reAlpha Tech Corp. (“reAlpha,” “Company,” “us,” “we” or “our”)
(Nasdaq: AIRE), a real estate technology company focused on
developing, utilizing and commercializing real estate-focused
artificial intelligence (“AI”) technologies, today provides a
business update and reports financial results for the eight month
period ended December 31, 2023. In accordance with a change of its
fiscal year end from April 30 to December 31, effective as of
December 31, 2023, the Company is reporting results for the
transition period between May 1, 2023 and December 31, 2023.
“2023 marked a pivotal chapter in reAlpha’s journey,” said Giri
Devanur, Chief Executive Officer of reAlpha. “We successfully
debuted on the Nasdaq Capital Market in October, raised $8.0
million in gross proceeds through a public offering in November,
and introduced GENA, our AI-powered real estate technology, to
kick-start our goal to commercialize our technologies.
Additionally, with the execution of definitive agreements to
acquire Naamche, Inc. and Naamche Inc. Pvt. Ltd., coupled with a
non-binding letter of intent to acquire United Software Group and
certain affiliated entities, the due diligence process for which is
still ongoing, we believe reAlpha is well-positioned to drive
sustainable growth and create stockholder value while advancing
innovative AI solutions,” concluded Mr. Devanur.
Recent strategic and operational highlights during the
transition period ended December 31, 2023 include:
- Listed on the Nasdaq Capital Market (“Nasdaq”) under the ticker
symbol “AIRE” on October 23, 2023.
- Announced the launch of GENA, formerly known as BnBGPT, a
technology 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 our fiscal year-end from April 30 to
December 31, effective as of December 31, 2023.
- Entered into a non-binding 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.
Business Strategy Update
Given the current macroeconomic climate, including rising
interest rates, inflation, and high property prices, we decided to
pause our efforts in acquiring real estate. Instead, we shifted our
focus towards improving and developing our AI technologies for
commercial applications, aiming to create revenue through
technology while our short-term rental operations are on hold. We
intend to continue commercializing our technologies to further add
technology-derived revenue streams. We may resume the complementary
direct real estate investing model from our rental business segment
when prevailing interest rates and other macroeconomic factors
align more favorably. In the meantime, our growth strategy will
encompass both organic and inorganic methods through
commercialization of our AI technologies that are in varying stages
of development and acquisitions of complementary businesses and
technologies.
Financial Results
In accordance with a change of our fiscal year end from April 30
to December 31, effective as of December 31, 2023, we are reporting
results for the transition period between May 1, 2023 and December
31, 2023.
Revenue for the eight months ended December 31, 2023 was
$121,690, compared to $284,666 for the eight months ended December
31, 2022. Our revenues consist of both the short-term rental
revenue that we receive from our listed properties, if any, and
platform services income that we receive from our technologies.
This decrease in revenues is mainly attributed to lower rental
income segment due to the disposal of properties during the eight
months ended December 31, 2023, and lower platform services segment
revenue compared to the eight months ended December 31, 2022 as a
result of the sale of myAlphie.
We had cash and cash equivalents of $6,456,370 as of December
31, 2023 and $1,256,868 as of April 30, 2023.
Net loss was $1,251,259 for the eight months ended December 31,
2023, compared to a net loss of $4,241,555 for the eight months
ended December 31, 2022. This significant decrease in net loss is
predominantly attributable to the sale of myAlphie during the eight
months ended December 31, 2023. This decrease in net loss may not
accurately represent our current business operations and may be
unusually elevated for this period due to the impact of the
myAlphie sale.
Adjusted EBITDA was $(2,297,480) for the eight months ended
December 31, 2023, compared to $(4,031,674) for the eight months
ended December 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
U.S. Securities and Exchange Commission (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, settlement expenses
and related costs and non-recurring gains and losses. For the
transition period ended December 31, 2023 and the fiscal year ended
April 30, 2023, we did not have any restructuring expenses or
non-recurring acquisition-related compensation expenses.
About reAlpha
reAlpha is a real estate technology company with a mission to
shape the property technology market, or “proptech,” landscape
through the commercialization of artificial intelligence (“AI”)
technologies and strategic synergistic acquisitions that complement
our business model. 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.
Factors that may cause actual results to differ materially from
current expectations include, but are not limited to: whether
reAlpha’s recent business strategy shift will be successful;
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.
Consolidated Balance
Sheet
December 31, 2023, April 30,
2023 and April 30, 2022
December 31, 2023
April 30, 2023
April 30, 2022
ASSETS
Current Assets
Cash
$
6,456,370
$
1,256,868
$
2,072,090
Restricted cash
-
-
23,311
Accounts receivable
30,630
68,120
133,816
Receivable from related parties
-
20,874
-
Prepaid expenses
242,795
3,061,196
111,944
Other current assets
670,499
250,680
14,897
Total current assets
7,400,294
4,657,738
2,356,058
Property and Equipment, at cost
Property and equipment, net
328,539
2,185,992
3,816,149
Other Assets
Investments
115,000
115,000
115,000
Other long term assets
406,250
-
-
Intangible assets, net
997,962
-
-
Goodwill
17,337,739
5,135,894
-
Capitalized software development - work in
progress
839,085
8,998,755
599,459
TOTAL ASSETS
$
27,424,869
$
21,093,379
$
6,886,666
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
Current Liabilities
Accounts payable
$
461,875
$
412,947
$
81,377
Settling subscriptions, net of offering
costs
-
-
3,773,097
Mortgage loans, net
-
1,222,000
2,229,162
Other loans
190,095
-
-
Notes payable
-
5,850,000
6,000,000
Deferred liabilities, current portion
593,750
-
-
Accrued expenses
817,114
195,299
121,362
Total current liabilities
2,062,834
7,680,246
12,204,998
Long-Term Liabilities
Deferred liabilities, net of current
portion
406,250
-
-
Mortgage loans
247,000
247,000
-
Total liabilities
2,716,084
7,927,246
12,204,998
Stockholders’ Equity (Deficit)
Preferred stock, $0.001 par value;
5,000,000 shares authorized, 0 shares issued and outstanding as of
December 31, 2023, April 30, 2023 and April 30, 2022
-
-
-
Common stock ($0.001 par value;
200,000,000 shares authorized, 44,122,091 shares outstanding as of
December 31, 2023; 200,000,000 shares authorized, 42,522,091 shares
outstanding as of April 30, 2023; 50,000,000 shares authorized,
8,634,210 shares outstanding as of April 30, 2022)
44,123
42,523
8,634
Additional paid-in capital
36,899,497
24,107,159
192,490
Accumulated deficit
(12,237,885
)
(10,986,162
)
(5,533,053
)
Total stockholders’ equity (deficit) of
reAlpha Tech Corp.
24,705,735
13,163,520
(5,331,929
)
Non-controlling interests in consolidated
entities
3,050
2,613
13,597
Total stockholders’ equity (deficit)
24,708,785
13,166,133
(5,318,332
)
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
27,424,869
$
21,093,379
$
6,886,666
REALPHA TECH CORP.
Consolidated Statements of
Operations
For the Eight Months Ended
December 31, 2023 and Years Ended April 30, 2023 and 2022
For the Eight Months
Ended
For the Year Ended April
30,
December 31, 2023
2023
2022
Revenues
$
121,690
$
419,412
$
305,377
Cost of revenues
94,665
293,204
167,193
Gross Profit
27,025
126,208
138,184
Operating Expenses
Wages, benefits and payroll taxes
710,737
1,114,403
1,177,110
Repairs & maintenance
51,436
24,794
47,601
Utilities
12,321
32,456
49,058
Travel
45,276
-
-
Dues & subscriptions
24,581
98,309
105,047
Marketing & advertising
193,612
2,002,884
2,569,730
Professional & legal fees
4,619,480
1,483,889
712,322
Depreciation & amortization
289,067
157,802
151,478
Other operating expenses
419,137
160,050
154,780
Total operating expenses
6,365,647
5,074,587
4,967,126
Operating Loss
(6,338,622
)
(4,948,379
)
(4,828,942
)
Other Income (Expense)
Interest income
557
-
147
Other income
89,860
53,093
34,853
Gain on sale of myAlphie
5,502,774
-
-
Interest expense
(70,676
)
(169,776
)
(177,273
)
Other expense
(230,866
)
(387,321
)
(420,797
)
Total other income (expense)
5,291,649
(504,004
)
(563,070
)
Net Loss before income taxes
(1,046,973
)
(5,452,383
)
(5,392,012
)
Income tax expense
(204,286
)
-
-
Net Loss
$
(1,251,259
)
$
(5,452,383
)
$
(5,392,012
)
Less: Net Income (Loss) Attributable to
Non-Controlling Interests
464
726
(12,642
)
Net Loss Attributable to Controlling
Interests
$
(1,251,723
)
$
(5,453,109
)
$
(5,379,370
)
Net loss per share — basic
$
(0.03
)
$
(0.13
)
NA
Net loss per share — diluted
$
(0.03
)
$
(0.13
)
NA
Weighted-average outstanding shares —
basic
42,688,666
40,439,190
NA
Weighted-average outstanding shares —
diluted
42,688,666
40,439,190
NA
REALPHA TECH CORP.
Consolidated Statements of
Changes in Stockholders’ Equity (Deficit)
For the Eight Months Ended
December 31, 2023 and Years Ended April 30, 2023 and 2022
ReAlpha
Tech Corp.
Common Stock
Additional Paid-in
Accumulated
and Subsidiaries
Non- Controlling
Total Stockholders’
Shares
Amount
Capital
Deficit
Equity
Interests
Equity
Balance at April 30, 2021
8,624,210
$
8,624
$
92,500
$
(153,683
)
$
(52,559
)
$
24,929
$
(27,630
)
Net loss
-
-
-
(5,379,370
)
(5,379,370
)
(12,642
)
(5,392,012
)
Shares issued through Reg A offering
10,000
10
99,990
-
100,000
-
100,000
RTC India - Non controlling interest
-
-
-
-
1,310
1,310
Balance at April 30, 2022
8,634,210
$
8,634
$
192,490
$
(5,533,053
)
$
(5,331,929
)
$
13,597
$
(5,318,332
)
Net loss
-
-
-
(5,453,109
)
(5,453,109
)
726
(5,452,383
)
Shares issued through Reg A offering
895,537
896
8,954,474
-
8,955,370
-
8,955,370
Reg A offering costs
-
-
(777,466
)
-
(777,466
)
-
(777,466
)
Distribution to syndicate members
-
(46,587
)
-
(46,587
)
(12,351
)
(58,938
)
Shares issued for acquisition of Rhove
1,312,025
1,312
13,118,938
-
13,120,250
-
13,120,250
Shares issued for services
304,529
305
3,044,985
-
3,045,290
-
3,045,290
Shares issued in former parent
543,420
543
149,457
-
150,000
150,000
RTC India - Non controlling interest
-
-
-
-
-
641
641
Cancellation of shares in the former
parent
(9,167,630
)
(9,167
)
(241,957
)
-
(251,124
)
(251,124
)
Recapitalization of shares
40,000,000
40,000
410,000
-
450,000
450,000
Downstream merger transaction
-
-
(697,175
)
-
(697,175
)
-
(697,175
)
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 loss
-
-
-
(1,251,723
)
(1,251,723
)
464
(1,251,259
)
Shares issued through follow on
listing
1,600,000
1,600
3,898,898
-
3,900,498
-
3,900,498
Issuance of warrants
-
4,099,502
-
4,099,502
-
4,099,502
Issuance of stock options for Rhove
acquisition
-
-
5,462,000
-
5,462,000
-
5,462,000
Reg A offering costs
-
-
(562
)
-
(562
)
-
(562
)
Follow on listing offering costs
-
-
(667,500
)
-
(667,500
)
-
(667,500
)
RTC India - Non controlling interest
-
-
-
-
-
(27
)
(27
)
Balance at December 31, 2023
44,122,091
$
44,123
$
36,899,497
$
(12,237,885
)
$
24,705,735
$
3,050
$
24,708,785
REALPHA TECH CORP.
Condensed Consolidated
Statements of Cash Flows
For the Eight Months Ended
December 31, 2023 and Years Ended April 30, 2023 and 2022
For the Eight Months
Ended
For the Year Ended April
30,
December 31, 2023
2023
2022
Cash Flows from Operating
Activities:
Net loss
$
(1,251,259
)
$
(5,452,383
)
$
(5,392,012
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
289,067
157,802
151,478
Non cash legal & professional
expenses
3,045,290
-
-
Gain on sale of properties
(85,077
)
(22,817
)
(34,853
)
Gain on sale of myAlphie
(5,502,774
)
-
-
Changes in operating assets and
liabilities:
Accounts receivable
37,490
65,696
(133,816
)
Receivable from related parties
20,874
(20,874
)
-
Prepaid expenses
(226,889
)
96,038
-
Other current assets
(419,849
)
(81,689
)
(116,754
)
Accounts payable
48,928
235,433
81,377
Deferred liabilities
593,750
-
-
Accrued expenses
621,815
60,741
67,773
Total adjustments
(1,577,375
)
490,330
15,205
Net cash used in operating activities
(2,828,634
)
(4,962,053
)
(5,376,807
)
Cash Flows from Investing
Activities:
Proceeds from sale of properties
731,343
1,539,997
1,691,644
Additions to property, plant &
equipment
(40,840
)
19,721
(4,386,691
)
Other investment
-
-
(115,000
)
Cash paid to acquire business
(50,000
)
(25,000
)
-
Capitalized software development - work in
progress
(134,400
)
(452,451
)
(597,676
)
Net cash provided by (used in) investing
activities
506,103
1,082,267
(3,407,723
)
Cash Flows from Financing
Activities:
Proceeds from issuance of debt, net
190,095
247,000
7,923,351
Payments of long-term debt
-
(1,071,709
)
(1,420,987
)
Deferred financing costs
-
-
(92,288
)
Proceeds from issuance of common stock -
Reg A
(562
)
4,282,274
98,253
Proceeds from issuance of common stock -
Follow on
7,332,500
-
-
Settling subscription issuance of common
stock contributions
-
-
4,273,098
Offering costs paid on issuance of common
stock
-
(416,312
)
(500,000
)
Net cash provided by financing
activities
7,522,033
3,041,253
10,281,427
Net increase (decrease) in cash
5,199,502
(838,533
)
1,496,897
Cash - Beginning of Period
1,256,868
2,095,401
598,504
Cash - End of Period
$
6,456,370
$
1,256,868
$
2,095,401
Reconciliation of Cash
Cash
$
6,456,370
$
1,256,868
$
2,072,090
Restricted cash
-
-
23,311
Total cash
$
6,456,370
$
1,256,868
$
2,095,401
For the Eight Months Ended
December 31,
2023
2022
Net loss
(1,251,259
)
(4,241,555
)
Adjusted to exclude the
following:
-
-
Depreciation and amortization
289,067
98,256
gain on sale of myAlphie
(5,502,774
)
-
Interest expense
70,676
111,625
Legal settlement expenses
125,000
-
Non-recurring direct listing expenses
(1)
3,767,524
-
Income tax expenses, current
204,286
-
Adjusted EBITDA
(2,297,480
)
(4,031,674
)
(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 $0.72 million.
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version on businesswire.com: https://www.businesswire.com/news/home/20240312478655/en/
Investor Relations Contact
investorrelations@realpha.com
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