What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-14 · 751 added, 370 removed, 363 unchanged (76% of the section changed)

FINANCIAL STATEMENTS

Condensed Consolidated

Balance Sheet

As of June 30, 2024 and

December 31, 2023

REALPHA TECH CORP.

Condensed Consolidated Balance Sheet

September 30, 2024 and December 31, 2023

September 30,

Current Assets

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Accounts payable

Related party payables

Short term loans - related parties -current portion

Short term loans - unrelated parties -current portion

Notes payable, net of discount -current portion

Accrued expenses

Other current liabilities

Deferred consideration - current portion

Total current liabilities

Long-Term Liabilities

Deferred liabilities, net of current portion

Mortgage loans

Deferred liabilities

Mortgage and other long term loans - related parties - net of current portion

Mortgage and other long term loans - unrelated parties - net of current portion

Note payable, net of discount and current portion

Other long term liabilities

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Preferred stock, $ 0.001 par value;

5,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023

5,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023

Common stock ($ 0.001 par value;

200,000,000 shares authorized, 44,323,226 shares outstanding as of June 30, 2024;

200,000,000 shares authorized, 45,570,967 shares outstanding as of September 30, 2024;

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

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( 12,237,885 )

Accumulated other comprehensive loss

Total stockholders’ equity (deficit) of reAlpha Tech Corp.

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REALPHA TECH CORP.

Condensed Consolidated

Statements of Operations

For the Three and Six

Months Ended June 30, 2024 and 2023

Condensed Consolidated Statements of Operations

and Comprehensive (Loss) Income

For the Three and Nine

Months Ended September 30, 2024 and 2023 (unaudited)

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Cost of revenues

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Other Income (Expense)

Interest income

Gain on sale of myAlphie

Interest expense

Other expense

Total other income (expense)

Interest expense, net

Other expense, net

Total other (expense) income

Net (Loss) Income

1 unchanged sentence

( 4,995,931 )

Net Income (Loss) Attributable to Non-Controlling Interests

Net (Loss) Income Attributable to Non-Controlling Interests

Net (Loss) Income Attributable to Controlling Interests

1 unchanged sentence

$ ( 777,801 )

$ ( 4,995,857 )

Other comprehensive loss

Foreign currency translation adjustments

Total other comprehensive loss

Comprehensive (Loss) Income Attributable to Controlling Interests

$ ( 2,132,465 )

$ ( 777,801 )

$ ( 5,029,774 )

Net (loss) income per share — basic

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REALPHA TECH CORP.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’

Equity (Deficit)

for the Three and Six Months Ended June 30,

2024 and 2023

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

for the Three and Nine Months Ended September 30, 2024 and 2023

Comprehensive

and Subsidiaries

Stockholders’

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$ ( 15,135,194 )

( 2,098,548 )

( 2,098,574 )

Other Comprehensive Loss

Shares issue - Naamche acquisition

Shares issue - BMN acquisition

Shares issue – AiChat acquisition

Shares issued for services

Shares issued to employees

Share issued to AiChat employees

Hyperfast - Non Controlling Interests

RTC India - Non Controlling Interest

Balance at September 30, 2024

$ ( 17,233,742 )

Comprehensive

and Subsidiaries

Stockholders’

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$ ( 5,985,673 )

RTC India - Non Controlling Interest

Balance at September 30, 2023

$ ( 6,763,474 )

REALPHA TECH CORP.

Condensed Consolidated Statements of Cash Flows

For the Six Months

Ended June 30, 2024, and 2023

Six Months Ended

For the Nine Months Ended September 30, 2024, and 2023 (unaudited)

Nine Months Ended

September 30,

Nine Months Ended

September 30,

Cash Flows from Operating Activities:

Net income (loss)

Net (loss) income

$ ( 4,995,931 )

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

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

Non-cash items

Depreciation and amortization

Stock based compensation

Stock based compensation - employees

Stock based compensation - services

Write-off of capitalized software costs

Commitment fee expenses

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Additions to property, plant & equipment

Cash acquired through business combination

Cash paid to acquire business

Capitalized software development - work in progress

Net cash (used in) provided in investing activities

Net cash (used in) provided by investing activities

Cash Flows from Financing Activities:

Proceeds from issuance of debt

Payments of debt

Proceeds from issuance of common stock

Net cash used in financing activities

Net decrease in cash

( 2,774,187 )

Net cash provided by financing activities

Net increase (decrease) in cash

( 2,319,902 )

Effect of exchange rate changes on cash

Cash - Beginning of Period

Cash - End of Period

Reconciliation of Cash

Supplemental Disclosure of Cash Flow Information

Interest expense

Noncash Investing and Financing Activities:

Additional Paid-In Capital for Agreed Share Issuance for AiChat Acquisition

Share Issuance for Be My Neighbor Acquisition

Deferred Consideration for Agreed Investment of Xmore AI

Shares Issued to Settle Notes Payable in myAlphie sale

Share Issuance for Rhove Acquisition

reAlpha Tech Corp.

Notes to Condensed Consolidated

Financial Statements

Notes to Condensed Consolidated Financial Statements

Note 1 - Organization and Description of Business

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and Subsidiaries (“we,”

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

reAlpha Asset Management, Inc.

“us,” “our,” or the “Company”) were initially incorporated with the name reAlpha Asset Management,

in the State of Delaware on April 22, 2021 .

Initially, our asset-heavy operational model centered

on using proprietary artificial intelligence (“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 enhancing our AI technologies

to continuously improve our commission-free, AI-powered end-to-end homebuying platform, driven by a growth strategy centered on strategic

acquisitions.

Initially, our asset-heavy operational model centered on using proprietary artificial

intelligence (“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 enhancing our AI technologies to continuously improve our commission-free,

AI-powered end-to-end homebuying platform, driven by a growth strategy centered on strategic acquisitions.

The Company’s head office is located at

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

2 - Summary of Significant Accounting Policies

Note 2 - Summary of Significant Accounting

Principles of Consolidation

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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 (“Related Party Disclosures”).

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

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.

Significant Accounting Policies

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accounting policies from our Form 10-KT.

Equity Method Investment

The Company accounts for investments in entities

in which the Company has significant influence over the entity’s financial and operating policies, but does not control, using the

equity method of accounting.

The equity method investments are initially recorded at cost, and subsequently increased for capital contributions

and allocations of net income, and decreased for capital distributions and allocations of net loss.

Equity in net income (loss) from the

equity method investment is allocated based on the Company’s economic interest.

Equity method investments are reviewed for impairment

whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

If it is determined that a loss

in value of the equity method investment is other than temporary, an impairment loss is measured based on the excess of the carrying amount

of an investment over its estimated fair value.

We recorded the Xmore AI investment of

$ 125,000 under the equity method as per ASC 323.

Revenue Recognition

The AI conversational platform, AiChat (as

defined below), 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.

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.

Be My Neighbor (as defined below), a mortgage

brokerage company, complies with ASC 606 by recognizing revenue at the point of loan closing.

This moment marks the transfer of control

of the loan to the borrower, capturing the completion of Be My Neighbor’s primary service—successfully securing a loan.

services, including loan origination, application processing, and credit assessment, contribute to this culminating event.

therefore recognized only when the loan closes, 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.

Naamche (as defined below), which leverages proprietary

AI and other advanced technologies, 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.

Note 3 - Earnings per Share

Basic earnings per share (“EPS”) is

computed based on the weighted average number of shares of common stock outstanding during the period.

Diluted EPS is computed based on

the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period.

Dilutive potential common shares include outstanding stock options and warrants.

and the shares that will be issued for the recent acquisitions.

to the net losses reported in the periods presented, the affect of dilutive potential common shares are anti-dilutive

Recently Issued Accounting Pronouncements:

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2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”).

ASU 2023-07 requires expanded disclosures about reportable

segments including additional information on segment expenses, expanded interim period disclosures, and an explanation of how the chief

operating decision maker utilizes segment information in evaluating segment performance.

ASU 2023-07 is effective for fiscal years beginning

after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

We are currently assessing the impact

that the adoption of ASU 2023-07 will have on the disclosures in our consolidated financial statements.

to Reportable Segment Disclosures” (“ASU 2023-07”).

ASU 2023-07 requires expanded disclosures about reportable segments

including additional information on segment expenses, expanded interim period disclosures, and an explanation of how the chief operating

decision maker utilizes segment information in evaluating segment performance.

ASU 2023-07 is effective for fiscal years beginning after

December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

We are currently assessing the impact that

the adoption of ASU 2023-07 will have on the disclosures in our consolidated financial statements.

Reclassification Presentation

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Note 4 - Going Concern

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

We assess 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.

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.

anticipate continued operating losses in the near future, and our cash position as of June 30, 2024 may not fully cover operations for

the 12-month period following the date of issuing the condensed consolidated financial statements included in this report, we are confident

in our strategy to continue investing in the commercialization of our products and technologies and our ability to continue operations.

If we are unable to cover our operating expenses for the next 12-month period through the commercialization of our technologies, or if

we are unable to raise sufficient capital through additional debt or equity arrangements, to the extent needed, there will be uncertainty

regarding our ability to maintain liquidity sufficient to operate the business effectively, which raises substantial doubt as to our ability

to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

believe we have alleviated the substantial doubt of our ability to continue operations by securing funding of approximately $ 5.45 million

in gross proceeds pursuant to the issuance of a secured note on August 14, 2024, pursuant to which we raised approximately $ 5.0 million

in net proceeds, after paying related expenses and fees (see “Note 13 – Subsequent Events” below for additional information).

The condensed consolidated financial statements

do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification

of liabilities that might be necessary should we be unable to continue as a going concern.

As of June 30, 2024, we had approximately $ 3.7

million in cash.

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.

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 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.

has reviewed our financial condition, focusing on liquidity sources and upcoming financial obligations.

This assessment shows that

our short-term obligations exceed the resources available under current operational plans that raise a substantial doubt about

our ability to continue as a going concern for the next 12 months after the date that the condensed consolidated financial

statements are issued.

Additionally, while recent acquisitions are expected to increase operational expenses, we anticipate that

they will increase revenue streams, contributing positively to our financial outlook.

We believe these acquisitions will enhance

product offerings and market reach, which we anticipate will drive higher revenue in the coming months.

However, the revenue from

our recent acquisitions and from our technology platforms do not yet offset our current obligations and expenses.

Management anticipates continuing

operating losses for the next 12 months due to growth initiatives, management expects to continue raising capital through additional debt

and/or equity financings to fund its operations.

Management believes that these actions, which we expect to implement within the next

fiscal year, will effectively mitigate the conditions that raise substantial doubt about our ability to continue as a going concern

and to ultimately achieve profitability.

However, management cannot provide assurance that their plans to add revenue streams, raise

revenue or raise additional capital will be successful, and whether we will ultimately achieve profitability, become cash flow

positive, or raise additional debt and/or equity capital.

If we are unable to raise our revenues sufficiently to cover our

obligations and expenses or raise additional capital in the near future, management expects that we will need to curtail operations,

seek additional capital on less favorable terms, and/or pursue other remedial measures.

As of September 30, 2024, the

Company had approximately $ 7.0 million in cash.

Note 5 - Business Combinations

For comprehensive information regarding the acquisition

completed in the previous fiscal year, please refer to the Form 10-KT filed with the SEC for the transition period ended December 31,

Acquisition of Naamche Inc.

and Naamche Inc.

On May 6, 2024 , we completed our acquisitions

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(“Nepal Naamche,” and together with U.S.

As a result, the Company now owns 100 % of the issued and outstanding shares of capital stock of Naamche, and

both entities are wholly-owned subsidiaries of the Company.

We acquired Naamche to assist the Company with the research and development

of its proprietary AI algorithms and other technologies.

As a result, we own 100 % of the issued and outstanding shares of capital stock of Naamche, and both entities are

wholly-owned subsidiaries of the Company.

We acquired Naamche to assist the Company with the research and development of its proprietary

AI algorithms and other technologies.

The purchase price consisted of (i) a $ 50,000

cash payment, (ii) 225,000 restricted shares of the Company’s common stock to be issued within 9 months from the closing date of

the acquisitions, and (iii) $ 450,000 in cash, payable over a 3-year period following the closing date of the acquisitions based on the

achievement by Naamche of specified revenue-based targets.

Due to the limited amount of time since closing

the transaction, the preliminary allocation of the purchase price is not yet complete.

We expect most of the purchase price will be allocated

to goodwill and other identifiable intangible assets.

Naamche is included in our consolidated financial statements beginning on the date

of acquisition and reported as part of our Technology Services (formerly “Platform Services”) segment.

cash payment, (ii) 225,000 restricted shares of common stock to be issued within 9 months from the closing date of the acquisitions subject

to terms and conditions specified herein, and (iii) $ 450,000 in cash, payable over a 3-year period following the closing date of the acquisitions

based on the achievement by Naamche of specified revenue-based targets.

Naamche is included in our consolidated financial

statements beginning on the date of acquisition and reported as part of our Technology Services (formerly “Platform Services”)

We estimated fair values on the acquisition date,

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

with the Naamche acquisition.

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.

The table below represents the preliminary purchase

with the Naamche acquisition subject to measurement period adjustments.

During the measurement period, we obtained a purchase price allocation

report from a consulting firm to assist in finalizing the fair value of assets acquired and liabilities assumed.

Accordingly, the fair

value measurements and adjustments are noted below.

The table below represents the final purchase

price allocation to total assets acquired and liabilities assumed and the associated estimated useful lives as of the acquisition date.

Purchase price allocation

Net Property Plant & Equipment

Other Current Assets

Cash & cash equivalents

Accounts receivable

Other current assets

Net property plant & equipment

Intangible assets

Accounts payable

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Net assets acquired

Note 6 – Property and Equipment

in property and equipment consisted of the following as of June 30, 2024

Investments in property and equipment other than held for sale

Furniture and fixtures

Total investment in property and equipment

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

Investments in property and equipment other than held for sale

Furniture and fixtures

Total investment in property and equipment

Investments in property and equipment held for sale

Buildings and building improvements

Furniture and fixtures

Total investment in real estate

The Company recorded depreciation expenses of

$ 69,331 and $ 22,107 for the three months ended June 30, 2024, and June 30, 2023, respectively.

The Company also recorded depreciation

expenses of $ 140,784 and $ 48,658 for the six months ended June 30, 2024, and June 30, 2023, respectively.

$ ( 292,733 )

The determination of the fair value for the acquired

business employed the income approach, specifically the discounted cash flow (“DCF”) method.

This method involves assessing

the present value of anticipated future cash flows from the acquired business.

These cash flows are discounted at the weighted average

cost of capital (“WACC”), which represents the necessary return on the combined entity’s equity and debt.

weighted by the respective proportions of equity and debt in the overall capital structure.

For the fair valuation of trademarks and

trade names, the relief from royalty method was applied.

Customer and other relationships were valued through the

multi-period excess earnings model (“MPEEM”), which calculates the present value of excess earnings attributed to these

relationships over their estimated remaining useful life.

Assembled workforce is not recognized separately from goodwill, as it

lacks separability and contractual nature.

Purchase Price Allocation

The acquisition was accounted for as a business

combination in accordance with ASC Topic 805, Business Combinations.

The purchase price allocation above was allocated to the tangible

and intangible assets acquired and liabilities assumed based on management estimated fair values as of the acquisition date.

was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic

benefits arising from other assets acquired that could not be individually identified and separately recognized.

The final purchase price allocation includes $ 26,000 of

acquired identifiable intangible assets, all of which have finite lives.

The intangible assets are being amortized

over their estimated useful lives on a straight-line basis.

The determination of the useful lives is based upon various industry

studies, historical acquisition experience, economic factors.

The purchase price allocation to identifiable intangible assets acquired

subject to amortization consists of the following:

(in years) Gross Value Accumulated

Amortization Net Book

Definite Lived Intangible Assets:

Trademarks and trade names

5 $ 8,500 $ 689 $ 7,811

Customer and other relationships 6 17,500 1,183 16,317

Balance, September 30, 2024 $ 26,000 $ 1,872 $ 24,128

We estimate amortization expense for the next

five years and beyond will be as follows:

Years Ending December 31:

2024 (excluding the 9 months ended 9/30/2024)

Acquisition of AiChat Pte.

On July 12, 2024, we entered into a Business Acquisition

and Financing Agreement (the “Business Acquisition Agreement”) with AiChat Pte.

(“AiChat”), AiChat10X Pte.

Ltd., and Kester Poh Kah Yong, pursuant to which we acquired 85 % of AiChat’s ordinary shares, with the remaining 15 % to be acquired

by June 30, 2025.

AiChat is an AI-powered company offering conversational customer experience solutions.

The total purchase price to acquire 100 % of AiChat

is $ 1,140,000 , which consists of:

(i) $ 312,000 in restricted common stock, issuable by January 1, 2025;

(ii) $ 588,000 in restricted common

stock, issuable by April 1, 2025, subject to adjustments set forth in the Business Acquisition Agreement;

and (iii) $ 240,000 in restricted

common stock, issuable by December 1, 2025.

We estimated fair values on the acquisition date,

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

with the AiChat acquisition subject to measurement period adjustments.

We obtained a purchase price allocation report from a consulting

firm to assist in finalizing the fair value of assets acquired and liabilities assumed.

Accordingly, the fair value measurements and adjustments

are noted below.

The table below represents the final purchase

price allocation to total assets acquired and liabilities assumed and the associated estimated useful lives as of the acquisition date.

Cash & cash equivalents

Accounts receivable

Other current assets

Net property plant & equipment

Intangible assets

Accounts payable

Accrued expenses

Other current liabilities

( 1,238,785 )

Net assets acquired

The determination of the fair value for the acquired

business employed the income approach, specifically the DCF method.

This method involves assessing the present value of anticipated future

cash flows from the acquired business.

These cash flows are discounted at the WACC, which represents the necessary return on the combined

entity’s equity and debt.

The WACC is weighted by the respective proportions of equity and debt in the overall capital structure.

For the fair valuation of developed

technology, the relief from royalty method was applied.

The estimation of the economic useful life of these assets took into account

factors outlined in ASC 350-30-35-3.

Trademarks and trade names fair value was determined using the relief from royalty method.

Customer and other relationships were valued through MPEEM, which calculates the present value of excess earnings attributed to

these relationships over their estimated remaining useful life.

Assembled workforce is not recognized separately from goodwill, as

it lacks separability and contractual nature.

Purchase Price Allocation

The acquisition was accounted for as a business

combination in accordance with ASC Topic 805, Business Combinations.

The purchase price allocation above was allocated to the tangible

and intangible assets acquired and liabilities assumed based on management estimated fair values as of the acquisition date.

was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic

benefits arising from other assets acquired that could not be individually identified and separately recognized.

The final purchase price allocation includes $ 1,135,000 of

acquired identifiable intangible assets, all of which have finite lives.

The intangible assets are being amortized

over their estimated useful lives on a straight-line basis.

The determination of the useful lives is based upon various industry studies,

historical acquisition experience, economic factors, and future forecasted cash flows of the Company following the acquisition of AiChat.

Additionally, as part of the acquisition of AiChat, we committed to

purchase 55,710 ordinary shares of AiChat at a cost of $ 60,000 , payable at the transaction’s closing.

Furthermore, we also agreed

to purchase an additional 222,841 ordinary shares of AiChat for $ 240,000 .

The specific dates for these payments are outlined in the Business

Acquisition Agreement.

The purchase price allocation to identifiable intangible assets acquired

subject to amortization consists of the following:

(in years) Gross Value Accumulated

Amortization Net Book

Definite Lived Intangible Assets:

Developed technology 5 $ 800,000 $ 35,068 $ 764,932

Trademarks and trade names

9 272,000 6,624 265,376

Customer and other relationships 10 63,000 1,381 61,619

Balance, September 30, 2024 $ 1,135,000 $ 43,073 $ 1,091,927

We estimate amortization expense for the next

five years and beyond will be as follows:

Years Ending December 31:

2024 (excluding the 9 months ended 9/30/2024)

Acquisition of Debt Does Deals, LLC (d/b/a

Be My Neighbor)

September 8, 2024, we entered into a Membership Interest Purchase Agreement (the “MIPA”) with Debt Does Deals, LLC (d/b/a

Be My Neighbor) (“Be My Neighbor” or “BMN”), a Texas-based mortgage brokerage, and its sellers, Christopher Bradley

Griffith and Isabel Williams (collectively, the “Sellers”).

In accordance with the MIPA, we acquired 100 % of the membership

interests of Be My Neighbor that were outstanding prior to the consummation of the acquisition.

The purchase price was $ 6,000,000 , consisting

(i) $ 1,500,000 in cash to the Sellers based on their ownership percentages;

(ii) $ 1,500,000 in restricted common stock, or 1,146,837

shares valued at $ 1.31 per share, to be issued within 90 days of closing, allocated proportionally to each of the Sellers’ membership

interests in Be My Neighbor;

and (iii) up to $ 3,000,000 in potential earn-out payments, subject to BMN’s achievement of certain

financial metrics set forth in the MIPA.

We estimated fair values on the acquisition date,

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

with the Be My Neighbor acquisition subject to measurement period adjustments.

We obtained a purchase price allocation report from a consulting

firm to assist in finalizing the fair value of assets acquired and liabilities assumed.

Accordingly, the fair value measurements and adjustments

are noted below.

The table below represents the final purchase

price allocation to total assets acquired and liabilities assumed and the associated estimated useful lives as of the acquisition date.

Cash & cash equivalents

Accounts receivable

Intangible assets

Accounts payable

Other current liabilities

Net assets acquired

The determination of the fair value for the acquired

business employed the income approach, specifically the DCF method.

This method involves assessing the present value of anticipated future

cash flows from the acquired business.

These cash flows are discounted at the WACC, which represents the necessary return on the combined

entity’s equity and debt.

The WACC is weighted by the respective proportions of equity and debt in the overall capital structure.

For the fair valuation of trademarks and trade names the relief

from royalty method was applied.

Assembled workforce is not recognized separately from goodwill, as it lacks separability and contractual

Purchase Price Allocation

The acquisition was accounted for as a business

combination in accordance with ASC Topic 805, Business Combinations.

The purchase price allocation above was allocated to the tangible

and intangible assets acquired and liabilities assumed based on management estimated fair values as of the acquisition date.

was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic

benefits arising from other assets acquired that could not be individually identified and separately recognized.

The final purchase price allocation includes $ 1,434,000 of

acquired identifiable intangible assets, all of which have finite lives.

The intangible assets are being amortized

over their estimated useful lives on a straight-line basis.

The determination of the useful lives is based upon various industry

studies, historical acquisition experience, economic factors, and future forecasted cash flows of the Company following the acquisition

of Be My Neighbor.

The purchase price allocation to identifiable intangible assets acquired

subject to amortization consists of the following:

(in years) Gross Value Accumulated

Amortization Net Book

Definite Lived Intangible Assets:

Trademarks and trade names

15 $ 1,434,000 $ 5,762 $ 1,428,238

Balance, September 30, 2024 $ 1,434,000 $ 5,762 $ 1,428,238

We estimate amortization expense for the next

five years and beyond will be as follows:

Years Ending December 31:

2024 (excluding the 9 months ended 9/30/2024)

Acquisition of Hyperfast Title, LLC

On July 24, 2024, we acquired 85 % of the membership

interests of Hyperfast Title LLC (“Hyperfast”), a Florida-based title insurance provider, through a membership interest purchase

agreement for an aggregate purchase price of $ 21,250 .

This transaction resulted in an increase in goodwill of $ 25,054 .

Note 6 - Capitalized Software Development

Costs, Work In Progress

Qualifying internal-use software costs incurred

during the application development stage, which consist primarily of internal product development costs, outside services, and purchased

software license costs are capitalized.

As of June 30, 2024 and December 31, 2023, the balance of capitalized software costs, work in

progress amounted to $ 996,049 and $ 839,085 , respectively.

Qualifying internal-use software costs incurred during

the application development stage, which consist primarily of internal product development costs, outside services, and purchased software

license costs are capitalized.

As of September 30, 2024, the Company reclassified a portion of capitalized software costs of $ 750,642 from work-in-progress (“WIP”) to intangible assets following the release of the related product to the public, referred to as being placed “in service” under ASC 350.

The balance of work-in-progress capitalized software costs amounted to $ 359,720 as of September 30, 2024, compared to $ 839,085 as of December 31, 2023.

The Company assesses the carrying amount of capitalized

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

Note 8 – Other Loans

Other loans consisted of the following as of

June 30, 2024, and December 31, 2023:

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.

At September 30, 2024, our consolidated balance sheet includes goodwill related to the acquisition of Roost Enterprises, Inc.

included in the rental business reporting unit of $17.3 million.

As the activity of the reporting unit is on pause, we will conduct an

assessment of potential asset impairments as part of our annual review process during the fourth quarter of 2024.

Although we believe

that the goodwill reflected in the Consolidated Balance Sheet is not impaired, goodwill may subsequently become impaired due to changes

in facts and circumstances affecting the valuation of the reporting unit.

A goodwill impairment charge could have a material effect on

periodic earnings.

Changes in the carrying amount of goodwill were

Balance at June 30, 2024

Goodwill acquired, net of purchase price adjustments

Balance at September 30, 2024

(1) Includes goodwill of related to Naamche, AiChat, Be My Neighbor, and

Hyperfast acquisitions.

See “Note 5 – Business Combinations” for further information.

components of intangible assets, all of which are finite-lived, are as follows:

September 30, 2024

December 31, 2023

Definite-life Intangibles:

Developed technology

Trademarks and trade names

Customer relationships

(1) Includes intangible assets related to Naamche, AiChat and Be My Neighbor

acquisitions.

See “Note 5 – Business Combinations” for further information and reclassified a portion of capitalized

software costs from work-in-progress (“WIP”) to intangible assets.

The Company recorded depreciation and amortization expenses of $ 163,439

and $ 14,628 for the three months ended September 30, 2024, and September 30, 2023, respectively.

The following table outlines the estimated future

amortization expense related to intangible assets held as of September 30, 2024:

Years Ending December 31:

2024 (excluding the 9 months ended 9/30/2024)

Note 8 - Notes Payable

August 14, 2024, we entered into a note purchase agreement with Streeterville Capital, LLC (“Lender”) pursuant to which we

issued and sold a secured promissory note in the original principal amount of $ 5,455,000 .

The note carries an original issue discount

of $ 435,000 , and we paid $ 20,000 to cover the Lender’s legal and transaction costs, reducing the purchase price received by us

to $ 5,000,000 .

Interest accrues at 8 % annually, and the unpaid amount, interest, fees, and late fees are due 18 months after issuance.

The note and agreement include terms like the Lender’s ability to redeem a portion of the note, events of default, penalties, restrictive

covenants on our ability to issue certain securities, a “most favored nation” provision.

Additionally, Rhove, Be My Neighbor,

subsidiaries signed security and intellectual property agreements in favor of the Lender, and our U.S.

subsidiaries also

guaranteed all of the Company’s obligations under the note and other transaction documents.

The Company had the following outstanding notes

payable as of September 30, 2024 and December 31, 2023:

Summary of non-current

notes payable:

Date Interest

Rate Original

Amount September 30,

2024 December 31,

Secured promissory note to Streeterville Capital, LLC, $ 435,000 original issue discount February 14, 2026 8 % $ 5,455,000 $ 5,455,000 $ -

Unamortized debt issuance costs & Original issue discount ( 181,875 )

Current portion ( 3,815,000 )

Total notes payable $ 1,458,125 $ -

Summary of current

notes payable:

September 30,

Secured promissory note to Streeterville Capital, LLC, $ 435,000 original issue discount

Unamortized debt issuance costs & Original issue discount

Total notes payable - current

of September 30, 2024, accrued interest was $ 54,818 , compared to $ 0 as of September 30, 2023.

As of September 30, 2024 and December 31,

2023, unamortized debt issuance and original issue discount were reflected within long term liabilities on the condensed consolidated

balance sheets, netted with the notes payable.

Note 9 - Related Party Transactions

from Related Parties

party transactions involve loans provided to AiChat, our subsidiary, by Kester Poh, a director of AiChat, and Balaji Swaminathan, a member

of our board of directors.

All transactions were conducted on terms consistent with those offered to unrelated third parties.

of September 30, 2024, the balance due to Kester Poh under the loans was $ 137,939 , divided as follows:

short term loans of $ 75,240 and

long-term loans of $ 62,699 .

The notes issued in connection with these loans are structured to be repaid over a two-year period through

monthly installments of $ 9,626 , bearing an interest rate of 6.9 % per annum.

Similarly, as of September 30, 2024, the balance due

to Balaji Swaminathan under the loans made from December 2023 to August 2024 was $ 57,957 .

This amount includes short term loans of $ 52,985

and long-term loans of $ 4,972 .

The notes issued in connection with these loans are structured to be repaid over a one and a half year

period through monthly installments of $ 8,183 , bearing an interest rate of 6.9 % per annum.

Summary of Short-Term

Loans to Related Parties

Interest Rate

September 30,

Term Loan Facility

Interest Reserve

Total Short-Term Loans to Related Parties

Summary of Long-Term Loans to Related Parties

Interest Rate

September 30,

2024 September 30,

2024 December 31,

Term Loan Facility 2026 6.9 % 79,686 -

Interest Reserve ( 12,015 ) -

Total Long-Term Loans to Related Parties $ 67,671 $ -

Note 10 - Short Term Loans Unrelated parties

Short-Term Loans consisted of the following as of September 30, 2024,

and December 31, 2023:

Summary of Short-Term Loans to Unrelated Parties

Average Interest Rate

as of September 30,

September 30,

First Insurance loan

Total Short-term debt, net

Term Loan Facility

Interest Reserve

Total Short-Term Loans to Unrelated Parties

Note 11 - Deferred Consideration

The Company had the following deferred consideration

as of September 30, 2024 and December 31, 2023:

Consideration

Balance as on December 31, 2023

Deferred Consideration – AiChat

Deferred Consideration – BMN (1)

Deferred Consideration - Xmore AI

Balance as on September 30, 2024

(1) As part of the business combination with Be My Neighbor, which took place on September 8, 2024, and in accordance with the MIPA (as defined above), we agreed to pay as consideration an amount of $ 1.5 million in cash.

While the original due date for such payment was the closing date, the actual payment was made on October

Note 12 - Mortgage and Other Long-Term Loans

Long-term liabilities consisted of the following

as of June 30, 2024, and December 31, 2023:

June 30, December 31,

Mortgage note with a bank.

The note bears interest at a rate of 7.5 % and provides for monthly interest payments.

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.

Vehicle loan with a bank.

The loan bears interest at a rate of 11.17 % and provides for monthly interest and principal payments.

The loan tenure ends on October 20, 2029 .

Total Mortgage & other long-term loans $ 53,348 $ 247,000

- 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;

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

As of June 30, 2024 there

were 44,323,226 shares of common stock issued and outstanding and as of December 31, 2023, there were 44,122,091 shares of common stock

issued and outstanding, and there were 0 shares of preferred stock outstanding as of June 30, 2024

Mortgage and Other Long-Term Loans consisted of

the following as of September 30, 2024, and December 31, 2023:

Summary of Mortgage and Other Long-Term Loans to related Parties

Interest Rate

September 30,

2024 September 30,

2024 December 31,

Term Loan Facility 2026 6.9 % 79,686 -

Interest Reserve ( 12,015 ) -

Summary of Mortgage and Other Long-Term Loans to Unrelated Parties

Interest Rate

September 30,

Mortgage Loan

Term Loan Facilities

Vehicle Loans

Interest Reserve

Note 13 - 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;

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

As of September 30, 2024, there were 45,570,967 shares of common stock issued and outstanding and as of December 31, 2023,

there were 44,122,091 shares of common stock issued and outstanding, and there were 0 shares of preferred stock outstanding as of September

30, 2024 and December 31, 2023.

Stock Based Compensation

We issued an aggregate of 201,135 shares

of common stock during and as of the quarter ended June 30, 2024, pursuant to reAlpha Tech Corp.’s 2022 Equity Incentive Plan (the

“2022 Plan”) described below.

issued an aggregate of 100,904 shares of common stock during and as of the quarter ended September 30, 2024, pursuant to reAlpha Tech

Corp.’s 2022 Equity Incentive Plan (the “2022 Plan”) described below.

Equity Incentive Plan

We maintain 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 of

directors administers the 2022 Plan.

We maintain 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 of directors

administers the 2022 Plan.

The 2022 Plan permits grants of awards to eligible employees, consultants and 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.

All of our current employees, consultants and other service providers are eligible to be granted awards under the 2022 Plan.

for awards under the 2022 Plan is determined by the board of directors at its discretion.

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

3,697,961 remain available for issuance.

All of our current employees, consultants and other service providers are eligible to be

granted awards under the 2022 Plan.

Eligibility for awards under the 2022 Plan is determined by the board of directors at its discretion.

The 2022 Plan permits the discretionary award

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and all options issued to such participant under the 2022 Plan.

The 2022 Plan also provides the Company with a

right of repurchase all or portion of the shares awarded to the participant under the 2022 Plan, which may be exercised in case a participant

separates from service for any reason, at a price equal to the fair market value, as determined by the board of directors.

of a Change in Control (as defined in the 2022 Plan), the board of directors will have the sole discretion to address the treatment of

a participant’s unvested awards in connection with such Change in Control in the participant’s award agreement.

The 2022 Plan also provides the Company with a right of repurchase

all or portion of the shares awarded to the participant under the 2022 Plan, which may be exercised in case a participant separates from

service for any reason, at a price equal to the fair market value, as determined by the board of directors.

In the event of a Change in

Control (as defined in the 2022 Plan), the board of directors will have the sole discretion to address the treatment of a participant’s

unvested awards in connection with such Change in Control in the participant’s award agreement.

The board of directors may modify, amend or terminate

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

in FASB Accounting Standards Codification (“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 the warrant’s

issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

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 the warrant’s issuance and as of each subsequent quarterly period

end date while the warrants are outstanding.

For issued or modified warrants that meet all

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On October 23, 2023, pursuant to the terms of

the GEM Agreement (as defined below), 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

is subject to further adjustments specified therein.

the GEM Agreement (as defined below), we issued GYBL (as defined below) 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 is subject to further adjustments specified therein.

Due to an ongoing dispute with GYBL regarding the GEM Warrants,

there is uncertainty about the enforceability of the GEM Warrants and their classification under ASC 480 and ASC 815.

If the dispute is

not resolved through negotiations and is adversely determined against us, we may be required to reassess the classification of the GEM

Warrants, which could lead to them being recorded as liabilities instead of equity.

This reassessment could adversely impact our financial

statements and results of operations.

See “Note 16 - Subsequent Events” for further information.

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

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that the aggregate exercise price payable thereunder would equal the aggregate exercise price prior to such adjustment.

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, and

less than $ 5.00 per share, in the case of the Follow-On Warrants, we believe holders of the Warrants will be unlikely to exercise them.

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.

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

$ 5.00 per share, in the case of the Follow-On Warrants, it is unlikely that the holders of the Warrants will exercise their warrants.

While current conditions influencing the exercise of the Warrants make such exercise unlikely, further adjustments to their exercise prices,

or an adjustment to the amount of shares issuable upon exercise thereof, as applicable, may make the Warrants more attractive for investors

Our analysis is based on the trading price of our common stock as of August 13, 2024, which was $ 1.21 per share.

or an adjustment to the number of shares issuable upon exercise thereof, as applicable, may make the Warrants more attractive for investors

Additionally, as noted above, due to the ongoing dispute with GYBL regarding the GEM Warrants, pursuant to which we are seeking

to void the GEM Warrants, there is uncertainty about the enforceability of the GEM Warrants and method of calculating its exercise price

adjustment, which may impact the exercisability thereof.

See “Note 16 - Subsequent Events” for further information.

Consequently,

no adjustments have been made on the exercise price of GEM Warrants based on the one-year anniversary adjustment of such warrants.

Our analysis is based on the trading price of our common stock as of November

11, 2024, which was $ 1.00 per share.

On March 24, 2023, in connection with the acquisition

of Roost Enterprises, Inc.

(“Rhove”), we allocated rights to each seller and participating investors a right to purchase 1,263,000

additional shares of common stock (the “Rollover Stock”) at a fixed price of $ 10 per share within a two-year period following

the closing date of acquisition of Rhove and shall thereafter terminate if not exercised within in such two-year period with no modifications

to the exercise terms (the “Rights”).

of Rhove, we allocated rights to each seller and participating investors a right to purchase 1,263,000 additional shares of common stock

(the “Rollover Stock”) at a fixed price of $ 10 per share within a two-year period following the closing date of acquisition

of Rhove and shall thereafter terminate if not exercised within in such two-year period with no modifications to the exercise terms (the

These shares were issued without any restrictions.

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of the fair value of the Follow-On Warrants and Rights, refer to the audited consolidated financial statements included in the Form 10-KT.

As the Follow-On Warrants are classified as equity instruments, they are not subject to fair value remeasurement at the end of each reporting

Warrants and Rights activity as of June 30, 2024 were as follows:

Issue date Period

ended Contractual

As the warrants issued in connection with the follow-on offering and GEM Agreement are classified as equity instruments, they are not

subject to fair value remeasurement at the end of each reporting period.

Warrants and Rights activity as of September 30, 2024 were as follows:

Issue date Period ended Contractual

life (years) Warrants

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Follow-on Warrants issued on November 21, 2023 11/21/2023 09/30/2024 5 2,400,000 5.00 4.14

Warrants outstanding on June 30, 2024 5,363,884 122.52 3.49

Warrants outstanding on September 30, 2024 5,363,884 122.52 3.24

Note 14 - Commitments and Contingencies

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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.

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.

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 the

GEM Agreement prior to its expiration.

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

pursuant to the GEM Agreement.

The Company maintains indemnification agreements

with our 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.

with our 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

Acquisition Agreement – Naamche

The Company’s agreement with Naamche includes

deferred payment provisions representing potential milestone payments for Naamche’s former owners.

The provisions are made up of

two general types of arrangements, contingent compensation and contingent consideration.

The contingent compensation arrangement is contingent

on the former owner’s future employment with the Company and the related amounts are recognized over the required employment period.

The contingent consideration is not contingent on employment and was recorded as purchase consideration in other long-term liabilities

on the condensed consolidated balance sheets at the time of the initial acquisition based on the fair value of the estimated liability.

The amounts are paid over a three-year period, contingent on the achievement of certain revenue milestones.

Acquisition Agreement – Debt Does Deals,

LLC (dba “Be My Neighbor”)

The Company’s agreement with Be My Neighbor

includes deferred payment provisions representing potential milestone payments for its former owners.

The provisions are made up of contingent

consideration.

The contingent consideration is not contingent on employment and was recorded as purchase consideration in other long-term

liabilities on the condensed consolidated balance sheets at the time of the initial acquisition based on the fair value of the estimated

The amounts are paid over a three-year period, contingent on the achievement of certain revenue and EBITDA milestones.

The Company primarily determines the contingent

consideration liability based on the forecasted probability of achieving the respective milestones.

The contingent consideration liability

is measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.

As of September 30, 2024, the Company’s

contingent consideration liabilities related to acquisitions are categorized as Level 3 within the fair value hierarchy.

Contingent consideration

was valued at September 30, 2024 using unobservable inputs, primarily internal revenue forecasts.

Contingent consideration was valued

at the time of acquisitions and have included using the Monte Carlo simulation model.

The development and determination of the unobservable

inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the

assistance of a third-party valuation specialist.

As of September 30, 2024, the Company’s

contingent consideration liabilities current and non-current balances were as follows:

As of September 30, 2024

consideration

Consideration

Contingent consideration, non-current - Naamche

Contingent consideration, non-current - BMN

Total contingent consideration, net of current portion

Legal Matters

India Proceeding Involving Giri Devanur

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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 proper.

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

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

In response to the counterclaims filed by the Buchanan Legal Counsel on August 16, 2023, the Company has denied the allegations

made therein, asserting that they lack merit and are either insufficiently supported or entirely untrue.

The Company contends that any

damages claimed by the defendants arise from their own negligence and failure to meet their contractual obligations.

At this time, the

Company cannot predict the eventual scope, duration, or outcome of the lawsuit.

Note 15 - Segment Reporting

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Three months Ended

Six months Ended

September 30,

Nine months Ended

September 30,

Revenue by segment

Technology (formerly “Platform”) services

Technology services

Rental business

1 unchanged sentence

Segment cost of revenue

Technology (formerly “Platform”) services

Technology services

Rental business

2 unchanged sentences

Segment operating expense

Technology (formerly “Platform”) services

Technology services

Rental business

1 unchanged sentence

Total consolidated segment operating loss

Segment other income (expenses)

Technology (formerly “Platform”) services

Segment other(expenses) income

Technology services

Rental business

Total consolidated segment operating profit

Total consolidated segment operating loss

Corporate Expenses

3 unchanged sentences

( 2,090,352 )

Other income (expenses), net

Other (expenses) income , net

( 1,679,354 )

3 unchanged sentences

$ ( 777,607 )

- Subsequent Events

$ ( 4,995,931 )

Note 16 - Subsequent Events

The Company has evaluated subsequent events as

of the date of this report and has none to report, except as identified below.

Acquisition of AiChat Pte.

On July 12, 2024, the Company entered into a

Business Acquisition and Financing Agreement (the “Acquisition Agreement”) with AiChat Pte.

Ltd., a company incorporated

in the Republic of Singapore (“AiChat”), AiChat10X Pte.

Ltd., a Singaporean company (the “Seller”), and Kester

Poh Kah Yong (the “Founder”).

Under the agreement, the Company acquired 85 % of the outstanding ordinary shares of AiChat,

an AI-driven company specializing in conversational customer experience solutions, from the Seller.

The remaining 15 % of AiChat’s

shares will be acquired on June 30, 2025 (the “Acquisition”).

In exchange for the shares, the Company agreed

to pay the Seller a total purchase price of $ 1,140,000 , comprising of:

(i) $ 312,000 in restricted shares of the Company’s common

stock, priced at a 10 % discount to the 10-day volume weighted average price (VWAP) of the common stock on the Nasdaq Capital Market,

to be issued no later than January 1, 2025 (the “First Tranche Shares”);

(ii) $ 588,000 in restricted shares of common stock,

also priced at a 10 % discount to the VWAP, subject to any Base Case Adjustment (as defined in the Acquisition Agreement), to be issued

no later than April 1, 2025 (the “Second Tranche Shares”);

and (iii) $ 240,000 in restricted shares of common stock, calculated

at a 5 % discount to the VWAP, to be issued no later than December 1, 2025 (the “Third Tranche Shares,” collectively with

the First Tranche Shares and the Second Tranche Shares, the “Tranche Shares”).

Additionally, the Company agreed to subscribe

to and purchase from AiChat:

(i) 55,710 ordinary shares of AiChat at the closing of the Acquisition, for $ 60,000 ;

and (ii) 222,841 ordinary

shares of AiChat according to a disbursement schedule to be agreed upon by the Company, AiChat, and the Founder, for a total subscription

price of $ 240,000 .

The Tranche Shares will be subject to a 90-day

restrictive period (the “Restricted Period”) following issuance, during which the Seller cannot sell, transfer, or otherwise

dispose of the shares or request their registration under the Securities Act of 1933, as amended.

After the Restricted Period, the shares

will be deposited into the Seller’s designated account and then transferred to the Founder based on his beneficial ownership in

In order to comply with Nasdaq Listing Rule 5635(a), the total Tranche Shares issued cannot exceed 19.99 % of the Company’s

outstanding common stock immediately before the Acquisition Agreement, which equates to 8,860,213 shares (the “Cap Amount”).

Any shares issued in excess of this amount will be paid in cash to the Seller, as specified in the Acquisition Agreement.

Additionally, the Company agreed to guarantee

certain Singaporean bank loans from AiChat totaling approximately 862,092 Singapore Dollars (SGD).

The Acquisition Agreement also includes

the assignment of AiChat’s intellectual property rights from the Seller to the Company.

Post-acquisition, the Seller will indemnify

the Company and its affiliates against any liabilities, damages, losses, costs, or expenses arising from third-party claims related to

the Company and the Acquisition.

The Acquisition Agreement contains customary representations, warranties, covenants, and conditions

for transactions of this nature.

Acquisition of Controlling Interest of

Hyperfast Title LLC

On July 24, 2024, the Company entered into a Membership

Interest Purchase Agreement (the “Hyperfast Purchase Agreement”) with David R.

Breschi and Kristen Britton (the “Sellers”).

Under this agreement, the Company acquired 85 % of the outstanding membership interests in Hyperfast Title LLC (“Hyperfast”),

a Florida-based company specializing in real estate closings and title insurance.

Hyperfast was founded by the owners of Madison Settlement

Services, LLC, a national title agency (the “Hyperfast Acquisition”).

The Hyperfast Purchase Agreement includes standard representations,

warranties, and covenants typical for transactions of this nature.

In conjunction with the Hyperfast Acquisition,

the Company, the Sellers, and Hyperfast signed an Amended and Restated Operating Agreement (as amended from time to time, the “Operating

The Operating Agreement outlines several key provisions, including:

annual license fees to be paid to the Sellers,

contingent on their continued service with Hyperfast;

annual management fees based on Hyperfast’s operating margin;

first refusal for each Hyperfast member to purchase the interests of any member wishing to sell;

and various rights for the Company,

as the managing member, to acquire the Sellers’ membership interests, and for the Sellers to sell their respective interests in

Hyperfast, all in accordance with the terms specified in the Operating Agreement.

Streeterville Capital,

LLC Note Purchase Agreement and Secured Promissory Note

On August 14, 2024, the Company entered into a note purchase agreement

(the “Purchase Agreement”) with Streeterville Capital, LLC (“Lender”) pursuant to which the Company issued and

sold to the Lender a secured promissory note in the original principal amount of $ 5,455,000 (the “Note”).

The Note carries

an original issue discount of $435,000 and the Company agreed to pay $ 20,000 to the Lender to cover its legal fees, accounting costs,

due diligence, monitoring and other transaction costs, each of which were deducted from the proceeds of the Note received by the Company

resulting in a purchase price received by the Company of $ 5,000,000 .

Interest under the Note accrues at a rate of 8 % per annum, and the

unpaid amount of the Note, and any interest, fees, charges and late fees are due 18 months following the date of issuance.

Purchase Agreement include certain material terms, including the Lender’s ability to redeem a portion of the Note from time to time

beginning seven months after issuance, events of default and penalties associated therewith, restrictive covenants on our ability to issue

securities, subject to exceptions set forth therein, a “most favored nation” provision, among others.

In connection with the

Note and Purchase Agreement, the Company and Rhove also entered into security agreements and intellectual security agreements in favor

of the Lender, and the Company’s U.S.

subsidiaries entered into a guaranty in favor of the Lender.

The Company also entered

into a placement agency agreement (the “Placement Agency Agreement”) with Maxim Group LLC (“Maxim”), pursuant

to which Maxim agreed to serve as lead placement agent on a “reasonable best efforts basis” in connection with the sale of

the Note and any additional notes (the “Placement”).

Pursuant to the Placement Agency Agreement, the Company agreed to pay

Maxim a cash fee equal to 3.75 % of the gross proceeds received by the Company for the Note and any additional notes and to reimburse Maxim

for its reasonable accountable expenses, including legal fees, up to an aggregate amount of $ 10,000 .

In addition, if within nine months

of a closing of a sale of the Note or any additional notes, the Company completes any financing of equity or equity-linked capital-raising

activity with, or receives proceeds from, any of the investors that were introduced to the Company by Maxim in connection with the Placement,

then the Company will pay Maxim a cash fee of 3.75 % of the proceeds received from such financing.

“Part II – Item 5.

Other Information” of this report for more information on the Note, Purchase Agreement and related

In connection with acquisition of Be My Neighbor

on September 8, 2024, the Company agreed to pay $ 1.5 million in cash as deferred consideration.

A cash payment of $ 1.5 million was made

on October 1, 2024, as part of the deferred consideration arrangement.

See “Note 11 – Deferred Consideration” for further

On November 1, 2024, the Company filed a

lawsuit against GYBL in the United States District Court for the Southern District of New York (the “Action”).

Action, the Company has asserted two causes of action against GYBL:

(1) rescission of the GEM Warrants pursuant to 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 securities dealer, and (2) 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 in the GEM Agreement.

SPECIAL NOTE REGARDING

9 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;

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

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.

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

6 unchanged sentences

on these forward-looking statements.

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

and the “Company” refer to reAlpha Tech Corp.

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.

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