reAlpha Tech Corp.

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 April 22, 2021, which was changed to reAlpha Tech Corp. as a result of the short-form merger with its former parent on March 21, 2023. reAlpha Tech Corp. and its subsidiaries are collectively referred to as “we,” “us,” “our” or the “Company.”

Utilizing the power of artificial intelligence (“AI”) and an acquisition-led growth strategy, our goal is to offer a more affordable, streamlined experience for those on the journey to homeownership.

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 home purchase 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”), Naamche, Inc. Pvt. Ltd. (“Nepal Naamche” and together with U.S. Naamche, “Naamche”), and AiChat Pte. Ltd. (“AiChat”) to expand its software development expertise and AI-driven engagement tools, and reAlpha Realty, LLC, Debt Does Deals, LLC (f/k/a Be My Neighbor and d/b/a reAlpha Mortgage) (“reAlpha Mortgage”), and Hyperfast Title LLC (“Hyperfast”) to provide real estate brokerage and closing services, which enable the Company to capture value across multiple stages of the transaction process. During the three months ended September 30, 2025, the Company’s acquisition of GTG Financial, Inc. (“GTG” or “GTG Financial”) was rescinded pursuant to the terms of the Stock Purchase Agreement, by and among GTG Financial, Glenn Groves (the “Seller”) and the Company, dated February 20, 2025 (the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 is no longer a subsidiary of the Company as of August 21, 2025 (the “Rescission Date”) (see “Note 4 – Business Combinations” for more information).

With its focus on AI technology and integrated real estate services, the Company is creating a scalable, end-to-end, tech-enabled model for customers to buy a home. Through strategic acquisitions and innovations in its platform, the Company is expanding its market presence and diversifying revenue streams across real estate, mortgage services, and AI-powered solutions.

The Company’s principal executive office is located at 6515 Longshore Loop, Suite 100, Dublin, OH 43017.

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 Securities and Exchange Commission (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 50% of the voting interest. All significant intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with 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. generally accepted accounting principles (“U.S. GAAP”) for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring items) necessary for a fair presentation have been included. The condensed consolidated balance sheet as of December 31, 2024 has been derived from the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on April 2, 2025, as amended on May 13, 2025 (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. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

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 in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.

Related Party Transactions

The Company accounts for related party transactions in accordance with Accounting Standards Codification (“ASC”) 850. A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business.

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.

Concentration of Credit Risks

Financial instruments that potentially subject the Company to a significant concentration of credit risk primarily consist of cash, cash equivalents, and accounts receivable. As of September 30, 2025, the Company’s cash was held by financial institutions that management believes have acceptable credit. The Federal Deposit Insurance Corporation insures balances up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits. Accounts receivable are typically unsecured. The risk with respect to accounts receivable is mitigated by regular credit evaluations that the Company performs on its distribution partners and its ongoing monitoring of outstanding balances.

In accordance with ASC 326, Investments - Financial Instruments-Credit Losses the Company applies the Current Expected Credit Losses (“CECL”) model to estimate expected credit losses over the lifetime of financial assets measured at amortized cost. The Company has determined that accounts receivable is the only financial asset subject to CECL assessment, as it does not have any loan receivables, held-to-maturity debt securities, or other financial instruments requiring CECL evaluation.

The Company’s CECL methodology incorporates historical loss experience and current economic conditions to assess credit risk and expected loss reserves.

During the nine months ended September 30, 2025, the Company collected all previously outstanding receivables attributable to AiChat, its Singapore subsidiary. As a result, the previously recorded CECL reserve of 0.05% was released. However, a new CECL provision for the three months ended September 30, 2025 was recorded based on updated receivables and risk profiles as of September 30, 2025. The CECL reserve is netted against accounts receivable, net on the balance sheet.

There were no changes in the Company’s credit risk exposure, CECL methodology, and/or reserve assumptions during the nine months ended September 30, 2025. The updated values are as follows:

There have been no material changes to the Company’s significant accounting policies during the three and nine months ended September 30, 2025.

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, 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 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 4 – Business Combinations” for more information).

Naamche, a subsidiary of the Company that provides services related to the development of technology, adheres to ASC 606 for revenue recognition, primarily from its service-based contracts. This approach involves detailed identification of contracts with customers, determination of distinct performance obligations within these contracts, and accurate allocation of transaction prices to these obligations. Revenue is recognized as Naamche satisfies each performance obligation, typically over time, reflecting the ongoing delivery and customer consumption of its tech-driven services.

Recent Accounting Pronouncements

Accounting Pronouncements Issued and Adopted

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-05,Financial Instruments—Credit Losses (Topic 326) (“ASU 2025-05”), which introduces a practical expedient for all entities and an accounting policy election for certain entities related to estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The amendments, developed in coordination with the Private Company Council, address stakeholder concerns regarding the cost and complexity of applying the current expected credit loss model to such balances. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within those years, with early adoption permitted.

The Company elected to early adopt ASU 2025-05 during the quarter ended September 30, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements or related disclosures.

There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2025.

Note 3 - Going Concern

During the quarter ended September 30, 2025, the Company incurred a net loss and experienced negative operating cash flows. These conditions raised substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of these unaudited condensed consolidated financial statements.

Management has evaluated these conditions and developed plans intended to alleviate the substantial doubt, including by raising capital through equity offerings. As of September 30, 2025, the Company had cash and cash equivalents of approximately $9.3 million, a significant portion of which consist of proceeds raised by the Company’s recent equity offerings. Management believes such cash and cash equivalents are sufficient to meet its obligations as they become due over the next twelve months.

Based on these factors, management has determined that its plans are likely to be successfully implemented and will mitigate the conditions that initially raised substantial doubt about the Company’s ability to continue as a going concern. While the proceeds of the recent equity offerings have alleviated this substantial doubt, the financial statements for the quarter ended September 30, 2025, continue to be prepared on a going concern basis.

Note 4 - Business Combinations

For comprehensive information regarding acquisitions completed in the fiscal year ended December 31, 2024, please refer to “Note 5 - Business Combinations” included in the Form 10-K.

Rescission of GTG Financial, Inc.

In connection with the acquisition of GTG Financial, completed on February 20, 2025, the Company was contractually obligated under the SPA to issue shares of common stock valued at approximately $1.29 million. The number of shares of common stock was determined based on the 7-day volume-weighted average price (“VWAP”) of the Company’s common stock as reported on The Nasdaq Stock Market (“Nasdaq”) prior to the closing date. Based on a VWAP of $1.84, the Company issued 700,055 shares on April 28, 2025, to satisfy this obligation. In accordance with ASC 505, Equity, equity-classified instruments are recorded at fair value on the date of issuance. As a result, the preliminary purchase price allocation, previously reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, was updated as of June 30, 2025, to reflect a measurement period adjustment of $835,866, resulting in a corresponding reduction to goodwill.

On the Rescission Date, GTG Financial exercised its right to rescind the SPA originally executed on February 20, 2025. As part of the rescission, the shares of the Company’s series A convertible preferred stock (the “Series A Preferred Stock”) and common stock previously issued were returned and cancelled, and all obligations, such as the deferred cash, and contingent consideration, were extinguished. In accordance with ASC 810 Consolidation (“ASC 810”), the Company recognized gain on deconsolidation of $94,071 in the unaudited condensed consolidated statement of operations and comprehensive loss. The gain represents the difference between the carrying amounts of GTG Financial’s net assets derecognized and the carrying amounts of the consideration cancelled. No market transaction occurred at the Rescission Date. Accordingly, amounts were measured at carrying value.

In accordance with ASC 810, the rescission was accounted for as a deconsolidation, with GTG Financial’s assets, liabilities, equity balances, and results of operations removed from the Company’s unaudited condensed consolidated financial statements as of the Rescission Date. No remeasurement was required, as the Company did not retain any equity interest or other investment in GTG Financial following the rescission. Because the rescission involved the cancellation of shares and extinguishment of obligations without a market transaction, all amounts were measured at their carrying values. The transaction was not conducted with a related party, and GTG Financial is not considered a related party after the rescission.

Note 5 - Property and equipment, net

1. Property and equipment, net consisted of the following as of September 30, 2025 and December 31, 2024.

The Company recorded depreciation expenses of $5,420 and $22,259 for the three and nine months ended September 30, 2025, respectively, and $7,245 and $19,168 for the three and nine months ended September 30, 2024, respectively.

Note 6 - Capitalized Software Development Costs, Work In Progress

The Company adheres to ASC 350, Intangibles - Goodwill and Other, Internal-Use Software for the capitalization of software development costs. During the nine months ended September 30, 2025, the Company impaired the carrying amount of capitalized software due to the discontinuation of further development and the software becoming obsolete.

During the three months ended and nine months ended September 30, 2025, the Company recognized an impairment of approximately $0 and $105,000, respectively, compared to $0 for the same periods in 2024.

Note 7 - 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.

Changes in the carrying amount of goodwill during the nine months ended September 30, 2025, were as follows:

(i)The components of intangible assets as of September 30, 2025, all of which are finite lived, are as follows:

(ii)The components of intangible assets as of December 31, 2024, all of which are finite lived, are as follows:

The Company recorded amortization expenses of $126,580 and $371,186 for the three and nine months ended September 30, 2025, respectively, and $131,818 and $260,679 for the three and nine months ended September 30, 2024, respectively.

The following table outlines the estimated future amortization expense related to intangible assets held as of September 30, 2025:

Note 8 - Notes Payable

As of September 30, 2025, and December 31, 2024, the Company had outstanding notes payable of $0 and $4,909,376, respectively. During the three and nine months ended September 30, 2025, the Company recognized interest expense of $26,010 and $236,321, respectively, compared to $54,818 and $54,818 for the same periods in 2024.

On July 2, 2025, the Company received a redemption notice from Streeterville Capital, LLC (“Streeterville”) for a payment of $350,000. In connection with the redemption notice, the Company entered into an Exchange Agreement with Streeterville, pursuant to which the Company agreed to fully satisfy a redemption payment of $350,000 under the secured promissory note issued to Streeterville (the “Note”) by issuing 1,267,656 shares of common stock at an effective price of $0.2761 per share, in lieu of cash. In connection with the Exchange Agreement, the Company and Streeterville agreed to (i) partition a new secured promissory note in the principal amount of $350,000 (the “Partitioned Note”) and reduce the outstanding balance of the original note by the same amount, and (ii) exchange the Partitioned Note for the delivery of the common stock (the “Exchange”). Following the Exchange, the remaining outstanding balance of the original note was reduced to approximately $4,080,171.

On July 23, 2025, the Company fully repaid and extinguished the remaining outstanding balance of the Note, which had an initial principal of $5,455,000 and a maturity date of February 14, 2026. The repayment amount, which totaled approximately $4,466,202 (inclusive of a 9% prepayment penalty of $368,769), was satisfied using cash on hand and proceeds from the Company’s July 2025 equity offerings. In connection with this repayment, the Company received a certificate from Streeterville confirming full repayment and release of obligations, and Streeterville has released the Company and its subsidiaries from any further obligations or liabilities under the Note and thenote purchase agreement, dated August 14, 2024, with Streeterville (the “Note Purchase Agreement”). As a result, the Company no longer has any outstanding notes payable to Streeterville as of September 30, 2025.

In connection with this repayment, total accrued interest of $402,432 was settled, and the previously unamortized debt issuance costs of $121,875 and original issue discount of $181,247 were fully amortized.

Note 9 - Related Party Transactions

Loans from Related Parties

During the nine months ended September 30, 2025, AiChat, a subsidiary of the Company, entered into related party loan transactions with (i) AiChat’s Chief Executive Officer and director, Kester Poh, (ii) Balaji Swaminathan, a member of the Company’s board of directors (the “Board”), and (iii) Sea Easy Capital Ltd. (“SEA”), a Singapore-based entity that the spouse of Mr. Swaminathan controls by virtue of her ownership or control of a majority (51%) of the capital stock of SEA. Mr. Swaminathan also serves on the advisory board of SEA. All loans were provided on terms consistent with those offered to unrelated third parties.

As of September 30, 2025, AiChat had outstanding related party loans from three parties as described above. The loan from Mr. Poh to AiChat had an outstanding balance of approximately $97,313, consisting of $83,508 in principal and $13,805 in accrued interest. The loan from Mr. Swaminathan to AiChat had an outstanding balance of approximately $49,143, including $48,643 in principal and $500 in accrued interest. The loans to AiChat from SEA’s financing arrangement had an outstanding balance of approximately $126,946 comprised of $121,693 in principal and $5,253 in accrued interest, which has been repaid subsequent to the quarter ended September 30, 2025 (see “Note 18 - Subsequent Events” for more information).

a. Summary of Short-Term Loans to Related Parties

b. Summary of Other Long-Term Loans to Related Parties

Note 10 - Loans to Unrelated parties

a. Summary of Short-Term Loans to Unrelated Parties

Short-term loans primarily consist of multiple term loan facilities obtained by AiChat, carrying an average interest rate of approximately 8.9%. These facilities were entered into to support AiChat’s operating and working capital requirements. Additionally, short-term loans include a separate facility utilized by the Company to finance premiums related to directors’ and officers’ insurance coverage.

Short-term loan balances as of September 30, 2025, and December 31, 2024, are summarized as follows:

b. Summary of Long-Term Loans to Unrelated Parties

AiChat has obtained multiple long-term loans from external lenders at an average interest rate of 6.5%. These loans support general operating needs and carry varying repayment terms. The balance also includes a vehicle loan related to a Naamche-owned vehicle, which was sold during the three months ended September 30, 2025, resulting in a loss of $48,188 recognized in the statement of operations.

Long-term loan balances as of September 30, 2025, and December 31, 2024, are summarized as follows:

Note 11 - Deferred Liabilities

Deferred liabilities primarily consist of deferred revenue related to AiChat and deferred consideration from the GTG Financial acquisition. The deferred revenue reflects the net amount of revenue recognized and new deferrals during the period, representing contract liabilities for amounts billed in advance of performance. These amounts are recognized as revenue over time as the related services are delivered in accordance with the terms of the customer agreements.

Deferred consideration represents obligations payable in connection with the Company’s acquisitions. The deferred consideration to be paid to GTG Financial was cancelled on the Rescission Date, as part of the rescission of the GTG Financial acquisition (see “Note 4 – Business Combinations” for more information).

As of September 30, 2025, the Company’s deferred liabilities totaled approximately $1.1 million, compared to $1.5 million as of December 31, 2024.

Note 12 - Embedded Derivative Liability

As described in “Note 12 - Embedded Derivative Liability” to the unaudited condensed consolidated financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, the Company bifurcated and recorded embedded derivative liabilities in connection with the issuance of Series A Preferred Stock related to the GTG Financial acquisition and the Mercurius Media Capital LP (“MMC”) media-for-equity transaction. These derivative liabilities represent the fair value of the shortfall settlement features embedded in the agreements relating to the issuance of Series A Preferred Stock to GTG Financial and MMC, pursuant to which the Company is required to settle in cash or additional shares of common stock if the value of conversion shares upon automatic conversion of the Series A Preferred Stock is less than the paid consideration for such shares of Series A Preferred Stock.

On the Rescission Date, GTG Financial rescinded the SPA, thereby rescinding the GTG Financial acquisition. As a result, the embedded derivative liability associated with the issuance of Series A Preferred Stock to GTG was derecognized at book value of $253,134 in accordance with ASC 405, Liabilities—Extinguishments of Liabilities, and the Company no longer has any derivative obligations in connection with GTG Financial as of September 30, 2025. The derivative liabilities were classified as Level 3 within the fair value hierarchy and are measured at fair value using the Black-Scholes option pricing model. The fair values of the derivative liabilities are re-measured at each reporting date, with changes in fair value recognized in earnings.

As of September 30, 2025, the derivative liabilities recorded in connection with the MMC transaction were approximately $4,480,000. During the three and nine months ended September 30, 2025, the Company recognized an increase in fair value of approximately $12,500 and $405,204, respectively, in the unaudited condensed consolidated statements of operations and comprehensive loss, compared to $0 for the same periods in 2024.

As of September 30, 2025, the Company estimated the fair value of the derivative liability using the Black-Scholes option pricing model with the following key assumptions:

Note 13 - Preferred Stock Liability

In connection with the acquisition of GTG Financial and the transaction with MMC, the Company issued a total of 264,063 shares of Series A Preferred Stock with a stated value of $20 per share. The agreements pursuant to which these shares of Series A Preferred Stock were issued subject to certain conversion features, including a shortfall settlement feature, whereby the Company may be required to pay cash or issue shares of common stock if the aggregate value of the conversion shares issuable upon the automatic conversion of the Series A Preferred Stock is less than the paid consideration for such shares of Series A Preferred Stock.

In accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815 Derivatives and Hedging (“ASC 815”), the Company bifurcated the value of the issued Series A Preferred Stock between (i) the liability component of the Series A Preferred Stock and (ii) an embedded derivative liability representing the fair value of the shortfall settlement feature. The classification was based on the fact that the instruments obligate the Company to potentially settle the conversion at a fixed monetary value through a variable number of shares of common stock, which does not meet the criteria for equity classification.

On the Rescission Date, GTG Financial rescinded the SPA, thereby rescinding the GTG Financial acquisition. In connection with the rescission, the Series A Preferred Stock liability associated with the GTG Financial acquisition was terminated at its book value of $15,632, together with accrued interest of $3,490. As a result, the Company no longer has any obligations related to the issuance of Series A Preferred Stock in connection with GTG Financial as of September 30, 2025 (see “Note 4 – Business Combinations” for more information).

These instruments are classified as liabilities under U.S. GAAP due to redemption features and shortfall settlement provisions associated with the Series A Preferred Stock issued in connection with the acquisition of GTG Financial and the MMC transaction. The liability classification reflects the presence of an embedded derivative feature under applicable accounting guidance and is therefore not included in the diluted earnings per share (“EPS”) calculation. The Series A Preferred Stock and its embedded derivative liability were excluded from the diluted EPS calculation as their inclusion would have been anti-dilutive, consistent with ASC 260, Earnings per Share (“ASC 260”).

As of September 30, 2025, the liability component of the Series A Preferred Stock recorded in connection with the MMC transaction was approximately $292,272. During the three and nine months ended September 30, 2025, the Company recognized a loss of approximately $107,995 and a net gain of approximately $605,228, respectively, related to fair value remeasurement adjustments of the preferred stock liability, which were recorded in the condensed consolidated statements of operations and comprehensive loss, compared to $0 for the same periods in 2024.

In addition, the Company accrued dividends of approximately $28,843 and $78,391 during the three and nine months ended September 30, 2025, respectively. Because the Series A Preferred Stock is classified as a liability under ASC 480, these dividends are recognized as interest expense in the condensed consolidated statements of operations and increase the carrying amount of the preferred stock liability. No dividends were accrued for the comparative three- and nine-month periods ended September 30, 2024.

The preferred stock liability is re-measured at each reporting date, with changes in fair value recognized in earnings in accordance with ASC 480*.*

Note 14 - Stockholders’ Equity

The total number of shares of capital stock that the Company has the authority to issue is up to 205,000,000 shares, consisting of: (i)200,000,000 shares of common stock, having a par value of $0.001 per share; and (ii)5,000,000 shares of preferred stock, having a par value of $0.001 per share, of which 1,000,000 shares have been designated as Series A Preferred Stock. As of September 30, 2025, there were 103,050,651 shares ofcommon stock and 250,000 shares of Series A Preferred Stock issued and outstanding. As of December 31, 2024, there were 45,864,503 shares of common stock and 0 shares of preferred stock issued and outstanding.

Stock Based Compensation

Equity Incentive Plan

We maintain the reAlpha Tech Corp. 2022 Equity Incentive Plan (as amended, the “2022 Plan”), under which we may grant awards to our employees, officers and directors, and certain other service providers. The compensation committee of our Board (the “Compensation Committee”) administers the 2022 Plan. The 2022 Plan permits grants of awards to eligible employees, officers, directors and certain other service providers. The aggregate number of shares of common stock that may be issued under the 2022 Plan may not exceed 4,000,000 shares of common stock, of which 669,318 remain available for issuance as of September 30, 2025. During the three months ended September 30, 2025, the Company granted 1,713,996 restricted stock units (“RSUs”) and 76,607 shares of common stock pursuant to the 2022 Plan to its executive officers and certain employees,50,000 of which RSUs were forfeited in connection with the resignation of an employee. These awards are subject to time-based vesting, with 100% of the RSUs vesting over a period ranging from 2 to 4 years from the date of grant, subject to continued service and other terms and conditions.

All of our current employees, officers, directors and certain other service providers are eligible to be granted awards under the 2022 Plan. The Compensation Committee determines eligibility for awards at its discretion.

Ending balances for the 2022 Plan as of September 30, 2025 and December 31, 2024, are as follows:

The Company recorded stock-based compensation expenses of $286,581 and $557,825 for the three and nine months ended September 30, 2025, respectively, and $113,037 and $207,454 for the three and nine months ended September 30, 2024, respectively.

Short-Term Incentive Plan

On February 4, 2025, the Compensation Committee approved the Company’s 2025 Short-Term Incentive Plan (“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 tied to organic revenue, brokerage transactions, and the quality of acquisitions completed during such quarter.

Restricted Stock Units

The Company measures compensation cost for all stock-based awards granted to employees, directors, and certain other service providers based on the grant-date fair value of the award by ASC 718, Compensation - Stock Compensation (“ASC 718”). The fair value of RSUs is based on the closing market price of the Company’s common stock on the date of grant. The Company accounts for stock-based compensation in accordance with ASC 718. For awards with graded vesting features, the Company recognizes compensation expense on a straight-line basis over the requisite service period for each separately vesting portion of the award, treating the award as, in substance, multiple awards, in accordance with ASC 718. This method results in a front-loaded expense pattern that aligns more closely with the vesting schedule of the award.

For each fiscal quarter of 2025, the Company’s executive officers will be granted RSUs with a value of $62,500 to each of the Company’s executive officers based on the closing price of the Company’s common stock 30 calendar days after the end of each quarter.

During the nine months ended September 30, 2025, the Company granted 3,035,936 RSUs under the 2022 Plan to its executive officers and certain employees,100,000 of which RSUs were forfeited in connection with the termination of one employee and resignation of another employee. These awards are subject to time-based vesting, with 100% of the RSUs vesting over a period ranging from 2 to 4 years from the date of grant, subject to continued service and other terms and conditions.

Summary of RSU activity for the nine months ended September 30, 2025 follows:

As of September 30, 2025, a total of 2,935,936 RSUs remained outstanding, and none of the RSUs had vested. The RSUs were excluded from the diluted EPS calculation for the period ended September 30, 2025, as their inclusion would have been anti-dilutive under ASC 260.

Warrants

Additional details regarding the initial classification and terms of the Follow-On Warrants and GEM Warrants (each as defined below) are provided in Note 14 to the audited consolidated financial statements included in the Form 10-K.

The warrants issued to GEM Yield Bahamas Limited (“GYBL”) in October 2023 (the “GEM Warrants”) in connection with that certain Share Purchase Agreement, dated as of December 1, 2022 (the “GEM Agreement”), by and among us, GYBL, and GEM Global Yield LLC SCS (“GEM Yield”, and together with GYBL, “GEM”), remain classified as equity instruments. The Company is currently involved in litigation regarding the enforceability and adjustment provisions of the GEM Warrants. As of September 30, 2025, no reclassification or adjustment to the exercise price of the GEM Warrants has been made.

On April 6, 2025, in connection with the Company’s warrant inducement transaction, the Company entered into inducement letter agreements with certain holders of its existing warrants dated November 21, 2023 (the “Follow-On Warrants”), under which those holders agreed to exercise their warrants for cash at a reduced exercise price of $0.75 per share. In exchange, the Company agreed to issue warrants (the “New Warrants”) to purchase 8,437,502 shares of common stock (the “New Warrant Shares”). The issuance of the New Warrant Shares was subject to stockholder approval thereof, and such stockholder approval was obtained. The warrant inducement transaction closed on April 8, 2025 and resulted in the issuance of 4,218,751 shares of common stock and gross proceeds of approximately $3.1 million. In addition, the Company reduced the exercise price of Follow-On Warrants held by non-participating holders from $1.44 to $0.75 for the remainder of such warrants’ term. The Company accounted for the warrant inducement transaction in accordance with ASC 815. Under this guidance, the warrant inducement transaction was treated as a modification of equity-classified instruments, and the excess fair value of the New Warrants issued, amounting to $515,307, was charged to additional paid-in capital as an equity issuance cost. The average market price of the Company’s common stock during the period from July 1, 2025 to September 30, 2025, as reported on Nasdaq, was approximately $0.51, which is below the $0.75 exercise price of the warrants. As a result, these warrants were out-of-the-money and excluded from the diluted EPS calculation.

On July 18, 2025, the Company completed a best efforts public offering (the “2025 Public Offering”) of an aggregate of (i)13,333,334 shares of our common stock (the “July 2025 Shares”), (ii) Series A-1 warrants (the “Series A-1 Warrants”) to purchase up to an aggregate of 13,333,334 shares of common stock (the “Series A-1 Warrant Shares”) and (iii) Series A-2 warrants (the “Series A-2 Warrants,” and together with the Series A-1 Warrants, the “July 2025 Warrants”) to purchase up to an aggregate of 13,333,334 shares of common stock (the “Series A-2 Warrant Shares,” and together with the Series A-1 Warrant Shares, the “July 2025 Warrant Shares”). Each of the July 2025 Shares was sold together with one Series A-1 Warrant to purchase one share of common stock and one Series A-2 Warrant to purchase one share of common stock. The combined public offering price for each of the July 2025 Shares and accompanying July 2025 Warrants was $0.15. Each July 2025 Warrant has an exercise price of $0.15 per share and became exercisable beginning on October 8, 2025, the date stockholder approval for the issuance of the Series A-1 Warrant Shares and the Series A-2 Warrant Shares was received and became effective (the “Stockholder Approval Date”). The offering generated gross proceeds of approximately $2.0 million and net proceeds of approximately $1.56 million, after deducting placement agent fees and other offering-related expenses.

In connection with the 2025 Public Offering, the Company also issued warrants (the “Placement Agent Warrants”) to the placement agent, H.C. Wainwright & Co., LLC (“Wainwright”), or its designees, to purchase up to 666,667 shares of common stock, representing 5.0% of the shares sold in the offering. The Placement Agent Warrants have an exercise price of $0.1875 per share and became exercisable on the Stockholder Approval Date for the issuance of the shares underlying the Placement Agent Warrants was received and became effective. The Placement Agent Warrants will expire five years from the commencement of sales in such offering.

On July 22, 2025, the Company completed a registered direct offering (the “Registered Offering”) of 14,285,718 shares of its common stock (the “RDO Shares”) and a concurrent private placement (the “Private Placement”) of unregistered common stock warrants (the “Private Placement Warrants”) exercisable into an equal number of shares of common stock with an exercise price of $0.35 per share. The Private Placement Warrants are immediately exercisable upon issuance and expire after the fifth anniversary of the effective date of the registration statement covering the resale of shares of common stock issuable upon exercise of the Private Placement Warrants. The Registered Offering and concurrent Private Placement raised gross proceeds of approximately $5.0 million and net proceeds of approximately $4.5 million, after deducting placement agent fees and offering-related expenses. In connection with the concurrent Registered Offering and Private Placement, the Company also issued warrants to Wainwright, or its designees, to purchase up to 714,286 shares of common stock, representing 5.0% of the shares of common stock sold in the Registered Offering (the “RDO Placement Agent Warrants”). The RDO Placement Agent Warrants have an exercise price of $0.4375 per share, are immediately exercisable upon issuance and will expire five years from the commencement of sales in the concurrent Registered Offering and Private Placement.

During the three months ended September 30, 2025, (i) certain holders of the New Warrants exercised their warrants for cash in full to purchase an aggregate of 7,521,668 shares of common stock, at an exercise price per share of $0.75, resulting in aggregate gross proceeds to us of approximately $5.6 million, (ii) holders of the Private Placement Warrants exercised their warrants for cash to purchase an aggregate of 11,552,859 shares of common stock, at an exercise price per share of $0.35, resulting in aggregate gross proceeds of approximately $4.0 million and (iii) holders of the RDO Placement Agent Warrants exercised their warrants for cash in full to purchase to an aggregate of 617,856 shares of our common stock, at an exercise price per share of $0.4375, resulting in additional proceeds to us of approximately $270,000.

Subsequent to the three months ended September 30, 2025, certain additional warrants were exercised (see “Note 18 - Subsequent Events” for more information).

Warrant activity, for the nine months ended September 30, 2025, was as follows:

Rights

As previously disclosed, the rights granted in connection with the acquisition of Roost Enterprises, Inc. (“Rhove”) expired unexercised on March 24, 2025, and are no longer outstanding as of September 30, 2025.

Shelf Registration on Form S-3

On November 26, 2024, the Company’s shelf registration statement on Form S-3 (File No. 333-283284) was declared effective by the SEC (the “Form S-3”). 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 “AGP Sales Agreement”), allowing it to offer and sell common stock with an aggregate offering price of up to $14,275,000. The AGP Sales Agreement was terminated effective March 29, 2025. During the nine months ended September 30, 2025, the Company issued 160,879 shares under this program at a weighted-average price of $1.44 per share, for gross proceeds of approximately $231,235. After deducting sales commissions and offering expenses of $6,937, net proceeds totaled approximately $224,298, which were used to fund working capital and general corporate purposes. There were no issuances under the AGP Sales Agreement during the fiscal year ended December 31, 2024.

Following the termination of the ATM program with A.G.P. and related AGP Sales Agreement, on April 2, 2025, the Company entered into an At-The-Market Offering Agreement with Wainwright, permitting the sale of shares of common stock having an aggregate offering price of up to $7,650,000. During the three and nine months ended September 30, 2025, the Company issued 2,474,402 shares of our common stock and 2,792,104 shares of our common stock through the ATM program, generating net proceeds of approximately $837,664 and $944,758 after deducting commissions and offering expenses of approximately $34,591 and $40,689, respectively. The ATM program was suspended on July 16, 2025, in connection with the 2025 Public Offering, and we have not yet recommenced the ATM program.

Note 15 - 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.

Contingent Consideration and Compensation

The Company is party to acquisition-related agreements with former owners of Naamche and reAlpha Mortgage, which include contingent consideration arrangements based on the achievement of certain financial milestones. The terms of these arrangements were previously disclosed on “Note 15 - Commitments and Contingencies” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

In connection with the departure of the Naamche co-founders from the Company, contingent consideration of $137,000 that had been initially recognized at the time of the acquisition was settled in accordance with the terms of the separation agreements between the Company and each Naamche co-founder. During the three months ended September 30, 2025, separation payments in the amount of $50,000 were paid, and the remaining $87,000 was reclassified from contingent consideration to accrued expenses.

The contingent consideration liabilities are measured at fair value each reporting period, with changes recognized in earnings. During the nine months ended September 30, 2025, the Company recorded a $148,000 gain related to a decrease in the fair value of the contingent consideration associated with the reAlpha Mortgage acquisition. No payments were made under these arrangements during the period.

Acquisition Agreement - GTG Financial

On February 20, 2025, the Company completed the acquisition of GTG Financial, a mortgage brokerage, for total consideration of up to $4.2 million, which included equity, deferred cash payments, and performance-based earn-out payments in accordance with the terms of the SPA.

On the Rescission Date, GTG Financial rescinded the SPA. As a result, the Company has derecognized the contingent consideration liability and has no further obligations related to this acquisition. GTG Financial is no longer a subsidiary of the Company, effective as of the Rescission Date (see “Note 4 – Business Combinations” for more information).

Acquisitions of reAlpha Mortgage and Naamche

As of December 31, 2024, the Company’s contingent consideration liability was approximately $1,086,000, which included non-current liabilities related to the reAlpha Mortgage and Naamche acquisitions.

During the three and nine months ended September 30, 2025, the Company recognized fair value gains of approximately $67,000 and $148,000, respectively, primarily driven by changes in projected earn-out performance related to the reAlpha Mortgage acquisition. As of September 30, 2025, the fair value of the contingent consideration liability was approximately $801,000, all of which is classified as Level 3 within the fair-value hierarchy.

The contingent consideration related to the Naamche acquisition included a payment of $50,000 and a reclassification of $87,000 to accrued expenses during the nine months ended September 30, 2025.

The contingent consideration related to the GTG Financial acquisition was canceled on the Rescission Date, following the rescission of the SPA (see “Note 4 – Business Combinations” for more information).

Legal Matters

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 briefing schedule at the Second Circuit is being held in abeyance in order to allow two previously filed appeals, filed by two other public companies on identical issues against other similar investors, to be resolved first. However, if and when the appellate briefing moves forward, there is no assurance that it will be successful.

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.

Note 16 - Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which enhances segment reporting requirements by requiring disclosure of significant segment expenses included in the reported measure of segment profit or loss and regularly provided to the Chief Operating Decision Maker (“CODM”). The guidance also requires disclosure of the composition of other segment amounts, interim period segment profit or loss and asset information, and details regarding the CODM’s title and role in assessing segment performance.

The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company adopted ASU 2023-07 in the fourth quarter of 2024, with no material impact on its consolidated financial statements upon adoption.

The Company defines operating segments as components of the business for which discrete financial information is available and regularly reviewed by the CODM to allocate resources and assess performance. The Company’s Chief Executive Officer serves as the CODM and reviews financial information on a consolidated basis for decision-making, resource allocation, and performance evaluation. Accordingly, the Company operates asone operating and reportable segment—technology services—which encompasses its mortgage, real estate, and technology product lines. Although these product lines may exhibit different cyclical trends, they are managed together and reported as a single segment.

The CODM evaluates performance based on net income (loss), as presented in the Consolidated Statement of Operations, which represents the Company’s segment measure of profit or loss in accordance with GAAP. These measures are used to (i) assess operating results and the effectiveness of business strategies and (ii) benchmark the Company’s performance against competitors.

The CODM does not review segment assets or expenses at a level different from those presented in the Company’s consolidated balance sheet and statement of operations.

Note 17 - Discontinued Operations

There have been no changes to the Company’s discontinued operations since the filing of the Form 10-K. As previously disclosed, during the year ended December 31, 2024, the Company made a strategic decision to fully discontinue the operations through its previously acquired subsidiary, Rhove, which had previously operated under the rental business segment. This decision was made due to the lack of future revenue potential and the absence of funding to further develop the platform.

As of September 30, 2025, the operations formerly conducted by Rhove continue to be classified as a discontinued operation under ASC 205, Presentation of Financial Statements - Discontinued Operations.

The following table provides details of the discontinued operations as of September 30, 2025, and December 31, 2024:

The following table represents the statement of operations for discontinued operations as of each reporting period:

Note 18 - Subsequent Events

Subsequent to the three months ended September 30, 2025, (i) holders of the Private Placement Warrants exercised their warrants for cash to purchase an aggregate of 1,580,953 shares of common stock, at an exercise price per share of $0.35, resulting in additional proceeds to us of approximately $550,000 to date, (ii) certain holders of the July 2025 Warrants exercised their warrants for cash to purchase an aggregate of 23,051,394 shares of our common stock at an exercise price per share of $0.15, resulting in aggregate gross proceeds to us of approximately $3.5 million, (iii) holders of the Placement Agent Warrants exercised their warrants for cash to purchase an aggregate of 354,167 shares of our common stock, at an exercise price per share of $0.1875, resulting in additional proceeds to us of approximately $50,000 and (iv) a holder of the RDO Placement Agent Warrants exercised their warrants for cash to purchase an aggregate of 7,143 shares of our common stock, at an exercise price per share of $0.4375, resulting in additional proceeds to us of $2,500.

On October 21, 2025, the Company fully repaid the outstanding balance of loans to AiChat under SEA’s financing arrangement. The total amount repaid was approximately $126,946, which consisted of $121,693 in principal and $5,253 in accrued interest.

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:

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 except as required by law. 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.