UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number: 001-41839

REALPHA TECH CORP.

(Exact name of registrant as specified in its charter)

Delaware		86-3425507
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6515 Longshore Loop, Suite 100

Dublin, OH 43017

(Address of principal executive offices)

(Zip Code)

(707) 732-5742

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		AIRE		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period than the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 12, 2025, the registrant has 128,044,308 shares of common stock, par value $0.001, issued and outstanding.

REALPHA TECH CORP.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheet as of September 30, 2025 (Unaudited) and December 31, 2024	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	2

	Condensed Consolidated Statements of Stockholders’ (Deficit) Equity for the Three Months and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	3

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited)	5

	Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44

Item 4.	Controls and Procedures	44

PART II	OTHER INFORMATION	45

Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	46

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 3.	Defaults Upon Senior Securities	53

Item 4.	Mine Safety Disclosures	53

Item 5.	Other Information	53

Item 6.	Exhibits	54

	SIGNATURES	56

PART I - FINANCIAL INFORMATION³

ITEM 1. FINANCIAL STATEMENTS

reAlpha Tech Corp. and Subsidiaries

Condensed Consolidated Balance Sheet

September 30, 2025 (Unaudited) and December 31, 2024

	September 30, 2025			December 31, 2024
ASSETS

Current Assets
Cash	$	9,278,879		$	3,123,530
Accounts receivable, net		42,943			182,425
Receivable from related parties		-			12,873
Prepaid expenses		2,509,042			180,158
Current assets of discontinued operations		-			56,931
Other current assets		361,558			487,181
Total current assets		12,192,422			4,043,098

Property and Equipment, at cost
Property and equipment, net	$	50,378		$	102,638

Other Assets
Investments		204,923			215,000
Other long term assets		-			31,250
Intangible assets, net		3,071,109			3,285,406
Goodwill		4,208,261			4,211,166
Capitalized software development - work in progress		-			105,900

TOTAL ASSETS	$	19,727,093		$	11,994,458

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities
Accounts payable	$	200,386		$	655,765
Related party payables		5,622			9,287
Short term loans - related parties -current portion		227,504			261,986
Short term loans - unrelated parties -current portion		260,966			519,153
Accrued expenses		1,246,672			1,164,813
Deferred liabilities, current portion		1,117,807			1,534,433
Total current liabilities	$	3,058,957		$	4,145,437

Long-Term Liabilities
Embedded derivative liability		4,479,980			-
Preferred stock liability		377,343			-
Other long term loans - related parties - net of current portion		6,424			45,052
Other long term loans - unrelated parties - net of current portion		103,811			241,121
Note payable, net of discount		-			4,909,376
Other long term liabilities		801,000			1,086,000
Total liabilities	$	8,827,515		$	10,426,986

Stockholders’ Equity (Deficit)
Preferred Stock ($0.001 par value; 5,000,000 shares authorized) 1,000,000 shares designated as Series A Convertible Preferred Stock; 250,000 and 0 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		-			-
Common stock ($0.001 par value; 200,000,000 shares authorized, 103,050,651 shares outstanding as of September 30, 2025; 200,000,000 shares authorized, 45,864,503 shares outstanding as of December 31, 2024)		103,047			45,865
Common stock to be issued		280,000			-
Additional paid-in capital		61,610,536			39,770,060
Accumulated deficit		(51,008,326	)		(38,260,913	)
Accumulated other comprehensive (loss) income		(96,074	)		5,011
Total stockholders’ equity of reAlpha Tech Corp.		10,889,183			1,560,023

Non-controlling interests in consolidated entities		10,395			7,449
Total stockholders’ equity		10,899,578			1,567,472

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	19,727,093		$	11,994,458

reAlpha Tech Corp. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the Three and Nine Months Ended September 30, 2025 and 2024 (unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024

Revenues	$	1,445,137		$	339,227		$	3,623,153		$	422,006
Cost of revenue		695,557			113,361			1,733,441			139,687
Gross Profit		749,580			225,866			1,889,712			282,319

Operating Expense
Wages, benefits and payroll taxes		1,655,061			779,561			4,291,586			1,674,647
Repairs and maintenance		344			1,537			1,304			3,132
Utilities		4,963			2,555			16,881			5,197
Travel		27,172			75,424			111,556			186,705
Dues and subscriptions		29,732			37,491			121,971			74,234
Marketing and advertising		2,481,015			243,362			4,483,626			451,103
Professional and legal fees		996,329			441,569			2,742,220			1,222,086
Depreciation and amortization		132,001			99,009			393,445			239,792
Impairment of capitalized software		-			-			105,900			-
Other operating expense		371,764			170,548			1,032,663			345,832
Total operating expense		5,698,381			1,851,056			13,301,152			4,202,728

Operating Loss		(4,948,801	)		(1,625,190	)		(11,411,440	)		(3,920,409	)

Other Expense (income)
Changes in fair value of contingent consideration		(67,000	)		-			(148,000	)		-
Interest expense, net		388,364			119,485			934,365			130,607
Change in fair value of preferred stock liability and embedded derivative liability		95,495			-			(243,883	)		-
Other expense, net		415,664			289,469			787,770			741,249
Total other expense		832,523			408,954			1,330,252			871,856

Net Loss from continuing operations before income taxes		(5,781,324	)		(2,034,144	)		(12,741,692	)		(4,792,265	)
Income tax (expense) benefit		-			-			-			-

Net Loss from continuing operations		(5,781,324	)		(2,034,144	)		(12,741,692	)		(4,792,265	)

Discontinued operations (Roost and Rhove)
Loss from operations of discontinued operations		-			(64,430	)		-			(203,666	)
Income tax benefit		-			-			-			-
Loss on discontinued operations	$	-		$	(64,430	)	$	-		$	(203,666	)

Net Loss	$	(5,781,324	)	$	(2,098,574	)	$	(12,741,692	)	$	(4,995,931	)

Less: Net Income (Loss) Attributable to Non-Controlling Interests		1,317			(26	)		2,946			(74	)

Net Loss Attributable to Controlling Interests	$	(5,782,641	)	$	(2,098,548	)	$	(12,744,638	)	$	(4,995,857	)

Other comprehensive income (loss)
Foreign currency translation adjustments		17,282			(33,917	)		(89,154	)		(33,917	)
Total other comprehensive income (loss)		17,282			(33,917	)		(89,154	)		(33,917	)

Comprehensive Loss Attributable to Controlling Interests	$	(5,765,359	)	$	(2,132,465	)	$	(12,833,793	)	$	(5,029,774	)

Basic loss per share
Continuing operations	$	(0.07	)	$	(0.05	)	$	(0.22	)	$	(0.11	)
Discontinued operations	$	-		$	-		$	-		$	-
Net Loss per share — basic	$	(0.07	)	$	(0.05	)	$	(0.22	)	$	(0.11	)

Diluted loss per share
Continuing operations	$	(0.07	)	$	(0.05	)	$	(0.22	)	$	(0.11	)
Discontinued operations	$	-		$	-		$	-		$	-
Net Loss per share — diluted	$	(0.07	)	$	(0.05	)	$	(0.22	)	$	(0.11	)

Weighted-average outstanding shares — basic		81,716,309			44,372,982			58,167,658			44,240,099

Weighted-average outstanding shares — diluted		81,716,309			44,372,982			58,167,658			44,240,099

reAlpha Tech Corp. and Subsidiaries

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

For the Three and Nine Months Ended September 30, 2025, and 2024 (unaudited)

					Series A Convertible				Additional			Common					Accumulated Other			reAlpha Tech Corp. and			Non-			Total
	Common Stock				Preferred Stock				Paid-in			Stock to be		Accumulated			Comprehensive			Subsidiaries			Controlling			Stockholders’
	Shares		Amount		Shares		Amount		Capital			issued		Deficit			Loss			Equity			Interests			Equity

Balance at December 31, 2023		44,122,091	$	44,123		-	$	-	$	36,899,497		$	-	$	(12,237,885	)	$	-		$	24,705,735		$	3,050		$	24,708,785
Net loss		-		-		-		-		-			-		(1,418,980	)		-			(1,418,980	)		(65	)		(1,419,045	)
Balance at March 31, 2024		44,122,091	$	44,123		-	$	-	$	36,899,497		$	-	$	(13,656,865	)	$	-		$	23,286,755		$	2,985		$	23,289,740
Net loss		-		-		-		-		-			-		(1,478,329	)		-			(1,478,329	)		17			(1,478,312	)
Common stock issuance to employees & directors		201,135		201		-		-		202,945			-		-			-			203,146			-			203,146
Common stock issuance for Naamche acquisition		-		-		-		-		193,500			-		-			-			193,500			-			193,500
RTC India - non- controlling interests		-		-		-		-		-			-		-			-			-			5			5
Balance at June 30, 2024		44,323,226	$	44,324	$	-	$	-	$	37,295,942		$	-	$	(15,135,194	)	$	-		$	22,205,072		$	3,007		$	22,208,079
Net loss		-		-		-		-		-			-		(2,098,548	)		-			(2,098,548	)		(26	)		(2,098,574	)
Other comprehensive loss		-		-		-		-		-			-		-			(33,917	)		(33,917	)		-			(33,917	)
Common stock issuance for Naamche acquisition		-		-		-		-		(193,500	)		-		-			-			(193,500	)		-			(193,500	)
Common stock issuance for reAlpha Mortgage acquisition		1,146,837		1,147		-		-		1,512,853			-		-			-			1,514,000			-			1,514,000
Common stock issuance for AiChat acquisition		-		-		-		-		1,022,975			-		-			-			1,022,975			-			1,022,975
Common stock issuance for services		83,000		83		-		-		108,647			-		-			-			108,730			-			108,730
Common stock issuance for employees		3,288		3		-		-		4,304			-		-			-			4,307			-			4,307
Common stock issuance to AiChat employees		14,616		15		-		-		19,132			-		-			-			19,147			-			19,147
Hyperfast - Non-Controlling Interest		-		-		-		-		-			-		-			-			-			3,750			3,750
RTC India - Non-Controlling Interest		-		-		-		-		-			-		-			-			-			(1,816	)		(1,816	)
Balance at September 30, 2024		45,570,967		45,572		-		-		39,770,353			-		(17,233,742	)		(33,917	)		22,548,266			4,915			22,553,181

							Series A Convertible				Additional			Common					Accumulated Other			reAlpha Tech Corp. and			Non-			Total
	Common Stock						Preferred Stock				Paid-in			Stock to be		Accumulated			Comprehensive			Subsidiaries			Controlling			Stockholders’
	Shares			Amount			Shares		Amount		Capital			issued		Deficit			Loss			Equity			Interests			Equity
Balance at December 31, 2024		45,864,503		$	45,865			-	$	-	$	39,770,060		$	-	$	(38,260,913	)	$	5,011		$	1,560,023		$	7,449		$	1,567,472
Net loss		-			-			-		-		-			-		(2,849,942	)		-			(2,849,942	)		(409	)		(2,850,351	)
Other comprehensive loss		-			-			-		-		-			-		-			(11,931	)		(11,931	)		-			(11,931	)
Common stock issuance to AiChat10X Pte. Ltd.		189,679			189			-		-		(189	)		-		-			-			-			-			-
Common stock issuance through ATM		160,879			160			-		-		231,075			-		-			-			231,235			-			231,235
Common stock issuance to Streeterville Capital, LLC		15,873			16			-		-		19,984			-		-			-			20,000			-			20,000
Stock-based compensation		-			-			-		-		78,355			-		-			-			78,355			-			78,355
Balance at March 31, 2025		46,230,934		$	46,230		$	-	$	-	$	40,099,285		$	-	$	(41,110,855	)	$	(6,920	)	$	(972,260	)	$	7,040		$	(965,220	)
Net loss		-			-			-		-		-			-		(4,112,054	)		-			(4,112,054	)		2,038			(4,110,016	)
Other comprehensive loss		-			-			-		-		-			-		-			(106,436	)		(106,436	)		-			(106,436	)
Common stock issuance - Warrants exercised		4,218,751			4,218			-		-		2,930,692			-		-			-			2,934,910			-			2,934,910
Common stock issuance for GTG acquisition		700,055			700			-		-		450,435			-		-			-			451,135			-			451,135
Common stock issuance to Employees		99,100			99			-		-		63,952			-		-			-			64,051			-			64,051
Common stock issuance to Streeterville Capital, LLC		747,607			748			-		-		369,317			-		-			-			370,065			-			370,065
Common stock issuance to Non- Employee		50,505			50			-		-		24,950			-		-			-			25,000			-			25,000
Shares issued through ATM		317,702			318			-		-		106,776			-		-			-			107,094			-			107,094
Stock-based compensation		-			-			-		-		128,937			-		-			-			128,937			-			128,937

Balance at June 30, 2025		52,364,654		$	52,363		$	-	$	-	$	44,174,344		$	-	$	(45,222,909	)	$	(113,356	)	$	(1,109,558	)	$	9,078		$	(1,100,480	)
Net loss		-			-			-		-		-			-		(5,782,641	)		-			(5,782,641	)		1,317			(5,781,324	)
Other comprehensive income		-			-			-		-		-			-		-			17,282			17,282			-			17,282
Common stock issuance - Public offering		13,333,334			13,333			-		-		1,730,717			-		-			-			1,744,050			-			1,744,050
Common stock issuance - RDO		14,285,718			14,285			-		-		4,569,766			-		-			-			4,584,051			-			4,584,051
Common stock issuance - Private Placement Warrants exercised		11,552,859			11,553			-		-		4,031,948			-		-			-			4,043,501			-			4,043,501
Common stock issuance - Public offering Warrants exercised		7,521,668			7,522			-		-		5,633,729			-		-			-			5,641,251			-			5,641,251
Common stock cancellation for GTG rescission		(700,055	)		(700	)		-		-		(450,435	)		-		(2,776	)		-			(453,911	)		-			(453,911	)
Common stock issuance to Employees		76,607			75			-		-		30,277			-		-			-			30,352			-			30,352
Common stock issuance to Streeterville Capital, LLC		1,267,656			1,268			-		-		348,732			-		-			-			350,000			-			350,000
Common stock issuance to AiChat10X Pte. Ltd.		255,951			256			-		-		180,269			-		-			-			180,525			-			180,525
Common stock issuance - ATM		2,474,402			2,474			-		-		835,190			-		-			-			837,664			-			837,664
Common stock issuance - RDO Placement Agent warrants exercised		617,857			618			-		-		269,695			-		-			-			270,313			-			270,313
Stock-based compensation		-			-			-		-		256,304			-		-			-			256,304			-			256,304
Common stock to be issued - Private Placement Warrants exercised		-			-			-		-		-			280,000		-			-			280,000			-			280,000

Balance at September 30, 2025		103,050,651		$	103,047		$	-	$	-	$	61,610,536		$	280,000	$	(51,008,326	)	$	(96,074	)	$	10,889,183		$	10,395		$	10,899,578

reAlpha Tech Corp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2025, and 2024 (unaudited)

	For the Nine Months Ended			For the Nine Months Ended
	September 30, 2025			September 30, 2024
Cash Flows from Operating Activities:
Net Loss	$	(12,741,692	)	$	(4,995,931	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		393,445			304,222
Impairment of capitalized software		105,900			145,746
Amortization of loan discounts		545,624			-
Stock-based compensation - employees		557,999			207,454
Stock-based compensation - services		-			108,647
Change in fair value of contingent consideration		(148,000	)		-
Loss on extinguishment of debt		438,834			-
Change in fair value of preferred stock liability and embedded derivative liability		(243,883	)		-
Non-cash commitment fee expenses		375,000			375,000
Non-cash marketing and advertising		3,373,866			-
Non-cash compensation expense - GTG Financial		106,000			-
Non-cash dividend payable on Series A convertible preferred stock		78,391			-
Gain on rescission of GTG acquisition		(94,071	)		-
Loss/(gain) on sale of property and equipment		48,748			(31,392	)
Loss/(gain) from equity method investment		10,077			(20,663	)
Changes in operating assets and liabilities
Accounts receivable		139,482			150,736
Receivable from related parties		12,873			-
Payable to related parties		(3,665	)		-
Prepaid expenses		57,711			193,260
Other current assets		(286,820	)		(6,843	)
Accounts payable		(555,707	)		(59,178	)
Accrued expenses		(781,173	)		(177,148	)
Deferred liabilities		(236,101	)		-
Total adjustments		3,894,530			1,189,841
Net cash used in operating activities		(8,847,162	)		(3,806,090	)

Cash Flows from Investing Activities:
Additions to property and equipment		(32,604	)		(8,781	)
Proceeds from sale of properties		-			78,000
Net cash acquired in business combination		349,529			(20,464	)
Deconsolidation of GTG cash		(207,606	)		-
Cash used for additions to capitalized software		(156,892	)		(417,024	)
Net cash used in investing activities		(47,573	)		(368,269	)

Cash Flows from Financing Activities:
Proceeds from issuance of debt		155,481			5,000,000
Payments of debt		(5,409,086	)		(205,134	)
Proceeds from issuance of common stock		21,615,811			-
Debt extinguishment expenses		(368,769	)		-
Equity issuance expenses		(941,742	)		-
Net cash provided by financing activities		15,051,695			4,794,866

Net increase in cash		6,156,960			620,507

Effect of exchange rate changes on cash		(1,611	)		-

Cash - Beginning of Period		3,123,530			6,456,370

Cash - End of Period	$	9,278,879		$	7,076,877

Supplemental disclosure of cash flow information
Cash paid for interest		457,036			130,607

Noncash Investing and Financing Activities:
Preferred stock issuance - MMC transaction		5,000,000			-
Non-cash conversion of debt to equity – Streeterville Capital, LLC		720,065			-
Issuance of warrants to placement agents in connection with equity offerings		299,768			-

reAlpha Tech Corp. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 - Organization and Description of Business

reAlpha Tech Corp. was incorporated with the name reAlpha Asset Management, Inc. in the State of Delaware on April 22, 2021, which was changed to reAlpha Tech Corp. as a result of the short-form merger with its former parent on March 21, 2023. reAlpha Tech Corp. and its subsidiaries are collectively referred to as “we,” “us,” “our” or the “Company.”

Utilizing the power of artificial intelligence (“AI”) and an acquisition-led growth strategy, our goal is to offer a more affordable, streamlined experience for those on the journey to homeownership.

The Company is a technology-driven, integrated services company, leveraging AI to enhance the homebuying experience and streamline real estate transactions. At the core of the Company’s strategy is the reAlpha platform, an AI-powered solution designed to simplify the home purchase process while generating revenue through realty services, mortgage brokering services, and digital title and escrow services.

The Company operates through its subsidiaries, Naamche, Inc. (“U.S. Naamche”), Naamche, Inc. Pvt. Ltd. (“Nepal Naamche” and together with U.S. Naamche, “Naamche”), and AiChat Pte. Ltd. (“AiChat”) to expand its software development expertise and AI-driven engagement tools, and reAlpha Realty, LLC, Debt Does Deals, LLC (f/k/a Be My Neighbor and d/b/a reAlpha Mortgage) (“reAlpha Mortgage”), and Hyperfast Title LLC (“Hyperfast”) to provide real estate brokerage and closing services, which enable the Company to capture value across multiple stages of the transaction process. During the three months ended September 30, 2025, the Company’s acquisition of GTG Financial, Inc. (“GTG” or “GTG Financial”) was rescinded pursuant to the terms of the Stock Purchase Agreement, by and among GTG Financial, Glenn Groves (the “Seller”) and the Company, dated February 20, 2025 (the “SPA”). As a result of the rescission of the SPA, GTG is no longer a subsidiary of the Company as of August 21, 2025 (the “Rescission Date”) (see “Note 4 – Business Combinations” for more information).

With its focus on AI technology and integrated real estate services, the Company is creating a scalable, end-to-end, tech-enabled model for customers to buy a home. Through strategic acquisitions and innovations in its platform, the Company is expanding its market presence and diversifying revenue streams across real estate, mortgage services, and AI-powered solutions.

The Company’s principal executive office is located at 6515 Longshore Loop, Suite 100, Dublin, OH 43017.

Note 2 - Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and entities that the Company holds a controlling financial interest of, and those in which it owns more than 50% of the voting interest. All significant intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC applicable to interim financial reporting on Form 10-Q. Accordingly, they do not include all disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring items) necessary for a fair presentation have been included. The condensed consolidated balance sheet as of December 31, 2024 has been derived from the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on April 2, 2025, as amended on May 13, 2025 (the “Form 10-K”).

This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to U.S. GAAP and have been consistently applied in the preparation of the financial statements. The financial statements include the operations, assets, and liabilities of the Company. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to fairly present the accompanying financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Form 10-K. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.

Related Party Transactions

The Company accounts for related party transactions in accordance with Accounting Standards Codification (“ASC”) 850. A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business.

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

Cash and Cash Equivalents

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

Concentration of Credit Risks

Financial instruments that potentially subject the Company to a significant concentration of credit risk primarily consist of cash, cash equivalents, and accounts receivable. As of September 30, 2025, the Company’s cash was held by financial institutions that management believes have acceptable credit. The Federal Deposit Insurance Corporation insures balances up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits. Accounts receivable are typically unsecured. The risk with respect to accounts receivable is mitigated by regular credit evaluations that the Company performs on its distribution partners and its ongoing monitoring of outstanding balances.

In accordance with ASC 326, Investments - Financial Instruments-Credit Losses the Company applies the Current Expected Credit Losses (“CECL”) model to estimate expected credit losses over the lifetime of financial assets measured at amortized cost. The Company has determined that accounts receivable is the only financial asset subject to CECL assessment, as it does not have any loan receivables, held-to-maturity debt securities, or other financial instruments requiring CECL evaluation.

The Company’s CECL methodology incorporates historical loss experience and current economic conditions to assess credit risk and expected loss reserves.

During the nine months ended September 30, 2025, the Company collected all previously outstanding receivables attributable to AiChat, its Singapore subsidiary. As a result, the previously recorded CECL reserve of 0.05% was released. However, a new CECL provision for the three months ended September 30, 2025 was recorded based on updated receivables and risk profiles as of September 30, 2025. The CECL reserve is netted against accounts receivable, net on the balance sheet.

There were no changes in the Company’s credit risk exposure, CECL methodology, and/or reserve assumptions during the nine months ended September 30, 2025. The updated values are as follows:

	Amount
Opening balance, January 1, 2025		62
Provision for expected credit losses		279
Release of allowance for expected credit losses		(121	)
Ending balance, September 30, 2025	$	220

There have been no material changes to the Company’s significant accounting policies during the three and nine months ended September 30, 2025.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) when control of services is transferred to the customer. On a standalone basis, the Company generates revenue by providing monthly support services. Revenue is recognized over time as the services are performed and the customer benefits from them.

AiChat, a company specializing in AI conversational customer experience solutions, adheres to the revenue recognition standards outlined in ASC 606. The license fee for platform access and consulting services are recognized as distinct performance obligations, reflecting their ability to provide value independently within our customer contracts. For the “right to access” license fee, revenue is recognized over the duration of the subscription period, as control and benefits are provided continuously to the customer. Consulting services are recognized based on the nature of the engagement. Revenue for one-time services, such as project setups, is recognized at the point in time of delivery. For ongoing consulting services, revenue is recognized over time, reflecting the continuous benefit transferred to the customer throughout the service period. This approach ensures that revenue recognition accurately matches the ongoing provision of access and the timing of consulting services, as per the guidelines of ASC 606.

reAlpha Mortgage, a mortgage brokerage company, complies with ASC 606 by recognizing revenue at the point of loan funding. This moment marks the transfer of control of the loan to the borrower, capturing the completion of reAlpha Mortgage’s primary service successfully securing a loan. All services, including loan origination, application processing, and credit assessment, contribute to this culminating event. Revenue is therefore recognized only when the loan is funded, ensuring that the exact revenue amount is determinable based on the loan amount and agreed commission, accurately reflecting the completion of all related performance obligations.

GTG Financial, a mortgage brokerage company, complies with ASC 606 by recognizing revenue at the point of loan funding. This moment marks the transfer of control of the loan to the borrower, capturing the completion of GTG Financial’s primary service successfully securing a loan. All services, including loan origination, application processing, and credit assessment, contribute to this culminating event. Revenue is therefore recognized only when the loan is funded, ensuring that the exact revenue amount is determinable based on the loan amount and agreed commission, accurately reflecting the completion of all related performance obligations. Effective as of the Rescission Date, the Company’s acquisition of GTG Financial was rescinded. Accordingly, GTG Financial is no longer a subsidiary of the Company, and its results are not included in these unaudited condensed consolidated financial statements for periods after that date (see “Note 4 – Business Combinations” for more information).

Naamche, a subsidiary of the Company that provides services related to the development of technology, adheres to ASC 606 for revenue recognition, primarily from its service-based contracts. This approach involves detailed identification of contracts with customers, determination of distinct performance obligations within these contracts, and accurate allocation of transaction prices to these obligations. Revenue is recognized as Naamche satisfies each performance obligation, typically over time, reflecting the ongoing delivery and customer consumption of its tech-driven services.

Recent Accounting Pronouncements

Accounting Pronouncements Issued and Adopted

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-05, Financial Instruments—Credit Losses (Topic 326) (“ASU 2025-05”), which introduces a practical expedient for all entities and an accounting policy election for certain entities related to estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The amendments, developed in coordination with the Private Company Council, address stakeholder concerns regarding the cost and complexity of applying the current expected credit loss model to such balances. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within those years, with early adoption permitted.

The Company elected to early adopt ASU 2025-05 during the quarter ended September 30, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements or related disclosures.

There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2025.

Note 3 - Going Concern

During the quarter ended September 30, 2025, the Company incurred a net loss and experienced negative operating cash flows. These conditions raised substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of these unaudited condensed consolidated financial statements.

SEC Form 10-Q filed by reAlpha Tech Corp.