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 (as defined above). 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 powered by large language models that educates users on the homebuying process, answers questions, and guides them 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 and GTG Financial. 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 30 U.S. states, including our recent expansion into Utah. 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. 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, reAlpha Mortgage and GTG Financial. These 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 and GTG Financial, our in-house mortgage brokerage that operates through the reAlpha platform is now licensed to operate in 30 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 two mortgage brokerage firms 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. 25 Table of Contents 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 of directors 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 18 – Discontinued Operations” for more information). The technology services segment is currently our only reportable segment following the approval by our board of directors to discontinue our rental business segment operations (see “Note 18 – Discontinued Operations” and “Note 17 – Segment Reporting” for more information). 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, Hyperfast and GTG Financial 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 service, 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. 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 30 U.S. states, including our recent expansion into Utah. 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 subsidiaries, reAlpha Mortgage and GTG Financial, in 30 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 our 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 . 26 Table of Contents Recent Developments Compliance with Nasdaq Continued Listing Requirements On May 20, 2025, we received a letter from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) 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 October 1, 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”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have been provided a period of 180 calendar days, or until December 29, 2025, to regain compliance with the MVLS Requirement. To regain compliance, our market value of listed securities must close at $35 million or more for a minimum of ten consecutive business days (subject to the Staff’s discretion to extend this ten consecutive business day period). The above mentioned letters have 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 MVLS Requirement or the Minimum Bid Price Requirement prior to the expiration of their respective 180-day compliance periods, 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-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. As of July 18, 2025, we have sold 2,792,104 shares of our common stock pursuant to the Sales Agreement for aggregate net proceeds of approximately $944,759. The ATM program with Wainwright was suspended on July 16, 2025, in connection with the 2025 Public Offering (as defined below) (see “Recent Developments – Consummation of July 2025 Public Offering” below for more details). Warrant Inducement Transaction On April 6, 2025, we entered into inducement offer letter agreements (the “Inducement Letters”) with certain holders (the “Holders”) of existing warrants of the Company to purchase up to an aggregate of 4,218,751 shares of our common stock having an original exercise price of $5.00 per share, which was subsequently adjusted to $1.44 per share pursuant to the anti-dilution provision included in such existing warrants, issued to the Holders on November 24, 2023, with a current expiration date of November 24, 2028 (the “Existing Warrants”). Pursuant to the Inducement Letters, the Holders agreed to exercise for cash their Existing Warrants at a reduced exercise price of $0.75 per share (the “Reduced Exercised Price”) in consideration for our agreement to issue in a private placement new common stock purchase warrants (the “New Warrants”) to purchase an aggregate of 8,437,502 shares of common stock (the “New Warrant Shares”) (such transaction, the “Warrant Inducement”). In connection with the Warrant Inducement, we also agreed to reduce the exercise price of the Existing Warrants to purchase an aggregate of 4,114,582 shares of common stock for all holders of the Existing Warrants not participating in the Warrant Inducement to the Reduced Exercise Price for the remaining term of the Existing Warrants. 27 Table of Contents The closing of the Warrant Inducement occurred on April 8, 2025, and we received aggregate gross proceeds of approximately $3.1 million from the exercise of the Existing Warrants, before deducting related placement agent fees and other expenses payable by us, resulting in net proceeds of approximately $2.9 million. The New Warrants are currently exercisable and expire on November 24, 2028. 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”). In exchange for the remaining 15% of the outstanding ordinary shares of AiChat, we will issue $240,000 in shares of our common stock (the “Consideration Shares”) to AiChat10X 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. The Consideration Shares, which have not yet been issued, will be issued no later than December 1, 2025 in accordance with the terms of the AiChat Acquisition Agreement. Streeterville Note Exchanges We entered into a note purchase agreement (the “Note Purchase Agreement”) with Streeterville, on August 14, 2024, pursuant to which we issued and sold a secured promissory note (the “Note”), which had a principal balance of $5,455,000 upon its issuance that is due on February 14, 2026. Under the terms of the Note, Streeterville may redeem up to $545,000 of the Note per month, commencing seven months after the date of issuance of the Note and at any time thereafter until the Note is paid in full. After we have made five redemption payments in cash, any subsequent redemption payments made in cash will be subject to a 9% redemption premium. On June 9, 2025, we received a redemption notice from Streeterville for a redemption payment in the amount of $300,000. We and Streeterville have agreed that we may fully satisfy this redemption payment in shares of common stock, in lieu of cash. Accordingly, on June 9, 2025, we issued 747,607 shares of common stock to Streeterville in satisfaction of the $300,000 redemption payment due under the Note, at an effective price per share equal to $0.4013, which was below the “Minimum Price” (as defined in Nasdaq Listing Rule 5635(d)). The number of shares of common stock issued in connection with this exchange was less than 20% of our voting power outstanding prior to the exchange. On July 2, 2025, we received a redemption notice from Streeterville for a redemption payment in the amount of $350,000. We and Streeterville have agreed that we may fully satisfy this redemption payment in shares of common stock, in lieu of cash. Accordingly, on July 7, 2025, we issued 1,267,656 shares of common stock in satisfaction of the $350,000 redemption payment due under the Note, at an effective price per share equal to $0.2761, which was below the “Minimum Price.” The number of shares of common stock to be issued in connection with this exchange was less than 20% of our voting power outstanding prior to the exchange. Consummation of July 2025 Public Offering On July 16, 2025, we commenced a best efforts public offering (the “2025 Public Offering”) of an aggregate of (i) 13,333,334 shares of our common stock, (ii) Series A-1 warrants (the “Series A-1 Warrants”) to purchase up to an aggregate of 13,333,334 shares of common stock (the “Series A-1 Warrant Shares”) and (iii) Series A-2 warrants (the “Series A-2 Warrants,” and together with the Series A-1 Warrants, the “July 2025 Warrants”) to purchase up to an aggregate of 13,333,334 shares of common stock (the “Series A-2 Warrant Shares,” and together with the Series A-1 Warrant Shares, the “July 2025 Warrant Shares”). Each share of common stock 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 share of common stock and accompanying July 2025 Warrants was $0.15. Each July 2025 Warrant has an exercise price of $0.15 per share and will be exercisable beginning on the effective date of stockholder approval of the issuance of the July 2025 Warrant Shares (the “Warrant Stockholder Approval”). The Series A-1 Warrants will expire five years from the effective date of the Warrant Stockholder Approval. The Series A-2 Warrants will expire twenty-four months from the effective date of the Warrant Stockholder Approval. 28 Table of Contents 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. Consummation of July 2025 Registered Offering On July 21, 2025, we entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional accredited investors (the “Investors”) pursuant to which we agreed to issue and sell, in a registered direct offering priced at-the-market under the Nasdaq rules (the “Registered Offering”), 14,285,718 shares of our common stock, at a price per share of $0.35. The shares of our common stock were offered and sold pursuant to our effective registration statement on Form S-3 (Form No. 333-283284), 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. In a concurrent private placement, pursuant to the terms of the Purchase Agreement, we also agreed to issue and sell unregistered warrants (the “Private Placement Warrants”) to purchase up to 14,285,718 shares of common stock (the “Private Placement” and, together with the Registered Offering, the “Offering”) (which offering price is included in the purchase price per share in the Registered Offering). The Private Placement Warrants have an exercise price of $0.35 per share (subject to customary adjustments as set forth in the Private Placement Warrants), are currently exercisable and have a term of five years from the effective date of the registration statement covering the resale of the shares of common stock issuable upon exercise of the Private Placement Warrants. The Private Placement Warrants contain customary anti-dilution adjustments to the exercise price, including for share splits, share dividends, rights offerings and pro rata distributions. The closing of the Offering 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, if any, from the exercise of the Private Placement Warrants. Full Repayment of Note 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 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. Impact of Macroeconomic Conditions, Cyclicality and Seasonality on our Business From April through June 2025, U.S. inflation remained above the U.S. Federal Reserve’s stated 2% target, ranging between approximately 2.3% and 2.7%. In response to continued inflationary pressures, the U.S. Federal Reserve maintained the target federal funds rate at 4.25% to 4.50% during both its May and June 2025 meetings. Mortgage rates remained elevated during the second quarter of 2025, with the average 30-year fixed mortgage rate in the high-6% range, with an average mortgage rate of approximately 6.77% in June 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. 29 Table of Contents 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 months ended June 30, 2025. For a full description of our critical accounting policies and significant estimates, refer to the unaudited condensed 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. Results of Operations Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024 Three Months Ended June 30, June 30, 2025 2024 (unaudited) Revenue $ 1,252,381 $ 62,353 Cost of revenue (630,916 ) (18,250 ) Gross profit $ 621,465 $ 44,103 Operating expense (4,710,595 ) (1,253,498 ) Operating loss (4,089,130 ) (1,209,395 ) Other expense (20,886 ) (268,046 ) Loss from continuing operations before tax (4,110,016 ) (1,477,441 ) Loss from discontinued operations before tax — (871 ) Revenue . Revenues were $1,252,381 for the three months ended June 30, 2025, compared to $62,353 for the three months ended June 30, 2024, an increase of approximately 1,909%. 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 revenue generated by reAlpha Mortgage and GTG Financial and AiChat’s conversational AI technology offered to enterprise clients. reAlpha Mortgage and GTG Financial generated $1,012,262 through mortgage brokerage transactions, which included loan origination fees, broker commissions and processing fees, while AiChat generated $158,660 from subscription fees for its AI conversational technologies. 30 Table of Contents Cost of revenue . Cost of revenue was $630,916 for the three months ended June 30, 2025, compared to $18,250 for the three months ended June 30, 2024, an increase of approximately 3,357%. This increase 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, reAlpha Mortgage and GTG Financial. Operating expense. Operating expenses were $4,710,595 during the three months ended June 30, 2025, compared to $1,253,498 for the three months ended June 30, 2024, an increase of approximately 276%. This increase in operating expenses was primarily driven by the integration of the newly acquired businesses within the technology segment, including reAlpha Mortgage and GTG Financial. A significant portion of this increase is attributed to salaries of the employees from our recent acquisitions, which salary expenses amounted to $1,538,479, and marketing and advertising expenses related to our advertising campaign which amounted to $1,483,672 In addition, we incurred $440,101 in professional and legal expenses during the three months ended June 30,2025, in connection with our recent capital raising activities (see “Liquidity and Capital Resources” for more information), which activities and related fees were not present in the comparable period in 2024. Other expense. Other expense was $20,886 for the three months ended June 30, 2025, up from $268,046 in other expenses for the three months ended June 30, 2024. Other expenses during the three months ended June 30, 2025, mainly consisted of $243,254 in interest expenses, which comprised of $96,769 in interest expenses under the Note (as defined above), $72,501 of original issue discount amortization relating to the Note, $49,364 of Series A Preferred Stock interest, and $125,000 relating to the amortization of commitment fee payable by us in connection with the GEM Agreement. These expenses were partially offset by non-cash gains of $339,378 from the decrease in fair value of the Series A Preferred Stock liability and a $174,000 decrease in fair value of contingent consideration of reAlpha Mortgage. Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024 Six Months Ended June 30, June 30, 2025 2024 (unaudited) Revenue $ 2,178,016 $ 82,779 Cost of revenue (1,037,884 ) (36,499 ) Gross profit $ 1,140,132 $ 46,280 Operating expense (7,651,521 ) (2,488,704 ) Operating loss (6,511,389 ) (2,442,424 ) Other expense (448,979 ) (453,223 ) Loss from continuing operations before tax (6,960,368 ) (2,895,647 ) Loss from discontinued operations before tax — (1,710 ) Revenue . Revenues were $2,178,016 for the six months ended June 30, 2025, compared to $82,779 for the six months ended June 30, 2024, an increase of approximately 2,531%. 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 revenue generated by reAlpha Mortgage and GTG Financial and AiChat’s conversational AI technology offered to enterprise clients. reAlpha Mortgage and GTG Financial generated $1,764,332 through mortgage brokerage transactions, which included loan origination fees, broker commissions, and processing fees, while AiChat generated $268,212 from subscription fees for its AI conversational technologies. Cost of revenue . Cost of revenue was $1,037,884 for the six months ended June 30, 2025, compared to $36,499 for the six months ended June 30, 2024, an increase of approximately 2,744%. This increase 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, reAlpha Mortgage and GTG Financial. Operating expenses. Operating expenses were $7,651,521 during the six months ended June 30, 2025, compared to $2,488,704 for the six months ended June 30, 2024, an increase of approximately 207%. This increase was primarily driven by the integration of newly acquired businesses within the technology segment, including reAlpha Mortgage and GTG Financial. A significant portion of this increase is attributed to salaries of employees from these acquisitions, totaling $2,598,583; marketing and advertising expenses related to our advertising campaign of $2,002,611; and professional and legal services expenses of $1,950,202, which consisted of $347,261 related to certain acquisitions completed during this period and $440,101 related to our recent capital raising activities (see “Liquidity and Capital Resources” for more information). 31 Table of Contents Other expense. Other expenses were $448,979 for the six months ended June 30, 2025, compared to $453,223 for the six months ended June 30, 2024. This increase was primarily driven by interest expense of $448,501, which consisted of $186,311 related to certain outstanding notes and $145,002 of original issue discount relating to the Note, as well as amortization expenses relating to the $250,000 commitment fee incurred in connection with the GEM Agreement, and a $93,000 increase in the fair value of the reAlpha Mortgage contingent consideration. These expenses were partially offset by non-cash gains of $339,378 from the decrease in fair value of the Series A Preferred Stock liability and a $174,000 decrease in fair value of contingent consideration of reAlpha Mortgage. 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 measures may be helpful to investors because it provides consistency and comparability with past financial performance. However, this non-U.S. GAAP financial measures is presented for supplemental informational purposes only, have 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 our 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, 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 June 30, For the Six Months Ended June 30 2025 2024 2025 2024 Net loss $ (4,110,016 ) $ (1,478,312 ) $ (6,960,368 ) $ (2,897,357 ) Adjusted to exclude the following Depreciation and amortization 131,045 69,331 261,444 140,784 Amortization of loan discounts and origination fee 121,251 — 242,502 — Impairment of capitalized software development- work in progress(1) 105,900 — 105,900 — Changes in fair value of contingent consideration(2) (174,000 ) — (81,000 ) — Change in fair value of Series A Preferred Stock(3) (339,378 ) — — — Loss (gain) on equity method investments 1,526 (129,045 ) 2,456 (129,045 ) Interest expense (income) 240,818 678 303,499 11,123 GEM commitment fee (4) 125,000 125,000 250,000 250,000 Share-based compensation (5) 192,988 203,146 271,343 203,146 Equity offering costs(6) 230,774 — 230,774 — Acquisition-related expenses — 61,691 87,352 184,748 Adjusted EBITDA $ (3,474,092 ) $ (1,147,511 ) $ (5,286,098 ) $ (2,236,601 ) 32 Table of Contents (1) Represents the impairment of capitalized software due to discontinued development thereof and such software becoming obsolete. (2) Represents remeasurement gains or losses related to the contingent consideration of reAlpha Mortgage. (3) Represents non-cash remeasurement gains or losses related to preferred stock issued in the MMC (as defined above) and GTG Financial transactions. (4) 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. (5) Represents non-cash expenses related to shares of common stock issued to certain employees and RSUs granted to our executive officers and certain employees. (6) Represents legal and professional fees incurred in connection with the Warrant Inducement (as defined above) and ATM program with Wainwright. 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 collections from our short-term rentals, if any, and technologies 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. As of June 30, 2025, we had cash and cash equivalents of approximately $0.58 million, and approximately $3.1 million as of December 31, 2024. Based on current estimates, we do not believe we have sufficient working capital to meet our financial needs for the 12-month period following June 30, 2025. As a result, to the extent that our technology services segment does not generate sufficient revenue to fund our operations, 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 expenses and capital expenditure requirements. As part of our efforts to increase our liquidity, on April 2, 2025, we entered into an ATM program with Wainwright, under which we may offer and sell from time to time through Wainwright, acting as sales agent, up to $7,650,000 in shares of our common stock, and as of the date of this filing, we have raised gross proceeds $985,448 under this ATM program (see “Note 15 – Stockholders’ Equity (Deficit) – Shelf Registration on Form S-3” and “Note 19 – Subsequent Events” for more information). Further, on April 6, 2025, we completed the Warrant Inducement (see “Recent Developments – Warrant Inducement Transaction” for more information), pursuant to which, we raised gross proceeds of approximately $3.1 million, and may raise up to an additional $9.4 million from the cash exercise of the New Warrants issued in connection with such transaction, to the extent those warrants are exercised. 33 Table of Contents Subsequent to June 30, 2025, we also completed two additional equity offerings for the purposes of raising capital. On July 18, 2025, upon closing the 2025 Public Offering (as defined above), we raised gross proceeds of $2.0 million by selling 13,333,334 shares and accompanying July 2025 Warrants (as defined above) at a combined price of $0.15 per share and accompanying July 2025 Warrants, each of which has an exercise price per share of $0.15. Once exercisable, we will be able to raise approximately $4.0 million in additional gross proceeds from the cash exercise of the July 2025 Warrants in full, to the extent those warrants are exercised. Shortly after, on July 22, 2025, we consummated the Registered Offering (as defined above), pursuant to which we sold 14,285,718 shares of common stock at a price per share of $0.35, and, concurrently to such offering, we consummated a private placement to sell the Private Placement Warrants (as defined above) to purchase up to 14,285,718 shares of our common stock at an exercise price of $0.35 per share, in each case to certain institutional accredit investors, pursuant to which Registered Offering and concurrent private placement, we raised an aggregate of $5.0 million in gross proceeds, and we may raise an additional $5.0 in gross proceeds upon the cash exercise of the Private Placement Warrants in full, to the extent those warrants are exercised. In connection with these offerings, and as compensation for the placement agent of the 2025 Public Offering and Registered Offering (collectively, the “Offerings”), we issued to the designees of Wainwright, the placement agent for the Offerings, certain placement agent warrants to purchase up to an aggregate of 666,667 and 714,286 shares of common stock at an exercise price of $0.1875 per share and $0.4375 per share, respectively. To the extent these warrants are exercised in full, we will be able to raise an additional $437,500 in the aggregate upon full cash exercise of such warrants. Additionally, the outstanding Follow-On Warrants (as defined above) remain exercisable at an exercise price of $0.75 per share, which may raise an additional $3.08 million in gross proceeds upon the exercise of such warrants for cash in full, to the extent those warrants are exercised. 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 prior to their respective expiration dates, and as such, we may receive no proceeds from the exercise of these warrants. 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 these 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 Offerings 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 (as further described below under “Contractual Commitments and Obligations”). Accordingly, following the recent capital raises and full repayment of the Note and based on our current operating plans, assuming we do not raise additional capital through further offerings of our securities, we estimate that our cash and cash equivalents as of the date of this report will be sufficient to fund our operating expenses and capital expenditure requirements until the end of October 2025. 34 Table of Contents 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. Contractual Commitments and Obligations On August 14, 2024, we issued the Note to Streeterville under the Note Purchase Agreement (each as defined above), which was a secured promissory note with a principal balance of $5,455,000 upon its issuance that was due on February 14, 2026. Beginning seven months after the Note’s issuance, Streeterville was able to redeem up to $545,000 per month, payable in cash within three trading days of a written notice. As of June 30, 2025, we had repaid $1,410,000 pursuant to such redemptions under the Note. Following our recent capital raises discussed above, on July 23, 2025, we repaid the Note in full by making a payment to Streeterville for an amount of approximately $4,466,202, which included a 9% prepayment penalty. As of the date of this report, the Note is no longer outstanding and we are no longer subject to making any further cash payments in connection with redemption notices under the Note. Additionally, in connection with the GTG Financial acquisition, and pursuant to the Stock Purchase Agreement dated as of February 20, 2025 (the “GTG Purchase Agreement”), we are obligated to pay to Glenn Groves (the “Seller”) the cash portion of the consideration payable in connection with the acquisition of GTG Financial (the “Cash Portion”), which consist of cash payments in the aggregate amount of $1,344,750. The Cash Portion is payable in three tranches as follows: $403,425 on the 120th day after February 20, 2025 (the “GTG Closing Date”), $403,425 on the 150th day after the GTG Closing Date and $537,900 on the 180th day following the GTG Closing Date. Further, to the extent that we do not pay the Cash Portion in full by the date that is 180 days of the GTG Closing Date, then, beginning on the 181st day following the GTG Closing Date, the outstanding amount of the Cash Portion will bear interest at a rate per annum equal to 4%. The Cash Portion outstanding at any time will also become due and payable no later than 60 days after the consummation of a bona fide transaction or series of transactions with the principal purpose of raising capital in the minimum amount of $10.0 million, whether through loans provided to us or through the sale of our equity securities. While we have raised over $10.0 million in a series of transactions with the principal purpose of raising capital since the GTG Financial acquisition, as discussed above, no payments of the Cash Portion have been made to date. Given that the 180-day deadline precedes the 60-day trigger tied to the $10.0 million capital raise threshold, the 180-day requirement takes precedence and remains the operative condition for the payment of the Cash Portion. Beginning on the 181st day, the unpaid balance on the Cash Portion will accrue interest at an annual rate of 4%. To the extent we have not paid the Cash Portion in full by the 180 th day after the GTG Closing Date, the Seller will be eligible to rescind the transactions contemplated under the GTG Purchase Agreement, which may materially impact our business, results of operations and cash flows. 35 Table of Contents Cash Flows The following table summarizes our cash flows from operating, investing, and financing activities for the periods presented. Six-month period Particulars June 30, 2025 June 30, 2024 Net cash used in operating activities $ (4,602,029 ) $ (2,550,879 ) Net cash provided by (used in) investing activities $ 191,132 $ (79,423 ) Net cash provided by (used in) financing activities $ 1,874,264 $ (143,885 ) Cash Flows from Operating Activities For the six months ended June 30, 2025, net cash used in operating activities was $$4,602,029, compared to $2,550,879 for the six months ended June 30, 2024. The increase is primarily due to higher operating expenses as a result of acquiring companies complementary to our business, including salaries of $2,530,525, marketing and advertising of $2,002,611 and professional and legal fees of $1,745,891. Cash Flows from Investing Activities For the six months ended June 30, 2025, net cash provided by investing activities was $191,132, compared to $79,423 of net cash used in investing activities for the six months ended June 30, 2024. This increase is primarily a result of the integration of GTG Financial into our business, which resulted in an increase of $349,529 due to the addition of the cash held by GTG Financial during the six months ended June 30, 2025. Cash Flows from Financing Activities For the six months ended June 30, 2025, net cash provided by financing activities was $1,874,264, compared to net cash used in financing activities of $143,885 for the six months ended June 30, 2024. This increase was primarily driven by $331,393 of capital raised through our ATM program, $3,164,063 of proceeds from the exercise of certain warrants in connection with the Warrant Inducement, and $155,481 from the issuance of debt. These cash inflows were partially offset by the repayment of outstanding debt totaling $1,554,456 and equity issuance cost totaling $235,251 during the six months ended June 30, 2025. 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.