reAlpha Tech Corp. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this report, as well as our audited financial statements and related notes included in our Form 10-K. In addition to historical information, this discussion and analysis here and throughout this report contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements due to a number of factors, including but not limited to, the risks described in the section titled “Risk Factors” in our Form 10-K. Business Overview We are a real estate technology company developing an end-to-end homebuying platform, which we have named reAlpha (hereinafter referred to as the “reAlpha platform”). Our goal is to offer through our AI-powered platform a more affordable, streamlined experience for those on the journey to homeownership. The reAlpha platform integrates AI-driven tools to offer, among others, tailored property recommendations, an intuitive visual interface, and certain services, including realty services, mortgage brokering services, and digital title and escrow services within the platform. We developed the reAlpha platform as a commitment to eliminate traditional barriers to home ownership and make it more accessible and transparent. We operate an integrated homebuying technology platform designed to simplify and streamline the home purchase process. The reAlpha platform supports buyers with key tasks such as mortgage pre-approval, booking property tours, submitting offer letters, and closing transactions. It also provides detailed market insights and comprehensive property data tailored to users’ areas of interest. Central to the reAlpha platform is “Claire,” a proprietary AI agent acting as a digital homebuying concierge. Claire is powered by large language models and is trained to educate users on the homebuying process, answer questions, and guide users through each step via a user-friendly, 24/7 web and iOS interface. The technology is complemented by licensed professionals, namely real estate agents operating through reAlpha Realty, LLC, the Company’s in-house brokerage, on a no obligation basis, and licensed loan officers operating through reAlpha Mortgage. Homebuyers using our realty services can receive a commission rebate at closing, up to 75% of any buy-side brokerage commissions paid, when they utilize all three services (realty services, mortgage brokering services, and digital title and escrow services). Currently, the full reAlpha platform is only available for homebuyers in Florida. However, two of the three services are offered to homebuyers in 4 U.S. states, and mortgage brokering services are available to homebuyers in 31 U.S. states, including our recent expansion into Utah and Nevada. We plan to expand our capabilities nationwide by the end of 2026, subject to factors such as acquiring and maintaining necessary real estate and mortgage licenses in all 50 U.S. states and D.C., securing additional multiple listing service data, executing effective national marketing campaigns, and building scalable technology infrastructure. 29 We are continuously working to commercialize, enhance and refine our AI technologies and the reAlpha platform to continue generating technology-derived revenue. Further, as part of our growth strategy, we intend to continue identifying and acquiring companies that are complementary to our business, and we intend to generate revenue from integrating such acquired companies and their capabilities into our business and our reAlpha platform. To advance such strategy, since the beginning of 2024, we have announced the acquisitions of Naamche, AiChat, Hyperfast and reAlpha Mortgage. Although we previously announced and completed the acquisition of GTG Financial, GTG Financial is no longer a subsidiary of the Company as of the Rescission Date (see “Recent Developments – GTG Financial Rescission and Disposition” for more information). Our acquisitions have added revenue, additional potential sources of revenue, technology services under our umbrella of product offerings, and, as further described below, additional operational and service-related capabilities to the reAlpha platform. For instance, as a result of the acquisition of reAlpha Mortgage, our in-house mortgage brokerage that operates through the reAlpha platform, we are now licensed to offer mortgage brokerage services in 31 U.S. states. Additionally, because of our acquisition of Hyperfast, we now can offer title, closing and settlement services in 3 U.S. states. As a result of these acquisitions, consumers using the reAlpha platform have access to these services directly in the platform, both through the web platform and iOS application. We expect to continue seeking additional strategic acquisitions that we believe will add additional sources of potential revenue and services to homebuyers using the reAlpha platform, including, but not limited to, home-showing companies, wholesale mortgage lenders, companies providing services for post-closing services (such as utility hookups, among others) and real estate brokerages. Additionally, although we have already acquired a mortgage brokerage firm and a title company, we may consider further acquisitions of companies providing such services to increase the number of U.S. states we are licensed to operate in and the potential revenue opportunities associated with expanding our geographical markets and reach of the reAlpha platform. Before shifting our focus towards the development of our AI technologies and the reAlpha platform, our operational model was asset-heavy and built on utilizing our proprietary AI-powered technology tools for the acquisition of real estate, converting them into short-term rentals, and enabling individual investors to acquire fractional interests in these real estate properties, allowing such investors to receive distributions based on the property’s performance as a short-term rental. In the first quarter of 2024, we decided to halt these operations due to macroeconomic conditions, such as higher interest rates, inflation, and elevated property prices, which conditions persisted throughout the fiscal year 2024. This led us to sell our last real property asset for such operations, and to recognize the impairment of goodwill and intangible assets under the rental business segment. As a result, in the first quarter of 2025, our Board approved to discontinue our short-term rental business operations entirely. The discontinuation of our rental business segment operations meets the criteria to be reported as discontinued operations (see “Note 17 - Discontinued Operations” for more information). 30 The technology services segment is currently our only reportable segment following the approval by our Board to discontinue our rental business segment operations. Our technology services segment offers and develops AI-based products and services to customers in various industries, including, but not limited to, real estate, retail, hospitality and education industries. Our technology development efforts are currently focused on the development and enhancement of the reAlpha platform. Technology Services We seek to differentiate ourselves from competitors primarily through the integration of AI into our technologies for the real estate industry. In addition to “Claire,” we use a proprietary AI-powered “Loan Officer Assistant,” which is intended to streamline and reduce processing time of our mortgage operations. This internal tool automates key loan origination tasks such as document collection and borrower communication and is designed to help loan officers manage higher volumes with greater efficiency. We expect that our technology services segment will benefit from the current exponential growth of the AI industry, and we believe that we are well-positioned to take advantage of these current trends due to our early adoption of AI for the development of our technologies. Our revenue model revolves around our realty services (e.g., assisting a homebuyer with finding, touring, and closing on homes), mortgage brokering services (e.g., finding and originating a mortgage for the homebuyer that fits their financial situation, needs, credit, and location), and digital title and escrow services (e.g., title, closing and settlement fees), offered through the reAlpha platform, which is currently under limited availability, and services offered by our subsidiaries, such as AiChat, Naamche, reAlpha Mortgage and Hyperfast. We currently offer a commission refund model through the reAlpha platform as part of our strategy to provide an integrated and customer-centric homebuying experience. Under this model, homebuyers may receive up to 75% of any buy-side brokerage commissions paid, which typically range from 2.2% to 3% of a home’s sale price depending on the geographical market, in connection with the purchase of a home through the reAlpha platform as a rebate or refund (hereinafter referred to as the “commission refund”). This commission refund is paid to the homebuyer by applying such commission refund towards closing costs or by adding the refund to a homebuyer’s down payment, as applicable and subject to market-by-market minimums. The percentage of the commission refund available to a homebuyer is determined based on their use of eligible integrated services offered via the reAlpha platform, such as realty, mortgage brokering and digital title and escrow services. Currently, homebuyers can receive 25% commission refund when using only realty services, 50% when using two services and 75% when using all three services. The commission refund model for the reAlpha platform is currently in a testing phase and remains subject to change as we evaluate customer adoption, expand into new geographical markets and further develop our platform and/or expand the number of services provided thereunder. 31 Although the full reAlpha platform is currently only available for homebuyers in Florida, two of the three services are offered in 4 U.S. states, and mortgage brokering services are available in 31 U.S. states, including our recent expansion into Utah and Nevada. We intend to expand the capabilities of the reAlpha platform nationwide by the end of 2026. In order to expand the availability of the reAlpha platform, and services provided thereunder, nationwide, we will need to obtain the relevant real estate and mortgage licenses in the U.S. states we are not yet licensed in, and, until we obtain such licenses, the full reAlpha platform will remain under limited availability for homebuyers statewide in Florida. While the reAlpha platform is under limited availability, we will continue offering standalone mortgage brokerage services through our subsidiary, reAlpha Mortgage, in 31 U.S. states and digital title and escrow services through our subsidiary, Hyperfast, in 3 U.S. states. We also plan to continue acquiring companies in the real estate market that provide services relating to the homebuying process, including, but not limited to, mortgage brokerage firms, title and escrow service providers, home insurance providers and others that are complementary to our business, which we expect to generate revenues by offering such services through the reAlpha platform, or as standalone offerings to customers. We expect that the reAlpha platform will drive additional customers to these acquired companies through users interacting and buying homes on the reAlpha platform, which will expand their overall potential customer base. Recent Developments Compliance with Nasdaq Continued Listing Requirements On May 20, 2025, we received a letter from Nasdaq’s Listing Qualifications Staff (the “Staff”) indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days ending on May 19, 2025, we no longer met the requirement to maintain a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided a period of 180 calendar days, or until November 17, 2025, in which to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of our common stock must be at least $1 per share for a minimum of ten consecutive business days during this 180-day period (subject to the Staff’s discretion to extend this ten consecutive business day period). On July 1, 2025, we received a letter from the Staff notifying us that, based on the market value of listed securities for the previous 30 consecutive business days, the listing of our common stock was not in compliance with Nasdaq Listing Rule 5550(b)(2), which requires companies listed on the Nasdaq Capital Market to maintain a minimum market value of listed securities of at least $35 million (the “MVLS Requirement”). 32 On September 22, 2025, three months in advance of the December 29, 2025 deadline, we received a letter from the Staff notifying us that, based on our market value of listed securities for the previous 10 consecutive business days, from September 8, 2025 through September 19, 2025, we had regained compliance with the MVLS Requirement. Though we have regained compliance with the MVLS Requirement, we have not yet regained compliance with the Minimum Bid Price Requirement. The letter regarding the Minimum Bid Price Requirement has no immediate effect on the listing of our common stock on the Nasdaq Capital Market. In the event that we do not regain compliance with the Minimum Bid Price Requirement prior to the expiration of the 180-day compliance period, we may be eligible to seek an additional compliance period of 180 calendar days if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq, with the exception of the Minimum Bid Price Requirement, and provide written notice to Nasdaq of our intent to cure the deficiency during the additional compliance period by effecting a reverse stock split, if necessary. In the event that we are not eligible for the additional compliance period, or if it appears to the Staff that we will not be able to cure the deficiency during such compliance period, the Staff will provide written notice to us that our common stock will be subject to delisting. At that time, we may appeal the Staff’s delisting determination to a Nasdaq Hearing Panel. At our annual meeting of stockholders held on October 8, 2025, our stockholders approved the proposal to amend our certificate of incorporation, as amended and restated from time to time, to effect a reverse stock split at a ratio between 1-for-7 and 1-for-25, which ratio will be determined at the discretion of the Board, subject to the Board’s discretion to abandon such amendment if we are otherwise able to regain compliance with the Minimum Bid Price Requirement during any applicable compliance period. As of the date of this report, we have not adopted such an amendment to effectuate a reverse stock split. At-The-Market (ATM) Program On April 2, 2025, we entered into an At The Market Offering Agreement (the “Sales Agreement”) with Wainwright under which we may offer and sell from time to time through Wainwright, acting as exclusive sales agent, shares of our common stock having an aggregate offering price of up to $7,650,000. The Sales Agreement provides that Wainwright is entitled to a cash commission equal to 3.0% of the aggregate gross proceeds from the sale of any shares of common stock pursuant to the Sales Agreement in addition to the reimbursement of certain expenses. The ATM program with Wainwright was suspended on July 16, 2025, in connection with the 2025 Public Offering (see “Recent Developments - Consummation of July 2025 Public Offering” below for more information) and we have not yet recommenced the ATM program. As of the date of this report, we have sold an aggregate of 2,792,104 shares of our common stock pursuant to the Sales Agreement for aggregate net proceeds of approximately $944,759. 33 Change in Ownership of AiChat On June 30, 2025, we increased our ownership interest in AiChat from 85% of its outstanding ordinary shares to 100% of its outstanding ordinary shares in accordance with the terms of the Business Acquisition and Financing Agreement, dated as of July 12, 2024, among the Company, AiChat, AiChat10X Pte. Ltd. (“AiChat10X”), and Kester Poh Kah Yong (the “AiChat Acquisition Agreement”). Pursuant to the terms of the AiChat Acquisition Agreement, $240,000 in shares of our common stock were issued to AiChat10X on September 15, 2025 at a 5% discount to the ten (10) day volume weighted average price of our common stock as reported on Nasdaq on the date of issuance in exchange for the remaining 15% of the outstanding ordinary shares of AiChat. Consummation of July 2025 Public Offering On July 16, 2025, we commenced the 2025 Public Offering. Each of the July 2025 Shares sold in such offering was sold together with one Series A-1 Warrant to purchase one share of common stock and one Series A-2 Warrant to purchase one share of common stock. The combined public offering price for each of the July 2025 Shares and accompanying July 2025 Warrants was $0.15. Each July 2025 Warrant has an exercise price of $0.15 per share and became exercisable beginning on the Stockholder Approval Date. The Series A-1 Warrants will expire on October 8, 2030, which is the date that is five years from the Stockholder Approval Date and the Series A-2 Warrants will expire on October 8, 2027, the date that is twenty-four months from the Stockholder Approval Date. In connection with the 2025 Public Offering, we also issued the Placement Agent Warrants to purchase up to 666,667 shares of common stock, which became exercisable as of the Stockholder Approval Date at an exercise price of $0.1875 per share. The Placement Agent Warrants will expire five years after the commencement of sales in the 2025 Public Offering. The closing of the 2025 Public Offering occurred on July 18, 2025, and resulted in net proceeds to us of approximately $1.56 million, after deducting offering-related fees and expenses payable by us and excluding the net proceeds, if any, from the exercise of the July 2025 Warrants and the Placement Agent Warrants. Consummation of Registered Offering and Concurrent Private Placement On July 21, 2025, we entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional accredited investors pursuant to which we agreed to issue and sell the RDO Shares in the Registered Offering and the Private Placement Warrants in the concurrent Private Placement. The RDO Shares were offered and sold pursuant to our Form S-3, which was declared effective by the SEC on November 26, 2024, and the base prospectus included therein and the prospectus supplement filed with the SEC on July 22, 2025. The Private Placement Warrants have an exercise price of $0.35 per share, subject to adjustments set forth therein, are currently exercisable and expire on September 12, 2030, which is five years from the effective date of the registration statement on Form S-1 (File No. 333-289704) covering the sales of the shares of common stock issuable upon exercise of the Private Placement Warrants. In connection with the Registered Offering and concurrent Private Placement, we also issued RDO Placement Agent Warrants to purchase up to 714,286 shares of common stock, which are currently exercisable at an exercise price of $0.4375 per share and expire five years after the commencement of sales in the Registered Offering. The closing of the Registered Offering and concurrent Private Placement occurred on July 22, 2025, and resulted in net proceeds to us of approximately $4.5 million, after deducting offering-related fees and expenses payable by us and excluding the net proceeds from the exercise of the Private Placement Warrants and the RDO Placement Agent Warrants. 34 Full Repayment of Note Issued to Streeterville On July 23, 2025, we repaid the outstanding balance on the Note in full using available cash, including proceeds from recent equity offerings. The payment to Streeterville was in the amount of approximately $4,466,202, representing the outstanding balance of the Note as of the date of repayment and a 9% prepayment penalty. As of July 23, 2025, we have no obligations to Streeterville and no outstanding secured promissory notes or convertible debt instruments at the parent company level. GTG Financial Rescission and Disposition On the Rescission Date, we received written notice from the Seller notifying us of his decision to exercise his right to rescind the transactions contemplated by the SPA. Such written notice was delivered pursuant to Section 1.02(a)(iv)(1) of the SPA, which granted the Seller, in his sole discretion, the right to rescind the transactions contemplated under the SPA if we did not pay the Cash Portion (as defined in the SPA) within 180 days after February 20, 2025 in accordance with the terms and conditions of the SPA. On September 8, 2025, we, GTG Financial and the Seller executed a rescission certificate (the “Certificate”) to memorialize the rescission and the related disposition of GTG Financial by us. Pursuant to the terms of the Certificate, the parties agreed to deem the rescission and all related actions effective, for legal and accounting purposes, as of the Rescission Date. As a result, (i) we returned to the Seller 100% of the issued and outstanding shares of common stock of GTG Financial; (ii) the Seller returned to us 14,063 shares of our Series A Preferred Stock; and (iii) the Seller returned to us 700,055 shares of our common stock, which shares of Series A Preferred Stock and common stock are no longer deemed issued and outstanding as of the Rescission Date. All rights of the Seller as a stockholder of the Company have ceased and terminated in connection with the execution of the Certificate, effective as of the Rescission Date. Exercise of Warrants During the three months ended September 30, 2025, (i) certain holders of the New Warrants exercised their warrants for cash in full to purchase an aggregate of 7,521,668 shares of common stock, at an exercise price per share of $0.75, resulting in aggregate gross proceeds to us of approximately $5.6 million, (ii) holders of the Private Placement Warrants exercised their warrants for cash to purchase an aggregate of 11,552,859 shares of common stock, at an exercise price per share of $0.35, resulting in aggregate gross proceeds of approximately $4.0 million and (iii) holders of the RDO Placement Agent Warrants exercised their warrants for cash in full to purchase to an aggregate of 617,856 shares of our common stock, at an exercise price per share of $0.4375, resulting in additional proceeds to us of approximately $270,000. Subsequent to the three months ended September 30, 2025, (i) holders of the Private Placement Warrants exercised their warrants for cash to purchase an aggregate of 1,580,953 shares of common stock, at an exercise price per share of $0.35, resulting in additional proceeds to us of approximately $550,000 to date, (ii) certain holders of the July 2025 Warrants exercised their warrants for cash to purchase an aggregate of 23,051,394 shares of our common stock at an exercise price per share of $0.15, resulting in aggregate gross proceeds to us of approximately $3.5 million, (iii) holders of the Placement Agent Warrants exercised their warrants for cash to purchase an aggregate of 354,167 shares of our common stock, at an exercise price per share of $0.1875, resulting in additional proceeds to us of approximately $50,000 and (iv) a holder of the RDO Placement Agent Warrants exercised their warrants for cash to purchase an aggregate of 7,143 shares of our common stock, at an exercise price per share of $0.4375, resulting in additional proceeds to us of $2,500. 35 Impact of Macroeconomic Conditions, Cyclicality and Seasonality on our Business From July 1, 2025 through September 30, 2025, U.S. inflation remained above the Federal Reserve’s stated 2% target, ranging between approximately 2.7% and 3% during the third quarter of 2025. In response to continued inflationary pressures, the Federal Reserve lowered the target federal funds rate by 25 basis points to a range of 4.00% to 4.25% at its September 2025 meeting, signaling a sustained cautious approach as inflation and housing activity moderate. Mortgage rates remained elevated during the third quarter of 2025, with the average 30-year fixed mortgage rate in the mid to high 6% range, with an average mortgage rate of approximately 6.30% as of September 25, 2025. Elevated borrowing costs, combined with limited housing inventory, have continued to constrain affordability and weigh on home purchase activity and mortgage origination volume. These factors, along with macroeconomic uncertainty, have contributed to slower transaction volumes across much of the housing market. The residential real estate market is cyclical, with performance influenced by macroeconomic trends, interest rates, credit availability, lending standards and major disruptions in economic or political environments. Local markets may follow different patterns than national trends, leading to regional variations in activity. In addition, transaction volumes follow seasonal patterns, typically peaking in the spring and summer and slowing in the fall and winter. These cyclical and seasonal dynamics, together with prevailing macroeconomic conditions, can create variability in our operating results from quarter to quarter. Management continues to evaluate the potential effects of current housing market conditions, interest rate trends, and seasonal factors on our operations. The extent of any impact will depend on future developments, including changes in macroeconomic conditions, housing demand, and regulatory or policy actions, all of which are inherently uncertain and difficult to predict. We may adjust elements of our strategy, cost structure, or operational focus in response to these developments to mitigate potential adverse effects and position the business for long-term objectives. Critical Accounting Policies The unaudited condensed consolidated financial statements included in this report have been prepared in accordance with U.S. GAAP and reflect the application of estimates and assumptions that require significant judgment by management. These estimates affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures and are based on a combination of historical experience, current business conditions, and other factors available to management. Actual results could differ materially from those estimates due to the inherent uncertainty in assumptions and external conditions. There have been no material changes to the Company’s critical accounting policies or the methods used in applying those policies during the three and nine months ended September 30, 2025. For a full description of our critical accounting policies and significant estimates, refer to the audited consolidated financial statements and accompanying notes included in our Form 10-K filed with the SEC, and “Note 2 - Summary of Significant Accounting Policies” to the unaudited condensed consolidated financial statements included in this report. 36 Results of Operations Three Months Ended September 30, 2025 Compared with Three Months Ended September 30, 2024 Three Months Ended September 30, September 30, 2025 (unaudited) 2024 (unaudited) Revenue $ 1,445,137 $ 339,227 Cost of revenue (695,557 ) (113,361 ) Gross profit 749,580 225,866 Operating expense (5,698,381 ) (1,851,056 ) Operating (loss) (4,948,801 ) (1,625,190 ) Other expense (832,523 ) (408,954 ) Loss from continuing operations before tax $ (5,781,324 ) $ (2,034,144 ) Revenue . Revenues were $1,445,137 for the three months ended September 30, 2025, compared to $339,227 for the three months ended September 30, 2024, an increase of approximately 326%. Our revenues currently consist of the revenues generated in our technology services segment that we receive directly from, or from services related to, our technologies and acquired companies. This increase in revenue was primarily driven by an increase in revenue generated from both our mortgage brokerage transactions by reAlpha Mortgage and GTG Financial and subscription fees from AiChat compared to the same period in 2024. reAlpha Mortgage and GTG Financial generated $1,038,782 through mortgage brokerage transactions, which included loan origination fees, broker commissions and processing fees compared to $183,128 for the same period in 2024, while AiChat generated $330,992 from subscription fees for its AI conversational technologies offered to enterprise clients, compared to $92,595 in the same period in 2024. The increase in mortgage brokerage transaction revenues was mainly due to an increase in operational efficiency resulting from the full integration of reAlpha Mortgage into our business and the additional revenue generated by GTG Financial. Revenue derived from GTG Financial’s operations in the amount of $461,552 was recognized during the three months ended September 30, 2025, until the Rescission Date, at which date GTG Financial ceased to be our subsidiary (see “Recent Developments – GTG Financial Rescission and Disposition” for more information). As a result, following the Rescission Date, GTG Financial’s operations did not contribute to our revenues. Cost of revenue . Cost of revenue was $695,557 for the three months ended September 30, 2025, compared to $113,361 for the three months ended September 30, 2024, an increase of approximately 514%. Cost of revenue reflects direct expenses associated with delivering our loan brokerage services and technology solutions, including compensation related costs for personnel supporting loan origination and customer interactions from our mortgage subsidiaries. The increase in cost of revenue was primarily attributable to the expansion of our mortgage brokerage operations following the acquisitions of reAlpha Mortgage and GTG Financial, which resulted in higher personnel and processing costs associated with increased loan origination activity compared to the same period in 2024. Cost of revenue incurred in connection with GTG Financial’s operations and loan originations in the amount of $336,865 was recognized during the three months ended September 30, 2025, until the Rescission Date, at which date GTG Financial ceased to be our subsidiary (see “Recent Developments – GTG Financial Rescission and Disposition” for more information). As a result, following the Rescission Date, we did not incur any costs related to revenue from GTG Financial’s operations and loan originations. 37 Operating expense . Operating expense was $5,698,381 for the three months ended September 30, 2025, compared to $1,851,056 for the three months ended September 30, 2024, an increase of approximately 208%. This increase in operating expense was primarily driven by an increase in salary expenses as a result of the integration of our newly acquired businesses, including reAlpha Mortgage and GTG Financial which amounted to $1,655,061, compared to $507,501 for the same period in 2024 and an increase in marketing and advertising expenses related to our advertising campaign which amounted to $2,481,015 compared to $212,386 for the same period in 2024. In addition, we incurred $996,329 in professional and legal expenses during the three months ended September 30, 2025, in connection with our general corporate services, the GEM litigation and our recent capital raising activities (see “Liquidity and Capital Resources” for more information), which activities and related fees were not present in the same period in 2024. Operating expense incurred in connection with GTG Financial’s operations in the amount of $124,132 was recognized during the three months ended September 30, 2025, until the Rescission Date, at which date GTG Financial ceased to be our subsidiary (see “Recent Developments – GTG Financial Rescission and Disposition” for more information). As a result, following the Rescission Date, we did not incur any operating expenses related to GTG Financial’s operations. Other expense. Other expense was $832,523 for the three months ended September 30, 2025, compared to $408,954 for the three months ended September 30, 2024, an increase of approximately 104%. Other expense during the three months ended September 30, 2025 mainly consisted of $85,242 in interest expenses, $368,769 of loss on extinguishment of debt relating to the Note, and $125,000 relating to the amortization of the commitment fee payable by us in connection with the GEM Agreement. This increase in other expense was mainly due to the loss on extinguishment of debt relating to the Note in the amount of $368,769, which was not present in the same period in 2024. These expenses were partially offset by non-cash gains of $95,495 from the decrease in fair value of the Series A Preferred Stock liability and a $67,000 decrease in the fair value of contingent consideration of reAlpha Mortgage. Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024 Nine Months Ended September 30, September 30, 2025 (unaudited) 2024 (unaudited) Revenue $ 3,623,153 $ 422,006 Cost of Revenue (1,733,441 ) (139,687 ) Gross profit 1,889,712 282,319 Operating expense (13,301,152 ) (4,202,728 ) Operating loss (11,411,440 ) (3,920,409 ) Other expense (1,330,252 ) (871,856 ) Loss from continuing operations before tax $ (12,741,692 ) $ (4,792,265 ) Revenue . Revenues were $3,623,153 for the nine months ended September 30, 2025, compared to $422,006 for the nine months ended September 30, 2024, an increase of approximately 759%. Our revenues currently consist of the revenues generated in our technology services segment that we receive directly from, or from services related to, our technologies and acquired companies. This increase in revenue was primarily driven by an increase in revenue generated from both our mortgage brokerage transactions by reAlpha Mortgage and GTG Financial and subscription fees from AiChat’s conversational AI technology offered to enterprise clients compared to the same period in 2024. reAlpha Mortgage and GTG Financial generated $2,803,114 through mortgage brokerage transactions, which included loan origination fees, broker commissions, and processing fees, compared to $183,128 for the same period in 2024, while AiChat generated $599,204 from subscription fees for its AI conversational technologies compared to $92,595 in the same period in 2024. The increase in mortgage brokerage transaction revenues was mainly due to an increase in operational efficiency resulting from the full integration of reAlpha Mortgage into our business and the additional revenue generated by GTG Financial. Revenue from GTG Financial in the amount of $1,416,352 was recognized during the three months ended September 30, 2025, until the Rescission Date, at which date GTG Financial ceased to be our subsidiary (see “Recent Developments – GTG Financial Rescission and Disposition” for more information). As a result, following the Rescission Date, GTG Financial’s operations did not contribute to our revenues. 38 Cost of revenue . Cost of revenue was $1,733,441 for the nine months ended September 30, 2025, compared to $139,687 for the nine months ended September 30, 2024, an increase of approximately 1141%. Cost of revenue reflects direct expenses associated with delivering our loan brokerage services and technology solutions, including compensation related costs for personnel supporting loan origination and customer interactions from our mortgage subsidiaries. The increase in cost of revenue was primarily attributable to higher direct expenses associated with delivering our loan brokerage services and technology solutions, including compensation-related costs for personnel supporting loan origination and customer interactions at our mortgage subsidiaries, reAlpha Mortgage and GTG Financial, compared to the same period in 2024. Cost of revenue incurred in connection with GTG Financial’s operations and loan originations in the amount of $336,865 was recognized during the three months ended September 30, 2025, until the Rescission Date, at which date GTG Financial ceased to be our subsidiary (see “Recent Developments – GTG Financial Rescission and Disposition” for more information). As a result, following the Rescission Date, we did not incur any costs related to revenue from GTG Financial’s operations and loan originations. Operating expense. Operating expense was $13,301,152 for the nine months ended September 30, 2025, compared to $4,202,728 for the nine months ended September 30, 2024, an increase of approximately 216%. This increase was primarily driven by an increase in salary expenses as a result of the integration of our newly acquired businesses within the technology segment, including reAlpha Mortgage and GTG Financial, which amounted to $4,291,586 compared to $920,144 for the same period in 2024 and an increase in marketing and advertising expenses related to our advertising campaign that amounted to $4,483,626 compared to $273,458 for the same period in 2024. In addition, we incurred professional and legal services expenses of $2,742,220 related to our general corporate services, the GEM litigation and our recent capital raising activities (see “Liquidity and Capital Resources” for more information), which activities were not present in the same period in 2024. Operating expense from GTG Financial in the amount of $513,763 was recognized during the three months ended September 30, 2025 until the Rescission Date, at which date GTG Financial ceased to be our subsidiary (see “Recent Developments – GTG Financial Rescission and Disposition” for more information). As a result, following the Rescission Date, we did not incur any operating expenses related to GTG Financial’s operations. Other expense. Other expense was $1,330,252 for the nine months ended September 30, 2025, compared to $871,856 for the nine months ended September 30, 2024, an increase of approximately 53%. This increase was primarily driven by interest expense of $582,493, amortization expenses relating to the $375,000 commitment fee incurred in connection with the GEM Agreement and the loss on extinguishment of debt including amortization of debt issuance expenses and original issue discounts relating to the Note in the amount of $611,271, which was not present in the same period in 2024. These expenses were partially offset by non-cash gains of $243,883 from the decrease in fair value of the Series A Preferred Stock liability and a $148,000 decrease in fair value of contingent consideration of reAlpha Mortgage. Non-U.S. GAAP Financial Measures To supplement our financial information presented in accordance with U.S. GAAP, we believe “Adjusted EBITDA,” a “non-U.S. GAAP financial measure,” as such term is defined under the rules of the SEC, is useful in evaluating our operating performance. We use Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-U.S. GAAP financial measure may be helpful to investors because it provides consistency and comparability with past financial performance. However, this non-U.S. GAAP financial measure is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate a similarly titled non-U.S. GAAP measure differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of this non-U.S. GAAP financial measure as a tool for comparison. A reconciliation is provided below for our non-U.S. GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP. Investors are encouraged to review the related U.S. GAAP financial measure and the reconciliation of this non-U.S. GAAP financial measure to its most directly comparable U.S. GAAP financial measure, and not to rely on any single financial measure to evaluate our business. 39 We use Adjusted EBITDA, a non-U.S. GAAP financial measure, to evaluate our operating performance and facilitate comparisons across periods and with peer companies. We reconcile our Adjusted EBITDA to our net income (loss) adjusted to exclude interest expense, depreciation and amortization, changes in fair value of contingent consideration and preferred stock, share-based compensation, and other non-cash, non-operating, or non-recurring items that we believe are not indicative of our core business operations. We believe this measure provides useful insight into our ongoing performance; however, it should not be considered a substitute for, or superior to, net income or other financial information prepared in accordance with U.S. GAAP. The following table provides a reconciliation of net income to Adjusted EBITDA for the periods presented below: For the Three Months Ended September 30, For the Nine Months Ended September 30 2025 2024 2025 2024 Net loss $(5,781,324) $(2,098,574) $(12,741,692) $(4,995,931) Adjusted to exclude the following Depreciation and amortization 132,001 163,439 393,445 304,222 Amortization of loan discounts and origination fee (1) 303,122 36,250 545,624 36,250 Non-cash marketing expenses (2) 2,079,874 - 3,373,865 - Impairment of intangible assets - - 105,900 - Changes in fair value of contingent consideration (3) (67,000 ) - (148,000 ) - Change in fair value of preferred stock (4) 95,495 - (243,883 ) - Loss on extinguishment of debt (5) 368,769 - 438,834 - GTG deconsolidation gain (6) (94,071 ) - (94,071 ) - Loss (gain) on equity method investments 7,679 108,382 10,077 (20,663 ) Interest expense 85,242 119,881 388,741 131,723 GEM commitment fee (7) 125,000 125,000 375,000 375,000 Share based compensation (8) 286,656 113,037 557,999 207,454 Equity offering costs (9) 250,000 - 480,774 - Acquisition-related expenses - 178,678 87,352 363,426 Adjusted EBITDA $ (2,208,557 ) $ (1,253,907 ) $ (6,467,579 ) $ (3,598,519 ) (1) Represents amortization of all debt issuance costs and original issue discount due to the repayment of the Note issued to Streeterville, including the prepayment penalty. (2) Represents the non-cash marketing expenses such as the utilization of credits from MMC. (3) Represents remeasurement gains or losses related to the contingent consideration of reAlpha Mortgage. (4) Represents non-cash remeasurement gains or losses related to the shares of Series A Preferred Stock issued in the MMC transaction. (5) Represents a loss recognized upon the extinguishment of the debt related to the Note issued to Streeterville. (6) Represents a gain recognized upon the rescission of the GTG Financial acquisition. (7) Represents the commitment fee of $1,000,000 incurred in connection with the GEM equity facility, which has been amortized over a period of 24 months, beginning on October 23, 2023. (8) Represents non-cash expenses related to shares of common stock issued to certain employees and RSUs granted to our executive officers and certain employees. (9) Represents legal and professional fees incurred in connection with the issuance of shares of common stock and warrants through the 2025 Public Offering, the Registered Offering, the Private Placement, and the ATM program with Wainwright. 40 Liquidity and Capital Resources Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt services, acquisitions, contractual obligations and other commitments. Our liquidity and capital resources are critical to our ability to execute our business plan and achieve our strategic objectives. Accordingly, to the extent that revenue from our technologies, including the reAlpha platform, and services provided by our subsidiaries cannot fund our operations, we intend to utilize equity or debt offerings to raise these funds, although volatility in the capital markets may negatively affect our ability to do so. The cost of capital and historically high-interest rates can also have a direct impact on our ability to raise capital through debt or equity offerings or to pursue acquisitions. Economic environments yielding higher interest rates with more stringent debt terms such as today’s market environment require larger equity commitments. This means that, as larger equity commitments are required, we will have less leverage and may have fewer acquisitions overall. We cannot provide any assurance that we will be able to raise additional funds on acceptable terms, if at all. Our ability to raise additional capital will depend on various factors, including market conditions, investor demand, and our financial performance. Management has reassessed the Company’s liquidity and financial condition as of September 30, 2025, and determined that the conditions which previously raised substantial doubt about our ability to continue as a going concern have improved. As of September 30, 2025, we had cash and cash equivalents of approximately $9.3 million, compared to $3.1 million as of December 31, 2024, and an accumulated deficit of $51.0 million. Based on our current operating plan and projected cash requirements, management believes that available cash resources are sufficient to fund operations for at least 12 months following the issuance of the unaudited condensed consolidated financial statements included in this report. T o the extent that we do not generate sufficient revenue to fund our operations beyond such 12-month period, we expect to fund operations through additional equity or debt financing, although capital markets volatility may limit our ability to raise funds on acceptable terms. While we anticipate continued operating losses in the near future, we expect to generate more significant revenues as we continue investing in the commercialization of our products and technologies and acquiring complementary businesses to fund our operating and capital expenditure requirements. As part of our efforts to increase our liquidity, we completed two equity offerings. On July 18, 2025, upon the closing of the 2025 Public Offering, we raised gross proceeds of $2.0 million and in connection therewith, we also issued the Placement Agent Warrants as partial compensation to Wainwright for the placement agent services it offered in connection with the 2025 Public Offering (see “Recent Developments – Consummation of July 2025 Public Offering” for more information). The majority of the July 2025 Warrants and the Placement Agent Warrants have been exercised, resulting in additional gross proceeds of approximately $3.5 million, as of the date of this report, and to the extent that the remaining July 2025 Warrants are exercised in full, we will be able to raise approximately $0.4 million in additional gross proceeds from the cash exercise thereof. On July 22, 2025, following the closing of the 2025 Public Offering, we consummated the Registered Offering and concurrent Private Placement. Upon the closing of such offerings, we raised an aggregate of $5.0 million in gross proceeds and in connection therewith, we also issued the RDO Placement Agent Warrants as partial compensation to Wainwright for the placement agent services it offered in connection with the Registered Offering (see “Recent Developments – Consummation of Registered Offering and Concurrent Private Placement” for more information). The majority of the Private Placement Warrants and the RDO Placement Agent Warrants have been exercised, resulting in additional gross proceeds of approximately $4.5 million, as of the date of this report, and to the extent that the remaining Private Placement Warrants and RDO Placement Agent Warrants are exercised in full, we will be able to raise approximately $0.4 million in additional gross proceeds from the cash exercise thereof. 41 Additionally, the outstanding Follow-on Warrants and New Warrants remain exercisable at an exercise price of $0.75 per share, which warrants, to the extent exercised for cash in full, may raise an additional $3.8 million in gross proceeds to us. With respect to the outstanding GEM Warrants, due to ongoing litigation with GYBL (see “Item 1. Legal Proceedings - GEM Lawsuit” for more information), we do not expect to raise any proceeds from the exercise of the GEM Warrants while the dispute remains unresolved. Further, as of the date of this report, there has been no adjustment to the exercise price of the GEM Warrants in connection with the dismissal of our complaint, and our position regarding the GEM Warrants, including the exercise price and subsequent adjustments thereof, remains the same pending resolution of these disputes with GEM. As a result, we do not expect that the GEM Warrants will be exercised while these disputes are pending, however, if these disputes are not resolved through negotiations and these lawsuits are adversely determined against us, we may be required to adjust the GEM Warrants’ exercise price downward significantly, and we may incur penalties under the GEM Agreement and/or other litigation expenses related to these disputes, which could materially adversely impact our financial statements, cash flows and results of operations. There is no guarantee that the warrants described above will be exercised in full prior to their respective expiration dates, and as such, we may receive less proceeds from the exercise of these warrants than the total amount that could be received if all such warrants were exercised. Given the trading price of our common stock and the volatility of our common stock price, we have not included, and do not currently intend to include, any potential cash proceeds from the exercise of outstanding warrants in our short-term liquidity projections. We will continue to evaluate the probability that the warrants described above are exercised and the merit of including cash proceeds from the exercise thereof in our liquidity projections. With the proceeds of the Registered Offering and concurrent Private Placement, we were able to repay the outstanding balance under the Note in full using cash on hand, which payment was in the amount of approximately $4.46 million. Upon such payment, we fully satisfied all amounts due under the Note, and we will no longer be subject to redemptions from Streeterville under the Note, which were adversely affecting our liquidity. Our business model requires significant capital expenditures to build and maintain the infrastructure and technology required to support our operations. In addition, we may incur additional costs associated with research and development of new products and services, expansion into new markets or geographies, and general corporate overhead. As a result, we may require additional financing in the future to fund these initiatives, which may include additional equity or debt financing or strategic partnerships. If we are unable to obtain additional financing when required, we may be forced to reduce the scope of our operations, delay the launch of new products or services, or take other actions that could adversely affect our business, financial condition, and results of operations. We may also be required to seek additional financing on terms that are unfavorable to us, which could result in the dilution of our stockholders’ ownership interests or the imposition of burdensome terms and restrictions. 42 Cash Flows The following table summarizes our cash flows from operating, investing, and financing activities for the periods presented. Nine-month period ended Particulars September 30, 2025 September 30, 2024 Net cash used in operating activities $ (8,847,162 ) $ (3,806,090 ) Net cash used in investing activities $ (47,573 ) $ (368,269 ) Net cash provided by financing activities $ 15,051,695 $ 4,794,866 Cash Flows from Operating Activities For the nine months ended September 30, 2025, net cash used in operating activities was approximately $8.8 million compared to approximately $3.8 million for the nine months ended September 30, 2024. The increase is primarily due to higher operating expense as a result of acquiring companies complementary to our business, including salaries of approximately $4.0 million and professional and legal fees of approximately $2.7 million. Cash Flows from Investing Activities For the nine months ended September 30, 2025, net cash used in investing activities was $47,573, compared to $368,269 for the nine months ended September 30, 2024. The decrease is primarily due to an increase of $156,892 in capitalized software additions, which was partially offset by the cash impact of the GTG acquisition and the subsequent rescission thereof during the nine months ended September 30, 2025. Cash Flows from Financing Activities For the nine months ended September 30, 2025, net cash provided by financing activities was approximately $15.0 million, compared to net cash provided by financing activities of approximately $4.8 million for the nine months ended September 30, 2024. This increase was primarily driven by approximately $1.2 million of capital raised through our ATM programs, approximately $5.6 million in proceeds from the exercise of certain warrants in connection with the warrant inducement transaction, approximately $4.3 million in proceeds from the exercise of warrants issued in connection with the Private Placement, approximately $0.3 million in proceeds from the exercise of RDO Placement Agent Warrants, and approximately $7.5 million from the issuance of common stock in connection with our recent equity offerings (see “Note 14 - Stockholders’ Equity” for more information). These cash inflows were partially offset by the repayment of outstanding debt totaling approximately $4.7 million and equity offering expenses, such as placement agent fees and other costs related to the equity offerings, totaling approximately $0.9 million during the nine months ended September 30, 2025. 43 Off-Balance Sheet Transactions We do not have any off-balance sheet transactions. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, we are not required to provide this information.