Note 15 - Stockholders’ Equity (Deficit)

The total number of shares of capital stock that the Company has the authority to issue is up to 205,000,000 shares, consisting of: (i) 200,000,000 shares of common stock, having a par value of $0.001 per share; and (ii) 5,000,000 shares of preferred stock, having a par value of $0.001 per share, of which 1,000,000 shares have been designated as Series A Preferred Stock. As of June 30, 2025, there were 52,364,654 shares of common stock and 264,043 shares of Series A Preferred Stock issued and outstanding. As of December 31, 2024, there were 45,864,503 shares of common stock and 0 shares of preferred stock issued and outstanding.

Stock Based Compensation

Equity Incentive Plan

We maintain the reAlpha Tech Corp. 2022 Equity Incentive Plan (as amended, the “2022 Plan”), under which we may grant awards to our employees, officers and directors, and certain other service providers. The compensation committee of our board of directors administers the 2022 Plan. The 2022 Plan permits grants of awards to eligible employees, officers, directors and certain other service providers. The aggregate number of shares of common stock that may be issued under the 2022 Plan may not exceed 4,000,000 shares of common stock, of which 2,891,118 remain available for issuance as of June 30, 2025. During the three months ended June 30, 2025, we issued 99,100 shares of common stock to employees under the 2022 Plan.

All of our current employees, officers, directors and certain other service providers are eligible to be granted awards under the 2022 Plan. The board of directors determines eligibility for awards under the 2022 Plan at its discretion.

Short-Term Incentive Plan

On February 4, 2025, the compensation committee of the board of directors (the “Compensation Committee”) approved the Company’s 2025 Short-Term Incentive Plan (“STIP”), providing for quarterly awards of performance-based restricted stock units (“RSUs”) under the 2022 Plan. The STIP is designed to reward key employees and executives based on the achievement of quarterly performance targets tied to organic revenue, brokerage transactions, and the quality of acquisitions.

Restricted Stock Units

The Company measures compensation cost for all stock-based awards granted to employees, directors, and certain other service providers based on the grant-date fair value of the award by ASC 718, Compensation – Stock Compensation (“ASC 718”). The fair value of restricted RSUs is based on the closing market price of the Company’s common stock on the date of grant. The Company accounts for stock-based compensation by ASC 718. For awards with graded vesting features, the Company recognizes compensation expense on a straight-line basis over the requisite service period for each separately vesting portion of the award, treating the award as, in substance, multiple awards, in accordance with ASC 718. This method results in a front-loaded expense pattern that aligns more closely with the vesting schedule of the award.

For each fiscal quarter of 2025, the Company’s executive officers will be granted RSUs with a value of $62,500 to each of the Company’s executive officers based on the closing price of the Company’s common stock 30 calendar days after the end of each quarter.

During the six months ended June 30, 2025, the Company granted 840,743 RSUs under the 2022 Plan to its executive officers and certain employees, 50,000 of which RSUs were forfeited in connection with the termination of an employee of the Company. These awards are subject to time-based vesting, with 100% of the RSUs vesting over a two-year period from the date of grant, subject to continued service and other terms and conditions.

Summary of RSU activity for the six months ended June 30, 2025 follows:

Ending balances for the 2022 Plan as of June 30, 2025 and December 31, 2024, is as follows:

None of the RSUs granted under the 2022 Plan as of June 30, 2025 vested during the six months ended June 30, 2025. The RSUs were excluded from the diluted earnings per share calculation for the period ended June 30, 2025, as their inclusion would have been anti-dilutive under ASC 260.

Warrants

Additional details regarding the initial classification and terms of the Warrants (as defined below) are provided in Note 14 to the consolidated financial statements included in the Form 10-K.

On April 6, 2025, in connection with the Company’s warrant inducement transaction, the Company entered into inducement letter agreements with certain holders of its existing warrants dated November 21, 2023 (the “Follow-On Warrants”), under which those holders agreed to exercise their warrants for cash at a reduced exercise price of $0.75 per share. In exchange, the Company agreed to issue new warrants to purchase 8,437,502 shares of common stock, which issuance of shares of common stock underlying such warrants was subject to stockholder approval thereof, and which stockholder approval was obtained. The warrant inducement transaction resulted in the issuance of 4,218,751 shares of common stock and gross proceeds of approximately $3.1 million and closed on April 8, 2025. In addition, the Company reduced the exercise price of Follow-On Warrants held by non-participating holders from $1.44 to $0.75 for the remainder of such warrants’ term. The Company accounted for the warrant inducement transaction in accordance with ASC 815-40. Under this guidance, the warrant inducement transaction was treated as a modification of equity-classified instruments, and the excess fair value of the new warrants issued, amounting to $515,307, was charged to additional paid-in capital as an equity issuance cost. The average market price of the Company’s common stock during the period from April 1, 2025 to June 30, 2025, as reported on Nasdaq, was approximately $0.57, which is below the $0.75 exercise price of the warrants. As a result, the warrants were out-of-the-money and excluded from the diluted EPS calculation.

The warrants issued to GEM Yield Bahamas Limited (“GYBL”) in October 2023 (the “GEM Warrants,” and together with the Follow-On Warrants, the “Warrants”) in connection with that certain Share Purchase Agreement, dated as of December 1, 2022 (the “GEM Agreement”), by and among us, GYBL, and GEM Global Yield LLC SCS (“GEM Yield”, and together with GYBL, “GEM”), remain classified as equity instruments. The Company is currently involved in litigation regarding the enforceability and adjustment provisions of the GEM Warrants. As of June 30, 2025, no reclassification or adjustment to the exercise price of the GEM Warrants has been made.

As part of a best-efforts public offering completed on July 18, 2025, the Company issued Series A-1 and Series A-2 warrants (one of each per share of common stock issued), each exercisable into up to 13,333,334 shares at $0.15 per share. The Series A-1 warrants expire five years, and the Series A-2 warrants expire twenty-four months, after the effective date of stockholder approval for the issuance of the shares underlying such warrants. In connection with this offering, the Company also issued warrants to the placement agent or its designees (the “Placement Agent Warrants”), H.C. Wainwright & Co., LLC (“Wainwright”), to purchase up to 666,667 shares at $0.1875 per share. These Placement Agent Warrants will become exercisable beginning on the effective date of stockholder approval for the issuance of the shares underlying such warrants (see “Note 19 – Subsequent Events”).

Additionally, on July 22, 2025, in a private placement concurrent with a registered direct offering, the Company issued unregistered warrants to purchase up to 14,285,718 shares at $0.35 per share which are immediately exercisable and have a term of five years from the effective date of registration statement registering the shares of common stock issuable upon exercise of such warrants. In connection with the registered direct offering, the Company issued Placement Agent Warrants to Wainwright or its designees to purchase up to 714,286 shares of common stock at $0.4375 per share. These Placement Agent Warrants are immediately exercisable upon issuance (see “Note 19 – Subsequent Events”).

Warrant activity, as of June 30, 2025 was as follows:

Rights

As previously disclosed, the Rights granted in connection with the Rhove acquisition expired unexercised on March 24, 2025, and are no longer outstanding as of June 30, 2025.

Shelf Registration on Form S-3

On November 26, 2024, the Company’s shelf registration statement on Form S-3 (File No. 333-283284) was declared effective by the SEC (the “Form S-3”). This registration statement permits the Company to offer and sell, from time to time, common stock, preferred stock, warrants, subscription rights, and units in one or more offerings, subject to market conditions and applicable regulatory requirements.

On December 19, 2024, the Company entered into an At the Market (“ATM”) Sales Agreement with A.G.P./Alliance Global Partners (“A.G.P.”) (the “AGP Sales Agreement”), allowing it to offer and sell common stock with an aggregate offering price of up to $14,275,000. The AGP Sales Agreement was terminated effective March 29, 2025. During the six months ended June 30, 2025, the Company issued 160,879 shares under this program at a weighted-average price of $1.44 per share, for gross proceeds of approximately $231,235. After deducting sales commissions and offering expenses of $6,937, net proceeds totaled approximately $224,298, which were used to fund working capital and general corporate purposes. There were no issuances under the AGP Sales Agreement during the fiscal year ended December 31, 2024.

Following the termination of the ATM program with A.G.P. and related AGP Sales Agreement, on April 2, 2025, the Company entered into an At-The-Market Offering Agreement with Wainwright, permitting the sale of shares of common stock having an aggregate offering price of up to $7,650,000. During the three months ended June 30, 2025, the Company issued 317,702 shares under this ATM program, generating net proceeds of $107,094 after deducting commissions and offering expenses of $6,099.