AIRE 10-Q
reAlpha Tech Corp. (AIRE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from ______________ to _______________
Commission File Number:
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period than the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
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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.
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As of August 12, 2026, the registrant had
REALPHA TECH CORP.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2026
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
reAlpha Tech Corp. and Subsidiaries
Condensed Consolidated Balance Sheet
June 30, 2026 (unaudited) and December 31, 2025
| June 30, 2026 |
December 31, 2025 |
|||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Escrow deposit | ||||||||
| Total current assets | $ | $ | ||||||
| Property and Equipment | ||||||||
| Property and equipment, net | $ | $ | ||||||
| Other Assets | ||||||||
| Investments | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | |||||||
| Related party payables | ||||||||
| Short term loans - related parties - current portion | ||||||||
| Short term loans - unrelated parties - current portion | ||||||||
| Accrued expenses | ||||||||
| Deferred liabilities - current portion | ||||||||
| Deferred revenue | ||||||||
| Contingent consideration - current portion | ||||||||
| Total current liabilities | $ | $ | ||||||
| Long-Term Liabilities | ||||||||
| Derivative liability | ||||||||
| Other long-term loans - unrelated parties - net of current portion | ||||||||
| Deferred liabilities - net of current portion | ||||||||
| Contingent consideration - net of current portion | ||||||||
| Total liabilities | $ | $ | ||||||
| Mezzanine Equity | ||||||||
Preferred Stock, $ | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock ($ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive (loss) | ( | ) | ( | ) | ||||
| Total stockholders’ equity of reAlpha Tech Corp. | ||||||||
| Non-controlling interests in consolidated entities | ||||||||
| Total stockholders’ equity | ||||||||
| TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
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reAlpha Tech Corp. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss
For the Three Months and Six Months Ended June 30, 2026 and 2025 (unaudited)
| For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
| June 30, 2026 |
June 30, 2025 |
June 30, 2026 |
June 30, 2025 |
|||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Wages, benefits and payroll taxes | ||||||||||||||||
| Marketing and advertising | ||||||||||||||||
| Professional and legal fees | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Impairment of capitalized software | ||||||||||||||||
| Other operating expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Expense (income) | ||||||||||||||||
| Changes in fair value of contingent consideration | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense, net | ||||||||||||||||
| Change in fair value of derivative liability | ||||||||||||||||
| Other expense, net | ||||||||||||||||
| Total other expense | ||||||||||||||||
| Net Loss from operations before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax (expense) benefit | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Less: Net (Loss) income Attributable to Non-Controlling Interests | ( | ) | ( | ) | ||||||||||||
| Net Loss Attributable to Controlling Interests | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Preferred stock dividend | $ | $ | ||||||||||||||
| Net Loss Attributable to Common Stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive income | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
| Total other comprehensive (Loss) income | ( | ) | ( | ) | ||||||||||||
| Comprehensive Loss Attributable to Common Stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic loss per share | ||||||||||||||||
| Net Loss per share — basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted loss per share | ||||||||||||||||
| Net Loss per share — diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted-average outstanding shares — basic | ||||||||||||||||
| Weighted-average outstanding shares — diluted | ||||||||||||||||
2
reAlpha Tech Corp. and Subsidiaries
Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity (Deficit)
For the Three and Six Months Ended June 30, 2026, and 2025 (unaudited)
| Accumulated | ReAlpha Tech |
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| Additional | Other | Corp. and | Non- | Total | ||||||||||||||||||||||||||||||||||||||||
| Mezzanine Equity | Common Stock | Paid-in | Accumulated | Comprehensive | Subsidiaries | Controlling | Stockholders’ | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Total | Shares | Amount | Capital | Deficit | Loss | Equity | Interests | Equity | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Series A convertible preferred stock issuance | - | |||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Common stock issuance to AiChat10X Pte. | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Common stock issuance through ATM | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issuance to Streeterville Capital, LLC | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Other Comprehensive gain | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | ( | ) | ( | ) | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||
| Warrants exercised | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issuance - GTG acquisition | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issuance to employees | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issuance to Streeterville Capital, LLC | ||||||||||||||||||||||||||||||||||||||||||||
| Share issuance - Non-employee | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issuance through ATM | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Common stock issuance through ATM | ||||||||||||||||||||||||||||||||||||||||||||
| Series A convertible preferred stock issuance | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Adjustment related to reverse stock split | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Common stock issuance to Prevu | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issuance – board compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividend | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Common stock issuance – board compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Shares Cancelled | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
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reAlpha Tech Corp. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2026, and 2025 (unaudited)
| For the Six Months Ended |
For the Six Months Ended |
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| June 30, 2026 |
June 30, 2025 |
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| Cash Flows from Operating Activities: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Impairment of capitalized software | ||||||||
| Impairment of intangible assets | ||||||||
| Bad debt expense | ||||||||
| Amortization of loan discounts and origination fees | ||||||||
| Stock based compensation | ||||||||
| Change in fair value of contingent consideration | ( | ) | ( | ) | ||||
| Non-cash commitment fee expenses | ||||||||
| Change in fair value of derivative liability | ||||||||
| Non-cash marketing and advertising | ||||||||
| Non-cash compensation - GTG Financial | ||||||||
| Loss on extinguishment of debt | ||||||||
| Loss on sale of properties | ||||||||
| Loss from equity method investment | ||||||||
| Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Receivable from related parties | ||||||||
| Payable to related parties | ( | ) | ( | ) | ||||
| Prepaid expenses | ||||||||
| Other current assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ( | ) | ( | ) | ||||
| Deferred liabilities | ||||||||
| Deferred revenue | ( | ) | ||||||
| Total adjustments | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Additions to property and equipment | ( | ) | ( | ) | ||||
| Cash acquired in acquisitions, net | ||||||||
| Cash used for additions to capitalized software | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from issuance of debt- related parties | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Payments of debt | ( | ) | ( | ) | ||||
| Equity issuance expenses | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Cash - Beginning of Period | ||||||||
| Cash - End of Period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Interest paid | $ | $ | ||||||
| Noncash Investing and Financing Activities: | ||||||||
| Series A Convertible Preferred Stock issuance - MMC | ||||||||
| Series A Convertible Preferred Stock issuance - GTG Financial | ||||||||
| Deferred cash payments - GTG Financial | ||||||||
| Common stock issuance for GTG Financial acquisition | ||||||||
| Common stock issuance to Streeterville Capital, LLC | ||||||||
| Common stock issuance - GTG Financial | ||||||||
| Deferred issuance of common stock - Prevu | ||||||||
| Common stock issuance – Board Compensation | ||||||||
| Paid in kind dividends | ||||||||
4
reAlpha Tech Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Organization and Description of Business
reAlpha Tech Corp. was incorporated with the name reAlpha Asset Management, Inc. in the State of Delaware on
The Company is a technology-driven, integrated services company, leveraging AI to enhance the homebuying experience and streamline real estate transactions. At the core of the Company’s strategy is the reAlpha platform, an AI-powered solution designed to simplify the homebuying process while generating revenue through realty services, mortgage brokering services, and digital title and escrow services.
The Company operates through its subsidiaries Naamche, Inc. (“U.S. Naamche”), Realpha Nepal Pvt. Ltd. (f/k/a Naamche, Inc. Pvt. Ltd.) (“reAlpha Nepal Pvt Limited” and together with U.S. Naamche, “reAlpha Nepal”), and AiChat Pte. Ltd. (“AiChat”) to expand its software development expertise and AI-driven engagement tools, and the reAlpha Realty, LLC entities, Debt Does Deals, LLC (f/k/a Be My Neighbor and d/b/a reAlpha Mortgage) (“reAlpha Mortgage”), Hyperfast Title LLC (“Hyperfast”) and Prevu, Inc. and its subsidiaries (collectively, “Prevu”) to provide realty services, mortgage brokering and digital title and escrow services, which enable the Company to capture value across multiple stages of the transaction process. Although the Company had previously acquired GTG Financial, Inc. (“GTG” or “GTG Financial”), during the year ended December 31, 2025, the Company’s acquisition of GTG was rescinded pursuant to the terms of the Stock Purchase Agreement, by and among GTG Financial, Glenn Groves (the “Seller”) and the Company, dated February 20, 2025 (the “SPA”). As a result of the rescission of the SPA, GTG was no longer a subsidiary of the Company as of August 21, 2025 (the “Rescission Date”). See “Note 4 - Business Combinations - Acquisition and Rescission of GTG Financial, Inc.” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”), filed on March 12, 2026, with the Securities and Exchange Commission (the “SEC”), for more information.
With its focus on AI technology and integrated real estate services, the Company is developing an end-to-end homebuying platform named the “reAlpha platform.” The Company’s goal is to offer through its AI-powered platform a more affordable, streamlined experience for those on the journey to homeownership. The reAlpha platform integrates AI-driven tools to offer, among others, tailored property recommendations, an intuitive visual interface, and certain services, including realty services, mortgage brokering services, and digital title and escrow services within the platform.
The Company’s principal office is located at 6515 Longshore Loop, Suite 100, Dublin, OH 43017.
During the three months ended June 30, 2026, the Company implemented restructuring plans (the “Plans”) to improve operating efficiency and streamline the Company’s operations as it continues to align its cost structure with its strategic objectives. The Plans were designed to support the Company’s return-driven spending initiative by prioritizing capital deployment in areas with clear and measurable returns, while reducing personnel-related costs and rationalizing certain third-party vendor relationships. The Plans included a reduction of approximately
In implementing the Plans, the Company incurred restructuring costs of $
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. These unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and entities that the Company holds a controlling financial interest of, and those in which it owns more than
5
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC applicable to interim financial reporting on Form 10-Q. Accordingly, they do not include all disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments necessary for a fair presentation have been included. The unaudited condensed consolidated balance sheet as of December 31, 2025, has been derived from the Company’s audited consolidated financial statements included in the Form 10-K.
This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to U.S. GAAP and have been consistently applied in the preparation of the financial statements. The financial statements include the operations, assets, and liabilities of the Company. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to fairly present the accompanying financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Form 10-K. The results of operations for the interim period are not necessarily indicative of the results to be expected for any future periods.
During the preparation of the Form 10-K, the Company reevaluated the accounting classification of its Series A Convertible Preferred Stock, par value $
As a result of the revised accounting treatment, for the three months ended June 30, 2025, interest expense was revised from $
Reverse Stock Split
On April 28, 2026, the Company filed a Certificate of Amendment (the “Charter Amendment”) to its Second Amended and Restated Certificate of Incorporation (the “certificate of incorporation”) with the Secretary of State of the State of Delaware to effect a 1-for-25 reverse stock split of the Company’s issued and outstanding common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective at 12:01 a.m., Eastern Time, on April 30, 2026. As a result, every
The Reverse Stock Split affected all stockholders uniformly and did not affect any stockholder’s percentage ownership interest in the Company, except for adjustments that may have resulted from the treatment of fractional shares. No fractional shares were issued in connection with the Reverse Stock Split, and fractional interests were rounded up to the nearest whole share. The Company’s common stock began trading on a post-split basis on April 30, 2026, under its existing trading symbol “AIRE” with a new CUSIP number 75607T204.
6
In connection with the Reverse Stock Split, the number of shares of common stock issuable upon exercise or conversion of the Company’s outstanding warrants, stock options and other equity awards, as well as shares reserved for issuance under the Company’s equity compensation plans, were proportionately adjusted, and the corresponding exercise prices were increased proportionately, such that the aggregate exercise price payable by the holder remains substantially unchanged.
Additionally, the conversion price and the number of shares of common stock issuable upon conversion of the Series A Preferred Stock were proportionately adjusted in accordance with the terms of the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (as amended, the “Certificate of Designation”), which was amended in connection with the Reverse Stock Split.
All share and per share amounts presented in the accompanying condensed consolidated financial statements and related notes have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented.
Use of Estimates
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 and 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. In the opinion of management, all adjustments necessary to make the financial statements not misleading have been included. Actual results could differ from those estimates.
Business Promotion and Advertising Costs
The Company expenses advertising and marketing costs, including pre-paid advertising arrangements, as they are incurred. Advertising and marketing expenses were $
“Note 10 – Mezzanine Equity and Preferred Stock Embedded Derivative Liability” for more information. These marketing credits were fully utilized during the first quarter of 2026. Accordingly, no related marketing credit expense was recognized during the three months ended June 30, 2026, and the six-month amount represents only the utilization recognized during the first quarter of 2026.
Related Party Transactions
The Company accounts for related party transactions in accordance with Accounting Standards Codification (“ASC”) 850, Related Party Disclosures (“ASC 850”). A related party is generally defined as (i) any person that holds
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
7
Concentration of Credit Risks
During the year ended December 31, 2025, the Company collected all previously outstanding receivables attributable to AiChat, its Singapore subsidiary. As a result, the previously recorded CECL reserve of
Foreign Currency Translation
The Company’s unaudited condensed consolidated financial statements are presented in U.S. dollars. The functional currency of each subsidiary is the local currency of its primary economic environment, which in certain cases differs from the reporting currency.
Assets and liabilities of subsidiaries with non-U.S. dollar functional currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Equity transactions are translated at historical exchange rates, and revenues and expenses, are translated at weighted-average exchange rates for the period.
Translation adjustments are recorded in other comprehensive income (loss) and accumulated in accumulated other comprehensive income (loss) within stockholders’ equity.
Equity Method Investment
The Company accounts for investments in entities in which the Company has significant influence over the entity’s financial and operating policies, but does not control, using the equity method of accounting. The equity method investment is initially recorded at cost and subsequently increased for capital contributions and allocations of net income and decreased for capital distributions and allocations of net loss. Equity in net income (loss) from the equity method investment is allocated based on the Company’s economic interest. The equity method investment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If it is determined that a loss in value of the equity method investment is other than temporary, an impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value.
In September 2024, reAlpha AI Labs Inc., a subsidiary of the Company, entered into a subscription agreement with Xmore AI, Inc. (“XMore”) to purchase
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets acquired and liabilities assumed. Goodwill is tested for impairment at the reporting unit level at least annually, as of December 31, or more frequently when events occur and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Accounting requirements provide that a reporting entity may perform an optional qualitative assessment on an annual basis to determine whether events occurred or circumstances changed that would more likely than not reduce the fair value of a reporting unit below its carrying amount. If an initial qualitative assessment identifies that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or the optional qualitative assessment is not performed, a quantitative analysis is performed. The quantitative goodwill impairment test is performed by calculating the fair value of the reporting unit and comparing it to the reporting unit’s carrying amount. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. However, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill recorded on the reporting unit.
8
No such indicators of impairment were identified as of June 30, 2026. (See “Note 6 - Goodwill and Intangible Assets” in the Form 10-K for further discussion of the Company’s goodwill impairment assessment).
Definite-lived Intangible Assets
In accordance with ASC Topic 350, Intangibles—Goodwill and Other (“ASC 350”), definite-lived intangible assets include assets such as developed technology, customer contracts, and trademarks that are acquired in business combinations. The Company’s definite-lived intangible assets primarily consist of developed technology, trademarks and trade names, and customer relationships, which are amortized on a straight-line basis over estimated useful lives ranging from
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) when control of services is transferred to the customer. On a standalone basis, the Company generates revenue by providing monthly support services. Revenue is recognized over time as the services are performed and the customer benefits from them.
AiChat, a company specializing in AI conversational customer experience solutions, adheres to the revenue recognition standards outlined in ASC 606. The license fee for platform access and consulting services are recognized as distinct performance obligations, reflecting their ability to provide value independently within our customer contracts. For the “right to access” license fee, revenue is recognized over the duration of the subscription period, as control and benefits are provided continuously to the customer. Consulting services are recognized based on the nature of the engagement. Revenue for one-time services, such as project setups, is recognized at the point in time of delivery. For ongoing consulting services, revenue is recognized over time, reflecting the continuous benefit transferred to the customer throughout the service period. This approach ensures that revenue recognition accurately matches the ongoing provision of access and the timing of consulting services, as per the guidelines of ASC 606.
reAlpha Mortgage, a mortgage brokerage company, complies with ASC 606 by recognizing revenue at the point of loan funding. This moment marks the transfer of control of the loan to the borrower, capturing the completion of reAlpha Mortgage’s primary service successfully securing a loan. All services, including loan origination, application processing, and credit assessment, contribute to this culminating event. Revenue is therefore recognized only when the loan is funded, ensuring that the exact revenue amount is determinable based on the loan amount and agreed commission, accurately reflecting the completion of all related performance obligations.
GTG Financial, a mortgage brokerage company which was deconsolidated on August 21, 2025, complied with ASC 606 by recognizing revenue at the point of loan funding. This moment marks the transfer of control of the loan to the borrower, capturing the completion of GTG Financial’s primary service successfully securing a loan. All services, including loan origination, application processing, and credit assessment, contribute to this culminating event. Revenue is therefore recognized only when the loan is funded, ensuring that the exact revenue amount is determinable based on the loan amount and agreed commission, accurately reflecting the completion of all related performance obligations. Effective as of the Rescission Date, the Company’s acquisition of GTG Financial was rescinded. Accordingly, GTG Financial is no longer a subsidiary of the Company, and its results are not included in these unaudited condensed consolidated financial statements for periods after that date (see “Note 5 - Business Combinations - Acquisition of GTG Financial, Inc.” and “Note 5 - Business Combinations - Rescission of GTG Financial Acquisition” included in the Form 10-K for more information).
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reAlpha Nepal, a subsidiary of the Company that provides technology-related services, recognizes revenue in accordance with ASC 606 from its service-based contracts. reAlpha Nepal currently generates revenue exclusively from providing monthly technology support services to third parties. These arrangements include a single service-based performance obligation that is satisfied over time, as these third parties simultaneously receive and consume the benefits of the services provided. Revenue is recognized over time in a manner that reflects the continuous transfer of services to the customer.
Prevu is a digital real estate brokerage that provides licensed brokerage services to homebuyers and home sellers across multiple states through its online platform. Prevu’s revenue is primarily derived from brokerage commissions earned for services provided as both a buyer’s agent and a seller’s agent upon the successful completion of real estate transactions. In accordance with ASC 606, revenue is recognized when control of the brokerage services transfers to the customer, which occurs upon the closing of a transaction, at which point the Company has satisfied its performance obligations and is entitled to the commission. Prevu offers commission rebate programs, including its Smart Buyer™ rebate, under which a portion of the gross brokerage commission is rebated to the buyer at closing. The rebate amount is determined pursuant to contractual rebate agreements and is based on a defined calculation methodology that may vary by transaction, commission structure, service bundle, and market. The rebate amount varies based on the applicable contractual formula and transaction-specific factors and is determined upon closing of the related transaction. In accordance with ASC 606, the rebate is accounted for as a reduction of the transaction price, and brokerage commission revenue is recognized net of the applicable rebate when the transaction closes.
Business Combinations
Business combinations are accounted for using the acquisition method of accounting in accordance with the ASC 805, Business Combinations (“ASC 805”). The purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Fair value of the acquired assets and liabilities is measured in accordance with the guidance of ASC 820, Fair Value Measurements (“ASC 820”), using discounted cash flows and other applicable valuation techniques. To assist the Company in making these fair value determinations, the Company may engage third-party valuation specialists or internal specialists who generally assist the Company in the fair value determination of identifiable assets such as customer relationships, trademarks and any other significant asset or liabilities. Any acquisition-related costs incurred by the Company are expensed as incurred. Any excess purchase price over the fair value of the net identifiable assets acquired is recorded as goodwill if the definition of a business is met. Operating results of an acquired business are included in our results of operations from the date of acquisition.
This fair value assessment involves significant inputs and assumptions, including projected cash flows, expected growth rates, discount rates, and other relevant market data. The Company exercises careful judgment in selecting these inputs, based on historical performance, market conditions, and the specific technological characteristics of the software, to ensure that the valuation accurately reflects its economic potential.
Fair Value Measurements
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying unaudited condensed consolidated balance sheet, primarily due to their short-term nature.
The Company applies to ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.
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The fair value hierarchy consists of three broad levels:
Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.
The Company’s financial instruments measured at fair value on a recurring basis consist of (i) the embedded derivative liability associated with the Series A Preferred Stock issued to MMC, classified as Level 3 and measured using the Black-Scholes option pricing model (see “Note 10 - Mezzanine Equity and Preferred Stock Embedded Derivative Liability” for more information), and (ii) the contingent consideration liability arising from the acquisition of reAlpha Mortgage, classified as Level 3 and estimated using an income-based valuation approach (see “Note 12 - Commitments and Contingencies” for more information). Both instruments incorporate significant unobservable inputs; refer to the respective notes for a description of key assumptions and inputs used in each valuation. There were no transfers between Level 1, Level 2, or Level 3 classifications during the three and six months ended June 30, 2026.
Recent Accounting Pronouncements
Accounting Pronouncements Issued and Not yet Adopted
In November 2024, the FASB issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires additional disclosures about the nature of expenses included in the income statement, such as purchases of inventory, employee compensation and depreciation. ASU 2024-03 is effective for public business entities for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of ASU 2024-03 on its financial statements and related disclosures. The Company does not expect the adoption of this standard to have a material impact on its financial statements, but it will require additional disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The amendments in ASU 2025-06 modernize the accounting for internal-use software development costs by removing references to software development “stages” and instead requiring entities to begin capitalizing costs when management has authorized and committed to funding the project and it is probable that the project will be completed and the software will be used as intended. The amendments also provide guidance for evaluating significant development uncertainty, align the accounting for website development costs with Subtopic 350-40, Intangibles-Goodwill and Other-Internal-Use Software, and require capitalized internal-use software costs to be subject to certain disclosure requirements in ASC 360, Property, Plant, and Equipment. The amendments do not affect software costs accounted for under ASC 985-20, Software - Costs of Software to be Sold, Leased, or Marketed. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact that adoption of ASU 2025-06 will have on its financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 clarifies and reorganizes certain aspects of interim reporting guidance, including disclosure requirements related to events occurring since the end of the most recent annual reporting period, and enhances the presentation and usability of interim financial statement disclosures. ASU 2025-11 is effective for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact that adoption of ASU 2025-11 will have on its financial statements and related disclosures. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.
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Accounting Pronouncements Issued and Adopted
In April 2026, the FASB issued ASU No. 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock (“ASU 2026-01”). ASU 2026-01 requires paid-in-kind (“PIK”) dividends on equity-classified preferred stock, including preferred stock classified as temporary equity, to be initially measured on the basis of the PIK dividend rate stated in the Certificate of Designation. During the period, the Company declared PIK dividends on its equity-classified preferred stock calculated as the stated PIK dividend rate applied to the dollar value of the outstanding Series A Preferred Stock , resulting in a dividend of $
There have been no material changes to the Company’s critical accounting policies or the methods used in applying those policies during the six months ended June 30, 2026. For a full description of the Company’s significant accounting policies and critical estimates, refer to the audited consolidated financial statements and accompanying notes included in the Form 10-K.
Note 3 - Going Concern
During the six months ended June 30, 2026, the Company incurred a net loss of approximately $
In accordance with ASC 205-40, Going Concern, management evaluated whether conditions and events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. The Company’s recurring losses, negative operating cash flows, limited cash resources relative to its projected cash requirements, and dependence on access to external financing raise substantial doubt about its ability to continue as a going concern.
On May 20, 2025, the Company received a deficiency letter from Nasdaq notifying the Company that its common stock had failed to maintain the minimum $
To address its liquidity needs, the Company intends to seek additional capital through debt or equity financing transactions. The Company may also receive proceeds from the potential exercise of outstanding warrants; however, such exercises are outside the Company’s control and are dependent on the trading price of the Company’s common stock and other market conditions. These plans are subject to market conditions, investor demand, and other factors outside the Company’s control, and there can be no assurance that any financing will be available on acceptable terms, in the amounts needed, or at all.
As a result, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued. The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.
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Note 4 - Business Combinations
For comprehensive information regarding acquisitions completed in the fiscal year ended December 31, 2025, please refer to “Note 5 - Business Combinations” included in the Form 10-K. There were no acquisitions completed during the six months ended June 30, 2026.
Acquisitions during the year ended December 31, 2025
Acquisition and Rescission of GTG Financial, Inc.
In February 2025, the Company acquired
Acquisition of Prevu, Inc.
In November 2025, the Company completed the acquisition of Prevu, Inc. (“Prevu”), a Delaware corporation, pursuant to an Agreement and Plan of Merger (the “Prevu Merger Agreement”). Pursuant to the terms of the Prevu Merger Agreement and related transition arrangements, the total consideration payable by the Company of $
Note 5 - Property and equipment, net
Property and equipment, net consisted of the following as of June 30, 2026, and as of December 31,2025:
| June 30, 2026 | December 31, 2025 | |||||||
| Computer | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Property and equipment, gross | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
The Company recorded depreciation expense of $
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Note 6 - Goodwill and Intangible Assets
Goodwill and intangible assets are primarily the result of business acquisitions. Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets acquired and liabilities assumed. Goodwill is tested for impairment at the reporting unit level at least annually, as of December 31, or more frequently when events occur and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
As of June 30, 2026, the carrying amount of goodwill was $
The components of intangible assets as of June 30, 2026, all of which are finite-lived, are as follows:
| June 30, 2026 | December 31, 2025 | |||||||
| Developed technology | $ | $ | ||||||
| Trademarks and trade names | ||||||||
| Customer relationships | ||||||||
| Gross value | ||||||||
| Less Amortization | ( | ) | ( | ) | ||||
| Net value | $ | $ | ||||||
The Company recorded amortization expenses of $
The following table outlines the estimated future amortization expense related to intangible assets held as of June 30, 2026:
| Years Ending December 31: | Amount | |||
| 2026 (remaining period) | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
During the three months ended June 30, 2026, the Company identified changes in the manner in which certain finite-lived intangible assets associated with its Naamche operations were being used. In April 2026, the external customer relationship and related revenue historically associated with Naamche were reassigned to reAlpha Tech Corp., while the underlying service arrangement and related development activities continued on substantially the same terms. As a result, the Naamche customer relationship intangible asset no longer generated identifiable cash flows in the manner contemplated when the asset was initially recognized. In addition, following the rebranding of Naamche as reAlpha Nepal, the Company discontinued use of the acquired Naamche trade name. These changes indicated that the carrying amounts of the customer relationship and trade name intangible assets were not recoverable. Accordingly, the Company recognized an impairment loss of $
In accordance with ASC 350, the Company is required to evaluate goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that the fair value of a reporting unit may be less than its carrying amount.
The Company performs its annual goodwill impairment test as of December 31 each year. During the six months ended June 30, 2026, the Company evaluated whether any events or changes in circumstances had occurred that would more likely than not reduce the fair value of a reporting unit below its carrying amount, requiring an interim goodwill impairment test. Based on this evaluation, the Company determined that no such triggering events or changes in circumstances existed as of June 30, 2026. Accordingly,
For further information regarding the Company’s annual goodwill impairment test, including the methodology and key assumptions applied (see “Note 6 - Goodwill and Intangible Assets” for more information).
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Note 7 - Related Party Transactions
a. Summary of Short-Term Loans - Related Parties
Short-term loans from related parties consist of unsecured loans obtained from related parties to support the Company’s operating and working capital requirements. These loans carry interest rates of approximately
On March 9, 2026, the Company hired Payton Cuddy, the son-in-law of Mr. Swaminathan, as a Senior Marketing Manager. Mr. Cuddy is employed on an at-will basis with an annual base salary of $
Short-term loans from related parties as of June 30, 2026, and December 31, 2025, are summarized as follows:
| Average Interest Rate as of June 30, 2026 | June 30, 2026 | December 31, 2025 | ||||||||||
| Term Loan Facility | % | $ | $ | |||||||||
| Less: Interest Reserve | ( | ) | $ | ( | ) | |||||||
| Total Debt | $ | $ | ||||||||||
Note 8 - Loans from Unrelated Parties
a. Summary of Short-Term Loans - Unrelated Parties
Short-term loans primarily consist of multiple term loan facilities obtained by AiChat, a subsidiary of the Company, carrying an average interest rate of approximately
Short-term loan balances as of June 30, 2026, and December 31, 2025, are summarized as follows:
| Average Interest Rate as of June 30, 2026 | June 30, 2026 | December 31, 2025 | ||||||||||
| Term Loan Facility | % | $ | $ | |||||||||
| Less: Interest Reserve | ( | ) | $ | ( | ) | |||||||
| Total Debt | $ | $ | ||||||||||
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b. Summary of Long-Term Loans - Unrelated Parties
AiChat has obtained multiple long-term loans from external lenders to support general operating needs. As of June 30, 2026, these loans bore an average interest rate of approximately
Long-term loan balances as of June 30, 2026, and December 31, 2025, are summarized as follows:
| Maturity Year | Average Interest Rate as of June 30, 2026 | June 30, 2026 | December 31, 2025 | |||||||||||
| Term Loan Facility | % | $ | $ | |||||||||||
| Vehicle Loan | % | |||||||||||||
| Less: Interest Reserve | ( | ) | ( | ) | ||||||||||
| $ | $ | |||||||||||||
Note 9 - Deferred Liabilities
Deferred liabilities primarily consist of deferred consideration arising from the Company’s business combinations. Deferred consideration represents obligations payable in connection with the Company’s acquisitions. Deferred consideration related to the acquisition of GTG Financial was cancelled on the rescission date as part of the rescission of the GTG Financial acquisition (see “Note 4 - Business Combinations - Acquisition and Rescission of GTG Financial, Inc.” included in the Form 10-K for more information). In addition, approximately $
In connection with the acquisition of Prevu on November 21, 2025, a portion of the purchase consideration is payable on a deferred basis pursuant to the terms of the Prevu Merger Agreement. As of June 30, 2026, approximately $
Note 10 - Mezzanine Equity and Preferred Stock Embedded Derivative Liability
On March 7, 2025, the Company entered into a media-for-equity transaction with MMC, pursuant to that certain Advertising Agreement (the “Advertising Agreement”) and Investment Agreement (the “Investment Agreement”), each dated as of March 7, 2025, pursuant to which the Company issued
During the three and six months ended June 30, 2026, the Company recognized marketing expense of $
On March 9, 2026, the Company issued
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As of June 30, 2026, the key Level 3 inputs used were as follows:
| Inputs | MMC | |||
| Common stock price as of June 30, 2026 | $ | |||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Dividend yield | % | |||
| Expected term (years) | ||||
As of December 31, 2025, the key Level 3 inputs used were as follows:
| Inputs | MMC | |||
| Common stock price as of December 31, 2025 | $ | |||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Dividend yield | % | |||
| Expected term (years) | ||||
As of June 30, 2026, the fair value of the derivative liability was $
Amendment to Series A Preferred Stock Certificate of Designation
On April 30, 2026, the Company effected th
Additionally, any share-based inputs used in the valuation of the embedded derivative liability, including the Company’s common stock price, have been adjusted to reflect the Reverse Stock Split. The Reverse Stock Split did not impact the aggregate carrying value of the Series A Preferred Stock classified in mezzanine equity or the fair value measurement methodology of the embedded derivative liability.
Note 11 - Stockholders’ Equity
The total number of shares of capital stock that the Company has the authority to issue is up to
As of June 30, 2026, there were
As of June 30, 2026,
Stock Based Compensation
Equity Incentive Plan
We maintain the 2022 Plan, under which we may grant awards to employees, officers, directors, and certain other service providers. The compensation committee of the Board (the “Compensation Committee”) administers the 2022 Plan.
Pursuant to the evergreen provision of the 2022 Plan, the number of shares authorized for issuance under the 2022 Plan increases automatically on an annual basis. As a result of such increases, which commenced on October 15, 2025, the aggregate number of shares of common stock authorized for issuance under the 2022 Plan was
There were no changes to the number of shares authorized for issuance under the 2022 Plan during the three and six months ended June 30, 2026.
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Ending balances for the 2022 Plan for the six months ended June 30, 2026 are as follows:
| Description | Number of Shares | |||
| Shares available for future issuance under the 2022 Plan as of December 31, 2025 | ||||
| Restricted stock units granted, net of forfeitures | ( | ) | ||
| Common stock issued | ( | ) | ||
| Shares available for future issuance under the 2022 Plan as of June 30, 2026 | ||||
Stock-based compensation expense for the three and six months ended June 30, 2026, was $
Restricted Stock Units
The Company measures compensation cost for all stock-based awards granted to employees and certain other service providers based on the grant-date fair value of the award by ASC 718. The fair value of RSUs is determined based on the closing market price of the Company’s common stock on the date of the grant.
During the six months ended June 30, 2026, the Company granted
A summary of RSU activity for the six months ended June 30, 2026, is as follows:
| Number of RSUs | Weighted Average Grant Price | |||||||
| Balance as of December 31, 2025 | ||||||||
| RSUs granted | ||||||||
| RSUs vested | ( | ) | ||||||
| RSUs forfeited | ( | ) | ||||||
| Balance as of June 30, 2026 | ||||||||
As of June 30, 2026,
Short-Term Incentive Plan
On February 4, 2025, the Compensation Committee approved the Company’s 2025 Short-Term Incentive Plan, as amended and restated on April 23, 2026 (the “STIP”), providing for quarterly awards of performance-based RSUs under the 2022 Plan. The STIP is designed to reward executive officers and key employees based on the achievement of quarterly performance targets. The Compensation Committee has full power to administer and interpret the STIP and, in its sole discretion, may establish or amend the rules of general application for the administration of the STIP. For the three and six months ended June 30, 2026, no quarterly awards were approved by the Compensation Committee under the STIP.
Warrants
During the years ended December 31, 2025 and 2024, the Company issued warrants to purchase shares of its common stock in connection with financing transactions, warrant inducement transactions, public offerings, registered direct offerings, and private placements. The warrants generally have fixed exercise prices, subject to adjustments set forth therein, are exercisable upon issuance or following stockholder approval, as applicable, and have contractual terms ranging from to years from their respective issuance dates.
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All warrants issued by the Company remain classified as equity instruments and are recorded in additional paid-in capital. During the six months ended June 30, 2026, there were no warrant issuances, exercises, modifications, repricing, or reclassifications. The proportional adjustment to the number of shares issuable upon exercise of the warrants resulting from the Reverse Stock Split was an anti-dilution adjustment under the applicable warrant terms and was not accounted for as a warrant modification or repricing.
As of June 30, 2026, the Company had
The following table presents the securities that were excluded from the computation of diluted net loss per share because their inclusion would have been anti-dilutive:
| Balance as of June 30, | ||||||||
| Potential common shares excluded | 2026 | 2025 | ||||||
| Warrants | ||||||||
| Restricted stock units | ||||||||
| Series A Preferred Stock, if converted | ||||||||
| Total | ||||||||
Shelf Registration Statement on Form S-3
On November 26, 2024, the Company’s shelf registration statement on Form S-3 (File No. 333-283284) (the “Form S-3”) was declared effective by the SEC. This registration statement permits the Company to offer and sell, from time to time, common stock, preferred stock, warrants, subscription rights, and units in one or more offerings, subject to market conditions and applicable regulatory requirements.
On December 19, 2024, the Company entered into an At the Market (“ATM”) Sales Agreement with A.G.P./Alliance Global Partners (“A.G.P.”) (the “A.G.P. Sales Agreement”), under which the Company was able to offer and sell shares of its common stock from time to time. The A.G.P. Sales Agreement was terminated effective March 29, 2025.
Following the termination of the ATM program with A.G.P. and the related A.G.P. Sales Agreement, the Company entered into an At-The-Market Offering Agreement (the “HCW Sales Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), on April 2, 2025, under which the Company was able to offer and sell shares of its common stock having an aggregate offering price of up to $
On December 23, 2025, the Company filed a prospectus supplement to its Form S-3 to increase the aggregate offering price of shares of common stock available for issuance under the HCW Sales Agreement to up to $
Note 12 - Commitments and Contingencies
GEM Agreement
Pursuant to the terms of the GEM Agreement, we are required to indemnify GEM for any losses it incurs as a result of a breach by us of our representations and warranties and covenants under the GEM Agreement or for any misstatement or omission of a material fact in a registration statement registering those shares pursuant to the GEM Agreement. Also, GEM is entitled to be reimbursed for legal or other costs or expenses reasonably incurred in investigating, preparing, or defending against any such loss. To date, we have not raised any capital pursuant to the GEM Agreement, and we may not raise any capital pursuant to the GEM Agreement prior to its expiration. Restrictions arising under the terms of our future financings may also affect our ability to raise capital pursuant to the GEM Agreement. The Company cannot reasonably estimate the potential losses, if any, with respect to the GEM Agreement or the related litigation.
Indemnification Agreements
The Company maintains indemnification agreements with its directors and officers that may require the Company to indemnify these individuals against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by law.
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Contingent Consideration
The Company is party to acquisition-related agreements with the former owners of reAlpha Mortgage that include contingent consideration arrangements based on the achievement of specified revenue and EBITDA targets over a three-year measurement period from October 1, 2024, through September 30, 2027.
The contingent consideration liability is measured at fair value at each reporting period, with changes in fair value recognized in earnings. During the six months ended June 30, 2026, the Company recognized a gain of $
As of June 30, 2026 and December 31, 2025, the fair value of the Company’s contingent consideration liability relating to reAlpha Mortgage was approximately $
The fair value of the contingent consideration liability was estimated using an income-based valuation approach. The valuation incorporates significant unobservable inputs, including projected revenue and EBITDA, the probability of achieving the specified earnout targets, the timing of expected payments, and a discount rate that reflects the risk associated with the underlying performance metrics.
Observable inputs include market-based interest rates, while unobservable inputs are based on management’s assumptions regarding future operating performance. Due to the significance of these unobservable inputs, the contingent consideration liability is classified as a Level 3 fair value measurement.
Valuation Inputs — June 30, 2026
| Assumptions | reAlpha Mortgage | |||
| Required Metric Risk Premium (RMRPC, Continuous) | % | |||
| Cost of Debt (KdC, Continuous) | % | |||
| Risk-Free Rate (RF) | % | |||
Valuation Inputs — December 31, 2025
| Assumptions | reAlpha Mortgage | |||
| Required Metric Risk Premium (RMRPC, Continuous) | % | |||
| Cost of Debt (KdC, Continuous) | % | |||
| Risk-Free Rate (RF) | % | |||
Legal Matters
Except as noted below, there have been no material changes to the legal proceedings disclosed in the Form 10-K. The Company continues to monitor the status of those proceedings, and developments will be disclosed in future filings as necessary.
GEM Yield Bahamas Limited Litigation
On November 1, 2024, we filed a lawsuit against GYBL in the United States District Court for the Southern District of New York (the “Court”), under which we asserted two causes of action: (i) rescission of the GEM Warrants issued to GYBL under the GEM Agreement, by and among us, GYBL and GEM Global Yield LLC SCS, under Section 29(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), due to GYBL’s underlying violation of Section 15(a) of the Exchange Act for effecting the GEM Warrants as an unregistered dealer, and (ii) in the alternative, a declaratory judgment that the exercise price adjustment calculation of the GEM Warrants is governed by the terms provided in the GEM Warrants, rather than the terms of the GEM Agreement. Following a motion to dismiss filed by GYBL on January 17, 2025, the Court granted such motion to dismiss on March 14, 2025. On April 15, 2025, we filed an appeal of the Court’s decision dismissing our case to the United States Court of Appeals for the Second Circuit (the “Second Circuit”). The Second Circuit granted the parties’ stipulation to withdraw the appeal on March 12, 2026.
Additionally, following the Court’s grant of GYBL’s motion to dismiss our lawsuit, GYBL filed a separate lawsuit against us, in which GYBL is asserting two causes of action against us: (1) breach of the terms of the GEM Warrants, and (2) declaratory relief concerning the validity and enforceability of the GEM Warrants. In addition to the declaratory relief, GYBL is seeking monetary damages in an amount to be determined at trial, specific performance of the GEM Warrants and attorneys’ fees and litigation costs. On June 9, 2025, we filed a motion to dismiss this lawsuit from GYBL. GYBL responded to our motion to dismiss on June 23, 2025, asserting that our motion to dismiss should be denied, or, in the alternative, GYBL should be given leave to further amend its complaint. On June 30, 2025, the Company filed a reply in support of its motion to dismiss. On August 21, 2025, the Court granted, in part, our motion to dismiss the amended complaint with respect to GYBL’s claim for declaratory relief concerning the validity and enforceability of the GEM Warrants. The Court denied our motion to dismiss in all other respects. Following the Court’s partial grant and partial dismissal of our motion to dismiss, we filed an answer to GYBL’s amended complaint on September 4, 2025.
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Note 13 - Segment Reporting
The Company operates through
The following table presents information about the Company’s reportable segments for the three and six months ended June 30, 2026, and 2025, along with the items necessary to reconcile segment information to the accompanying consolidated financial statements:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue by segment | ||||||||||||||||
| Technology Services | $ | $ | $ | $ | ||||||||||||
| Homebuying Services | ||||||||||||||||
| Consolidated revenue | ||||||||||||||||
| Segment cost of revenues | ||||||||||||||||
| Technology Services | ||||||||||||||||
| Homebuying Services | ||||||||||||||||
| Consolidated segment cost of revenues | ||||||||||||||||
| Segment operating expenses | ||||||||||||||||
| Wages, benefits and payroll taxes | ||||||||||||||||
| Technology Services | ||||||||||||||||
| Homebuying Services | ||||||||||||||||
| Marketing and advertising | — | |||||||||||||||
| Technology Services | ||||||||||||||||
| Homebuying Services | ||||||||||||||||
| Professional and legal fees | ||||||||||||||||
| Technology Services | ||||||||||||||||
| Homebuying Services | ( | ) | ||||||||||||||
| Other operating expense | ||||||||||||||||
| Technology Services | ( | ) | ||||||||||||||
| Homebuying Services | ||||||||||||||||
| Consolidated segment operating expenses | ||||||||||||||||
| Segment earnings | ||||||||||||||||
| Technology Services | ( | ) | ( | ) | ( | ) | ||||||||||
| Homebuying Services | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total consolidated segment operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Intangible amortization expense | ||||||||||||||||
| M&A-related expenses | ||||||||||||||||
| Corporate expense | ||||||||||||||||
| Non-operating other expense (income), net | ||||||||||||||||
| Net Loss from operations before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (1) | Segment operating expenses consist primarily of wages and employee benefits, payroll taxes, marketing and advertising costs, professional and legal fees, and other direct operating expenses attributable to each reportable segment. |
| (2) | Intangible amortization expense primarily represents the amortization of definite-lived intangible assets recognized in connection with business combinations. |
| (3) | Acquisition-related costs include, among others, transaction, advisory, legal, and other professional fees incurred in connection with business combinations. |
| (4) | Other operating expenses primarily consist of general and administrative costs, including office and facility-related expenses, dues and subscriptions, travel and related costs, and other miscellaneous expenses such as insurance, licensing and regulatory fees, bank charges, and technology-related expenses. |
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| (5) | Corporate expense includes costs that are managed at the corporate level and are not allocated to the reportable segments. These expenses consist primarily of executive and functional compensation, deal-related costs, and administrative expenses associated with the corporate headquarters. Unallocated corporate expenses also include finance, human resources, legal, and other management-related costs that are not considered by the CODM in evaluating segment performance. |
| (6) | Restructuring costs of $68,244 incurred during the three and six months ended June 30, 2026, are included within corporate expense in the Company’s segment expense disclosures. These costs consist primarily of severance and related termination benefits associated with the Plans and are reflected within the operating results of the respective entities in which the costs were incurred. |
The following table presents information about the company’s reportable segment assets as of June 30, 2026, and the year ended December 31, 2025:
| As of June 30, | As of December 31, | |||||||
| 2026 | 2025 | |||||||
| Total Assets by Segment | ||||||||
| Technology Services | $ | $ | ||||||
| Homebuying Services | ||||||||
| Corporate | ||||||||
| $ | $ | |||||||
Corporate assets include cash and cash equivalents of $
Note 14 - Revenue
Revenue is disaggregated by reportable segment, consistent with how the Company manages its operations and evaluates performance. (see “Note 13 - Segment Reporting” for more information regarding the Company’s reportable segments).
Disaggregation of Revenue
Revenue from Contracts with Customers and Performance Obligations
The Company recognizes revenue in accordance with ASC 606, by identifying the contract with a customer, determining the distinct performance obligations within the contract, allocating the transaction price to those performance obligations, and recognizing revenue when (or as) control of the promised goods or services transfers to the customer.
AiChat generates revenue from subscription-based access to its AI conversational customer experience platform and related consulting and implementation services. Subscription revenue is recognized over time over the contractual term. Consulting and implementation revenues are recognized either at a point in time or over time depending on the nature of the services provided.
reAlpha Mortgage generates revenue from mortgage brokerage commissions earned upon the successful funding of residential mortgage loans. Revenue is recognized at a point in time upon loan funding.
Prevu and reAlpha Realty generates revenue from brokerage commissions earned upon the successful completion of residential real estate transactions. Revenue is recognized at a point in time upon closing. Commission rebates provided to customers are recorded as a reduction of revenue at closing.
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The following table presents our revenue disaggregated by revenue type:
| For the three months ended June 30, 2026 | For the Six months ended June 30, 2026 | |||||||||||||||
| Services transferred at a Point in time | Services transferred Over time | Services transferred at a Point in time | Services transferred Over time | |||||||||||||
| Technology Services | $ | $ | $ | $ | ||||||||||||
| Homebuying Services | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| For the three months ended June 30, 2025 | For the Six months ended June 30, 2025 | |||||||||||||||
| Services transferred at a Point in time | Services transferred Over time | Services transferred at a Point in time | Services transferred Over time | |||||||||||||
| Technology Services | $ | $ | $ | $ | ||||||||||||
| Homebuying Services | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Transaction Price Allocated to the Remaining Performance Obligations
As of June 30, 2026, the Company estimated that $
Contract liabilities
Contract liabilities related to the Company’s technology services segment consist primarily of advance consideration received or advance billings for subscription and service arrangements for which revenue has not yet been recognized. These amounts are recorded as deferred liabilities in the unaudited condensed consolidated balance sheets and are recognized as revenue as the related performance obligations are satisfied.
The following table provides information about contract liabilities from contracts with customers:
| June 30, 2026 | December 31, 2025 | |||||||
| Deferred revenue | $ | $ | ||||||
During the six months ended June 30, 2026, the Company recognized $
Note 15 - Subsequent Events
On August 1, 2026, pursuant to the terms of the Prevu Merger Agreement, the Company issued an aggregate of
The issuance occurred subsequent to June 30, 2026 and, accordingly, is not reflected in the accompanying unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2026.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION CONTAINED IN THIS REPORT
This Quarterly Report on Form 10-Q, or this “report,” contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “may,” “will” or other similar expressions in this report. In particular, these include statements relating to future actions; prospective products, applications, customers and technologies; future performance or results of any products; anticipated expenses; and future financial results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to:
| ● | We have a limited operating history, which may adversely affect us; |
| ● | We have a history of operating losses, and we may not be able to generate sufficient revenue to achieve and sustain profitability; |
| ● | We may be unable to obtain financing through the debt and equity capital markets, which would have a material adverse effect on our growth strategy and our financial condition and results of operations; |
| ● | Our financial condition raises substantial doubt as to our ability to continue as a going concern; |
| ● | Our ability to maintain the listing of our common stock on Nasdaq; |
| ● | If we are unable to successfully identify, consummate or integrate acquisitions into our operations, our business, results of operations, and financial condition could be adversely affected; |
| ● | We have integrated, and intend to continue to integrate, artificial intelligence (“AI”) in our operations and services which may result in operational challenges, compliance challenges, reputational concerns, privacy risks and competitive risks, which could have material adverse effects on our financial condition, results of operations, or reputation; |
| ● | We have experienced, and expect to continue to experience, significant dilution of our common stock, which may adversely affect the market price of our common stock and make it more difficult to raise capital in the future; |
| ● | Compliance with governmental laws, regulations and covenants that are applicable to our business and industries or that may be passed in the future, including those related to the operations of brokerages, title service companies, and other real estate services, may adversely affect our business operations and financial condition; |
| ● | Our business depends significantly on the health of the U.S. residential real estate industry and changes in general economic conditions; |
| ● | The business and industry in which we participate are highly competitive, and we may be unable to compete successfully with our current or future competitors; |
| ● | The reAlpha platform and our services are currently limited to certain geographic markets and if we are unable to successfully expand the reAlpha platform and our services to new markets, our growth prospects, results of operations and financial condition may be adversely affected; |
| ● | Our technologies that are currently being developed may not yield expected results or be delivered on time; and |
| ● | The market price and trading volume of our common stock may continue to be highly volatile, which could lead to a loss of all or part of a stockholder’s investment. |
Forward-looking statements may appear throughout this report, including without limitation, the following sections: “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 1A. Risk Factors.” The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statements included in this report. You should not place undue reliance on these forward-looking statements.
Unless otherwise stated or the context otherwise requires, the terms “we,” “us,” “our” and the “Company” refer to reAlpha Tech Corp. and its subsidiaries, as applicable.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this report, as well as our audited financial statements and related notes included in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Form 10-K”). In addition to historical information, this discussion and analysis here and throughout this report contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements due to a number of factors, including but not limited to, the risks described in the section titled “Risk Factors” in our Form 10-K.
Overview
We are a real estate technology company developing an end-to-end homebuying platform, which we have named reAlpha (hereinafter referred to as the “reAlpha platform”). Our goal is to offer, through our AI-powered platform, a more affordable, streamlined experience for those on the journey to homeownership. The reAlpha platform integrates AI-driven tools to offer, among others, tailored property recommendations, an intuitive visual interface, and certain services, including realty services, mortgage brokering services, and digital title and escrow services within the platform.
Our revenue model revolves around: (i) our homebuying services, which include realty services (e.g., assisting a homebuyer with finding, touring, and closing on homes), mortgage brokering services (e.g., finding and originating a mortgage for the homebuyer that fits their financial situation, needs, credit, and location), and digital title and escrow services (e.g., title, closing and settlement fees) directly to customers, mainly through the reAlpha platform, and (ii) our technology services, including software development services provided by our subsidiaries Naamche, Inc. (“U.S. Naamche”) and Realpha Nepal Pvt. Ltd. (f/k/a Naamche, Inc. Pvt. Ltd.) (“reAlpha Nepal Pvt Limited” and together with U.S. Naamche, “reAlpha Nepal”) to businesses and the AI-powered conversational platform provided to customers by our subsidiary, AiChat Pte. Ltd. (“AiChat”).
We are continuously working to commercialize, enhance and refine our AI technologies to support our homebuying services and technology services and to continue generating revenue. As part of our growth strategy, we also plan to continue identifying and acquiring companies that are complementary to our business, and we intend to generate revenue from integrating such acquired companies and their capabilities into our business. To advance such strategy, we have, in recent years, announced the acquisitions of reAlpha Nepal, AiChat, Hyperfast Title LLC (“Hyperfast”), Debt Does Deals, LLC (f/k/a Be My Neighbor and d/b/a reAlpha Mortgage) (“reAlpha Mortgage”) and Prevu, Inc. and its subsidiaries (collectively, “Prevu”), as well as the proposed acquisition of InstaMortgage Inc. (“InstaMortgage”), which would expand our mortgage operations by adding direct lending capabilities.
Before shifting our focus towards the development of our homebuying services and technology services, our operational model was asset-heavy and built on utilizing our proprietary AI-powered technology tools for the acquisition of real estate, converting them into short-term rentals, and enabling individual investors to acquire fractional interests in these real estate properties, allowing such investors to receive distributions based on the properties’ performance as a short-term rental. In the first quarter of 2024, we decided to halt these operations due to macroeconomic conditions, such as higher interest rates, inflation, and elevated property prices, which conditions persisted throughout the fiscal year 2024. This led us to sell our last real property asset for such operations, and to recognize the impairment of goodwill and intangible assets under the rental business segment. As a result, in the first quarter of 2025, our Board approved the discontinuation of our short-term rental business operations entirely and this discontinuation meets the criteria for being reported as discontinued operations. We currently have two reportable segments: our homebuying services segment and our technology services segment.
Description of Our Segments
Homebuying Services
Our homebuying services segment consists of our (i) realty services offered by Prevu and our reAlpha Realty, LLC entities (collectively, “reAlpha Realty”); (ii) mortgage brokering services offered by reAlpha Mortgage and (iii) digital title and escrow services offered by Hyperfast. These services are mainly provided through the reAlpha platform, which supports homebuyers with key tasks such as booking property tours, submitting offer letters, mortgage pre-approval and closing transactions. It also provides detailed market insights and comprehensive property data tailored to users’ areas of interest.
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We seek to differentiate ourselves from competitors primarily through the vertical integration of homebuying services (real estate brokerage, mortgage brokering, title and escrow services) within a single platform; the integration of AI into our homebuying services offerings and our rebate, which is further described below. We have integrated AI into our homebuying services offerings through our development of “Claire,” a proprietary, customer-facing AI-powered agent acting as a digital homebuying concierge, and internal AI-powered tools for our loan officers. “Claire” is powered by large language models and provides real-time customer support by answering questions and guiding customers through each step of the homebuying journey through a user-friendly, 24/7 web and iOS interface. “Claire” is complemented by licensed professionals, namely real estate agents and loan officers, who step in when their expertise is needed.
In addition to “Claire,” we use AI-powered internal tools, such as our proprietary AI-powered “Loan Officer Assistant,” which is intended to reduce manual review time for our loan officers, and the AI-powered “Engagement Agent,” which integrates with our customer relationship management system to automate certain intake and scheduling and other pre-application workflows for our loan officers. The “Loan Officer Assistant” automates key loan origination tasks, such as document collection and borrower communication and is designed to help loan officers manage higher volumes with greater efficiency while the “Engagement Agent” is designed to accelerate prospective borrower’s connection to loan officers for personalized support, improve prospective borrower engagement and reduce repetitive administrative work related to the intake, follow-up and scheduling processes.
As part of our strategy to differentiate ourselves from competitors and provide a customer-centric homebuying experience, we offer a rebate to homebuyers using the reAlpha platform.
Under our current rebate structure, homebuyers can receive a rebate of up to 1.0% of the home purchase price when using our realty services and an additional rebate of up to 0.5% of the home purchase price when bundling the mortgage brokering services with our realty services, in each case subject to the limitations, terms and conditions described in the buyer agreement (the “current commission rebate”). The current commission rebate is paid to the homebuyer as a rebate towards closing costs, which is reflected on the settlement statement at closing.
Prior to the implementation of the current commission rebate in mid-January 2026, we offered a rebate whereby eligible homebuyers could receive up to 75% of the buy-side brokerage commission paid in connection with the purchase of a home through the reAlpha platform as a rebate towards closing costs, subject to market-specific commissions and minimums (the “historic commission rebate”). The buy-side brokerage commission was dependent on the geographical market of the home purchased and the percentage of the historic commission rebate available to a homebuyer was determined based on their use of eligible integrated services offered via the reAlpha platform, such as realty, mortgage brokering, and digital title and escrow services. Under this model, homebuyers could receive a 25% rebate when using only realty services, 50% when using two services and 75% when using all three services. The update to the current commission rebate in mid-January 2026 was designed to make the rebate easier for customers to understand.
Currently, all three services (realty, mortgage brokering, and title services) are only available on the reAlpha platform for homebuyers in Florida and Virginia. However, two of the three services are offered to homebuyers in eight additional U.S. states, and at least one service is available in an additional 25 U.S. states and the District of Columbia. While our homebuying services are currently offered in 35 U.S. states and the District of Columbia, we plan to offer our homebuying services (and expand the capabilities of the reAlpha platform) nationwide, subject to factors such as acquiring and maintaining necessary real estate and mortgage licenses in each U.S. state and the District of Columbia, securing additional multiple listing service data, executing effective national marketing campaigns and building scalable technology infrastructure.
Technology Services
Our technology services segment includes: (i) software development services provided to third-party customers by reAlpha Tech Corp.; (ii) software development and other technology support services provided by reAlpha Nepal to us under an intercompany services agreement; and (iii) the AI-powered conversational platform provided to customers by AiChat. We expect that our technology services segment will benefit from the current growth of the AI industry, and we believe that we are well-positioned to take advantage of these current trends due to our early adoption of AI for the development of our technologies.
reAlpha Nepal’s Software Development Services
reAlpha Nepal provides services related to the development of technology, AI and applications, as well as other technology support to the reAlpha platform and to third parties. For example, reAlpha Nepal developed the Company’s AI-powered tools such as the proprietary, customer-facing “Claire” and our internal AI-powered “Loan Officer Assistant” and “Engagement Agent.”
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AiChat’s Conversational Platform
AiChat provides AI-powered conversational customer experience platforms in the Asia-Pacific (“APAC”) region. AiChat’s conversational platform enables businesses to automate and optimize customer service, marketing, and e-commerce processes through the integration of major messaging channels in the APAC region, including Facebook Messenger, WhatsApp, Instagram, LINE, and KakaoTalk. AiChat also offers customers the ability to integrate their e-commerce platforms with payment gateways, which is powered by Stripe’s financial infrastructure, enabling them to sell products via messaging channels such as WhatsApp Pay directly to their customers. Through these capabilities, AiChat is able to offer customers a comprehensive array of customer service solutions, ranging from customer inquiry and AI-powered recommendations via its AI agents and chatbot capabilities, to completing the purchase through WhatsApp.
AiChat’s technology is built on conversational and generative AI models, supporting over 270 languages, including regional languages like Singlish and Bahasa. The conversational platform incorporates features such as contextual memory, real-time analytics, and personalized messaging to facilitate customer interactions. Key functionalities of the platform include automated responses, lead qualification, and customer engagement automation. Further, its recently released next-generation AI agents, which include Voice AI and Agentic AI, can provide human-like interactions and personalize responses based on the context of previous conversations, remembering customer preferences and past interactions to deliver more relevant recommendations. With self-learning and multi-turn contextual awareness, AiChat’s next-generation AI agents can scale human-like interactions while maintaining brand consistency, which we believe can improve customer loyalty and overall customer service satisfaction.
AiChat generates revenue through subscription packages of its conversational platforms and next-generation AI agents. These packages are tailored to businesses based on their size, needs and the volume of customer interactions. AiChat offers flexible pricing models, including monthly and annual subscriptions, as well as performance-based pricing for specific integrations and services, such as automated marketing campaigns and e-commerce automation.
Recent Developments
Proposed Merger with InstaMortgage Inc.
On December 19, 2025, we entered into the Merger Agreement (the “Merger Agreement”) with InstaMortgage, reAlpha Merger Sub I, Inc. (“Merger Sub”), a newly formed wholly-owned subsidiary of the Company, and the stockholders of InstaMortgage (the “Stockholders”). The Merger Agreement provides that, among other things and on the terms and subject to the satisfaction or waiver of the closing conditions and other conditions set forth therein, Merger Sub will merge with and into InstaMortgage at the effective time (the “Effective Time”) of the proposed merger (the “Proposed Merger”), with InstaMortgage surviving the Proposed Merger as a wholly-owned subsidiary of the Company.
Pursuant to the terms and conditions of the Merger Agreement, we agreed to pay the Stockholders an aggregate amount of $8,500,000, subject to certain closing adjustments, consisting of: (i) $500,000 in cash to be paid on the closing date of the Proposed Merger, less any applicable withholding tax payable by the Stockholders in accordance with the terms of the Merger Agreement; (ii) $1,500,000 in shares of our common stock to be issued on the closing date of the Proposed Merger and valued based on the volume-weighted average price (“VWAP”) of our common stock as reported on Nasdaq for the ten (10) consecutive trading day period ending on and including the trading day that is one (1) trading day prior to the date of the Merger Agreement; and (iii) $6,500,000 payable in bi-annual payments over three (3) years following the closing date of the Proposed Merger, either in cash or shares of common stock (the “Additional Payment Purchaser Stock”), at our sole discretion, with such Additional Payment Purchaser Stock, if any, valued based on the VWAP of our common stock as reported on Nasdaq, for the ten (10) consecutive trading days ending on the date immediately prior to the date on which such issuance is to be made.
Under the terms of the Merger Agreement, the completion of the Proposed Merger is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, the receipt of the Regulatory Approvals (as defined in the Merger Agreement), in each case subject to certain limitations further described in the Merger Agreement. The Proposed Merger is targeted to close by the end of August 2026, subject to Regulatory Approvals and other customary closing conditions
Reverse Stock Split
On May 20, 2025, we received a deficiency letter from Nasdaq notifying us that our common stock had failed to maintain the minimum $1.00 closing bid price required for continued listing under Nasdaq Listing Rule 5550(a)(2). On March 30, 2026, the Board approved a 1-for-25 reverse stock split of our issued and outstanding shares of common stock, which was previously approved by our stockholders at the 2025 annual meeting of stockholders. Subsequently, we filed an amendment to our certificate of incorporation with the Secretary of State of Delaware on April 28, 2026, pursuant to which the Reverse Stock Split became effective on April 30, 2026. On May 14, 2026, we received written confirmation from Nasdaq notifying us that we have regained compliance with Nasdaq Listing Rule 5550(a)(2).
In connection with the Reverse Stock Split, we also filed an amendment to the Certificate of Designation with the Secretary of State of Delaware on, which became effective immediately upon filing, which amended the formula set forth in the Certificate of Designation for the adjustment of the conversion price of the Series A Preferred Stock upon any stock dividend, subdivision or combination of the Company’s outstanding shares of common stock, including in connection with the Reverse Stock Split.
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Impact of Macroeconomic Conditions, Cyclicality and Seasonality on our Business
U.S. inflation remained above the Federal Reserve’s stated 2% target during the second quarter of 2026, increasing 3.5% over the year ended in June 2026, down from 4.2% over the year ended May 2026. In response to continued inflationary pressures, the Federal Reserve held the target federal funds rate steady at a range of 3.5% to 3.75% at both its April and June 2026 meetings. The Federal Reserve also noted that uncertainty around the economic outlook remained elevated, partly due to geopolitical developments in the Middle East.
Mortgage rates remained elevated during the second quarter of 2026, with the average 30-year fixed mortgage rate remaining near the mid-6% range in June 2026. Elevated borrowing costs, combined with elevated home prices and constrained housing inventory, have continued to affect affordability and home purchase activity. These factors, along with macroeconomic uncertainty, have contributed to mixed transaction volumes across the housing market. For example, in June 2026, existing-home sales in the U.S. increased 2.8% year-over-year to a seasonally adjusted annual rate of 4.09 million, while single-family home sales increased 3.3% year-over-year to a seasonally-adjusted annual rate of 3.73 million.
The residential real estate market is cyclical, with performance influenced by macroeconomic trends, interest rates, credit availability, lending standards and major disruptions in economic or political environments. Local markets may follow different patterns than national trends, leading to regional variations in activity. In addition, transaction volumes follow seasonal patterns, typically peaking in the spring and summer and slowing in the fall and winter. These cyclical and seasonal dynamics, together with prevailing macroeconomic conditions, can create variability in our operating results from quarter to quarter.
Management continues to evaluate the potential effects of current housing market conditions, interest rate trends, and seasonal factors on our operations. The extent of any impact will depend on future developments, including changes in macroeconomic conditions, housing demand, and regulatory or policy actions, all of which are inherently uncertain and difficult to predict. We may adjust elements of our strategy, cost structure, or operational focus in response to these developments to mitigate potential adverse effects and position the business for long-term objectives.
Key Business Metrics
We monitor a number of key performance indicators and non-U.S. GAAP financial measures to evaluate the performance of our business operations and the execution of our strategy. These metrics provide management with insight into transaction activity across our platform, operating efficiency, and trends affecting the scale and overall health of our business. We use these measures, together with our financial results, to assess performance across periods, inform management decision-making, and support financial planning and strategic priorities.
| Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Total transaction volume | $ | 150,368,178 | $ | 88,388,063 | ||||
| Revenue | $ | 1,951,406 | $ | 2,178,016 | ||||
| Cash and cash equivalents | $ | 2,230,607 | $ | 587,311 | ||||
| Gross profit margin | 66 | % | 52 | % | ||||
| Net loss | $ | (7,387,812 | ) | $ | (7,667,902 | ) | ||
| Adjusted EBITDA | $ | (6,066,798 | ) | $ | (5,625,233 | ) | ||
Total Transaction Volume
Total transaction volume is a key measure of the operational scale of our homebuying services offerings, and a key indicator of the reAlpha platform’s capacity and scalability that supports our revenue and drives expansion across our homebuying services segment. We define total transaction volume as the aggregate dollar volume of transactions generated across our real estate brokerage, mortgage, and title services during the applicable trailing twelve-month period. This includes (i) the closing sale prices of residential properties transacted through our realty services, (ii) the principal loan amounts closed through our mortgage brokerage operations, and (iii) the underlying property transaction value associated with title services provided during the period. We present total transaction volume on a trailing twelve-month basis to provide a view of transaction activity that smooths seasonal fluctuations and reflects the overall economic throughput of our platform. Total transaction volume is influenced by transaction activity across our business, home prices in the markets we serve, mortgage origination activity, service adoption rates, seasonality, and macroeconomic conditions, including interest rate levels and housing affordability. Management believes total transaction volume is useful in understanding period-over-period changes in transaction activity, evaluating the effectiveness of our agent network and marketing initiatives and assessing the overall health and growth trajectory of our business.
For realty transactions, we include the full closing sale price for each transaction, regardless of whether our brokerage represented the buyer, the seller, or both sides of the transaction, in accordance with applicable laws and disclosure requirements. Since customers may utilize more than one of our services in connection with a single underlying property transaction, the same property transaction value may be included in more than one component of total transaction volume. As a result, total transaction volume may exceed the dollar value of unique underlying residential property transactions completed during the period. This metric also excludes rental transactions that may be offered by Prevu to customers from time to time, which are not material to our operations.
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Further, although our revenue is primarily generated as a percentage of total transaction volume, it does not directly correspond to revenue recognized in the period. As such, total transaction volume is not a measure of revenue and is not directly comparable to revenue recognized during the six months ended June 30, 2026. Total transaction volume reflects the full value of the underlying transactions generated during the applicable trailing twelve-month period, whereas revenue reflects only the commissions, fees and other amounts recognized during the applicable six-month financial reporting period. The relationship between total transaction volume and revenue may also vary depending on the mix of services provided, the timing of revenue recognition, customer adoption of multiple services and applicable fee arrangements. Accordingly, changes in total transaction volume may not correspond directly or proportionately with changes in revenue and it should not be viewed as a measure or predictor of revenue for any particular financial reporting period.
As of June 30, 2026, our total transaction volume, measured on a trailing twelve-month basis, increased to approximately $150.4 million, or approximately a 70% increase, compared to June 30, 2025, which increase was primarily driven by the expansion, scaling and full integration of reAlpha Mortgage’s mortgage brokerage operations into our business, as well as the expansion of our real estate brokerage footprint and integrated realty-and-mortgage service coverage following the acquisition of Prevu. The increase in total transaction volume did not result in a proportionate increase in revenue, primarily due to the mix of services contributing to transaction volume, including the impact of Prevu following its acquisition in November 2025.
Revenue
Revenue represents income earned from services provided across our homebuying services and technology services segments. We generate revenue primarily from real estate brokerage commissions, mortgage brokerage fees, and other service-related revenues, which are recognized in accordance with U.S. GAAP. For more information regarding our discussion of revenue, see “Results of Operations” below.
For the six months ended June 30, 2026, revenue was $1,951,406, compared to $2,178,016 for the six months ended June 30, 2025, representing a decrease of approximately 10%.
Management evaluates revenue growth as an indicator of transaction activity across our platform and the effectiveness of our integrated service offerings. Revenue is influenced by transaction volume, customer adoption of multiple services, home prices in the markets we serve, mortgage origination activity, and prevailing market conditions, including interest rate levels and housing affordability.
Cash and cash equivalents
Cash and cash equivalents represent our primary source of liquidity and include unrestricted cash and highly liquid investments available to fund our operations and support strategic initiatives. Management monitors cash and cash equivalents to assess our liquidity position, working capital needs, and ability to support ongoing operations, platform development, and market expansion activities.
Cash and cash equivalents are influenced by operating performance, timing of transaction activity, capital raising activities, debt service requirements, and investments in technology, research and development, and acquisitions. As of June 30, 2026, cash and cash equivalents were $2,230,607, higher than the balance as of June 30, 2025 but lower than the $7,783,529 as of December 31, 2025, reflecting significant operating cash burn during the current period.
Gross profit margin
Gross profit margin represents gross profit as a percentage of revenue and reflects the efficiency of our operations after direct costs associated with delivering our homebuying services and technology services.
Management evaluates gross profit margin as an indicator of operating efficiency and unit economics across our services. Gross profit margin is influenced by service mix, total transaction volume, pricing dynamics, compensation and commission structures, and costs associated with operating and supporting our platform, including technology and service delivery expenses.
In the six months ended June 30, 2026, our gross profit margin increased to approximately 66% from 52% in the six months ended June 30, 2025. This increase in gross profit margin was mainly a result of lower cost of revenues, which was primarily due to the rescission of the GTG Financial and the absence of the cost of operations from GTG Financial, which had historically incurred higher cost of revenues than our other operating subsidiaries, and the increase in subscription-related revenue from AiChat’s platform, which also carries higher gross profit margins than our real estate and mortgage operations, resulting in an overall higher profit gross margin for the current period.
Net loss
Net loss represents loss from continuing operations before tax. Management uses this measure to evaluate our underlying business performance and to plan and forecast its operations.
In the six months ended June 30, 2026, our net loss, narrowed by approximately 4% to $(7,387,812), compared to $(7,667,902) for the six months ended June 30, 2025. This change was primarily a result of lower marketing and advertising expenses, driven by reduced non-cash marketing expense recognized in connection with the MMC media-for-equity transaction, as well as lower professional and legal fees following the absence of prior-year costs associated with financing and capital-raising activities. This decrease was partially offset by higher wages, benefits and payroll taxes resulting from increased headcount following our recent acquisition, as well as restructuring costs incurred in connection with a reduction in force implemented during the current period. For additional discussion regarding the drivers of the period-over-period change, see “Results of Operations” below.
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Adjusted EBITDA
We use Adjusted EBITDA, a non-U.S. GAAP financial measure, to evaluate our operating performance and facilitate comparisons across periods and with peer companies. We reconcile our Adjusted EBITDA to our net income (loss) adjusted to exclude interest expense, depreciation and amortization, changes in fair value of contingent consideration and preferred stock, share-based compensation, and other non-cash, non-operating, or non-recurring items that we believe are not indicative of our core business operations. We believe this measure provides useful insight into our ongoing performance; however, it should not be considered a substitute for, or superior to, net income or other financial information prepared in accordance with U.S. GAAP. For more information about how we use this non-GAAP financial measure in our business, the limitations of this measure, and reconciliation of this measure to the most directly comparable GAAP financial measure, see the section titled “Non-GAAP Financial Measures” below.
In the six months ended June 30, 2026, our Adjusted EBITDA was $(6,066,798), compared to $(5,625,233) in the six months ended June 30, 2025, a decrease of approximately 8%. This decrease reflects a change in the mix of adjustments. The prior-year period benefited from larger non-cash and financing-related add-backs for non-recurring items, including a $250,000 GEM commitment fee, $230,774 of equity offering costs, $242,502 of loan discount amortization, and higher interest expense of $253,950, that did not recur, or were significantly lower, in 2026. This decline in add-backs more than offset an increase in non-cash share-based compensation adjustments, which rose to $712,342 from $271,644, as well as $68,244 of expense related to restructuring incurred in the current period.
Critical Accounting Policies
The unaudited condensed consolidated financial statements included in this report have been prepared in accordance with U.S. GAAP and reflect the application of estimates and assumptions that require significant judgment by management. These estimates affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures and are based on a combination of historical experience, current business conditions, and other factors available to management. Actual results could differ materially from those estimates due to the inherent uncertainty in assumptions and external conditions.
There have been no material changes to the Company’s critical accounting policies or the methods used in applying those policies during the three months ended June 30, 2026. For a full description of our critical accounting policies and significant estimates, refer to the audited consolidated financial statements and accompanying notes included in our Form 10-K, and “Note 2 - Summary of Significant Accounting Policies” to the unaudited condensed consolidated financial statements included in this report.
Results of Operations
Three Months Ended June 30, 2026, Compared with Three Months Ended June 30, 2025
| Three months ended | ||||||||
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Revenue | $ | 1,110,343 | $ | 1,252,381 | ||||
| Cost of revenue | (377,396 | ) | (630,916 | ) | ||||
| Gross profit | $ | 732,947 | $ | 621,465 | ||||
| Operating expense | (3,628,021 | ) | (4,710,595 | ) | ||||
| Operating loss | (2,895,074 | ) | (4,089,130 | ) | ||||
| Other expense | (154,191 | ) | (728,604 | ) | ||||
| Loss from continuing operations before tax | (3,049,265 | ) | (4,817,734 | ) | ||||
Revenue. Revenue was $1,110,343 for the three months ended June 30, 2026, compared to $1,252,381 for the three months ended June 30, 2025, representing a decrease of approximately 11%. Revenue for the three months ended June 30, 2026, consisted of $821,169 from our homebuying services segment, and $289,174 from our technology services segment, compared to $1,030,472 and $221,909, respectively, for the three months ended June 30, 2025.
The decrease in revenue from our homebuying services segment was primarily attributable to the absence of revenue from GTG Financial in the current period following the rescission of the GTG Financial acquisition in August 2025. GTG Financial contributed $568,206 of revenue during the three months ended June 30, 2025. This decrease was partially offset by an increase in revenue generated from real estate brokerage transactions through Prevu’s operations, which contributed $369,572 during the three months ended June 30, 2026, compared to no such revenue during the three months ended June 30, 2025. Although we recently modified our commission rebate structure, we have not experienced a material change in revenue generated by our homebuying services segment under the new structure. We continue to evaluate the impact of this change on revenue, total transaction volume, and customer adoption.
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Revenue from our technology services segment increased primarily due to higher subscription revenue from AiChat’s platform, which generated $244,175 during the three months ended June 30, 2026, compared to $158,660 during the three months ended June 30, 2025.
Cost of revenue. Cost of revenue was $377,396 for the three months ended June 30, 2026, compared to $630,916 for the three months ended June 30, 2025, a decrease of approximately 40%. The decrease was primarily attributable to the absence of direct costs associated with the operations of GTG Financial, which had historically incurred higher cost of revenue than our other homebuying services operating subsidiaries. Cost of revenue for the current period reflects direct expenses associated with delivering our mortgage brokerage, real estate brokerage, and technology services, including compensation-related costs for personnel supporting loan origination and customer interactions.
Operating expenses. Operating expenses were $3,628,021 for the three months ended June 30, 2026, compared to $4,710,595 for the three months ended June 30, 2025, a decrease of approximately 23%. The decrease in operating expenses was primarily driven by a decrease in marketing and advertising expenses, as well as a reduction in professional and legal fees. The decrease in marketing and advertising expenses was primarily attributable to the absence of non-cash marketing expense recognized under the MMC media-for-equity transaction (see “Note 10 - Mezzanine Equity and Preferred Stock Embedded Derivative Liability” for more information), with marketing and advertising expenses decreasing to $178,076 for the three months ended June 30, 2026, from $1,483,672 for the three months ended June 30, 2025 . As the Company fully utilized all marketing credits under the MMC program in prior periods, there were no non-cash marketing expenses recognized during the three months ended June 30, 2026. Professional and legal fees decreased primarily due to lower legal, accounting, and other professional service costs incurred during the three months ended June 30, 2026, declining to $650,294 from $1,003,732 for the three months ended June 30, 2025. The prior-year period included higher legal and professional fees associated with financing and capital-raising activities that did not occur during the current period. During the three months ended June 30, 2026, the Company also implemented a restructuring plan, including a reduction in force, to improve operating efficiency and better align its cost structure with its strategic objectives. While the related restructuring costs were not material to the current-period operating expense variance, management expects these initiatives to support a more efficient operating cost structure over time.
Other expenses. Other expense was $154,191 for the three months ended June 30, 2026, compared to $728,604 for the three months ended June 30, 2025. The decrease in other expense was primarily attributable to lower interest expense, which decreased to $16,790 for the three months ended June 30, 2026, from $242,639 for the three months ended June 30, 2025, following the repayment of debt outstanding during the prior comparable period, as well as lower financing-related costs, including the absence of amortization of commitment fees incurred in the prior-year period. These decreases were partially offset by a smaller gain recognized from the change in fair value of contingent consideration (see “Note 12 – Commitments and Contingencies—Contingent Consideration” for more information), which was $21,677 for the three months ended June 30, 2026, compared to $174,000 for the three months ended June 30, 2025.
Six Months Ended June 30, 2026, Compared with Six Months Ended June 30, 2025
| Six months ended | ||||||||
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Revenue | $ | 1,951,406 | $ | 2,178,016 | ||||
| Cost of revenue | (666,193 | ) | (1,037,884 | ) | ||||
| Gross profit | $ | 1,285,213 | $ | 1,140,132 | ||||
| Operating expense | (8,461,389 | ) | (7,651,521 | ) | ||||
| Operating loss | (7,176,176 | ) | (6,511,389 | ) | ||||
| Other (expense) income | (211,636 | ) | (1,156,513 | ) | ||||
| Loss from continuing operations before tax | (7,387,812 | ) | (7,667,902 | ) | ||||
Revenue. Revenue was $1,951,406 for the six months ended June 30, 2026, compared to $2,178,016 for the six months ended June 30, 2025, representing a decrease of approximately 10%. Revenue for the six months ended June 30, 2026, consisted of $1,398,643 from our homebuying services segment and $552,763 from our technology services segment, compared to $1,782,542 and $395,474, respectively, for the six months ended June 30, 2025.
The decrease in revenue from our homebuying services segment was primarily attributable to the absence of the $954,800 of revenue generated by GTG Financial during the six months ended June 30, 2025, following the rescission of the GTG Financial acquisition in August 2025. This decrease was partially offset by an increase in revenue generated from real estate brokerage transactions through Prevu’s operations, which contributed $543,264 during the six months ended June 30, 2026, compared to no such revenue during the six months ended June 30, 2025. Although we recently modified our commission rebate structure, we have not experienced a material change in revenue generated by our homebuying services segment under the new structure. We continue to evaluate the impact of this change on revenue, total transaction volume, and customer adoption.
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Although total transaction volume increased, revenue decreased during the six months ended June 30, 2026, primarily due to the absence of revenue from GTG Financial, partially offset by revenue generated through Prevu’s operations. In addition, total transaction volume is measured on a trailing twelve-month basis and reflects the full value of the underlying transactions, whereas revenue reflects the commissions, fees and other amounts recognized during the applicable six-month period. Accordingly, changes in total transaction volume may not correspond directly or proportionately with changes in revenue.
Revenue from our technology services segment increased primarily due to higher subscription revenue from AiChat’s platform, which generated $462,763 during the six months ended June 30, 2026, compared to $268,212 during the six months ended June 30, 2025.
Cost of revenue. Cost of revenue was $666,193 for the six months ended June 30, 2026, compared to $1,037,884 for the six months ended June 30, 2025, a decrease of approximately 36%. The decrease was primarily attributable to the absence of direct costs associated with the operations of GTG Financial, which had historically incurred higher cost of revenue than our other homebuying services operating subsidiaries. Cost of revenue for the current period reflects direct expenses associated with delivering our mortgage brokerage, real estate brokerage, and technology services, including compensation-related costs for personnel supporting loan origination and customer interactions.
Operating expenses. Operating expenses were $8,461,389 for the six months ended June 30, 2026, compared to $7,651,521 for the six months ended June 30, 2025, an increase of approximately 11%. The increase in operating expenses was primarily driven by higher wages due to our increased headcount following our recent acquisition, which was partially offset by a decrease in marketing and advertising expenses and a reduction in professional and legal fees. Wages, benefits and payroll taxes increased to $4,157,988 for the six months ended June 30, 2026, from $2,636,525 for the six months ended June 30, 2025. Marketing and advertising expenses decreased to $1,440,059 for the six months ended June 30, 2026, from $2,002,611 for the six months ended June 30, 2025. The decrease in marketing and advertising expenses was primarily attributable to lower non-cash marketing expense recognized under the MMC media-for-equity transaction (see “Note 10 - Mezzanine Equity and Preferred Stock Embedded Derivative Liability” for more information), as the Company fully utilized a significant portion of its marketing credits in prior periods. Of the current period amount, approximately $593,429 was non-cash expense recognized in connection with the utilization of pre-paid marketing credits, while our cash marketing and advertising expenses were approximately $846,630 for the six months ended June 30, 2026. Professional and legal fees decreased to $1,380,923 for the six months ended June 30, 2026, from $1,745,891 for the six months ended June 30, 2025. The prior-year period included higher legal and professional fees associated with financing and capital-raising activities that did not occur during the current period. During the six months ended June 30, 2026, the Company also implemented a restructuring plan, including a reduction in force, to improve operating efficiency and better align its cost structure with its strategic objectives. While the related restructuring costs were not material to the current-period operating expense variance, management expects these initiatives to support a more efficient operating cost structure over time.
Other expenses. Other expense was $211,636 for the six months ended June 30, 2026, compared to $1,156,513 for the six months ended June 30, 2025. The decrease in other expense was primarily attributable to lower interest expense, which decreased to $41,465 for the six months ended June 30, 2026, from $447,702 for the six months ended June 30, 2025, following the repayment of debt outstanding during the prior-year period, as well as lower other financing-related costs, including the absence of amortization of commitment fees incurred in the prior-year period. These decreases were partially offset by a smaller gain recognized from the change in the fair value of contingent consideration, which was $40,027 for the six months ended June 30, 2026, compared to $81,000 for the six months ended June 30, 2025 (see “Note 12 – Commitments and Contingencies – Contingent Consideration” for more information).
Non-GAAP Financial Measures
To supplement our financial information presented in accordance with U.S. GAAP, we believe “Adjusted EBITDA,” a “non-U.S. GAAP financial measure,” as such term is defined under the rules of the SEC, is useful in evaluating our operating performance. We use Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-U.S. GAAP financial measure may be helpful to investors because it provides consistency and comparability with past financial performance. However, this non-U.S. GAAP financial measure is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate a similarly titled non-U.S. GAAP measure differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of this non-U.S. GAAP financial measure as a tool for comparison. A reconciliation is provided below for our non-U.S. GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP. Investors are encouraged to review the related U.S. GAAP financial measure and the reconciliation of this non-U.S. GAAP financial measure to its most directly comparable U.S. GAAP financial measure, and not to rely on any single financial measure to evaluate our business.
We use Adjusted EBITDA, a non-U.S. GAAP financial measure, to evaluate our operating performance and facilitate comparisons across periods and with peer companies. We reconcile our Adjusted EBITDA to our net income (loss) adjusted to exclude interest expense, depreciation and amortization, share-based compensation, and other non-cash, non-operating, or non-recurring items that we believe are not indicative of our core business operations. We believe this measure provides useful insight into our ongoing performance; however, it should not be considered a substitute for, or superior to, net income or other financial information prepared in accordance with U.S. GAAP.
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The following table provides a reconciliation of net income to Adjusted EBITDA for the periods presented below:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | (3,049,265 | ) | (4,817,734 | ) | $ | (7,387,812 | ) | (7,667,902 | ) | ||||||
| Adjusted to exclude the following | ||||||||||||||||
| Depreciation and amortization | 170,680 | 131,045 | 332,739 | 261,444 | ||||||||||||
| Amortization of loan discounts and origination fee | - | 121,251 | - | 242,502 | ||||||||||||
| Impairment of capitalized software development- work in progress | - | 105,900 | - | 105,900 | ||||||||||||
| Changes in fair value of contingent consideration(1) | (21,677 | ) | (174,000 | ) | (40,027 | ) | (81,000 | ) | ||||||||
| Change in fair value of derivative liability(2) | 157,532 | 417,705 | 185,032 | 417,705 | ||||||||||||
| Loss on equity method investments | 2,951 | 1,526 | 5,180 | 2,398 | ||||||||||||
| Interest expense | 16,790 | 191,454 | 41,465 | 253,950 | ||||||||||||
| GEM commitment fee | - | 125,000 | - | 250,000 | ||||||||||||
| Share-based compensation (3) | 368,377 | 192,988 | 712,342 | 271,644 | ||||||||||||
| Equity offering costs | - | 230,774 | - | 230,774 | ||||||||||||
| Impairment of intangible assets(4) | 16,039 | - | 16,039 | - | ||||||||||||
| Acquisition-related expenses | - | - | - | 87,352 | ||||||||||||
| Expense related to restructuring | 68,244 | - | 68,244 | - | ||||||||||||
| Adjusted EBITDA | $ | (2,270,329 | ) | (3,474,091 | ) | $ | (6,066,798 | ) | (5,625,233 | ) | ||||||
| (1) | Represents non-cash changes in the fair value of contingent consideration payable to reAlpha Mortgage which is calculated based on revenue and EBITDA targets (see “Note 12 – Commitments and Contingencies” for more information). |
| (2) | Represents non-cash changes in the fair value of derivative liability recorded in connection with our media-for-equity transaction with MMC (see “Note 10 - Mezzanine Equity and Preferred Stock Embedded Derivative Liability” for more information). |
| (3) | Represents non-cash stock-based compensation expenses recognized during the period (see “Note 11 - Stockholders’ Equity” for more information). |
| (4) | Represents impairment of intangible assets during the period (see “Note 6 - Goodwill and Intangible Assets” for more information). |
| (5) | Represents restructuring costs incurred in connection with the Plans (see “Note 1 - Organization and Description of Business” for more information). |
Liquidity and Capital Resources
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. Our liquidity and capital resources are critical to our ability to execute our business plan and achieve our strategic objectives. Accordingly, to the extent that collections from our operations cannot fund our operations, we intend to utilize equity or debt offerings to raise these funds, although volatility in the capital markets may negatively affect our ability to do so.
We had cash and cash equivalents of $2.2 million as of June 30, 2026, and $7.8 million as of December 31, 2025. Based on our estimates, we believe we do not have sufficient working capital to meet our financial needs for the 12-month period following the date that the unaudited condensed consolidated financial statements included in this report are issued. Further, based on our current operating plans, we estimate that our cash and cash equivalents as of June 30, 2026, will be sufficient to fund our operating expenses and capital expenditure requirements for a period of three months as of the filing date of this report. These conditions, including recurring operating losses, negative operating cash flows, limited cash resources relative to projected cash requirements, and dependence on external financing, raise substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements included in this report are issued (see “Note 3 - Going Concern” for more information).
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Accordingly, to the extent that collections from our operations cannot fund our operations beyond such period, we intend to utilize equity or debt offerings to raise additional funds, although volatility in the capital markets may negatively affect our ability to do so on terms acceptable to us, or at all. As part of these efforts, we previously raised capital through equity offerings and utilized our At the Market (“ATM”) program with H.C. Wainwright & Co., LLC (“Wainwright”) to raise working capital, and during the three months ended March 31, 2026, we raised approximately $126,150 in net proceeds through such ATM program (see “Note 11 - Stockholders’ Equity” for more information). However, the amount and timing of future proceeds we may receive from the sale of shares of common stock pursuant to the ATM program with Wainwright, if any, will depend on a number of factors, including that we are eligible to use a Registration Statement on Form S-3 to sell shares thereunder, the number of shares we may elect to sell, the timing of such sales and the future market price of our shares of common stock. As of the date of this report, we are unable to sell shares pursuant to the ATM program with Wainwright due to restrictions on the use of our Form S-3, which may have a material adverse impact on our liquidity and ability to raise capital efficiently when needed.
We may also receive proceeds from the cash exercises of warrants outstanding as of June 30, 2026. As of such date, our outstanding warrants are exercisable into an aggregate of 436,022 shares of common stock. If all such warrants other than the GEM Warrants were exercised for cash, we can potentially receive aggregate gross proceeds of $4.7 million. The amount of cash proceeds that we may ultimately receive is dependent upon the trading price of our common stock and other market conditions, and there can be no assurance that such warrants will be exercised.
Further, due to the ongoing disputes with GEM regarding the warrants issued under the GEM Agreement, there is uncertainty regarding the enforceability of such warrants and the potential proceeds therefrom. As a result, we do not expect that such warrants will be exercised while these disputes are pending.
Our business model requires significant capital expenditures to build and maintain the infrastructure and technology required to support our growing operations. In addition, we may incur additional costs associated with compliance, research and development of new products and services, expansion into new markets or geographies, including through strategic acquisitions, and general corporate overhead. As a result, we may require additional financing in the future to fund our operations, which may include additional equity or debt financings or strategic partnerships or investments. If we are unable to obtain additional financing when required, we may be forced to reduce the scope of our operations, delay the launch of new products or services, or take other actions that could adversely affect our business, financial condition, and results of operations. We may also be required to seek additional financing on terms that are unfavorable to us, which could result in the dilution of our stockholders’ ownership interests or the imposition of burdensome terms and restrictions.
While we anticipate continued operating losses for the foreseeable future, we expect to generate more significant revenues as we continue investing in the commercialization of our products and technologies and pursuing strategic growth opportunities. However, our ability to raise additional capital will depend on various factors, including market conditions, investor demand, and our financial performance, and there can be no assurance that we will be able to raise additional funds on acceptable terms, if at all.
Contractual Commitments and Obligations
Acquisition of Prevu
In connection with the acquisition of Prevu, we are obligated to pay deferred consideration totaling $2.5 million pursuant to the terms of the Prevu Merger Agreement. The deferred consideration is payable in four equal installments of $625,000 over an 18-month period following the closing date, payable in cash or shares of our common stock, at our sole discretion. On March 16, 2026, we satisfied $617,495 of our deferred consideration obligation through the issuance of shares of common stock. As of June 30, 2026, the remaining deferred consideration of approximately $1,831,349 was classified as a current liability, as all remaining installments are due within the next 12 months (see “Note 9 – Deferred Liabilities” for more information). Subsequent to June 30, 2026, we satisfied an additional deferred consideration installment through the issuance of shares of common stock (see “Note 15 – Subsequent Events” for more information). To the extent we elect to satisfy future payments in cash, such payments will reduce our available liquidity. To the extent we elect to satisfy future payments through the issuance of shares of common stock, existing stockholders will experience dilution.
Proposed Merger with InstaMortgage
On December 19, 2025, we entered into the Merger Agreement to acquire 100% of the outstanding equity of InstaMortgage for total consideration of approximately $8.5 million, payable in a combination of cash and shares of our common stock, including deferred consideration. The transaction is targeted to close by the end of August 2026, subject to regulatory approvals and other customary closing conditions. In connection with this proposed acquisition, we will be required to pay cash consideration of approximately $0.5 million and issue approximately $1.5 million in shares of our common stock if and when the acquisition is consummated. As of June 30, 2026, the $0.5 million cash consideration is being held in escrow. (see “Recent Developments - Proposed Merger with InstaMortgage Inc.” for more information).
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Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities for the periods presented.
| Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| Particulars | 2026 | 2025 | ||||||
| Net cash used in operating activities | $ | (5,478,111 | ) | $ | (4,602,029 | ) | ||
| Net cash (used in) provided by investing activities | $ | (116,862 | ) | $ | 191,132 | |||
| Net cash provided by financing activities | $ | 42,312 | $ | 1,874,264 | ||||
Cash Flows from Operating Activities
For the six months ended June 30, 2026, net cash used in operating activities was $5,478,111, compared to $4,602,029 for the six months ended June 30, 2025, an increase of $876,082. The increase in net cash used in operating activities was primarily attributable to higher personnel-related costs, including increased wages and benefits and stock-based compensation associated with additional RSU and common stock grants to employees and directors, as well as changes in working capital during the current period. These increases were partially offset by lower non-cash marketing expense following the utilization of the remaining MMC marketing credits in prior periods.
Cash Flows from Investing Activities
For the six months ended June 30, 2026, net cash used in investing activities was $116,862, compared to net cash provided by investing activities of $191,132 for the six months ended June 30, 2025, a change of $307,994. The change was primarily attributable to the absence of cash acquired as part of business combinations during the six months ended June 30, 2026. During the prior-year period, the Company acquired cash and cash equivalents through business acquisitions, which increased net cash provided by investing activities for such period.
Cash Flows from Financing Activities
For the six months ended June 30, 2026, net cash provided by financing activities was $42,312, compared to $1,874,264 for the six months ended June 30, 2025, a decrease of $1,831,952. Net cash provided by financing activities during the six months ended June 30, 2026, was lower than in the prior-year period primarily because we raised significantly less capital through equity issuances, including through our ATM program, during the current period. In addition, $617,495 of the first deferred consideration payment related to the Prevu acquisition was satisfied through the issuance of common stock during the period. The remaining portion of the installment was not issued as of June 30, 2026 due to pending documentation required to complete the issuance. The $617,495 settlement was a non-cash financing activity and, accordingly, did not affect cash flows from financing activities.
Off-Balance Sheet Transactions
We do not have any off-balance sheet transactions.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide this information.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal accounting and financial officer, as appropriate, to allow timely decisions regarding required disclosure.
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We carried out an evaluation under the supervision and with the participation of management, including our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2026, the end of the period covered by this report. Based upon the evaluation of our disclosure controls and procedures as of June 30, 2026, our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer) concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer), does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
GEM Lawsuit
On November 1, 2024, we filed a lawsuit against GYBL in the Court pursuant to which we asserted two causes of action: (i) rescission of the GEM Warrants issued to GYBL under the GEM Agreement, by and among us, GEM, under Section 29(b) of the Exchange Act, due to GYBL’s underlying violation of Section 15(a) of the Exchange Act for effecting the GEM Warrants as an unregistered dealer, and (ii) in the alternative, a declaratory judgment that the exercise price adjustment calculation of the GEM Warrants is governed by the terms provided in the GEM Warrants, rather than the terms of the GEM Agreement. Following a motion to dismiss filed by GYBL on January 17, 2025, the Court granted such motion to dismiss on March 14, 2025. On April 15, 2025, we filed an appeal of the Court’s decision dismissing our case to the United States Court of Appeals for the Second Circuit (the “Second Circuit”). The Second Circuit granted the parties’ stipulation to withdraw the appeal on March 12, 2026.
Additionally, following the Court’s grant of GYBL’s motion to dismiss our lawsuit, GYBL filed a separate lawsuit against us, in which GYBL is asserting two causes of action against us: (1) breach of the terms of the GEM Warrants, and (2) declaratory relief concerning the validity and enforceability of the GEM Warrants. In addition to the declaratory relief, GYBL is seeking monetary damages in an amount to be determined at trial, specific performance of the GEM Warrants and attorneys’ fees and litigation costs. On June 9, 2025, we filed a motion to dismiss this lawsuit from GYBL. GYBL responded to our motion to dismiss on June 23, 2025, asserting that our motion to dismiss should be denied, or, in the alternative, GYBL should be given leave to further amend its complaint. On June 30, 2025, the Company filed a reply in support of its motion to dismiss. On August 21, 2025, the Court granted, in part, our motion to dismiss the amended complaint with respect to GYBL’s claim for declaratory relief concerning the validity and enforceability of the GEM Warrants. The Court denied our motion to dismiss in all other respects. Following the Court’s partial grant and partial dismissal of our motion to dismiss, we filed an answer to GYBL’s amended complaint on September 4, 2025. The parties have engaged in discussions with respect to a potential settlement of this matter. These discussions are currently ongoing, and we cannot predict the likelihood or terms of any potential settlement at this time
ITEM 1A. RISK FACTORS
There have been no material changes to our risk factors since those disclosed in “Part I, Item 1A. Risk Factors” of our Form 10-K, except as set forth below.
Our financial condition raises substantial doubt as to our ability to continue as a going concern.
Our independent registered public accounting firm previously expressed substantial doubt regarding our ability to continue as a going concern in its audit report dated March 12, 2026, for the year ended December 31, 2025. This conclusion was based on recurring losses from operations, negative cash flows, and the need to raise additional capital to support our ongoing activities.
Although we cannot predict with certainty all of our particular short-term cash uses or the timing or amount of cash requirements, management has concluded that there is substantial doubt about our ability to continue as a going concern (see “Note 3 - Going Concern” for more information). Our recurring losses, negative cash flow and the uncertainties surrounding our ability to execute and to realize our planned revenue growth and expected benefits from our operational improvement initiatives, could impact our future profitability and liquidity, which could in the future raise substantial doubt about our ability to continue to execute our operating plan as currently intended and require us to seek additional financing. If adequate funds or additional financings are not available, if and when needed, or if the terms of potential funding sources are unfavorable, our business, financial condition, and results of operations could be materially and adversely affected. Additionally, our financial statements have been prepared assuming that we will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Thus, our financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
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We have a history of operating losses, and we may not be able to generate sufficient revenue to achieve and sustain profitability.
We have not achieved profitability and have incurred losses since inception. For the quarter ended June 30, 2026, we recorded a net loss of $(3,049,265). For the year ended December 31, 2025, we recorded a net loss of $17,590,392. As of June 30, 2026, we had an accumulated deficit of $(63,444,055). While we have experienced revenue growth over recent periods, we may not be able to sustain or increase our growth or achieve profitability in the future. We intend to continue to invest diligently in sales and marketing efforts. In addition, we expect to incur significant additional legal, accounting, compliance and other expenses related to public company compliance and the expansion of our business. If our revenue fails to grow at a rate faster than these increases in our operating expenses, we will not be able to achieve and maintain profitability in future periods. As a result, we may continue to generate losses. Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays, and other unknown factors that may result in losses in future periods. If these losses exceed our expectations or our revenue growth expectations are not met in future periods, our financial performance will be harmed.
We are currently ineligible to use a Registration Statement on Form S-3 to register the offer and sale of our securities until April 2027, which could adversely impact our ability to raise future capital on acceptable terms to us, or at all.
We are currently not eligible to utilize our “shelf” Registration Statement on Form S-3 to conduct offerings of our securities until April 2027. Until such time that we become eligible to utilize the Form S-3, if we determine to pursue an offering, we would be required to conduct the offering on an exempt basis or file a Registration Statement on Form S-1. Using a Registration Statement on Form S-1 for a public offering, for instance, would likely take significantly longer than using a Registration Statement on Form S-3 and increase our transaction costs, and could, to the extent we are not able to conduct offerings using alternative methods, adversely impact our liquidity, ability to raise capital or complete acquisitions in a timely manner. The use of a Registration Statement on Form S-1 would also limit our flexibility as to the terms, timing or manner of any such offering, making it more difficult to execute any such transaction successfully and potentially harming our financial condition. Further, there can be no assurance that any financing using alternative methods will be available on acceptable terms, in the amounts needed, or at all.
If we are unable to maintain compliance with the continued listing requirements of the Nasdaq, our common stock could be delisted and the price and liquidity of our common stock may be adversely affected.
Our common stock may lose value and could be delisted from Nasdaq due to several factors or a combination of such factors. While our common stock is currently listed on Nasdaq, and we are in compliance with Nasdaq’s continued listing requirements as of the date of this report, we can give no assurance that we will be able to satisfy the continued listing requirements of Nasdaq in the future, including, but not limited to, the corporate governance requirements and the minimum closing bid price requirement, the minimum equity requirement or the market value of listed securities requirement.
If we were to be delisted, we would expect our common stock to be traded in the over-the-counter market which could adversely affect the liquidity of our common stock. Additionally, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our common stock; |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future; |
| ● | reduced liquidity for our stockholders; |
| ● | potential loss of confidence by customers, collaboration partners and employees; and |
| ● | loss of institutional investor interest. |
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement, or prevent future non-compliance with Nasdaq’s listing requirements.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There are no transactions that have not been previously included in a Current Report on Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None of the Company’s directors or officers
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ITEM 6. EXHIBITS
| * | Filed herewith. |
| ** | Furnished herewith. |
| # | Certain schedules, exhibits and similar attachments to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request. |
| + | Indicates management contract or compensatory plan or arrangement. |
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SIGNATURES
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, thereunto duly authorized.
| REALPHA TECH CORP. | ||
| Date: August 14, 2026 | By: | /s/ Michael J. Logozzo |
| Michael J. Logozzo | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 14, 2026 | By: | /s/ Thomas J. Kutzman Jr. |
| Thomas J. Kutzman Jr. | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
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