value | 12,464,937 | 9,944,973 | ||||||
| Total current assets | 13,452,503 | 10,845,820 | ||||||
| Non-current assets | ||||||||
| Furniture and Equipment | 53,616 | 103,130 | ||||||
| Laptop | 17,113 | 17,113 | ||||||
| Accumulated Depreciation | (70,729 | ) | (120,243 | ) | ||||
| Total Non-current assets | — | — | ||||||
| Other Assets | ||||||||
| Security deposit | 19,560 | 19,560 | ||||||
| Notes Receivables | — | 405,000 | ||||||
| Right to use assets | — | 102,047 | ||||||
| Total Other assets | 19,560 | 526,607 | ||||||
| TOTAL ASSETS | $ | 13,472,063 | $ | 11,372,427 | ||||
| LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 135,713 | $ | 207,054 | ||||
| Warehouse line of credit, UPB | 12,463,955 | 9,794,470 | ||||||
| Operating lease liabilities - current portion | — | 67,642 | ||||||
| Total current liabilities | 12,599,668 | 10,069,166 | ||||||
| Long-Term Liabilities | ||||||||
| Operating lease liabilities - non-current portion | — | 34,405 | ||||||
| Total Long term liabilities | — | 34,405 | ||||||
| Total liabilities | 12,599,668 | 10,103,571 | ||||||
| Stockholder’s Equity | ||||||||
| Common stock, $.01 par value, 100,000 shares authorized, 100,000 shares issued and outstanding | 1,000 | 1,000 | ||||||
| Additional paid-in capital | 2,162,378 | 2,750,378 | ||||||
| Retained earnings | (1,290,983 | ) | (1,482,522 | ) | ||||
| Total Stockholder’s Equity | 872,395 | 1,268,856 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | $ | 13,472,063 | $ | 11,372,427 | ||||
Page 1
Condensed Statement of Income
For the Six months ended June 30, 2026 and June 30,2025 (unaudited)
| For the Six Months Ended | ||||||||
| June 30, 2026 | June 30, 2025 | |||||||
| Revenues | ||||||||
| Loan origination income | $ | 4,475,511 | $ | 2,429,102 | ||||
| Total revenues | 4,475,511 | 2,429,102 | ||||||
| Cost of revenues | 1,161,653 | 736,987 | ||||||
| Gross Profit | 3,313,858 | 1,692,115 | ||||||
| Operational Expenses | ||||||||
| Legal and Professional Charges | 294,874 | 53,027 | ||||||
| Bank Charges and Fees | 3,953 | 1,250 | ||||||
| Donations | 1,000 | — | ||||||
| Occupancy expense | 61,436 | 101,846 | ||||||
| Interest expense | 8,983 | 10,839 | ||||||
| Marketing Expenses | 60,083 | 22,795 | ||||||
| Office Expenses | 6,492 | 16,443 | ||||||
| Branch Expenses | 628,677 | 63,306 | ||||||
| Other General and Administrative Expenses | — | 167,000 | ||||||
| Software, memberships and subscriptions | 142,487 | 91,657 | ||||||
| Meals and Entertainment | — | 3,001 | ||||||
| Membership fee | — | 1,869 | ||||||
| Other business Expenses | 13,169 | 1,960 | ||||||
| Postage and delivery | 1,845 | 539 | ||||||
| Payroll Expenses | 1,844,826 | 1,398,335 | ||||||
| Utilities Expenses | 2,168 | 3,566 | ||||||
| Taxes and Licenses | 56,493 | 36,651 | ||||||
| Travel Expenses | 4,824 | 4,424 | ||||||
| Total expenses | 3,131,310 | 1,978,508 | ||||||
| Income (loss) before taxes | 182,548 | (286,393 | ) | |||||
| Other income | 8,990 | 35,734 | ||||||
| Net Income (loss) | $ | 191,538 | $ | (250,659 | ) | |||
Page 2
Statements of Cash Flows
For six months ended June 30 2026, and June 30 2025, (unaudited)
| For the six Months Ended | For the six Months Ended | |||||||
| June 30, 2026 | June 30, 2025 | |||||||
| Cash Flows from/(used in) Operating Activities: | ||||||||
| Net Income | $ | 191,538 | $ | (250,659 | ) | |||
| Adjustments to reconcile net income to net cash provided by operations: | ||||||||
| Accounts payable | (71,340 | ) | 43,147 | |||||
| Other prepaid Expenses | — | (90,601 | ) | |||||
| Total adjustments | (71,340 | ) | (47,454 | ) | ||||
| Net cash provided by operating activities | 120,198 | (298,113 | ) | |||||
| Cash Flows from/(used in) Investing Activities: | ||||||||
| Security deposit | — | 1,910 | ||||||
| Software | — | (5,180 | ) | |||||
| Cash Flows used in Investing Activities: | — | (3,270 | ) | |||||
| Cash Flows from/(used in) Financing Activities: | ||||||||
| Cash distributions to owner (owner draws) | (183,000 | ) | — | |||||
| Contributions from owner | — | 250,000 | ||||||
| Net cash used in financing activities | (183,000 | ) | 250,000 | |||||
| Net increase in cash and restricted cash | (62,802 | ) | (51,383 | ) | ||||
| Cash and restricted cash-Beginning of Period | 567,690 | 205,625 | ||||||
| Cash and restricted cash-End of Period | $ | 504,888 | $ | 154,242 | ||||
Page 3
NOTE A — ORGANIZATION AND BASIS OF PRESENTATION
Purpose and Organization
InstaMortgage, Inc. (the “Company”) derives income primarily from fees charged for services related to the origination and processing of mortgage loans for financial institutions. The Company was incorporated on April 18, 2008, under the laws of the State of California. The Company has adopted a December 31 year-end for financial reporting and income tax purposes.
The Company had elected and been approved to be taxed as a Subchapter S Corporation effective January 1, 2009. As of January 1, 2020, the Company changed its elected status to a C Corporation. The Company changed its name from Arcus Lending, Inc. to InstaMortgage, Inc. and filed the name change with the Secretary of State of California on February 18, 2022.
Basis of Presentation
The accompanying condensed financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for the interim periods presented have been included.
These condensed interim financial statements are unaudited and have not been subjected to a review by an independent registered public accounting firm in accordance with AICPA AU-C Section 930, Interim Financial Information, or PCAOB AS 4105, Reviews of Interim Financial Information. Operating results for the six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026.
The accompanying condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2025.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents. The reconciliation of cash and restricted cash reported within the condensed balance sheet as of June 30, 2026 is as follows:
Account Type | Amount | |||
| Unrestricted cash in demand deposit accounts | $ | 453,888 | ||
| Restricted cash in demand deposit accounts | $ | 51,000 | ||
| Total | $ | 504,888 | ||
Page 4
Revenue Recognition
Gains or losses resulting from sales of mortgage loans are recognized at the date of settlement and are based on the difference between the sales price and the asset retained by the Company, if any, and the carrying value of the related loans sold less related transaction costs. Since the Company sells its loans on a servicing-released basis, gains are increased by the amount of any servicing-released premiums received. There were no changes to the Company’s revenue recognition policies during the six months ended June 30, 2026.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Material estimates for which a change is reasonably possible in the near term relate to the determination of the fair value of loans held for sale. The significant assumptions used by the Company to estimate the liability for losses on loans sold include consideration of the Company’s experienced losses on loans repurchased, the likelihood of an error or omission that results in a breach of standard representations and warranties included in the loan sale agreements, and the anticipated expense, if any, that may be incurred by the Company in resolving any repurchased loans. Actual results could materially differ from management’s estimates.
NOTE B — LOANS HELD FOR SALE
Mortgage loans held for sale are stated at fair value as determined by outstanding commitments from investors or quoted market prices for securities backed by similar types of loans when quotes are available. Interest on mortgage loans held for sale is credited to income as earned. Interest is accrued only if deemed collectible. During the three months ended June 30, 2026, the Company sold loans to 12 different investors . The Company monitors its relationships with its investors and, from time to time, adjusts in the amount it sells to any one investor based upon several factors, including but not limited to, price, loan review time and funding turnaround, underwriting guidelines, and the overall efficiency of its relationship with the investors.
As of June 30, 2026, loans held for sale consisted of mortgage loans recorded at fair value in the amount of $ 12,464,937. Loans are typically sold to investors on a servicing-released basis.
NOTE C — PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the improvements. Property and equipment as of June 30, 2026 consisted of the following:
Non-Current Assets | Amount | |||
| Furniture and Equipment | $ | 53,616 | ||
| Laptop | $ | 17,113 | ||
| Vehicles | $ | — | ||
| Total | $ | 70,729 | ||
| Less: Accumulated depreciation | $ | (70,729 | ) | |
| Net book value | 0 | |||
Page 5
NOTE D — TRANSFERS OF FINANCIAL ASSETS
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. There were no changes to the Company’s accounting for transfers of financial assets during the six months ended June 30, 2026.
NOTE E — ADVERTISING
Advertising costs are expensed as incurred. Advertising expenses amounted to $20,334 and $19,912 for the six months ended June 30, 2026 and 2025, respectively, and are included in marketing expenses in the condensed statement of income.
NOTE F — CONCENTRATION OF RISK
The Company originates mortgage loans on property located in 21 states throughout the United States. Originations in Virginia, Texas, New Jersey, and Maryland made up approximately 71% of all originations for the six months ended June 30, 2026, with Virginia (20%), Texas (17%), New Jersey (10%), and Maryland (23%) individually representing the most significant geographic concentrations. Due to the nature of the mortgage industry, interest rate increases and a depressed housing market may severely impact revenue from services related to originating and processing mortgages, which are the primary source of income for the Company.
The Company has concentrated its credit risk for cash by maintaining deposits in several financial institutions, which may at times exceed amounts covered by insurance provided by the Federal Deposit Insurance Corporation (FDIC). The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk to cash.
NOTE G — FAIR VALUE
The Company measures its financial assets based on a hierarchy that prioritizes the use of observable inputs in the valuation techniques used to measure fair value.
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability.
Level 3: Unobservable inputs.
The fair value of mortgage loans held for sale as of June 30, 2026 was $12,464,937, classified as a Level 3 input. For interim reporting periods, the Company estimates fair value using a fixed pricing assumption of 3.5% of unpaid principal balance, based on historical sale experience. For annual audited periods, fair value is determined based on actual subsequent sale prices realized on the loans.
There were no transfers between fair value hierarchy levels during the three months ended June 30, 2026.
NOTE H — WAREHOUSE LINE OF CREDIT
The Company funds loans through multiple warehouse lines of credit. These lines are used to finance the origination of loans for which a takeout commitment from an approved investor exists. As of June 30, 2026, $12,463,955 was advanced on the warehouse line of credit. The total available credit was $13,000,000.
Page 6
NOTE J — INCOME TAXES
The Company generated worldwide pre-tax income of $191,538 and a worldwide pre-tax loss of $250,659 for the periods ended June 30, 2026 and June 30, 2025, respectively.
Pre-Tax book income/(loss) has been recorded in the following jurisdictions:
| For the Six Months Ended | ||||||||
| 6/30/26 | 6/30/25 | |||||||
| US | $ | 191,538 | $ | (250,659 | ) | |||
| Foreign | — | — | ||||||
| Total pre-tax income/(loss) | $ | 191,538 | $ | (250,659 | ) | |||
The Company recorded federal and state income tax expense for the period ended June 30, 2026 of $7,720 and $12,484 respectively and no foreign tax expense. The Company recorded no federal, state, or foreign income tax expense for the period ended June 30, 2025.
| For the Six Months Ended | ||||||||
| 6/30/26 | 6/30/25 | |||||||
| Current: | ||||||||
| Federal | $ | 7,758 | $ | — | ||||
| State | 11,560 | 5,737 | ||||||
| Foreign | — | — | ||||||
| 19,318 | 5,737 | |||||||
| Deferred: | ||||||||
| Federal | — | — | ||||||
| State | — | — | ||||||
| Foreign | — | — | ||||||
| — | — | |||||||
| Income tax expense (benefit) | 19,318 | 5,737 | ||||||
| Total | $ | 19,318 | $ | 5,737 | ||||
Effective January 1, 2025, the Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, on a prospective basis in accordance with the standard’s transition guidance. As required under ASU 2023-09, the rate reconciliation for the current year is presented using the new prescribed categories and enhanced disaggregation to provide greater transparency into the factors affecting the Company’s effective tax rate for continuing operations. The following table presents the Company’s income tax rate reconciliation on continuing operations for the period ended June 30, 2026, prepared in accordance with the disclosure requirements of ASU 2023-09.
| For the Six Months Ended | For the Six Months Ended | |||||||||||||||
| 6/30/26 | 6/30/25 | |||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||
| U.S. Federal Statutory Tax Rate | $ | 40,223 | 21.00 | % | $ | (52,639 | ) | 21.00 | % | |||||||
| State and Local Income Taxes, Net of Federal Income Tax Effect | 9,132 | 4.77 | % | 4,532 | -1.81 | % | ||||||||||
| Changes in Valuation Allowances | (31,034 | ) | -16.20 | % | 53,308 | -21.27 | % | |||||||||
| Nontaxable or Nondeductible Items | 997 | 0.52 | % | 535 | -0.21 | % | ||||||||||
| Effective Tax Rate | $ | 19,318 | 10.09 | % | $ | 5,737 | -2.29 | % | ||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
| For the Six Months Ended | ||||||||
| 6/30/26 | 12/31/25 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | $ | 1,034,000 | $ | 1,105,429 | ||||
| Valuation allowance | (1,034,000 | ) | (1,105,429 | ) | ||||
| Net deferred tax assets | $ | — | $ | — | ||||
| Deferred tax liabilities | ||||||||
| Gross deferred tax liabilities | 0 | 0 | ||||||
| Net deferred tax liabilities | 0 | 0 | ||||||
| Net deferred taxes | $ | — | $ | — | ||||
Page 7
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The valuation allowance changed by -$0.1 million, during the period ended June 30, 2026.
For the period ended June 30, 2026, InstaMortgage, Inc. has a total carryover of Federal Net Operating Losses (NOLs) of $2.4 million. The Company’s NOLs were generated after the rules of the Tax Cuts and Jobs Act (TCJA) became effective on January 1, 2018. The NOLs do not expire but are subject to the 80% limitation. The Company has a State NOL carryover of $8.9 million. These NOLs are subject to various limitations and expiration dates.
The Internal Revenue Code of 1986, as amended, imposes restrictions on the utilization of net operating losses and tax credits in the event of an “ownership change” of a corporation. Accordingly, a company’s ability to use net operating losses and tax credits may be limited as prescribed under Internal Revenue Code Section 382 and 383 (“IRC Section 382”). Events which may cause limitations in the amount of the net operating losses or tax credits that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Utilization of the federal and state net operating losses may be subject to substantial annual limitation due to the ownership change limitations provided by the IRC Section 382 rules and similar state provisions. In the event the Company has any changes in ownership, net operating losses and research and development credit carryovers could be limited and may expire unutilized.
It is the Company’s policy to include penalties and interest expense in income tax expense. There was no interest expense or penalties related to unrecognized tax benefits recorded through June 30, 2026.
The Company’s major tax jurisdictions are the United States and California. All of the Company’s tax years will remain open for examination by the Federal and state tax authorities for three and four years, respectively, from the date of utilization of the net operating loss. The Company does not have any tax audits pending in the United States.
The Inflation Reduction Act of 2022 was signed into law August 16, 2022, and includes significant legislation addressing taxes, inflation, climate change and renewable energy incentives, and healthcare. Key tax provisions include a 15% corporate minimum tax, clean energy incentives, and a 1% excise tax on stock buybacks. The Company does not expect the provisions of such legislation to have any impact on the effective tax rate of the Company but will continue to evaluate the tax effects should any provisions become applicable to the Company.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted as Public Law 119-21. The legislation implements several amendments to the Internal Revenue Code, including the permanent extension of 100 percent bonus depreciation for qualified property and research and development expenditures, as well as revisions to expensing rules applicable to certain structures. The Act also includes modifications affecting corporate tax administration, such as adjustments to the Employee Retention Credit (ERC), changes to Opportunity Zone related provisions, and the scheduled expiration or modification of certain business related clean energy credits.
The Company has evaluated the corporate income tax effects of the OBBBA in the period of enactment. Based on its analysis, the Company determined that the enactment of the OBBBA did not have a material impact on its financial statements for the period ended June 30, 2026. The Company will continue to monitor regulatory and administrative guidance issued under the Act.
Page 8
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On August 19, 2026 (the “Closing Date”), reAlpha Tech Corp. (the “Company” or “reAlpha”) completed the acquisition (the “Acquisition”) of InstaMortgage Inc. (“InstaMortgage”) pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of August 17, 2026, which amended and restated the Agreement and Plan of Merger, dated as of December 19, 2025, in its entirety. The following unaudited pro forma condensed combined statements of operations (the “pro forma statements of operations”) and condensed combined balance sheet (the “pro forma balance sheet”) give effect to the Acquisition, as described in Note 1, and were prepared in accordance with Article 11 of Regulation S-X.
The unaudited pro forma condensed combined financial information has been prepared from the historical consolidated financial statements of the Company, as previously filed with the Securities and Exchange Commission (the “SEC”), and InstaMortgage, adjusted to give effect to the Acquisition. The unaudited pro forma condensed combined balance sheet combines the historical balance sheets of the Company and InstaMortgage as of June 30, 2026, giving effect to the Acquisition as if it had been completed on June 30, 2026. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2025, and the six months ended June 30, 2026, give effect to the Acquisition as if it had been completed on January 1, 2025. This information should be read together with (i) the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026, (ii) the Company’s unaudited condensed consolidated financial statements and related notes included in its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026, filed with the SEC on August 14, 2026, and (iii) InstaMortgage’s audited financial statements and related notes as of and for the year ended December 31, 2025 and unaudited interim financial statements as of and for the six months ended June 30, 2026, filed as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K/A. The pro forma financial information does not reflect any revenue or operating synergies or cost savings that may result from the Acquisition.
The unaudited pro forma condensed combined financial information has been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The pro forma financial information (i) was prepared using the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”), with the Company as the accounting acquirer, and (ii) is based on the historical consolidated financial statements of the Company and InstaMortgage, as adjusted to reflect the pro forma impact of the Acquisition.
In accordance with ASC 805, the Company used estimates and assumptions to assign fair value to the tangible assets acquired and liabilities assumed, identifiable intangible assets, deferred consideration, and related income tax impacts as of the Acquisition date. The excess of the purchase price over the fair value of net assets acquired has been allocated to goodwill. The estimated fair values of the assets acquired, and liabilities assumed are preliminary and based on information available as of the Acquisition date. Management believes the pro forma financial information includes all material adjustments necessary to present the transaction in accordance with Article 11 of Regulation S-X. The Company intends to finalize the acquisition accounting within the required measurement period, not to exceed one year from the Closing Date. The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have been achieved had the Acquisition occurred on the dates indicated, nor is it indicative of future results.
The unaudited pro forma condensed combined financial information as of June 30, 2026, for the year ended December 31, 2025, and for the six months ended June 30, 2026, is derived from:
| ● | the Company’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2025, included in its Annual Report on Form 10-K filed with the SEC on March 12, 2026. |
| ● | the Company’s unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2026, included in its Quarterly Report on Form 10-Q filed with the SEC on August 14, 2026. |
| ● | InstaMortgage, Inc.’s audited financial statements and related notes as of and for the year ended December 31, 2025; and | |
| ● | InstaMortgage, Inc.’s unaudited interim financial statements as of and for the six months ended June 30, 2026. |
The Company has performed a preliminary review of the accounting policies of InstaMortgage to assess alignment with the Company’s accounting policies and U.S. GAAP. Based on this preliminary review, no material differences in accounting policies were identified that would require adjustment to conform to the Company’s accounting policies for purposes of the accompanying unaudited pro forma condensed combined financial information. The Company will continue to evaluate the accounting policies as additional information becomes available, and adjustments may be identified in future periods. All terms defined in this section of the report are used solely for the purposes of this section and do not apply to any other section of this Current Report on Form 8-K/A.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of June 30, 2026
| As of June 30, 2026 | ||||||||||||||||||
| Transaction accounting adjustments note [4] | ||||||||||||||||||
| reAlpha Tech Corp. | Insta Mortgage | Transaction Accounting Adjustments | Note 4 | Pro Forma Combined | ||||||||||||||
| ASSETS | ||||||||||||||||||
| Current Assets | ||||||||||||||||||
| Cash | $ | 2,230,607 | 453,888 | $ | (396,980 | ) | (a)/(f) | $ | 2,287,515 | |||||||||
| Restricted cash | - | 51,000 | - | 51,000 | ||||||||||||||
| Accounts receivable, net | 164,959 | - | - | 164,959 | ||||||||||||||
| Prepaid expenses | 299,977 | 46,405 | - | 346,382 | ||||||||||||||
| Other current assets | 286,439 | - | - | 286,439 | ||||||||||||||
| Loans held for sale | - | 12,901,210 | - | 12,901,210 | ||||||||||||||
| Escrow deposit | 500,000 | - | (500,000 | ) | (a) | - | ||||||||||||
| Total current assets | 3,481,982 | 13,452,503 | (896,980 | ) | 16,037,505 | |||||||||||||
| Property and Equipment, at cost | ||||||||||||||||||
| Property and equipment, net | $ | 105,970 | - | $ | - | $ | 105,970 | |||||||||||
| Other Assets | ||||||||||||||||||
| Investments | 56,466 | - | - | 56,466 | ||||||||||||||
| Intangible assets, net | 4,031,464 | - | 517,500 | (c) | 4,548,964 | |||||||||||||
| Goodwill | 7,459,125 | - | 5,411,220 | (c) | 12,870,345 | |||||||||||||
| Other assets | - | 19,560 | - | 19,560 | ||||||||||||||
| TOTAL ASSETS | $ | 15,135,007 | $ | 13,472,063 | $ | 5,031,740 | $ | 33,638,810 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||
| Current Liabilities | - | |||||||||||||||||
| Accounts payable | 724,440 | 135,713 | $ | 32,703 | (f) | $ | 892,856 | |||||||||||
| Related party payables | 5,609 | - | - | 5,609 | ||||||||||||||
| Warehouse line of credit, UPB | - | 12,463,955 | - | 12,463,955 | ||||||||||||||
| Short term loans - related parties -current portion | 60,746 | - | - | 60,746 | ||||||||||||||
| Short term loans - unrelated parties -current portion | 185,141 | - | - | 185,141 | ||||||||||||||
| Accrued expenses | 248,459 | - | - | 248,459 | ||||||||||||||
| Deferred liabilities- current portion | 1,856,349 | - | 2,054,036 | (a) | 3,910,385 | |||||||||||||
| Deferred revenue | 256,713 | - | - | 256,713 | ||||||||||||||
| Contingent consideration- current portion | 60,184 | - | - | 60,184 | ||||||||||||||
| Total current liabilities | $ | 3,397,641 | $ | 12,599,668 | 2,086,739 | $ | 18,084,048 | |||||||||||
| Long-Term Liabilities | ||||||||||||||||||
| Derivative liability | 4,760,012 | - | - | 4,760,012 | ||||||||||||||
| Other long-term loans - unrelated parties - net of current portion | 54,872 | - | - | 54,872 | ||||||||||||||
| Deferred liabilities - net of current portion | - | - | 3,693,246 | (a) | 3,693,246 | |||||||||||||
| Contingent consideration - net of current portion | 244,666 | - | - | 244,666 | ||||||||||||||
| Total liabilities | $ | 8,457,191 | $ | 12,599,668 | $ | 5,779,985 | $ | 26,836,844 | ||||||||||
| Mezzanine Equity | ||||||||||||||||||
| Preferred Stock, $0.001 par value; 5,000,000 shares authorized, of which 1,000,000 shares are designated as Series A Convertible Preferred Stock; 256,125 shares issued and outstanding as of June 30, 2026. | 1,096,133 | - | - | 1,096,133 | ||||||||||||||
| Stockholders’ Equity (Deficit) | ||||||||||||||||||
| Common stock ($0.001 par value; 200,000,000 shares authorized, 5,494,206 shares outstanding as of June 30, 2026) | 5,374 | 1,000 | (880 | ) | (a)/(b) | 5,494 | ||||||||||||
| Additional paid-in capital | 69,129,985 | 2,162,378 | (1,989,836 | ) | (a)/(b) | 69,302,527 | ||||||||||||
| Accumulated deficit | (63,444,056 | ) | (1,290,983 | ) | 1,242,471 | (b)/(f) | (63,492,568 | ) | ||||||||||
| Accumulated other comprehensive (loss) | (120,599 | ) | - | - | (120,599 | ) | ||||||||||||
| Total stockholders’ equity attributable to controlling interests | 5,570,704 | 872,395 | (748,245 | ) | 5,694,854 | |||||||||||||
| Non-controlling interests in consolidated entities | 10,979 | - | - | 10,979 | ||||||||||||||
| Total stockholders’ equity | 5,581,683 | 872,395 | (748,245 | ) | 5,705,833 | |||||||||||||
| TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | $ | 15,135,007 | $ | 13,472,063 | $ | 5,031,740 | $ | 33,638,810 | ||||||||||
2
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended June 30, 2026
| For the Six Months Ended June 30, 2026 | ||||||||||||||||||||
| Transaction accounting adjustments note [4] | ||||||||||||||||||||
| reAlpha Tech Corp | Insta Mortgage | Transaction Accounting Adjustments | Note 4 | Pro Forma Combined | ||||||||||||||||
| Revenues | $ | 1,951,406 | $ | 4,475,511 | - | $ | 6,426,917 | |||||||||||||
| Cost of revenues | 666,193 | 1,161,653 | - | 1,827,846 | ||||||||||||||||
| Gross Profit | 1,285,213 | 3,313,858 | - | 4,599,071 | ||||||||||||||||
| Operating Expenses | ||||||||||||||||||||
| Wages, benefits and payroll taxes | 4,157,988 | 1,844,826 | - | 6,002,814 | ||||||||||||||||
| Marketing and advertising | 1,440,059 | 60,083 | - | 1,500,142 | ||||||||||||||||
| Professional and legal fees | 1,380,923 | 294,874 | - | 1,675,797 | ||||||||||||||||
| Depreciation and amortization | 332,739 | - | 25,875 | (c) | 358,614 | |||||||||||||||
| Other operating expenses | 1,149,680 | 922,544 | - | 2,072,224 | ||||||||||||||||
| Total operating expenses | 8,461,389 | 3,122,327 | 25,875 | 11,609,591 | ||||||||||||||||
| Operating (Loss) Income | (7,176,176 | ) | 191,531 | (25,875 | ) | (7,010,520 | ) | |||||||||||||
| Other Expense (income) | ||||||||||||||||||||
| Changes in fair value of contingent consideration | (40,027 | ) | - | - | (40,027 | ) | ||||||||||||||
| Interest expense, net | 41,465 | 8,983 | 144,143 | (d) | 194,591 | |||||||||||||||
| Change in fair value of derivative liability | 185,032 | - | - | 185,032 | ||||||||||||||||
| Other expense (income), net | 25,166 | (8,990 | ) | - | 16,176 | |||||||||||||||
| Total other expense | 211,636 | (7 | ) | 144,143 | 355,772 | |||||||||||||||
| Net (Loss) Income from continuing operations before income taxes | (7,387,812 | ) | 191,538 | (170,018 | ) | (7,366,292 | ) | |||||||||||||
| Income tax (expense) benefit | - | - | - | (e) | - | |||||||||||||||
| Net (Loss) Income from continuing operations | (7,387,812 | ) | 191,538 | (170,018 | ) | (7,366,292 | ) | |||||||||||||
| Net (Loss) Income | $ | (7,387,812 | ) | $ | 191,538 | $ | (170,018 | ) | $ | (7,366,292 | ) | |||||||||
| Less: Net Income (Loss) Attributable to Non-Controlling Interests | (46 | ) | - | - | (46 | ) | ||||||||||||||
| Net (Loss) Income Attributable to Controlling Interests | $ | (7,387,766 | ) | $ | 191,538 | $ | (170,018 | ) | $ | (7,366,246 | ) | |||||||||
| Preferred stock dividends | $ | 75,756 | - | - | $ | 75,756 | ||||||||||||||
| Net (Loss) Income Attributable to Common Stockholders | $ | (7,463,522 | ) | $ | 191,538 | $ | (170,018 | ) | $ | (7,442,002 | ) | |||||||||
| Other comprehensive income | ||||||||||||||||||||
| Foreign currency translation adjustments | 7,290 | - | - | 7,290 | ||||||||||||||||
| Total other comprehensive (Loss) income | 7,290 | - | - | 7,290 | ||||||||||||||||
| Comprehensive (Loss) Income Attributable to Controlling Interests | (7,380,476 | ) | 191,538 | (170,018 | ) | (7,358,956 | ) | |||||||||||||
| Basic loss per share | ||||||||||||||||||||
| Basic loss per share — continuing operations | $ | (1.40 | ) | - | $ | (1.36 | ) | |||||||||||||
| Diluted loss per share | ||||||||||||||||||||
| Diluted loss per share — continuing operations | $ | (1.40 | ) | - | $ | (1.36 | ) | |||||||||||||
| Weighted-average shares outstanding — basic | 5,333,592 | 119,904 | 5,453,496 | |||||||||||||||||
| Weighted-average shares outstanding — diluted | 5,333,592 | 119,904 | 5,453,496 | |||||||||||||||||
3
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2025,
| For the year ended December 31,2025 | ||||||||||||||||||
| Transaction accounting adjustments note [4] | ||||||||||||||||||
| reAlpha Tech Corp | Insta Mortgage | Transaction Accounting Adjustments | Note 4 | Pro Forma Combined | ||||||||||||||
| Revenues | $ | 4,518,498 | $ | 7,262,815 | $ | - | $ | 11,781,313 | ||||||||||
| Cost of revenues | 2,067,060 | 1,989,218 | - | 4,056,278 | ||||||||||||||
| Gross Profit | 2,451,438 | 5,273,597 | - | 7,725,035 | ||||||||||||||
| Operating Expenses | ||||||||||||||||||
| Wages, benefits and payroll taxes | 6,506,553 | 3,620,289 | - | 10,126,842 | ||||||||||||||
| Marketing and advertising | 5,946,514 | 54,688 | - | 6,001,202 | ||||||||||||||
| Professional and legal fees | 3,273,947 | 66,006 | 48,512 | (f) | 3,388,465 | |||||||||||||
| Depreciation and amortization | 543,170 | - | 51,750 | (c) | 594,920 | |||||||||||||
| Impairment of capitalized software | 220,016 | - | - | 220,016 | ||||||||||||||
| Other operating expenses | 1,968,196 | 1,463,430 | - | 3,431,626 | ||||||||||||||
| Total operating expenses | 18,458,396 | 5,204,413 | 100,262 | 23,763,071 | ||||||||||||||
| Operating (Loss) Income | (16,006,958 | ) | 69,184 | (100,262 | ) | (16,038,036 | ) | |||||||||||
| Other Expense (income) | ||||||||||||||||||
| Changes in fair value of contingent consideration | (604,123 | ) | - | - | (604,123 | ) | ||||||||||||
| Interest expense, net | 814,727 | 19,605 | 385,931 | (d) | 1,220,263 | |||||||||||||
| Change in fair value of derivative liability | 456,325 | - | - | 456,325 | ||||||||||||||
| Loss on debt extinguishment | 438,834 | - | - | 438,834 | ||||||||||||||
| Amortization of commitment fee | 406,250 | - | - | 406,250 | ||||||||||||||
| Other expense (income), net | 71,421 | (41,891 | ) | - | 29,530 | |||||||||||||
| Total other expense (Income) | 1,583,434 | (22,286 | ) | 385,931 | 1,947,079 | |||||||||||||
| Net (Loss) Income from continuing operations before income taxes | (17,590,392 | ) | 91,470 | (486,193 | ) | (17,985,115 | ) | |||||||||||
| Income tax (expense) benefit | - | - | - | (e) | - | |||||||||||||
| Net (Loss) Income from continuing operations | (17,590,392 | ) | 91,470 | (486,193 | ) | (17,985,115 | ) | |||||||||||
| Discontinued operations (Roost and Rhove) | ||||||||||||||||||
| Loss from operations of discontinued Operations | - | - | - | - | ||||||||||||||
| Impairment of goodwill and intangible assets of discontinued operations | - | - | - | - | ||||||||||||||
| Loss on discontinued operations | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Net (Loss) Income | $ | (17,590,392 | ) | $ | 91,470 | $ | (486,193 | ) | $ | (17,985,115 | ) | |||||||
| Less: Net Income (Loss) Attributable to Non-Controlling Interests | 3,576 | - | - | 3,576 | ||||||||||||||
| Net (Loss) Income Attributable to Controlling Interests | $ | (17,593,968 | ) | $ | 91,470 | $ | (486,193 | ) | $ | (17,988,691 | ) | |||||||
| Preferred stock dividends | 122,877 | $ | - | $ | - | $ | 122,877 | |||||||||||
| Net (Loss) Income Attributable to Common Stockholders | $ | (17,716,845 | ) | $ | 91,470 | $ | (486,193 | ) | $ | (18,111,568 | ) | |||||||
| Other comprehensive income | ||||||||||||||||||
| Foreign currency translation adjustments | (132,900 | ) | - | - | (132,900 | ) | ||||||||||||
| Total other comprehensive Income (Loss) | (132,900 | ) | - | - | (132,900 | ) | ||||||||||||
| Comprehensive (Loss) Income Attributable to Controlling Interests | $ | (17,726,868 | ) | $ | 91,470 | $ | (486,193 | ) | $ | (18,121,591 | ) | |||||||
| Basic loss per share — continuing operations attributable to common stockholders | (5.80 | ) | - | $ | (5.71 | ) | ||||||||||||
| Diluted loss per share — continuing operations attributable to common stockholders | (5.80 | ) | $ | - | $ | (5.71 | ) | |||||||||||
| Weighted-average shares outstanding — basic | 3,052,675 | 119,904 | 3,172,579 | |||||||||||||||
| Weighted-average shares outstanding — diluted | 3,052,675 | 119,904 | 3,172,579 | |||||||||||||||
4
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Description of the Transaction
On August 17, 2026, reAlpha Tech Corp. (the “Company” or “reAlpha”) entered into an Amended and Restated Agreement and Plan of Merger (as amended and restated, the “Merger Agreement”) with InstaMortgage Inc., a California corporation (“InstaMortgage”), reAlpha Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and the stockholders of InstaMortgage (the “Stockholders”). On August 19, 2026, pursuant to the Merger Agreement, Merger Sub merged with and into InstaMortgage (the “Merger”), with InstaMortgage surviving the Merger as a wholly owned subsidiary of the Company.
At the effective time of the Merger (the “Effective Time”), each share of InstaMortgage common stock issued and outstanding immediately prior to the Effective Time was cancelled and converted into the right to receive a portion of the aggregate merger consideration described below.
On August 19, 2026, the transaction closed and the Company acquired all outstanding shares of InstaMortgage for aggregate consideration of approximately $8.9 million (the “Aggregate Merger Consideration”), subject to the Closing Adjustment Amount (as defined in the Merger Agreement), consisting of: (i) cash consideration equal to $0.5 million, plus the Closing Adjustment Amount, paid at closing; (ii) shares of the Company’s common stock issued at closing with an aggregate value of $1.5 million, determined using the Closing Reference Price, which the Merger Agreement defines as $0.5004 per share, as adjusted for the Company’s 1-for-25 reverse stock split, resulting in an adjusted price of $12.51 per share; and (iii) aggregate deferred consideration of $6.5 million, payable in six equal semi-annual installments over a three-year period following the Closing Date, of which at least $1.5 million must be paid in cash, with the remaining $5.0 million payable in cash, shares of the Company’s common stock, or a combination thereof, at the Company’s election. The Closing Adjustment Amount is calculated as cash and cash equivalents, including accrued revenues for mortgage loans that have closed as of the Reference Time (as defined in the Merger Agreement) but have not yet been paid, less Closing Indebtedness (as defined in the Merger Agreement) and Unpaid Selling Expenses (as defined in the Merger Agreement). The deferred consideration was recognized at its acquisition-date fair value, reflecting the present value of the required future payments discounted at 7.4%, and will subsequently be measured at amortized cost using the effective interest method, with the resulting accretion recognized as interest expense. The Aggregate Merger Consideration of approximately $8.9 million represents the contractual consideration payable under the Merger Agreement; for purposes of the acquisition method of accounting, the acquisition-date fair value of the total consideration transferred was approximately $6.8 million, reflecting the measurement of the closing stock consideration at its acquisition-date fair value of $172,662 and the deferred consideration at its present value, as described in Note 3.
The shares of common stock issuable pursuant to the Merger Agreement are subject to certain transfer restrictions and Nasdaq listing rule limitations, with any amounts payable more than such limitations to be settled in cash in accordance with the terms of the Merger Agreement.
At the Closing Date, the Company issued 119,904 shares of its common stock to the Stockholders, determined by dividing the $1,500,000 of contractual stock consideration by the Closing Reference Price of $12.51 per share, as adjusted for the reverse stock split. The shares were issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D promulgated thereunder, and bear a restrictive legend which the Company is required to instruct its transfer agent to remove at any time following the six-month anniversary of the Closing Date, subject to applicable securities laws. The number of shares issued did not exceed the Cap Amount (as defined in the Merger Agreement) under the Merger Agreement, which limits aggregate issuances to 19.99% of the Company’s outstanding common stock and individual Stockholder ownership to 4.99% of outstanding common stock, and accordingly no portion of the closing stock consideration was settled in cash. For purposes of the acquisition method of accounting, the shares issued were measured at their acquisition-date fair value of $1.44 per share, the closing price of the Company’s common stock on August 19, 2026, resulting in an aggregate fair value of stock consideration of $172,662. The stock consideration accordingly rolls forward as follows: contractual stock consideration of $1,500,000, divided by the Closing Reference Price of $12.51 per share, resulted in 119,904 shares issued at closing; those 119,904 shares were then measured at the $1.44 acquisition-date closing price, resulting in an aggregate fair value of $172,662, reflected in the unaudited pro forma condensed combined balance sheet as an increase to common stock of $120 (119,904 shares at $0.001 par value) and an increase to additional paid-in capital of $172,542. The $(880) pro forma adjustment to common stock represents dollars of par value — the elimination of InstaMortgage’s historical common stock par value of $1,000, net of the $120 aggregate par value of the shares issued — and does not represent a number of shares.
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2. Basis of Presentation
The unaudited pro forma condensed combined financial statements and related notes are prepared in accordance with Article 11 of Regulation S-X and present the historical financial information of reAlpha and InstaMortgage, the pro forma effects of the Acquisition and certain acquisition accounting adjustments described herein, and they should be read in conjunction with the historical financial statements and notes of the Company and of InstaMortgage referred to in the introduction to this unaudited pro forma condensed combined financial information.
InstaMortgage historically had a fiscal year ending July 31 and subsequently changed its fiscal year end to December 31. Accordingly, reAlpha and InstaMortgage each have a fiscal year ending December 31, and the historical interim periods presented for both entities are the six months ended June 30, 2026. As a result, no conforming of periods was required under Rule 11-02(c)(3) of Regulation S-X.
The pro forma balance sheet gives effect to the Acquisition as if it had occurred on June 30, 2026, and the pro forma statements of operations give effect to the Acquisition as if it had occurred on January 1, 2025. The preliminary purchase price allocation presented in Note 3 has been determined as of the actual Closing Date of August 19, 2026. As a result, goodwill reflected in the pro forma balance sheet differs from the preliminary goodwill presented in Note 3.
The business combination of InstaMortgage has been accounted for using the acquisition method of accounting as per the provisions of ASC 805, using the fair value concepts defined in ASC Topic 820 – Fair Value Measurement and based on the historical consolidated financial statements of reAlpha and the historical financial statements of InstaMortgage. Under ASC 805, all assets acquired and liabilities assumed in a business combination are generally recognized and measured at their assumed acquisition date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of preliminary purchase price over the fair value of assets acquired and liabilities assumed, has been recorded in goodwill. The pro forma adjustments represent management’s best estimates and are based upon information currently available and certain assumptions that the management of reAlpha believes are reasonable under the circumstances.
The unaudited pro forma financial statements are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of the companies would have been had the Acquisition occurred on the dates indicated, nor are they necessarily indicative of future consolidated results of operations of the Company. The pro forma statements of operations neither reflect the costs of any integration activities, nor the synergies and benefits that may result from realization of any anticipated revenue growth or operational efficiencies expected to result from the Acquisition.
At the Closing Date, two state regulatory approvals relating to the Acquisition remained outstanding, and reAlpha and InstaMortgage mutually agreed to waive the related closing condition. These two states accounted for approximately 0.82% and 20.49%, respectively, of InstaMortgage’s loan origination volume for the six months ended June 30, 2026, and approximately 1.93% and 22.59%, respectively, for the year ended December 31, 2025. InstaMortgage may cease conducting business in one or both states while the applicable regulatory approvals remain pending. The potential effects of the pending regulatory approvals do not represent Transaction Accounting Adjustments required under Rule 11-02(a)(6) of Regulation S-X. Because the timing and financial effects of the pending approvals cannot be reasonably estimated, the Company has not presented any related optional Management’s Adjustments pursuant to Rule 11-02(a)(7) of Regulation S-X. The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and are not necessarily indicative of the results that would have been achieved had the Acquisition occurred on the dates indicated or of future results.
On April 30, 2026, the Company effected a 1-for-25 reverse stock split of its issued and outstanding common stock. All share and per-share amounts presented in the unaudited pro forma condensed combined financial statements have been retroactively restated to reflect the reverse stock split. There were no material intercompany transactions between reAlpha and InstaMortgage to eliminate for theperiods presented in the unaudited pro forma condensed combined financial statements.
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3. Preliminary Purchase Price Accounting and Allocation
The Acquisition of InstaMortgage has been accounted for as a business combination under the acquisition method of accounting in accordance with ASC 805. Under this method, the total consideration transferred is allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the Closing Date, with any excess recorded as goodwill.
Preliminary purchase price
The preliminary purchase price consideration consists of the cash paid, the fair value of common stock issued, and the present value of deferred consideration at the Closing Date as follows:
| Cash | $ | 881,171 | ||
| Fair value of common stock issued | 172,662 | |||
| Estimated present value of deferred consideration | 5,747,282 | |||
| Total estimated fair value of consideration | $ | 6,801,115 |
Preliminary purchase price allocation
The Company’s purchase price allocation for the Acquisition is preliminary and subject to revision as additional information regarding the fair values of the assets acquired and liabilities assumed becomes available. The Company currently expects to finalize the purchase price allocation prior to filing its Quarterly Report on Form 10-Q for the quarter ending September 30, 2026. In any event, the measurement period will not exceed one year from the acquisition date. The principal valuation assumptions used in the preliminary purchase price accounting are as follows: (i) the 119,904 shares of common stock issued at closing were measured at their acquisition-date fair value of $1.44 per share, the closing price of the Company’s common stock on August 19, 2026; (ii) the deferred consideration was measured at its present value using a discount rate of 7.4%, representing management’s preliminary estimate of reAlpha’s incremental borrowing rate at the acquisition date, which remains subject to validation by the Company’s third-party valuation specialist; (iii) loans held for sale were measured at fair value at 3.5% of unpaid principal balance, consistent with the fair value methodology applied in InstaMortgage’s audited financial statements, which methodology has been validated by the Company’s third-party valuation specialist; and (iv) the carrying amounts of the remaining tangible assets acquired and liabilities assumed were determined to approximate their respective fair values due to their short-term nature.
The Company has engaged a third-party valuation specialist to assist in the valuation of identifiable intangible assets acquired. The preliminary valuation is based on financial information available as of the Closing Date, consideration of comparable transactions, and currently available, but limited, forecasted financial information. The unaudited pro forma condensed combined financial statements may differ from the Company’s final purchase price accounting for a number of reasons, including that the estimates of fair values of assets acquired and liabilities assumed as of the Closing Date are preliminary and subject to change within the measurement period (not to exceed one year from the Closing Date), during which the valuation analysis and other analyses will be finalized.
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The preliminary purchase price allocation includes an identifiable intangible asset apart from goodwill. Based on the preliminary analysis performed with the assistance of the Company’s third-party valuation specialist, the Company identified and recognized a trade name/trademark intangible asset with a preliminary estimated fair value of $517,500, which is being amortized on a straight-line basis over an estimated useful life of 10 years. The identification and measurement of intangible assets, including the trade name/trademark asset described above, remain subject to completion of the valuation analysis within the measurement period, and any changes to the estimated fair value or the recognition of additional intangible assets upon finalization would adjust preliminary goodwill and could result in changes to amortization expense in future periods. The following table sets forth a preliminary allocation of the estimated purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed as of August 19, 2026, with the excess recorded as goodwill:
| Cash and cash equivalents | 314,061 | |||
| Loans held for sale | 4,932,065 | |||
| Prepaid expenses and other assets | 89,499 | |||
| Identified intangible assets | 517,500 | |||
| Total assets acquired | 5,853,125 | |||
| Accounts payable and accrued expenses | - | |||
| Warehouse line of credit, UPB | 4,492,983 | |||
| Total liabilities assumed | 4,492,983 | |||
| Net assets acquired | 1,360,142 | |||
| Total estimated fair value of consideration | 6,801,115 | |||
| Preliminary goodwill per Purchase Price Allocation as of the Closing Date (August 19, 2026) | 5,440,973 |
Warehouse Line of Credit.
InstaMortgage maintains a warehouse line of credit with First Bank, structured as a program under which First Bank purchases a 100% participation interest in qualifying one- to four-family residential mortgage loans held for sale, used to fund mortgage loans originated and held for sale. The facility has a committed amount of $10.0 million, with bulge capacity of up to $12.5 million available for up to 135 days in any 12-month period, subject to InstaMortgage’s compliance and performance and First Bank’s approval. Pricing is based on one-month CME Term SOFR plus a margin of 2.25%, subject to a minimum floor rate of 4.50%. The facility’s stated termination date is March 1, 2027, which may be extended by First Bank, in its sole discretion, for up to 45 days upon written notice to InstaMortgage. Borrowings under the facility are generally collateralized by the related mortgage loans and, to the extent any transaction under the facility is characterized as a loan rather than a sale, by a first priority security interest in the related mortgage notes, servicing rights, and associated collateral, as well as by a pledged deposit account maintained with First Bank of no less than $25,000 and InstaMortgage’s other deposits with First Bank, and are repaid upon the sale or other disposition of the underlying loans. The unpaid principal balance (“UPB”) represents the outstanding principal amount of borrowings under the warehouse line of credit as of the applicable measurement date. As of the acquisition date, approximately $4.5 million of borrowings under the warehouse line of credit were assumed in connection with the Acquisition.
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4. Transaction Accounting Adjustments
The pro forma adjustments presented below consist solely of Transaction Accounting Adjustments and are based on preliminary estimates and assumptions that are subject to change. No Autonomous Entity Adjustments or Management’s Adjustments have been presented. The following adjustments are included in the unaudited pro forma condensed combined balance sheet as of June 30, 2026, and give effect to the Acquisition as if it had occurred on that date:
| (a) | Represents the estimated total purchase consideration of approximately $8.9 million, subject to the Closing Adjustment Amount, consisting of: (i) cash consideration equal to $0.5 million funded from the Company’s existing escrow deposit, plus the Closing Adjustment Amount of approximately $0.4 million, calculated pursuant to the Merger Agreement based on InstaMortgage’s closing cash and cash equivalents, less closing indebtedness and unpaid selling expenses, resulting in total cash consideration paid at closing of approximately $0.9 million; (ii) shares of the Company’s common stock issued at closing with an aggregate value of $1.5 million, determined using a fixed Closing Reference Price of $12.51 per share and rounded to the nearest whole share, and measured for accounting purposes at their acquisition-date fair value of $172,662 based on the $1.44 closing price of the Company’s common stock on August 19, 2026; and (iii) aggregate deferred consideration of $6.5 million, payable in six equal semiannual installments over the three-year period following the Closing Date. No new debt or equity financing was incurred or issued to fund the Acquisition: the cash consideration paid at closing was funded entirely from the Company’s existing cash on hand, including the $500,000 escrow deposit, and no borrowings were drawn, and no shares were issued for financing purposes in connection with the Closing. Accordingly, no pro forma adjustments for financing-related interest expense or incremental shares outstanding are required. |
The Closing Adjustment Amount was calculated pursuant to the Merger Agreement using amounts determined as of the morning of August 17, 2026. The calculation consisted of InstaMortgage’s cash and cash equivalents of $595,385, plus accrued revenues on mortgage loans closed as of the Reference Time (as defined in the Merger Agreement) but not yet paid of $147,504, less closing indebtedness of $253,183 and unpaid selling expenses of $108,535, resulting in a Closing Adjustment Amount of $381,171. Total cash consideration of $881,171 comprises the $500,000 Purchaser Cash Consideration (as defined in the Merger Agreement), released from escrow at closing, plus the Closing Adjustment Amount of $381,171.
| Installment # | Due Date | Nominal ($) | PV Factor | PV ($) | |||||||||||
| 1 | 19-Feb-27 | 1,083,333 | 0.96 | 1,045,346 | |||||||||||
| 2 | 19-Aug-27 | 1,083,333 | 0.93 | 1,008,690 | |||||||||||
| 3 | 19-Feb-28 | 1,083,333 | 0.90 | 973,320 | |||||||||||
| 4 | 19-Aug-28 | 1,083,334 | 0.87 | 939,190 | |||||||||||
| 5 | 19-Feb-29 | 1,083,333 | 0.84 | 906,257 | |||||||||||
| 6 | 19-Aug-29 | 1,083,334 | 0.81 | 874,479 | |||||||||||
| Total | 6,500,000 | 5,747,282 | |||||||||||||
The deferred consideration is payable in six equal installments on the six-, twelve-, eighteen-, twenty-four-, thirty- and thirty-six-month anniversaries of the Closing Date. For purposes of the unaudited pro forma condensed combined balance sheet as of June 30, 2026, the Acquisition is assumed to have been consummated on June 30, 2026. Accordingly, solely for purposes of classifying the deferred consideration liability as current or non-current, the contractual semiannual payment intervals were applied from June 30, 2026, resulting in the first two installments being classified as current and the remaining four installments being classified as non-current. At the Company’s sole discretion, each installment may be settled in cash, shares of the Company’s common stock or a combination thereof, provided that at least $1.5 million is paid in cash. Any shares issued in settlement of the deferred consideration will be valued using the volume-weighted average price (“VWAP”) of the Company’s common stock for the ten consecutive trading-day period ending on the trading day immediately preceding the applicable payment due date.
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The deferred consideration is classified as a liability rather than equity because it represents a fixed monetary obligation of $6.5 million, at least $1.5 million of which must be settled in cash, and any portion settled in shares would be satisfied through the issuance of a variable number of shares determined using the applicable VWAP. The deferred consideration was recognized at its acquisition-date fair value, reflecting the present value of the required future payments, and will subsequently be measured at amortized cost using the effective interest method, with the resulting accretion recognized as interest expense. The number of shares issuable in settlement of the deferred consideration is variable and will depend on the VWAP of the Company’s common stock for the ten consecutive trading days ending on the trading day immediately preceding the applicable payment due date.
| (b) | Represents the elimination of InstaMortgage historical equity balances as of June 30, 2026 in accordance with the acquisition method of accounting, consisting of common stock of $1,000, additional paid-in capital of $2,162,378 and accumulated deficit of $(1,290,983), for total historical equity of $872,395. |
| (c) | Represents (i) the recognition of goodwill resulting from the Acquisition, calculated as the excess of the total consideration transferred over the preliminary estimated fair values of the identifiable tangible and intangible assets acquired and liabilities assumed of InstaMortgage as of the Closing Date, and Goodwill of $5,411,220 reflects the total estimated fair value of consideration transferred of $6,801,115, less the preliminary estimated fair value of net assets acquired of $1,360,142 (resulting in preliminary goodwill of $5,440,973), as further adjusted for InstaMortgage’s net loss of $29,753 for the period from July 1, 2026 through August 19, 2026 (the Closing Date), representing the change in net assets between the balance sheet date used in the preliminary purchase price allocation and the actual Closing Date. (ii) the recognition of an identifiable intangible asset consisting of a preliminary estimated fair value of $517,500 related to trade names/trademarks acquired. On the pro forma condensed combined statements of operations, this note also reflects the amortization expense associated with the intangible asset described above, calculated on a straight-line basis over an estimated useful life of 10 years, as if the Acquisition had occurred on January 1, 2025. The preliminary purchase price allocation, including the goodwill and intangible asset amounts, is based on management’s estimates and assumptions and is subject to change as additional information becomes available. |
| (d) | Represents the recognition of interest expense of approximately $385,931 and $144,143 for the year ended December 31, 2025, and the six months ended June 30, 2026, respectively, related to the accretion of the discount on the deferred consideration. The deferred consideration, which has an aggregate undiscounted amount of $6.5 million payable in six equal semi-annual installments of approximately $1,083,333 over a three-year period, was initially recognized at its estimated present value of approximately $5,747,282 as of the assumed acquisition date of January 1, 2025. The present value was calculated using a discount rate of 7.4%, representing reAlpha’s incremental borrowing rate at the acquisition date. The pro forma interest expense was calculated by applying the effective interest method to the opening present value of $5,747,282 the 7.4% discount rate over the three-year contractual payment period, assuming the Acquisition occurred on January 1, 2025. |
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| (e) | Income Taxes |
The unaudited pro forma condensed combined statements of operations reflect the income tax effects of the Acquisition on a hypothetical combined basis, as if reAlpha and InstaMortgage had filed a consolidated tax return for all periods presented. Under this approach, reAlpha’s historical pre-tax losses are combined with InstaMortgage’s historical pre-tax income, resulting in a combined pre-tax loss for all periods presented. Accordingly, no combined income tax provision has been reflected in the pro forma statements of operations. Because the combined entity’s net deferred tax assets are subject to a full valuation allowance, no income tax benefit has been recognized on the combined pre-tax loss.
The components of the combined income tax provision are as follows:
| Year Ended December 31, 2025 | ||||
| Current: | ||||
| Federal | $ | — | ||
| State | — | |||
| Foreign | — | |||
| Subtotal current | — | |||
| Deferred: | ||||
| Federal | — | |||
| State | — | |||
| Foreign | — | |||
| Subtotal deferred | — | |||
| Total income tax provision | $ | — |
The combined entity’s net deferred tax assets are subject to a full valuation allowance. Accordingly, no income tax benefit or expense has been reflected in the pro forma statements of operations for the transaction accounting adjustments presented above. The following table presents the combined income tax rate reconciliation for the period December 31 2025, presented:
| Year Ended December 31, 2025 | ||||||||
| Amount | Percent | |||||||
| U.S. Federal Statutory Rate (21%) | $ | (3,776,874 | ) | 21.00 | % | |||
| State and Local Income Taxes, Net of Federal Income Tax Effect | - | 0.00 | % | |||||
| Foreign Tax Effects | 163,363 | -0.91 | % | |||||
| Changes in Valuation Allowances | 2,949,611 | -16.40 | % | |||||
| Equity Offering Costs | 605,895 | -3.37 | % | |||||
| Other Nontaxable or Nondeductible Items | 49,650 | -0.28 | % | |||||
| Other Adjustments | 8,355 | -0.05 | % | |||||
| Effective Tax Rate | $ | — | 0.00 | % | ||||
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The significant components of the combined entity’s deferred tax assets and liabilities are as follows:
| December 31, 2025 | ||||
| Deferred tax assets: | ||||
| Net operating loss carryforwards | $ | 9,749,823 | ||
| Section 174 capitalization | 343,947 | |||
| Stock compensation | 185,925 | |||
| Other deferred tax assets | 2,365 | |||
| Gross deferred tax assets | 10,282,060 | |||
| Valuation allowance | (9,310,077 | ) | ||
| Net deferred tax assets | 971,983 | |||
| Deferred tax liabilities: | ||||
| Property and equipment | (1,218 | ) | ||
| Intangibles | (970,765 | ) | ||
| Gross deferred tax liabilities | (971,983 | ) | ||
| Net deferred tax liabilities | (971,983 | ) | ||
| Net deferred taxes | - | |||
A comparable deferred tax asset and liability schedule and rate reconciliation have not been presented as of June 30, 2026; the Company’s interim income tax provision for the six months ended June 30, 2026, and 2025 is discussed below.
The provision for income taxes is based on the current estimate of the annual effective tax rate applied to the Company’s year to date income and is adjusted for discrete items recorded in the period. For the six months ended June 30, 2026, and 2025, the Company’s effective tax rate was 0% for both periods.
On a hypothetical combined basis, the Company would have recorded income tax expense of $0 for the six months ended June 30, 2026, and 2025.
The Internal Revenue Code of 1986, as amended, imposes restrictions on the utilization of net operating losses and tax credits in the event of an “ownership change” of a corporation. Accordingly, a company’s ability to use net operating losses and tax credits may be limited as prescribed under Internal Revenue Code Section 382 and 383 (“IRC Section 382”). Events which may cause limitations in the amount of the net operating losses or tax credits that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. The Acquisition constitutes an ownership change under IRC Section 382 with respect to InstaMortgage’s Pre-Acquisition net operating loss carryforwards. The annual limitation on InstaMortgage’s ability to utilize these carryforwards is being determined and is not yet finalized. Because the combined entity’s net deferred tax assets, including InstaMortgage’s net operating loss carryforwards, are subject to a full valuation allowance, any limitation resulting from this analysis would not affect the pro forma income tax provision presented above.
| (f) | Represents reAlpha’s acquisition-related transaction costs. In accordance with ASC 805-10-25-23, acquisition-related costs are expensed in the periods in which the costs are incurred, and the services are received and are not included in the consideration transferred or in the preliminary purchase price allocation presented in Note 3; accordingly, this amount is not expected to agree to the purchase price allocation. The amount comprises regulatory counsel fees of $10,303, legal advisory fees of $2,045, regulatory consulting fees of $30,000, and registered agent fees of $6,164, for total acquisition-related costs of $48,512. Of this total, $15,809 had been paid and is reflected as a corresponding decrease to cash and cash equivalents, and the remaining $32,703 was unpaid as of June 30, 2026, and is reflected as an increase to Accounts payable and accrued expenses in the Transaction Accounting Adjustments column. The full $48,512 is reflected as an increase to accumulated deficit within Stockholders’ Equity (Deficit). |
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Exhibit 99.4
reAlpha (NASDAQ: AIRE) Provides Pro Forma Financial Information on InstaMortgage Acquisition
InstaMortgage reported approximately $4.5 million in revenue and $3.3 million in gross profit for the six months ended June 30, 2026, while reporting positive net income
Unaudited pro forma combined revenue was approximately $6.4 million for the six months ended June 30, 2026, and approximately $11.8 million for the year ended December 31, 2025
DUBLIN, Ohio, September 23, 2026 (GLOBE NEWSWIRE) – reAlpha Tech Corp. (Nasdaq: AIRE) (the “Company” or “reAlpha”), an AI-powered real estate technology company, today announced financial and operating results for InstaMortgage Inc. (“InstaMortgage”) and unaudited pro forma combined financial information following the completion of its acquisition of InstaMortgage.
InstaMortgage Standalone Financial Performance
InstaMortgage was acquired by reAlpha with an established operating business that generated revenue, gross profit and positive net income in 2025, while remaining profitable through the second quarter of 2026.
For the year ended December 31, 2025, InstaMortgage:
| ● | Generated approximately $7.3 million in revenue; |
| ● | Generated approximately $5.3 million in gross profit; |
| ● | Reported approximately $0.1 million in net income; and |
| ● | Originated approximately $277.1 million in residential mortgage loan volume. |
For the six months ended June 30, 2026, InstaMortgage:
| ● | Generated approximately $4.5 million in revenue; |
| ● | Generated approximately $3.3 million in gross profit; |
| ● | Reported approximately $0.2 million in net income; and |
| ● | Originated approximately $177.0 million in residential mortgage loan volume. |
As of June 30, 2026, InstaMortgage has originated more than $3.5 billion in residential mortgage loans since 2015, supported by a full-cycle lending operation spanning origination, underwriting, funding and loan sale.
“We believe that InstaMortgage meaningfully strengthens reAlpha’s financial and operating foundation and demonstrates what we are looking to build through our acquisition strategy,” said Thomas Kutzman, Chief Financial Officer of reAlpha. “On a pro forma basis, the acquisition increases our 2025 revenue by approximately 162% and gross profit by approximately 215%, while adding a direct-lending business that generated positive net income in 2025 while remaining profitable through the first six months of 2026. We are adding scale, but we are also adding capabilities and transaction economics that fit directly into the platform we have been building.”
Kutzman continued, “We are now operating at a larger scale, with a broader base of loan officers, which we believe provide opportunities to identify potential operational synergies and cost efficiencies over time. The expansion in the number of states in which we offer both real estate and mortgage services could create opportunities for revenue synergies by serving customers in these markets with multiple services over the course of a given transaction.”
Unaudited Pro Forma Combined Financial Information
For the six months ended June 30, 2026, reAlpha and InstaMortgage would have had approximately $6.4 million in unaudited pro forma combined revenue and approximately $4.6 million in unaudited pro forma combined gross profit.
For comparison, reAlpha reported approximately $2.0 million in standalone revenue and approximately $1.3 million in standalone gross profit for the same six-month period.
For the year ended December 31, 2025, reAlpha and InstaMortgage would have had approximately $11.8 million in unaudited pro forma combined revenue and approximately $7.7 million in unaudited pro forma combined gross profit.
For comparison, reAlpha reported approximately $4.5 million in standalone revenue and approximately $2.5 million in standalone gross profit for fiscal 2025. Accordingly, the unaudited pro forma combined figures represent approximately 2.6 times reAlpha’s reported standalone revenue and 3.2 times its reported standalone gross profit for the period.
The unaudited pro forma combined financial information was prepared in accordance with Article 11 of Regulation S-X. For purposes of the statements of operations, the financial information gives effect to the acquisition as if it had occurred on January 1, 2025 and is presented for informational purposes only.
The unaudited pro forma financial information is not necessarily indicative of consolidated results of operations of the combined business had the acquisition occurred at the beginning of the respective period, nor is it necessarily indicative of future results of operations of the combined company. The unaudited pro forma financial information is based on various assumptions and estimates and should be read in conjunction with the full set of pro forma financial information and the accompanying notes, as presented in Amendment No.1 to the Company’s Current Report on Form 8-K/A that will be filed with the Securities and Exchange Commission (the “SEC”) on September 23, 2026.
About reAlpha Tech Corp.
reAlpha Tech Corp. (Nasdaq: AIRE) is an AI-powered real estate technology company that aims to transform the multi-trillion-dollar U.S. real estate services market. reAlpha is developing an end-to-end platform that streamlines real estate transactions through integrated brokerage, mortgage, and title services. With a strategic, acquisition-driven growth model and proprietary AI infrastructure, reAlpha is building a vertically integrated ecosystem designed to deliver a simpler, smarter, and more affordable path to homeownership. For more information, visit www.realpha.com.
About InstaMortgage Inc.
Originally founded in 2008 by Shashank Shekhar as Arcus Lending, the company rebranded as InstaMortgage, NMLS 1035734, in 2021. InstaMortgage aims to provide a different mortgage experience to its clients across 29 states and Washington D.C. By combining technology with expert advice, excellent customer service, and competitive rates, InstaMortgage delivers mortgage options that are tailored to each client’s unique financial situation. To learn more, visit www.instamortgage.com.
Forward-Looking Statements
The information in this press release includes “forward-looking statements.” Any statements other than statements of historical fact contained herein, including statements by reAlpha’s Chief Financial Officer, Thomas Kutzman, or statements about the InstaMortgage acquisition, the anticipated benefits of the InstaMortgage acquisition, reAlpha’s ability to integrate InstaMortgage into its business and scale its business following the acquisition of InstaMortgage, reAlpha’s long-term platform strategy and anticipated benefits to customers, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “could”, “might”, “plan”, “possible”, “project”, “strive”, “budget”, “forecast”, “expect”, “intend”, “will”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: reAlpha and InstaMortgage’s ability to obtain regulatory approval in Virginia and New York; reAlpha’s ability to realize the expected benefits of the acquisition of InstaMortgage and its operations, including the possibility that the expected benefits from the acquisition will not be realized or will not be realized within the expected time period; the potential negative effects of the Company’s and InstaMortgage’s business from not obtaining the regulatory approvals in Virginia and New York timely or at all; the health of the U.S. residential real estate industry and changes in general economic conditions; reAlpha’s ability to pay contractual obligations, including with respect to the acquisition of InstaMortgage; reAlpha’s liquidity, operating performance, cash flow and ability to secure adequate financing; reAlpha’s ability to maintain compliance with Nasdaq’s continued listing rules; reAlpha’s ability to generate additional sales or revenue from having access to, or obtaining, additional U.S. states brokerage licenses; whether reAlpha’s technology and products will be accepted and adopted by its customers and intended users; reAlpha’s ability to integrate the business of its acquired companies into its existing business, including InstaMortgage, and the anticipated demand for such acquired companies’ services; reAlpha’s ability to successfully enter new geographic markets and to scale its operational capabilities to expand into additional geographic markets and nationally; the potential loss of key employees of reAlpha and of its subsidiaries; reAlpha’s ability to obtain, and maintain, the required licenses to operate in the U.S. states in which it, or its subsidiaries, operate in, or intend to operate in; reAlpha’s ability to maintain and strengthen its brand and reputation; reAlpha’s ability to continue attracting loan officers and maintain its relationship with its REALTOR® affiliate to expand its operations nationally; the availability of rebates, which may be limited or restricted by state law; risks related to data privacy, including evolving laws and consumer expectations; the inability to accurately forecast demand for AI-based real estate-focused products; the inability to execute business objectives and growth strategies successfully or sustain reAlpha’s growth; the inability of reAlpha’s customers to pay for reAlpha’s services; reAlpha’s ability to obtain additional financing or access the capital markets on acceptable terms and conditions in the future; changes in applicable laws or regulations, including with respect to the real estate market, AI and AI technologies, and the impact of the regulatory environment and complexities with compliance related to such environment; reAlpha’s ability to effectively compete in the real estate and AI industries; and other risks and uncertainties indicated in reAlpha’s most recent Annual report on Form 10-K and current or periodic reports filed with the SEC and available for review at www.sec.gov. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Although reAlpha believes that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. reAlpha’s future results, level of activity, performance or achievements may differ materially from those contemplated, expressed or implied by the forward-looking statements, and there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements. For more information about the factors that could cause such differences, please refer to reAlpha’s filings with the SEC. Readers are cautioned not to put undue reliance on forward-looking statements, and reAlpha does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Media Contact:
Payton Cuddy, Senior Marketing Manager
Investor Relations Contact:
Adele Carey, VP of Investor Relations