reAlpha Tech Corp. Goodwill & Intangibles Disclosure

Note 8 - Goodwill and Intangible Assets

 

Goodwill and intangible assets are primarily the result of business acquisitions. Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets acquired and liabilities assumed. Goodwill is tested for impairment at the reporting unit level at least annually, as of December 31, or more frequently when events occur and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Changes in the carrying amount of goodwill during the year ended December 31, 2025, were as follows:

 

		Technology Services				Homebuying Services				Total
Balance at January 1, 2025		$	1,798,892			$	2,412,274			$	4,211,166
Goodwill impairment			-				-				-
Goodwill acquired			-				6,050,387				6,050,387
Goodwill measurement period adjustment (1)			-				(838,771	)			(838,771	)
Goodwill derecognized due to rescission (2)			-				(1,963,657	)			(1,963,657	)
Balance at December 31, 2025		$	1,798,892			$	5,660,233			$	7,459,125

 

(1)

The goodwill measurement period adjustment includes (i) a reduction of $835,866 related to the GTG Financial acquisition primarily due to the finalizing of the equity issuance valuation, and (ii) a reduction of $2,905 related to the reAlpha Mortgage acquisition resulting from updated purchase price allocation estimates.

 

(2)

$1,963,657 goodwill initially recognized in connection with the acquisition of GTG Financial was fully cancelled on the Rescission Date. As a result, no goodwill related to GTG Financial remains on the Company’s audited consolidated balance sheet. (See “Note 5 – Business Combinations” for further information.)

 

The components of intangible assets as of December 31, 2025, all of which are finite lived, are as follows:

 

		December 31, 2025												December 31, 2024
		Gross value				Amortization				Net value				Gross value				Amortization				Net value
Definite-life Intangibles:
Developed technology		$	2,444,960				(371,457	)		$	2,073,503			$	2,131,129				(590,619	)		$	1,540,510
Trademarks and trade names			2,301,100				(134,447	)			2,166,653				1,748,501				(71,333	)			1,677,168
Customer relationships			75,613				(9,216	)			66,397				106,615				(38,887	)			67,728
Total		$	4,821,673			$	(515,120	)		$	4,306,553			$	3,986,245			$	(700,839	)		$	3,285,406

 

During the year ended December 31, 2025, the Company recorded an impairment loss of $114,116 related to its developed technology intangible asset associated with GENA, an artificial intelligence platform, which became obsolete based on management’s assessment of its recoverability. The impairment loss is included in “Impairment of capitalized software” in the consolidated statements of operations. The Company recorded amortization expenses of $515,120 and $441,800 for the year ended December 31, 2025, and year ended December 31, 2024, respectively

 

The following table outlines the estimated future amortization expense related to intangible assets held as of December 31, 2025:

 

Years Ending December 31:		Amount
2026			631,302
2027			631,302
2028			631,706
2029			481,942
2030			280,545
Thereafter			1,649,756
Total		$	4,306,553

In accordance with Accounting Standard Codification (“ASC”) 350, Intangibles—Goodwill and Other (“ASC 350”), the Company is required to evaluate goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that the fair value of a reporting unit may be less than its carrying amount. ASC 350 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that goodwill is impaired; however, an entity may elect to bypass the qualitative assessment and proceed directly to a quantitative impairment test. For the year ended December 31, 2025, the Company elected to forego the qualitative assessment and performed a quantitative goodwill impairment test in accordance with ASC 350-20.

 

The quantitative impairment test was performed using an income approach to estimate the fair value of each reporting unit. Under this approach, fair value was derived based on projected operating performance, with the terminal value estimated using a perpetual growth rate. Discounting was performed using each reporting unit’s weighted average cost of capital, which reflects the relative weighting of equity and debt financing and the risks associated with the reporting unit’s operations.

 

Key assumptions used in the impairment analysis included projected revenue growth, expected operating margins, terminal value assumptions derived using a perpetual growth rate, and discount rate inputs used in the determination of the weighted average cost of capital, including risk-free interest rates, equity risk premiums, beta, liquidity premiums, and credit risk considerations.

 

Based on the results of the quantitative impairment analysis, the estimated fair values of the Company’s reporting units, including reAlpha Nepal, AiChat, and reAlpha Mortgage, exceeded their respective carrying amounts as of December 31, 2025. Accordingly, no goodwill impairment was recorded for the year ended December 31, 2025.