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Item 1. Financial Statements

2024-04-19 compared with 2023-12-18 · 521 added, 632 removed, 127 unchanged (90% of the section changed)

Financial Statements

Consolidated Balance Sheet

31, 2023 and April 30, 2023

REALPHA TECH CORP.

Condensed Consolidated Balance Sheet

March 31, 2024 and December 31, 2023

Current Assets

Accounts receivable

Receivable from related parties

Prepaid expenses

3 unchanged sentences

Property and equipment, net

Other long term assets

Intangible assets, net

Capitalized software development - work in progress

2 unchanged sentences

Accounts payable

Mortgage and other loans, net

Notes payable

Related party payables

Accrued expenses

1 unchanged sentence

Long-Term Liabilities

Mortgage loans, net

Deferred liabilities

Mortgage loans

Total liabilities

1 unchanged sentence

Preferred stock, $ 0.001 par value;

5,000,000 shares authorized, 0 shares issued and outstanding as of October 31, 2023 and April 30, 2023

5,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2023 and March 31, 2024

Common stock ($ 0.001 par value;

200,000,000 shares authorized, 42,522,091 shares outstanding as of October 31, 2023;

200,000,000 shares authorized, 42,522,091 shares outstanding as of April 30, 2023)

200,000,000 shares authorized, 44,122,091 shares outstanding as of December 31, 2023;

200,000,000 shares authorized, 44,122,091 shares outstanding as of March 31, 2024)

Additional paid-in capital

5 unchanged sentences

Total stockholders’ equity (deficit)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Consolidated Statements of Operations

For the Three and Six Months Ended

October 31, 2023 and 2022 (unaudited)

TOTAL LIABILITIES AND STOCKOLDERS’ EQUITY

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

REALPHA TECH CORP.

Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2024, and 2023 (unaudited)

For the Three Months Ended

For the Six Months Ended

For the Three Months Ended

Cost of revenues

10 unchanged sentences

( 1,307,498 )

( 1,487,848 )

( 4,787,808 )

( 2,379,816 )

Other Income (Expense)

Interest income

Gain on sale of myAlphie

Interest expense

1 unchanged sentence

Total other income (expense)

Net (Loss) Income

( 4,252,866 )

Net Loss before income taxes

( 1,419,045 )

Income tax expense

$ ( 1,419,045 )

Net Income (Loss) Attributable to Non-Controlling Interests

Net (Loss) Income Attributable to Controlling Interests

$ ( 864,913 )

Net Loss Attributable to Non-Controlling Interests

Net Loss Attributable to Controlling Interests

$ ( 1,418,980 )

$ ( 864,722 )

Net (loss) Income per share — basic

Net (loss) Income per share — diluted

Net loss per share — basic

Net loss per share — diluted

Weighted-average outstanding shares — basic

Weighted-average outstanding shares — diluted

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

REALPHA TECH CORP.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

the Three and Six Months Ended October 31, 2023 and 2022

For the Three Months Ended March 31, 2024, and 2023 (unaudited)

Stockholders’

at April 30, 2023

$ ( 10,986,162 )

Income (Loss)

A Offering costs

India - Non Controlling Interest

at July 31, 2023

Balance at December 31, 2023

$ ( 12,237,885 )

Income (Loss)

( 1,418,980 )

1 unchanged sentence

( 1,419,045 )

India - Non Controlling Interest

at October 31, 2023

RTC India - Non controlling interest

Balance at March 31, 2024

$ ( 13,656,865 )

Stockholders’

Balance at April 30, 2022

Balance at December 31, 2022

$ ( 9,775,175 )

1 unchanged sentence

$ ( 2,784,145 )

Net Income (Loss)

Shares issued through Reg A offering

Reg A offering costs

Distribution to syndicate members

RTC India - Non Controlling Interest

Balance at July 31, 2022

$ ( 6,501,849 )

$ ( 6,300,725 )

$ ( 6,298,343 )

Net Income (Loss)

( 1,557,887 )

( 1,557,841 )

Shares issued for acquisition of Rhove

Shares issued for services

Shares issued in former parent

RTC India - Non controlling interest

Balance at October 31, 2022

$ ( 8,059,736 )

Cancellation of shares in the former parent

( 9,167,630 )

Recapitalization of shares

Downstream merger transaction

Balance at March 31, 2023

$ ( 10,639,897 )

Consolidated Statements of Cash Flows

the Six Months Ended October 31, 2023, and 2022 (unaudited)

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

REALPHA TECH CORP.

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2024, and 2023 (unaudited)

Cash Flows from Operating Activities:

Net income (loss)

$ ( 1,419,045 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

Gain on sale of myAlphie

$ ( 864,913 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Non cash commitment fee expense

Gain on sale of properties

Changes in operating assets and liabilities:

Accounts receivable

Receivable from related parties

Payable to related parties

Prepaid expenses

3 unchanged sentences

Total adjustments

( 1,759,748 )

Net cash used in operating activities

2 unchanged sentences

Cash Flows from Investing Activities:

Proceeds from sale of properties

Additions to property, plant & equipment

Cash paid to acquire business

Capitalized software development - work in progress

Net cash provided by investing activities

Net cash provided by (used in) investing activities

Cash Flows from Financing Activities:

Proceeds from issuance of debt, net

Payments of long-term debt

Deferred financing costs

Proceeds from issuance of common stock - Reg A

Net cash provided by financing activities

Net decrease in cash

Payments of debt

Proceeds from issuance of common stock

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

( 1,618,224 )

Effect of exchange rate changes on cash

( 1,442,314 )

Cash - Beginning of Period

Cash - End of Period

to Condensed Consolidated Financial Statements

1 - Organization and Description of Business

and Subsidiaries (“we,” “us,” “our,” the “Company” or the “Registrant”)

were initially incorporated with the name reAlpha Asset Management, Inc.

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements .

reAlpha Tech Corp.

Notes to Condensed Consolidated Financial Statements

Note 1 - Organization and Description of Business

ReAlpha Tech Corp.

and Subsidiaries (“we,”

“us,” “our,” the “Company” or the “Registrant”) were initially incorporated with the name

reAlpha Asset Management, Inc.

in the State of Delaware on April 22, 2021.

The Company is primarily

engaged in the business of purchasing and managing real estate through the use of technology, and other allied means for the benefit

of the Company’s stockholders.

March 21, 2023, reAlpha Tech Corp (the Parent) merged with reAlpha Asset Management, Inc.

(the Subsidiary) in a short-form merger in

accordance with Section 253 of the Delaware General Corporate Law (“DGCL”) (the “Downstream Merger”), resulting

in reAlpha Asset Management, Inc.

becoming the surviving corporation and gaining access to reAlpha Tech Corp.’s technology and

intellectual property.

Prior to the merger, the Parent owned over 90 % of the Subsidiary’s shares.

The merger enables reAlpha Asset

Management, Inc.

to provide customers with a broader range of AI (Artificial Intelligence) solutions for various industries.

the merger, reAlpha Asset Management, Inc.

changed its name to reAlpha Tech Corp.

As the former reAlpha Tech Corp shareholders owned

a majority of the common stock of reAlpha Asset Management, Inc.

the Downstream Merger is deemed a common control transaction.

between entities under common control are accounted for in a manner similar to the pooling of-interest method.

Thus, the financial statements

of the commonly controlled entities would be consolidated, retrospectively, as if the transaction had occurred at the beginning of the

As a result, the assets and liabilities and the historical operations reflected in the Company’s financial statements are

those of reAlpha Tech Corp and subsidiaries and reAlpha Asset Management, Inc.

Initially, our asset-heavy

operational model centered on using proprietary AI tools for real estate acquisition, converting properties into short-term rentals, and

offering fractional interests to investors.

However, due to current macroeconomic challenges like higher interest rates and inflated property

prices, we’ve suspended real estate acquisition operations.

Our new focus is on advancing and refining our AI technologies for commercial

applications to generate revenue.

Transactions between entities under common control

are accounted for in a manner similar to the pooling of-interest method.

Thus, the financial statements of the commonly controlled entities

would be consolidated, retrospectively, as if the transaction had occurred at the beginning of the period.

As a result, the assets and

liabilities and the historical operations reflected in the Company’s financial statements are those of reAlpha Tech Corp and subsidiaries

and reAlpha Asset Management, Inc.

recorded at historical cost basis.

The historical shareholders’

equity of the accounting acquirer prior to the merger is retroactively reclassified for the equivalent number of shares received in the

merger after giving effect to any difference in par value of the company’s and the accounting acquirer’s stock by an offset

in paid in capital.

March 24, 2023, the Company acquired Roost Enterprises, Inc.

(“Rhove”), a leading provider of real estate technology solutions.

The Rhove acquisition includes technology developed for the purpose of syndicating real estate properties for investment by retail and

institutional investors (the “Syndication Platform”).

Pursuant to the Stock Purchase Agreement entered into in connection

with the Rhove acquisition (the “Stock Purchase Agreement”) among the Company, Rhove and certain investor sellers in Rhove

(the “Sellers”), we acquired all the intellectual property related to the Syndication Platform and other related intangible

property and proprietary information of Rhove.

Company’s main office is located at 6515 Longshore Loop, Suite 100 — Dublin, OH 43017.

The Company has elected April 30th

as its year end;

however, on December 12, the board of directors of the

Company approved a change in the Company’s fiscal year from a fiscal year ending on April 30 of each year to a fiscal year ending

on December 31 of each year, which change will become effective on December 31, 2023.

2 - Summary of Significant Accounting Policies

of Consolidation

accompanying consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange

Commission (the “SEC”).

These consolidated financial statements include the accounts of the Company and its wholly-owned

subsidiaries.

All significant intercompany accounts and transactions have been eliminated in consolidation.

of Presentation

These statements have been prepared in accordance

with accounting principles generally accepted in the United States of America for interim financial information and the instructions

to Form 10-Q and do not include all the information and footnotes required by accounting principles generally accepted in the United

States of America for complete financial statements.

In the opinion of management, all adjustments (primarily consisting of normal recurring

accruals) considered necessary for a fair statement of the results for the interim periods have been included.

Operating results for

the six months ended October 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending April

The accompanying consolidated financial statements and the information included under the heading “Management’s Discussion

and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the audited financial statements

and notes for the year ended April 30, 2023.

preparation of financial statements in conformity with U.S.

generally accepted accounting principles 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.

and Cash Equivalents

Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Company had cash of $ 605,337 and $ 1,256,868 as of October 31, 2023 and April 30, 2023, respectively.

Concentration

of Credit Risks

instruments that potentially subject the Company to a significant concentration of credit risk primarily consist of cash, cash equivalents,

and accounts receivable.

As of October 31, 2023, 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.

The historical shareholders’ equity of the accounting acquirer

prior to the merger is retroactively reclassified for the equivalent number of shares received in the merger after giving effect to any

difference in par value of the company’s and the accounting acquirer’s stock by an offset in paid in capital.

The Company’s head office is located at

6515 Longshore Loop, Suite 100 — Dublin, OH 43017.

Note 2 - Summary of Significant Accounting

Principles of Consolidation

The accompanying condensed consolidated financial

statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

These condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All significant

intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

This summary of significant accounting policies

is presented to assist in understanding the Company’s financial statements.

These accounting policies conform to accounting principles,

generally accepted in the United States of America, 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 condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary

to fairly present the accompanying financial statements.

Use of Estimates

The preparation of financial statements in conformity

generally accepted accounting principles 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.

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.

had cash of $ 4,838,146 and $ 6,456,370 as of March 31, 2024 and December 31, 2023, respectively.

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.

March 31, 2024, the Company’s cash was held by financial institutions that management believes have acceptable credit.

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

and Equipment

and equipment are stated at cost, less accumulated depreciation.

Depreciation is computed using the straight-line method over the estimated

useful lives of related asset.

Real estate assets are carried at cost.

Depreciation is calculated on the straight-line method over the

estimated lives of the assets ( 27.5 years for residential rental property, 5 years for furniture and fixtures and 3 years for furnishings).

Major additions and betterments are capitalized and depreciated.

Maintenance and repairs, which do not improve or extend the estimated

useful lives, are expensed as incurred.

Upon disposal of assets, the related cost and accumulated depreciation are removed from the accounts,

and any gain or loss resulting from the disposal is recorded in the period of disposition in the accompanying statement of operations.

Company holds 25 % of the equity in each of the two privately held entities, Naamche Inc.

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.

Property and Equipment

Property and equipment are stated at cost, less

accumulated depreciation.

Depreciation is computed using the straight-line method over the estimated useful lives of related asset.

estate assets are carried at cost.

Depreciation is calculated on the straight-line method over the estimated lives of the assets ( 27.5

years for residential rental property, 5 years for furniture and fixtures and 3 years for furnishings).

Major additions and betterments

are capitalized and depreciated.

Maintenance and repairs, which do not improve or extend the estimated useful lives, are expensed as incurred.

Upon disposal of assets, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss resulting from

the disposal is recorded in the period of disposition in the accompanying statement of operations.

The Company holds 25 % of the equity in each of

the two privately held entities, Naamche Inc.

and Carthagos.

However, the Company does

not have any significant control or influence over the financial and operating policies.

As these equity instruments do not have readily

determinable fair values, they have been measured using the measurement alternative, cost-less impairment.

The carrying amount for these

instruments would be subsequently adjusted for observable price changes, or prices in orderly transactions for an identical investment

or similar investment of the same issuer.

In addition, these investments are periodically evaluated for impairment.

The investments are

classified as other long-term assets on the Company’s Consolidated Balance Sheet and the Company has not recorded any adjustments

to the carrying value of investments in the quarter ended October 31, 2023.

Software Development Costs

Company follows Accounting Standards Codification (ASC) 350, “Internal-Use Software,” to assess the capitalization of software

development costs, such as those incurred during the application development stage, including coding, testing, and development of software

functionality which are eligible for capitalization.

Such costs encompass direct labor, third-party services, and other directly attributable

As of October 31, 2023, the software under development has not reached the stage of being substantially complete and ready

for its intended use.

Consequently, the Company continues to capitalize on costs related to the application development stage in accordance

with ASC 350.

of capitalized software development costs commences when the software is placed in service and is available for its intended use.

capitalized costs are amortized over the software’s estimated useful life, which is determined based on factors such as expected future

benefits and the rate of technological change.

fair value of software acquired in a business combination is determined using the discounted cash flow (DCF) method as per ASC 820 “Fair

Value Measurements and Disclosures”, requiring the consideration of significant inputs and assumptions, such as projected cash

flows, expected growth rates, discount rates, and other relevant market data.

The Company exercises judgment in selecting appropriate

inputs, taking into account historical performance, market conditions, and the technological characteristics of the software.

Company accounts for goodwill in accordance with ASC 350 Intangibles-Goodwill and Other.

ASC 350 requires that goodwill with indefinite

useful lives no longer be amortized but instead be evaluated for impairment at least annually.

In accordance with ASC 350, goodwill is

allocated to reporting units.

On an annual basis and more frequently based on triggering events, as of April 30 of each year, management

reviews goodwill for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances

makes it more likely than not that the fair value of a reporting unit is less than it carrying amount.

If it is determined that it is

more likely than not that the fair value of a reporting unit is less than it carrying amount, goodwill is further tested for impairment

by comparing the carrying amount to the estimated fair value of its reporting units, determined using externally quoted prices (if available)

or a discounted cash flow model and, when deemed necessary, a market approach.

Goodwill impairment, if any, is measured as the amount

by which a reporting unit’s carrying amount exceeds its fair value.

of goodwill impairment tests requires significant management judgment, including the identification of reporting units, assigning assets,

liabilities and goodwill to reporting units and determination of fair value of each reporting unit.

Judgment applied when performing

the qualitative analysis includes consideration of macroeconomic, industry and market conditions, overall financial performance of the

reporting unit, composition, personnel or strategy changes affecting the reporting unit and recoverability of asset groups within a reporting

Judgments applied when performing the quantitative analysis includes estimating future cash flows, determining appropriate discount

rates, and making other assumptions.

Changes in these judgments, estimates and assumptions could materially affect the determination

of fair value for each reporting unit.

Assets, Intangible Assets, and Goodwill Impairment

While changes in circumstances requiring a goodwill

impairment test have not been identified for the quarter ended October 31, 2023, the Company will continue to monitor circumstances, such

as disposition activity or changes in forecasted cash flows in future periods.

If the fair value of the Company’s reporting unit

declines below the carrying value in the future, goodwill impairment charges may be incurred.

May 2022, the reAlpha Acquisitions Churchill, LLC, a wholly-owned subsidiary of reAlpha Tech Corp., entered into a credit agreement with

Churchill Finance I, LLC, securing a credit facility of $ 200 million.

The primary purpose of this credit facility is to finance short-term

rental acquisitions.

The facility provides the company with increased financial flexibility to pursue strategic opportunities in the

real estate market.

may utilize the credit facility to expand the Company’s portfolio of rental properties.

By leveraging this credit facility, the Company

aims to capitalize on attractive investment prospects while adhering to its prudent financial management principles.

terms and conditions of the credit agreement with Churchill Finance I, LLC have been evaluated by management, and the interest rates

and repayment terms are considered competitive and favorable to the Company’s financial interests.

consist of short-term rentals and technology platform booking income.

Short-term rental revenues include revenues from the rental of

properties via Airbnb, Vacasa, and such digital hospitality platforms.

Technology Platform Revenue includes revenues from bookings made

on our technology platform towards painting and cleaning of properties.

we are responsible for services rendered by the technology platform, fees charged to end-users are also included in revenue, while payments

to vendors in exchange for their services are recognized in the cost of revenue, exclusive of depreciation and amortization.

are recognized in accordance with Topic 606 of the Financial Accounting Standards Board (FASB) ASC for revenue recognition.

recognizes revenues in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration

expected to be received in exchange for those goods or services.

The Company considers revenue realized or realizable and earned when

all the five following criteria are met:

(1) identification of the contract with a customer, (2) identification of the performance obligations

in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in

the contract, and (5) recognition of revenue when (or as) performance obligations are satisfied.

(Refer to Note 6 for more details).

Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities

for the expected future tax consequences of events that have been included in the financial statements.

Under this method, the Company

determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets

and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change

in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

recognizes deferred tax assets to the extent that these assets are more likely than not to be realized.

In making such a determination,

the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences,

projected future taxable income, tax-planning strategies, and results of recent operations.

it is determined that the Company would be able to realize the deferred tax assets in the future in excess of their net recorded amount,

an adjustment would be made to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it is determined whether it

is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those

tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that

is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes and interest

and penalties, if any, with income tax expense in the accompanying statement of operations.

(Loss) Per Share

However, the Company does not have any significant control or influence

over the financial and operating policies.

As these equity instruments do not have readily determinable fair values, they have been measured

using the measurement alternative, cost-less impairment.

The carrying amount for these instruments would be subsequently adjusted for

observable price changes, or prices in orderly transactions for an identical investment or similar investment of the same issuer.

these investments are periodically evaluated for impairment.

The investments are classified as other assets on the Company’s condensed

Consolidated Balance Sheet and the Company has not recorded any adjustments to the carrying value of investments in the period ended March

Capitalized Software Development Costs

The Company follows Accounting Standards Codification

(ASC) 350, “Internal-Use Software,” to assess the capitalization of software development costs, such as those incurred during

the application development stage, including coding, testing, and development of software functionality which are eligible for capitalization.

Such costs encompass direct labor, third-party services, and other directly attributable expenses.

As of March 31, 2024, the software

under development has not reached the stage of being substantially complete and ready for its intended use.

Consequently, the Company

continues to capitalize costs related to the application development stage in accordance with ASC 350.

Amortization of capitalized software development

costs commences when the software is placed in service and is available for its intended use.

The capitalized costs are amortized over

the software’s estimated useful life, which is determined based on factors such as expected future benefits and the rate of technological

The fair value of software acquired in a business

combination is determined using the discounted cash flow (DCF) method as per ASC 820 “Fair Value Measurements and Disclosures”,

requiring the consideration of significant inputs and assumptions, such as projected cash flows, expected growth rates, discount rates,

and other relevant market data.

The Company exercises judgment in selecting appropriate inputs, taking into account historical performance,

market conditions, and the technological characteristics of the software.

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.

Definite-lived Intangible Assets

ASC 350 on Intangibles – Goodwill and Other;

Intangible assets;

the valuation and classification of these intangible assets and determination of useful lives involves judgments and

significant estimates.

These Identifiable intangible assets resulting from the acquisitions of entities accounted for using the purchase

method of accounting are amortized over their estimated useful lives in a manner that best reflects the economic benefits of the intangible

asset using the straight-line method and estimated useful lives ranging from 2 to 8 years.

We periodically review the estimated useful

lives of our definite-lived intangible assets and identify events or changes in circumstances that may indicate revised estimated useful

Credit Facilities

In May 2022, reAlpha Acquisitions Churchill, LLC,

a wholly-owned subsidiary of reAlpha Tech Corp., entered into a credit agreement with Churchill Finance I, LLC, securing a credit facility

of $ 200 million.

The primary purpose of this credit facility is to finance short-term rental acquisitions.

The facility provides the Company

with increased financial flexibility to pursue strategic opportunities in the real estate market.

Management may utilize the credit facility to

expand the Company’s portfolio of rental properties.

By leveraging this credit facility, the Company aims to capitalize on attractive

investment prospects while adhering to its prudent financial management principles.

The terms and conditions of the credit agreement

with Churchill Finance I, LLC have been evaluated by management, and the interest rates and repayment terms are considered competitive

and favorable to the Company’s financial interests.

Revenue Recognition

Revenues consist of short-term rentals and technology

platform booking income.

Short-term rental revenues include revenues from the rental of properties via Airbnb, Vacasa, and such digital

hospitality platforms.

Technology Platform Revenue includes revenues from bookings made on our technology platform towards painting and

cleaning of properties.

As we are responsible for services rendered by

the technology platform, fees charged to end-users are also included in revenue, while payments to vendors in exchange for their services

are recognized in the cost of revenue, exclusive of depreciation and amortization.

Revenues are recognized in accordance with Topic

606 of the Financial Accounting Standards Board (FASB) ASC for revenue recognition.

The Company recognizes revenues in a manner to depict

the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those

goods or services.

The Company considers revenue realized or realizable and earned when all the five following criteria are met:

(1) identification

of the contract with a customer, (2) identification of the performance obligations in the contract, (3) determination of the transaction

price, (4) allocation of the transaction price to the performance obligations in the contract, and (5) recognition of revenue when (or

as) performance obligations are satisfied.

We account for income taxes in accordance with

ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred tax assets and liabilities for

the expected tax consequences of our future financial and operating activities.

Under ASC 740, we determine deferred tax assets and liabilities

based on the temporary difference between the financial statement and tax bases of assets and liabilities using the tax rates in effect

for the year in which we expect such differences to reverse.

If we determine that it is more likely than not that we will not generate

sufficient taxable income to realize the value of some or all of our deferred tax assets (net of our deferred tax liabilities), we establish

a valuation allowance offsetting the amount we do not expect to realize.

We perform this analysis each reporting period and reduce our

measurement of deferred taxes if the likelihood we will realize them becomes uncertain.

The deferred tax assets that we record each period depend primarily on our ability to generate future taxable income in the United States.

Each period, we evaluate the need for a valuation allowance against our deferred tax assets and, if necessary, adjust the valuation allowance

so that net deferred tax assets are recorded only to the extent we conclude it is more likely than not that these deferred tax assets

will be realized.

If our outlook for future taxable income changes significantly, our assessment of the need for, and the amount of, a

valuation allowance may also change.

We are also required to evaluate and quantify other sources of taxable income, such as the possible reversal of future deferred tax liabilities,

should any arise, and the implementation of tax planning strategies.

Evaluating and quantifying these amounts is difficult and involves

significant judgment, based on all of the available evidence and assumptions about our future activities.

Earnings (Loss) Per Share

The Company presents basic earnings (loss) per

share (“EPS”) and diluted EPS on the face of the consolidated statements of operations.

Basic earnings (loss) per share is

computed as net earnings (loss) divided by the weighted average number of common shares outstanding for the period.

For periods in which

the Company incurs a net loss, the effects of potentially dilutive securities would be antidilutive and would be excluded from diluted

EPS calculations.

For the three and six months ended October 31, 2023, the GEM Warrants (as defined below) to purchase up to 1,700,884

of the Company’s shares of common stock were excluded.

Value of Financial Instruments

Company’s balance sheet includes certain financial instruments.

The carrying amounts of financial instruments approximate their

fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

Issued Accounting Pronouncements

with the treatment for emerging growth companies under the Jumpstart Our Business Startups (JOBS) Act, the Company has elected to delay

the implementation of new accounting standards to the extent such standards provide for delayed implementation by non-public business

June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses

on Financial Instruments.” ASU 2016-13 requires that entities use a new forward-looking “expected loss” model that

generally will result in the earlier recognition of allowance for credit losses.

The measurement of expected credit losses is based on

historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

2016-13 is effective for annual reporting periods, including interim reporting periods within those periods, beginning after

December 15, 2022.

The implementation of this standard did not have a material effect on the Company’s financial statements.

share (“EPS”) and diluted EPS on the face of the condensed consolidated statements of operations.

Basic earnings (loss) per

share is computed as net earnings (loss) divided by the weighted average number of common shares outstanding for the period.

in which the Company incurs a net loss, the effects of potentially dilutive securities would be antidilutive and would be excluded from

diluted EPS calculations.

For the three months ended March 31, 2024, the GEM Warrants (as defined below) to purchase up to 1,700,884 of

the Company’s shares of common stock were excluded.

Fair Value of Financial Instruments

When required to measure assets or liabilities

at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used.

The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall.

The categorization

within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses

significant unobservable inputs.

The amount of the total gains or losses for the period are included in earnings that are attributable

to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date.

The Company has

no financial assets or liabilities that are adjusted to fair value on a recurring basis.

The Company’s balance sheet includes certain

financial instruments.

Certain assets and liabilities are measured at fair value on a non-recurring basis;

that is, the instruments are

not measured at fair value on an ongoing basis, but are subject to fair value adjustments only in certain circumstances.

Recently Issued Accounting Pronouncements

Consistent with the treatment for emerging growth

companies under the Jumpstart Our Business Startups (JOBS) Act, the Company has elected to delay the implementation of new accounting

standards to the extent such standards provide for delayed implementation by non-public business entities.

In December 2023, the FASB issued ASU 2023-09,

“Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness

of income tax disclosures, including jurisdictional information, by requiring consistent categories and greater disaggregation of information

in the rate reconciliation and income taxes paid disclosures.

ASU 2023-09 is effective for annual periods beginning after December 15,

2024 and early adoption is permitted.

The Company is currently evaluating the impact this standard will have on its condensed consolidated

financial statements and related disclosures from the adoption of this guidance.

Reclassification Presentation

Certain amounts have been reclassified for consistency with the current

period presentation.

Certain amounts have been reclassified for consistency

with the current period presentation.

These reclassifications had no effect on the reported results of operations.

3 - Going Concern

Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern.

commenced operations as of April 22, 2021, and has not yet realized its planned operations.

The Company is dependent upon additional

capital resources for the full commencement of its planned operations and is subject to significant risks and uncertainties, including

failing to secure funding to commence the Company’s planned operations or failing to profitably operate the business.

believes that the Company will continue to incur losses for the foreseeable future and will need equity or debt financing to sustain

its operations until it can generate additional revenues and achieve profitability and positive cash flows.

The ability to continue as

a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing

to meet its obligations and repay its liabilities arising from normal business operations when they come due.

intends to finance operating costs over the next twelve months with existing cash on hand, loans and proceeds from the issuance of its

Management has determined that these matters, among others, raise substantial doubt about the Company’s ability to continue

as a going concern for a period of at least one year from the date these financial statements are issued.

The accompanying financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

4 - Income Taxes

Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to

generate taxable income in future periods.

The tax benefits for the periods presented are offset by a valuation allowance established

against deferred tax assets arising from the net operating losses, the realization of which could not be considered more likely than

In future periods, tax benefits and related deferred tax assets will be recognized when management considers the realization of

such amounts to be more likely than not.

Note 5 - Business Combinations

On March 24, 2023, we acquired all of the assets

of Roost Enterprises, Inc.

The acquisition was made to expand our market share in the real estate category and

capitalize on the synergies of product lines and services between the Companies.

The acquisition of Roost Enterprises, Inc., a

real estate technology solutions provider, includes Rhove’s Syndication Platform and related intellectual property.

price involved a $ 25,000 cash payment, 49,029 common stock shares to Silicon Valley Bank (“SVBB”), 1,263,000 shares to the

common stockholders of Rhove, and the option for the same stockholders to purchase 1,263,000 shares at the fair value of $ 10 per share.

Drive Capital and its funds became investors of reAlpha, and Rhove’s CEO, Calvin Cooper, and Rhove’s CTO, Greg Miller, both

joined reAlpha in advisory roles.

We estimated fair values on March 24, 2023, for

the preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in connection with

the Rhove Transaction.

During the measurement period, not to exceed 12 months, we will continue to obtain information to assist in finalizing

the fair value of assets acquired and liabilities assumed, which may differ materially from these preliminary estimates.

If we determine

any measurement period adjustments are material, we will apply those adjustments, including any related impacts to net income, in the

reporting period in which the adjustments are determined.

Accordingly, the fair value measurements noted below are preliminary and subject

to modification in the future.

Assets Acquired:

Capitalized software development costs

Other current assets

Total Assets Acquired

Liabilities assumed:

Accounts payable

Accrued expenses payable

Membership Contributions

Venture debt/loc 1

Total Liabilities Assumed

Total identifiable net assets

Purchase price

Goodwill - Excess of the purchase price over fair value of net assets acquired on acquisition date

The Rhove acquisition is the only business combination

the Company has completed.

This goodwill arises because the purchase price exceeded the fair value of acquired identifiable net assets

due to the purchase prices reflecting a number of factors including the future earnings and cash flow potential of the business, the multiple

to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive nature of

the processes by which the Company acquired the business and the complementary strategic fit and resulting synergies the business bring

to existing operations.

Note 3 - Going Concern

With the implementation of FASB standard on going

concern, ASU No.

2014-15, we assessed going concern uncertainty in our condensed consolidated financial statements to determine if we

have sufficient cash and cash equivalents on hand and working capital, including available loans or lines of credit, if any, to operate

for a period of at least 12 months from the date our condensed consolidated financial statements are issued, which is referred to as the

“look-forward period” as defined by ASU No.

As part of this assessment, based on conditions that are known and reasonably

knowable to us, we consider various scenarios, forecasts, projections, and estimates, and we make certain key assumptions, including the

timing and nature of projected cash expenditures or programs, and our ability to delay or curtail those expenditures or programs, if necessary,

among other factors.

Although we anticipate ongoing operating losses

in the foreseeable future, we have assessed our ability to continue as a going concern for the next 12 months.

Despite the current lack

of sufficient revenue, we possess ample liquid capital to fund projected expenses over the next year based on our budgeted operating plans.

As of March 31, 2024, the Company holds approximately

$ 4.8 million in cash.

With positive working capital and current assets adequately covering liabilities as of March 31, 2024, the Company

believes it has sufficient cash to fund its operations for the next 12 months.

Note 4 - Income Taxes

The Company has not recognized an income tax benefit

for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods.

benefits for the periods presented are offset by a valuation allowance established against deferred tax assets arising from the net operating

losses, the realization of which could not be considered more likely than not.

In future periods, tax benefits and related deferred tax

assets will be recognized when management considers the realization of such amounts to be more likely than not.

Note 5 - Property and Equipment

Investments in property and equipment consisted of the following as of October 31, 2023

Investments in property and equipment consisted of the following as of March 31, 2024

Investments in property and equipment other than held for sale

Furniture and fixtures

investment in real estate

in property and equipment held for sale

Buildings and building improvements

Furniture and fixtures

investment in real estate

Investments in property and equipment consisted of the following as of April 30, 2023

Total investment in property and equipment

Investments in property and equipment consisted of the following as of December 31, 2023

Investments in property and equipment other than held for sale

Buildings and building improvements

Furniture and fixtures

$ ( 106,773 )

in property and equipment held for sale

Total investment in property and equipment

Investments in property and equipment held for sale

Buildings and building improvements

Furniture and fixtures

Company recorded depreciation expenses of $ 7,862 and $ 21,133 for the three months ended October 31, 2023, and October 31, 2022, respectively.

The Company also recorded depreciation expenses of $ 29,174 and $ 42,158 for the six months ended October 31, 2023, and October 31, 2022,

respectively.

7- Receivables from Related Parties

of October 31, 2023, and April 30, 2023, the balance of related party transactions amounted to $ 20,240 and $ 20,874 , respectively.

related party balance primarily consists of a receivable from Turnit Holdings, LLC, a related party.

8 – Prepaid Expenses

As of October 31, 2023, prepaid expenses amounted

to $ 1,292,758 , compared to $ 3,061,196 as of April 30, 2023, $ 3,045,290 of which consist of shares issued for services rendered during

the year ended April 30, 2023, in connection with the Company’s direct listing on Nasdaq.

Prepaid expenses consists mainly of director’s

and officer’s insurance services and the Commitment Fee (as defined below) for the period ending October 31, 2023.

9 – Capitalized Software Development costs, work in progress

Total investment in real estate

The Company recorded depreciation expenses of

$ 7,022 and $ 26,551 for the three months ended March 31, 2024 and March 31, 2023, respectively.

Note 6 - Capitalized Software Development costs,

work in progress

Qualifying internal-use software costs incurred

1 unchanged sentence

software license costs are capitalized.

As of October 31, 2023 and April 30, 2023, the balance of capitalized software costs, work in

As of March 31, 2024 and December 31, 2023, the balance of capitalized software costs, work in

progress amounted to $ 911,485 and $ 839,085 , respectively.

Company assesses the carrying amount of capitalized software costs for impairment regularly and considers the recoverability of capitalized

costs based on expected future benefits and cash flows.

The Company assesses the carrying amount of capitalized

software costs for impairment regularly and considers the recoverability of capitalized costs based on expected future benefits and cash

Any impairment loss, if identified, is recognized in the statement of operations.

10 – Mortgage and other loans

and other loans consisted of the following as of October 31, 2023, and April 30, 2023:

Mortgage note with a bank.

The note bears interest at a rate of 5 % + Prime with floor of 8.25 % and provides for monthly interest payments.

The note matures on February 10, 2024 at which time there is a balloon payment of remaining principal and interest due, and is secured by the property as well as guaranteed by a shareholder of the Company.

Mortgage note with a bank.

The note bears interest at a rate of 4.75 % + Prime with floor of 8.25 % and provides for monthly interest payments.

The note matures on April 15, 2024 at which time there is a balloon payment of remaining principal and interest due, and is secured by the property as well as guaranteed by a shareholder of the Company.

Short-term debt related to Properties

Deferred financing

Short-term debt related to Properties, net

Promissory note bears interest at a rate of 1 % + Prime.

Amex Loan bears Annual Percentage Rate 32.60 %

Short-term debt, net

of short-term debt as of October 31, 2023, are as follows:

Short-term debt, net

11 - Long-Term Liabilities

liabilities consisted of the following as of October 31, 2023, and April 30, 2023:

Note 7 - Other loans

Mortgage and other loans consisted of the following

as of March 31, 2024 and December 31, 2023:

First Insurance Loan

Total Short-term debt, net

Note 8 - Mortgage Loans

Long-term liabilities consisted of the following

as of March 31, 2024 and December 31, 2023:

Mortgage note with a bank.

1 unchanged sentence

The note matures on January 1, 2053 at which time there is a balloon payment of remaining principal and interest due, and is secured by the property as well as guaranteed by a shareholder of the Company.

of long-term debt as of October 31, 2023, are as follows:

Long-term debt, net

12 - Stockholders’ Equity (Deficit)

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 (the “Common Stock”);

and (ii) 5,000,000 shares of preferred

stock, having a par value of $ 0.001 per share (the “Preferred Stock”).

As of October 31, 2023 and April 30, 2023 there were

42,522,091 shares of common stock issued and outstanding.

On October 23, 2023, pursuant to the terms of

that certain share purchase agreement (the “GEM Agreement”) between us and GEM Global Yield LLC SCS (“GEM Global”)

and GEM Yield Bahamas Limited (“GYBL,” and collectively, “GEM”), we issued five-year warrants to purchase up to

1,700,884 shares of our common stock to GYBL at an exercise price of $ 406.67 per share (the “GEM Warrants”).

Pursuant to the

terms of the GEM Warrants, the exercise price of such warrants was reset to $ 371.90 (the “Adjusted Exercise Price”) on the

date of the closing of our recent public offering and shall be further subject to adjustment as provided in the GEM Warrants.

13 - Commitments and Contingencies

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 or 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 it prior to its expiration.

Restrictions pursuant to terms of our future financings may also affect our ability

to use the GEM Agreement.

Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business.

The results of such proceedings

cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matter

will have a material adverse effect on its business, financial condition, or results of operations.

Ohio Subpoena

August 31, 2023, the Ohio Department of Commerce’s Division of Securities (the “ODS”) issued a Cease & Desist Order

(the “Division Order”) to us, and we entered into a Consent Agreement with the ODS (the “Consent Agreement”),

following an investigation by the ODS into whether we engaged in acts or practices that violated the Ohio Securities Act, Chapter 1707

of the Ohio Revised Code.

to the Consent Agreement, we did consent, stipulate, admit, and agree to the findings, conclusions and order set forth in the Division

Order and that nothing in the Division Order or the Consent Agreement impedes, prohibits, interferes with, or infringes upon the lawful

rights, if any, including but not limited to private rights of action, if any, possessed by our individual investors.

the terms of the Division Order, pursuant to Revised Code Chapter 1707.23, we will cease and desist from the acts and practices as described

in the Division Order which constitute a violation of Chapter 1707 of the Ohio Revised Code, which include selling or causing to be sold

securities that were not properly registered with the ODS and that were not exempt from registration.

The Division Order and Consent

Agreement do not impact our ability to conduct future exempt offerings.

Company Litigation

On December 27, 2021, Ms.

Valentina Isakina, a

board advisor of our former parent company, reAlpha Tech Corp., (the “Parent Company”) filed a lawsuit in the Southern District

of Ohio against the Parent Company in connection with her termination package.

After three months of service, the Parent Company discontinued

her services as she was not the right fit for the Parent Company’s needs.

reAlpha Tech Corp.

contends that pursuant to the terms

of her employment agreement, she was offered 12,500 shares of reAlpha Tech Corp., to vest over a period of time, however, she never accepted

Isakina, on the other hand, contends she is owed up to 5 % from reAlpha Tech Corp.

in connection with an alleged agreement

to serve on the board of directors.

reAlpha Tech Corp.

denies the existence of such agreement.

On November 3, 2023, an order was served by the Court in connection

with this proceeding (the “Court Order”).

The Court Order granted summary judgment against Ms.

Isakina and in favor of the

Company, regarding Ms.

Isakina’s claims of relief, including breach of contract claims, promissory estoppel and unjust enrichment.

On November 16, 2023, Ms.

Isakina filed an appeal, which was subsequently dismissed by the United States Court of Appeals for the Sixth

Circuit on December 7, 2023.

May 8, 2023, the Company filed a malpractice lawsuit with the United States District Court for the Southern District of Ohio, Eastern

Division, against Buchanan, Ingersoll & Rooney, PC (“Buchanan”), Rajiv Khanna (“Khanna”) and Brian S.

(“North,” together with Buchanan and Khanna, the “Buchanan Legal Counsel”).

The complaint alleges that the Buchanan

Legal Counsel failed to provide proper and timely legal advice during the Company’s Tier 2 Regulation A offering, resulting in

late Blue Sky notice filings with all required states prior to the Company offering and selling securities in those states.

the Company was subject to a number of inquiries, investigations, and subpoenas by the various states, incurring significant legal fees

and fines, lost opportunity due to pausing its Regulation A campaign, in addition to the loss of a $ 20 million institutional investment.

The Company is seeking the forfeit of all legal fees associated with this matter, the award of legal fees to bring this matter to action,

and further legal and equitable relief as the Court deems just and proper.

The Company cannot predict the eventual scope, duration, or

outcome at this time.

14 – Segment Reporting

280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with

the Company’s internal organization structure as well as information about services categories, business segments and major customers

in financial statements.

The Company has two reportable segments based on the business unit, Rental business and Platform service business.

In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been

identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and

assessing performance for the entire Company.

Existing guidance, which is based on a management approach to segment reporting, establishes

requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services,

in which the entity holds material assets and reports revenue.

Three months Ended

Six months Ended

Cost of goods sold

Operating expenses

Operating loss

Other expenses, net

Net Income/ (loss)

Note 9 - Stockholders’ Equity (Deficit)

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 (the “Common Stock”);

and (ii) 5,000,000 shares of preferred stock, having a par value of $ 0.001

per share (the “Preferred Stock”).

As of March 31, 2024 and December 31, 2023, there were 44,122,091 shares of Common Stock

issued and outstanding, and 0 shares of Preferred Stock issued and outstanding.

Note 10 - Commitments and Contingencies

Pursuant to the terms of that certain Share Purchase

Agreement between the Company and GEM Global Yield LLC SCS (“GEM Yield”) and GEM Yield Bahamas Limited (“GYBL,”

and collectively, “GEM”), dated December 1, 2022 (the “GEM Agreement”), we are required to indemnify GEM for any

losses it incurs as a result of a breach by us or 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.

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 it prior

to its expiration.

Restrictions pursuant to terms of our future financings may also affect our ability to use the GEM Agreement.

Legal Matters

India Proceeding Involving

Devanur became the CEO of an India-based company named Gandhi City Research Park, Private Limited (“Gandhi City Research

Gandhi City Research Park was liquidated as a result of the Lehman Brothers collapse in 2009.

In 2010, an investor in Gandhi

City Research Park filed a fraud complaint with the Cubbon Park Police Station in Bengaluru, India, against, among others, Mr.

In 2014, the Cubbon Park Police dismissed all claims.

Subsequently, in 2015 the investor appealed the Cubbon Park Police’s decision

before the Lower Court.

In November 2018, the Lower Court issued a criminal summons against, among others, Mr.

Devanur petitioned

the High Court to quash the summons.

By order dated March 27, 2023, the High Court granted Mr.

Devanur’s petition and ordered the

Lower Court to reconsider the investor’s appeal.

On August 3, 2023, the Lower Court decided to uphold the Cubbon Park Police’s

decision and close the criminal case against Mr.

On December 4, 2023, Mr.

Devanur received a petition to challenge the Lower

Court’s order to uphold the Cubbon Park Police’s decision and close Mr.

Devanur’s criminal case.

Devanur is vigorously

contesting this petition.

Malpractice Lawsuit

On May 8, 2023, the Company filed a malpractice

lawsuit with the United States District Court for the Southern District of Ohio, Eastern Division, against Buchanan, Ingersoll & Rooney,

PC (“Buchanan”), Rajiv Khanna (“Khanna”) and Brian S.

North (“North,” together with Buchanan and Khanna,

the “Buchanan Legal Counsel”).

The complaint alleges that the Buchanan Legal Counsel failed to provide proper and timely legal

advice during the Company’s Tier 2 Regulation A offering, resulting in late Blue Sky notice filings with all required states prior

to the Company offering and selling securities in those states.

As a result, the Company was subject to a number of inquiries, investigations,

and subpoenas by the various states, incurring significant legal fees and fines, lost opportunity due to pausing its Regulation A campaign,

in addition to the loss of a $ 20 million institutional investment.

The Company is seeking the forfeit of all legal fees associated with

this matter, the award of legal fees to bring this matter to action, and further legal and equitable relief as the Court deems just and

The Company cannot predict the eventual scope, duration, or outcome at this time.

Note 11 - Segment Reporting

ASC 280, “Segment Reporting” establishes

standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure

as well as information about services categories, business segments and major customers in financial statements.

The Company has two reportable

segments based on the business unit, Rental business and Platform service business.

Due to current market conditions, we expect to pause

the Rental business segment until the first quarter of 2025 in accordance with the “Segment Reporting” Topic of the ASC, the

Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating

results to make decisions about allocating resources and assessing performance for the entire Company.

Existing guidance, which is based

on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report

annually entity-wide disclosures about products and services, in which the entity holds material assets and reports revenue.

The table below presents a reconciliation of revenue

by reportable segment to consolidated revenue and a reconciliation of consolidated segment operating profit to consolidated loss before

income taxes for the three months ended March 31, 2024 and 2023.

Three months Ended

Six months Ended

Cost of goods sold

Revenue by segment

Platform services

Rental services

Consolidated revenue

Segment cost of revenue

Platform services

Rental services

Consolidated segment cost of revenue

Consolidated segment gross margin

Segment operating expense

Platform services

Rental services

Consolidated segment operating expenses

Total consolidated segment operating loss

Segment other income (loss)

Platform services

Rental services

Total consolidated segment operating loss

Corporate expenses

Operating expenses

( 1,270,540 )

( 1,514,701 )

( 1,769,144 )

( 2,427,900 )

Operating loss

( 1,145,018 )

( 1,488,377 )

( 1,747,767 )

( 2,380,662 )

Other expenses, net

Net Income/ (loss)

$ ( 1,207,576 )

Other income (expenses), net

( 1,402,677 )

Total consolidated loss before income taxes

$ ( 1,419,045 )

$ ( 864,913 )

Note 15 – Sale of myAlphie

Effective May 17, 2023, the Company (the “Seller”)

entered into a Second Amendment to an agreement (the “Second Amendment”) to finalize a transaction that was originally agreed

to through a Membership Interest Purchase Agreement dated December 31, 2022 (the “Purchase Agreement”), with Turnit Holdings,

LLC, an Ohio limited liability company (the “Buyer”, or “Turnit”).

The Buyer is an indirect subsidiary of Crawford

Hoying, which is owned and partially controlled by Brent Crawford, former chairman of the Company’s board of directors.

Investments, LLC, and CH REAlpha Investments II, LLC are also managed by Mr.

The Purchase Agreement was previously amended by

a Letter Agreement dated March 11, 2023 (the “First Amendment”), which was entered into between the Buyer and Seller.

Purchase Agreement provided for the Buyer’s acquisition of all the issued and outstanding membership interests of myAlphie, LLC

(the “Subsidiary”).

Prior to the execution of the Purchase Agreement

and pursuant to the Downstream Merger, the Company held myAlphie LLC as a subsidiary, along with (a) all its technology and intellectual

property, and (b) two on-demand promissory notes in the amounts of $ 975,000 and $ 4,875,000 payable to CH REAlpha Investments, LLC, and

CH REAlpha Investments II, LLC, respectively (together, the “Promissory Notes”).

Upon closing of the Purchase Agreement (a)

the Seller sold all of its interests in myAlphie LLC, and (b) the Buyer assumed the Seller’s remaining liabilities and outstanding

obligations under the Promissory Notes.

The net assets of myAlphie (excluding the promissory

notes) prior to sale was approximately $ 347,000 resulting in a gain on sale of approximately $ 5,503,000 from the assumption of the promissory

notes by the Buyer.

The gain on sale is included in other income in the statement of operations for the six months ended October 31, 2023.

Note 12 - Warrants

As of October 31, 2023, we have outstanding warrants

to purchase up to 1,700,884 shares of the Company’s common stock, which were issued to GYBL (as defined above).

The GEM Warrants

are exercisable, for cash, for an equal number of shares of our common stock at an exercise price of $ 406.67 per share, subject to adjustments

specified therein.

In consideration for these services, the Company

has agreed to pay GEM a commitment fee equal to 2 % of the First Tranche that is $ 1,000,000 (as defined in the GEM Agreement) (the “Commitment

Fee”), and, to the extent that the Company has completed Draw Downs (as defined in the GEM Agreement) within the Second Tranche

(as defined in the GEM Agreement), the Company shall tender to GYBL, as an additional commitment fee, an amount equal to 2 % of the Second

Tranche (as defined in the GEM Agreement) (the “Additional Commitment Fee”), each deliverable as set forth below.

The Commitment

Fee or Additional Commitment Fee, as applicable, due upon each Draw Down may be paid in cash from the proceeds of such Draw Down or in

freely tradeable shares of the Company’s common stock valued at the Daily Closing Price (as defined in the GEM Agreement) at the

time of such Draw Down, at the option of the Company in cash or freely tradable shares of the Company’s common stock, payable on

or prior to the second anniversary of the date of listing.

Warrant activity during the three months ended October 31, 2023 and

2022 follows:

Average Remaining

Average Exercise Price

Contractual Life (Years)

Warrants outstanding at October 31, 2022

No warrant activity

Warrants outstanding at March 31, 2023

Warrants Issued

Warrants outstanding at October 31, 2023

17 - Subsequent Events

has evaluated all subsequent events through December 14, 2023, the date the consolidated financial statements were available to be issued.

Based on this evaluation, below was identified which require disclosure in these consolidated financial statements.

On November 21, 2023,

we entered into a placement agency agreement with Maxim Group LLC (“Maxim”), pursuant to which we agreed to sell 1,600,000

units on a best-efforts basis at a price of $ 5.00 per unit for aggregate gross and net proceeds of $ 8.0 million and $ 7.16 million, respectively.

Each unit was comprised of one share and one and a half warrant to purchase one and a half share of common stock, with each warrant being

exercisable for a five-year period to purchase an additional share at a price of $ 5.00 , subject to adjustments specified therein (the

“Common Warrants”).

The securities were issued on November 24, 2023, and were registered pursuant to a Form S-11 registration

statement (File No.

Maxim was paid 7 % of the gross proceeds from this offering and was also reimbursed $ 107,500 for

its expenses.

On December 3, 2023,

the Company entered into two stock purchase agreements (the “Purchase Agreements”), pursuant to which, the Company agreed

to acquire all of the issued and outstanding shares of capital stock of Naamche, Inc.

and Naamche, Inc.

not already owned by

the Company (the “Acquisitions”) in exchange for, in the aggregate:

(i) 225,000 shares (the “Shares”) of the Company’s

restricted common stock to be issued within 9 months from the closing date of the Acquisitions (the “Closing Date”), in a

pro-rated amount set forth in the Purchase Agreements;

and (ii) $ 500,000 in cash, of which $ 450,000 is payable in the 3 year period following

the Closing Date based on the achievement of specified revenue-based targets.

On December 12, 2023, the Company’s board

of directors approved a change in the Company’s fiscal year end from April 30 of each year to December 31 of each year, effective

as of December 31, 2023.

Accordingly, the Company will be issuing audited financial statements in connection with the preparation of the

Company’s Annual Report on Form 10-K for the eight-month transition period from May 1, 2023 to December 31, 2023 and calendar year

financial statements thereafter.

NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION CONTAINED IN THIS REPORT

Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act

of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of

1934, as amended.

Warrant accounting

We account for warrants as either equity-classified

or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance

in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability

pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether

the warrants are indexed to our own ordinary shares and whether the warrant holders could potentially require “net cash settlement”

in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires

the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while

the warrants are outstanding.

For issued or modified warrants that meet all

of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded

as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter.

Changes in the estimated fair

value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

The warrants issued upon the follow-on offering

and private placements meet the criteria for equity classification under ASC 480 and ASC 815, therefore, the warrants are classified as

On October 23, 2023, pursuant to the terms of

the GEM Agreement (as defined above), we issued GYBL warrants to purchase up to 1,700,884 shares of the Company’s common stock (the

“GEM Warrants”).

The GEM Warrants are exercisable, for cash, at an original exercise price of $ 406.67 per share, which exercise

price was subsequently adjusted to $ 371.90 after the Company’s most recent public offering, and the exercise price of the GEM Warrants

are subject to further adjustments specified therein.

We believe the likelihood that any warrant holders

will exercise their warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of

our common stock.

If the trading price for our common stock is less than $ 371.90 per share, in the case of the GEM Warrants, we believe

holders of the GEM Warrants will be unlikely to exercise them.

While current conditions influencing the exercise of the GEM Warrants make

such exercise unlikely, further adjustments to its exercise price may make the GEM Warrants more attractive for investors to exercise.

Our analysis is based on the trading price of our common stock as of the date of this report, with a threshold set at $ 371.90 per share

for the GEM warrants.

On November 24, 2023, we conducted a follow-on

offering by issuing 1,600,000 units priced at $ 5.00 per unit.

This offering generated total gross proceeds of $ 8.0 million, and after

deducting associated expenses, the net proceeds amounted to $ 7.16 million.

Each unit consisted of one share and one and a half warrants,

allowing warrant holders to exercise their rights over a five-year period at a price of $ 5.00 .

The factors considered in the Black Scholes option

valuation model are as below:

Rhove acquisition

Underlying stock price

Exercise price

Risk free interest rate

Warrant activity for the period ended March 31, 2024 follows:

Exercise Price

Warrants outstanding on April 30, 2022

Warrant activity

Warrants outstanding on April 30, 2023

Warrants Issued on October 23, 2023

Warrants Issued on November 21, 2023

Warrants outstanding on March 31, 2024

Note 13 - Subsequent Events

Management has evaluated all subsequent events

through April 19, 2024, the date the condensed consolidated financial statements were available to be issued.

Based on this evaluation,

nothing was identified which require disclosure in these condensed consolidated financial statements.

SPECIAL NOTE REGARDING

FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION

CONTAINED IN THIS REPORT

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.

5 unchanged sentences

“could,” “may,” “will” or other similar expressions in this report.

In particular, these include

statements relating to future actions;

In particular, these include statements

relating to future actions;

prospective products, applications, customers and technologies;

future performance or results

of any products;

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 are employing a business

model with a limited track record, which makes our business difficult to evaluate;

We intend to utilize a

significant amount of indebtedness in the operation of our business;

Our ability to retain our

executive officers and other key personnel;

Our real estate investments

are and will continue to be concentrated in certain markets and in the single-family properties sector of the real estate industry,

thus, exposing us to risk concentrations, which, in turn, exposes us to risk caused by seasonal fluctuations in short-term rental

demand and downturns in certain markets or in the single-family properties sector;

We face significant competition

in the short-term rental market for guests, which may limit our ability to rent our properties on favorable terms;

The impact of laws and

regulations regarding privacy, data protection, consumer protection, and other matters.

Many of these laws and regulations are subject

to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, or otherwise

harm to our business;

Other factors discussed

in this report and in our other U.S.

Securities and Exchange Commission (“SEC”) filings.

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.

could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to:

We are employing a business model with a limited track record, which makes our business difficult to evaluate;

Our technology that is currently being developed may not yield expected results or be delivered on time;

Our ability to integrate any acquisitions successfully;

We intend to utilize a significant amount of indebtedness and raise capital through public offerings for the operation of our business;

The implementation of artificial intelligence (“AI”) into our technologies may prove to be more difficult than anticipated;

The real estate technology industry in which we participate are highly competitive, and we may be unable to compete successfully with our current or future competitors;

Our ability to retain our executive officers and other key personnel;

If we fail to attract or retain customers and users of our technologies, or if we fail to provide high-quality real estate industry solutions, our business, results of operations, and financial condition would be materially adversely affected;

Our real estate investments are currently on hold, and there is no assurance we will resume our short-term rental operations.

We may restart these operations depending on macroeconomics factors, such as high interest rates, and general factors such as real estate investment demand, capital availability, investment yields, regulatory changes, competitive landscape and others;

The impact of laws and regulations regarding privacy, data protection, consumer protection, and other matters.

Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, or otherwise harm to our business.

Forward-looking

statements may appear throughout this report, including, without limitation, Item 2 “Management’s Discussion and Analysis

of Financial Condition and Results of Operations.” 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.

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.

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.

otherwise stated or the context otherwise requires, the terms “reAlpha,” “we,” “us,” “our”

and the “Company” refer to reAlpha and any and all of our subsidiaries.

and the “Company” refer to reAlpha Tech Corp.

and its subsidiaries, as applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements