reAlpha Tech Corp. (AIRE) Risk Analysis

We are currently not eligible to utilize our "shelf" Registration Statement on Form S-3 to conduct offerings of our securities until April 2027. Until such time that we become eligible to utilize the Form S-3, if we determine to pursue an offering, we would be required to conduct the offering on an exempt basis or file a Registration Statement on Form S-1. Using a Registration Statement on Form S-1 for a public offering, for instance, would likely take significantly longer than using a Registration Statement on Form S-3 and increase our transaction costs, and could, to the extent we are not able to conduct offerings using alternative methods, adversely impact our liquidity, ability to raise capital or complete acquisitions in a timely manner. The use of a Registration Statement on Form S-1 would also limit our flexibility as to the terms, timing or manner of any such offering, making it more difficult to execute any such transaction successfully and potentially harming our financial condition. Further, there can be no assurance that any financing using alternative methods will be available on acceptable terms, in the amounts needed, or at all.

We are an "emerging growth company" ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act'"). We will remain an EGC until the earliest to occur of (i) the last day of the fiscal year in which it has total annual gross revenue of $1.235 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common stock pursuant to this registration statement; (iii) the date on which it has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; or (iv) the date it qualifies as a "large accelerated filer" under the rules of the SEC, which means the market value of the common stock held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter after it has been a reporting company in the United States for at least 12 months. For so long as we remain an EGC, it is permitted to and intends to rely upon exemptions from certain disclosure requirements that are applicable to other public companies that are not EGCs. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of SOX. We may take advantage of some, but not all, of the available exemptions available to EGCs. We cannot predict whether investors will find the common stock less attractive if it relies on these exemptions. If some investors find the common stock less attractive as a result, there may be a less active trading market for the common stock and the price of the common stock may be more volatile. We are also a smaller reporting company, as defined in Rule 405 promulgated under the Securities Act ("SRC"). As an SRC, our Company intends to utilize certain reduced disclosure requirements, including publishing two years of audited financial statements instead of three years, as required for companies that do not qualify as an SRC. Our Company will remain an SRC until the last day of the fiscal year in which it had (i) a public float that exceeded $250 million or (ii) annual revenues of more than $100 million and a public float that exceeded $700 million. To the extent our Company takes advantage of such reduced disclosure obligations, it may make comparison of its financial statements to those of other public companies difficult or impossible. After our Company ceases to be an SRC, it is expected to incur additional management time and cost to comply with the more stringent reporting requirements applicable to companies that are accelerated filers or large accelerated filers, including complying with the auditor attestation requirements of Section 404 of SOX.

Our certificate of incorporation provides for indemnification of our directors and officers to the fullest extent authorized or permitted under Delaware law, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or hereafter may be amended. Our bylaws obligates us to indemnify each of our directors or officers who is or is threatened to be made a party to or witness in a proceeding by reason of his or her service in those or certain other capacities, to the maximum extent permitted by Delaware law, from and against any claim or liability to which such person may become subject or which such person may incur by reason of his or her status as a present or former director or officer of us or serving in such other capacities. In addition, we have entered into separate indemnification agreements with our directors and officers, which provide that we may be obligated to reimburse the expenses reasonably incurred by our present and former directors and officers in connection with such proceedings. As a result, we and our stockholders may have more limited rights to recover money damages from our directors and officers than might otherwise exist absent these provisions in our bylaws or that might exist with other companies, which could limit your recourse in the event of actions that are not in our best interests.

Our investment, financing, borrowing and dividend policies and our policies with respect to all other activities, including growth, debt, capitalization and operations, will be determined by our Board. These policies may be amended or revised at any time and from time to time at the discretion of our Board without a vote of our stockholders. In addition, our Board may change our policies with respect to conflicts of interest provided that such changes are consistent with applicable legal requirements.

Our certificate of incorporation (as amended from time to time, the "certificate of incorporation") provides that, with certain limited exceptions, the Court of Chancery of the State of Delaware is the exclusive forum for: - any derivative action or proceeding brought on our behalf;- any action asserting a claim of breach of fiduciary duty owed by any director, officer or stockholder;- any action asserting a claim against us arising under the Delaware General Corporation Law ("DGCL"), or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware;- any action arising pursuant to any provision of our second amended and restated bylaws (the "bylaws") or certificate of incorporation; and - any action asserting a claim against us or any current or former director, officer or stockholder that is governed by the internal-affairs doctrine. This provision does not apply to suits brought to enforce a duty or liability created by the Securities Act, Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction. In addition, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause or causes of action arising under the Securities Act, including all causes of action asserted against any defendant to such complaint. For the avoidance of doubt, this provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint, and any other professional entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering. However, these choice of forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees. Further, these choice of forum provisions may increase the costs for a stockholder to bring such a claim and may discourage them from doing so. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will be enforced by a court in those other jurisdictions. If a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. For example, the Court of Chancery of the State of Delaware recently determined that the exclusive forum provisions of federal district courts of the United States of America for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable. We note that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

Our certificate of incorporation authorizes us to issue up to 5,000,000 shares of preferred stock with designations, rights and preferences determined from time-to-time by our Board. Accordingly, our Board is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of holders of our common stock. For example, an issuance of shares of preferred stock could: - adversely affect the voting power of the holders of our common stock;- make it more difficult for a third-party to gain control of us;- discourage bids for our common stock at a premium;- limit or eliminate any payments that the holders of our common stock could expect to receive upon our liquidation; or - otherwise adversely affect the market price or our common stock. We have in the past issued, and we may at any time in the future issue, shares of preferred stock. In connection with our transaction with Mercurius Media Capital LP ("MMC"), we issued 250,000 shares of our Series A Preferred Stock. Subject to and in accordance with the terms of the Certificate of Designation, each share of Series A Preferred Stock is convertible into one share of our common stock at the election of the holder during the initial three year-period following the issuance of such share of Series A Preferred Stock, and each share is automatically convertible at the end of such 3-year period following the issuance thereof, subject to certain beneficial ownership limitations. Each share of Series A Preferred Stock also has voting rights to vote on any matter presented to our stockholders on an as-converted basis and it ranks senior to our common stock as to distributions and payments upon our liquidation, dissolution and winding up. Further, our outstanding shares of Series A Preferred Stock accrue dividends in an amount equal to 3% per annum on a stated value of $20 per share (the "Stated Value"), subject to adjustment provided in the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (the "Certificate of Designation"), which will be payable in additional shares of Series A Preferred Stock or cash, to the extent there are any funds legally available therefor. We may choose not to pay the accrued dividends of our Series A Preferred Stock in cash, may not have sufficient available cash to pay the dividends as they accrue or may be prohibited contractually, or pursuant to applicable law, from paying such dividends in cash. The payment of the dividends could reduce our available cash on hand, have a material adverse effect on our results of operations and cause the value of our stock to decline in value. Additionally, the issuance of shares of common stock upon conversion of our Series A Preferred Stock, including those that may be issued as payment for dividend accrued thereunder, could cause substantial dilution to existing stockholders.

During the fiscal year ended December 31, 2025, the number of shares of our common stock outstanding increased from approximately 45.9 million to approximately 131.7 million, representing an increase of approximately 187%. This increase resulted from multiple capital-raising transactions, including a warrant inducement transaction in April 2025, a best-efforts public offering and a registered direct offering in July 2025, and the exercise of related warrants in September and October 2025. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations––Liquidity and Capital Resources" herein. As of December 31, 2025, we also had outstanding warrants to purchase approximately 9.2 million additional shares of common stock at various exercise prices, as well as 250,000 shares of Series A Preferred Stock, each of which is convertible into shares of our common stock on March 10, 2028, or earlier at the option of the holder. The exercise or conversion, as applicable, of these securities would result in further dilution to our stockholders. In addition, the resolution of our ongoing litigation with GYBL regarding the GEM Warrants, if adverse to us, could require a significant downward adjustment to the exercise price of the GEM Warrant that are exercisable to purchase approximately 1.7 million shares of common stock (in a cash exercise), which would increase the number of shares issuable upon exercise and result in additional dilution. To the extent we continue to raise capital by issuing equity securities, our stockholders may experience substantial dilution. We may sell shares of common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. In particular, we may sell a substantial number of shares of our common stock pursuant to our At The Market Offering Agreement (the "HCW Sales Agreement") with H.C. Wainwright & Co., LLC ("Wainwright"), pursuant to which we have the discretion to offer and sell securities in an amount not to exceed the number or dollar amount of shares of our common stock registered on the prospectus supplement covering the ATM offering, as may be amended or supplemented from time to time, in accordance with the terms of the HCW Sales Agreement. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations––Recent Developments––At the Market Offering" herein. We have the discretion to vary the timing, prices, and quantity of shares of our common stock sold; subject to market demand and market conditions. We are also continuing to consider additional potential acquisitions in connection with our growth strategy, and these acquisitions could involve the issuance of additional shares of common stock or other equity securities. For example, in connection with our acquisitions of AiChat, reAlpha Mortgage and Prevu, we agreed to issue shares of common stock as part of the consideration thereof, and we agreed to issue shares of common stock as part of the consideration for the proposed acquisition of InstaMortgage. Additionally, pursuant to the 2022 Plan, we are authorized to grant stock awards to our employees, directors and consultants. The 2022 Plan includes a stockholder-approved evergreen provision, which commencing October 15, 2025, permits automatic annual increases in the number of shares reserved under the 2022 Plan in an amount equal to the lesser of: (A) ten percent (10%) of the total number of shares of common stock issued and outstanding on October 14 of such year or (B) 15,000,000 shares of common stock; provided, that the Board may decide by October 15 of such year to provide that there shall be no increase in the shares of common stock available for issuance under the 2022 Plan for such fiscal year or that the increase shall be a lesser number of shares of common stock than otherwise provided under the automatic annual increase provision. Any grants under the 2022 Plan, including the 2025 Short Term Incentive Plan (the "STIP"), and automatic annual increases to the number of shares reserved under the 2022 Plan may result in additional dilution to our stockholders. These future issuances of additional common stock may also adversely affect the market price of our common stock and make it more difficult to raise capital in the future.

Recently, the stock markets generally have experienced, and will probably continue to experience, price and volume fluctuations that have affected the market price of the shares of many small-cap companies. These fluctuations have often been unrelated to the operating results of such companies and in recent times have been exacerbated by investors' concerns stemming from geopolitical issues and changes in macroeconomic conditions. Factors that may affect the volatility of our stock price include the following: - anticipated or actual fluctuations in our quarterly or annual operating results;- fluctuations in interest rates;- our success, or lack of success, in developing and marketing our products and services;- terrorist attacks, natural disasters and the effects of climate change, regional and global conflicts, sanctions, laws and regulations that prohibit or limit operations in certain jurisdictions, public health crises or other such events impacting countries where we have operations;- changes in macroeconomic conditions, including inflationary pressures;- changes in financial estimates by us or of securities or industry analysts;- the issuance of new or updated research reports by securities or industry analysts;- the announcement of new products, services, or technological innovations by us or our competitors;- the announcement of new customers, partners or suppliers;- the ability to collect our outstanding accounts receivable;- changes in our executive leadership;- regulatory developments in our industry affecting us, our customers or our competitors;- competition;- actual or purported "short squeeze" trading activity; and - the sale or attempted sale of a large amount of common stock, including sales of common stock following exercises of outstanding warrants. In addition, the market price and trading volume of our common stock has, since our listing on Nasdaq, and may continue to exhibit, extreme volatility, including within a single trading day. Such volatility could cause purchasers of our common stock to incur substantial losses. With respect to these such instances of trading volatility, we are not aware of any material changes in our financial condition or results of operations that would explain such price volatility or trading volume, which we believe reflect market and trading dynamics unrelated to our operating business or prospects and outside of our control. We are thus unable to predict when such instances of trading volatility will occur or how long such dynamics may last. Under these circumstances, we would caution you against investing in our common stock unless you are prepared to incur the risk of incurring substantial losses. A proportion of our common stock may be traded by short sellers which may put pressure on the supply and demand for our common stock, creating further price volatility. In particular, a possible "short squeeze" due to a sudden increase in demand of our common stock that largely exceeds supply may lead to sudden extreme price volatility in our common stock. Investors may purchase our common stock to hedge existing exposure in our common stock or to speculate on the price of our common stock. Speculation on the price of our common stock may involve long and short exposures. To the extent aggregate short exposure exceeds the number of common stock available for purchase in the open market, investors with short exposure may have to pay a premium to repurchase our common stock for delivery to lenders of our common stock. Those repurchases may in turn, dramatically increase the price of our common stock until investors with short exposure are able to purchase additional common stock to cover their short position. This is often referred to as a "short squeeze." Following such a short squeeze, once investors purchase the shares necessary to cover their short position, the price of our common stock may rapidly decline. A short squeeze could lead to volatile price movements in our shares that are not directly correlated to the performance or prospects of our company and could cause purchasers of our common stock to incur substantial losses. We are unable to predict when instances of trading volatility or "short-squeezing" may occur or how long such dynamics may last. Under these circumstances, we would caution you against investing in our common stock unless you are prepared to incur the risk of incurring substantial losses. Further, stockholders may institute securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.