SecProbe.io

United States securities and exchange commission logo
May 15, 2023
Giri Devanur
Chief Executive Officer
reAlpha Tech Corp.
6515 Longshore Loop, Suite 100
Dublin, OH 43017
Re:reAlpha Tech Corp.
Registration Statement on Form S-1
Filed April 18, 2023
File No. 333-271307
Dear Giri Devanur:
            We have reviewed your registration statement and have the following comments.  In
some of our comments, we may ask you to provide us with information so we may better
understand your disclosure.
            Please respond to this letter by amending your registration statement and providing the
requested information.  If you do not believe our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
            After reviewing any amendment to your registration statement and the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-1 filed April 18, 2023
Cover Page
1.Please revise the cover page to highlight the risk that the listing of your common stock on
the Nasdaq Capital Market without underwriters is a novel method for commencing public
trading in shares of your common stock and, consequently, the trading volume and price
of shares of your common stock may be more volatile than if shares of your common
stock were initially listed in connection with an underwritten initial public offering.
2.Please revise the cover page to clearly explain how the opening price will be determined.
See Item 501(b)(3) of Regulation S-K and the Instructions to paragraph 501(b)(3).
Revise your Plan of Distribution to provide similar disclosure, and also describe the roles
of the exchange and any financial advisor(s) or designated financial advisor in the
offering.

 FirstName LastNameGiri Devanur
 Comapany NamereAlpha Tech Corp.
 May 15, 2023 Page 2
 FirstName LastName
Giri Devanur
reAlpha Tech Corp.
May 15, 2023
Page 2

Prospectus Summary, page 1
3.Please identify those aspects of the offering and your company that are most significant,
and highlight these points in plain, clear language. The summary should not, and is not
required to, repeat the detailed information in the prospectus.  The detailed description of
your business, strategy, platforms and technology, competitive strengths, and intellectual
property is unnecessary since you repeat them in the business section of the prospectus.
4.We note that you discuss the potential secondary trading of securities through
syndications.  Please revise to discuss the status of such platform in more detail.
5.Please revise your summary to explain clearly your syndicate member offerings. Please
explain differences of the rights of the holders of each of the securities offered as
compared to holders of your common stock.  Please also clarify whether the syndicate
member offerings could materially impact holders of your common stock and whether
investors will have any benefits under these programs which will not be available to
common stock holders.  Also, clarify how membership in these programs is acquired and
maintained.
6.Please revise to specify the date you started your first syndication of one of your Orlando
properties.  Identify the property and specify whether it is owned by you or one of your
subsidiaries.  Revise similar disclosure on page 53.
Syndicate Member Exempt Offerings, page 3
7.Please tell us what you mean by a "SEC registered broker-dealer managed process."
Our Platform and Technologies, page 6
8.We note your disclosure that syndicate members will have real-time visibility into their
property asset portfolio and performance.  Please clarify if you also intend to include such
information to holders of your common stock.
Intellectual Property, page 8
9.Please revise the graphic on page 8 so that it is legible without magnification.
Additionally, please revise to use only plain English descriptions of your technology in
the graphic.  Revise similar disclosure on page 63.
Recent Developments, page 8
10.Please disclose the status of your affiliate, reAlpha Realty, LLC, and their broker-dealer
registration.

 FirstName LastNameGiri Devanur
 Comapany NamereAlpha Tech Corp.
 May 15, 2023 Page 3
 FirstName LastName
Giri Devanur
reAlpha Tech Corp.
May 15, 2023
Page 3
Selected Risks Associated with Our Business, page 11
11.Please revise to highlight the risk that your listing differs significantly from an
underwritten initial public offering.
Risk Factors, page 13
12.Please add summary and risk factor disclosure quantifying your net losses incurred in each
of the past two fiscal years and quantify your accumulated deficit and outstanding
indebtedness.
Risks Related to the Real Estate Industry, page 25
13.Please revise your risk factor disclosure on page 32, "Our lack of a long operating history
could adversely impact us," to specify the recent events that could have a greater impact
upon you as compared to a company with a long operating history.
Risks Related to this Direct Listing and Ownership of Our Common Stock, page 39
14.Please expand your Risk Factors to highlight the ways in which your listing differs from
an underwritten initial public offering, including, if true, the following:
•There are no underwriters;
•There is no overallotment option, and neither you nor anyone else will engage in
price stabilization or price support activities;
•There is not a fixed or determinable number of shares of your common stock that will
be available for sale in connection with your listing, which may result in undersupply
and/or oversupply;
•None of the registered stockholders, other than Maxim Partners LLC, is subject to
lock-up agreements or other restrictions in connection with your listing; and
•Neither you nor anyone else will conduct a roadshow prior to the opening of trading
of your common stock, which may result in a lack of price discovery or demand
among potential investors and a more volatile trading price.
15.Please expand your risk factor disclosure on page 40, "The price of our common stock
may be volatile...," to clearly explain how the opening price will be determined.  Highlight
the risks related to the determination of the opening price in a direct listing as compared to
an underwritten initial public offering, including the absence of a predetermined initial
public offering price.
16.Please expand your risk factor disclosure on page 41, "Although we intend to apply to list
our common stock on Nasdaq...," to highlight the market and price risks related to your
listing as compared to an underwritten initial public offering.  For example, highlight the
risk of undersupply and/or oversupply because the registered stockholders may not sell
any, or may sell all, of their shares of your common stock.  Additionally, highlight the risk

 FirstName LastNameGiri Devanur
 Comapany NamereAlpha Tech Corp.
 May 15, 2023 Page 4
 FirstName LastName
Giri Devanur
reAlpha Tech Corp.
May 15, 2023
Page 4
that the registered stockholders may have greater influence in setting the trading price,
including because they may be unwilling to sell your common stock at the price offered
by potential investors.
17.Please expand your Risk Factors to highlight any risks associated with creating demand
for shares of your common stock, including brand recognition and potential investors'
awareness of or familiarity with your business.
18.Please revise your risk factor disclosure on page 41, "Upon its effectiveness, our
Certificate of Incorporation will provide...," to clarify, if true, that your certificate of
incorporation is already effective.  Additionally, please clarify whether the exclusive
forum provision applies to claims under the Securities Act or the Exchange Act.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations, page 45
19.Please tell us why you have presented and discussed operating data in a different format
than what is presented on the consolidated statements of operations.  To the extent that
you retain this format, please provide a disaggregated analysis of the components of
general, administrative and other non-operating expenses to include the significant types
of expense disclosed on the consolidated statements of operations.
20.We note that several of the income statement line items decreased due to the decrease in
the number of properties listed.  Please disclose which properties are no longer listed, the
reason that they are no longer listed, the date as of which they were no longer contributing
to revenues or expenses, and any other meaningful factors that contributed to period over
period changes in your financial statement line items.
21.Based upon your disclosure on page 46, it appears that cost of sales includes property
management fees.  Please clarify what entities were paid property management fees, and
to the extent that these entities are consolidated subsidiaries, why the fees were not
eliminated in consolidation.
22.We note on page 47 that the rise in operating expenses for the nine months ended January
31, 2023 is attributable to an increase in depreciation and amortization costs compared to
January 31, 2022.  Please explain why depreciation and amortization costs increased when
you disposed of properties during the period.
23.Given the significance of advertising expense to your consolidated operations for all
periods presented, please elaborate on what is included and whether or not you expect this
level of advertising spend to continue in future periods.

 FirstName LastNameGiri Devanur
 Comapany NamereAlpha Tech Corp.
 May 15, 2023 Page 5
 FirstName LastName
Giri Devanur
reAlpha Tech Corp.
May 15, 2023
Page 5
Management's Discussion and Analysis of Financial Condition and Results of Operations
Contractual and Obligations and Commitments, page 50
24.Please revise to provide your contractual and other obligations as of the most recent
practicable date.  Describe the material terms of each mortgage loan, including the interest
rate and maturity date.

Additionally, please reconcile your narrative and tabular disclosure.  More specifically,
we note your statement that "[o]ur contractual obligations as of April 30, 2022 include
existing mortgage loans of the 5 properties currently owned by the Company."  However,
the accompanying table identifies ten properties.
Business
Our Business Model, page 53
25.Please revise to include a diagram of your organizational structure by legal entity.
Additionally, revise to briefly describe the primary functions and operations of each legal
entity and specify which legal entities own rental property(ies).  For example, we note
your disclosure that you expect reAlpha Acquisitions, LLC will maintain management
control of each of the LLCs.
Our Growth Strategy, page 55
26.Please revise to clarify your plans for expansion outside the United States.  In this regard,
we note your disclosure on page 55 that you "may consider expanding to other favorable
global markets."  However, we also note an October 2022 business update on your
website that you have opened international offices in India, Nepal, and Brazil.
27.Please revise to reconcile your disclosure regarding your market selection and investment
methodology.  For example, we note that you have selected the Orlando, Tampa, and Ft.
Lauderdale areas in Florida.  However, we also note that your investment methodology
focuses on finding any "red flags," including areas where natural disasters are extremely
common and damaging.  As another example, we note that you have shifted the focus of
your acquisition strategy to rent-ready homes as a result of current supply chain issues.
However, we also note that your investment criteria includes target properties with a
repair/improvement budget of less than 20% of the home purchase price, which suggests
such target properties may not be rent-ready; and that the five properties you currently
own and operate were renovated.
28.Please revise to describe how your investment decision-making process considers
unknown or contingent liabilities.  In this regard, we note your disclosure elsewhere that
the properties you acquire are vacant at the time of closing and that you may acquire
properties at auction, in short sales, in foreclosure sales, or in bulk/portfolio purchases.

 FirstName LastNameGiri Devanur
 Comapany NamereAlpha Tech Corp.
 May 15, 2023 Page 6
 FirstName LastName
Giri Devanur
reAlpha Tech Corp.
May 15, 2023
Page 6
Our Platform and Technologies, page 59
29.Please revise to clarify the development stage of each of your four technologies.  As
an example only, we note the description of your BnBGPT technology on page 60
that "BnBGPT is a product that simplifies the process of generating personalized and
effective home descriptions," which suggests the app is already operational.  However,
you also describe features that the app "will" offer, which suggests the app is not yet
operational.  As another example, we note the description of your reAlpha Brain
technology on page 63 that "[a]s of April 2023, the reAlpha BRAIN has analyzed over
1,500,000 homes," which suggests the platform is already operational.  However, you also
describe various steps the technology "will" undertake prior to assigning each property a
"reAlpha score," which suggests the platform is not yet operational.

Additionally, to the extent practicable, please specify the expected timeline for when each
of your technologies will be operational.
30.Please revise to describe how Rhove's Syndication Platform and technology complements
your platform and technologies.  In this regard, we note your page 11 statement that
"Rhove's innovative platform will enhance reAlpha's capabilities and enable us to offer a
more seamless and efficient real estate investment experience to our clients."
31.We note your disclosure on page 59 regarding the reAlpha app, including that it "will be a
broker-dealer managed marketplace that our Syndicate Members will be able to utilize
with ease."  Please tell us whether you expect yourself or a third-party to be the broker-
dealer who will manage the app.  Please also tell us what interests you expect will be
available for purchase on the app.  We may have additional comments after we review
your response.
32.We note your disclosure on page 59 regarding the reAlpha HUMINT app.  Please revise
to specify the qualitative property features that impact short-term rental profitability, and
briefly explain the relationship between such factors and short-term rental profitability.
33.We note your disclosure on page 60 regarding the BnBGPT app.  Please revise to define
"GPT."  Additionally, please clarify whether BnBGPT is intended to complement your
other technologies and be used internally, or whether it is intended to be a standalone
product/business line for use by third parties.
Our Industry, page 60
34.Please revise to clarify on which platform(s) you list your short-term rental properties.  In
this regard, we note your disclosure on page 60 that "Airbnb has been chosen as the
platform to market and operate our short-term rental properties," which suggests Airbnb is
the only platform.  However, we note your disclosure elsewhere that you list your
properties on "short-term rental sites" and that your rental revenues include revenues from

 FirstName LastNameGiri Devanur
 Comapany NamereAlpha Tech Corp.
 May 15, 2023 Page 7
 FirstName LastName
Giri Devanur
reAlpha Tech Corp.
May 15, 2023
Page 7
the rental of properties via Airbnb, Vacasa, and similar digital hospitality platforms.  To
the extent Airbnb is the only platform, please revise your Risk Factors to address any risks
associated with such platform concentration.
Intellectual Property, page 63
35.Please revise to include the following information:
•the material terms to any material license or other rights you hold to your material
intellectual property;
•patent expiration dates and exp