reAlpha Tech Corp. (“reAlpha” or the “Company”) (Nasdaq: AIRE),
a real estate technology company focused on developing, utilizing
and commercializing real estate-focused artificial intelligence
(“AI”) to drive efficiency, sustainability and growth, today
provides a business update and reports financial results for the
second quarter ended October 31, 2023.
“Our second fiscal quarter of 2023 marked a pivotal quarter for
reAlpha,” said Giri Devanur, CEO of reAlpha. “Following a
successful listing on the Nasdaq Capital Market during the quarter,
and announcement of the commercial launch of our AI real estate
tool GENA, we raised $8.0 million in gross proceeds in November
through a public offering to begin executing our growth strategy.
With the execution of the definitive agreements to purchase
Naamche, Inc. and Naamche Inc. Pvt. Ltd., and a letter of intent to
acquire United Software Group and certain subsidiaries and
affiliates, we are looking to continue to develop and scale reAlpha
to provide innovative AI solutions to further enhance stockholder
value.”
Recent strategic and operational highlights during and
subsequent to the second quarter of 2023 include:
- Listed on the Nasdaq Capital Market (“Nasdaq”) under the ticker
symbol “AIRE” on October 23, 2023.
- Announced the commercial launch of GENA, formerly known as
BnBGPT, a novel tool that enhances residential property listings in
multiple online real estate marketplaces through the integration of
personalized generative AI descriptions.
- Consummated a public offering for gross proceeds of $8.0
million on November 24, 2023.
- Entered into definitive agreements to acquire Naamche, Inc. and
Naamche, Inc. Pvt. Ltd (collectively, “Naamche”), a technology
company focused on developing AI-powered solutions for large
industries, including real estate, which is subject to closing
conditions and jurisdictional approval (the “Acquisitions”).
- Approved the change of its fiscal year end from April 30 to
December 31, effective as of December 31, 2023, and the Company
will prepare an Annual Report on Form 10-K for the transition
period between May 1, 2023 and December 31, 2023 to be filed with
the U.S. Securities and Exchange Commission (“SEC”).
- Entered into a letter of intent to acquire United Software
Group and certain subsidiaries and affiliates (collectively,
“USG”), an Ohio-based privately-held, multi-industry information
technology consulting company.
Financial Results
Revenue was $33,459 for the three months ended October 31, 2023
compared to $110,624 for the three months ended October 31, 2022.
Our revenues consist of those derived from our two segments: (i)
short-term rental income: $3,099 for the three months ended October
31, 2023 and $33,322 for the three months ended October 31, 2022;
and (ii) platform services income: $30,360 for the three months
ended October 31, 2023 and $77,302 for the three months ended
October 31, 2022. Revenue was $101,180 for the six months ended
October 31, 2023 compared to $199,497 for the six months ended
October 31, 2022. Our revenues consist of those derived from our
two segments: (i) short-term rental income: $22,662 for the six
months ended October 31, 2023 and $59,789 for the six months ended
October 31, 2022; and (ii) platform services income: $78,518 for
the six months ended October 31, 2023 and $139,708 for the six
months ended October 31, 2022.
The Company had cash on hand of $605,337 and $ 1,256,868 as of
October 31, 2023, and April 30, 2023 respectively.
Net loss was $4,252,879 for the three months ended October 31,
2023, compared to a net loss of $1,559,016 for the three months
ended October 31, 2022. The net loss increase is mainly due a
significant increase to general legal advisory and professional
services, which primarily consisted of issuance of shares of
reAlpha’s common stock in exchange for services rendered in
connection with reAlpha’s direct listing on Nasdaq. Net income was
$590,128 for the six months ended October 31, 2023, compared to a
net loss of $2,526,644 for the six months ended October 31, 2022.
The reason for this significant increase in our net income during
the six months ended October 31, 2023, is mainly attributable to
the gain on sale of myAlphie, as described above. This increase in
net income may not reflect our current business and may be
abnormally high for this period.
Adjusted EBITDA was $(626,885) for the three months ended
October 31, 2023, compared to $(1,481,579) for the three months
ended October 31, 2022. Adjusted EBITDA was $(4,815,881) for the
six months ended October 31, 2023, compared to $(2,368,438) for the
six months ended October 31, 2022. The full reconciliation to
Adjusted EBITDA is set forth below.
Explanatory Notes on Use of Non-GAAP Financial
Measures
To supplement our financial information presented in accordance
with U.S. GAAP (“GAAP”), we believe “Adjusted EBITDA,” a “non-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 Adjusted EBITDA
may be helpful to investors because it provides consistency and
comparability with past financial performance. However, Adjusted
EBITDA is presented for supplemental informational purposes only,
has limitations as an analytical tool, and should not be considered
in isolation or as a substitute for financial information presented
in accordance with GAAP. In addition, other companies, including
companies in our industry, may calculate similarly titled non-GAAP
measures differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of our
non-GAAP financial measures as tools for comparison. A
reconciliation is provided below for each non-GAAP financial
measure to the most directly comparable financial measure stated in
accordance with GAAP. Investors are encouraged to review the
related GAAP financial measures and the reconciliation of these
non-GAAP financial measures to their most directly comparable GAAP
financial measures, and not to rely on any single financial measure
to evaluate our business.
We reconcile our non-GAAP financial measure of Adjusted EBITDA
to our net income, adjusted to exclude interest expense, provision
for (benefit from) income taxes, depreciation and amortization,
non-recurring acquisition-related compensation expenses,
non-recurring direct listing expenses, unrealized gain or loss on
foreign exchange, non-recurring legal reserves and related costs
and non-recurring gains. For the three months ended October 31,
2023 and October 31, 2022, we did not have any restructuring
expenses and non-recurring acquisition-related compensation
expenses.
About reAlpha
reAlpha is a real estate technology company with a mission to
develop, utilize and commercialize real-estate focused artificial
intelligence. Founded with a focus on short-term rental properties,
reAlpha’s strategy involves developing and buying technologies
aimed at democratizing access to this asset class. In addition to
providing individual investors with access to short-term rentals,
reAlpha plans to make some of its technologies available for
commercial use on a licensing fee basis, pay-per-use basis or other
fee arrangements. For more information about reAlpha, visit
www.realpha.com.
Forward-Looking Statements
The information in this press release includes “forward-looking
statements”. Any statements other than statements of historical
fact contained herein, including statements as to future results of
operations and financial position, planned acquisitions, business
strategy and plans, objectives of management for future operations
of reAlpha, market size and growth opportunities, competitive
position and technological and market trends, are forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as “may”, “should”, “could”,
“might”, “plan”, “possible”, “project”, “strive”, “budget”,
“forecast”, “expect”, “intend”, “will”, “estimate”, “anticipate”,
“believe”, “predict”, “potential” or “continue”, or the negatives
of these terms or variations of them or similar terminology. These
forward-looking statements include, without limitation, statements
regarding the satisfaction of required conditions for the listing
of the reAlpha common stock. Factors that may cause actual results
to differ materially from current expectations include, but are not
limited to: reAlpha’s ability to pay contractual obligations;
reAlpha’s liquidity, operating performance, cash flow and ability
to secure adequate financing; reAlpha’s limited operating history
and that reAlpha has not yet fully developed its AI-based
technologies; whether reAlpha’s technology and products will be
accepted and adopted by its customers and intended users; reAlpha’s
ability to satisfy closing conditions and obtain jurisdictional
approval for the Acquisitions; reAlpha’s ability to successfully
negotiate a definitive agreement to acquire USG and satisfy
associated closing conditions, including potential stockholder
approval; reAlpha’s ability to integrate the business of Naamche
and USG into its existing business and the anticipated demand for
Naamche’s and USG’s services; reAlpha’s ability to commercialize
its developing AI-based technologies; the inability to maintain and
strengthen reAlpha’s brand and reputation; any accidents or
incidents involving cybersecurity breaches and incidents; the
inability to accurately forecast demand for short-term rentals and
AI-based real estate focused products; the inability to execute
business objectives and growth strategies successfully or sustain
reAlpha’s growth; the inability of reAlpha’s customers to pay for
reAlpha’s services; the inability of reAlpha to obtain additional
financing or access the capital markets to fund its ongoing
operations on acceptable terms and conditions; the outcome of any
legal proceedings that might be instituted against reAlpha; changes
in applicable laws or regulations, and the impact of the regulatory
environment and complexities with compliance related to such
environment; and other risks and uncertainties indicated in our SEC
filings. Forward-looking statements are based on the opinions and
estimates of management at the date the statements are made and are
subject to a variety of risks and uncertainties and other factors
that could cause actual events or results to differ materially from
those anticipated in the forward-looking statements. Although
reAlpha believes that the expectations reflected in the
forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct.
reAlpha’s future results, level of activity, performance or
achievements may differ materially from those contemplated,
expressed or implied by the forward-looking statements, and there
is no representation that the actual results achieved will be the
same, in whole or in part, as those set out in the forward-looking
statements. For more information about the factors that could cause
such differences, please refer to reAlpha’s filings with the SEC.
Readers are cautioned not to put undue reliance on forward-looking
statements, and reAlpha does not undertake any obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by
law.
REALPHA TECH CORP.
Condensed Consolidated Balance
Sheet
October 31, 2023 and April 30,
2023
October 31, 2023
April 30, 2023
(unaudited)
ASSETS
Current Assets
Cash
$
605,337
$
1,256,868
Accounts receivable
-
68,120
Receivable from related parties
20,240
20,874
Prepaid expenses
1,292,758
3,061,196
Other current assets
237,962
250,680
Total current assets
2,156,297
4,657,738
Property and Equipment, at cost
Property and equipment, net
329,385
2,185,992
Other Assets
Investments
115,000
115,000
Goodwill
5,135,894
5,135,894
Capitalized software development - work in
progress
8,752,330
8,998,755
TOTAL ASSETS
$
16,488,906
$
21,093,379
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
Current Liabilities
Accounts payable
$
2,128,562
$
412,947
Mortgage and other loans, net
13,891
1,222,000
Notes payable
-
5,850,000
Accrued expenses
343,624
195,299
Total current liabilities
2,486,077
7,680,246
Long-Term Liabilities
Mortgage loans, net
247,000
247,000
Total liabilities
2,733,077
7,927,246
Stockholders’ Equity (Deficit)
Preferred stock, $0.001 par value;
5,000,000 shares authorized, 0 shares issued and outstanding as of
October 31, 2023 and April 30, 2023
-
-
Common stock ($0.001 par value;
200,000,000 shares authorized, 42,522,091 shares outstanding as of
October 31, 2023; 200,000,000 shares authorized, 42,522,091 shares
outstanding as of April 30, 2023)
42,523
42,523
Additional paid-in capital
24,106,597
24,107,159
Accumulated deficit
(10,396,033
)
(10,986,162
)
Total stockholders’ equity (deficit) of
reAlpha Tech Corp.
13,753,087
13,163,520
Non-controlling interests in consolidated
entities
2,742
2,613
Total stockholders’ equity (deficit)
13,755,829
13,166,133
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
16,488,906
$
21,093,379
REALPHA TECH CORP.
Condensed Consolidated
Statements of Operations
For the Three and Six Months
Ended October 31, 2023 and 2022 (unaudited)
For the Three Months
Ended
For the Six Months
Ended
October 31, 2023
October 31, 2022
October 31, 2023
October 31, 2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
$
33,459
$
110,624
$
101,180
$
199,497
Cost of revenues
30,360
83,771
74,554
151,413
Gross Profit
3,099
26,853
26,626
48,084
Operating Expenses
Wages, benefits and payroll taxes
265,099
298,326
517,145
566,503
Repairs & maintenance
24,663
4,776
48,893
11,357
Utilities
4,551
8,244
11,453
21,285
Travel
15,208
23,919
25,229
38,078
Dues & subscriptions
8,100
25,894
17,827
46,750
Marketing & advertising
43,213
402,359
95,842
582,427
Professional & legal fees
3,680,488
485,307
3,876,300
936,825
Depreciation & amortization
7,863
36,736
29,176
73,738
Other operating expenses
144,222
229,140
192,569
150,937
Total operating expenses
4,193,407
1,514,701
4,814,434
2,427,900
Operating Loss
(4,190,308
)
(1,487,848
)
(4,787,808
)
(2,379,816
)
Other Income (Expense)
Interest income
277
93
321
157
Other income
-
2,660
525
2,660
Gain on sale of myAlphie
-
-
5,502,774
-
Interest expense
(22,075
)
(40,701
)
(67,588
)
(84,468
)
Other expense
(40,760
)
(33,213
)
(57,946
)
(64,676
)
Total other income (expense)
(62,558
)
(71,161
)
5,378,086
(146,327
)
Net (Loss) Income
(4,252,866
)
(1,559,009
)
590,278
(2,526,143
)
Less: Net Income (Loss) Attributable to
Non-Controlling Interests
13
7
150
501
Net (Loss) Income Attributable to
Controlling Interests
$
(4,252,879
)
$
(1,559,016
)
$
590,128
$
(2,526,644
)
Net (loss) Income per share — basic
$
(0.10
)
$
(0.04
)
$
0.01
$
(0.06
)
Net (loss) Income per share — diluted
$
(0.10
)
$
(0.04
)
$
0.01
$
(0.06
)
Weighted-average outstanding shares —
basic
42,522,091
40,127,956
42,522,091
40,127,956
Weighted-average outstanding shares —
diluted
42,522,091
40,127,956
42,522,091
40,127,956
REALPHA TECH CORP.
Unaudited Condensed
Consolidated Statements of Changes in Stockholders’ Equity
(Deficit)
for the Three and Six Months
Ended October 31, 2023 and 2022
ReAlpha
Tech Corp.
Additional
and Subsidiaries
Non-
Total Stockholders’
Common Stock
Paid-in
Accumulated
Equity
Controlling
Equity
Shares
Amount
Capital
Deficit
(Deficit)
Interests
(Deficit)
Balance at April 30, 2023
42,522,091
$
42,523
$
24,107,159
$
(10,986,162
)
$
13,163,520
$
2,613
$
13,166,133
Net Income (Loss)
-
-
-
4,843,008
4,843,008
137
4,843,145
Reg A Offering costs
-
-
(562
)
-
(562
)
-
(562
)
RTC India - Non Controlling Interest
-
-
-
-
(10
)
(10
)
Balance at July 31, 2023
42,522,091
$
42,523
$
24,106,597
$
(6,143,154
)
$
18,005,966
$
2,740
$
18,008,706
Net Income (Loss)
-
-
-
(4,252,879
)
(4,252,879
)
13
(4,252,866
)
RTC India - Non Controlling Interest
-
-
-
-
(11
)
(11
)
Balance at October 31, 2023
42,522,091
$
42,523
$
24,106,597
$
(10,396,033
)
$
13,753,087
$
2,742
$
13,755,829
ReAlpha
Tech Corp.
Additional
and Subsidiaries
Non-
Total Stockholders’
Common Stock
Paid-in
Accumulated
Equity
Controlling
Equity
Shares
Amount
Capital
Deficit
(Deficit)
Interests
(Deficit)
Balance at April 30, 2022
8,634,210
$
8,634
$
192,490
$
(5,533,053
)
$
(5,331,929
)
$
13,597
$
(5,318,332
)
Net Income (Loss)
-
-
-
(968,796
)
(968,796
)
799
(967,997
)
Distribution to Syndicate members
-
-
-
-
-
(11,625
)
(11,625
)
RTC India - Non Controlling Interest
-
-
-
-
-
(44
)
(44
)
Balance at July 31, 2022
8,634,210
$
8,634
$
192,490
$
(6,501,849
)
$
(6,300,725
)
$
2,727
$
(6,297,998
)
Net Income (Loss)
-
-
-
(1,559,016
)
(1,559,016
)
7
(1,559,009
)
RTC India - Non Controlling Interest
-
-
-
-
-
(10
)
(10
)
Balance at October 31, 2022
8,634,210
$
8,634
$
192,490
$
(8,060,865
)
$
(7,859,741
)
$
2,724
$
(7,857,017
)
REALPHA TECH CORP.
Condensed Consolidated
Statements of Cash Flows
For the Six Months Ended
October 31, 2023, and 2022 (unaudited)
For the Six Months Ended
October 31, 2023
For the Six Months Ended
October 31, 2022
(unaudited)
(unaudited)
Cash Flows from Operating
Activities:
Net income (loss)
$
590,278
$
(2,526,143
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization
29,176
73,738
Gain on sale of myAlphie
(5,502,774
)
-
Changes in operating assets and
liabilities:
Accounts receivable
68,120
38,067
Receivable from related parties
634
-
Prepaid expenses
1,768,438
41,499
Other current assets
12,718
(9,762
)
Accounts payable
1,715,615
743,502
Accrued expenses
148,325
(7,144
)
Total adjustments
(1,759,748
)
879,900
Net cash used in operating activities
(1,169,470
)
(1,646,243
)
Cash Flows from Investing
Activities:
Proceeds from sale of properties
646,266
491,598
Additions to Property, Plant &
Equipment
(40,833
)
(5,796
)
Capitalized software development - work in
progress
(100,800
)
(353,288
)
Net cash provided by investing
activities
504,633
132,514
Cash Flows from Financing
Activities:
Proceeds from issuance of debt, net
13,891
-
Payments of long-term debt
-
(23,311
)
Deferred financing costs
-
32,757
Proceeds from issuance of common stock -
Reg A
(562
)
160,769
Net cash provided by financing
activities
13,329
170,215
Net decrease in cash
(651,508
)
(1,343,514
)
Effect of exchange rate changes on
cash
(23
)
1,590
Cash - Beginning of Period
1,256,868
2,095,401
Cash - End of Period
$
605,337
$
753,477
For the Three Months Ended
October 31,
For the Six Months Ended
October 31,
2023
2022
2023
2022
Net (Loss) Income
$
(4,252,879
)
$
(1,559,016
)
$
590,129
$
(2,526,644
)
Adjusted to exclude the following
-
-
-
-
Depreciation & amortization
7,863
36,736
29,176
73,738
Interest Expense
22,075
40,701
67,588
84,468
Gain on Sale of myAlphie
-
-
(5,502,774
)
-
Non-recurring direct listing
expenses(1)
3,596,056
-
-
-
Adjusted EBITDA
$
(626,885
)
$
(1,481,579
)
$
(4,815,881
)
$
(2,368,438
)
(1)
Consists of (ii) 304,529 shares of our
common stock issued for services rendered in connection with our
direct listing on Nasdaq at an aggregate fair market value of
approximately $3.05 million, and (ii) cash payments of
approximately $550,000.
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