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 most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Form 10-K”). In addition to historical information, this discussion and analysis here and throughout this report contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements due to a number of factors, including but not limited to, the risks described in the section titled “Risk Factors” in our Form 10-K. Overview We are a real estate technology company developing an end-to-end homebuying platform, which we have named reAlpha (hereinafter referred to as the “reAlpha platform”). Our goal is to offer, through our AI-powered platform, a more affordable, streamlined experience for those on the journey to homeownership. The reAlpha platform integrates AI-driven tools to offer, among others, tailored property recommendations, an intuitive visual interface, and certain services, including realty services, mortgage brokering services, and digital title and escrow services within the platform. Our revenue model revolves around: (i) our homebuying services, which include realty services (e.g., assisting a homebuyer with finding, touring, and closing on homes), mortgage brokering services (e.g., finding and originating a mortgage for the homebuyer that fits their financial situation, needs, credit, and location), and digital title and escrow services (e.g., title, closing and settlement fees) directly to customers, mainly through the reAlpha platform, and (ii) our technology services, including software development services provided by our subsidiaries Naamche, Inc. (“U.S. Naamche”) and Realpha Nepal Pvt. Ltd. (f/k/a Naamche, Inc. Pvt. Ltd.) (“reAlpha Nepal Pvt Limited” and together with U.S. Naamche, “reAlpha Nepal”) to businesses and the AI-powered conversational platform provided to customers by our subsidiary, AiChat Pte. Ltd. (“AiChat”). We are continuously working to commercialize, enhance and refine our AI technologies to support our homebuying services and technology services and to continue generating revenue. As part of our growth strategy, we also plan to continue identifying and acquiring companies that are complementary to our business, and we intend to generate revenue from integrating such acquired companies and their capabilities into our business. To advance such strategy, we have, in recent years, announced the acquisitions of reAlpha Nepal, AiChat, Hyperfast Title LLC (“Hyperfast”), Debt Does Deals, LLC (f/k/a Be My Neighbor and d/b/a reAlpha Mortgage) (“reAlpha Mortgage”) and Prevu, Inc. and its subsidiaries (collectively, “Prevu”), as well as the proposed acquisition of InstaMortgage Inc. (“InstaMortgage”), which would expand our mortgage operations by adding direct lending capabilities. Before shifting our focus towards the development of our homebuying services and technology services, our operational model was asset-heavy and built on utilizing our proprietary AI-powered technology tools for the acquisition of real estate, converting them into short-term rentals, and enabling individual investors to acquire fractional interests in these real estate properties, allowing such investors to receive distributions based on the properties’ performance as a short-term rental. In the first quarter of 2024, we decided to halt these operations due to macroeconomic conditions, such as higher interest rates, inflation, and elevated property prices, which conditions persisted throughout the fiscal year 2024. This led us to sell our last real property asset for such operations, and to recognize the impairment of goodwill and intangible assets under the rental business segment. As a result, in the first quarter of 2025, our board of directors approved the discontinuation of our short-term rental business operations entirely and this discontinuation meets the criteria for being reported as discontinued operations. We currently have two reportable segments: our homebuying services segment and our technology services segment. 23 Homebuying Services Our homebuying services segment consists of our (i) realty services offered by Prevu and our reAlpha Realty, LLC entities (collectively, “reAlpha Realty”); (ii) mortgage brokering services offered by reAlpha Mortgage and (iii) digital title and escrow services offered by Hyperfast. These services are mainly provided through the reAlpha platform, which supports homebuyers with key tasks such as booking property tours, submitting offer letters, mortgage pre-approval and closing transactions. It also provides detailed market insights and comprehensive property data tailored to users’ areas of interest. We seek to differentiate ourselves from competitors primarily through the vertical integration of homebuying services (real estate brokerage, mortgage brokering, title and escrow services) within a single platform; the integration of AI into our homebuying services offerings and our rebate, which is further described below. We have integrated AI into our homebuying services offerings through our development of “Claire,” a proprietary, customer-facing AI-powered agent acting as a digital homebuying concierge, and internal AI-powered tools for our loan officers. “Claire” is powered by large language models and provides real-time customer support by answering questions and guiding customers through each step of the homebuying journey through a user-friendly, 24/7 web and iOS interface. “Claire” is complemented by licensed professionals, namely real estate agents and loan officers, who step in when their expertise is needed. In addition to “Claire,” we use AI-powered internal tools, such as our proprietary AI-powered “Loan Officer Assistant,” which is intended to reduce manual review time for our loan officers, and the AI-powered “Engagement Agent,” which integrates with our customer relationship management system to automate certain intake and scheduling and other pre-application workflows for our loan officers. The “Loan Officer Assistant” automates key loan origination tasks, such as document collection and borrower communication and is designed to help loan officers manage higher volumes with greater efficiency while the “Engagement Agent” is designed to accelerate prospective borrower’s connection to loan officers for personalized support, improve prospective borrower engagement and reduce repetitive administrative work related to the intake, follow-up and scheduling processes. As part of our strategy to differentiate ourselves from competitors and provide a customer-centric homebuying experience, we offer a rebate to homebuyers using the reAlpha platform. Under our current rebate structure, homebuyers can receive a rebate of up to 1.0% of the home purchase price when using our realty services and an additional rebate of up to 0.5% of the home purchase price when bundling the mortgage brokering services with our realty services, in each case subject to the limitations, terms and conditions described in the buyer agreement (the “current commission rebate”). The current commission rebate is paid to the homebuyer as a rebate towards closing costs, which is reflected on the settlement statement at closing. Prior to the implementation of the current commission rebate in mid-January 2026, we offered a rebate whereby eligible homebuyers could receive up to 75% of the buy-side brokerage commission paid in connection with the purchase of a home through the reAlpha platform as a rebate towards closing costs, subject to market-specific commissions and minimums (the “historic commission rebate”). The buy-side brokerage commission was dependent on the geographical market of the home purchased and the percentage of the historic commission rebate available to a homebuyer was determined based on their use of eligible integrated services offered via the reAlpha platform, such as realty, mortgage brokering, and digital title and escrow services. Under this model, homebuyers could receive a 25% rebate when using only realty services, 50% when using two services and 75% when using all three services. The update to the current commission rebate in mid-January 2026 was designed to make the rebate easier for customers to understand. Currently, all three services (realty, mortgage brokering, and title services) are only available on the reAlpha platform for homebuyers in Florida and Virginia. However, two of the three services are offered to homebuyers in eight additional U.S. states, and at least one service is available in an additional 25 U.S. states and the District of Columbia. While our homebuying services are currently offered in 35 U.S. states and the District of Columbia, we plan to offer our homebuying services (and expand the capabilities of the reAlpha platform) nationwide, subject to factors such as acquiring and maintaining necessary real estate and mortgage licenses in each U.S. state and the District of Columbia, securing additional multiple listing service data, executing effective national marketing campaigns and building scalable technology infrastructure. 24 Technology Services Our technology services segment includes: (i) software development services provided by reAlpha Nepal to third parties, which is also provided to us via an intercompany services agreement between us and reAlpha Nepal and (ii) the AI-powered conversational platform provided to customers by AiChat. We expect that our technology services segment will benefit from the current growth of the AI industry, and we believe that we are well-positioned to take advantage of these current trends due to our early adoption of AI for the development of our technologies. reAlpha Nepal’s Software Development Services reAlpha Nepal provides services related to the development of technology, AI and applications, as well as other technology support to the reAlpha platform and to third parties. For example, reAlpha Nepal developed the Company’s AI-powered tools such as the proprietary, customer-facing “Claire” and our internal AI-powered “Loan Officer Assistant” and “Engagement Agent.” reAlpha Nepal also provides monthly technology support services to third parties. AiChat’s Conversational Platform AiChat provides AI-powered conversational customer experience platforms in the Asia-Pacific (“APAC”) region. AiChat’s conversational platform enables businesses to automate and optimize customer service, marketing, and e-commerce processes through the integration of major messaging channels in the APAC region, including Facebook Messenger, WhatsApp, Instagram, LINE, and KakaoTalk. AiChat also offers customers the ability to integrate their e-commerce platforms with payment gateways, which is powered by Stripe’s financial infrastructure, enabling them to sell products via messaging channels such as WhatsApp Pay directly to their customers. Through these capabilities, AiChat is able to offer customers a comprehensive array of customer service solutions, ranging from customer inquiry and AI-powered recommendations via its AI agents and chatbot capabilities, to completing the purchase through WhatsApp. AiChat’s technology is built on conversational and generative AI models, supporting over 270 languages, including regional languages like Singlish and Bahasa. The conversational platform incorporates features such as contextual memory, real-time analytics, and personalized messaging to facilitate customer interactions. Key functionalities of the platform include automated responses, lead qualification, and customer engagement automation. Further, its recently released next-generation AI agents, which include Voice AI and Agentic AI, can provide human-like interactions and personalize responses based on the context of previous conversations, remembering customer preferences and past interactions to deliver more relevant recommendations. With self-learning and multi-turn contextual awareness, AiChat’s next-generation AI agents can scale human-like interactions while maintaining brand consistency, which we believe can improve customer loyalty and overall customer service satisfaction. AiChat generates revenue through subscription packages of its conversational platforms and next-generation AI agents. These packages are tailored to businesses based on their size, needs and the volume of customer interactions. AiChat offers flexible pricing models, including monthly and annual subscriptions, as well as performance-based pricing for specific integrations and services, such as automated marketing campaigns and e-commerce automation. Recent Developments Proposed Merger with InstaMortgage Inc. On December 19, 2025, we entered into the Merger Agreement (the “Merger Agreement”) with InstaMortgage, reAlpha Merger Sub I, Inc. (“Merger Sub”), a newly formed wholly-owned subsidiary of the Company, and the stockholders of InstaMortgage (the “Stockholders”). The Merger Agreement provides that, among other things and on the terms and subject to the satisfaction or waiver of the closing conditions and other conditions set forth therein, Merger Sub will merge with and into InstaMortgage at the effective time (the “Effective Time”) of the proposed merger (the “Proposed Merger”), with InstaMortgage surviving the Proposed Merger as a wholly-owned subsidiary of the Company. Pursuant to the terms and conditions of the Merger Agreement, we agreed to pay the Stockholders an aggregate amount of $8,500,000, subject to certain closing adjustments, consisting of: (i) $500,000 in cash to be paid on the closing date of the Proposed Merger, less any applicable withholding tax payable by the Stockholders in accordance with the terms of the Merger Agreement; (ii) $1,500,000 in shares of our common stock to be issued on the closing date of the Proposed Merger and valued based on the volume-weighted average price (“VWAP”) of our common stock as reported on Nasdaq for the ten (10) consecutive trading day period ending on and including the trading day that is one (1) trading day prior to the date of the Merger Agreement; and (iii) $6,500,000 payable in bi-annual payments over three (3) years following the closing date of the Proposed Merger, either in cash or shares of common stock (the “Additional Payment Purchaser Stock”), at our sole discretion, with such Additional Payment Purchaser Stock, if any, valued based on the VWAP of our common stock as reported on Nasdaq or such other trading market, as applicable, for the ten (10) consecutive trading days ending on the date immediately prior to the date on which such issuance is to be made. Under the terms of the Merger Agreement, the completion of the Proposed Merger is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, the receipt of the Regulatory Approvals (as defined in the Merger Agreement), in each case subject to certain limitations further described in the Merger Agreement. 25 Impact of Macroeconomic Conditions, Cyclicality and Seasonality on our Business U.S. inflation remained above the Federal Reserve’s stated 2% target during the first quarter of 2026, which rose 3.3% year-over-year in March 2026, up from 2.7% in December 2025. In response to continued inflationary pressures, the Federal Reserve lowered the target federal funds rate by 25 basis points to a range of 3.5% to 3.75% at its December 2025 meeting. Following the three consecutive federal funds rate cuts during the fourth quarter of 2025, the Federal Reserve held rates steady at both its January and March 2026 meetings, signaling a sustained cautious approach as inflation and housing activity moderate, which was further impacted by heightened geopolitical uncertainty due to the conflicts in the Middle East. Mortgage rates remained elevated during the first quarter of 2026, with the average 30-year fixed mortgage rates at nearly 6.5% by the end of the period, which increased from a low of 5.99% prior to the start of the conflict in the Middle East involving Iran. 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. For example, during the first quarter of 2026, residential sales fell by 6% year-over-year. The residential real estate market is cyclical, with performance influenced by macroeconomic trends, interest rates, credit availability, lending standards and major disruptions in economic or political environments. Local markets may follow different patterns than national trends, leading to regional variations in activity. In addition, transaction volumes follow seasonal patterns, typically peaking in the spring and summer and slowing in the fall and winter. These cyclical and seasonal dynamics, together with prevailing macroeconomic conditions, can create variability in our operating results from quarter to quarter. Management continues to evaluate the potential effects of current housing market conditions, interest rate trends, and seasonal factors on our operations. The extent of any impact will depend on future developments, including changes in macroeconomic conditions, housing demand, and regulatory or policy actions, all of which are inherently uncertain and difficult to predict. We may adjust elements of our strategy, cost structure, or operational focus in response to these developments to mitigate potential adverse effects and position the business for long-term objectives. Key Business Metrics We monitor a number of key performance indicators and non-U.S. GAAP financial measures to evaluate the performance of our business operations and the execution of our strategy. These metrics provide management with insight into transaction activity across our platform, operating efficiency, and trends affecting the scale and overall health of our business. We use these measures, together with our financial results, to assess performance across periods, inform management decision-making, and support financial planning and strategic priorities. Three Months Ended March 31, 2026 March 31, 2025 Total transaction volume $ 131,361,215 59,929,668 Revenue $ 841,062 $ 925,635 Cash and cash equivalents $ 4,667,612 $ 7,783,529 Gross profit margin 66 % 56 % Adjusted EBITDA $ (3,795,500 ) $ (1,960,997 ) Total transaction volume Total transaction volume is a key measure of the scale of our homebuying services offerings. We define total transaction volume as the aggregate dollar volume of transactions generated across our real estate brokerage, mortgage, and title services during the applicable trailing twelve-month period. This includes (i) the closing sale prices of residential properties transacted through our realty services, (ii) the principal loan amounts closed through our mortgage brokerage operations, and (iii) the underlying property transaction value associated with title services provided during the period. 26 Due to the fact that customers may utilize more than one of our services in connection with a single underlying property transaction, the same property transaction value may be included in more than one component of total transaction volume. As a result, total transaction volume may exceed the dollar value of unique underlying residential property transactions completed during the period. For realty transactions, we include the full closing sale price for each transaction, regardless of whether our brokerage represented the buyer, the seller, or both sides of the transaction, in accordance with applicable laws and disclosure requirements. This metric excludes rental transactions that may be offered by Prevu to customers from time to time, which are not material to our operations. We present total transaction volume on a trailing twelve-month basis to provide a view of transaction activity that smooths seasonal fluctuations and reflects the overall economic throughput of our platform. Total transaction volume is influenced by transaction activity across our business, home prices in the markets we serve, mortgage origination activity, service adoption rates, seasonality, and macroeconomic conditions, including interest rate levels and housing affordability. As of March 31, 2026, our total transaction volume, measured on a trailing twelve-month basis, increased to approximately $131.4 million, or approximately a 119% increase, compared to March 31, 2025, which increase was primarily driven by the expansion, scaling and full integration of reAlpha Mortgage’s mortgage brokerage operations into our business, as well as the expansion of our real estate brokerage footprint and integrated realty-and-mortgage service coverage following the acquisition of Prevu. Because our revenue is primarily generated as a percentage of transaction value, total transaction volume provides insight into the volume of business flowing through the reAlpha platform and serves as an indicator of the potential revenue-generating capacity of our operations. Further, this metric reflects sustained transaction activity over the trailing twelve-month period and, as such, it may not directly correspond to revenue recognized in the current quarter. Management believes total transaction value is useful in understanding period-over-period changes in transaction activity, evaluating the effectiveness of our agent network and marketing initiatives, and assessing the overall health and growth trajectory of our business. Revenue Revenue represents income earned from services provided across our homebuying services and technology services segments. We generate revenue primarily from real estate brokerage commissions, mortgage brokerage fees, and other service-related revenues, which are recognized in accordance with U.S. GAAP. For more information regarding our discussion of revenue, see “Results of Operations” below. Management evaluates revenue growth as an indicator of transaction activity across our platform and the effectiveness of our integrated service offerings. Revenue is influenced by transaction volume, customer adoption of multiple services, home prices in the markets we serve, mortgage origination activity, and prevailing market conditions, including interest rate levels and housing affordability. Cash and cash equivalents Cash and cash equivalents represent our primary source of liquidity and include unrestricted cash and highly liquid investments available to fund our operations and support strategic initiatives. Management monitors cash and cash equivalents to assess our liquidity position, working capital needs, and ability to support ongoing operations, platform development, and market expansion activities. Cash and cash equivalents are influenced by operating performance, timing of transaction activity, capital raising activities, debt service requirements, and investments in technology, research and development, and acquisitions. In the three months ended March 31, 2026, our cash and cash equivalents decreased to approximately $4.7 million , or approximately a 40% decrease compared to the three months ended March 31, 2025, which was primarily driven by increased operating expenses and costs associated with the acquisition and integration of Prevu. See “Liquidity and Capital Resources” for more information. 27 Gross profit margin Gross profit margin represents gross profit as a percentage of revenue and reflects the efficiency of our operations after direct costs associated with delivering our homebuying services and technology services. Management evaluates gross profit margin as an indicator of operating efficiency and unit economics across our services. Gross profit margin is influenced by service mix, transaction volume, pricing dynamics, compensation and commission structures, and costs associated with operating and supporting our platform, including technology and service delivery expenses. In the three months ended March 31, 2026, our gross profit margin increased to approximately 66%, or an increase of approximately 10%, compared to the three months ended March 31, 2025. This increase in gross profit margin was mainly a result of lower cost of revenues, which was primarily due to the rescission of the GTG Financial and the absence of the cost of operations from GTG Financial, which had historically incurred higher cost of revenues than our other operating subsidiaries, and the increase in subscription-related revenue from AiChat’s platform, which also carries higher gross profit margins than our real estate and mortgage operations, resulting in an overall higher profit gross margin for the current period. Adjusted EBITDA We use Adjusted EBITDA, a non-U.S. GAAP financial measure, to evaluate our operating performance and facilitate comparisons across periods and with peer companies. We reconcile our Adjusted EBITDA to our net income (loss) adjusted to exclude interest expense, depreciation and amortization, changes in fair value of contingent consideration and preferred stock, share-based compensation, and other non-cash, non-operating, or non-recurring items that we believe are not indicative of our core business operations. We believe this measure provides useful insight into our ongoing performance; however, it should not be considered a substitute for, or superior to, net income or other financial information prepared in accordance with U.S. GAAP. In the three months ended March 31, 2026, our Adjusted EBITDA was $(3,795,500) compared to $(1,960,997), or a decrease of approximately 94%, which change was primarily driven by, among others, an increase in our net loss due to higher stock-based compensation expenses and higher marketing expenses. For more information about how we use this non-GAAP financial measure in our business, the limitations of this measure, and reconciliation of this measure to the most directly comparable GAAP financial measure, see the section titled “ Non-U.S. GAAP Financial Measures ” below. Critical Accounting Policies The unaudited condensed consolidated financial statements included in this report have been prepared in accordance with U.S. GAAP and reflect the application of estimates and assumptions that require significant judgment by management. These estimates affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures and are based on a combination of historical experience, current business conditions, and other factors available to management. Actual results could differ materially from those estimates due to the inherent uncertainty in assumptions and external conditions. There have been no material changes to the Company’s critical accounting policies or the methods used in applying those policies during the three months ended March 31, 2026. For a full description of our critical accounting policies and significant estimates, refer to the audited consolidated financial statements and accompanying notes included in our Form 10-K, and “Note 2 - Summary of Significant Accounting Policies” to the unaudited condensed consolidated financial statements included in this report. Results of Operations Three Months Ended March 31, 2026, Compared with Three Months Ended March 31, 2025 Three Months Ended March 31, March 31, 2026 2025 Revenue $ 841,062 $ 925,635 Cost of Revenue (288,797 ) (406,968 ) Gross profit $ 552,265 $ 518,667 Operating expense (4,832,923 ) (2,940,925 ) Operating loss (4,280,658 ) (2,422,258 ) Other (expense) income (57,837 ) (427,909 ) Loss from continuing operations before tax (4,338,495 ) (2,850,167 ) 28 Revenue . Revenue was $841,062 for the three months ended March 31, 2026, compared to $925,635 for the three months ended March 31, 2025, a decrease of approximately 9%. Revenue for the three months ended March 31, 2026, consisted of $577,473 from our homebuying services segment and $263,589 from our technology services segment, compared to $752,070 from our homebuying services segment and $173,565 from our technology services segment for the three months ended March 31, 2025. The decrease in homebuying services segment was primarily due to the absence of the revenue previously generated by GTG Financial that was not present during the three months ended March 31, 2026, which was partially offset by the addition of revenue generated from real estate brokerage transactions by Prevu’s operations of $173,692 compared to the three months ended March 31, 2025. While we recently changed our commission rebate structure, we have not experienced a material change in the revenue generated in our homebuying services segment under this new commission rebate structure, but we are continuing to evaluate the impact of this change on revenue, total transaction volume and customer adoption. Further, the increase in our technology services segment positively contributed to our revenue during the three months ended March 31, 2026, which increase was primarily driven by an increase in number of subscriptions of AiChat’s platform, that generated $218,589 in revenue compared to $109,552 in the three months ended March 31, 2025. Cost of revenue . Cost of revenue was $288,797 for the three months ended March 31, 2026, compared to $406,968 for the three months ended March 31, 2025, a decrease of approximately 29%. The decrease was primarily attributable to the absence of direct costs associated with the operations of GTG Financial, which had historically incurred higher cost of revenue than our other homebuying services operating subsidiaries. Cost of revenue for the current period reflects direct expenses associated with delivering our mortgage brokerage, real estate brokerage, and technology services, including compensation-related costs for personnel supporting loan origination and customer interactions. Operating expenses. Operating expenses were $4,832,923 for the three months ended March 31, 2026, compared to $2,940,925 for the three months ended March 31, 2025, an increase of approximately 64%. The increase in operating expenses was primarily driven by higher wages due to our increased headcount following our recent acquisitions and an increase in marketing and advertising expenses. Marketing and advertising expenses increased to $1,261,980. for the three months ended March 31, 2026, from $518,939 for the three months ended March 31, 2025. Of the current period amount, approximately $593,000 was non-cash expense recognized in connection with the utilization of pre-paid marketing credits , while our cash marketing and advertising expenses were approximately $668,000 for the three months ended March 31, 2026. Other expense. Other expense was $57,837 for the three months ended March 31, 2026, compared to $427,909 for the three months ended March 31, 2025. The decrease in other expense was primarily attributable to a reduction in the fair value of contingent consideration during the current period, as compared to an increase in the prior-year period. In addition, the prior-year period included interest expense and other financing-related costs, including amortization of commitment fees, which were not incurred during the three months ended March 31, 2026. 29 Non-GAAP Financial Measures To supplement our financial information presented in accordance with U.S. GAAP, we believe “Adjusted EBITDA,” a “non-U.S. GAAP financial measure,” as such term is defined under the rules of the SEC, is useful in evaluating our operating performance. We use Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-U.S. GAAP financial measure may be helpful to investors because it provides consistency and comparability with past financial performance. However, this non-U.S. GAAP financial measure is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate a similarly titled non-U.S. GAAP measure differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of this non-U.S. GAAP financial measure as a tool for comparison. A reconciliation is provided below for our non-U.S. GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP. Investors are encouraged to review the related U.S. GAAP financial measure and the reconciliation of this non-U.S. GAAP financial measure to its most directly comparable U.S. GAAP financial measure, and not to rely on any single financial measure to evaluate our business. We use Adjusted EBITDA, a non-U.S. GAAP financial measure, to evaluate our operating performance and facilitate comparisons across periods and with peer companies. We reconcile our Adjusted EBITDA to our net income (loss) adjusted to exclude interest expense, depreciation and amortization, share-based compensation, and other non-cash, non-operating, or non-recurring items that we believe are not indicative of our core business operations. We believe this measure provides useful insight into our ongoing performance; however, it should not be considered a substitute for, or superior to, net income or other financial information prepared in accordance with U.S. GAAP. The following table provides a reconciliation of net income to Adjusted EBITDA for the periods presented below: For the Three Months Ended March 31, 2026 2025 Net loss $ (4,338,495 ) $ (2,850,167 ) Adjusted to exclude the following Depreciation and amortization 165,202 179,149 Amortization of loan discounts and origination fee - 121,251 Changes in fair value of contingent consideration (1) (18,350 ) 93,000 Change in fair value of derivative liability (2) 27,500 - Interest expense 24,680 205,063 GEM commitment fee - 125,000 Stock based compensation (3) 343,963 78,355 Acquisition-related expenses - 87,352 Adjusted EBITDA $ (3,795,500 ) $ (1,960,997 ) (1) Represents non-cash changes in the fair value of contingent consideration payable to reAlpha Mortgage which is calculated based on revenue and EBITDA targets. (2) Represents non-cash changes in the fair value of derivative liability recorded in connection with our media-for-equity transaction with MMC. (3) Represents non-cash stock-based compensation expenses recognized during the period. 30 Liquidity and Capital Resources Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. Our liquidity and capital resources are critical to our ability to execute our business plan and achieve our strategic objectives. Accordingly, to the extent that collections from our operations cannot fund our operations, we intend to utilize equity or debt offerings to raise these funds, although volatility in the capital markets may negatively affect our ability to do so We had cash and cash equivalents of approximately $4.7 million as of March 31, 2026, and approximately $7.8 million as of December 31, 2025. Based on our estimates, we believe we do not have sufficient working capital to meet our financial needs for the 12-month period following the date that the unaudited condensed consolidated financial statements included in this report are issued. Further, based on our current operating plans, we estimate that our cash and cash equivalents as of March 31, 2026, will be sufficient to fund our operating expenses and capital expenditure requirements for a period of approximately five months as of the filing date of this report . These conditions, including recurring operating losses, negative operating cash flows, limited cash resources relative to projected cash requirements, and dependence on external financing, raise substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements included in this report are issued (see “Note 3 – Going Concern” for more information). Accordingly, to the extent that collections from our operations cannot fund our operations beyond such period, we intend to utilize equity or debt offerings to raise additional funds, although volatility in the capital markets may negatively affect our ability to do so on terms acceptable to us, or at all. As part of these efforts, we utilized our At the Market (“ATM”) program with H.C. Wainwright & Co., LLC to raise working capital, and during the three months ended March 31, 2026, we raised approximately $126,150 in net proceeds through such ATM program (see “Note 11 – Stockholders’ Equity” for more information). We may also receive proceeds from the cash exercises of warrants outstanding as of March 31, 2026. As of such date, our outstanding warrants are exercisable into an aggregate of 10,900,266 shares of common stock. If all such warrants were exercised for cash, we can potentially receive aggregate gross proceeds of approximately $4,646,396. The amount of cash proceeds that we may ultimately receive is dependent upon the trading price of our common stock and other market conditions, and there can be no assurance that such warrants will be exercised. Further, due to the ongoing disputes with GEM regarding the warrants issued under the GEM Agreement, there is uncertainty regarding the enforceability of such warrants and the potential proceeds therefrom. As a result, we do not expect that such warrants will be exercised while these disputes are pending. In addition, we have received notice from Nasdaq indicating non-compliance with the minimum bid price requirement for continued listing on Nasdaq. Failure to regain compliance could result in the delisting of our common stock, which could adversely affect the liquidity of our securities and our ability to access capital markets. To address this, we have evaluated potential actions, including a reverse stock split, to regain compliance. Although, such actions have not yet been effected, the Board approved a 1-for-25 reverse stock split of our outstanding common stock, which is expected to become effective on or around April 30, 2026, subject to the filing and effectiveness of an amendment to our Second Amended and Restated Certificate of Incorporation (the “certificate of incorporation”) with the Secretary of State of Delaware. The reverse stock split was previously approved by our stockholders at the 2025 annual meeting of stockholders. Our business model requires significant capital expenditures to build and maintain the infrastructure and technology required to support our growing operations. In addition, we may incur additional costs associated with compliance, research and development of new products and services, expansion into new markets or geographies, including through strategic acquisitions, and general corporate overhead. As a result, we may require additional financing in the future to fund our operations, which may include additional equity or debt financings or strategic partnerships or investments. If we are unable to obtain additional financing when required, we may be forced to reduce the scope of our operations, delay the launch of new products or services, or take other actions that could adversely affect our business, financial condition, and results of operations. We may also be required to seek additional financing on terms that are unfavorable to us, which could result in the dilution of our stockholders’ ownership interests or the imposition of burdensome terms and restrictions. While we anticipate continued operating losses for the foreseeable future, we expect to generate more significant revenues as we continue investing in the commercialization of our products and technologies and pursuing strategic growth opportunities. However, our ability to raise additional capital will depend on various factors, including market conditions, investor demand, and our financial performance, and there can be no assurance that we will be able to raise additional funds on acceptable terms, if at all. 31 Contractual Commitments and Obligations Acquisition of Prevu In connection with the acquisition of Prevu, we are obligated to pay deferred consideration totaling $2.5 million pursuant to the terms of the Prevu Merger Agreement. The deferred consideration is payable in four equal installments of $625,000 over an 18-month period following the closing date, payable in cash or shares of our common stock, at our sole discretion. On March 16, 2026, we satisfied $617,496 of our deferred consideration obligation through the issuance of shares of common stock. As of March 31, 2026, three additional installments, totaling $1,217,466, are scheduled to be paid within the next 12 months and are included in current liabilities, with the remaining $577,836 classified as a long-term liability (see “Note 9 - Deferred Liabilities” for additional information. To the extent we elect to satisfy future payments in cash, such payments will reduce our available liquidity. To the extent we elect to satisfy future payments through the issuance of shares of common stock, existing stockholders will experience dilution. Proposed Merger with InstaMortgage On December 19, 2025, we entered into the Merger Agreement to acquire 100% of the outstanding equity of InstaMortgage for total consideration of approximately $8.5 million, payable in a combination of cash and shares of our common stock, including deferred consideration. The transaction is expected to close in the second quarter of 2026, subject to regulatory approvals and other customary closing conditions. In connection with this proposed acquisition, we will be required to pay cash consideration of approximately $0.5 million and issue approximately $1.5 million in shares of our common stock if and when the acquisition is consummated. As of March 31, 2026, the $0.5 million cash consideration is being held in escrow. (see “Recent Developments – Proposed Merger with InstaMortgage Inc.” for additional information). Cash Flows The following table summarizes our cash flows from operating, investing, and financing activities for the periods presented. Three Months Ended March 31, March 31, Particulars 2026 2025 Net cash used in operating activities $ (3,123,752 ) $ (2,267,103 ) Net cash (used in) provided by investing activities (63,810 ) 244,554 Net cash provided by financing activities $ 72,067 $ 103,005 Cash Flows from Operating Activities For the three months ended March 31, 2026, net cash used in operating activities was $3,123,752, compared to $2,267,103 for the three months ended March 31, 2025, an increase of $856,649. The increase was primarily driven by higher operating expenses, which mainly relate to, among others, the integration costs of the Prevu acquisition, including increased wages and benefits, higher marketing and advertising expenses, and stock-based compensation due to additional RSU and common stock grants to employees and directors. Cash Flows from Investing Activities For the three months ended March 31, 2026, net cash used in investing activities was $63,810, compared to net cash provided by investing activities of $244,554 for the three months ended March 31, 2025, a change of $308,364. The change was primarily attributable to reduced investing cash inflows as no acquisitions took place during the three months ended March 31, 2026. Cash Flows from Financing Activities For the three months ended March 31, 2026, net cash provided by financing activities was $72,067, compared to $103,005 for the three months ended March 31, 2025, a decrease of $30,938. Net cash provided by financing activities during the three months ended March 31, 2026 was lower than in the prior-year period primarily because we raised less capital through our ATM program compared to the three months ended March 31, 2025. Further, the first payment of $625,000 of deferred consideration related to the Prevu acquisition was satisfied through the issuance of shares of common stock, and because this represented a non-cash financing activity, it did not affect cash flows from financing activities. 32 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.