EX-99.1 2 ex99-1.htm

Exhibit 99.1

Table of Contents

Interim Condensed Consolidated Financial Statements (Unaudited):

Interim Condensed Consolidated Statements of Financial Positions	3

Interim Condensed Consolidated Statements of Loss and Other Comprehensive Loss	4

Interim Condensed Consolidated Statements of Changes in Equity	5

Interim Condensed Consolidated Statement of Cash Flows	6

Notes to the Interim Condensed Consolidated Financial Statements	7-21

THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONS
(Expressed in thousands of U.S. dollars)

UNAUDITED

	As of
	June 30, 2024			December 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	23,316		$	14,707
Restricted cash		33,124			12,948
Funds held in restricted escrow account		9,250			-
Investments in financial assets		10,276			14,222
Trade receivables		18,631			6,441
Other receivables		56			63
Prepaid expenses and deposits		1,541			2,132
TOTAL CURRENT ASSETS		96,194			50,513
NON-CURRENT ASSETS
Intangible assets		2,996			3,442
Goodwill		8,993			8,993
Property and equipment		1,977			1,600
TOTAL NON-CURRENT ASSETS		13,966			14,035
TOTAL ASSETS		110,160			64,548

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable		1,196			571
Accrued liabilities		33,629			13,374
Customer deposits		33,124			12,948
Other payables		11,028			302
Warrants outstanding		356			-
TOTAL CURRENT LIABILITIES		79,333			27,195
NON-CURRENT LIABILITIES
Warrants outstanding		-			269
TOTAL NON-CURRENT LIABILITIES		-			269
TOTAL LIABILITIES		79,333			27,464

EQUITY
EQUITY ATTRIBUTABLE TO OWNERS
Share premium		79,075			62,567
Stock-based compensation reserves		57,020			52,937
Deficit		(95,517	)		(78,205	)
Other reserves		422			(167	)
Treasury stock, at cost		(10,435	)		(257	)
EQUITY ATTRIBUTABLE TO OWNERS		30,565			36,875
Non-controlling interests		262			209
TOTAL EQUITY		30,827			37,084
TOTAL LIABILITIES AND EQUITY		110,160			64,548

The accompanying notes form an integral part of the condensed consolidated financial statements.

THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in thousands of U.S. dollars, except for per share amounts)

UNAUDITED

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenues	$	340,778		$	185,332		$	541,521		$	293,177
Commissions and other agent-related costs		308,910			167,573			488,894			264,610
Gross Profit		31,868			17,759			52,627			28,567

General and administrative expenses		14,015			9,654			26,151			18,292
Marketing expenses		15,889			10,266			28,518			17,950
Research and development expenses		2,608			1,579			5,070			3,103
Settlement of litigation		-			-			9,250			-
Operating Loss		(644	)		(3,740	)		(16,362	)		(10,778	)

Other income		57			40			230			68
Finance expenses, net		(523	)		(272	)		(1,075	)		(577	)
Net Loss		(1,110	)		(3,972	)		(17,207	)		(11,287	)
Net income attributable to noncontrolling interests		105			146			105			226
Net Loss Attributable to the Owners of the Company		(1,215	)		(4,118	)		(17,312	)		(11,513	)
Other comprehensive income/(loss):
Cumulative (gain)/loss on investments in debt instruments classified as FVTOCI reclassified to profit or loss		51			42			94			135
Foreign currency translation adjustment		376			(85	)		495			62
Total Comprehensive Loss Attributable to Owners of the Company		(788	)		(4,161	)		(16,723	)		(11,316	)
Total Comprehensive Income Attributable to NCI		105			146			105			226
Total Comprehensive Loss		(683	)		(4,015	)		(16,618	)		(11,090	)
Loss per share
Basic and diluted loss per share		(0.01	)		(0.02	)		(0.09	)		(0.06	)
Weighted-average shares, basic and diluted		189,046			179,764			186,568			178,252

The accompanying notes form an integral part of the condensed consolidated financial statements.

THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(U.S. dollar in thousands)

UNAUDITED

	Share Premium			Stock-Based Compensation Reserve			Foreign Exchange Translation Reserve		Investments Revaluations Reserve			Deficit			Treasury Stock			Equity Attributable to Owners			Non-Controlling Interests			Total Equity
Balance at, January 1, 2024		62,567			52,937			262		(429	)		(78,205	)		(257	)		36,875			209			37,084
Total loss and income		-			-			-		-			(17,312	)		-			(17,312	)		105			(17,207	)
Total other comprehensive income		-			-			495		94			-			-			589			-			589
Distributions paid to non-controlling interest		-			-			-		-			-			-			-			(52	)		(52	)
Acquisition of commons shares for Restricted Share Unit (RSU) Plan		-			-			-		-			-			(15,226	)		(15,226	)		-			(15,226	)
Release of treasury shares		(5,048	)		-			-		-			-			5,048			-			-			-
Issuance of Restricted Share Units		14,801			(14,801	)		-		-			-			-			-			-			-
Exercise of stock options		7,021			(3,398	)		-		-			-			-			3,623			-			3,623
Exercise of warrants		475			(98	)		-		-			-			-			377			-			377
Shares withheld for taxes		(741	)		-			-		-			-			-			(741	)		-			(741	)
Equity-settled share-based payment		-			22,380			-		-			-			-			22,380			-			22,380
Balance at, June 30, 2024		79,075			57,020			757		(335	)		(95,517	)		(10,435	)		30,565			262			30,827

Balance at, January 1, 2023		63,204			25,083			290		(759	)		(50,704	)		(14,962	)		22,152			263			22,415
Total loss and income		-			-			-		-			(11,513	)		-						226			(11,287	)
Total other comprehensive income		-			-			62		135			-			-						-			197
Acquisition of commons shares for Restricted Share Unit (RSU) Plan		-			-			-		-			-			(1,411	)					-			(1,411	)
Release of treasury shares		(12,045	)		-			-		-			-			12,045			-			-			-
Issuance of Restricted Share Units		4,794			(4,794	)		-		-			-			-			-						-
Exercise of stock options		313			(101	)		-		-			-			-						-			212
Equity-settled share-based payment		-			11,836			-		-			-			-						-			11,836
Balance at, June 30, 2023		56,266			32,024			352		(624	)		(62,217	)		(4,328	)		21,473			489			21,962

The accompanying notes form an integral part of the condensed consolidated financial statements.

THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(U.S. dollar in thousands)

UNAUDITED

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
OPERATING ACTIVITIES
Net Loss	$	(1,110	)	$	(3,972	)	$	(17,207	)	$	(11,287	)
Adjustments for:
Depreciation and amortization		340			284			666			553
Equity-settled share-based payment		13,536			6,075			22,380			11,836
Finance costs		271			116			671			299
Changes in operating asset and liabilities:
Funds Held in Restricted Escrow Account		(9,250	)		-			(9,250	)		-
Trade receivables		(9,096	)		(526	)		(12,190	)		(378	)
Other receivables		34			23			7			22
Prepaid expenses and deposits		(319	)		(306	)		591			(530	)
Accounts payable		103			776			625			672
Accrued liabilities		12,415			6,333			20,255			9,414
Customer deposits		8,684			14,144			20,176			22,099
Other payables		362			641			10,726			166
NET CASH PROVIDED BY OPERATING ACTIVITIES		15,970			23,588			37,450			32,866

INVESTING ACTIVITIES
Purchase of property and equipment		(501	)		(110	)		(597	)		(250	)
Investment Deposits in Debt Instruments held at FVTOCI		(1,542	)		(3,223	)		(1,713	)		(3,729	)
Investment Withdrawals in Debt Instruments held at FVTOCI		5,730			845			5,752			845
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		3,687			(2,488	)		3,442			(3,134	)

FINANCING ACTIVITIES
Purchase of common shares for Restricted Share Unit (RSU) Plan		(10,603	)		(810	)		(15,226	)		(1,411	)
Shares withheld for taxes		(420	)		-			(741	)		-
Proceeds from exercise of stock options		3,010			146			3,623			212
Payment of lease liabilities		-			(16	)		-			(96	)
Cash disbursements for non-controlling interest		(14	)		-			(52	)		-
NET CASH USED IN FINANCING ACTIVITIES		(8,027	)		(680	)		(12,396	)		(1,295	)

Net change in cash, cash equivalents and restricted cash		11,630			20,420			28,496			28,437
Cash, cash equivalents and restricted cash, beginning of period		44,512			26,411			27,655			18,327
Fluctuations in foreign currency		298			(87	)		289			(19	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE	$	56,440		$	46,745		$	56,440		$	46,745

SUPPLEMENTAL DISCLOSURE OF NON CASH ACTIVITIES
Cashless exercise of warrants		377			-			377			-

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

1.	General Information

The Real Brokerage Inc. (“Real” or the “Company”) is a growing real estate technology company located in the United States and Canada. Real is taking a first principles approach to redefining the role of a real estate brokerage in the lives of agents and within the broader housing ecosystem. The Company focuses on developing technology to enhance real estate agent performance while building a scalable, efficient brokerage operation that is not dependent on a cost-heavy brick and mortar presence in the markets in which Real operates. Real’s goal is to establish the Company as the destination brokerage for agents, by offering an unmatched combination of technology, support, and financial incentives. Real’s vision is to transform home buying under the guidance of an agent via an integrated consumer portal and app, while growing attachment of ancillary services including mortgage brokerage and title insurance. Concurrently, Real plans to expand its suite of tools and products tailored for agents, including mobile banking, payment solutions, and wealth management tools, to facilitate their journey towards generational wealth.

The consolidated operations of Real include the subsidiaries of Real, including those involved in the brokerage, title and mortgage broker operations.

On May 17, 2021, the TSX Venture Exchange (the “TSXV”) accepted the Company’s Notice of Intention to implement a normal course issuer bid (“NCIB”). On May 19, 2022, the Company announced that it renewed its NCIB to be transacted through the facilities of the NASDAQ Capital Market (“NASDAQ”) and other stock exchanges and/or alternative trading systems in the United States and/or Canada. Pursuant to the NCIB, Real was able to purchase up to 8.9 million common shares of the Company (“Common Shares”), representing approximately 5% of the total 178.3 million Common Shares issued and outstanding as of May 19, 2022. On May 24, 2023, the Company announced that it renewed its NCIB pursuant to which Real may purchase up to approximately 9.0 million Common Shares, representing approximately 5% of the total 180 million Common Shares issued and outstanding as of May 18, 2023. On May 14, 2024, the Company announced that it renewed its NCIB again pursuant to which Real may purchase up to approximately 9.47 million Common Shares, representing approximately 5% of the total 189 million Common Shares issued and outstanding as of May 1, 2024. Purchases are made at prevailing market prices and may be conducted during the twelve-month period ended May 28, 2025.

The NCIB is being conducted to acquire Common Shares for the purposes of satisfying restricted share unit (each, an “RSU”) obligations. The Company appointed CWB Trust Services (the “Trustee”) as the trustee for the purposes of arranging the acquisition of Common Shares and to hold the Common Shares in trust for the purposes of satisfying RSU payments as well as to manage other administrative matters. RBC Capital Markets was engaged to undertake purchases under the NCIB.

During the quarter ended June 30, 2024, the Company repurchased 2.7 million Common Shares for a total of $10.6 million.

2.	SUMMARY OF MATERIAL ACCOUNTING POLICIES

The material accounting policies applied in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2023.

A.	Basis of preparation

The unaudited interim condensed consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting as issued by the International Accounting Standards Board (IASB). The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Company’s annual audited consolidated financial statements for the period ended December 31, 2023. These unaudited interim condensed consolidated financial statements were authorized for issuance by the Company’s Board of Directors on August 2, 2024.

All dollar amounts are in U.S. dollars unless otherwise stated.

B.	Recent Accounting Pronouncements

In April 2024, the IASB issued IFRS 18 “Presentation and Disclosure in Financial Statements” (“IFRS 18”). IFRS 18 mainly introduces three sets of requirements to give investors more transparent and comparable information about companies’ financial performance: additional subtotals with newly defined categories for classifying income and expenses in the statement of profit or loss, disclosures about management-defined performance measures, and enhanced requirements for more useful grouping of information in the financial statements.

The impact of IFRS 18 on Real’s consolidated financial statements is being evaluated.

3.	Revenue

In the following table, revenue (in thousands) from contracts with customers is disaggregated by major service lines.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Main revenue streams
Commissions		338,574		184,022		537,826		291,137
Title		1,255		948		2,050		1,546
Mortgage Income		949		362		1,645		494
Total Revenue		340,778		185,332		541,521		293,177

Timing of Revenue Recognition
Products and Services Transferred at a Point in Time		340,778		185,332		541,521		293,177
Revenue from Contracts with Customers		340,778		185,332		541,521		293,177

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

4.	Expenses By Nature

In the following table, cost of sales represents real estate commissions paid to the Company’s agents, as well as to outside brokerages in Canada, and Title Fee Expenses (in thousands).

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Commissions and other agent-related costs		308,910		167,573		488,894		264,610

Operating Expenses
General and Administrative Expenses		14,015		9,654		26,151		18,292
Salaries and Benefits		6,566		4,689		12,434		9,167
Stock Based Compensation		2,066		1,128		3,420		2,087
Administrative Expenses		933		905		1,769		1,590
Professional Fees		3,304		1,968		6,422		3,615
Depreciation Expense		340		284		666		553
Other General and Administrative Expenses		806		680		1,440		1,280
Marketing Expenses		15,889		10,266		28,518		17,950
Salaries and Benefits		237		203		442		310
Stock Based Compensation for Employees		1		11		5		22
Stock Based Compensation for Agents		2,335		1,640		4,472		3,181
Revenue Share		12,475		7,684		21,539		13,118
Other Marketing and Advertising Cost		841		728		2,060		1,319
Research and Development Expenses		2,608		1,579		5,070		3,103
Salaries and Benefits		1,322		748		2,713		1,406
Stock Based Compensation		198		75		333		125
Other Research and Development		1,088		756		2,024		1,573
Settlement of Litigation		-		-		9,250		-
Total Cost of Sales and Operating Expenses		341,422		189,072		557,883		303,955

Finance Expenses

The following table provides a detailed breakdown of Finance costs (in thousands) as reported in the Condensed Consolidated Statement of Income (Loss):

	Three Months Ended June 30,						Six Months Ended June 30,
Description	2024			2023			2024			2023
Change in Fair Value of Warrants Outstanding		200			123			471			81
Realized Losses (Gains)		(55	)		77			(2	)		85
Bank Fees		201			156			311			278
Finance Costs		177			(84	)		295			133
Total Finance Expenses		523			272			1,075			577

5.	OPERATING segments disclosures

The businesses of the Company are divided operationally into three identified operating segments: North American Brokerage, One Real Title and One Real Mortgage. North American Brokerage generates revenue by processing real estate transactions which entitles the Company to commissions. One Real Title generates revenue by offering title insurance and closing services for residential and/or commercial transactions. One Real Mortgage derives revenue from premiums associated with facilitating mortgage transactions between borrowers and lenders.

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

The Company has identified one reportable segment, North American Brokerage which comprises of more than 90% of Group’s total revenue and net loss. The other two segments, One Real Title and One Real Mortgage are not considered as reporting segments as their revenue and net loss do not meet quantitative threshold set for reporting segments. These two segments are disclosed in an ‘other segments’ category below.

The Company uses judgement in determining its operating segments by taking into consideration the Chief Operating Decision Maker’s (“CODM”) assessment of overall performance and decisions such as resource allocations and delegation of authority. The CODM is the Company’s Chief Executive Officer.

The presentation in this note for prior periods have been restated based on the current segment reporting.

Segment performance is evaluated based on income (loss) from operations and is measured consistently with income or loss in the consolidated financial statements.

The following tables present significant information about the Company’s reportable operating segments as reported to the Company’s CODM:

	For the Three Months Ended June 30, 2024
	North American Brokerage			Other Segments			Total
Revenues		338,574			2,204			340,778
Commissions and other agent-related costs		308,268			642			308,910
Gross Profit		30,306			1,562			31,868

General and administrative expenses		11,546			2,469			14,015
Marketing expenses		15,866			23			15,889
Research and development expenses		2,571			37			2,608
Operating Loss		323			(967	)		(644	)

Other income (expenses), net		57			-			57
Finance expenses, net		(499	)		(24	)		(523	)
Net Loss		(119	)		(991	)		(1,110	)

	For the Six Months Ended June 30, 2024
	North American Brokerage			Other Segments			Total
Revenues		537,826			3,695			541,521
Commissions and other agent-related costs		487,736			1,158			488,894
Gross Profit		50,090			2,537			52,627

General and administrative expenses		21,691			4,460			26,151
Marketing expenses		28,457			61			28,518
Research and development expenses		5,006			64			5,070
Litigation expenses		9,250			-			9,250
Operating Loss		(14,314	)		(2,048	)		(16,362	)

Other income (expenses), net		230			-			230
Finance expenses, net		(1,041	)		(34	)		(1,075	)
Net Loss		(15,125	)		(2,082	)		(17,207	)

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

	For the Three Months Ended June 30, 2023
	North American Brokerage			Other Segments			Total
Revenues		184,022			1,310			185,332
Commissions and other agent-related costs		167,204			369			167,573
Gross Profit		16,818			941			17,759

General and administrative expenses		7,905			1,749			9,654
Marketing expenses		10,240			26			10,266
Research and development expenses		1,561			18			1,579
Operating Loss		(2,889	)		(852	)		(3,740	)

Other income (expenses), net		40			-			40
Finance expenses, net		(270	)		(2	)		(272	)
Net Loss		(3,118	)		(854	)		(3,972	)

	For the Six Months Ended June 30, 2023
	North American Brokerage			Other Segments			Total
Revenues		291,137			2,040			293,177
Commissions and other agent-related costs		264,067			543			264,610
Gross Profit		27,070			1,497			28,567

General and administrative expenses		14,748			3,545			18,292
Marketing expenses		17,895			55			17,950
Research and development expenses		3,070			33			3,103
Operating Loss		(8,643	)		(2,136	)		(10,778	)

Other income (expenses), net		68			-			68
Finance expenses, net		(574	)		(3	)		(577	)
Net Loss		(9,148	)		(2,139	)		(11,287	)

Segment revenue reported above represents revenue generated from external customers. There were no intersegment sales in the current and in the prior year.

The assets and liabilities of each segment are not reported to the CODM on a regular basis therefore they are not disclosed in these condensed consolidated financial statements.

The amount of revenue from external customers, by geography, is shown in the table below:

	For the Three Months Ended
	June 30, 2024		June 30, 2023
United States		296,261		157,645
Canada		44,517		27,687
Total revenue by region		340,778		185,332

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

	For the Six Months Ended
	June 30, 2024		June 30, 2023
United States		472,750		253,354
Canada		68,771		39,823
Total revenue by region		541,521		293,177

6.	BASIC AND DILUTED Loss Per Share

Basic loss per share is computed by dividing the loss for the period by the weighted average number of Common Shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) less any preferred dividends for the period by the weighted average number of Common Shares outstanding plus any potentially dilutive Common Shares outstanding during the period. The Company does not pay dividends or have participating shares outstanding.

The following table outlines the number of Common Shares (in thousands) and basic and diluted loss per share.

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Issued Common Shares at the beginning of the period		187,188			178,629			183,606			178,201
Effect of Treasury Purchases		(1,522	)		-			(2,168	)		-
Release of Shares		517			-			1,037			-
Effect of Warrant Exercise		29			-			15			-
Effect of Treasury Issuance		1,822			205			2,824			-
Effect of Share Options Exercise		1,012			930			1,254			51
Weighted-average numbers of Common Shares		189,046			179,764			186,568			178,252

Loss per share
Basic and diluted loss per share		(0.01	)		(0.02	)		(0.09	)		(0.06	)

The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purpose of diluted earnings per share.

	For the Period Ended
	June 30, 2024		June 30, 2023
Options		18,787		22,740
RSU		25,551		22,071
Total		44,338		44,811

7.	Share-Based Payment Arrangements

A.	Description of share-based payment arrangements

Stock option plan (equity-settled)

On January 20, 2016, the Company established a stock option plan (the “Stock Option Plan”) that entitles key management personnel and employees to purchase shares in the Company. Under the Stock Option Plan, holders of vested Options are entitled to purchase Common Shares for the exercise price as determined at the grant date.

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

On February 26, 2022, the Company established an omnibus incentive plan providing for up to 20% of the issued and outstanding Common Shares as of the date thereof (being 35.6 million Common Shares, less RSUs and Options outstanding under other equity inventive plans) to be issued as RSUs or Options to directors, officers, employees, and consultants of the Company (the “Omnibus Incentive Plan”). The Omnibus Incentive Plan was approved by shareholders of the Company on June 13, 2022.

In connection with the graduation to the TSX, the Company amended its Omnibus Incentive Plan (the “A&R Plan”) on July 13, 2022, and the Company’s shareholders approved the A&R Plan on June 9, 2023. Pursuant to the A&R Plan, the maximum number of Common Shares issuable pursuant to outstanding Options at any time shall be limited to 15% of the aggregate number of issued and outstanding Common Shares as of the applicable award date less the number of Common Shares issuable pursuant to Options under the A&R Plan or any other security-based compensation arrangement of the Company. In addition, the Company is authorized to grant up to 70,000,000 RSUs pursuant to the A&R Plan. The RSU limit is separate and distinct from the maximum number of Common Shares reserved for issuance pursuant to Options under the A&R Plan.

The following table depicts the number of Options granted apart from the Company’s various acquisitions (in thousands):

Grant Date	Number of Options		Vesting Conditions	Contractual Life of Options
Balance January 1, 2023		27,057
On March, 2023		1,500	16.7% on first anniversary, then quarterly vesting	10 years
On March, 2023		15	3 years quarterly vest	10 years
On June, 2023		65	33.3% on first anniversary, then quarterly vesting	10 years
On August, 2023		85	3 years quarterly vest	10 years
On November, 2023		10	33.3% on first anniversary, then quarterly vesting	10 years
Balance December 31, 2023		28,732
Balance January 1, 2024		28,732
On April, 2024		45	3 years vest	10 years
Balance June 30, 2024		28,777

B.	Measurement of fair value

The fair value of the Options has been measured using the Black-Scholes formula which was also used to determine the Company’s share value. Service and non-market performance conditions attached to the arrangements were not considered in measuring fair value. The inputs used in the measurement of the fair value at the grant and measurement date of options granted in the period were as follows:

	June 30, 2024			June 30, 2023
Share price	$	4.31		$	1.91
Expected volatility (weighted-average)		95	%		108	%
Expected life (weighted-average)		10 years			10 years
Expected dividends		-	%		-	%
Risk-free interest rate (based on US government bonds)		4.26	%		3.62 - 3.65	%

Expected volatility has been based on an evaluation of historical volatility of the company’s share price.

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

C.	Reconciliation of outstanding stock-options

The following table outlines the number of Options (in thousands) and weighted-average exercise price:

	June 30, 2024					December 31, 2023
	Number of Options			Weighted-Average Exercise Price		Number of Options			Weighted-Average Exercise Price
Outstanding at beginning of year		21,943		$	0.92		21,746		$	0.87
Granted		45			4.31		1,675			1.28
Forfeited/ Expired		(50	)		2.38		(312	)		1.41
Exercised		(3,151	)		0.62		(1,166	)		0.36
Outstanding at end of period		18,787		$	0.98		21,943		$	0.92
Exercisable at end of period		14,270			0.81		15,566			0.72

The Options outstanding as of June 30, 2024 had a weighted average exercise price of $0.98 (December 31, 2023: $0.92) and a weighted-average remaining contractual life of 6.9 years (December 31, 2023: 8.8 years).

D.	Restricted share unit plan

Restricted share unit plan

Under the Company’s agent performance grant program, the Company issues RSUs to agents based on an agent meeting certain performance metrics, and successfully attracting other performing agents to the Company. Each RSU, which has a vesting term of up to 3 years and is subject to forfeiture in certain circumstances, entitles the holder to one Common Share or the equivalent cash value, as determined in the Company’s discretion. The Company recognizes expense from the issuance of these RSUs during the applicable vesting period based upon the best available estimate of the number RSUs expected to vest with a corresponding increase in stock-based compensation reserve. The expense recognized from the issuance of RSU awards for the period ended June 30, 2024 was $2 million, and was classified as marketing expense.

Under the Company’s agent stock purchase program, agents purchase RSUs, which vests immediately but have a one year restriction period, using a percentage of the agent’s commission that is withheld by the Company. Each RSU entitles the holder to one Common Share or the equivalent cash value, as determined in the Company’s sole discretion. The RSUs are expensed in the period in which they are issued with a corresponding increase in equity. Each agent pays the Company 15% of commissions until the commission paid to the Company totals that agent’s “cap” amount (the “Cap”). As an incentive to participate in the program, the Company issues additional RSUs (“Bonus RSUs”) with a value of (i) 10% of the commission withheld (the percentage was 15% previously) if an agent has not met the Cap and (ii) 20% of the commission withheld (the percentage was 30% previously) if an agent has met the Cap. The Bonus RSUs have a one-year vesting term and are subject to forfeiture in certain circumstances. The RSUs purchased under the program are expensed to cost of goods sold and the Bonus RSUs are expensed to stock-based compensation expense. Bonus RUSs are amortized over the vesting period with a corresponding increase in stock-based compensation reserve.

Stock compensation awards granted to full time employees (“FTEs”) are classified as a general and administrative, research and development, or marketing expense based on the appropriate department within the Consolidated Statements of Loss and Other Comprehensive Loss.

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

The following table illustrates the Company’s stock activity (in thousands of units) for the restricted share units under its equity plan.

	Restricted Share Units
Balance at, December 31, 2022		16,908
Granted		23,400
Vested and Issued		(10,631	)
Forfeited		(4,089	)
Balance at, December 31, 2023		25,588
Granted		9,727
Vested and Issued		(8,721	)
Forfeited		(1,043	)
Balance at, June 30, 2024		25,551

Stock Based Compensation Expense

The following table provides a detailed breakdown of the stock-based compensation expense (in thousands) as reported in the Condensed Consolidated Statement of Loss and Comprehensive Loss.

	For the Period Ended
	June 30, 2024						June 30, 2023
	Options Expense		RSU Expense		Total		Options Expense		RSU Expense		Total
COGS – Agent Stock Based Compensation		-		14,150		14,150		-		6,422		6,422
Marketing Expenses – Agent Stock Based Compensation		211		4,261		4,472		687		2,494		3,181
Marketing Expenses – FTE Stock Based Compensation		1		4		5		4		18		22
Research and Development – FTE Stock Based Compensation		15		318		333		54		70		124
General and Administrative – FTE Stock Based Compensation		1,065		2,355		3,420		1,389		698		2,087
Total Stock Based Compensation		1,292		21,088		22,380		2,134		9,702		11,836

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

8.	Investments in Available for Sale Securities at Fair Value

The following table provides a detailed breakdown of short-term investments (in thousands) as reported in the Condensed Consolidated Statements of Financial Positions:

Description	Estimated Fair Value December 31, 2023		Deposit / (Withdraw)			Dividends, Interest & Income		Gross Unrealized Gains / (Losses)			Estimated Fair Value June 30, 2024
Cash Investments		6,531		1,488			225		-			8,244
Fixed Income		7,597		(5,738	)		-		93			1,952
Investment Certificate		94		-			-		(14	)		80
Total		14,222		(4,250	)		225		79			10,276

Investment securities are recorded at fair value. The Company’s investment securities portfolio consists primarily of cash investments, debt securities issued by U.S. government agencies, local municipalities and certain corporate entities. The products in the Company’s investment portfolio have maturity dates ranging from less than one year to over 20 years.

The fair value of investment securities is impacted by interest rates, credit spreads, market volatility, and liquidity conditions. Net unrealized gains and losses in the portfolio are included in Other Comprehensive Income (Loss).

9.	Property and Equipment

Reconciliation of Carrying Amounts (in thousands)

	Computer Equipment			Software		Furniture and Equipment			Total
Cost
Balance at December 31, 2022		526			969		96			1,591
Disposals		-			-		(86	)		(86	)
Additions		138			449		-			587
Balance at December 31, 2023		664			1,418		10			2,092
Disposals		(17	)		-		-			(17	)
Additions		102			495		-			597
Balance at June 30, 2024		749			1,913		10			2,672
Accumulated Depreciation
Balance at December 31, 2022		118			57		66			241
Disposals		-			-		(65	)		(65	)
Depreciation		125			191		-			316
Balance at December 31, 2023		243			248		1			492
Disposals		(17	)		-		-			(17	)
Depreciation		65			155		-			220
Balance at June 30, 2024		291			403		1			695

Carrying Amounts
Balance at December 31, 2023		421			1,170		9			1,600
Balance at June 30, 2024		458			1,510		9			1,977

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

10.

INTANGIBLE ASSETS

The Company’s intangible assets are finite lived and consist primarily of customer relationships which is amortized on a straight-line basis over its useful life of 5 years.

Reconciliation of Carrying Amounts (in thousands)

	Intangible Assets
Cost
Balance at December 31, 2022		3,933
Purchase Price Allocation Adjustment		530
Balance at December 31, 2023		4,463
Additions		-
Balance at June 30, 2024		4,463
Accumulated Depreciation
Balance at December 31, 2022		225
Depreciation		796
Balance at December 31, 2023		1,021
Depreciation		446
Balance at June 30, 2024		1,467

Carrying Amounts
Balance at December 31, 2023		3,442
Balance at June 30, 2024		2,996

11.

GOODWILL

We record goodwill associated with acquisitions of businesses when the purchase price of the business exceeds the fair value of the net tangible and intangible assets acquired. We review goodwill for impairment on an annual basis in the fiscal fourth quarter or on an interim basis if an event occurs or circumstances change that indicate goodwill may be impaired.

	Realty Crunch		Expetitle			LemonBrew			Total
Cost
Balance at December 31, 2022		602		8,393			1,267			10,262
Impairment		-		(723	)		-			(723	)
Adjustments		-		-			(546	)		(546	)
Balance at December 31, 2023		602		7,670			721			8,993
Additions		-		-			-			-
Balance at June 30, 2024		602		7,670			721			8,993
Carrying Amounts
Balance at December 31, 2023		602		7,670			721			8,993
Balance at June 30, 2024		602		7,670			721			8,993

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

12.

Capital and Reserves

Share capital and share premium

All Common Shares rank equally with regards to the Company’s residual assets. The following table is presented in thousands:

Authorized

Issued and Paid

June 30, 2024

December 31, 2023

June 30, 2024

December 31, 2023

Ordinary shares

no-par value

unlimited

194,496

183,605

During the period ended June 30, 2024, the Company issued 10.9 million shares due to exercise of stock options, exercise of warrants, and release of restricted stock units granted to agents and employees.

Total number of shares held by our trustee in the NCIB is 2.6 million and 0.175 million as of June 30, 2024 and December 31, 2023, respectively.

13.

LIQUIDITY AND CAPITAL RESOURCES

Real defines capital as its equity. It is comprised of share premium, stock-based compensation reserves, deficit, other reserves, treasury stock, and non-controlling interests. The Company’s capital management framework is designed to maintain a level of capital that funds the operations and business strategies and builds long-term shareholder value.

The Company’s objective is to manage its capital structure in such a way as to diversify its funding sources, while minimizing its funding costs and risks. The Company sets the amount of capital in proportion to the risk and adjusts by considering changes in economic conditions and the characteristic risk of underlying assets. To maintain or adjust the capital structure, the Company may repurchase shares, return capital to shareholders, issue new shares or sell assets to reduce debt.

Real’s objective is met by retaining adequate liquidity to provide the possibility that cash flows from its assets will not be sufficient to meet operational, investing and financing requirements. There have been no changes to the Company’s capital management policies during the periods ended June 30, 2024, and December 31, 2023.

The following table presents the Company’s liquidity (in thousands):

	For the Period Ended
	June 30, 2024		December 31, 2023
Cash		23,316		14,707
Other Receivables		56		63
Investments in Financial Assets		10,276		14,222
Total		33,648		28,992

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

14.

Financial Instruments – Fair Value and Risk Management

Accounting classifications and fair value (in thousands)

	For the Period Ended June 30, 2024
	Carrying Amount						Fair Value
	Financial Assets at Amortized Cost		Other Financial Liabilities		Total		Level 1		Level 2		Total
Financial Assets Measured at Fair Value (FV)
Investments in Financial Assets		-		-		-		10,276		-		10,276
Total Financial Assets Measured at Fair Value (FV)		-		-		-		10,276		-		10,276
Financial Liabilities Measured at Fair Value (FV)
Warrants		-		-		-		-		356		356
Total Financial Liabilities Measured at Fair Value (FV)		-		-		-		-		356		356
Financial Assets Not Measured at Fair Value (FV)
Cash and Cash Equivalents		23,316		-		23,316		-		-		-
Restricted Cash		33,124		-		33,124		-		-		-
Funds Held in Restricted Escrow Account		9,250		-		9,250		-		-		-
Trade Receivables		18,631		-		18,631		-		-		-
Other Receivables		56		-		56		-		-		-
Total Financial Assets Not Measured at Fair Value (FV)		84,377		-		84,377		-		-		-
Financial Liabilities Not Measured at Fair Value (FV)
Accounts Payable		-		1,196		1,196		-		-		-
Accrued Liabilities		-		33,629		33,629		-		-		-
Customer Deposits		-		33,124		33,124		-		-		-
Other Payables		-		11,028		11,028		-		-		-
Total Financial Liabilities Not Measured at Fair Value (FV)		-		78,977		78,977		-		-		-

	For the Year Ended December 31, 2023
	Carrying Amount						Fair Value
	Financial Assets at Amortized Cost		Other Financial Liabilities		Total		Level 1		Level 2		Total
Financial Assets Measured at Fair Value (FV)
Investments in Financial Assets		-		-		-		14,222		-		14,222
Total Financial Assets Measured at Fair Value (FV)		-		-		-		14,222		-		14,222
Financial Liabilities Measured at Fair Value (FV)
Warrants		-		-		-		-		269		269
Total Financial Liabilities Measured at Fair Value (FV)		-		-		-		-		269		269
Financial Assets Not Measured at Fair Value (FV)
Cash and Cash Equivalents		14,707		-		14,707		-		-		-
Restricted Cash		12,948		-		12,948		-		-		-
Trade Receivables		6,441		-		6,441		-		-		-
Other Receivables		63		-		63		-		-		-
Total Financial Assets Not Measured at Fair Value (FV)		34,159		-		34,159		-		-		-
Financial Liabilities Not Measured at Fair Value (FV)
Accounts Payable		-		571		571		-		-		-
Accrued Liabilities		-		13,374		13,374		-		-		-
Customer Deposits		-		12,948		12,948		-		-		-
Other Payables		-		302		302		-		-		-
Total Financial Liabilities Not Measured at Fair Value (FV)		-		27,195		27,195		-		-		-

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

A.	Transfers between levels

During the periods ended June 30, 2024, and December 31, 2023, there have been no transfers between Level 1, Level 2 and Level 3.

B.	Valuation techniques and inputs for level 2 instruments

The warrants were initially recorded at fair value on date of grant using the Black-Scholes model and net of issuance costs, and are subsequently re-measured to fair value at each subsequent balance sheet date.

C.	Financial risk management

The Company has exposure to the following risks arising from financial instruments:

‒	credit risk (see (ii));

‒	liquidity risk (see (iii));

‒	market risk (see (iv)); and

‒	investment risk (see (v)).

i.	Risk management framework

The Company’s activity exposes it to a variety of financial risks, including credit risk, liquidity risk, market risk and investment risk. These financial risks are managed by the Company under policies approved by the Board of Directors. The principal financial risks are actively managed by the Company’s finance department, within the policies and guidelines.

On an ongoing basis, the finance department actively monitors the market conditions, with a view of minimizing exposure of the Company to changing market factors, while at the same time limiting the funding costs of the Company.

The Company’s Audit Committee oversees how management monitors compliance with the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

ii.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s receivables from customers. The receivables are processed through an intermediary trustee, as part of the structure of every deal, which ensures collection on the close of a successful transaction. In order to mitigate the residual risk, the Company contracts exclusively with reputable and credit-worthy partners.

The carrying amount of financial assets represents the maximum credit exposure.

Trade receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers other factors may influence the credit risk of the customer base, including the default risk associated with the industry and the country in which the customers operate.

The Company does not require collateral in respect to trade and other receivables. The Company does not have trade receivables for which no loss allowance is recognized because of collateral.

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to write-off. Roll rates are calculated separately for exposures in different Cash Generating Units based on the following common credit risk characteristics – geographic region, credit information about the customer and the type of home purchased.

Loss rates are based on actual credit loss experience. These rates are multiplied by scalar factors to reflect differences between economic conditions during the period over which the historical data has been collected, compared to current conditions of the Company’s view of economic conditions over the expected lives of the receivables.

As of June 30, 2024, the exposure to credit risk for trade receivables (in thousands) by geographic region was as follows:

	June 30, 2024		December 31, 2023
US		11,455		4,607
Other Regions		7,176		1,834
Trade Receivables		18,631		6,441

iii.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to maintaining liquidity is to ensure, as far as possible, that it will have sufficient cash and cash equivalents and other liquid assets to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

iv.

Market risk

Market risk is the risk that changes in market prices – e.g. foreign exchange rates, interest rates and equity prices – will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

Currency risk

The Company is exposed to transactional foreign currency risk to the extent there is a mismatch between currencies in which purchases and receivables are denominated and the respective functional currencies of the Company. The currencies in which transactions are primarily denominated are US dollars, Israeli shekel and Canadian dollars.

Sensitivity analysis

A reasonably possible strengthening (weakening) of the U.S. dollar (USD), Israeli shekel (ILS), or Canadian Dollar (CAD) against all other currencies in which the Company operates as of June 30, 2024 and December 31, 2023 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. The following table is presented in thousands:

	Average Rate						Period-end Spot Rate
	Strengthening			Weakening			Strengthening			Weakening
Balance at, June 30, 2024
CAD (-5% movement)		210			(210	)		285			(285	)
ILS (-5% movement)		(9	)		9			(34	)		34
Balance at, December 31, 2023
CAD (-5% movement)		485			(485	)		655			(655	)
ILS (-5% movement)		33			(33	)		121			(121	)

THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2024 AND 2023

UNAUDITED

Foreign Currency Risk Management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilizing forward foreign exchange contracts.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities (in thousands) at the reporting date are as follows:

	Liabilities						Assets
	June 30, 2024			December 31, 2023			June 30, 2024		December 31, 2023
CAD		(34,397	)		(13,463	)		24,200		4,949
ILS		(44	)		(178	)		7,452		7,494
Total Exposure		(34,441	)		(13,641	)		31,652		12,443

v.	Investment risk

The Company invested into a managed investment portfolio, exposing it to risk of losses based on market fluctuations. Securities are purchased on behalf of the Company and are actively managed through multiple investment accounts. Funds apportioned for investment are allocated accordingly to the investment guidelines set forth by Management. Investments are made in U.S. currency.

The Company follows a conservative investment approach with limited risk for investment activities and has allocated the funds in Level 1 assets to reduce market risk exposure.

Information about the Company’s investment activity is included in Note 8.

15.

COMMITMENTS AND CONTINGENCIES

In December 2023, the Company was named as a defendant in a putative class action lawsuit, captioned Umpa v. The National Association of Realtors, et al., which was filed in the United States District Court for the Western District of Missouri (the “Class Action”). The Class Action alleges that certain real estate brokerages, including the Company, participated in practices that resulted in inflated buyer broker commissions, in violation of federal antitrust laws. On April 7, 2024, the Company entered into a settlement agreement to resolve the Class Action on a nationwide basis. This settlement conclusively addresses all claims asserted against the Company in the Class Action, releasing the Company, its subsidiaries, and affiliated agents from these claims. The settlement does not constitute an admission of liability by the Company, nor does it concede or validate any of the claims asserted in the litigation. Pursuant to the terms of the settlement agreement, the Company paid $9.25 million into a qualified settlement fund following the court’s preliminary approval of the settlement agreement. This settlement amount is presented as a current asset in funds held in restricted escrow account, and as a current liability in other payables, on the Company’s Consolidated Statements of Financial Position for the period ended June 30, 2024.

Additionally, the Company agreed to implement specific changes to its business practices. These changes include clarifications about the negotiability of commissions, prohibitions on claims that buyer agent services are free, and the inclusion of listing broker compensation offers in communications with clients. The Company will also develop training materials to support these practice changes. The settlement agreement awaits final court approval and will take effect upon such final approval. The Company does not foresee the settlement terms having a material impact on its future operations.

On June 14, 2024, the Company was named as a defendant in a putative class action lawsuit, captioned Kyle Miholich v. The Real Brokerage Inc., et al., which was filed in the United States District Court for the Southern District of California (“Class Action”). The Class Action alleges that real estate agents affiliated with the Company through an Independent Contractor Agreement sent text messages that violated the federal Telephone Consumers Privacy Act. The Company’s policies requires the independent contractor real estate agents to comply with the Telephone Consumers Privacy Act. The plaintiffs are seeking certification of the Class Action, injunctive relief prohibiting future violations of the Telephone Consumers Privacy Act, monetary damages for each alleged statutory violation and reimbursement of their litigation costs and attorneys’ fees. The Company will vigorously defend against the claims asserted in the Class Action, and the Company is unable to predict the outcome of the Class Action or whether an outcome unfavorable to the Company would have a material adverse effect on its results of operations or financial condition.

16.

RELATED PARTY TRANSACTIONS

Balances and transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. The Company’s key management personnel are comprised of its Chief Executive Officer, Chief Financial Officer, President, Chief Technology Officer, and Chief Marketing Officer, and other members of the executive team. Executive officers participate in the A&R Plan (see Note 7.A). Directors and officers of the Company control approximately 35.29% of the voting shares of the Company. The remuneration of key management personnel and directors of the Company who are part of related parties is set out below (in thousands):

	For the Period Ended
	June 30, 2024		June 30, 2023
Salaries and Benefits		1,535		1,046
Stock-Based Compensation		3,062		1,731
Compensation Expenses for Related Parties		4,597		2,777