reAlpha Tech Corp. (NasdaqCM:AIRE) entered into a letter of intent to acquire United Software Group Inc. from Satyavathi Vallabhaneni for $40 million on December 13, 2023. Under the terms of the LOI, reAlpha intends to acquire USG through a combination of common stock and cash, some of which cash payments are subject to performance-based earn-out measures.

Purchase of USG is for an aggregate purchase price of up to $40 million payable as follows $11.7 million in cash at closing, $16.7 million in shares of our common stock, at an initial value of $10 per share, subject to adjustments based on the common stock?s performance 18 months after closing; and an additional $11.6 million in cash, subject to performance based earn-out measures set forth in the LOI. The LOI also provides for a termination fee in the amount of $0.15 million which is payable by us in the event that we breach our due diligence obligations under the LOI. Upon the close of the Acquisition, it is expected that USG will become a wholly-owned subsidiary of reAlpha with Anju Vallabhaneni to continue serving as USG?s Chief Executive Officer.

Transaction is subject to the negotiation of the definitive agreement to be entered into in connection with the acquisition, foreign regulatory approval, other customary closing conditions, Due Diligence, board and stockholder approval and potential stockholder approval to the extent required by the Nasdaq Listing Rules. Transaction is expected to close on Q1, 2024.