Business Model and Strategy - The reAlpha platform aims to simplify the homebuying process through AI-driven tools, currently available in Florida, with plans for nationwide expansion by the end of 2026[144][145][156] - Homebuyers can receive up to 75% commission rebate on brokerage fees when using all three services (realty, mortgage brokering, and digital title and escrow) through the reAlpha platform[154] - The operational model has shifted from asset-heavy short-term rental operations to a technology-focused approach, leading to the discontinuation of the rental business segment[149][151] - The technology services segment is the only reportable segment following the discontinuation of the rental business, focusing on AI-based products for various industries[151][152] - The company plans to continue acquiring complementary businesses to enhance the reAlpha platform and expand service offerings[147][156] Financial Performance - Revenue for the three months ended September 30, 2025, was $1,445,137, an increase of approximately 326% compared to $339,227 for the same period in 2024[183] - Cost of revenue increased to $695,557 for the three months ended September 30, 2025, reflecting a 514% increase from $113,361 in the same period in 2024[184] - Operating expenses rose to $5,698,381 for the three months ended September 30, 2025, representing a 208% increase compared to $1,851,056 for the same period in 2024[186] - Gross profit for the three months ended September 30, 2025, was $749,580, compared to $225,866 for the same period in 2024[183] - Revenue for the nine months ended September 30, 2025, was $3,623,153, a 759% increase from $422,006 in the same period in 2024[188] - Cost of revenue increased to $1,733,441 for the nine months ended September 30, 2025, representing a 1141% increase from $139,687 in 2024[189] - Operating expenses rose to $13,301,152 for the nine months ended September 30, 2025, an increase of approximately 216% from $4,202,728 in 2024[190] - The company reported a net loss of $12,741,692 for the nine months ended September 30, 2025, compared to a net loss of $4,995,931 in the same period in 2024[194] - Adjusted EBITDA for the nine months ended September 30, 2025, was $(6,467,579), compared to $(3,598,519) in 2024[194] Cash Flow and Financing - Cash and cash equivalents as of September 30, 2025, were approximately $9.3 million, up from $3.1 million as of December 31, 2024[196] - The company raised gross proceeds of $2.0 million from the 2025 Public Offering on July 18, 2025, with additional proceeds of approximately $3.5 million from warrant exercises[198] - An aggregate of $5.0 million in gross proceeds was raised from the Registered Offering and concurrent Private Placement on July 22, 2025, with additional proceeds of approximately $4.5 million from warrant exercises[199] - For the nine months ended September 30, 2025, net cash used in operating activities was approximately $8.8 million, an increase from approximately $3.8 million for the same period in 2024, primarily due to higher operating expenses related to acquisitions[208] - Net cash provided by financing activities for the nine months ended September 30, 2025, was approximately $15.0 million, compared to approximately $4.8 million for the same period in 2024, driven by capital raised through various programs and warrant exercises[210] - The company fully repaid the outstanding balance under the Note in full, amounting to approximately $4.46 million, improving liquidity by eliminating adverse redemption conditions[203] - The company may require additional financing in the future to support capital expenditures, research and development, and market expansion, which could include equity or debt financing[204] Compliance and Legal Matters - The company is currently under a compliance period with Nasdaq to regain a minimum bid price of $1 per share by November 17, 2025[157][161] - The company has been given until November 17, 2025, to regain compliance with Nasdaq's Minimum Bid Price Requirement, following a notification received on May 20, 2025[227] - The company faces potential delisting from Nasdaq, which could adversely affect the liquidity of its common stock and result in significant material adverse consequences[232] - The company is currently involved in ongoing litigation regarding the GEM Warrants, which may materially impact financial statements and cash flows if not resolved favorably[202] - The company is permanently barred from raising capital in Massachusetts due to a Consent Order, limiting its ability to sell securities in that state[235] Market Conditions - Financial results are highly dependent on macroeconomic conditions and U.S. residential real estate market conditions, which are seasonal and cyclical[236] - During periods of high interest rates, refinancing activity and home purchase transactions generally decline, negatively impacting demand for the company's real estate services[238] - The company may experience significant fluctuations in revenues due to the cyclical nature of loan origination activity and broader real estate market conditions[239] - The residential real estate and mortgage markets are subject to seasonal trends, affecting transaction volumes and demand for services[240] Corporate Governance and Operations - The company continues to comply with SEC regulations as evidenced by the filing of multiple forms and agreements[259] - The executive employment agreements for key personnel were amended, reflecting potential strategic shifts in management[259] - The report was signed by the CEO and CFO, confirming the accuracy of the financial disclosures[263] - The company has incurred significant legal and professional fees totaling approximately $2.7 million as part of its operational expenses[208] - The company has not reported any significant new product developments or market expansions in this quarter[256] - There were no acquisitions or mergers disclosed during this reporting period[256] - No unregistered sales of equity securities occurred during the fiscal quarter ended September 30, 2025[252] - There were no defaults upon senior securities reported[253] - No mine safety disclosures were applicable for the company[254] - No changes were made to trading arrangements by the company's directors or officers during the fiscal quarter[255] - The company filed various exhibits including a Rescission Certificate and amended bylaws, indicating ongoing corporate governance activities[257][258]
reAlpha Tech (AIRE) - 2026 Q2 - Quarterly Report