The Real Brokerage Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-F

☐ Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934

☒ Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2023

Commission File Number 001-40442

The Real Brokerage Inc.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English (if applicable))

British Columbia, Canada	7370	N/A
(Province or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification Number)

701 Brickell Avenue, 17^thFloor

Miami, Florida, 33131 USA

(646) 859-2368

(Address and telephone number of Registrant’s principal executive offices)

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

1-800-221-0102

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Shares, no par value		REAX		The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

For annual reports, indicate by check mark the information filed with this Form:

☒ Annual information form

☒ Audited annual financial statements

Indicate the number of outstanding shares of each of the registrant’s classes of capital or common stock as of the close of the period covered by the annual report: 183,605,781 outstanding as of December 31, 2023.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

☒ Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

†	The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

EXPLANATORY NOTE

The Real Brokerage Inc. is a “foreign private issuer” as defined in Rule 3b-4 under Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is a Canadian issuer eligible to file its annual report (“Annual Report”) pursuant to Section 13 of the Exchange Act on Form 40-F pursuant to the multi-jurisdictional disclosure system (the “MJDS”) adopted by the United States Securities and Exchange Commission (the “SEC”). The Company’s common shares are listed in the United States on the Nasdaq Capital Market (“NASDAQ”) under the trading symbol “REAX.”

In this Annual Report, references to “we,” “our,” “us,” the “Registrant,” the “Company,” or “Real Brokerage,” mean The Real Brokerage Inc. unless the context suggests otherwise.

FORWARD LOOKING STATEMENTS

The exhibits incorporated by reference into this Annual Report of the Registrant contain forward-looking statements. These statements may constitute “forward-looking information” and “forward-looking statements” under applicable Canadian and United States securities laws (collectively, “forward-looking statements”). These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “outlook,” “will,” “should,” “could” or other words of similar meaning, as well as statements written in the future tense. Forward-looking statements contained herein may include opinions or beliefs regarding market conditions and similar matters. In many instances, those opinions and beliefs are based upon general observations by members of our management, anecdotal evidence and our experience in the conduct of our businesses, without specific investigations or analyses. Therefore, while they reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views or views that are necessarily shared by all who are involved in those industries or markets. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Without limitation, the exhibits incorporated by reference into this Annual Report of the Registrant may contain forward-looking statements pertaining to the following:

	●	the Company’s capital and organizational structure;
	●	the Company’s expected working capital;
	●	the Company’s business plans and strategies including targets for future growth;
	●	the development of the Company’s business;
	●	the real estate industry;
	●	expectations regarding the development and launch of new technologies;
	●	expectations with respect to future opportunities;
	●	capital expenditure programs and future capital requirements;
	●	supply and demand fundamentals for services of the Company;
	●	the Company’s plans regarding and composition of principal security holders, directors, officers, Promoters and management;
	●	the Company’s plans and funding for planned development activities and the expected results of such activities;
	●	the Company’s treatment under governmental and international regulatory regimes and intellectual property laws;
	●	the Company’s future general and administrative expenses;
	●	the Company’s security based compensation plans;
	●	the Company’s access to capital and overall strategy and development plans for all of the Company’s assets;
	●	expectations on how the Company will manage production and marketing risks; and
	●	the business and strategic plans of the Company.

The forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from what is anticipated by our forward-looking statements. The most important factors that could cause actual results to differ materially from those anticipated by our forward-looking statements include, but are not limited to: the impact of macroeconomic conditions on the strength of the residential real estate market; an extended slowdown in some or all of the real estate markets in which we operate; the future operational and financial activities of the Company generally; fluctuations in foreign currency exchange rates, interest rates, business prospects and opportunities; the impact of inflation or a higher interest rate environment; reduced availability or increased cost of mortgage financing for homebuyers; increased interest rates or increased competition in the mortgage industry; our inability to successfully execute our strategies, including our strategy regarding a consumer facing application and Real Wallet, and our strategy to grow our ancillary mortgage broker and title operations; the possibility that we will incur nonrecurring costs that affect earnings in one or more reporting periods; the impact of the industry antitrust litigation on the industry generally and specifically to us with respect to the lawsuit in which we were named, as well as potential future lawsuits in which we are named; a reduction in customary commission rates and reduction in the Company’s gross commission income collection; new laws or regulatory changes that adversely affect the profitability of our businesses; risks related to information technology failures or data security breaches; the effect of cybersecurity incidents and threats; our inability to retain agents, or maintain our agent growth rate; the regulatory framework governing intellectual property in the jurisdictions in which the Company conducts its business and any other jurisdictions in which the Company may conduct its business in the future; the Company’s inability to comply with the regulatory bodies governing its activities; the impact of competition on the Company; the effects of weather conditions and natural disasters on our business and financial results; the effects of public health issues such as a major epidemic or pandemic that could have a negative impact on the economy and on our businesses; the effects of negative publicity; our ability to successfully estimate the impact of certain accounting and tax matters, including related to transfer pricing; changes in law that have a negative impact on our business; and our ability to successfully estimate the impact of regulatory and litigation matters.

The foregoing list of assumptions is not exhaustive. Actual results could differ materially from those anticipated in forward-looking statements as a result of various events and circumstances, including, among other things, the risk factors set forth under the heading “5.2 – Risk Factors” in the Annual Information Form for the year ended December 31, 2023, attached as Exhibit 99.1 to this Annual Report and incorporated herein by reference.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievement may vary materially from those expressed or implied by the forward-looking information contained in this Annual Report and in the exhibits incorporated by reference into this Annual Report. Applicable risks and uncertainties include, but are not limited to, those identified under the heading “Risk Factors” on page 20 of the Annual Information Form for the year ended December 31, 2023, attached as Exhibit 99.1 to this Annual Report and incorporated herein by reference, and under the heading “Risks and Uncertainties” on page 32 of the Registrant’s Management’s Discussion & Analysis for the year ended December 31, 2023, attached as Exhibit 99.3 to this Annual Report and incorporated herein by reference, and in other filings that the Registrant has made and may make with applicable securities authorities in the future.

These factors should be carefully considered and readers are cautioned not to place undue reliance on forward-looking information, which speaks only as of the date of this Annual Report and the date of the exhibits incorporated by reference into this Annual Report. Such forward-looking statements are based on the beliefs, expectations, and opinions of management on the date the statements are made. In preparing this Annual Report, the Registrant has not updated such forward-looking statements to reflect any change in circumstances or in management’s beliefs, expectations or opinions that may have occurred prior to the date hereof. All subsequent forward-looking information of the Company herein is expressly qualified in its entirety by the cautionary statements contained in or referred to herein. The Company does not undertake any obligation to release publicly any revisions to this forward-looking information to reflect events or circumstances that occur after the date of this Annual Report or to reflect the occurrence of unanticipated events, except as may be required under applicable Canadian and United States securities laws. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

NOTICE TO UNITED STATES READERS - DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES

The Registrant is permitted, under the MJDS, to prepare this Annual Report in accordance with Canadian disclosure requirements, which are different from those of the United States. The Registrant has historically prepared its consolidated financial statements, which are filed as Exhibit 99.2 to this Annual Report on Form 40-F, in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), which are subject to Canadian auditing and auditor independence standards. Financial statements prepared in IFRS may differ from financial statements prepared in United States GAAP (“U.S. GAAP”) and from practices prescribed by the SEC. Therefore, the Registrant’s financial statements filed with this Annual Report may not be comparable to financial statements of United States companies prepared in accordance with U.S. GAAP.

Unless otherwise indicated, all dollar amounts in this Annual Report on Form 40-F are in United States dollars.

PRINCIPAL DOCUMENTS

The following documents have been filed as part of this Annual Report on Form 40-F:

A. Annual Information Form

The Registrant’s Annual Information Form for the fiscal year ended December 31, 2023 is attached as Exhibit 99.1 to this Annual Report on Form 40-F, and is incorporated by reference herein.

B. Audited Annual Financial Statements

The Registrant’s consolidated audited annual financial statements, including the reports of the independent registered public accounting firm with respect thereto, are attached as Exhibit 99.2 to this Annual Report on Form 40-F and is incorporated by reference herein.

C. Management’s Discussion and Analysis

The Registrant’s management’s discussion and analysis of financial condition and results of operations for the twelve-month period ended December 31, 2023 is attached as Exhibit 99.3 to this Annual Report on Form 40-F and is incorporated by reference herein.

TAX MATTERS

Purchasing, holding or disposing of securities of the Registrant may have tax consequences under the laws of the United States and Canada that are not described in this Annual Report on Form 40-F.

DISCLOSURE CONTROLS AND PROCEDURES

The information provided in the section entitled Disclosure Controls and Procedures and Internal Control Over Financial Reporting in the Management’s Discussion and Analysis filed as Exhibit 99.3 to this Annual Report on Form 40-F is incorporated by reference herein.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM

This Annual Report does not include an attestation report of the Registrant’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Under Section 3 of the Exchange Act, as a result of enactment of the Jumpstart Our Business Startups Act (the “JOBS Act”), “emerging growth companies” are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002, which generally requires that a public company’s registered public accounting firm provide an attestation report relating to management’s assessment of internal control over financial reporting. The Registrant qualifies as an “emerging growth company” and therefore has not included in, or incorporated by reference into, this Annual Report such an attestation report as of the end of the period covered by this Annual Report.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in the Registrant’s internal control over financial reporting during the fiscal year ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

NOTICES PURSUANT TO REGULATION BTR

None.

CODE OF ETHICS

The Registrant has adopted a written “code of ethics” (as defined by the rules and regulations of the SEC), entitled “Code of Conduct” (the “Code”) that applies to all members of the board of directors, officers, employees, consultants, contractors and agents of the Company and its affiliates and subsidiaries worldwide. Adherence to this code is a condition of employment with or providing services to the Company.

The Code may be obtained upon request from The Real Brokerage Inc.’s head office at 701 Brickell Avenue, 17th Floor, Miami, Florida, 33131, United States of America, or by viewing the Registrant’s web site at https://investors.onereal.com/corporate-governance.

All amendments to the Code, and all waivers of the Code with respect to any director, executive officer or principal financial and accounting officers, will be posted on the Registrant’s web site within five business days following the date of the amendment or waiver and any amendment will be provided in print to any shareholder upon request.

AUDIT COMMITTEE

Our Board of Directors has established the Audit Committee in accordance with section 3(a)(58)(A) of the Exchange Act and Rule 5605(c) of the NASDAQ Marketplace Rules for the purpose of overseeing our accounting and financial reporting processes and the audits of our annual financial statements.

The Audit Committee is comprised of Larry Klane (Chair), Atul Malhotra, Jr., Vikki Bartholomae, and Susanne Sandler. Our Board of Directors has determined that the Audit Committee meets the composition requirements set forth by Section 5605(c)(2) of the NASDAQ Marketplace Rules and are independent members of the Audit Committee as determined under Rule 10A-3 of the Exchange Act and Rule 5605(a)(2) of the NASDAQ Marketplace Rules.

All four members of the Audit Committee are financially literate, meaning they are able to read and understand the Registrant’s financial statements and to understand the breadth and level of complexity of the issues that can reasonably be expected to be raised by the Registrant’s financial statements.

Our Board of Directors has determined that Larry Klane qualifies as an “audit committee financial expert” (as defined in paragraph (8)(b) of General Instruction B to Form 40-F).

The SEC has indicated that the designation or identification of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose any duties, obligations or liability on such person that are greater than those imposed on members of the audit committee and the board of directors who do not carry this designation or identification, or affect the duties, obligations or liability of any other member of the audit committee or board of directors.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The required disclosure is included under the heading “Audit Committee Information - External Auditor Service Fees” in the Company’s Annual Information Form for the fiscal year ended December 31, 2023, filed as Exhibit 99.1 to this Annual Report on Form 40-F.

PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES PROVIDED BY

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee Charter sets out responsibilities regarding the provision of non-audit services by the Registrant’s external auditors and requires the Audit Committee to pre-approve all permitted non-audit services to be provided by the Registrant’s external auditors, in accordance with applicable law.

OFF-BALANCE SHEET ARRANGEMENTS

The Registrant currently has no off-balance sheet arrangements.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table lists, as of December 31, 2023, information with respect to the Registrant’s known contractual obligations (in thousands):

	Payments due by period
			Less than						More than
Contractual Obligations	Total		1 year		1-3 years		3-5 years		5 years
Long-Term Debt Obligations	$	0	$	0	$	0	$	0	$	0
Capital (Finance) Lease Obligations	$	0	$	0	$	0	$	0	$	0
Operating Lease Obligations	$	0	$	0	$	0	$	0	$	0
Purchase Obligations	$	0	$	0	$	0	$	0	$	0
Other Long-Term Liabilities Reflected on Balance Sheet	$	0	$	0	$	0	$	0	$	0
Total	$	0	$	0	$	0	$	0	$	0

NASDAQ CORPORATE GOVERNANCE

The Registrant is a foreign private issuer and its common shares are listed on the NASDAQ.

NASDAQ Rule 5615(a)(3) permits a foreign private issuer to follow its home country practice in lieu of the requirements of the Rule 5600 Series, the requirement to distribute annual and interim reports set forth in Rule 5250(d), and the Direct Registration Program requirement set forth in Rules 5210(c) and 5255; provided, however, that such a company shall comply with the Notification of Material Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640), have an audit committee that satisfies Rule 5605(c)(3), and ensure that such audit committee’s members meet the independence requirement in Rule 5605(c)(2)(A)(ii).

The Registrant has reviewed the NASDAQ corporate governance requirements and confirms that except as described below, the Registrant is in compliance with the NASDAQ corporate governance standards in all significant respects:

The Registrant does not follow Rule 5620(c), under which the Nasdaq minimum quorum requirement for a shareholder meeting is 33-1/3% of the outstanding shares of common stock. In addition, a registrant listed on Nasdaq is required to state its quorum requirement in its by-laws. The Registrant’s quorum requirement is set forth in its articles. A quorum for the transaction of business at a meeting of shareholders of the Registrant is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued common shares of the Company entitled to vote at the meeting. In lieu of following Rule 5620(c) (shareholder quorum), the Registrant follows the rules of the TSX.

The foregoing is consistent with the laws, customs, and practices in the province of British Columbia and Canada.

Further information about the Registrant’s governance practices is included on the Registrant’s website.

MINE SAFETY DISCLOSURE

Not applicable.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.

RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION

None.

BOARD DIVERSITY MATRIX

The table below reports self-identified diversity statistics for the Board of Directors of the Registrant as required by NASDAQ Rule 5606.

Board Diversity Matrix		The Real Brokerage Inc.

Country of Principal Executive Offices		Canada

Foreign Private Issuer		Yes

Disclosure Prohibited Under Home Country Law		No

	As of	Aug. 2, 2022			As of	July 28, 2023

Total Number of Directors	6				7

Gender Identity	Female	Male	Non- Binary	Did Not Disclose Gender	Female	Male	Non- Binary	Did Not Disclose Gender
Directors	1	5	0		2	4	0	1
Demographic Background
Underrepresented Individual in Home Country Jurisdiction	2				0
LGBTQ+	0				0
Did Not Disclose Demographic Background	0				7

UNDERTAKING

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the SEC staff, and to furnish promptly, when requested to do so by the SEC staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

CONSENT TO SERVICE OF PROCESS

The Registrant has previously filed with the SEC a written consent to service of process on Form F-X. Any change to the name or address of the Registrant’s agent for service shall be communicated promptly to the SEC by amendment to the Form F-X referencing the file number of the Registrant.

ADDITIONAL INFORMATION

Additional information relating to the Registrant may be found on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system at www.sec.gov.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE REAL BROKERAGE INC.

	By:	/s/ Tamir Poleg
	Name:	Tamir Poleg
	Title:	Chief Executive Officer

Date: March 14, 2024

EXHIBIT INDEX

EXHIBIT		DESCRIPTION OF EXHIBIT
99.1		The Registrant’s Annual Information Form for the fiscal year ended December 31, 2023
99.2		Audited Consolidated Financial Statements for the fiscal year ended December 31, 2023
99.3		Management’s Discussion and Analysis for the year ended December 31, 2023
99.4		Certification by the Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) or 15d-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
99.5		Certification by the Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) or 15d-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
99.6		Certification by the Chief Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.7		Certification by the Chief Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.8		Consent of Brightman Almagor Zohar & Co.
101		XBRL Document
104		Cover Page Interactive Data File

Exhibit 99.1

The Real brokerage Inc.

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2023

March 14, 2024

Item 1.

ABOUT THIS ANNUAL INFORMATION FORM

In this annual information form (“AIF” or “Annual Information Form”), unless the context otherwise requires, the “Company”, “Real”, “we”, “us” and “our” refers to The Real Brokerage Inc. together with its wholly-owned and majority-owned subsidiaries, as defined and set out below under Item 3.2 – Intercorporate Relationships.

All financial information in this Annual Information Form is prepared in Canadian dollars, except where otherwise indicated, and using IFRS as issued by the International Accounting Standards Board.

In this AIF, all references to “C$” refer to Canadian dollars, all references to “US$” refer to U.S. dollars. The daily exchange rate as reported by the Bank of Canada was US$1.00 = C$1.3226 on December 31, 2023.

This AIF applies to the business activities and operations of the Company for the fiscal year ended December 31, 2023, with certain information updated to reflect changes occurring subsequent to December 31, 2023, up to the date of this AIF. Unless otherwise indicated, the information in this AIF is given as of March 14, 2024.

This Annual Information Form contains company names, product names, trade names, trademarks and service marks of the Company and other organizations, all of which are the property of their respective owners.

The information contained in this AIF, including news releases and other disclosure items of the Company, is available under the Company’s profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. The Common Shares are traded on the NASDAQ under the symbol “REAX”.

Cautionary Note Regarding Forward-Looking Statements

Some of the statements in this AIF are forward-looking statements. These statements may constitute “forward-looking information” and “forward-looking statements” under applicable Canadian and United States securities laws (collectively, “forward-looking statements”). These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “outlook,” “will,” “should,” “could” or other words of similar meaning, as well as statements written in the future tense. Forward-looking statements contained herein may include opinions or beliefs regarding market conditions and similar matters. In many instances, those opinions and beliefs are based upon general observations by members of our management, anecdotal evidence and our experience in the conduct of our businesses, without specific investigations or analyses. Therefore, while they reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views or views that are necessarily shared by all who are involved in those industries or markets. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Without limitation, this AIF may contain forward-looking statements pertaining to the following:

	●	the Company’s capital and organizational structure;
	●	the Company’s expected working capital;
	●	the Company’s business plans and strategies including targets for future growth;
	●	the development of the Company’s business;
	●	the real estate industry;
	●	expectations regarding the development and launch of new technologies;
	●	expectations with respect to future opportunities;
	●	capital expenditure programs and future capital requirements;
	●	supply and demand fundamentals for services of the Company;
	●	the Company’s plans regarding and composition of principal security holders, directors, officers, Promoters and management;
	●	the Company’s plans and funding for planned development activities and the expected results of such activities;
	●	the Company’s treatment under governmental and international regulatory regimes and intellectual property laws;
	●	the Company’s future general and administrative expenses;
	●	the Company’s security based compensation plans;
	●	the Company’s access to capital and overall strategy and development plans for all of the Company’s assets;
	●	expectations on how the Company will manage production and marketing risks; and
	●	the business and strategic plans of the Company.

2023 ANNUAL INFORMATION FORM | 1

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievement may vary materially from those expressed or implied by the forward-looking information contained in this AIF. These factors should be carefully considered and readers are cautioned not to place undue reliance on forward-looking information, which speaks only as of the date of this AIF. All subsequent forward-looking information of the Company herein is expressly qualified in its entirety by the cautionary statements contained in or referred to herein. The Company does not undertake any obligation to release publicly any revisions to this forward-looking information to reflect events or circumstances that occur after the date of this AIF or to reflect the occurrence of unanticipated events, except as may be required under applicable Canadian and United States securities laws.

Market and Industry Data

This AIF may contain market and industry data and forecasts obtained from third-party sources, industry publications and publicly available information. The Company believes that the industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third-party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of included information. Although management believes it to be reliable, the Company has not independently verified any of the data from third-party sources referred to in this AIF, or analyzed or verified the underlying information relied upon or referred to by such sources, or ascertained the underlying economic assumptions relied upon by such sources.

2023 ANNUAL INFORMATION FORM | 2

Glossary of Terms

The following is a glossary of certain terms used in this Annual Information Form. Words below importing the singular, where the context requires, include the plural and vice versa, and words importing any gender include all genders.

“Affiliate” means a corporation that is affiliated with another corporation as follows: (A) a corporation is an “Affiliate” of another corporation if: (i) one of them is the subsidiary of the other; or (ii) each of them is controlled by the same Person; (B) a corporation is “controlled” by a Person if: (i) voting securities of the corporation are held, other than by way of security only, by or for the benefit of that Person; and (ii) the voting securities, if voted, entitle the Person to elect a majority of the directors of the corporation; or (C) a Person beneficially owns securities that are beneficially owned by: (i) a corporation controlled by that Person; or (ii) an Affiliate of that Person or an Affiliate of any corporation controlled by that Person.

“Amended and Restated Omnibus Incentive Plan” means the securities-based incentive compensation plan of the Company adopted by the Board on July 15, 2022, and approved by the Shareholders at a meeting on June, 9, 2023, providing for the grant of Options and RSUs to eligible directors, officers, employees and consultants.

“Arbor Oaks Apartments” has the meaning ascribed to it in Item 10.2 - Cease Trade Orders, Bankruptcies, Penalties or Sanctions.

“Audit Committee” means the audit committee of the Board.

“Auditor” has the meaning ascribed to it in Item 15.1 – Interests of Experts.

“Award” means an Option or RSU granted pursuant to a Securities Based Compensation Arrangement.

“Award Date” means the date or dates on which an Award is granted pursuant to a Securities Based Compensation Arrangement.

“BCBCA” means the Business Corporations Act (British Columbia), including the regulations promulgated thereunder, as amended from time to time.

“Board” means the board of directors of the Company.

“Common Shares” means common shares in the authorized share structure of the Company.

“Compensation Committee” means the compensation committee of the Board.

“Dodd-Frank Act” means The Dodd-Frank Wall Street Reform and Consumer Protection Act.

“EDGAR” means Electronic Data Gathering, Analysis, and Retrieval system under the U.S. Securities Act and available for public view at www.sec.gov.

“Expetitle” means One Real Title, Inc. (formerly, Expetitle, Inc.), a company existing under the laws of the state of Delaware.

“Expetitle Transaction” has the meaning ascribed to it in Item 4.2 – Significant Acquisitions – Expetitle Transaction.

“Forced Exchange Event” has the meaning ascribed to it in Item 4.1 – Three Year History.- Insight Partners Investment.

2023 ANNUAL INFORMATION FORM | 3

“Guarantors” has the meaning ascribed to it in Item 10.2 - Cease Trade Orders, Bankruptcies, Penalties or Sanctions.

“IFRS” means International Financial Reporting Standards, as issued by the International Accounting Standards Board.

“Indemnity and Guarantee” has the meaning ascribed to it in Item 10.2 - Cease Trade Orders, Bankruptcies, Penalties or Sanctions.

“Insight Investment” has the meaning ascribed to it in Item 4.1 – Three Year History - Insight Partners Investment.

“Insight Partners” means certain funds affiliated with Insight Holdings Group, LLC, in particular Insight Partners XI, L.P.; Insight Partners (Cayman) XI, L.P.; Insight Partners XI (Co-Investors), L.P.; Insight Partners XI (Co-Investors) (B), L.P.; Insight Partners (Delaware) XI, L.P.; and Insight Partners (EU) XI, S.C.Sp.

“Investor Rights Agreement” has the meaning ascribed to it in Item 4.1 – Three Year History - Insight Partners Investment.

“LemonBrew Key Employee Agreements” has the meaning ascribed to it in Item 4.2 – Significant Acquisitions – LemonBrew Transaction.

“LemonBrew Lending” means Lemonbrew Lending Corp., a corporation existing under the laws of the State of New Jersey, United States of America. LemonBrew Lending changed its name to One Real Mortgage Corp.

“LemonBrew Transaction” has the meaning ascribed to it in Item 4.2 – Significant Acquisitions – LemonBrew Transaction.

“Mortgage Act” has the meaning ascribed to it in Item 5.2 – Risk Factors.

“NASDAQ” means the NASDAQ Capital Market.

“NASDAQ Listing” has the meaning ascribed to it in Item 4.1 – Three Year History - NASDAQ Listing.

“NCIB” has the meaning ascribed to it in Item 4.1 – Three Year History - Normal Course Issuer Bid.

“NI 52-110” means National Instrument 52-110 – Audit Committees.

“Nominating and Corporate Governance Committee” means the nominating and corporate governance committee of the Board.

“Non-Employee Director” means a member of the Board who is not otherwise an employee or executive officer of the Company.

“Optimum” has the meaning ascribed to it in Item 10.2 - Cease Trade Orders, Bankruptcies, Penalties or Sanctions.

“Option Price” means the price per Common Share to be payable upon the exercise of each such Option.

2023 ANNUAL INFORMATION FORM | 4

“Options” means the options exercisable into Common Shares pursuant to a Securities Based Compensation Arrangement.

“Order” has the meaning ascribed to it in Item 10.2 - Cease Trade Orders, Bankruptcies, Penalties or Sanctions.

“Person” includes an individual, partnership, association, body corporate, trustee, executor, administrator or legal representative.

“Predecessor Omnibus Incentive Plan” means the securities-based incentive compensation plan of the Company as approved by the Shareholders at the Company’s annual general meeting of Shareholders held on June 13, 2022.

“Predecessor RSU Plan” means the Restricted Share Unit plan of the Company as approved by the Shareholders at the Company’s annual general meeting of Shareholders held on August 20, 2020.

“Predecessor Stock Option Plan” means the stock option plan of the Company as approved by the Shareholders at the Company’s annual general meeting of Shareholders held on August 20, 2020.

“Preferred Units” means preferred units of Real PIPE.

“Promoter” means (A) a Person or company that, acting alone or in conjunction with one or more other persons, companies or a combination of them, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of an issuer; or (B) a Person or company that, in connection with the founding, organizing or substantial reorganizing of the business of an issuer, directly or indirectly, receives in consideration of services or property or both services and property, 10% or more of the issued securities of a class of securities of the issuer or 10% or more of the proceeds from the sale of a class of securities of a particular issue, but a Person or company who receives the securities or proceeds either solely as underwriting commissions or solely in consideration of property shall not be considered a Promoter within the meaning of this definition where that Person or company does not otherwise take part in founding, organizing or substantially reorganizing the business.

“Real” or the “Company” means The Real Brokerage Inc., a company incorporated under the laws of British Columbia.

“Real PIPE” means Real PIPE, LLC, a company existing under the laws of the State of Delaware.

“RealtyCrunch” means RealtyCrunch Inc., a company existing under the laws of the State of Delaware.

“RealtyCrunch Transaction” has the meaning ascribed to it in Item 4.2 – Significant Acquisitions – RealtyCrunch Transaction.

“RESPA” means The Real Estate Settlement Procedures Act of 1974, as amended.

“Restricted Share Unit” or “RSU” means a restricted share unit granted pursuant to a Securities Based Compensation Arrangement.

“Securities Based Compensation Arrangements” means the Amended and Restated Omnibus Incentive Plan, the Predecessor Omnibus Incentive Plan, the Predecessor Stock Option Plan and Predecessor RSU Plan.

“SEDAR+” means the system for the transmission of documents known as the System for Electronic Data Analysis and Retrieval+.

2023 ANNUAL INFORMATION FORM | 5

“Shareholders” means the holders of the Common Shares.

“Stock Exchange” means NASDAQ or if the Common Shares are not listed or posted for trading on any of such stock exchanges at a particular date, any other stock exchange on which the majority of the trading volume and value of the Common Shares are listed or posted for trading.

“Trading Day” means a day when trading occurs through the facilities of NASDAQ.

“Trustee” has the meaning ascribed to it in Item 4.1 – Three Year History - Normal Course Issuer Bid.

“TSX” means the Toronto Stock Exchange.

“TSXV” means the TSX Venture Exchange.

“United States” or “U.S.” means the United States of America, its territories and possessions, any state of the United States and the District of Columbia.

“VWAP” means the volume weighted average trading price of the Common Shares on the NASDAQ calculated by dividing the total value by the total volume of such securities traded for the five Trading Days immediately preceding thereof.

“Warrants” means Common Share purchase warrants of the Company.

2023 ANNUAL INFORMATION FORM | 6

Item 2.

Table of contents

			Page
Item 1.	ABOUT THIS ANNUAL INFORMATION FORM		1

Cautionary Note Regarding Forward-Looking Statements			1

Market and Industry Data			2

Glossary of Terms			3

Item 2.	Table of contents		7
Item 3.	CORPORATE STRUCTURE		8
	3.1	Name, Address and Incorporation	8
	3.2	Intercorporate Relationships	8
Item 4.	General Development of the Business		8
	4.1	Three Year History	8
	4.2	Significant Acquisitions	10
Item 5.	Description of the Business		11
	5.1	General	11
	5.2	Risk Factors	19
Item 6.	DIVIDENDS		36
	6.1	Dividends or Distributions	36
Item 7.	Description of Capital Structure		37
	7.1	Share Capital	37
	7.2	Options to Purchase Securities	37
Item 8.	Market for Securities		39
	8.1	Trading Price and Volume	39
	8.2	Prior Sales	40
Item 9.	ESCROWED SECURITIES and securities subject to contractual restrictions on transfer		40
	9.1	Escrowed Securities and Securities Subject to Contractual Restriction on Transfer	40
Item 10.	Directors and Officers		41
	10.1	Name, Occupation and Security Holding	41
	10.2	Cease Trade Orders, Bankruptcies, Penalties or Sanctions	42
	10.3	Conflicts of Interest	44
Item 11.	PROMOTERS		44
	11.1	Promoters	44
Item 12.	LEGAL PROCEEDINGS AND REGULATORY ACTIONS		44
	12.1	Legal Proceedings	44
	12.2	Regulatory Actions	45
Item 13.	INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS		45
	13.1	Interest of Management and Others in Material Transactions	45
Item 14.	TRANSFER AGENTS AND REGISTRARS		45
	14.1	Transfer Agents and Registrars	45
	14.2	Material Contracts	45
Item 15.	INTERESTS OF EXPERTS		45
	15.1	Interests of Experts	45
Item 16.	ADDITIONAL INFORMATION		46
	16.1	Audit Committee Information	46

Appendix A		Audit Committee Charter	A-1

2023 ANNUAL INFORMATION FORM | 7

Item 3.

CORPORATE STRUCTURE

3.1

Name, Address and Incorporation

The full corporate name of the Company is The Real Brokerage Inc. The Company was incorporated under the laws of the BCBCA on February 27, 2018. The Company’s principal executive office is located at 701 Brickell Avenue, 17^th Floor, Miami, Florida, 33131 and its registered office is located at 550 Burrard Street, Suite 2300, Bentall 5, Vancouver, British Columbia, V6C 2B5, Canada.

The majority of our business operations are in the United States. For the year ended December 31, 2023, approximately 83% of our revenue was generated from operations in the United States, while approximately 17% of our revenue was generated from our operations in Canada. In the United States, as a real estate brokerage, we primarily generate revenue from our portion of commissions from real estate transactions, and from our ancillary mortgage broker and title services operations. In Canada, also as a real estate brokerage, we primarily generate revenue from our portion of commissions from real estate transactions.

3.2

Intercorporate Relationships

The following diagram illustrates the current corporate structure of the Company and its material subsidiaries, each of which is 100% owned, and their jurisdictions of incorporation and the percentage of voting securities beneficially owned, directly or indirectly, by the Company as of the date of this AIF. Certain subsidiaries with assets that comprise less than 10% individually, and 20% in the aggregate, are excluded from the corporate structure illustrated below.

Item 4.

General Development of the Business

4.1

Three Year History

The Company

Real is a growing real estate technology company located in the United States and Canada. As a licensed real estate brokerage, our revenue is generated primarily by processing real estate transactions which entitle us to commissions. We pay a portion of our commission revenue to real estate agents that are affiliated with us. We are 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. We focus on developing technology to enhance real estate agent performance while building a scalable, efficient brokerage operation that allows for technologically supported brokerage oversight that is not dependent on a cost-heavy brick and mortar presence in the markets in which we operate. Our goal is to establish ourselves as the destination brokerage for agents, by offering an unmatched combination of technology, support, and financial incentives. Our vision is to transform home buying under the guidance of an agent through an integrated consumer application, while growing our ancillary services, including mortgage broker and title insurance services. In addition, we plan to expand our suite of tools and products tailored for agents, including Real branded financial products which we plan to offer in the first half of 2024.

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Real began operations in Texas in 2014 and we have since grown our presence to all 50 states and the District of Columbia. In 2021, we launched operations in Alberta, Canada, and currently have operations in four Canadian provinces. As of December 31, 2023, over 13,600 real estate agents were affiliated with Real or its subsidiaries.

In January 2021, we completed the acquisition of certain assets of RealtyCrunch, a collaboration web and mobile app for home buyers and real estate agents. Also during 2021, as part of our evolution of being a technology-powered real estate brokerage, we launched reZEN, our proprietary transaction management software platform. As part of providing a seamless end-to-end home buying experience for consumers, we acquired a title services company, rebranded as One Real Title, in January 2022 and a mortgage broker business, rebranded as One Real Mortgage, in December 2022.

(a)

Stock Exchange Listing

The Real Brokerage Inc. (formerly ADL Ventures Inc.) was incorporated under the laws of the BCBCA on February 27, 2018 and was a capital pool company with shares listed for trading on the TSXV. On June 5, 2020, ADL Ventures Inc. acquired all of the issued and outstanding common shares of Real Technology Broker Ltd., a private corporation incorporated under the laws of Israel, and changed its name to The Real Brokerage Inc. On April 22, 2021, the Company announced that it applied to list the Common Shares on the NASDAQ (the “NASDAQ Listing”). On June 15, 2021, the Common Shares commenced trading on the NASDAQ under the trading symbol “REAX”.

On July 26, 2022, the Company graduated to the TSX and its Common Shares were concurrently delisted from the TSXV. On July 28, 2023, the Company announced that its application for a voluntary delisting of its Common Shares from the TSX had been approved by the Board. The Common Shares were delisted from the TSX effective as of close of markets on August 11, 2023. The Common Shares continue to be listed and traded on the NASDAQ. The Company is a reporting issuer in all the provinces and territories of Canada.

(b)

Insight Partners Investment

On December 2, 2020, in exchange for a US$20 million equity investment by Insight Partners, the Company issued 17,286,848 Preferred Units at a price of C$1.52 per Preferred Unit and an aggregate of 17,286,848 Warrants, each of which was exercisable by the Insight Partners into one Common Share at a price of C$1.90.

The Company also entered into an investor rights agreement with Insight Partners providing for, among other things, participation rights, certain standstill and transfer restrictions and certain director nomination rights (the “Investor Rights Agreement”). The Company also entered into a registration rights agreement with Insight Partners providing for, among other things, customary registration rights. In connection with the Insight Investment and in accordance with the Investor Rights Agreement, the Company appointed AJ Malhotra, a Vice President of Insight Partners, to the Board.

In connection with the Company’s listing on the NASDAQ in April 2021, the Company delivered an “Acceleration Notice” in accordance with the Warrant terms to accelerate the exercise of the Warrants, and a “Forced Exchange Notice” to convert all of the issued and outstanding Preferred Units. On June 28, 2021, Insight Partners exercised all of their issued and outstanding Warrants for aggregate proceeds of C$32,845,011.20. On August 3, 2021, the Company issued an aggregate of 17,286,848 Common Shares to Insight Partners in exchange for all of the issued and outstanding Preferred Units. Immediately following the forced exchange event, Insight Partners had ownership and control of (i) 34,573,696 Common Shares and (ii) 100,000 Options exercisable for 100,000 Common Shares, representing approximately 19.5% of the issued and outstanding Common Shares on a partially-diluted basis assuming the exercise of all of the Options owned or controlled by Insight Partners.

2023 ANNUAL INFORMATION FORM | 9

As of the date of this AIF, Insight Partners has ownership and control of (i) 34,606,447 Common Shares (ii) 100,000 Options exercisable for 100,000 Common Shares and 60,000 RSUs, representing approximately 18.7% of the issued and outstanding Common Shares on a partially-diluted basis assuming the exercise of all of the Options and conversion of all RSUs owned or controlled by Insight Partners.

(c)

Normal Course Issuer Bid

On May 17, 2021, 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 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, 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 9.0 million Common Shares, representing approximately 5% of the total 180 million Common Shares issued and outstanding as of May 18, 2023. Purchases are made at prevailing market prices, and may be conducted until the twelve-month period ending May 28, 2024.

The NCIB is being conducted to acquire Common Shares for the purposes of Restricted Share Unit 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 obligations as well as deal with other administrative matters. Through the Trustee, RBC Capital Markets was engaged to undertake purchases under the NCIB.

4.2

Significant Acquisitions

(a)

RealtyCrunch Transaction

On January 11, 2021, the Company completed the acquisition of the business assets and intellectual property of RealtyCrunch (the “RealtyCrunch Transaction”). The purchase of assets and intellectual property acquired in the RealtyCrunch Transaction was satisfied in cash for an aggregate purchase price of US$1.1 million plus the issuance 184,227 Warrants to the selling securityholders of RealtyCrunch. Each whole Warrant is exercisable into one Common Share at a price of C$1.36 until January 8, 2025.

In connection with the closing of the RealtyCrunch Transaction, Pritesh Damani joined the Company as Chief Technology Officer. Damani, the founder and CEO of RealtyCrunch, was granted 2,130,773 Options pursuant to the Predecessor Stock Option Plan at a price of C$1.11. Each Option is exercisable until January 11, 2031 and was subject to a four year vesting period.

(b)

Expetitle Transaction

Real acquired 100% of the issued and outstanding equity interests of Expetitle pursuant to a stock purchase agreement dated January 20, 2022 (the “Expetitle Transaction”). The aggregate purchase price for the Expetitle Transaction was aggregate cash consideration of US$8.2 million, with US$7.4 million payable in cash at the closing of the Expetitle Transaction and US$0.8 million that was released from escrow on January 23, 2023 upon the satisfaction of certain terms and conditions of the Expetitle Transaction.

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In connection with the Expetitle Transaction, Real also granted an aggregate of 700,000 Options and an aggregate of 1,100,000 RSUs to Expetitle employees and consultants pursuant to the Predecessor Stock Option Plan and Predecessor RSU Plan. The Options vest quarterly over three years and are exercisable for a period of three years at C$1.36 per share. The RSUs vest quarterly over three years.

Subsequent to the completion of the Expetitle Transaction, Expetitle was renamed The Real Title Inc., and has subsequently been rebranded to One Real Title, Inc. One Real Title, Inc. offers, primarily through joint ventures in which our wholly-owned subsidiaries are the managing member and majority owner, title insurance, and closing services for residential and/or commercial transactions.

(c)

LemonBrew Transaction

On December 9, 2022, the Company acquired 100% of the issued and outstanding equity interests of LemonBrew Lending, a tech-enabled home loan platform, pursuant to a share purchase agreement dated September 23, 2022 (the “LemonBrew Transaction”). The aggregate purchase price for the LemonBrew Transaction was aggregate cash consideration of US$1.25 million, which was satisfied by (i) cash in the amount of US$800,000 and (ii) the issuance of 351,837 Common Shares at a deemed issue price of $1.279 per share. The issue price of the Common Shares was equal to the product of $450,000 divided by the 5-day volume weighted average trading price of the Common Shares on the NASDAQ immediately prior to the closing of the LemonBrew Transaction.

In connection with the LemonBrew Transaction, Real entered into certain agreements with management and key employees of LemonBrew Lending (the “LemonBrew Key Employee Agreements”). The LemonBrew Key Employee Agreements provide for certain performance-based milestone payments of US$2,500,000 payable over 36 months following closing of the LemonBrew Transaction of which US$2,000,000 will be payable in cash and $500,000 will be payable in RSUs.

Subsequent to the completion of the LemonBrew Transaction, LemonBrew Lending was rebranded to One Real Mortgage Corp.

Item 5.

Description of the Business

5.1

General

(a)

Summary

Real is a growing real estate technology company located in the United States and Canada. We are 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. Real began operations in Texas in 2014 and we have since grown our presence to all 50 states and the District of Columbia. In 2021, we launched operations in Alberta, Canada, and currently have operations in four Canadian provinces. As of December 31, 2023, Real had over 13,600 real estate agents that were affiliated with Real or its subsidiaries.

Our goal is to establish ourselves as the destination brokerage for agents, by offering an unmatched combination of technology, support, and financial incentives. Our primary business today is our real estate brokerage business, where our innovative software-based technology platform and flexible operating model enable agents to earn more, enjoy greater autonomy, and utilize superior technology. We believe this high-value, low-cost proposition attracts agents dedicated to growing their businesses.

2023 ANNUAL INFORMATION FORM | 11

Our vision is to create an integrated home buying experience through the adoption of our consumer-facing portal and mobile application. This portal, which currently can be used to apply for a mortgage in certain states with One Real Mortgage and which we are further developing for other uses, will aim to streamline the home buying process for consumers which we expect will also increase transparency and consumer understanding of the process, while increasing the adoption of our ancillary services, such as mortgage broker and title services.

In addition, we have announced that we are developing a program called Real Wallet, which is a platform that will centralize an agent’s access to certain Real branded financial products, such a Real branded credit offerings. Initial testing of Real Wallet is expected to take place in the first half of 2024.

Real’s websites can be accessed at www.onereal.com and www.joinreal.com

Business Model

Real is focused on delivering 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. We generally do not maintain physical office locations in the markets that we operate in unless required by local laws. As a licensed real estate brokerage, our revenue is generated primarily by processing real estate transactions which entitle us to commissions. We pay a portion of our commission revenue to our real estate agents who are independent contractors that are affiliated with us.

Our proprietary transaction management software platform, reZEN, allows us to create an unparalleled agent experience. reZEN equips agents with the necessary tools required to build their businesses rapidly and efficiently, enhancing productivity and providing support for marketing, education, community-building, transaction management and more. This software is the backbone of our transaction processing efficiency and is a key to unlocking operating leverage as we continue to scale. Agents do not need a third-party system for inputting new transactions, which gives us greater control over the transaction experience, increases our brokerage oversight, allows us to better integrate our own technology as we develop an end-to-end consumer-facing app, and drives productivity and efficiency for agents. Further, by offering an open application programming interface, Real gives agents the flexibility to integrate technology partners of their choosing and maintain more control over their data.

We are focused on creating an integrated home buying experience, including building, buying, or partnering to deliver ancillary services as part of a holistic one-stop shop solution. As part of this strategy, we acquired a title company in January 2022, which has been rebranded to One Real Title. In addition, we acquired a tech-enabled mortgage broker business in December 2022, which has been rebranded to One Real Mortgage. A core component of our strategy going forward is building upon and improving our customer-facing portal that provides a seamless end-to-end home buying experience for consumers, including access to ancillary services such as mortgage and title services. This consumer-focused portal is in addition to the technology we provide to agents, and is a natural next step in supporting our agents with another benefit that can be provided to clients, while providing consumers a more enjoyable real estate transaction experience with less friction. In October 2023, marking the initial phase of our strategy to enhance the consumer home buying experience, we launched the One Real mobile application, offering consumers the ability to apply for a home loan through the platform, thereby integrating a key component of the home buying process.

We are also focused on continually providing new benefits to agents and establishing new revenue channels for the Company. In 2023, we announced the launch of Leo, an artificial intelligence (“AI”) powered assistant that is integrated with reZEN, Real’s proprietary transaction management software platform. Leo acts as a 24/7 concierge to our agents and brokers throughout the U.S. and Canada, providing real-time insights about past and future transactions and key agent performance metrics. In addition, we have announced that we are developing a financial technology program called Real Wallet, which is a platform that will centralize an agent’s access to certain Real branded financial products, such as Real branded debit card and credit offerings. Initial testing of Real Wallet is expected to take place in the first half of 2024.

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Marketing and Growth

Real’s market growth strategy is built on an affiliate model-based revenue sharing system as well as cost-effective digital agent acquisition. Real’s primary agent acquisition method is through revenue-sharing incentivized referrals. Agents who have their license with Real can earn a share of Real’s portion of commission revenue for agents they refer into the Company. We believe this program continued to have a positive impact on our agent count and revenue growth in 2023. Real believes there is opportunity to rapidly scale and grow our revenue sharing referral acquisitions with new programs in 2024, including the Private Label and ProTeams offerings, which were announced in January 2024. Our Private Label program is tailored for independent brokerages that have established their own brand in the local market, allowing them to leverage our advanced technology platform while retaining and nurturing their unique brand identity and customer base. The ProTeams program offers team leaders customizable options for their team members’ commission caps, splits, and fee structures, enabling them to maintain their preferred operational model while benefiting from the resources and support of Real’s expansive platform. Other sources of agent growth include through digital channels, including search engine marketing and search engine optimization, and organic social media and content partnerships that drive agent traffic to Real’s website.

Agent Experience

Our strength is our ability to offer real estate agents a higher value, through our proprietary technology stack - a set of technologies, software and tools essential for developing and deploying digital products - at a lower cost, compared to other brokerages. This approach allows us to operate efficiently and scale rapidly with increased brokerage oversight. Our proprietary technology stack puts agents at the center of a real estate transaction, empowering them to assist home buyers and sellers in making one of the biggest financial decisions of their lives.

(b)

Production and Services

Real has developed, integrated and adopted various mobile and desktop focused technologies to create a comprehensive offering for agents and to support its brokerage operations. The implementation and utilization of technology enables Real to operate multi-jurisdiction operations, quickly expand to additional markets and serve agents more efficiently. These factors seek to disrupt the market and minimize the need for traditional brick-and-mortar locations. Real’s technology product offering is focused on the following segments and includes the following features:

●

Productivity - transaction management platform, transaction support, documents library, contract templates, paperless file sharing, virtual signature tools, business dashboard, customer relationship management (CRM) platform, broker support, technical support (including Leo), interactive training, education platform (www.real.academy), and weekly educational webinars and conference calls.

●

Marketing - Each agent joining Real receives a personally branded mobile app, personal branded website, access to Real’s printing portal enabling ordering of business cards, yard signs, and marketing materials, designer assistance, and access to marketing webinars focused on lead generation and personal marketing. Real also offers the opportunity for its agents to benefit from buyer and seller leads through a cooperation with Opcity.

2023 ANNUAL INFORMATION FORM | 13

●

Community - Real’s agents have access to Real’s app and desktop-based community, which enhances the sense of agent belonging, creates synergy and collaboration in local markets and propels information sharing. Real’s community has topic groups and feeds, and contains posts from agents across the U.S. and in Canada, and Real’s employees. Real’s agents use the community to socialize, celebrate success, ask questions, cooperate, market properties, exchange leads, transact business with colleagues, share information and learn about Company announcements.

●

Brokerage Operations - A key component in building a sustainable brokerage is the ability to operate extremely efficiently to ensure a competitive advantage. Over the years, Real has invested substantial resources in building proprietary software and implementing automation and technology to assist in serving agents, processing transactions, overseeing agent activity, measuring performance, facilitating contract reviews, ensuring timely payments to agents, streamlining communications and eliminating redundant staffing costs.

(c)

Specialized Skill and Knowledge

The Company believes that its success is largely dependent on the performance of its management and key employees, many of whom have specialized experience relating to our industry, services, regulatory environment, customers and business. The assembled management team and the Board has experience in the management and growth of successful emerging enterprises.

See also “Item 5.2 – Risk Factors”.

(d)

Competitive Conditions

As a licensed real estate brokerage, Real competes with other local, regional and nationwide brokerages over agents, teams of agents, brokers and consumers. We compete primarily on the basis of our service, culture, collaboration, economic model, technologies that reduce costs, professional development opportunities and the ability to participate in the growth of our company. Residential real estate brokerage companies typically realize revenues in the form of a commission based on a percentage of the price of each home purchased or sold, which can vary based on industry standards, geographical location and specific customer-agent negotiations, among other factors. We are positioned to earn commissions on either — or both — of the buy side or sell side of residential real estate transactions, as well as the ability to receive other fees for services provided by our ancillary mortgage and title businesses.

Industry Overview

The real estate brokerage industry is closely aligned with the health of the residential real estate market, which fluctuates with factors such as economic growth, interest rates, unemployment, inventory levels, and mortgage rate volatility. Our business could be negatively impacted by higher mortgage rates or further increases in mortgage rates. As mortgage rates rise, the number of home sale transactions tends to decrease as potential home sellers choose to stay with their lower mortgage rate rather than sell their home and pay a higher mortgage rate with the purchase of another home. Similarly, in higher interest rate environments, potential home buyers may choose to rent rather than purchase a home. Changes in the interest rate environment and mortgage market are beyond our control and are difficult to predict and, as such, could have a material adverse effect on our business and profitability.

In 2023, macroeconomic conditions in North America continued to impact the residential real estate market, as well as our business and financial results. The year was characterized by a significant slowdown in the market, a continuation of a trend that began during 2022, following robust market activity in 2021.

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Key 2023 Trends:

	●	Continued Rise in Interest Rates. As a result of a persistently high inflation rate in the U.S., the Federal Reserve Board increased the Federal Funds Rate by an aggregate of 100 basis points in 2023, which followed an increase of 425 basis points in 2022. In connection with the rise in the Federal Funds Rate, mortgage rates also increased, with average 30-year fixed mortgage rates rising as high as 7.8% in November 2023, before declining to 6.6% at the end of December 2023. This rate level reflects an increase from 6.4% at the end of 2022 and 3.1% at the end of 2021, according to Freddie Mac data, and has significantly dampened buyer demand.

	●	Declining Transaction Volume. As a consequence of rising interest rates, total existing-home sales in the U.S., which consists of completed transactions that include single-family homes, townhomes, condominiums and co-ops, contracted by 19% to 4.1 million in 2023 compared to 2022, according to data reported by the National Association of Realtors. Volumes declined in each month of 2023 compared to 2022, both on an absolute and seasonally adjusted basis.

	●	Stabilizing Pricing. The median sale price on a U.S. existing home was $382,600 as of December 2023, an increase of 4% from December 2022, but 7.5% below the peak price of $413,800 reached in June 2022. Given low available for sale inventory, average home prices remain well above levels experienced prior to the COVID-19 pandemic, and home price appreciation was still slightly positive on a year-over-year basis in 2023, with a decline in home prices in the first half of the year offset by an increase in home prices during the second half. With the exception of 2022 and 2023, prices and transaction volumes in recent years have been strong, boosted by historically low mortgage rates and a strong labor market.

New business models, intense competition, technology and evolving consumer expectations are reshaping the industry landscape. Real believes the most agile and agent-centric real estate brokerages will emerge as the long-term winners.

One trend involves national brick-and-mortar brokerages using significant financial resources to attract agents, including offering lucrative signing packages to gain market share. Meanwhile, some lead-generation focused players hire in-house agents as staff rather than as commissioned contractors, aiming for higher per agent transaction volumes. Real believes neither of these models serve the long-term interests of consumers or investors. Instead of purchasing market share or squeezing agent revenue, Real seeks to compete by providing agents a higher value offering at a lower cost.

Another notable dynamic is the emergence of “instant buyers” (iBuyers) such as Opendoor. iBuyers use industry data to make instant offers on listings in some markets and then seek to resell or “flip” the homes they buy for a profit. While iBuyers provide sellers speed and certainty, their offers are often below market rates. iBuyers use agents to close the original transaction and the resale transaction, and therefore Real does anticipate the iBuyer trend to substantially affect the demand for real estate brokerage services.

Real’s Opportunity

Consumer demand for better service, transparency, increased competition for agents, and the high overhead costs of traditional models, create ripe opportunities for innovative brokerage offering’s like Real’s. Real believes the following trends impacting the real estate brokerage industry position the company well to continue growing its business:

●

Democratization of Information - Traditionally, real estate brokerages relied heavily on brick-and-mortar locations to attract clients with listing information that was otherwise difficult to obtain. The internet and database technology have now made listing information publicly available through well-known listing search sites, thereby eliminating a consumer’s need to visit street-front brokerages to discover homes for sale. Real expects this trend to continue, and that consumers will choose agents based on their local knowledge, professional experience, and service quality, rather than their access to listing information.

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	●	Mobile Technology - Traditional brick-and-mortar real estate brokerages also provided dedicated physical offices where agents and clients met and signed purchase agreements, closing documents and related paperwork. Mobile technology has since enabled consumers and agents to communicate directly and sign documents from anywhere, making physical offices for signing agreements and paperwork obsolete. Real’s mobile-first technology platform was designed to facilitate seamless remote interactions, providing agents and clients with the flexibility to conduct transactions from anywhere, a unique differentiator that many traditional brokerages cannot match.

	●	Desire for Freedom and Flexibility - Although agents are mainly independent contractors, agents at traditional brokerages are often required to perform unpaid “floor time” at the office and attend in-office meetings. So-called “desk fees” are also common. As the need for physical space diminishes, agents increasingly seek the flexibility to work their own hours and from locations that suit them best. Real caters to this trend with its flexible, remote-first model, while many traditional brokerages lack the culture and the technological infrastructure required to fully support remote work.

	●	Consumer pressure on real estate commissions - In the United States, sellers traditionally paid a 6% commission which was divided between the buyer’s and the seller’s managing broker and then further split among the agents involved in the sale. Buyers, who increasingly research and find their homes online, still want an agent to help them make introductions, prepare contracts and connect them to resources and the community. Likewise, sellers still want agents to prepare and price listings, attract buyers, write contracts, and coordinate a transaction to its closing. However, service commissions are dropping across industries and sellers increasingly expect to pay less than the traditional 6% commission. To support lower costs for consumers while keeping agents net pay sustainable, brokerage firms may be forced to reduce their portion of a commission split without dropping service levels. Real believes its competitive agent commission splits and lean cost structure position the company well to withstand any potential commission compression in the industry, a challenge that traditional brokerages with higher overheads may struggle to meet.

	●	Younger generations of agents - According to the Pew Research Center, millennials have now surpassed baby boomers as the largest living generational group in the United States.¹ Millennials already comprise the largest segment of home buyers in the United States. Millennials entering their real estate market expect their brokerage to provide and use effective mobile technology and to allow the agents the freedom to express their personal brand in social media. Real believes its differentiated technology platform and collaborative culture will appeal to new and younger generations of agents when compared to traditional brokerage models.

(e)

Intangible Properties

Real’s material owned intellectual property consists of unpatented proprietary technology, processes, trade secrets and know-how. The Company also has inherent copyright of authorship in the source code developed by Real and unregistered trademarks. Real does not have any material licensed intellectual property. While Real’s commercial success generally depends on its ability to maintain the confidentiality of its proprietary technology, processes, trade secrets, and know-how, the Company is not substantially dependent on any specific and identifiable intellectual property.

¹https://www.pewresearch.org/fact-tank/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/

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To protect its intellectual property, Real relies on a combination of trade secret, copyright, trademark, passing-off laws and other statutory and common law protections in Israel, the United States and international markets. Real also protects its intellectual property through the use of non-disclosure agreements and other contracts, disclosure and invention assignment agreements, confidentiality procedures and technical measures.

The Company does not have any registrations in respect of its material owned intellectual property. The Company owns the rights to several domain names used in conjunction with its business.

For additional information on intellectual property risks, see “Item 5.2 – Risk Factors”.

(f)

Seasonality

Seasons and weather traditionally impact the real estate industry in the jurisdictions where Real operates. Continuous poor weather or natural disasters negatively impact listings and sales. Spring and summer seasons historically reflect greater sales periods in comparison to fall and winter seasons. Real has historically experienced lower revenues during the fall and winter seasons, as well as during periods of unseasonable weather, which reduces Real’s operating income, net income, operating margins and cash flow.

Real estate listings precede sales and a period of poor listings activity will negatively impact revenue. Past performance in similar seasons or during similar weather events can provide no assurance of future or current performance and macroeconomic shifts in the markets Real serves can conceal the impact of poor weather or seasonality.

(g)

Regulatory Environment

Our principal business is residential real estate brokerage in the United States. We also offer, through a wholly-owned subsidiary and joint ventures in which our wholly-owned subsidiaries are the managing member and majority owner, title insurance, and closing services for residential and/or commercial transactions in Florida, Texas, Georgia, Utah, California, Arizona, Nevada, Tennessee, Minnesota, Michigan, Wisconsin, Colorado, North Carolina and South Carolina. In addition, through our wholly-owned subsidiary One Real Mortgage, we are a residential mortgage broker for borrowers (or consumers), and we are considering entering the correspondent residential mortgage space, as well. Our residential real estate brokerage, title services and mortgage broker services are subject to a number of U.S. federal, state and local laws and regulations.

Residential Real Estate Brokerage

Federal

Real estate brokers are subject to the Federal Fair Housing Act, which make it unlawful to discriminate against protected classes of individuals in housing or in brokerage services. Our brokerage activities are also affected by the Telephone Consumer Protection Act and other federal and state laws pertaining to privacy, which affect our ability to solicit new clients.

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State and Local

In every jurisdiction, there are state or local laws affecting real estate brokerages. While these laws vary across jurisdictions, they virtually all require that anyone who receives compensation for arranging real estate transactions be licensed as a broker or a salesperson. Licensed activities include (but are not limited to) advertising or helping to arrange the sale or purchase of real estate or managing or leasing residential properties for a fee or commission. An agent, sales associate or sales person generally must be associated with a licensed broker. We are a licensed broker in 50 states, the District of Columbia and four Canadian provinces.

Real estate licensees, whether they are brokers, agents, sales associates or salespersons, must follow the local real estate licensing laws and regulations. These laws and regulations generally specify minimum duties and obligations of licensees to their clients and the public, as well as standards for the conduct of business, including requirements for contract disclosures, record keeping, local offices, escrow trust fund management, agency representation, advertising and fair housing.

In each of the jurisdictions where Real has operations, Real assigns appropriately licensed personnel to manage and comply with applicable laws and regulations.

Industry Organizations

Beyond federal, state and local governmental regulations, the real estate brokerage industry is subject to rules established by private real estate groups or trade organizations, including, but not limited to, state and local Associations of REALTORS®², the National Association of Realtors® and local Multiple Listing Services. Generally, licensed brokers, salespersons, individuals, agents and brokerage entities join these groups and organizations, which causes them to be subject to the organizations’ rules. The Company assigns appropriate personnel to manage compliance with organizations’ rules.

Mortgage Finance and Title

Our mortgage and title subsidiaries must comply with applicable real estate, brokerage and insurance laws and regulations. The subsidiaries are licensed in the states in which they do business and must comply with laws and regulations in those states.

Our One Real Mortgage subsidiary must comply with any and all U.S. federal laws affecting residential a mortgage broker and with state laws in jurisdictions where it is licensed as a mortgage broker. It currently is licensed as a mortgage broker in twenty states. If, as we expect, One Real Mortgage begins to fund residential mortgage loans in the states licensed, it will have to comply with a variety of U.S. federal and state laws that apply to residential mortgage lenders.

(h)

Employees

As of March 6, 2024, Real and its subsidiaries had 164 full-time employees, 83 independent contractors supporting its corporate operations (including 66 independent contractors in India engaged through a local company), 87 contracted state brokers who are independent contractors and over 15,000 real estate agents and brokers who are independent contractors.

(i)

Foreign Operations

As of the date of this AIF, Real has brokerage operations in the United States and Canada.

See “Item 5.2 – Risk Factors”.

²“REALTOR” and “REALTORS” are registered trademarks of the National Association of REALTORS®.

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(j)

Bankruptcy and Similar Procedures

There have been no bankruptcy or receivership proceedings against the Company or any of its subsidiaries within the three most recently completed financial years or the current financial year.

(k)

Reorganizations

See “Item 4.2– General Development of the Business – Three Year History – Significant Acquisitions”.

5.2

Risk Factors

The following are certain risk factors relating to the Company’s business which prospective investors should carefully consider before deciding whether to purchase Common Shares. The following information is a summary only of certain risk factors and is qualified in its entirety by reference to, and must be read in conjunction with, the detailed information appearing elsewhere in this AIF. These risks and uncertainties are not the only ones the Company is facing. Additional risks and uncertainties not presently known to the Company, or that the Company currently deems immaterial, may also impair operations. If any such risks actually occur, the business, financial condition, liquidity and results of the Company’s operations could be materially adversely affected.

Risk Related to the Company

The Company is dependent on the health of the residential real estate market and general economic conditions.

The Company’s financial performance is closely connected to the strength of the residential real estate market, which is subject to a number of general business and macroeconomic conditions beyond the Company’s control.

Macroeconomic conditions that could adversely impact the growth of the real estate market and have a material adverse effect on the Company’s business include, but are not limited to, economic slowdown or recession, increased unemployment, increased energy costs, reductions in the availability of credit or higher interest rates, increased costs of obtaining mortgages, an increase in foreclosure activity, inflation, disruptions in capital markets, declines in the stock market, adverse tax policies or changes in other regulations, lower consumer confidence, lower wage and salary levels, war or terrorist attacks, a health pandemic, natural disasters or adverse weather events, or the public perception that any of these events may occur. Unfavorable general economic conditions, such as a recession or economic slowdown, in the United States, Canada or other markets the Company enters and operates within could negatively affect the affordability of, and consumer demand for, its services which could have a material adverse effect on its business and profitability. In addition, federal and state governments, agencies and government-sponsored entities could take actions that result in unforeseen consequences to the real estate market or that otherwise could negatively impact the Company’s business.

The real estate market is substantially reliant on the monetary policies of the federal government and its agencies and is particularly affected by the policies of the United States’ Federal Reserve Board, which regulates the supply of money and credit in the U.S., which in turn impacts interest rates. Changes in the interest rate environment and mortgage market are beyond the Company’s control, are difficult to predict and could have a material adverse effect on its business and profitability.

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The Company’s business is impacted by interest rates, and changes in prevailing interest rates may have an adverse effect on the Company’s financial results.

The financial performance of our brokerage business may be adversely affected by changes in prevailing interest rates, which may be impacted by a number of factors. In response to increased inflation, in 2023, the U.S. Federal Reserve raised interest rates, which has resulted in higher mortgage interest rates. The Company’s business can be, and has been, negatively impacted by any rising interest rate environment. As mortgage rates rise, the number of home sale transactions may decrease as potential home sellers choose to stay with their lower mortgage rate rather than sell their home and pay a higher mortgage rate with the purchase of another home. Similarly, in higher interest rate environments, potential home buyers may choose to rent rather than pay higher mortgage rates. The financial performance of our mortgage broker business may also be adversely affected by changes in prevailing interest rates. As interest rates fall, refinancing generally becomes a larger portion of the mortgage market. Likewise, as interest rates rise, refinancing generally becomes a smaller portion of the mortgage loan market and demand may also decrease for purchase mortgages as home ownership becomes more expensive. Changes in the interest rate environment and mortgage market are beyond the Company’s control, are difficult to predict and could have a material adverse effect on its business and profitability.

The Company may be unable to maintain its agent growth rate, which would adversely affect its revenue growth and results of operations.

The Company has experienced rapid and accelerating growth in our real estate broker and agent base. Because the Company derives revenue from real estate transactions in which its brokers and agents receive commissions, increases in the Company’s agent and broker base correlate to increases in revenues and the rate of growth of its revenue correlates to the rate of growth of the Company’s agent and broker base. The rate of growth of the Company’s agent and broker base cannot be predicted and is subject to many factors outside of the Company’s control, including actions taken by the Company’s competitors and macroeconomic factors affecting the real estate industry generally. There is no assurance that the Company will be able to maintain its recent agent growth rate or that the Company’s agent and broker base will continue to expand in future periods. A slowdown in the Company’s agent growth rate would have a material adverse effect on revenue growth and could adversely affect the Company’s business, financial condition or results of operations.

The Company may be unable to effectively manage rapid growth in its business.

The Company may not be able to scale its business quickly enough to meet the growing needs of its affiliated real estate professionals and if the Company is not able to grow efficiently, its operating results could be harmed. As the Company adds new real estate professionals, the Company will need to devote additional financial and human resources to improving its internal systems, integrating with third-party systems, and maintaining infrastructure performance. In addition, the Company will need to appropriately scale its internal business systems and its services organization, including support of its affiliated real estate professionals as its demographics expand over time. Any failure of or delay in these efforts could cause impaired system performance and reduced real estate professional satisfaction. These issues could reduce the attractiveness of the Company to existing real estate professionals who might leave the Company, as well as result in decreased attraction of new real estate professionals. Even if the Company is able to upgrade its systems and expand its staff, such expansion may be expensive, complex, and place increasing demands on its management. The Company could also face inefficiencies or operational failures as a result of its efforts to scale its infrastructure and the Company may not be successful in maintaining adequate financial and operating systems and controls as it expands. Moreover, there are inherent risks associated with upgrading, improving and expanding its information technology systems. The Company cannot be sure that the expansion and improvements to its infrastructure and systems will be fully or effectively implemented on a timely basis, if at all. These efforts may reduce the Company’s revenue and margins and adversely impact its financial results.

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The Company faces significant risk to its brand and revenue if it fails to maintain compliance with laws and regulations of federal, state, county and foreign governmental authorities, or private associations and governing boards.

The Company operates in the real estate industry which is a heavily regulated industry subject to complex, federal, state, provincial and local laws and regulations and third-party organizations’ regulations, policies and bylaws.

In the United States generally, the laws, rules and regulations that apply to the Company’s business practices include, without limitation, RESPA, the federal Fair Housing Act, the Dodd-Frank Act, and federal advertising laws, as well as comparable state statutes; rules of trade organizations such as the National Association of Realtors, local MLSs, and state and local AORs; licensing requirements and related obligations that could arise from its business practices relating to the provision of services other than real estate brokerage services; privacy regulations relating to its use of personal information collected from the users of its websites; laws relating to the use and publication of information through the internet; and state real estate brokerage licensing requirements, as well as statutory due diligence, disclosure, record keeping and standard-of-care obligations relating to these licenses.

Additionally, the Dodd-Frank Act contains the Mortgage Reform and Anti-Predatory Lending Act (“Mortgage Act”), which imposes a number of additional requirements on lenders and servicers of residential mortgage loans, by amending certain existing provisions and adding new sections to RESPA and other federal laws. It also broadly prohibits unfair, deceptive or abusive acts or practices, and knowingly or recklessly providing substantial assistance to a covered Person in violation of that prohibition. The penalties for noncompliance with these laws are also significantly increased by the Mortgage Act, which could lead to an increase in lawsuits against mortgage lenders and servicers.

In Canada, generally, the laws, rules and regulations that apply to Real’s business practices include, without limitation, the Trust in Real Estate Services Act (Ontario), the Real Estate Act (Alberta), the Real Estate Services Act (British Columbia), the Real Estate Services Act (Manitoba), the Manitoba Securities Commission, the British Columbia Financial Services Authority and advertising and other laws, as well as comparable and associated statutes and regulations; rules of regulatory bodies, trade organizations and associations such as the Canadian Real Estate Association, and the real estate associations for each province, including licensing and compliance requirements and related obligations that could arise from our business practices relating to the provision of services other than real estate brokerage services; privacy regulations relating to our use of personal information collected from the registered users of our websites; laws relating to the use and publication of information through the Internet; and provincial real estate brokerage licensing requirements, as well as statutory and common law due diligence, disclosure, record keeping and standard-of-care obligations relating to these licenses and the provision of real estate brokerage services.

Maintaining legal compliance is challenging and increases business costs due to resources required to continually monitor business practices for compliance with applicable laws, rules and regulations, and to monitor changes in the applicable laws themselves.

The Company may not become aware of all the laws, rules and regulations that govern its business, or be able to comply with all of them, given the rate of regulatory changes, ambiguities in regulations, contradictions in regulations between jurisdictions, and the difficulties in achieving both company-wide and region-specific knowledge and compliance.

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If the Company fails, or is alleged to have failed, to comply with any existing or future applicable laws, rules and regulations, the Company could be subject to lawsuits and administrative complaints and proceedings, as well as criminal proceedings. Non-compliance could result in significant defense costs, settlement costs, damages and penalties.

The Company’s business licenses could be suspended or revoked, business practices enjoined, or it could be required to modify its business practices, which could materially impair, or even prevent, the Company’s ability to conduct all or any portion of its business. Any such events could also damage the Company’s reputation and impair the Company’s ability to attract and service home buyers, home sellers and agents, as well its ability to attract brokerages, brokers, teams of agents and agents to the Company, without increasing its costs.

Further, if the Company loses its ability to obtain and maintain all of the regulatory approvals and licenses necessary to conduct business as we currently operate, the Company’s ability to conduct its business may be harmed. Lastly, any lobbying or related activities the Company undertakes in response to mitigate liability of current or new regulations could substantially increase the Company’s operating expenses.

The Company could be subject to changes in tax laws and regulations, and challenges to its transfer pricing arrangements that may have a material adverse effect on its business.

The Company operates and is subject to taxes in the United States, and other jurisdictions throughout the world. Changes to federal, state, local or international tax laws on income, sale, use, indirect, or other tax laws, statutes, rules or regulations may adversely affect its effective tax rate, operating results or cash flows.

As an international corporation, the Company is subject to transfer pricing and other tax regulations designed to ensure that its intercompany transactions are consummated at prices that reflect the economic reality of the relationship between entities and have not been manipulated to produce a desired tax result, that appropriate levels of income are reported as earned by the local entities, and that the Company is taxed appropriately on such transactions. The Company has had transfer pricing arrangements between Canada and the United States, the two countries where our operations are located, and the United States and Israel, primarily related to intellectual property. If taxing authorities challenge the Company’s transfer pricing arrangements, the Company could be subject to additional taxes in one or more jurisdictions, and the Company’s operations may be harmed.

The Company may suffer financial harm and loss of reputation if it does not or cannot comply with applicable laws, rules and regulations concerning the classification and compensation practices for its state broker and real estate agents.

All real estate professionals in the Company’s brokerage operations, which includes real estate agents and state brokers, have been retained as independent contractors, either directly or indirectly through third-party entities formed by these independent contractors for their business purposes. With respect to these independent contractors, like most brokerage firms, the Company is subject to the Internal Revenue Service regulations and applicable state law guidelines regarding independent contractor classification. These regulations and guidelines are subject to judicial and agency interpretation and it might be determined that the independent contractor classification is inapplicable to any of the Company’s affiliated real estate professionals. Further, if legal standards for classification of real estate professionals as independent contractors change or appear to be changing, it may be necessary to modify the Company’s compensation and benefits structure for its affiliated real estate professionals in some or all of its markets, including by paying additional compensation or reimbursing expenses.

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In the future, the Company could incur substantial costs, penalties and damages, including back pay, unpaid benefits, taxes, expense reimbursement and legal fees, in defending future challenges by its affiliated real estate professionals to our employment classification or compensation practices.

Actions by the Company’s real estate agents or employees could adversely affect its reputation and subject it to liability.

The Company’s success depends on the performance of our agents and employees. Although its agents are independent contractors, if they were to provide lower quality services to clients, the Company’s image and reputation could be adversely affected. In addition, if the Company’s agents make fraudulent claims about properties they show, their transactions lead to allegations of errors or omissions, they violate certain regulations, including employment laws applicable to the management of their own employees, or they engage in self-dealing or do not disclose conflicts of interest to the Company agents and clients, the Company could be subject to litigation and regulatory claims which, if adversely determined, could adversely affect the Company’s business, financial condition and results of operations. Similarly, the Company is subject to risks of loss or reputational harm in the event that any of its employees violate applicable laws.

Some of the Company’s losses may not be covered by insurance or the Company may not be able to obtain or maintain adequate insurance coverage.

The Company maintains insurance to cover costs and losses from certain risk exposures in the ordinary course of the Company’s operations, but its insurance does not cover all of the costs and losses from all events. The Company is responsible for certain retentions and deductibles that vary by policy, and the Company may suffer losses that exceed its insurance coverage limits by a material amount. The Company may also incur costs or suffer losses arising from events against which it does not have insurance coverage. In addition, large-scale market trends or the occurrence of adverse events in the Company’s business may raise its cost of procuring insurance or limit the amount or type of insurance it is able to secure. The Company may not be able to maintain its current coverage, or obtain new coverage in the future, on commercially reasonable terms or at all. Incurring uninsured or underinsured costs or losses could harm the Company’s business.

Unanticipated delays or problems associated with the Company’s products and improvements may cause customer dissatisfaction.

The Company’s future success is dependent on its ability to continue to develop and expand its products and technologies and to address the needs of its customers. There may be delays in releasing the Company’s new products or technologies in the future, and any material delays may cause customers to forego purchases of the Company’s products to purchase competitors’ offerings instead. Further, if the Company’s systems and technologies lack capacity or quality sufficient to service agents and clients, then the number of agents who wish to use its products could decrease, the level of client service and transaction volume afforded by the Company’s systems could suffer, and its costs could increase.

The Company may need to develop new products and services and rapid technological change could render its systems obsolete.

The Company’s business strategy is dependent on its ability to develop platforms and features to attract new businesses and users, while retaining existing ones. The introduction of new products and new technologies, the emergence of new industry standards, or improvements to existing technologies could render the Company’s platform obsolete or relatively less competitive. There is no guarantee that agents will use these features and the Company may fail to generate revenue from these products. Additionally, any of the following events may cause decreased use of our platform: (a) emergence of competing platforms and applications with novel technologies; (b) inability to convince potential agents to join our platform; (c); technical issues or delays in releasing, updating or integrating certain platforms or in the cross-compatibility of multiple platforms; (d) security breaches with respect to our data; (e) a rise in safety or privacy concerns; and (f) an increase in the level of spam or undesired content on the network.

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The Company’s commercial and financial success depends on market acceptance, and if not achieved will result in the Company not being able to generate revenue to support its operations.

The commercial success of the Company depends, among other things, on market acceptance. The success of the Company’s products and any new products and services that it may launch is dependent upon its ability to attract and retain a critical mass of users in potentially diverse geographic locations. Competitive pricing and market acceptance also depends on the future pricing and availability of competing products and the perceived comparative efficacy of its products. If the Company cannot monetize these products, or cannot offer competitive pricing packages, its operating results and revenues will be adversely affected.

A decrease in the Company’s gross commission income collection could adversely affect the Company’s business.

The Company’s business model depends upon its agents’ success in generating gross commission income, which the Company collects and from which the Company pays net commissions. Real estate commission rates vary somewhat by market, and although historical rates have been relatively consistent over time across markets, there can be no assurance that prevailing market practice will not change in a given market or across the industry. Customary commission rates could change due to market forces locally or industry-wide and due to regulatory or legal changes in such markets, including as a result of litigation or enforcement actions. The Company cannot predict the outcome of any new investigations or enforcement actions, but any such actions may result in industry-wide regulations, which can cause commission rates to decrease. Any decrease in commission rates may adversely impact the Company’s business, financial condition, and results of operations may be adversely impacted.

If the Company fails to grow in the various local markets that it serves or is unsuccessful in identifying and pursuing new business opportunities, the Company’s long-term prospects and profitability will be harmed.

To capture and retain market share in the various local markets that the Company serves, it must compete successfully against other brokerages for agents and brokers and for the consumer relationships that it brings. The Company’s competitors could lower the fees that they charge to agents and brokers or could raise the compensation structure for those agents. The Company’s competitors may have access to greater financial resources than it, allowing them to undertake expensive local advertising or marketing efforts. In addition, the Company’s competitors may be able to leverage local relationships, referral sources and strong local brand and name recognition that it has not established. The Company’s competitors could, as a result, have greater leverage in attracting new and established agents in the market and in generating business among local consumers. The Company’s ability to grow in the local markets that it serves will depend on its ability to compete with these local brokerages.

The Company may implement changes to its business model and operations to improve revenues that cause a disproportionate increase in its expenses or reduce profit margins. For example, the Company plans to allocate resources to its Real Wallet program, a fintech product that centralizes the functionality of a debit card, credit card, reward points and an array of additional perks for its agents as a way to unlock financing sources. Expanding its service offerings could involve significant up-front costs that may only be recovered after lengthy periods of time. In addition, expansion into new markets, including internationally, could expose the Company to additional compliance obligations and regulatory risks. If the Company fails to continue to grow in the local markets it serves or if it fails to successfully identify and pursue new business opportunities, its long-term prospects, financial condition, and results of operations may be harmed, and its stock price may decline.

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If the Company fails to grow its ancillary services, the Company’s long-term prospects and profitability may be harmed.

The Company’s efforts to expand its operations, including through ancillary services such as its mortgage broker and title operations, may not be successful. Currently, the Company’s mortgage and title services are available only in certain markets. If the Company is unsuccessful in expanding these services into other markets, or growing the businesses in the markets in which they currently operate, then it may not realize the expected benefits (including anticipated revenue), which could negatively impact its business, financial condition and results of operations. Similarly, if homebuyers do not use the Company’s ancillary services, then the Company’s revenues from ancillary services will not grow as quickly as we expect. Further, the Company’s title joint ventures, in which certain of the Company’s affiliated real estate agents are members, are subject to a number of regulations and ongoing compliance, and it is possible that ongoing compliance costs, including any potential audits, inquiries, investigations or reviews, could have a material adverse impact on the financial condition of the business. While the Company plans to continue to expand the Company’s brokerage and ancillary services businesses to other offerings, there is no guarantee that the Company will do so or be successful, and even if the Company does, the expansions might be at a slower pace than anticipated.

If agents and brokers do not understand the Company’s value proposition the Company may not be able to attract, retain and incentivize agents.

Participation in the Company’s Amended and Restated Omnibus Incentive Plan and Securities Based Compensation Arrangements represents a key component of the Company’s agent and broker value proposition. Agents and brokers may not understand or appreciate the value of these incentive programs. In addition, agents may not appreciate other components of the Company’s value proposition including the technology platform, the mobility it affords, the systems and tools that it provides to agents and brokers, among other benefits. If agents and brokers do not understand the elements of the Company’s service offering, or do not perceive it to be more valuable than the models used by most competitors, the Company may not be able to attract, retain and incentivize new and existing agents and brokers to grow its revenues.

The Company’s operating results are subject to seasonality and vary significantly among quarters during each calendar year, making meaningful comparisons of successive quarters difficult.

Seasons and weather traditionally impact the real estate industry in the jurisdictions where the Company operates. Continuous poor weather or natural disasters negatively impact listings and sales. Spring and summer seasons historically reflect greater sales periods in comparison to fall and winter seasons. The Company has historically experienced lower revenues during the fall and winter seasons, as well as during periods of unseasonable weather, which reduces the Company’s operating income, net income, operating margins and cash flow.

Real estate listings precede sales and a period of poor listings activity will negatively impact revenue. Past performance in similar seasons or during similar weather events can provide no assurance of future or current performance, and macroeconomic shifts in the markets the Company serves can conceal the impact of poor weather or seasonality.

Home sales in successive quarters can fluctuate widely due to a wide variety of factors, including holidays, national or international emergencies, the school year calendar’s impact on timing of family relocations, interest rate changes, speculation of pending interest rate changes and the overall macroeconomic market. The Company’s revenue and operating margins each quarter will remain subject to seasonal fluctuations, poor weather and natural disasters and macroeconomic market changes that may make it difficult to compare or analyze the Company’s financial performance effectively across successive quarters.

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The Company may require additional capital to support its operations or the growth of its business, and it cannot be certain that this capital will be available on reasonable terms when required, or at all.

From time to time, the Company may need additional financing to operate or grow its business. The ability to continue as a going concern, may be dependent upon raising additional capital from time-to-time to fund operations. The Company’s ability to obtain additional financing, if and when required, will depend on investor and lender willingness, its operating performance, the condition of the capital markets and other facts, and the Company cannot assure anyone that additional financing will be available to it on favorable terms when required, or at all. If the Company raises additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of its current stock, and its existing stockholders may experience dilution. If the Company is unable to obtain adequate financing or financing on terms satisfactory to it when it requires it, its ability to continue to support the operation or growth of its business could be significantly impaired and its operating results may be harmed.

The Company has experienced losses in recent years and, because it has a limited operating history, its ability to fully and successfully develop its business is unknown.

The Company has a history of operating at losses since its inception. The Company’s ability to realize consistent, meaningful revenues and profit over a sustained period has not been established over the long term and cannot be assured in future periods.

The Company’s growth strategy may not achieve the anticipated results.

The Company’s future success will depend on its ability to grow its business, including through commercialization of its products. Growth and innovation strategies require significant commitments of management resources and investments and the Company may not grow its revenues at the rate it expects or at all. As a result, the Company may not be able to recover the costs incurred in developing new projects and initiatives or to realize their intended or projected benefits, which could materially adversely affect its business, financial condition or results of operations.

The Company faces substantial competition in the future and may not be able to keep pace with the rapid technological changes which may result from others discovering, developing or commercializing products before or more successfully than the Company. The activities of competing companies, or others, may limit the Company’s revenues.

In general, the development and commercialization of new Software as a Service (SaaS) products is highly competitive and is characterized by extensive research and development and rapid technological change. Market share can shift as a result of technological innovation and other business factors. Commercial opportunities for the Company’s products may be reduced if the Company’s competitors develop or market products or novel technologies that are more effective, are more convenient, are more accepted by the market, have better distribution channels, or are less costly than that offered by the Company. If those products gain market acceptance, the Company’s revenue and financial results could be adversely affected. If the Company fails to develop new products or enhance existing products, its leadership in the current markets served could erode and its business, financial condition and results of operations may be adversely affected.

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While the Company’s products and technologies are unique and novel, there are a number of indirect competitors in the market. Such competitors include large and small companies that may have significant access to capital resources, competitive product pipelines, substantial research and development resources and substantial experience in the market. The Company recognizes the need to invest in research and development to continue to add high-value, differentiated capabilities to expand both the depth and breadth of the Company’s product offering. Management also recognizes the need to ensure customer satisfaction through all phases of the sales cycle and intends to invest in competitive intelligence and analysis as it relates to the dynamics of the market, as well as in trends in technology and in products as they are introduced into the market. However, the Company may not be able to compete with competitors that are more established in the market.

The Company depends on highly skilled personnel to grow and operate its business. If the Company is not able to hire, retain, and motivate its key personnel, its business may be adversely affected.

The Company is highly dependent on its senior management team, including its Chief Executive Officer Tamir Poleg. Competition for talented senior management is intense and the Company’s ability to successfully develop and maintain a competitive market position will depend in part on its ability to attract and retain highly qualified and experienced management. The loss of the services of key personnel could have a materially adverse effect on the Company’s business. The Company does not carry “key-man” life insurance on the lives of our executive officers, employees, or advisors. Many key employees consider the value of the Options and RSUs received in connection with their employment. If the trading price of the Common Shares declines or experiences volatility, the Company’s ability to attract and retain key employees may be adversely affected. If the Company fails to attract new personnel or fails to retain and motivate current personnel, its growth prospects could be severely harmed.

Adverse litigation judgments or settlements resulting from legal proceedings could reduce the Company’s profits or limit its ability to operate.

The Company is subject to allegations, claims and legal actions arising in the ordinary course of its business, which may include claims by third parties, including employees or regulators. The outcome of many of these proceedings cannot be predicted. If any of these proceedings were to be determined adversely against the Company, a judgment, a fine or a settlement involving a payment of a material sum of money were to occur, or injunctive relief were issued against the Company, its business, financial condition and results of operations could be materially adversely affected.

The Company may be subject to claims, lawsuits, arbitration proceedings, government investigations, and other legal and regulatory proceedings in the ordinary course of business, including those involving labor and employment, anti-discrimination, commercial disputes, competition, professional liability, consumer complaints, personal injury, intellectual property disputes, compliance with regulatory requirements, antitrust and anti-competition claims (including claims related to NAR or MLS rules regarding buyer-broker commissions), securities laws, and other matters, and we may become subject to additional types of claims, lawsuits, government investigations and legal or regulatory proceedings if the regulatory landscape changes or as our business grows and as the Company deploys new offerings, including proceedings related to its acquisitions, securities issuances or business practices. The Company may also be subject to disputes with its employees and agents.

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The results of any such claims, lawsuits, arbitration proceedings, government investigations or other legal or regulatory proceedings cannot be predicted with certainty. Any claims against the Company or investigations involving the Company, whether meritorious or not, could be time-consuming, result in significant defense and compliance costs, be harmful to the Company’s reputation, require significant management attention and divert significant resources. Determining reserves for any pending litigation is a complex and fact-intensive process that requires significant subjective judgment and speculation. It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines and penalties that could adversely affect the Company’s business, financial condition, and results of operations, or could cause harm to our reputation and brand, sanctions, consent decrees, injunctions or other Orders requiring a change in our business practices. Any of these consequences could adversely affect our business, financial condition and results of operations. Furthermore, under certain circumstances, the Company may have contractual and other legal obligations to indemnify and to incur legal expenses on behalf of its business and commercial partners and current and former directors, officers and employees.

In October 2023, a jury found that the National Association of Realtors and several brokerage agencies had violated the antitrust laws by artificially inflating commissions through, among other things, the practice of having sellers pay both the sellers’ agents and the buyers’ agents commissions. The Company was not a party to that litigation. However, assuming the decision is not reversed on appeal, it may change the way brokers’ commissions are determined within the industry, and could negatively affect the revenues of the Company’s agents, which in turn would negatively affect the Company’s revenues. There have been a number of complaints with similar allegations filed against other real estate brokerages, and its possible there could more. In Nosalek, a similar case pending in Massachusetts (the Company is not a defendant) in which the parties proposed a settlement, the Department of Justice (“DOJ”) submitted a Statement of Interest objecting that the settlement did not do enough and should prohibit sellers from making commission offers to buyer’s brokers at all. If the DOJ were to take action in the future to prohibit sellers from making commission offers to buyer’s brokers, it could reduce commissions to real estate agents in transactions, and could have an adverse affect on our results of operations.

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 (“Class Action”). The Class Action alleges that certain real estate brokerages, including the Company, participated in practices resulting in inflated buyer broker commissions, in violation of federal antitrust laws. The Company will vigorously defend against the claims asserted in the Class Action, but is unable to predict the outcome of this action. It is possible that the Company will be named in additional similar litigation.

Other than as described in the Annual Information Form, the Company is not involved in any material pending legal proceeding and there are no proceedings in which any of its directors, officers or Affiliates is an adverse party or has a material interest adverse to its interest.

If the Company fails to develop widespread brand awareness cost-effectively, its business may suffer.

The Company believes that developing and maintaining widespread awareness of its brand in a cost-effective manner is critical to achieving widespread acceptance of its products. The Company’s marketing efforts are directed at growing brand awareness. Brand promotion activities, although they have been successful in the past, may not generate customer awareness or increase revenues, and even if they do, any increase in revenues may not offset the expenses incurred in brand building. If the Company fails to successfully promote and maintain its brand, or incur substantial expenses in doing so, the Company may fail to attract or retain customers necessary to realize a sufficient return on its brand building efforts, or to achieve the widespread brand awareness that is critical for broad adoption of its products.

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Possible failure to realize anticipated benefits of future acquisitions could impact the Company’s business.

In the future, the Company may complete acquisitions to strengthen its position in the real estate industry and to create the opportunity to realize certain benefits including, among other things, potential cost savings. Achieving the benefits of any future acquisitions depends, in part, on successfully consolidating functions and integrating operations, procedures and personnel in a timely and efficient manner, as well as the Company’s ability to realize the anticipated growth opportunities and synergies from combining the acquired businesses and operations with its own. The integration of acquired businesses requires the dedication of substantial management effort, time and resources which may divert management’s focus and resources from other strategic opportunities and from operational matters during this process. The integration process may result in the loss of key employees and the disruption of ongoing business, customer and employee relationships that may adversely affect the Company’s ability to achieve the anticipated benefits of these and future acquisitions.

Acquisitions and joint ventures are inherently risky, and any that the Company completes may not be successful. Any acquisitions and joint ventures that the Company pursues would involve numerous risks, including the following: (i) difficulties in integrating and managing the operations and technologies of the companies the Company acquires, including higher than expected integration costs and longer integration periods; (ii) diversion of the Company’s management’s attention from normal daily operations of its business; (iii) the Company’s inability to maintain the customers, key employees, key business relationships and reputations of the businesses it acquires; (iv) the Company’s inability to generate sufficient revenue or business efficiencies from acquisitions or joint ventures to offset its increased expenses associated with acquisitions or joint ventures; (v) the Company’s responsibility for the liabilities of the businesses it acquires or gains ownership in through joint ventures, including, without limitation, liabilities arising out of its failure to maintain effective data security, data integrity, disaster recovery and privacy controls prior to the acquisition, or its infringement or alleged infringement of third party intellectual property, contract or data access rights prior to the acquisition; (vi) difficulties in complying with new markets or regulatory standards to which the Company was not previously subject; (vii) delays in the Company’s ability to implement internal standards, controls, procedures and policies in the businesses it acquires or gains ownership in through joint ventures and increased risk that its internal controls will be ineffective; (viii) operations in a nascent state depend directly on utilization by the Company’s agents and brokers; (ix) adverse effects of acquisition and joint venture activity on the key performance indicators the Company uses to monitor its performance as a business; (x) disagreements with partners in the joint ventures which could lead to litigation, and (xi) inability to fully realize intangible assets recognized through acquisitions or joint ventures and related non-cash impairment charges that may result if the Company is required to revalue such intangible assets.

The Company’s failure to address these risks or any other challenges it encounters with its future acquisitions, joint ventures, and investments could cause it to not realize all or any of the anticipated benefits of such acquisitions or investments, incur unanticipated liabilities, and harm the Company’s business, which could negatively impact its operating results, financial condition, and cash flows.

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The Company expects to partner with a bank to launch a credit card program in 2024, and, as a result of this being a new business, the credit card offering will have a limited performance history and any failure to accurately capture credit risk or to execute our funding strategy for it could have a negative impact on our business, operating results and financial condition.

We do not have experience offering a Real branded credit card. The performance of the Real credit card product will significantly depend on the ability of the credit and fraud decisioning and scoring models we and our bank partner use in the bank’s origination of the product, which includes a variety of factors, to effectively prevent fraud and to evaluate an applicant’s credit profile and likelihood of default. There is no assurance that the credit criteria used can accurately predict repayment and loss profiles. If the criteria do not accurately prevent fraud or reflect credit risk on the Real credit card product, greater than expected losses may result and our business, operating results, financial condition and prospects could be materially and adversely affected. In addition, revenue growth for the Real credit card will be dependent on increasing the volume of members who open an account and on growing loan balances on those accounts. There can be no assurance that any investments we make in the Real credit card to acquire members, including by providing differentiated features, will be effective. Developing our service offerings and forming any partnerships related to the credit card could have higher costs than anticipated, and could adversely impact our results or dilute our brand. Furthermore, the success of the Real credit card product depends on our ability to execute on our funding strategy for the resulting credit card receivables. In the event we are unable to finance our credit card receivables, it could have a negative impact on our business, operating results and financial condition.

The highly regulated environment in which our bank partner in the Real Wallet program operates could have an adverse effect on our business, results of operations, financial condition, and future prospects.

We expect to launch the Real Wallet program, which will offer credit card and debit card products, in 2024. We will be the Real Wallet program manager providing services to our bank partner in support of the program. We and our bank partner will be subject to increasingly demanding regulatory requirements. Federal regulation of the banking industry, along with tax and accounting laws, regulations, rules, and standards, may limit operations significantly and control the methods by which business is conducted. In addition, compliance with laws and regulations can be difficult and costly, and changes to laws and regulations can impose additional compliance requirements. In particular, regulatory requirements affect our bank partner’s lending practices, among other aspects of their business. Furthermore, the regulatory agencies have extremely broad discretion in their interpretation of the regulations and laws and their interpretation of the quality of our originating bank partner’s loan portfolios and other assets. If any regulatory agency’s assessment of the quality of our originating bank partner’s assets, operations, lending practices, investment practices, or other aspects of their business changes, it may impact our bank’s partner’s ability to support the Real Wallet program, which could have a negative impact on our results of operations.

We are developing new products and services that may be subject to additional state or federal laws or regulations or the authority of the Consumer Financial Protection Bureau.

We are constantly developing new products and services to make it easier for real estate agents affiliated with us to operate their businesses. These new products and services, including those in the Real Wallet program, may include features that are subject to additional state or federal laws or regulations or the authority of the CFPB. There is no assurance, particularly since we may have no experience in the relevant industry, that we will be able to comply with all the rules and regulations related to the product. In particular, there is no assurance that we will be able to comply with the rules and regulations related to the Real Wallet program or that we will be successful in launching this program, which includes credit card and debit card products, that we plan to launch in 2024 and in which industry we have no experience. An examination by a regulatory agency could result in regulatory or enforcement actions that adversely affect the operation of our business by increasing our costs, imposing penalties for non-compliance or otherwise limiting our ability to provide such products and services.

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There is intense competition in the Software as a Service and real estate brokerage industries.

Both the SaaS and real estate brokerage industries are highly competitive and rapidly changing, and the Company expects that competition will intensify in the future. The Company may be significantly affected by new product introductions and geographic expansion by existing competition. Specific factors upon which the Company competes include, but are not limited to, the functionality of its applications, ease of use, timing for implementation, quality of support and services, and price. The Company’s potential competitors include other real estate brokerage firms, as well as technology companies developing SaaS services and novel technologies designed for the real estate sector. Many of these potential competitors have significantly greater financial, technical, marketing and other resources than the Company has. Many of them also have longer operating histories, greater name recognition and stronger relationships with agents and/or consumers who use or might use a software-based real estate mobile application. The Company may not be able to successfully compete with these competitors.

The Company has a limited operating history which makes it difficult to evaluate its future prospects for success.

The Company has a limited operating history which makes it difficult for Shareholders and potential investors to evaluate our business or prospective operations. The Company is subject to all the risks inherent in a developing organization, financing, expenditures, complications and delays inherent in a new business. Shareholders and investors should evaluate an investment in the Company in light of the uncertainties encountered by developing companies in a competitive and evolving environment. The Company’s business is dependent upon the implementation of our business plan and execution of our strategies, including the Company’s plan to develop a consumer-facing portal and the Real Wallet. The Company may not be successful in implementing its business plan or executing its strategies, and cannot guarantee that, if implemented, the Company will ultimately be able to attain sufficient profitability.

There is inherent technology and development risk in the Company’s business and industry.

The Company’s approach utilizes technology principally architected and developed by the Company. There can be no assurances that the Company will meet its targeted development or integration timelines such that it will be able to offer solutions at competitive pricing, or that the Company can continue to enhance and improve the responsiveness, functionality and features of its technology and enable the solutions to scale at a reasonable cost. In addition, there is a risk that third parties may have applied for or been granted patents for certain processes or technology which the Company has already deployed or intends to deploy, in which case the Company may incur additional costs or be prohibited from using or implementing certain product features or processes in one or more countries. The Company’s solutions incorporate complex technology and software. Accordingly, they may contain errors, or “bugs”, that could be detected at any point. Such errors could materially and adversely affect the Company’s reputation, resulting in claims and/or significant costs to the Company, and/or cause consumers, merchants, licensees and other parties to abandon the Company’s solutions and impair the Company’s ability to market and sell solutions and services in the future. The costs incurred in correcting any errors and satisfying any such claims may be substantial and could adversely affect the Company’s operating margins. While the Company plans to continually test its solutions for errors and work with customers and merchants through its maintenance support services to identify and correct bugs, errors may be found in the future.

The Company maintains data on cloud storage servers, which could be the target of a security breach.

The Company’s business faces certain security risks. The Company’s products and services involve storage using cloud-based hosting services and also physical storage. Although data is stored in specialized security groups and are externally encrypted, storage hardware and networking infrastructure is provided by a third party, and security breaches and cyberattacks expose this information to a risk of loss, litigation and potential liability. If an actual or perceived breach of security and/or cyberattack occurs, the market perception of the effectiveness of the Company’s security measures could be harmed, and the Company could lose users and may incur significant legal and financial exposure, including legal claims and regulatory fines and penalties. Computer viruses, break-ins, cyberattacks or other security problems could lead to misappropriation of proprietary information and interruptions, delays, or cessation in service to clients. Real’s primary risks that could result directly from the occurrence of a cyber incident include operational interruption, loss of agent and client information, damage to the Company’s public image and reputation, and/or potentially impact the relationships with its agents and clients, and could cause the Company’s financial results to be negatively impacted.

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There could be interruptions or delays from cloud servers that could affect the Company’s products or services.

The Company’s products and services involve storage using a third-party cloud-based hosting service. Any damage to, or failure of, the hosting service’s systems generally could result in interruptions in the use of the Company’s products or services. Such interruptions may reduce the Company’s revenue, cause customers to terminate their subscriptions and adversely affect the Company’s ability to attract new customers. The Company’s business will also be harmed if its customers and potential customers believe its products or services are unreliable.

Risk Related to World Wide Economic Conditions

Currency exchange rates fluctuations could adversely affect the Company’s operating results.

The Company is exposed to the effects of fluctuations in currency exchange rates. Since the Company conducts some of its business in currencies other than U.S. dollars but reports its operating results in U.S. dollars, it faces exposure to fluctuations in currency exchange rates. Consequently, exchange rate fluctuations between the U.S. dollar and other currencies could have a material impact on the Company’s operating results.

Downturns in general economic and market conditions may reduce demand for the Company’s products and could negatively affect the Company’s revenue, operating results and cash flow.

Financial markets have demonstrated that businesses and industries throughout the world are very tightly connected to each other. Thus, financial developments seemingly unrelated to the Company or to the real estate industry could materially adversely affect the Company over the course of time. Volatility in the market could hurt the Company’s ability to raise capital. Potential price inflation caused by an excess of liquidity in countries where the Company conducts business may increase the costs incurred to sell the Company’s products and may reduce the Company’s profit margins. As a result of downturns in general economic and market conditions, potential customers may not be interested in purchasing the Company’s products. Any of these events, or other events caused by turmoil in world financial markets may have a material adverse effect on the Company’s business, operating results and financial conditions.

Information technology failures and data security breaches could harm our business.

Cybersecurity threats and incidents directed at us could range from uncoordinated individual attempts to gain unauthorized access to information technology systems to sophisticated and targeted measures aimed at disrupting business or gathering personal data of customers. In the ordinary course of our business, we and our agents and brokers collect and store sensitive data, including proprietary business information and personal information about our clients and customers. Our business and particularly our cloud-based platform, reZEN, is reliant on the uninterrupted functioning of our information technology systems. The secure processing, maintenance and transmission of information are critical to our operations, especially the processing and closing of real estate transactions. Cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption, or unavailability of critical data and confidential or proprietary information (our own or that of third parties, including potentially sensitive personal information of our clients and customers) and the disruption of business operations. Our use of remote work environments and virtual platforms may increase our risk of cyber-attack or data security breaches. If we were to be subject to a material successful cyber-intrusion, it could result in remediation or service restoration costs, increased cyber protection costs, lost revenues, our agents and brokers may no longer want to work with us, litigation or regulatory actions by governmental authorities, increased insurance premiums, reputational damage and damage to our competitiveness, our stock price and our long-term stockholder value.

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Our results of operations and financial condition may be adversely affected by public health issues.

Infectious disease outbreaks (including COVID-19, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, BSE, avian influenza, or other material outbreaks of disease) could result in restrictions adversely affecting the Company’s business operations. These restrictions could include prohibitions on home showings and open houses, limiting face-to-face meetings, and general transportation or isolation orders from government authorities. Such outbreaks may negatively impact the general economy and job markets. The economy and job markets directly affect demand for housing and therefore the Company could suffer harm to its business, including, but not limited to, significant revenue decreases, should there be a sustained negative impact on economic conditions as a result of disease outbreak.

Current and threatened conflicts could negatively affect the housing market, and could lead to lower revenue for us.

There currently are ongoing conflicts in Ukraine and Israel. While neither of these conflicts has had a material direct impact on our consolidated financial performance, the conflicts are still ongoing, and there are many risks and uncertainties in relation to those conflicts that are outside of our control. For example, these conflicts have already led and could lead to further market disruptions, including significant volatility in credit and capital markets. If either or both conflicts escalate further or if additional countries join either conflict, it could lead to uncertainty in the markets and low consumer confidence, which may lead potential homebuyers to decide not to invest in new homes at this time, or sellers to decide to stay in their current homes, and could have a material impact on our business operations and financial performance.

Risk Related to Intellectual Property

The Company’s intellectual property rights are valuable, and any failure or inability to protect them could adversely affect its business.

The Company’s success depends substantially upon the intellectual property that forms the basis of its products, primarily consisting of unpatented proprietary technology, processes, trade secrets, and know-how, as well as inherent copyright of authorship in the source code developed by the Company, and unregistered trademarks. To protect its intellectual property rights, the Company relies upon trade secret, copyright, trademark, passing-off laws and other statutory and common law protections in the United States, and international markets. The Company also protects its intellectual property through the use of non-disclosure agreements and other contracts, disclosure and invention assignment agreements, confidentiality procedures, and technical measures. There can be no assurance that these measures will be successful in any given case, particularly in those countries where the laws do not afford the Company protection for its intellectual property rights as robust as those available under Canadian and United States laws. The Company may be unable to prevent the misappropriation, infringement or violation of its intellectual property rights, breaching any contractual obligations, or independently developing intellectual property that is similar to its own, any of which could reduce or eliminate Real’s competitive advantages, adversely affect the Company’s revenues, or otherwise harm its business.

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Assertions by third parties of infringement or other violations of the Company’s intellectual property rights could result in significant costs and substantially harm the Company’s business and operating results.

Third parties may in the future assert claims of infringement, misappropriation or other violations of intellectual property rights against the Company. Any such claim against the Company, even those without merit could cause the Company to incur substantial costs defending against the claim and could distract its management. An adverse outcome of a dispute may require the Company to pay substantial damages, cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others, expend additional development resources to attempt to redesign its services or otherwise develop non-infringing technology, which may not be successful, or enter into potentially unfavorable royalty or license agreements in order to obtain the right to use technologies or intellectual property rights.

Intellectual property claims are expensive and time consuming to defend and if resolved adversely, could have a significant impact on the Company’s business, financial condition, and operating results.

The Company is actively engaged in enforcement and other activities to protect its intellectual property rights. If it became necessary to resort to litigation to protect these rights, any proceedings could be burdensome, costly and divert the attention of management and the Company may not prevail. Any repeal or weakening of intellectual property laws or diminishment of procedures available for the enforcement of intellectual property rights in Canada, the United States, or internationally could make it more difficult for the Company to adequately protect its intellectual property rights, negatively impacting their value and increasing the cost of enforcing its rights.

If the Company is unable to protect the confidentiality of its proprietary information and know-how, the value of its technology and products could be adversely affected.

The Company relies upon unpatented proprietary technology, processes, trade secrets and know-how. Any disclosure to or misappropriation by third-parties of its confidential or proprietary information could enable the Company’s competitors to duplicate or surpass the Company’s technological achievements, potentially eroding its competitive position in the market and negatively impacting the Company’s business and operating results.

The Company protects its confidential and proprietary information in part through non-disclosure agreements and other contracts, disclosure and invention assignment agreements, with all employees, consultants, advisors and any third-parties, who have access to its confidential and proprietary information, and employs confidentiality procedures and technical measures, there can be no certainty that these measures or procedures will be sufficient to prevent improper disclosure of such confidential and proprietary information, or to prevent it from falling into the hands of the Company’s competitors and other third parties. There can be no certainty that parties to contracts used by the Company to protect its confidential and proprietary information will not be terminated or breached, and the Company may not have adequate remedies for any such termination or breach. Legal remedies may be insufficient or ineffective to meaningfully protect the Company’s confidential and proprietary information or compensate the Company for losses that may occur in the event of unauthorized use or disclosure.

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If the Company fails to protect the privacy and personal information of its customers, agents or employees, the Company may be subject to legal claims, government action and damage to its reputation.

Consumers, independent contractors and employees have shared personal information with the Company during the normal course of its business processing real estate transactions. This includes, but is not limited to, social security numbers, annual income amounts and sources, consumer names, addresses, telephone and cell phone numbers and email addresses. For the Company to run its business, it is essential to store and transmit this sensitive information in its systems and networks. At the same time, the Company is subject to numerous laws, regulations, and other requirements that require businesses like theirs to protect the security of personal information, notify customers and other individuals about our privacy practices, and limit the use, disclosure, or transfer of personal data across country borders. Regulators in the U.S. and abroad continue to enact comprehensive new laws or legislative reforms imposing significant privacy and cybersecurity restrictions. The result is that the Company is subject to increased regulatory scrutiny, additional contractual requirements from corporate customers, and heightened compliance costs. These ongoing changes to privacy and cybersecurity laws also may make it more difficult for the Company to operate our business and may have a material adverse effect on our operations. For example, in the U.S., California enacted the California Consumer Privacy Act, which went into full effect in 2020, imposing new and comprehensive requirements on organizations that collect and disclose personal information about California residents.

Any significant violations of privacy and cybersecurity could result in the loss of new or existing business, litigation, regulatory investigations, the payment of fines, damages, and penalties and damage to the Company’s reputation, which could have a material adverse effect on its business, financial condition, and results of operations. The Company could also be adversely affected if legislation or regulations are expanded to require changes in its business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect its business, results of operations or financial condition. In addition, while the Company discloses its information collection and dissemination practices in a published privacy statement on its websites, which the Company may modify from time to time, the Company may be subject to legal claims, government action and damage to its reputation if it acts or is perceived to be acting inconsistently with the terms of its privacy statement, customer expectations or state, national and international regulations. The Company’s policy and safeguards could be deemed insufficient if third parties with whom we have shared personal information fail to protect the privacy of that information.

The occurrence of a significant claim in excess of the Company’s insurance coverage or which is not covered by its insurance in any given period could have a material adverse effect on its financial condition and results of operations during the period. In the event the Company or the vendors with which it contracts to provide services on behalf of the Company’s customers were to suffer a breach of personal information, the Company’s real estate agents and clients could terminate their business with the Company. Further, the Company may be subject to claims to the extent individual employees or independent contractors breach or fail to adhere to Company policies and practices and such actions jeopardize any personal information. The Company’s legal liability could include significant defense costs, settlement costs, damages and penalties, plus, damage its reputation with consumers, which could significantly damage its ability to attract customers. Any or all of these consequences would result in meaningful unfavorable impact on the Company’s brand, business model, revenue, expenses, income and margins.

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Risk Related to Common Shares

The Company may issue additional Common Shares and Shareholders may experience dilution.

The Company is authorized to issue an unlimited number of Common Shares. Additionally, the Company maintains the Amended and Restated Omnibus Incentive Plan which employees, agents, brokers and certain service providers of the Company and its Affiliates can receive Awards. The Company issues Restricted Shares Units to agents each month pursuant to its incentive programs, and issues Common Shares periodically to other eligible participants, including employees. As of December 31, 2023, the Company had 183,605,781 Common Shares issued and outstanding, and there were 26,293,712 Common Shares reserved for issuance subject to Restricted Share Units and 16,899,038 Common Shares reserved for issuance pursuant to the exercise of Options. Consequently, Shareholders may experience more dilution in their ownership of their Common Shares in the future.

It may be difficult to enforce civil liabilities under Canadian securities laws.

Most of the directors and officers of the Company are based in Israel and the United States and most of the Company’s assets, and assets of the directors and officers are located outside of Canada. Therefore, a judgment obtained against the Company, or any of these Persons, including a judgment based on the civil liability provisions of the Canadian securities laws, may not be collectible in Canada and may not be enforced by an Israeli or U.S. court. It also may be difficult to effect service of process on these Persons in Canada or to assert Canadian securities law claims in original actions instituted in Israel or the United States. Israeli or U.S. courts may refuse to hear a claim based on an alleged violation of Canadian securities laws reasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli or U.S. court agrees to hear a claim, it may determine that Israeli law or United States law and not Canadian law is applicable to the claim. If the Canadian law is found to be applicable, the content of applicable Canadian law must be proven as a fact by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law or United States law. There is little binding case law in Israel and the United States that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against the Company or its directors and officers in Israel or the United States, it may be difficult to collect any damages awarded by either a Canadian or a foreign court.

The Company does not have any control over the research and reports that securities or industry analysts publish about the Company or its business.

The trading market for the Common Shares will, to some extent, depend on the research and reports that securities or industry analysts publish about the Company or its business. The Company does not have any control over these analysts. If one or more of the analysts who covers the Company should downgrade the Common Shares or change their opinion of the Company’s business prospects, the Common Shares trading price would likely decline. If one or more of these analysts ceases coverage of the Company or fails to regularly publish reports on the Company, it could lose visibility in the financial markets, which could cause the Company’s share price or trading volume to decline.

Item 6.

DIVIDENDS

6.1

Dividends or Distributions

There are no restrictions in the Company’s articles or elsewhere which could prevent the Company from paying dividends. The Company has not paid dividends in any of the three most recently completed financial years and the payment of dividends on Common Shares is not anticipated in the immediate future. The Board will determine if, and when, to declare and pay dividends in the future from funds properly applicable to the payment of dividends based on the Company’s financial position at the relevant time. All of the Common Shares will be entitled to an equal share in any dividends declared and paid on a per share basis.

2023 ANNUAL INFORMATION FORM | 36

Item 7.

Description of Capital Structure

7.1

Share Capital

Common Shares

The authorized share structure of the Company consists of an unlimited number of Common Shares without par value. As of As of March 6, 2024, there were 185,277,309 Common Shares issued and outstanding on a non-diluted basis.

The holders of Common Shares are entitled to receive notice of and attend any meeting of the Shareholders and are entitled to cast one vote for each Common Share held. The holders of Common Shares will be entitled to receive dividends if, as and when declared by the Board and to receive a proportionate share, on a per share basis, of the assets of the Company available for distribution in the event of a liquidation, dissolution or winding-up of the Company.

Warrants

As of the date of this AIF, an aggregate of 184,227 Warrants are issued and outstanding. The Warrants were issued in connection with the RealtyCrunch Transaction. Each Warrant is exercisable for one (1) Common Share at an exercise price of C$1.36 per Common Share and will expire on January 8, 2025.

7.2

Options to Purchase Securities

Amended and Restated Omnibus Incentive Plan

The Amended and Restated Omnibus Incentive Plan is a “rolling” plan and the Company is authorized to grant Options of up to 15% of its issued and outstanding Common Shares at each Award Date, less the number of Common Shares subject to grants of Options under any other Securities Based Compensation Arrangement. In addition, the Company is authorized to grant up to 70,000,000 RSUs pursuant to the Amended and Restated Omnibus Incentive Plan. The RSUs limit is separate and distinct from the maximum of Common Shares reserved for issuance pursuant to Options under the Amended and Restated Omnibus Incentive Plan. The Amended and Restated Omnibus Incentive Plan was approved by the Board on July 15, 2022 and by Shareholders on June 9, 2023.

The purpose of the Amended and Restated Omnibus Incentive Plan is to advance the interests of the Company by encouraging eligible directors, officers, employees and consultants of the Company to acquire Common Shares, thereby increasing their interest in the Company and furnishing them with additional incentive in their efforts on behalf of the Company in the conduct of its business and affairs.

As of March 6, 2024, 16,899,038 Common Shares remained available for issuance pursuant to the grant of Options under the Amended and Restated Omnibus Incentive Plan, taking into account all Common Shares issuable under all Securities Based Compensation Arrangements.

As of March 6, 2024, 23,859,588 Common Shares remained available for issuance pursuant to the grant of RSUs under the Amended and Restated Omnibus Incentive Plan.

Each Option granted pursuant to the terms of the Amended and Restated Omnibus Incentive Plan will vest and be exercisable as to one third (1/3) of the total number of Options granted on each of the first, second and third anniversaries of the Award Date, unless otherwise determined by the Board. The Option Price of any Option shall be determined and approved by the Board when such Option is granted, but shall not be less than the lesser of (i) the VWAP on the Award Date and (ii) the closing market price on a Stock Exchange on the day immediately prior to the Award Date. The Board may at its sole discretion at any time or on the Award Date in respect of any Option granted, accelerate or provide for the acceleration of vesting in whole or in part of Options previously granted.

2023 ANNUAL INFORMATION FORM | 37

Each RSU granted pursuant to the terms of the Amended and Restated Omnibus Incentive Plan will vest and be payable as to one third (1/3) of the total number of Options granted on each of the first, second and third anniversaries of the Award Date, unless otherwise determined by the Board. The Board may at its sole discretion at any time or on the Award Date in respect of any RSUs granted, accelerate or provide for the acceleration of vesting in whole or in part of RSUs previously granted. Notwithstanding the foregoing, an RSU shall not vest prior to the date that is one year following the Award Date of such RSU.

The maximum number of Common Shares issued to participants who are insiders, collectively, within any one (1) year period, under the Amended and Restated Omnibus Incentive Plan and any other Security Based Compensation Arrangement, cannot exceed 10% of the outstanding Common Shares at any point in time. The maximum number of Common Shares issued to one Person collectively, within any one (1) year period, under the Amended and Restated Omnibus Incentive Plan and any other Security Based Compensation Arrangement, cannot exceed 5% of the outstanding Common Shares at the Award Date.

The Board may make Awards to Non-Employee Directors under the Amended and Restated Omnibus Incentive Plan provided that (i) the annual grant of Awards under the Amended and Restated Omnibus Incentive Plan to any one Non-Employee Director shall not exceed $150,000 in value (based on a Black-Scholes calculation or such other similar and acceptable methodology, applied consistently and appropriately as determined by the Board), of which no more than $100,000 may comprise Options; and (ii) the maximum number of Common Shares that may be made issuable pursuant to Awards made to all Non-Employee Directors within any one-year period shall not exceed 1% of the issued and outstanding Common Shares (as of the commencement of such one-year period). Furthermore. securities issuable to any one Person, who is a Non-Employee Director, shall be limited to the lesser of: (i) 1% of the Common Shares then issued and outstanding; and (ii) $1,000,000 in total value of grants of Options that each director receives over the life of the Amended and Restated Omnibus Incentive Plan or an annual grant value of $100,000 per director, in both cases based on a valuation determined using the Black-Scholes formula or any other formula which is widely accepted by the business community as a method for the valuation of options.

The Amended and Restated Omnibus Incentive Plan is administered by the Board, which has full and final authority with respect to the granting of all Options and RSUs thereunder subject to the requirements of NASDAQ.

Predecessor Omnibus Incentive Plan

As of As of March 6, 2024, there were 465,000 Options and 1,005,760 RSUs issued and outstanding pursuant to the Predecessor Omnibus Incentive Plan. Each Option entitles the holder to the exercise the Option for one (1) Common Share in accordance with the terms of the Predecessor Omnibus Incentive Plan. Each RSU entitles the holder to a cash payment or one (1) Common Share at the discretion of the Company in accordance with the terms of the Predecessor Omnibus Incentive Plan. The Company will no longer grant any Options or RSUs pursuant to the Predecessor Omnibus Incentive Plan, which exists solely for the purposes of governing the existing Options and RSUs granted thereunder.

2023 ANNUAL INFORMATION FORM | 38

Stock Option Plan

As of As of March 6, 2024, there were 16,107,833 Options issued and outstanding, pursuant to the Predecessor Stock Option Plan. Each Option entitles the holder to the exercise the Option for one (1) Common Share in accordance with the terms of the Predecessor Stock Option Plan. The Company will no longer grant any Options pursuant to the Predecessor Stock Option Plan, which exists solely for the purposes of governing the existing Options granted thereunder.

Restricted Share Unit Plan

As of As of March 6, 2024, there were 1,238,677 RSUs issued and outstanding pursuant to the Predecessor RSU Plan. Each RSU entitles the holder to a cash payment or one (1) Common Share at the discretion of the Company in accordance with the terms of the Predecessor RSU Plan. The Company will no longer grant any RSUs pursuant to the Predecessor RSUs Plan, which exists solely for the purposes of governing the existing RSUs granted thereunder.

Item 8.

Market for Securities

8.1

Trading Price and Volume

On June 15, 2021, the Company’s Common Shares commenced trading on the NASDAQ under the symbol “REAX”. On July 26, 2022, the Company’s Common Shares commenced trading on the TSX under the symbol “REAX”. On July 28, 2023, the Company announced that its application for a voluntary delisting of its Common Shares from the TSX had been approved by the Board and the TSX. The Common Shares were delisted from the TSX effective as of close of markets on August 11, 2023. The Common Shares continue to be listed and traded on the NASDAQ. The Company is a reporting issuer in each of the provinces and territories in Canada.

The following tables sets forth, for the periods indicated, the marketplace, reported high and low trading prices (in the currencies in which such securities were listed and posted for trading) and the volume traded on the relevant stock exchanges.

Month	Stock Symbol	Market	High Trading Price (US$)		Low Trading Price (US$)		Share Volume
January 2023	REAX	NASDAQ		1.42		1.00		1,125,253
February 2023	REAX	NASDAQ		1.50		1.38		1,173,127
March 2023	REAX	NASDAQ		1.50		1.13		1,567,009
April 2023	REAX	NASDAQ		1.38		1.14		1,457,166
May 2023	REAX	NASDAQ		1.34		1.09		3,377,683
June 2023	REAX	NASDAQ		1.93		1.23		3,384,046
July 2023	REAX	NASDAQ		1.99		1.55		2,133,351
August 2023	REAX	NASDAQ		1.97		1.56		2,368,438
September 2023	REAX	NASDAQ		1.87		1.37		2,150,254
October 2023	REAX	NASDAQ		1.67		1.36		1,726,701
November 2023	REAX	NASDAQ		1.55		1.30		2,417,521
December 2023	REAX	NASDAQ		1.70		1.28		2,316,326

2023 ANNUAL INFORMATION FORM | 39

Month	Stock Symbol	Market	High Trading Price (C$)		Low Trading Price (C$)		Share Volume
January 2023	REAX	TSX		1.95		1.41		204,815
February 2023	REAX	TSX		1.93		1.69		254,189
March 2023	REAX	TSX		1.98		1.57		310,240
April 2023	REAX	TSX		1.85		1.54		228,299
May 2023	REAX	TSX		1.80		1.49		479,994
June 2023	REAX	TSX		2.54		1.67		804,261
July 2023	REAX	TSX		2.61		2.01		363,112
August 1-11, 2023	REAX	TSX		2.60		2.19		81,961

8.2

Prior Sales

The following table sets forth securities issued by the Company that are not listed or quoted on a marketplace during the year ended December 31, 2023 and to the date of this AIF.

Date	Type of Security Issued	Number/Principal Amount of Securities Issued		Issuance/Exercise Price per Security
January 5, 2023	Restricted Stock Unit		911,016	N/A
January 6, 2023	Restricted Stock Unit		1,276,760	N/A
February 7, 2023	Restricted Stock Unit		1,061,723	N/A
March 9, 2023	Restricted Stock Unit		937,191	N/A
March 23, 2023	Restricted Stock Unit		1,116,600	N/A
March 23, 2023	Options		1,515,000	US$1.25
April 12, 2023	Restricted Stock Unit		1,768,179	N/A
June 9, 2023	Restricted Stock Unit		4,155,271	N/A
June 14, 2023	Options		65,000	US$1.40
June 23, 2023	Restricted Stock Unit		26,409	N/A
July 11, 2023	Restricted Stock Unit		1,706,008	N/A
August 7, 2023	Restricted Stock Unit		2,004,727	N/A
August 8, 2023	Restricted Stock Unit		151,793	N/A
August 8, 2023	Options		85,000	US$1.67
August 10, 2023	Restricted Stock Unit		188,680	N/A
September 12, 2023	Restricted Stock Unit		1,905,245	N/A
October 11, 2023	Restricted Stock Unit		1,979,930	N/A
November 7, 2023	Restricted Stock Unit		2,038,851	N/A
November 16, 2023	Restricted Stock Unit		890,659	N/A
November 16, 2023	Options		10,000	US$1.47
December 6, 2023	Restricted Stock Unit		1,685,964	N/A
December 14, 2023	Restricted Stock Unit		507,119	N/A
January 8, 2024	Restricted Stock Unit		1,598,024	N/A
February 9, 2024	Restricted Stock Unit		836,100	N/A
March 8, 2024	Restricted Stock Unit		788,122	N/A
(1) 7,579,431 vested Restricted Share Units were settled through delivery of Common Shares acquired pursuant to the NCIB.

Item 9.

ESCROWED SECURITIES and securities subject to contractual restrictions on transfer

9.1

Escrowed Securities and Securities Subject to Contractual Restriction on Transfer

As of the date of this AIF, the Company does not have any Common Shares subject to escrow or contractual restrictions on transfer.

2023 ANNUAL INFORMATION FORM | 40

Item 10.

Directors and Officers

10.1

Name, Occupation and Security Holding

The following table sets out the name, province or state and country of residence, positions and offices held with the Company, period served as a director and/or officer and the principal occupations during the last five (5) years, for each Person who serves as a director and/or officer of the Company as of the date of this AIF. Each director shall hold office until the next annual general meeting of the Company, or until his or her successor is duly elected or appointed, unless his or her office is earlier vacated in accordance with the Company’s Articles.

Name, Residence and Positions Held ⁽¹⁾	Director or Officer Since	Principal Occupation for Previous Five Years ⁽¹⁾
Tamir Poleg ⁽²⁾ Tel Aviv, Israel Chairman, Chief Executive Officer and Director	June 5, 2020	Chief Executive Officer of The Real Brokerage Inc., or a subsidiary.

Michelle Ressler New York, New York Chief Financial Officer and Corporate Secretary	July 28, 2020	Chief Financial Officer at Real; Controller at Canaccord Genuity Group Inc.

Sharran Srivatsaa Marina Del Ray, California President	December 12, 2022	President at Real; Chairman at ARC Multifamily Group; Chief Executive Officer at Highland Prime

Pritesh Damani St, Petersburg, Florida Chief Technology Officer	November 30, 2021	Chief Technology Officer at Real; Chief Executive Officer at RealtyCrunch, Chief Technology Officer at Plexus Entertainment – GoWatchIt.

Jenna Rozenblat Atlanta, Georgia Chief Operating Officer	August 10, 2023	Vice President of Operations at Real; Head of Operations, Orchard, Chief Executive Officer of Village Realty.

Andrea “Dre” Madden Corte Madera, California Chief Marketing Officer	September 15, 2022	Chief Marketing Officer at Real; Chief Marketing Officer at Underground Cellar; Interim Chief Marketing Officer at Aero; Interim Chief Marketing Officer at Community Wellness; Senior Director of Marketing at Rodan + Fields

Alexandra Lumpkin Miami, Florida Vice President, General Counsel and Assistant Secretary	February 27, 2023	Vice President and General Counsel at Real; Previously Deputy General Counsel at Lennar Corporation.

Vikki Bartholomae ^{(2) (4)} Winter Garden, Florida Director	April 20, 2021	Franchise Owner at Wild Birds Unlimited; Chief Customer Success Officer at Side; President at eXp Realty.

Guy Gamzu ^{(3) (4)} Tel Aviv, Israel Director	June 5, 2020	Investor & Director at Moon Active LTD, Spikenow LTD, Vi Labs LTD, Vyzer LTD, Eyeclick LTD, Atlas Invest Big Data LTD; Founder of Cubit Investments Ltd.

Susanne Greenfield Sandler ⁽²⁾ Jersey City, New Jersey Director	June 14, 2023	General Manager, Apalon; Vice President of Global Strategy, Booking Holdings; Vice President of Corporate Development, Booking Holdings; Director of Corporate Development, Griffon Corp.

Larry Klane ^{(2) (3)} New York, New York Director	June 5, 2020	Board member at Goldman Sachs Bank USA, Board member at Navient; Partner of Pivot Investment Partners

Atul Malhotra, Jr. ⁽²⁾ West Hollywood, California Director	December 2, 2020	Investment Team, Insight Partners (various roles)

Laurence Rose^{(3) (4)} Toronto, Ontario Director	June 5, 2020	Chairman, President and Chief Executive Officer, Tradelogiq Markets, Inc.

Notes:

⁽¹⁾	The information as to place of residence and principal occupation has been furnished by the respective directors and officers of the Company individually.
⁽²⁾	Member of the Audit Committee. Larry Klane is the Audit Committee Chair.
⁽³⁾	Member of the Compensation Committee. Guy Gamzu is the Compensation Committee Chair.
⁽⁴⁾	Member of the Nominating and Corporate Governance Committee. Laurence Rose is the Nominating and Corporate Governance Committee Chair.

2023 ANNUAL INFORMATION FORM | 41

As of March 6, 2024, the directors and executive officers of the Company, as a group, beneficially owned or controlled or directed, directly or indirectly, 68,296,218 Common Shares, representing approximately 37% of the 185,277,309 issued and outstanding Common Shares on a non-diluted basis or approximately 29.27% of the issued and outstanding Common Shares on a partially-diluted basis, based on 232,649,000 Common Shares issued and outstanding. The information as to the Common Shares beneficially owned or controlled or directed, directly or indirectly, by the directors and executive officers, not being within the knowledge of the Company, has been furnished by such directors and executive officers.

10.2

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Cease Trade Orders and Bankruptcies

To the knowledge of the Company, no director or executive officer of the Company, or personal holding company of any of them is, as of the date of this AIF, or was within ten (10) years before the date of this AIF, a director, chief executive officer or chief financial officer of any company (including this Company) that:

	i.	was subject to a cease trade or similar order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than thirty (30) consecutive days (an “Order”) that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or

	ii.	was subject to an Order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that Person was acting in the capacity as director, chief executive officer or chief financial officer.

To the knowledge of the Company, no director or executive officer of the Company, or Shareholder holding a sufficient number of securities of the Company to materially affect the control of the Company, or personal holding company of any of them is, as at the date of this AIF, or has been within the ten (10) years before the date of this AIF, a director or executive officer of any company (including this Company) that, while that Person was acting in that capacity, or within a year of that Person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

2023 ANNUAL INFORMATION FORM | 42

Personal Bankruptcies

To the knowledge of the Company, no director or executive officer of the Company, or Shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, or personal holding company of any of them has, within the ten (10) years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that Person.

Penalties and Sanctions

Except as described herein, no director or executive officer of the Company, or Shareholder holding a sufficient number of securities of the Company to materially affect the control of the Company, or personal holding company of any of them, has been subject to:

	i.	any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

	ii.	any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

On September 15, 2015, the District Court of Harris County, Texas, 215^th Judicial District in Cause No. 2011-77806 rendered a civil judgement against Optimum Arbor Oaks, LLC (“Optimum”), among other defendants including Tamir Poleg (a director and officer of the Company), relating to the misappropriation of insurance proceeds and the fraudulent transfer of funds to certain third-parties (the “Arbor Oaks Judgement”).

Optimum was principally liable under the Arbor Oaks Judgement and was required to pay the amount of US$1,119,466 to the plaintiffs. Tamir Poleg, together with certain other defendants, were held liable to the plaintiffs for the aggregate amount of US$257,929.25. In connection with an Assumption and Release Agreement and related loan documents executed by Optimum dated April 17, 2008, Mr. Poleg, together with another individual defendant (collectively, the “Guarantors”), were required to sign a personal indemnity and guarantee agreement (the “Indemnity and Guarantee”) in favour of certain lenders to Optimum that required that the Guarantors would be personally liable for certain debts associated with a multi-residential apartment complex in Texas, United States owned by Optimum (the “Arbor Oaks Apartments”) to the extent that Optimum misappropriated any insurance claims in connection with the Arbor Oaks Apartments. Mr. Poleg was an indirect and passive investor in Optimum and had no operational or managerial control over Optimum. Optimum was contractually responsible to use certain insurance proceeds to improve the Arbor Oaks Apartments or reduce its debt and Optimum had failed to do so. As a result of the Indemnity and Guarantee, Mr. Poleg was contractually bound to pay for any misappropriation of funds by Optimum, irrespective that Mr. Poleg was a passive investor of Optimum.

2023 ANNUAL INFORMATION FORM | 43

10.3

Conflicts of Interest

Certain of the directors and/or officers of the Company serve as directors and/or officers of other companies or have shareholdings in other companies. Such associations may give rise to conflicts of interest from time to time. To the knowledge of the Company, there are no known existing or potential material conflicts of interest between the Company and any director or officer of the Company.

Any conflicts of interest will be subject to and governed by the law applicable to directors’ and officers’ conflicts of interest and fiduciary duties, including the procedures prescribed by the BCBCA respecting disclosable interests. The BCBCA requires, among other things, that directors and officers of the Company, who are also directors or officers of, or who have a material interest in, a party which enters into a material contract or transaction with the Company, or otherwise have a material interest in a material contract or transaction entered into by the Company, must disclose their interest and, in certain instances, refrain from voting on any resolution of the Board to approve the contract or transaction.

Item 11.

PROMOTERS

11.1

Promoters

Tamir Poleg may be considered a Promoter of the Company based on his role as founder of Real Technology Broker Ltd. Other than as described in this AIF, no Promoter of the Company has received or will receive anything of value, including money, property, contracts, options, or rights of any kind from the Company for acting as a Promoter of the Company. Mr. Poleg beneficially owns, directly or indirectly, or exercises control or direction over 8,893,668 Common Shares representing 4.8% of the issued and outstanding Common Shares. Mr. Poleg also has 8,315,467 Stock Options that are currently exercisable for Common Shares at a ratio of one Common Share for each Stock Option.

Item 12.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

12.1

Legal Proceedings

From time to time, the Company may be involved in disputes, claims, litigation or regulatory inquiries that arise in the ordinary course of its business. Other than as described herein, the Company does not believe that the outcome of any of these individual existing legal or regulatory proceedings to which it is a party will have a material adverse effect on its results of operations, financial condition or overall business in each case, taken as a whole.

Antitrust Litigation

Umpa v. The National Association of Realtors, et al. was filed on December 27, 2023 in the United States District Court for the Western District of Missouri, naming two of the Company’s legal entities, The Real Brokerage Inc. and Real Broker, LLC, and The National Association of Realtors, Homeservices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, The Long & Foster Companies, Inc., Keller Williams Realty, Inc., Compass, Inc., Exp World Holdings, Inc., Exp Realty, LLC, Redfin Corporation, Weichert Realtors, United Real Estate, Hanna Holdings, Inc, Douglas Elliman, Inc., Douglas Elliman Realty, LLC, At World Properties, LLC, Realty One Group, Inc. and Homesmart International, LLC, as defendants. The complaint alleges that the defendants participated in practices resulting in inflated buyer broker commissions, in violation of federal antitrust laws. The Company is unable to predict the outcome of this action or to reasonably estimate the possible loss or range of loss, if any, arising from the claims asserted therein. The Company plans to vigorously defend itself against all claims.

2023 ANNUAL INFORMATION FORM | 44

Other than as described herein, Real is neither a party to, nor is any of its property the subject matter of, any material legal proceedings, nor are any such proceedings known to Real to be contemplated by any party during the financial year ended December 31, 2023 or during the period commencing January 1, 2024 to the date of this AIF.

12.2

Regulatory Actions

There have been no penalties or sanctions imposed against the Company by a court during the financial year ended December 31, 2023, or during the period commencing January 1, 2024 to the date of this AIF. There have been no other penalties or sanctions imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision. The Company has not entered into any settlement agreement before a court relating to securities legislation or with a securities regulatory authority during the financial year ended December 31, 2023, or during the period commencing January 1, 2024 to the date of this AIF.

Item 13.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

13.1

Interest of Management and Others in Material Transactions

No director or executive officer of the Company or a Person or company that is the direct or indirect beneficial owner of, or who exercises control or direction over, more than 10% of any class or series of the Company’s outstanding voting securities, nor any of their respective associates or Affiliates have any material interest, direct or indirect, in any transaction within the last three (3) years before the date of this AIF, or in any proposed transaction, that has materially affected or will materially affect the Company or a subsidiary of the Company.

Item 14.

TRANSFER AGENTS AND REGISTRARS

14.1

Transfer Agents and Registrars

The transfer agent and registrar of the Company is Computershare Investor Services Inc., located at 100 University Avenue, 8th Floor, Toronto, ON M5J 2Y1 and Computershare Trust Company, N.A. located at 150 Royal Street, Canton, MA 02021.

14.2

Material Contracts

Except for contracts entered into in the ordinary course of business, the only material contract entered into by the Company within the most recently completed financial year and through to the date of this AIF, or prior thereto and that is still in effect as of the date hereof, is the Investor Rights Agreement.

Additional details with respect to the terms of the Investor Rights Agreement is included elsewhere in this AIF. Copies of any material contracts are available on the Company’s SEDAR+ profile at www.sedarplus.ca and on EDGAR at www.sec.gov.

Item 15.

INTERESTS OF EXPERTS

15.1

Interests of Experts

Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network (the “Auditor”), whose principal office is located at Azrieli Center, Derech Menachem Begin 132, Tel Aviv, Israel, 6701101, are the auditors of the Company and have confirmed that they are independent with respect to the Company within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada, Israel and any applicable legislation or regulations.

2023 ANNUAL INFORMATION FORM | 45

The Auditor has confirmed that neither they nor any of their directors, officers, employees or partners have any registered or beneficial interests, direct or indirect, in any securities or other property of the Company or the Company’s associates or affiliates.

Item 16.

ADDITIONAL INFORMATION

16.1

Audit Committee Information

The purposes of the Audit Committee are to assist the Board in its oversight of the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the qualifications and independence of the Company’s independent auditors, and the performance of the independent auditors and the Company’s internal audit function.

The overall purpose of the Audit Committee is to provide oversight of the Company’s financial management and the design and implementation of an effective system of internal financial controls, to review and report to the Board on the integrity of the financial statements of the Company, and to oversee, report on and make recommendations to the Board in respect of financial and non-financial risks faced by the Company. The Audit Committee has specific responsibilities relating to the Company’s financial reports, external auditors, internal controls, regulatory reports and returns, and legal and compliance matters that have a material impact on the Company. In fulfilling its responsibilities, the Audit Committee meets regularly with the external auditors and members of management.

Audit Committee Charter

The Board has adopted a written charter for the Audit Committee, which is disclosed in Appendix A to this AIF.

Composition of the Audit Committee

The Audit Committee is comprised of four directors: Larry Klane (Chair), Vikki Bartholomae, Atul Malhotra, Jr. and Susanne Sandler. Each member of the Audit Committee is financially literate and independent, as such terms are defined in NI 52-110.

Each of the Audit Committee members has an understanding of the accounting principles used to prepare the Company’s financial statements, experience preparing, auditing, analyzing or evaluating comparable financial statements and experience as to the general application of relevant accounting principles, as well as an understanding of the internal controls and procedures necessary for financial reporting.

The Audit Committee has the primary function of fulfilling its responsibilities in relation to reviewing the integrity of the Company’s financial statements, financial disclosures and internal controls over financial reporting; monitoring the system of internal control; monitoring the Company’s compliance with legal and regulatory requirements, selecting the external auditor for Shareholder approval; reviewing the qualifications, independence and performance of the external auditor; and reviewing the qualifications, independence and performance of the Company’s internal auditors. The Audit Committee has specific responsibilities relating to the Company’s financial reports; the external auditor; the internal audit function; internal controls; regulatory reports and returns; legal or compliance matters that have a material impact on the Company; and the Company’s whistleblowing procedures. In fulfilling its responsibilities, the Audit Committee meets regularly with the internal and external auditor and key management members. The full text of the Audit Committee’s charter is disclosed in Appendix A to this AIF.

2023 ANNUAL INFORMATION FORM | 46

Relevant Education and Experience

Each member of the Audit Committee is financially literate and, collectively, the Audit Committee has the education and experience to fulfill the responsibilities outlined in the Audit Committee Charter. The following is a description of the education and experience of each member of the Audit Committee that is, in addition to such member’s general business experience, relevant to the performance of his or her responsibilities as a member of the Audit Committee.

Larry Klane – Chair of the Audit Committee

Larry Klane is an independent director, co-founder of an investment firm, and prior CEO and business leader of an array of wholesale and retail financial services businesses globally. In addition to his executive experience, Mr. Klane has served on eleven corporate boards - six public boards and five private boards. In addition to The Real Brokerage Inc., Mr. Klane currently serves on the boards of Goldman Sachs Bank USA and Navient Corporation (NASDAQ: NAVI). Previously, Mr. Klane served on the Board of Bottomline Technology (USA) and earlier in his career as Chairman of the Board and CEO of Korea Exchange Bank and as a director of Aozora Bank, publicly traded banks in Korea and Japan, respectively. Prior to leading Korea Exchange Bank, Mr. Klane served as President of the Global Financial Services division of Capital One Financial Corporation. Mr. Klane joined Capital One in 2000 to help lead the company’s transformation to a diversified financial services business. His responsibilities during his tenure included a broad range of consumer and business finance activities in the United States, Europe and Canada. He oversaw all merger and acquisition activities. Prior to Capital One, Mr. Klane was a Managing Director at Deutsche Bank and ran the Corporate Trust and Agency Services business acquired from Bankers Trust. Earlier in his career, Mr. Klane spent a decade in a variety of U.S. and overseas consulting and strategy roles. Mr. Klane qualifies as an Audit Committee financial expert under U.S. Securities and Exchange Commission rules. In January 2014, Mr. Klane co-founded Pivot Investment Partners, a private investment firm focused on investing in a select set of high potential financial technology companies. Mr. Klane received his MBA from the Stanford Graduate School of Business and earned his undergraduate degree from Harvard College. In 2007, Mr. Klane was nominated by the President of the United States to sit on the Federal Reserve Board of Governors.

Vikki Bartholomae – Member of the Audit Committee

Vikki Bartholomae joined the Company’s board of advisors in January 2021 to continue her service to real estate agents, and joined the Board in April 2021. A recognized industry leader, Ms. Bartholomae previously served as Chief of Agent Success at Side and President at eXp Realty, where she helped eXp Realty grow from 500 agents to 15,000 agents in three years. Ms. Bartholomae also worked as team leader and agent throughout her career with Tarbell Realtors, Disney Vacation Development and Keller Williams. Ms. Bartholomae has extensive experience coaching real estate agents. Ms. Bartholomae and her husband own a Wild Bird Unlimited, a bricks-and-mortar store in Orlando.

Atul Malhotra Jr. – Member of the Audit Committee

Atul Malhotra Jr. joined the Company as a Director in December 2020. He is currently a Managing Director on the investment team at Insight Partners, a global technology investor based in New York City. He serves as a board member for multiple Insight portfolio companies. Mr. Malhotra received a BBA from the University of Michigan’s Stephen M. Ross School of Business, graduating with high distinction.

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Susanne Greenfield Sandler – Member of the Audit Committee

Susanne Greenfield Sandler joined the Board in June 2023. From 2020 to 2022, Ms. Sandler served as General Manager of Apalon, a subscription mobile app business owned by technology conglomerate IAC Inc. (NASDAQ:IAC). Prior to Apalon, from 2014 to 2017, Ms. Sandler served as Director and then Vice President of Corporate Development at Booking Holdings, becoming Vice President of Global Strategy in 2017. Since 2021, Ms. Sandler has been a member of the Supervisory Board of HomeToGo, a business-to-consumer marketplace and business-to-business software provider for vacation rentals. Ms. Sandler graduated Magna Cum Laude from NYU’s Stern School of Undergraduate Business with a double major in finance and accounting.

Audit Committee Oversight

Since the commencement of the financial year ended December 31, 2023, and to the date of this AIF, there has not been a recommendation of the Audit Committee to nominate or compensate an external auditor which was not adopted by the Board.

Reliance on Certain Exemptions

Since the commencement of the financial year ended December 31, 2023 and to the date of this AIF, the Company has not relied on:

	i.	the exemption in section 2.4 of NI 52-110 (De Minimis Non-audit Services),

	ii.	the exemption in subsection 6.1.1(5) of NI 52-110 (Events Outside Control of Member),

	iii.	the exemption in subsection 6.1.1(6) of NI 52-110 (Death, Incapacity or Resignation), or

	iv.	an exemption from the requirements of NI 52-110, in whole or in part, granted under Part 8 of NI 52-110 (Exemptions).

Prior to the Company’s listing on the NASDAQ, it had relied on the exemption provided for in section 6.1 of NI 52-110, Part 5 (Reporting Obligations).

Pre-Approval Policies and Procedures

The Audit Committee will pre-approve all non-audit services to be provided to the Company by the external auditors, as required by the Audit Committee Charter. The Audit Committee may delegate to one or more independent members the authority to pre-approve non-audit services, so long as the pre-approval is presented to the full Audit Committee at its first scheduled meeting following such pre-approval.

External Auditor Service Fees

	Fiscal Year Ended December 31, 2023 (US$)		Fiscal Year Ended December 31, 2022 (US$)
Audit Fees ⁽¹⁾		215,000		140,000
Audit-Related Fees ⁽²⁾		nil		nil
Tax Fees ⁽³⁾		86,650		9,800
All Other Fees ⁽⁴⁾		nil		nil
Total		301,650		149,800

Notes:

⁽¹⁾	“Audit Fees” include fees necessary to perform the annual audit of the Company’s consolidated financial statements and for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.
⁽²⁾	“Audit-Related Fees” include services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.
⁽³⁾	“Tax Fees” include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees”. This category includes fees for tax compliance, review of the Company’s transfer pricing arrangements, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from tax authorities.
⁽⁴⁾	“All Other Fees” include all other non-audit services.

Additional information relating to the Company may be found on the Company’s SEDAR+ profile at www.sedarplus.ca and on EDGAR at www.sec.gov.

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under the Amended and Restated Omnibus Incentive Plan, the Predecessor Omnibus Incentive Plan, the Predecessor Stock Option Plan and the Predecessor RSU Plan is contained in the Company’s management information circular for its annual meeting of Shareholders held on June 9, 2023. Additional information is also provided in the Company’s financial statements and management’s discussion and analysis for its most recently completed financial year.

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Appendix A
Audit Committee Charter

The Real Brokerage Inc.

Purpose of the Committee

The Audit Committee (the “Committee”) is a committee of the board of directors (the “Board”) of The Real Brokerage Inc. (the “Company”) to which the Board has delegated its responsibility for the oversight of the following:

	●	nature and scope of the annual audit;

	●	management’s reporting on internal accounting standards and practices;

	●	the review of financial information, accounting systems and procedures;

	●	financial reporting and financial statements,

and has charged the Committee with the responsibility of recommending, for approval of the Board, the audited financial statements, interim financial statements and other mandatory disclosure releases containing financial information.

The primary objectives of the Committee, with respect to the Company and its subsidiaries, are as follows:

	●	to oversee the accounting and financial reporting processes and the audits of the financial statements of the Company and to assist the directors of the Company (the “Directors”) in meeting their responsibilities in respect of the preparation and disclosure of the financial statements of the Company and related matters;

	●	to provide an open avenue of communication among the Company’s auditors, financial and senior management and the Board;

	●	to ensure the external auditors’ independence and review and appraise their performance;

	●	to increase the credibility and objectivity of financial reports; and

	●	to facilitate in depth discussions between Directors on the Committee, management and external auditors.

Composition

The Committee will be comprised of at least three Directors or such greater number as the Board may determine from time to time and all members of the Committee shall be “independent” (as such term is used in National Instrument 52-110 – Audit Committees (“NI 52-110”) and in Nasdaq Listing Rule 5605(a)(2)) and meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (subject to the exemptions provided for therein).

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All of the members of the Committee must be able to read and understand fundamental financial statements, including a Company’s balance sheet, income statement, and cash flow statement, as required by Nasdaq Listing Rule 5605(c)(2)(A) and be “financially literate” (as defined in NI 52-110) unless the Board determines that an exemption under NI 52-110 from such requirement in respect of any particular member is available and determines to rely thereon in accordance with the provisions of NI 52-110. At least one member of the Committee must have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. The Board shall from time to time designate one of the members of the Committee to be the chairperson of the Committee (the “Chair”).

Meetings and Administrative Matters

	(a)	The Committee shall meet at least four times per year and/or as deemed appropriate by the Committee Chair. As part of its job to foster open communication, the Committee will meet at least annually with management and the external auditors in separate sessions, and at such other times as the external auditor and/or the Committee consider appropriate. The Chief Financial Officer of the Company shall attend meetings of the Committee, unless otherwise excused from all or part of any such meeting by the Chair.

	(b)	Meeting materials shall be circulated to Committee members and relevant management personnel along with background information on a timely basis prior to the Committee meetings.

	(c)	A quorum for meetings of the Committee will be a majority of its members, and the rules for calling, holding, conducting and adjourning meetings of the Committee will be the same as those governing the Board unless otherwise determined by the Committee or the Board.

	(d)	The Chair will preside at all meetings of the Committee, unless the Chair is not present, in which case the members of the Committee that are present will designate from among such members the Chair for purposes of the meeting.

	(e)	At all meetings of the Committee, every resolution shall be decided by a majority of the votes cast. In case of an equality of votes, the Chair of the meeting shall be entitled to a second or casting vote.

	(f)	The minutes of the Committee meetings shall accurately record the decisions reached and the minutes (which may be in draft form) shall be distributed to the Committee members with copies to the Board, the Chief Financial Officer or such other officer acting in that capacity, and the external auditor.

	(g)	The Committee may invite such officers, directors and employees of the Company and its subsidiaries, if any, as it sees fit from time to time to attend at meetings of the Committee and assist in the discussion and consideration of the matters being considered by the Committee.

	(h)	Any members of the Committee may be removed or replaced at any time by the Board and will cease to be a member of the Committee as soon as such member ceases to be a Director. The Board may fill vacancies on the Committee by appointment from among its members. If and whenever a vacancy exists on the Committee, the remaining members may exercise all its powers so long as a quorum remains. Subject to the foregoing, following appointment as a member of the Committee, each member will hold such office until the Committee is reconstituted.

	(i)	Any issues arising from these meetings that bear on the relationship between the Board and management should be communicated to the Lead Director of the Board by the Committee Chair.

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Mandate and Responsibilities

To fulfill its responsibilities and duties, the Committee shall:

	(a)	undertake annually a review of this mandate and make recommendations to the Board as to proposed changes;

	(b)	be directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, and each such registered public accounting firm must report directly to the Committee. The appointment of auditors will also require approval of the Board and Shareholders;

	(c)	propose appropriate funding to compensate the Company’s registered public accounting firm and advisors employed by the audit committee, to pay for ordinary administrative expenses of the audit committee and to fund or pay any other applicable items so as to satisfy Nasdaq Listing Rule 5605;

	(d)	satisfy itself on behalf of the Board with respect to the Company’s internal control systems, including, where applicable, relating to derivative instruments:

	(i)	identifying, monitoring and mitigating business risks; and

	(ii)	ensuring compliance with legal, ethical and regulatory requirements;

(e)

review the Company’s financial statements and reports and any related management’s discussion and analysis (“MD&A”), any annual and interim earnings press releases before the Company publicly discloses this information and any reports or other financial information (including quarterly financial reports), which are submitted to any governmental body, or to the public, including any certification, report, opinion, or review rendered by the external auditors; the process should include but not be limited to:

	(i)	reviewing changes in accounting principles and policies, or in their application, which may have a material impact on the current or future years’ financial statements;

	(ii)	reviewing significant accruals, reserves or other estimates such as the ceiling test calculation;

	(iii)	reviewing accounting treatment of unusual or non-recurring transactions;

	(iv)	ascertaining compliance with covenants under loan agreements;

	(v)	reviewing financial reporting relating to asset retirement obligations;

	(vi)	reviewing disclosure requirements for commitments and contingencies;

	(vii)	reviewing adjustments raised by the external auditors, whether or not included in the financial statements;

	(viii)	reviewing unresolved differences between management and the external auditors;

	(ix)	obtain explanations of significant variances with comparative reporting periods; and

	(x)	determine through inquiry if there are any related party transactions, approve the transactions if needed and ensure the nature and extent of such transactions are properly disclosed;

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	(f)	review the financial reports and related information included in prospectuses, MD&A, information circular-proxy statements and annual information forms and all public disclosure containing audited or unaudited financial information (including, without limitation, annual and interim earnings press releases and any other press releases disclosing earnings or financial results) before release and prior to Board approval. The Committee must be satisfied that adequate procedures are in place for the review of the Company’s disclosure of all other financial information and will periodically assess the adequacy of those procedures;

	(g)	with respect to the Board’s responsibility, shared with the Committee, to appoint external auditors:

	(i)	require the external auditors to report directly to the Committee;

	(ii)	review annually the performance of the external auditors who shall be ultimately accountable to the Board and the Committee as representatives of the shareholders of the Company;

	(iii)	obtain annually, a formal written statement of external auditors setting forth all relationships between the external auditors and the Company and confirming their independence from the Company;

	(iv)	review and discuss with the external auditors any disclosed relationships or services that may impact the objectivity and independence of the external auditors;

	(v)	be directly responsible for overseeing the work of the external auditors engaged for the purpose of issuing an auditors’ report or performing other audit, review or attestation services for the Company, including the resolution of disagreements between management and the external auditor regarding financial reporting;

	(vi)	review management’s recommendation for the appointment of external auditors and recommend to the Board appointment of external auditors and the compensation of the external auditors;

	(vii)	review the terms of engagement of the external auditors, including the appropriateness and reasonableness of the auditors’ fees;

	(viii)	when there is to be a change in auditors, review the issues related to the change and the information to be included in the required notice to securities regulators of such change;

	(ix)	take, or recommend that the full Board take, appropriate action to oversee the independence of the external auditors;

	(x)	at each meeting, consult with the external auditors, without the presence of management, about the quality of the Company’s accounting principles, internal controls and the completeness and accuracy of the Company’s financial reports;

(h)

review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Company;

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	(i)	review annually with the external auditors their plan for their audit and, upon completion of the audit, their reports upon the financial reports of the Company and its subsidiaries;

	(j)	review and pre-approve all audit and audit-related services and the fees and other compensation related thereto, and any non-audit services, provided by the Company’s external auditors and consider the impact on the independence of the auditors; The pre-approval requirement is waived with respect to the provision of non-audit services if:

	(i)	the aggregate amount of all such non-audit services provided to the Company constitutes not more than five percent (5%) of the total amount of fees paid by the Company to its external auditors during the fiscal year in which the non-audit services are provided;

	(ii)	such services were not recognized by the Company at the time of the engagement to be non-audit services; and

	(iii)	such services are promptly brought to the attention of the Committee by the Company and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members of the Board to whom authority to grant such approvals has been delegated by the Committee;

provided the pre-approval of the non-audit services is presented to the Committee’s first scheduled meeting following such approval, such authority may be delegated by the Committee to one or more independent members of the Committee;

	(k)	review any other matters that the Audit Committee feels are important to its mandate or that the Board chooses to delegate to it;

	(l)	with respect to the financial reporting process:

	(i)	in consultation with the external auditors, review with management the integrity of the Company’s financial reporting process, both internal and external;

	(ii)	consider the external auditors’ judgments about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting;

	(iii)	consider and approve, if appropriate, changes to the Company’s auditing and accounting principles and practices as suggested by the external auditors and management;

	(iv)	review significant judgments made by management in the preparation of the financial reports and the view of the external auditors as to appropriateness of such judgments;

	(v)	following completion of the annual audit, review separately with management and the external auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information;

	(vi)	review any significant disagreement among management and the external auditors regarding financial reporting;

	(vii)	review with the external auditors and management the extent to which changes and improvements in financial or accounting practices have been implemented; and

	(viii)	review the certification process,

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	(m)	review financial reporting relating to risk exposure and risk management policies and procedures of the Company (i.e., hedging, litigation and insurance),

	(n)	establish a procedure for:

	(i)	the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and

	(ii)	the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

Authority of the Committee

The Committee has the authority to engage independent counsel and other advisers at the expense of the Company without the Board’s approval, at any time and has the authority to determine that advisor’s fees and other retention terms. The Company shall provide for appropriate funding, as determined by the Committee, for the payment of: (i) compensation to the independent auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services or other permitted services for the Company; (ii) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties and responsibilities; and (iii) compensation to legal, accounting or other advisors retained by the Committee.

Committee and Charter Review

The Committee will conduct an annual review and assessment of its performance, effectiveness and contribution. The Committee will conduct that review and assessment in such manner as it deems appropriate and report the results to the Board.

The Committee will also review and assess the adequacy of this Charter on an annual basis, taking into account all legislative and regulatory requirements applicable to the Committee, as well as any best practice guidelines recommended by regulators, and will recommend any required or desirable changes to the Board.

Reporting to the Board

The Committee will regularly report to the Board on all significant matters it has considered and addressed and with respect to such other matters that are within its responsibilities, including any matters approved by the Committee or recommended by the Committee for approval by the Board.

Approved by the Board of Directors on July 17, 2023

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Exhibit 99.2

TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 1197)	3

Consolidated Financial Statements:

Consolidated Statements of Financial Positions	4

Consolidated Statements of Loss and Other Comprehensive Loss	5

Consolidated Statements of Changes in Equity	6

Consolidated Statement of Cash Flows	7

Notes to the Consolidated Financial Statements	8-35

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of The Real Brokerage Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of The Real Brokerage Inc. and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of loss and comprehensive loss, changes in equity and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Brightman Almagor Zohar & Co

Brightman Almagor Zohar & Co

Certified Public Accountants

A Firm in the Deloitte Global Network

Tel Aviv, Israel

March 14, 2024

We have served as the Company’s auditor since 2014.

THE REAL BROKERAGE INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONS

(Expressed in thousands of U.S. dollars)

	December 31, 2023			December 31, 2022
	As of
	December 31, 2023			December 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	14,707		$	10,846
Restricted cash		12,948			7,481
Investments in financial assets		14,222			7,892
Trade receivables		6,441			1,547
Other receivables		63			74
Prepaid expenses and deposits		2,132			529
TOTAL CURRENT ASSETS		50,513			28,369
NON-CURRENT ASSETS
Intangible assets		3,442			3,708
Goodwill		8,993			10,262
Property and equipment		1,600			1,350
Right-of-use assets		-			73
TOTAL NON-CURRENT ASSETS		14,035			15,393
TOTAL ASSETS		64,548			43,762

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable		571			474
Accrued liabilities		13,374			11,866
Customer deposits		12,948			7,481
Other payables		302			1,188
Lease liabilities		-			96
TOTAL CURRENT LIABILITIES		27,195			21,105
NON-CURRENT LIABILITIES
Warrants outstanding		269			242
TOTAL NON-CURRENT LIABILITIES		269			242
TOTAL LIABILITIES		27,464			21,347

EQUITY
EQUITY ATTRIBUTABLE TO OWNERS
Share premium		62,567			63,204
Stock-based compensation reserves		52,937			25,083
Deficit		(78,205	)		(50,704	)
Other reserves		(167	)		(469	)
Treasury stock, at cost		(257	)		(14,962	)
EQUITY ATTRIBUTABLE TO OWNERS		36,875			22,152
Non-controlling interests		209			263
TOTAL EQUITY		37,084			22,415
TOTAL LIABILITIES AND EQUITY		64,548			43,762

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

THE REAL BROKERAGE INC.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Expressed in thousands of U.S. dollars, except for per share amounts)

	December 31, 2023			December 31, 2022
	For the Year Ended
	December 31, 2023			December 31, 2022
Revenues	$	689,158		$	381,756
Commissions and other agent-related costs		626,285			349,806
Gross Profit		62,873			31,950

General and administrative expenses		42,913			24,155
Marketing expenses		38,611			22,674
Research and development expenses		7,359			4,867
Operating Loss		(26,010	)		(19,746	)

Other income (expenses), net		(587	)		729
Listing expenses		-			(151	)
Finance expenses, net		(619	)		(1,167	)
Net Loss		(27,216	)		(20,335	)
Net income attributable to noncontrolling interests		285			242
Net Loss Attributable to the Owners of the Company		(27,501	)		(20,577	)
Other comprehensive income/(loss), *Items that will be reclassified subsequently to profit or loss:*
Cumulative (gain)/loss on investments in debt instruments classified as FVTOCI reclassified to profit or loss		330			(407	)
Foreign currency translation adjustment		(28	)		285
Total Comprehensive Loss Attributable to Owners of the Company		(27,199	)		(20,699	)
Total Comprehensive Income Attributable to NCI		285			242
Total Comprehensive Loss		(26,914	)		(20,457	)
Loss per share
Basic and diluted loss per share	$	(0.15	)	$	(0.12	)
Weighted-average shares, basic and diluted		178,127			178,201

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

THE REAL BROKERAGE INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(U.S. dollar in thousands)

	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, 2023		63,204			25,083			290			(759	)		(50,704	)		(14,962	)		22,152			263			22,415
Total loss and income		-			-			-			-			(27,501	)		-			(27,501	)		285			(27,216	)
Total other comprehensive loss		-			-			(28	)		330			-			-			302			-			302
Member draws		-			-			-			-			-			-			-			(339	)		(339	)
Acquisitions of commons shares for Restricted Share Unit (RSU) plan		-			-			-			-			-			(2,865	)		(2,865	)		-			(2,865	)
Release of treasury shares		(17,570	)		-			-			-			-			17,570			-			-			-
Issuance of Restricted Share Units		16,407			(16,407	)		-			-			-			-			-			-			-
Exercise of stock options		888			(386	)		-			-			-			-			502			-			502
Shares withheld for taxes		(362	)		-			-			-			-			-			(362	)		-			(362	)
Equity-settled share-based payment		-			44,647			-			-			-			-			44,647			-			44,647
Balance at, December 31, 2023		62,567			52,937			262			(429	)		(78,205	)		(257	)		36,875			209			37,084

Balance at, January 1, 2022		63,397			6,725			5			(352	)		(30,127	)		(12,644	)		27,004			-			27,004
Balance		63,397			6,725			5			(352	)		(30,127	)		(12,644	)		27,004			-			27,004
Total loss and income		-			-			-			-			(20,577	)		-			(20,577	)		242			(20,335	)
Total other comprehensive loss		-			-			285			(407	)		-			-			(122	)		-			(122	)
Acquisitions of commons shares for Restricted Share Unit (RSU) plan		-			-			-			-			-			(8,060	)		(8,060	)		-			(8,060	)
Release of treasury shares		(5,742	)		-			-			-			-			5,742			-			-			-
Issuance of Restricted Share Units		4,886			(4,886	)		-			-			-			-			-			-			-
Adjustment arising from change in non-controlling interest		-			-			-			-			-			-			244			21			265
Exercise of stock options		663			(398	)		-			-			-			-			4,775			-			4,775
Shares issue as part of Expetitle and LemonBrew Acquisitions		-			4,775			-			-			-			-			21			-			21
Equity-settled share-based payment		-			18,867			-			-			-			-			18,867			-			18,867
Balance at, December 31, 2022		63,204			25,083			290			(759	)		(50,704	)		(14,962	)		22,152			263			22,415
Balance		63,204			25,083			290			(759	)		(50,704	)		(14,962	)		22,152			263			22,415

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

THE REAL BROKERAGE INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(U.S. dollar in thousands)

	December 31, 2023			December 31, 2022
	For the Year Ended
	December 31, 2023			December 31, 2022
OPERATING ACTIVITIES
Net Loss	$	(27,216	)	$	(20,335	)
Adjustments for:
Depreciation and amortization		1,128			333
Impairment of goodwill		723			-
Equity-settled share-based payments		38,403			16,201
Finance costs		91			167
Changes in operating asset and liabilities:
Trade receivables		(4,894	)		(1,293	)
Other receivables		11			(51	)
Prepaid expenses and deposits		(1,603	)		(81	)
Accounts payable		97			420
Accrued liabilities		7,752			5,316
Customer deposits		5,467			4,170
Other payables		(86	)		1,148
NET CASH PROVIDED BY OPERATING ACTIVITIES		19,873			5,995

INVESTING ACTIVITIES
Purchase of property and equipment		(629	)		(1,408	)
Acquisition of subsidiaries (Note 4 and 5)		-			(8,152	)
Investment deposits in debt instruments held at FVTOCI		(6,847	)		(125	)
Investment withdrawals in debt instruments held at FVTOCI		847			637
NET CASH USED IN INVESTING ACTIVITIES		(6,629	)		(9,048	)

FINANCING ACTIVITIES
Purchase of common shares for Restricted Share Unit (RSU) Plan		(2,865	)		(8,060	)
Shares withheld for taxes		(362	)		-
Proceeds from exercise of stock options		502			265
Payment of lease liabilities		(96	)		(35	)
Cash payment for contingent consideration		(800	)		-
Dividends paid to non-controlling interest		(339	)		(19	)
NET CASH USED IN FINANCING ACTIVITIES		(3,960	)		(7,849	)

Net change in cash, cash equivalents and restricted cash		9,284			(10,902	)
Cash, cash equivalents and restricted cash, beginning of year		18,327			29,129
Fluctuations in foreign currency		44			100
CASH, CASH EQUIVALENTS AND RESTRICTED CASH BALANCE, ENDING BALANCE	$	27,655		$	18,327

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Share-based compensation as part of Expetitle consideration		-			4,325
Share-based compensation as part of LemonBrew consideration		-			450

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

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

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. Purchases are made at prevailing market prices and may be conducted during the twelve-month period ended May 28, 2024.

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 deal with other administrative matters. Through the Trustee, RBC Capital Markets was engaged to undertake purchases under the NCIB.

During the year ended December 31, 2023, the Company repurchased 2 million Common Shares in the amount of $2.9 million.

On June 15, 2021, the Company’s Common Shares commenced trading on the NASDAQ under the symbol “REAX”. On July 26, 2022, the Company’s Common Shares commenced trading on the Toronto Stock Exchange (the “TSX”) under the symbol “REAX”.

On July 28, 2023, the Company announced that its application for a voluntary delisting of its Common Shares from the TSX had been approved by the Company’s Board of Directors and the TSX. The Common Shares were delisted from the TSX effective as of close of markets on August 11, 2023. The Common Shares continue to be listed and traded on the “NASDAQ under the symbol “REAX”.

2. SUMMARY OF MATERIAL ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the annual 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, 2022.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

A. Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). These consolidated financial statements were authorized for issuance by the Board of Directors on March 6, 2024.

B. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to December 31 of each year. Control is achieved when the Company:

	●	Has the power over the investee
	●	Is exposed, or has rights, to variable returns from its involvement with the investee
	●	Has the ability to use its power to affect its returns

The Company reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in profit or loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Where necessary, adjustments are made to the financial statements of subsidiaries to ensure subsidiaries’ accounting policies are in line with Company’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions between the members of the Company and its subsidiaries are eliminated on consolidation.

C. Functional and presentation currency

These consolidated financial statements are presented in U.S. dollars, which is the Company’s functional currency. All amounts have been rounded to the nearest thousands of dollars, unless otherwise noted.

D. Foreign currency

Foreign currency transactions and balances

Transactions in foreign currencies are initially recognized in the financial statements using exchange rates prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the relevant functional currency at the exchange rates prevailing at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction. Foreign currency differences arising on translation are recognized in the income statement for determination of net profit or loss during the period.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the functional currency at exchange rates at the reporting date. The income and expenses of foreign operations and cash flows are translated using average exchange rates during the period. Any differences arising on such translation are recognized in other comprehensive income. Such differences are included in the foreign currency translation reserve “FCTR” within other components of equity. When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or loss.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

E. Operating segments

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 segment information disclosed in these consolidated Financial Statements reflects historical results consistent with the identifiable reportable segments of Real Brokerage Inc. and financial information that the Chief Operating Decision Maker (“CODM”) reviews to evaluate segmental performance and allocate resources among the segments. The CODM is the Company’s Chief Executive Officer.

Detailed segment information is disclosed in Note 8.

F. Revenue from contracts with customers

The Company generates substantially all its revenue from commissions from the sale of real estate properties. Other sources of revenue relate to ancillary services.

The Company is contractually obligated to provide services for the fulfillment of transfer of real estate between agents, buyers, and sellers. The Company satisfies its performance obligations through closing of a transaction and provides services between the agents and buyers and sellers as a principal. Accordingly, the Company recognizes revenues in the gross amount of consideration, to which it expects to be entitled to.

Please see Note 6 for more information about the Company’s revenues from contracts with customers.

Performance obligations and revenue recognition policies

Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue upon the satisfaction of its performance obligation when it transfers control over a good or service to a customer.

The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms, and related revenue recognition policies.

Type of product or service	Nature of timing of satisfaction of performance obligations including significant payment terms	Revenue recognition policies
Commissions from real estate contracts	Customers obtain control of real estate property on the closing date, which is ordinarily when consideration is received	Revenue is recognized at a point in time as the purchase agreement is closed and the sale is executed
Title Fees (Escrow and Title Insurance)	Customers obtain control of real estate property on the closing date, which is ordinarily when consideration is received	Revenue is recognized at a point in time when the transaction is closed and paid
Mortgage Broker	Customers obtain control of real estate property on the closing date, which is ordinarily when consideration is received	Revenue is recognized at a point in time when the loan has been funded

G. Share-based compensation

The Company’s real estate agents receive remuneration in the form of share-based compensation, whereby those agents are entitled to restricted share units. In addition, the Company grants its employees and members of the board of directors remuneration in the form of share-based compensation, whereby employees and the board of directors render services in consideration for equity instruments.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

Share-based payment arrangements

The grant-date fair value excluding the effect of non-market equity-settled share-based payment arrangements granted to employees is generally recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

Restricted share unit plan

Under the restricted share unit plans, eligible participants receive restricted share units (RSUs), which generally vest over a period of up to four years. The expense in relation to RSUs earned in recognition of service performance conditions is recognized at grant-date fair value during the applicable vesting period based on the best available estimate of the number of equity instruments expected to vest with a corresponding increase in equity. RSUs granted under the agent stock purchase plan are fully vested at grant date. The expense in relation to such RSUs is recognized at grant-date fair value with a corresponding increase in equity. Please see Note 10.D for more information about the Company’s restricted share unit.

H. Income tax

Income tax expenses comprise of current and deferred tax. It is recognized in profit or loss, or items recognized directly in equity or in other comprehensive income.

Current tax

Current tax is comprised of expected payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using the tax rates enacted or substantively enacted at the reporting date.

Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax

Deferred taxes are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred taxes are not recognized for:

‒	Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and

‒	Temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognize a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Company. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date, and reflects uncertainty related to income taxes, if any.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if certain criteria are met.

I. Property and equipment

Recognition and measurement

Items of property and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. If significant parts of an item of property and equipment have different useful lives, then they are accounted for as separate items (significant components) of property and equipment.

Any gain or loss on disposal of an item of property and equipment is recognized in profit or loss.

Depreciation

Depreciation is calculated to write off the cost of items of property and equipment less their estimated residual values using the straight-line method over their estimated useful lives and is recognized in profit or loss.

The estimated useful lives of property and equipment for current and comparative periods are as follows:

Computer equipment:	3 years
Furniture and fixtures:	5-10 years.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.

J. Financial instruments

Recognition and initial measurement

Financial assets and financial liabilities are recognized on the Company’s consolidated statements of financial position when Real becomes party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Classification and subsequent measurement

Financial assets – Policy

Financial Assets:

Financial assets are comprised of investments in equity and debt securities, trade and other receivables, cash and cash equivalents, restricted cash, and other financial assets.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

Initial recognition:

All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

Subsequent measurement:

Financial assets measured at amortized cost:

Financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at amortized cost using effective interest rate (EIR) method. The EIR amortization is recognized as finance income in the Statement of Income.

The Company while applying above criteria has classified the following financial assets at amortized cost

-	Trade receivables

-	Other financial assets.

Financial assets at fair value through other comprehensive income (FVTOCI):

Financial assets that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are subsequently measured at FVTOCI. Fair value movements in financial assets at FVTOCI are recognized in other comprehensive income.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as Financial assets at fair value through profit or loss (FVTPL):

‒	it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

‒	its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets – Business model assessment

The Company assesses the objective of the business model in which a financial asset is held at a portfolio level, because this best reflects the way the business is managed, and information is provided to management. The information considered includes:

‒	the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows;

‒	how the performance of the portfolio is evaluated and reported to the Company’s management;

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

‒	the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

‒	how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

‒	the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and the expectations of future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales, consistent with the Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets – Subsequent measurement and gains and losses

Financial assets at amortized cost		These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
Debt investments at FVOCI		These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Derecognition

Financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

Financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows or the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

Offsetting

Financial assets and financial liabilities are offset and the net amount presented on the consolidated statements of financial position, only when the Company has a legally enforceable right to offset the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

K. Share capital

i. Share Premium

Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity. Income tax relating to transactions costs of an equity transaction are accounted for in accordance with IAS 12.

ii. Non – controlling interests

Non-controlling interests represents the portion of net income and net assets which the Company does not own, either directly or indirectly. It is presented as “Attributable to non-controlling interests” separately in the Consolidated Statements of Loss, and separately from shareholders’ equity in the Consolidated Statements of Financial Position.

L. Cash and Cash Equivalents

In the statement of financial position, cash and bank balances comprise cash (i.e. cash on hand and demand deposits) and cash equivalents. Cash equivalents are short-term (generally with original maturity of three months or less), highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

Bank balances for which use by the Company is subject to third party contractual restrictions are included in Restricted cash in the statement of financial position. Restricted cash consists of cash held in escrow by the Company’s brokers and agents on behalf of real estate buyers. The Company recognizes a corresponding customer deposit liability until the funds are released. Once the cash is transferred from escrow, the Company reduces the respective customers’ deposit liability.

M. Goodwill

Goodwill is the excess of the consideration transferred over the net identifiable assets acquired and liabilities assumed in a business combination. Goodwill is tested annually for impairment, or more regularly if certain indicators are present. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGU) that are expected to benefit from the synergies of the combination and represent the lowest level at which the goodwill is monitored for internal management purposes. The recoverable amount is the higher of the fair value less cost to sell and the value in use; where the value in use is the present value of the future cash flows. Goodwill is evaluated for impairment by comparing the recoverable amount of the Company’s operating segments to the carrying amount of the operating segments to which the goodwill relates. If the recoverable amount is less than the carrying amount an impairment charge is determined. 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. For the year ended December 31, 2023 and 2022, we performed an assessment of goodwill related to our previous business acquisition which resulted in an impairment charge for the year ended December 31, 2023. (See Note 4. “Expetitle Acquisition”).

N. Intangible Assets

The Company’s intangible assets are finite lived and consist primarily of customer relationships. The Company evaluates its intangible assets for recoverability and potential impairment, or as events or changes in circumstances indicate the carrying value may be impaired.

O. Impairment

Assets that are subject to depreciation or amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognized in the consolidated statement of loss and other comprehensive loss consistent with the function of the assets, for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows. Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal each reporting period.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

P. Provisions

Provisions are recognized when present (legal or constructive) obligations as a result of a past event will lead to a probable outflow of economic resources and amounts can be estimated reliably. Provisions are measured at management’s best estimate of the expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation.

The Company performs evaluations to identify onerous contracts and, where applicable, records provisions for such contracts. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. In those cases where the possible outflow of economic resources as a result of present obligations is considered remote, no liability is recognized.

Q. Leases

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements (i.e. changes in lease term) of the lease liability.

The lease liability is initially measured at the present value of lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

As of December 31, 2023, the Company is not engaged in long term operational or capital lease arrangements for which right of use asset and lease liability were recognized.

R. Business combinations

Business combinations are accounted for under the purchase method. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 ‘Business Combinations’, are recognized at their fair value at the acquisition date, except certain assets and liabilities required to be measured as per the applicable standards.

Goodwill is recognized when the fair value of purchase consideration and non-controlling interests exceeds the fair value of identifiable net assets acquired on the acquisition date. Goodwill arising on acquisitions is reviewed for impairment annually. Where the fair values of the identifiable assets and liabilities exceed the cost of acquisition, the Company assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the surplus is credited to the consolidated statements of profit or loss in the period of acquisition.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

Where it is not possible to complete the determination of fair values by the date on which the first post-acquisition financial statements are approved, a provisional assessment of fair value is made and any adjustments required to those provisional fair values are finalized within twelve months of the acquisition date.

Those provisional amounts are adjusted through goodwill during the measurement period, or additional assets or liabilities are recognized to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. These adjustments are called measurement period adjustments. The measurement period does not exceed twelve months from the acquisition date.

Any non-controlling interest in an acquiree is measured at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. This accounting choice is made on a transaction-by-transaction basis.

Acquisition expenses are charged to consolidated statements of profit or loss.

If the Company acquires a group of assets in a company that does not constitute a business in accordance with IFRS 3, the cost of the acquired group of assets is allocated to the individual identifiable assets acquired based on their relative fair value.

S. Revenue Share

The Company has a revenue sharing plan where its agents and brokers can receive additional commission income from real estate transactions consummated by agents and brokers they have attracted to the Company. Agents and brokers are eligible for revenue share based on the number of qualifying active agents they have attracted to the Company. Revenue sharing payments are included as part of Marketing Expenses in the consolidated statements of loss and other comprehensive loss.

T. Warrants Accounting

Warrants are a financial instrument that allow the holder to purchase stock of the issuer at a specified price during the warrant term. The Company classifies a warrant to purchase shares of its common stock as a liability on its consolidated statements of financial position as this warrant is a free-standing financial instrument that may require the Company to transfer consideration upon exercise. Each warrant is initially recorded at fair value on date of grant using the Black-Scholes model and net of issuance costs, and it is subsequently re-measured to fair value at each subsequent balance sheet date. Changes in fair value of the warrant are recognized as a component of other income (expense), net in the consolidated statement of operations and comprehensive loss. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the warrant. The warrant holder have the ability to exercise 184,227 warrants at an exercise price of $1.36 CAD.

U. Treasury Share

Company shares held by the Company are recognized at cost of purchase and presented as a deduction from equity. Any gain or loss arising from a purchase, sale, issue or cancellation of treasury shares is recognized directly in equity.

During the year ended December 31, 2023, the Company purchased 2 million Common Shares which were classified as Treasury shares and held in the CWB Trust.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

V. Accounting policy development

New and amended IFRS Accounting Standards that are effective for the current year

Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements – Disclosure of Accounting Policies

In February 2021, the International Accounting Standards Board issued narrow-scope amendments to IAS 1, Presentation of Financial Statements, IFRS Practice Statement 2, Making Materiality Judgements and IAS 8, Accounting Polices, Changes in Accounting Estimates and Errors. The amendments are effective for annual periods beginning on or after January 1, 2023, although earlier application is permitted. The amendments will require the disclosure of material accounting policy information rather than disclosing significant accounting policies and clarifies how to distinguish changes in accounting policies from changes in accounting estimates. We have assessed the impacts of the amended standards, which have had no material effect on our financial disclosures by the application of the amendments.

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In preparing these consolidated financial statements, management has made judgments estimates and assumptions that affect the application of the Company’s accounting policies which are described in Note 2 and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.

Information about assumptions and estimation uncertainties that have significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes:

–	Deferred taxes

Deferred tax assets are recognized only if management assesses that these tax assets can be offset against positive taxable income within a foreseeable future. This judgment is made by management on an ongoing basis and is based on budgets and business plans for the coming years. These budgets and business plans are reviewed and approved by the Board of Directors. Since inception, the Company has reported losses, and consequently, the Company has unused tax losses. The deferred tax assets are currently not deemed to meet the criteria for recognition as management is not able to provide any convincing positive evidence that deferred tax assets should be recognized. Therefore, management has concluded that deferred tax assets should not be recognized on December 31, 2023.

–

Goodwill

Goodwill is assessed annually for impairment, or more frequently if there are indicators of impairment, by comparing the carrying value of the CGU to which these assets are allocated to their recoverable amounts. The company principally uses discounted cash flows to estimate the recoverable amount of a CGU to which goodwill has been allocated, and market approaches inclusive of a control premium are used when applicable. Significant judgments and assumptions are required to determine the recoverable amount of a CGU, including forecasted cash flows, discount rates, long term growth rates. The recoverable amount is subject to sensitivity analysis given the uncertainty in preparing forecasts. Details of goodwill including the results of annual impairment tests, are presented in Note 14.

–	Stock options

In estimating the fair value of stock options granted to employees we use the Black-Scholes model which requires management to make significant assumptions including the expected life of the stock options, volatility and risk-free interest rate. The assumptions used to estimate the fair value of the stock options are disclosed in Note 10.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

4. EXPETITLE ACQUISITION

On January 20, 2022, the Company completed the acquisition of 100% of the issued and outstanding equity interests of Expetitle, Inc. (“Expetitle”) pursuant to a stock purchase agreement (the “Expetitle Transaction”). Expetitle had developed technology that simplifies the paper-intensive and time-intensive title and escrow processes, reducing errors and saving time. As part of the Expetitle Transaction, the Company also acquired 51% ownership of five subsidiaries of Expetitle. The noncontrolling ownership interest in these five subsidiaries of Expetitle recognized at the acquisition date was measured by reference to the fair value of the non-controlling interest and amounted to $21 thousand. The aggregate purchase price for 100% of the issued and outstanding equity interests of Expetitle was comprised of cash consideration of $7.4 million payable at the closing of the Expetitle Transaction and contingent consideration of $600 thousand in cash subject to escrow, that would be released after twelve (12) months upon the satisfaction or waiver of the following terms and conditions: (i) the key employees remain in their current position with the Company for at least twelve (12) months after the closing of the Expetitle Transaction and (ii) Expetitle will become licenced to operate in at least fifteen states, including the then current states of operation, Florida, Georgia, and Texas. In addition, certain Expetitle employees were entitled to a cash payment of $200 thousand subject to the same terms as set out for the contingent consideration. The contingent terms were met and the $800 thousand that was in escrow was released on January 23, 2023.

As part of the Expetitle Transaction, Real granted an aggregate of 700 thousand incentive stock options (“Options”) and an aggregate of 1.1 million RSUs to shareholders of Expetitle and employees of the Expetitle team. The fair value of those Options was $4.8 million from which $4.3 million was determined to be part of the consideration and $451 thousand that was recorded immediately to the statement of loss and comprehensive loss as post transaction employee compensation which vests immediately. The Options are exercisable for a period of 3 years at $3.60 per Common Share. In addition, and as part of the transaction, the Company provided cash payments to the Expetitle employees in the aggregate amount of $168 thousand.

We have completed the valuation of the acquired assets and assumed liabilities and have assigned $3.4 million as the fair value of the Company’s developed technology and $8.4 million as the residual goodwill. Goodwill represents expected synergies, future income and growth potential, and other intangibles that do not qualify for separate recognition. None of the goodwill arising from this acquisition is deductible for tax purposes.

The following table summarizes the recognized amounts of assets acquired and liabilities assumed, total consideration, and cash flow related to the Expetitle Transaction (in thousands):

	Balance at January 21, 2022
Recognized amounts of assets acquired and liabilities assumed
Cash		80
Other Current Assets		42
In Trust Cash		960
Goodwill		8,393
Intangible Assets		3,364
Accounts Payables and Accrued Liabilities		(103	)
Held in Trust Funds		(960	)
Other Payables		(19	)
Net Assets Acquired		11,757

Cash Flow
Common shares issued
Total Consideration		(11,757	)
Acquired Cash		80
Equity-settled share-based payment		4,325
Cash from Investing Activities		(7,352	)

The Company conducted an impairment test on its acquired goodwill during the fiscal year ended December 31, 2023. The test was performed in accordance with the requirements of IAS 36, Impairment of Assets. As a result of the impairment test, it was determined that the carrying amount of goodwill related to the Expetitle acquisition exceeded its recoverable amount. Consequently, the Company recognized a goodwill impairment loss of $723 thousand during the fiscal year ended December 31, 2023.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

5. LEMONBREW LENDING ACQUISITION

On December 9, 2022, pursuant to the terms of a share purchase agreement dated September 23, 2022 between the Company, LemonBrew Lending Corp. (“LemonBrew Lending”) and LemonBrew Technologies Corp. (“LemonBrew Technologies”), the Company acquired 100% of the issued and outstanding equity interests of LemonBrew Lending from the seller for an aggregate purchase price of $1.25 million (the “LemonBrew Transaction”). The purchase price was satisfied by (i) cash in the amount of $800 thousand and (ii) the issuance of 351,837 Common Shares (the “Consideration Shares”) at a deemed issued price of $1.279 per share. The issued price of the Consideration Shares is equal to the product of $450,000 divided by the 5-day volume weighted average trading price of the Common Shares on the NASDAQ immediately prior to the closing of the LemonBrew Transaction.

In connection with the closing of the LemonBrew Transaction, the Company entered into agreements with management and key employees of LemonBrew Lending (the “LemonBrew Key Employee Agreements”). The LemonBrew Key Employment Agreements provide for performance-based milestone payments of $2.5 million payable over 36 months following the closing of the LemonBrew Transaction, of which $2 million will be payable in cash and $500 thousand will be payable in RSUs of the Company. The performance-based milestones are:

	●	LemonBrew achieving at least $500 thousand in EBITDA for the first 12-month period following closing, $1 million in EBITDA for the second 12-month period following closing, and $2 million in EBITDA for the third 12-month period following closing; and
	●	Certain employees remaining in their roles to be established with Real during the transaction

These performance-based payments are considered separate from the aggregate purchase price. Management believes it is a highly unlikely that the performance-based milestones will be achieved and has not recognized any expenses related to the performance-based milestone payment.

The Company has determined that the LemonBrew Transaction meets the definition of business combinations within the scope of IFRS 3, Business Combination. The Company has completed the valuation of the acquired assets and assumed liabilities and have assigned $529 thousands as the fair value of the Company’s intangible assets and $721 thousands as the residual goodwill. Goodwill represents expected synergies, future income and growth potential, and other intangibles that do not qualify for separate recognition. None of the goodwill arising from this acquisition is deductible for tax purposes.

The following table summarizes the recognized amounts of assets acquired and liabilities assumed, total consideration, and cash flow related to the LemonBrew Transaction (in thousands) following the completion of the purchase price allocation:

	Balance at December 9, 2022
Recognized amounts of assets acquired
Intangible Assets		529
Goodwill		721
Net Assets Acquired		1,250

Consideration
Cash		800
Common shares issued		450
Total Consideration		1,250

Cash Flow
Total Consideration		(1,250	)
Equity-settled share-based payment		450
Cash From Investing Activities		(800	)

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

6. REVENUE

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

	December 31, 2023		December 31, 2022
	For the Year Ended
	December 31, 2023		December 31, 2022
Main revenue streams
Commissions		684,873		379,868
Title		2,990		1,869
Mortgage Income		1,295		19
Total Revenue		689,158		381,756

7. 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).

	December 31, 2023		December 31, 2022
	For the Year Ended
	December 31, 2023		December 31, 2022
Commissions and other agent-related costs		626,285		349,806

Operating Expenses
General and Administrative Expenses		42,913		24,155
Salaries and Benefits		18,940		11,733
Stock Based Compensation		8,607		2,778
Administrative Expenses		3,244		1,803
Professional Fees		8,425		5,893
Depreciation Expense		1,128		333
Other General and Administrative Expenses		2,569		1,615
Marketing Expenses		38,611		22,674
Salaries and Benefits		767		478
Stock Based Compensation for Employees		14		1
Stock Based Compensation for Agents		7,780		5,519
Revenue Share		27,905		14,975
Other Marketing and Advertising Cost		2,145		1,701
Research and Development Expenses		7,359		4,867
Salaries and Benefits		3,749		2,012
Stock Based Compensation		440		212
Other Research and Development		3,170		2,643
Total Cost of Sales and Operating Expenses		715,168		401,502

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

Finance Expenses

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

SCHEDULE OF FINANCE COST

Description	December 31, 2023			December 31, 2022
	For the Year Ended
Description	December 31, 2023			December 31, 2022
Unrealized Losses (Gains)		27			(397	)
Realized Losses (Gains)		(3	)		24
Bank Fees		528			400
Finance Costs		68			540
Remeasurement of contingent consideration		-			600
Total Finance Expenses		619			1,167

8. OPERATING SEGMENTS DISCLOSURES

The businesses of the Company is divided operationally into three identified operating segments: North American Brokerage, Real Title and One Real Mortgage. North American Brokerage generates revenue by processing real estate transactions which entitles the Company to commissions. 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 Company has determined that it operates as a single reporting segment - North American Brokerage which comprises of more than 90% of Group’s total revenue and net loss. The other two segments 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 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 table present significant information about the Company’s reportable operating segments as reported to the Company’s CODM:

SCHEDULE OF OPERATING SEGMENTS

	North American Brokerage			Other Segments			Total
	For the Year Ended December 31, 2023
	North American Brokerage			Other Segments			Total
Revenues		684,873			4,285			689,158
Commissions and other agent-related costs		625,016			1,269			626,285
Gross Profit		59,857			3,016			62,873

General and administrative expenses		35,653			7,260			42,913
Marketing expenses		38,458			153			38,611
Research and development expenses		7,284			75			7,359
Operating Loss		(21,538	)		(4,472	)		(26,010	)

Other income (expenses), net		136			(723	)		(587	)
Listing expenses		-			-			-
Finance expenses, net		(614	)		(5	)		(619	)
Net Loss		(22,016	)		(5,200	)		(27,216	)

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

	North American Brokerage			Other Segments			Total
	For the Year Ended December 31, 2022
	North American Brokerage			Other Segments			Total
Revenues		379,868			1,888			381,756
Commissions and other agent-related costs		349,464			342			349,806
Gross Profit		30,404			1,546			31,950

General and administrative expenses		21,564			2,591			24,155
Marketing expenses		22,590			84			22,674
Research and development expenses		4,621			246			4,867
Operating Loss		(18,370	)		(1,376	)		(19,746	)

Other income (expenses), net		729			-			729
Listing expenses		(151	)		-			(151	)
Finance expenses, net		(1,167	)		-			(1,167	)
Net Loss		(18,959	)		(1,376	)		(20,335	)

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 consolidated financial statements.

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

SCHEDULE OF REVENUE GEOGRAPHY

	December 31, 2023		December 31, 2022
	For the Year Ended
	December 31, 2023		December 31, 2022
United States		573,658		320,181
Canada		115,500		61,575
Total revenue by region		689,158		381,756

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

9. 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.

	December 31, 2023			December 31, 2022
	For the Year Ended
	December 31, 2023			December 31, 2022
Issued Common Shares, Balance at the beginning of the year		173,993			170,483
Warrant Exercises		-			8,526
Treasury Return		-			(1,049	)
Purchase of Shares		(974	)		-
Release of Shares		4,267			-
Issuance of Shares		379			21
Exercise of Options		462			220
Weighted-average numbers of Common Shares		178,127			178,201

Loss per share
Basic and diluted loss per share		(0.15	)		(0.12	)

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.

	December 31, 2023		December 31, 2022
	For the Year Ended
	December 31, 2023		December 31, 2022
Options		21,943		21,746
RSU		25,588		16,908
Total		47,531		38,654

10. 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.

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.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 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, 2022		22,287
On March, 2022		240	3 years quarterly vest	10 years
On May, 2022		320	3 years quarterly vest	10 years
On August, 2022		4,000	25% on first anniversary, then quarterly vesting	10 years
On August, 2022		145	3 years quarterly vest	10 years
On November, 2022		55	3 years quarterly vest	10 years
On December, 2022		10	3 years quarterly vest	10 years
Balance December 31, 2022		27,057
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

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 were as follows:

	December 31, 2023			December 31, 2022
Share price	$	1.25 to $1.67		$	1.35 to $2.45
Expected volatility (weighted-average)		95.0% - 108.0%			108.0	%
Expected life (weighted-average)		10 years			10 years
Expected dividends		-	%		-	%
Risk-free interest rate (based on US government bonds)		3.62 – 3.95%			1.95 – 2.89%

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

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

C. Reconciliation of outstanding stock-options

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

	December 31, 2023					December 31, 2022
	Number of Options			Weighted-Average Exercise Price		Number of Options			Weighted-Average Exercise Price
Outstanding at beginning of year		21,746		$	0.87		20,815		$	0.71
Granted		1,675			1.28		4,770			1.61
Forfeited/ Expired		(312	)		1.41		(2,450	)		2.35
Exercised		(1,166	)		0.36		(1,389	)		0.23
Outstanding at end of year		21,943		$	0.92		21,746		$	0.87
Exercisable at end of year		15,566			0.72		11,046			0.55

The Options outstanding as of December 31, 2023 had a weighted average exercise price of $0.92 (December 31, 2022: $0.87) and a weighted-average remaining contractual life of 8.8 years (December 31, 2022: 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 have a vesting term of up to 3 years and subject to forfeiture in certain circumstances, entitles the holder to one Common Share. 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 year ended December 31, 2023 was $5.5 million, and was classified as marketing expense.

Under the Company’s agent stock purchase program, agents purchase RSUs, which vest after a year, using a percentage of the agent’s commission that is withheld by the Company. Each RSU entitles the holder to one Common Share. 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) 15% of the commission withheld (the percentage was 25% prior to June 16, 2022) if an agent has not met the Cap and (ii) 30% of the commission withheld (the percentage was 50% prior to June 16, 2022) 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. Both 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 CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

The following table illustrates the Company’s stock activity (in thousands of units) for the restricted share units under its equity plan. Once fully vested, all awards are settled in stock

	Restricted Share Units
Balance at, December 31, 2021		3,965
Granted		16,053
Vested and Issued		(2,504	)
Forfeited		(606	)
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

Stock Based Compensation Expense

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

	Options Expense		RSU Expense		Total		Options Expense		RSU Expense		Total
	For the Year Ended
	December 31, 2023						December 31, 2022
	Options Expense		RSU Expense		Total		Options Expense		RSU Expense		Total
COGS – Agent Stock Based Compensation		-		21,562		21,562		-		8,008		8,008
Marketing Expenses – Agent Stock Based Compensation		2,209		5,571		7,780		1,215		4,304		5,519
Marketing Expenses – FTE Stock Based Compensation		7		7		14		-		1		1
Research and Development – FTE Stock Based Compensation		142		298		440		111		101		212
General and Administrative – FTE Stock Based Compensation		5,914		2,693		8,607		1,702		1,076		2,778
Total Stock Based Compensation		8,272		30,131		38,403		3,028		13,490		16,518

On May 20, 2021, the Company began transacting under the NCIB to purchase up to 7.2 million of its Common Shares representing approximately 5% of the total 143 million Common Shares issued and outstanding as of April 30, 2021. On May 19, 2022, the Company announced that it renewed the NCIB. Pursuant to the renewed NCIB, Real may purchase up to 8.9 million Common Shares, representing approximately 5% of the total 178.3 million Common Shares issued and outstanding as of May 19, 2022. The purpose of the purchase of Common Shares under the NCIB is to enable the Company to acquire shares to satisfy its RSU grants for shares. On May 24, 2023, the Company announced that it renewed its NCIB pursuant to which, Real may purchase up to 9 million common shares of the Company, representing approximately 5% of the total 180 million Common Shares issued and outstanding as of May 18, 2023. The NCIB shall terminate on the earlier of May 28, 2024 or the date on which the maximum number of Common Shares purchasable under the NCIB is acquired by the Company.

The Company appointed the Trustee for the purposes of arranging for the acquisition of the Common Shares and to hold the Common Shares in trust for the purposes of satisfying RSU payments as well as deal with other administration matters. Through the Trustee, RBC Capital Markets was engaged to undertake purchases under the NCIB for the purposes of the RSU Plan, the Option Plan, the Omnibus Incentive Plan, and the A&R Plan.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

11. 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 Consolidated Statements of Financial Positions:

Description	Estimated Fair Value December 31, 2022		Deposit / (Withdraw)			Dividends, Interest & Income		Gross Unrealized Gains / (Losses)		Estimated Fair Value December 31, 2023
Cash Investments		-		6,368			163		-		6,531
Fixed Income		6,997		277			-		323		7,597
Fixed Income – Mutual Funds		840		(847	)		-		7		-
Investment Certificate		55		39			-		-		94
Total		7,892		5,837			163		330		14,222

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).

12. PROPERTY AND EQUIPMENT

Reconciliation of Carrying Amounts (in thousands)

	Computer Equipment		Software		Furniture and Equipment			Total
Cost
Balance at December 31, 2021		205		-		69			274
Additions		321		969		27			1,317
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
Accumulated Depreciation
Balance at December 31, 2021		39		-		65			104
Disposals
Depreciation		79		57		1			137
Balance at December 31, 2022		118		57		66			241
Beginning balance		118		57		66			241
Disposals		-		-		(65	)		(65	)
Depreciation		125		191		-			316
Balance at December 31, 2023		243		248		1			492
Ending balance		243		248		1			492

Carrying Amounts
Balance at December 31, 2022		408		912		30			1,350
Ending balance		408		912		30			1,350
Balance at December 31, 2023		421		1,170		9			1,600
Ending balance		421		1,170		9			1,600

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

13. INTANGIBLE ASSETS

The Company’s intangible assets are finite lived and consist primarily of 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, 2021		563
Additions		3,370
Purchase Price Allocation Adjustment		-
Depreciation		-
Balance at December 31, 2022		3,933
Purchase Price Allocation Adjustment		530
Balance at December 31, 2023		4,463
Accumulated Depreciation
Balance at December 31, 2021		113
Depreciation		112
Balance at December 31, 2022		225
Beginning balance		225
Depreciation		796
Balance at December 31, 2023		1,021
Ending balance		1,021

Carrying Amounts
Balance at December 31, 2022		3,708
Ending balance		3,708
Balance at December 31, 2023		3,442
Ending balance		3,442

14. 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. For the year ended December 31, 2023, as part of the annual review, we performed an assessment of goodwill which resulted in an impairment charge for the goodwill allocated to Expetitle CGU, which is presented as part of Other Segment (see Note 8). The recoverable amount of the CGU has been determined based on the value in use. Value in use has been determined based on the estimated future cash flows, discounted at a discount rate of 24.5%.

	Realty Crunch		Expetitle			LemonBrew			Total
Cost
Balance at December 31, 2021		602		-			-			602
Additions		-		8,393			1,267			9,660
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
Ending balance		602		7,670			721			8,993
Carrying Amounts
Balance at December 31, 2022		602		8,393			1,267			10,262
Balance at December 31, 2022		602		8,393			1,267			10,262
Balance at December 31, 2023		602		7,670			721			8,993
Balance at December 31, 2023		602		7,670			721			8,993

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

15. 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

December 31, 2023

December 31, 2022

December 31, 2023

December 31, 2022

Ordinary shares no-par value

unlimited

183,605

179,922

During the year ended December 31, 2023, the company issued 1.2 million shares as a result of exercise of stock options and 2.5 million associated with restricted stock unit granted to agents and employees.

Total number of shares held in treasury is 175 thousand and 5.9 million as of December 31, 2023 and 2022 respectively.

16. 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 no-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 years ended December 31, 2023, and December 31, 2022.

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

	December 31, 2023		December 31, 2022
	For the Year Ended
	December 31, 2023		December 31, 2022
Cash		14,707		10,846
Other Receivables		63		74
Investments in Financial Assets		14,222		7,892
Total		28,992		18,812

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

17. LEASE LIABILITY AND RIGHT OF USE ASSET

The Company leased a corporate office in New York, NY under a lease agreement dated December 1, 2017, which expired on June 30, 2023. A summary of the changes in the right-of-use asset (in thousands) for the years ended December 31, 2023, and December 31, 2022 is as follows:

	Right-of-Use Asset
Cost
Balance at December 31, 2021		502
Additions		107
Acquired Depreciation
Depreciation
Depreciation (Adjustment)
Balance at December 31, 2022		609
Additions (Adjustment)		(69	)
Balance at December 31, 2023		540
Accumulated Depreciation		-
Balance at December 31, 2021		393
Acquired Depreciation		59
Depreciation		84
Balance at December 31, 2022		536
Depreciation (Adjustment)		(12	)
Depreciation		16
Balance at December 31, 2023		540

Carrying Amounts
Balance at December 31, 2022		73
Balance at December 31, 2023		-

As of December 31, 2023, there is no lease liability remaining in respect to the corporate office in New York, NY. A summary of the changes in the lease liability (in thousands) during the years ended December 31, 2023 and December 31, 2022 is as follows:

	December 31, 2023		December 31, 2022
Maturity analysis – contractual undiscounted cash flows
Less than one year		-		96
One year to five years		-		-
More than five years		-		-
Total undiscounted lease liabilities		-		96
Lease liabilities included in the balance sheet		-		96
Current		-		96
Non-current		-		-

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

18. FINANCIAL INSTRUMENTS – FAIR VALUE AND RISK MANAGEMENT

Accounting classifications and fair value (in thousands)

	Financial Assets at Amortized Cost		Other Financial Liabilities		Total		Level 1		Level 2		Total
	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		-		-		-

	Financial Assets at Amortized Cost		Other Financial Liabilities		Total		Level 1		Level 2		Total
	For the Year Ended December 31, 2022
	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		-		-		-		7,892		-		7,892
Total Financial Assets Measured at Fair Value (FV)		-		-		-		7,892		-		7,892
Financial Liabilities Measured at Fair Value (FV)
Warrants		-		-		-		-		242		242
Total Financial Liabilities Measured at Fair Value (FV)		-		-		-		-		242		242
Financial Assets Not Measured at Fair Value (FV)
Cash and Cash Equivalents		10,846		-		10,846		-		-		-
Restricted Cash		7,481		-		7,481		-		-		-
Trade Receivables		1,547		-		1,547		-		-		-
Other Receivables		74		-		74		-		-		-
Total Financial Assets Not Measured at Fair Value (FV)		19,948		-		19,948		-		-		-
Financial Liabilities Not Measured at Fair Value (FV)
Accounts Payable		-		474		474		-		-		-
Accrued Liabilities		-		11,866		11,866		-		-		-
Customer Deposits		-		7,481		7,481		-		-		-
Other Payables		-		1,188		1,188		-		-		-
Total Financial Liabilities Not Measured at Fair Value (FV)		-		21,009		21,009		-		-		-

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

A. Transfers between levels

During the years ended December 31, 2023, and December 31, 2022, there have been no transfers between Level 1, Level 2 and Level 3.

B. 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 receivable and contract assets for which no loss allowance is recognized because of collateral.

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.

THE REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

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 December 31, 2023, the exposure to credit risk for trade receivables and contract asset (in thousands) by geographic region was as follows:

	December 31, 2023		December 31, 2022
US		4,607		1,105
Other Regions		1,834		442
Trade Receivables		6,441		1,547

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 December 31, 2023 and December 31, 2022 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, December 31, 2023
CAD (-5% movement)		485		(485	)		655		(655	)
ILS (-5% movement)		33		(33	)		121		(121	)
Balance at, December 31, 2022
CAD (-5% movement)		355		(355	)		456		(456	)
ILS (-5% movement)		2		(2	)		6		(6	)

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 REAL BROKERAGE INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

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
	December 31, 2023			December 31, 2022			December 31, 2023		December 31, 2022
CAD		(13,463	)		(7,058	)		4,949		3,474
ILS		(178	)		(82	)		7,494		7,724
Total Exposure		(13,641	)		(7,140	)		12,443		11,198

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 11.

19. COMMITMENTS AND CONTINGENCIES

The Company may have various other contractual obligations in the normal course of operations. The Company is not materially contingently liable with respect to litigation, claims and environmental matters. Any settlement of claims in excess of amounts recorded will be charged to profit or loss as and when such determination is made.

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 (“Class Action”). The Class Action alleges that certain real estate brokerages, including the Company, participated in practices resulting in inflated buyer broker commissions, in violation of federal antitrust laws. The Company will vigorously defend against the claims asserted in the Class Action, but is unable to predict the outcome of this action.

20. 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 10.A). Directors and officers of the Company control approximately 37.08% 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):

	December 31, 2023		December 31, 2022
	Year Ended
	December 31, 2023		December 31, 2022
Salaries and Benefits		3,465		2,435
Stock-Based Compensation		7,470		2,164
Compensation Expenses for Related Parties		10,934		4,599

21. SUBSEQUENT EVENTS

On January 1, 2024, the Company updated the Bonus RSUs structure to matching (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.

Exhibit 99.3

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

MANGAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION

INTRODUCTION

This Management’s Discussion and Analysis (the “MD&A”) is provided to enable a reader to assess the results of operations and financial condition of The Real Brokerage Inc. (“Real” or the “Company”) for the period ended December 31, 2023, and 2022. This MD&A is dated March 14, 2024 and should be read in conjunction with the consolidated financial statements and related notes for the period ended December 31, 2023 and 2022 (the “Financial Statements”). Unless the context indicates otherwise, references to “Real”, “the Company”, “we”, “us” and “our” in this MD&A refer to The Real Brokerage Inc. and its subsidiaries. All dollar amounts are in U.S. dollars unless otherwise stated. This MD&A contains company names, product names, trade names, trademarks and service marks of the Company and other organizations, all of which are the property of their respective owners.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

Some of the statements in this MD&A are forward-looking statements. These statements may constitute “forward-looking information” and “forward-looking statements” under applicable Canadian and United States securities laws (collectively, “forward-looking statements”). These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “outlook,” “will,” “should,” “could” or other words of similar meaning, as well as statements written in the future tense. Forward-looking statements contained herein may include opinions or beliefs regarding market conditions and similar matters. In many instances, those opinions and beliefs are based upon general observations by members of our management, anecdotal evidence and our experience in the conduct of our businesses, without specific investigations or analyses. Therefore, while they reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views or views that are necessarily shared by all who are involved in those industries or markets. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Without limitation, this MD&A may contain forward-looking statements pertaining to the following:

●	the Company’s capital and organizational structure;
●	the Company’s expected working capital;
●	the Company’s business plans and strategies including targets for future growth;
●	the development of the Company’s business;
●	the real estate industry;
●	expectations regarding the development and launch of new technologies;
●	expectations with respect to future opportunities;
●	capital expenditure programs and future capital requirements;
●	supply and demand fundamentals for services of the Company;
●	the Company’s plans and funding for planned development activities and the expected results of such activities;
●	the Company’s treatment under governmental and international regulatory regimes;
●	the Company’s access to capital and overall strategy and development plans for all of the Company’s assets; and
●	the business and strategic plans of the Company.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievement may vary materially from those expressed or implied by the forward-looking information contained in this MD&A. These factors should be carefully considered and readers are cautioned not to place undue reliance on forward-looking information, which speaks only as of the date of this MD&A. All subsequent forward-looking information of the Company herein is expressly qualified in its entirety by the cautionary statements contained in or referred to herein. The Company does not undertake any obligation to release publicly any revisions to this forward-looking information to reflect events or circumstances that occur after the date of this MD&A or to reflect the occurrence of unanticipated events, except as may be required under applicable Canadian and United States securities laws.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

BUSINESS OVERVIEW AND STRATEGY

Our goal is to establish ourselves as the destination brokerage for real estate agents, by offering an unmatched combination of technology, support, and financial incentives. Our primary business today revolves around real estate brokerage, where our innovative software-based technology platform and flexible operating model enable agents to earn more, enjoy greater autonomy, and utilize superior technology compared to our competitors. This high-value, low-cost proposition attracts agents dedicated to growing their businesses.

Our vision is to create an integrated home buying experience through the adoption of our consumer-facing portal and mobile application. This portal, guided by our agents, aims to streamline the home buying process for consumers, while increasing the adoption of our higher-margin ancillary services, such as mortgage brokerage and title services. As part of this strategy, we acquired a title company in January 2022, which has been rebranded to One Real Title. In addition, we acquired a tech-enabled mortgage broker business in December 2022, which has been rebranded to One Real Mortgage. This consumer-focused portal is in addition to the technology we provide to agents, and is a natural next step in supporting both our agents with another benefit that can be provided to their clients, while providing consumers a more enjoyable real estate transaction experience with less friction. In October 2023 we launched the One Real mobile application, offering consumers the ability to apply for a home loan through an easy-to-use mobile application, marking the initial phase of our strategy to enhance the consumer home buying experience.

Real believes it can revolutionize the way home buying is done, making it simpler and easier for consumers by making the experience more relaxed, efficient, and enjoyable. Embarking on this transformative mission will deliver value to shareholders by better monetizing ancillary services with historically high margins while seeking to create a technology-enhanced game-changing experience for consumers. We are also focused on developing an ecosystem of financial products for real estate agents, creating additional avenues to monetize the significant gross market value transacted on our platform. These offerings will include mobile and e-wallet solutions, debit and credit card services, and ultimately a suite of wealth management tools. These innovations are designed to empower agents in building generational wealth, all under the Real umbrella. As part of this strategy of continually providing new benefits to agents and new revenue channels for the Company, we are developing a financial technology program called Real Wallet, which is a platform that will centralize an agent’s access to certain Real branded financial products, such as Real branded credit offerings. Initial testing of these products is expected to take place in the first half of 2024.

We are differentiated by our ability to deliver a simple, enjoyable experience that aligns broker, agent, and consumer interests and changes the entire process for the better. We are poised to deliver on this promise, supported by our unique ecosystem that includes:

	●	Growth-minded agents who care about making a difference in the industry. They are team players who are in it to help others, not just themselves.
	●	Innovative technology that removes friction and keeps everything seamless, easily accessible, and transparent.
	●	Integrated services that put the consumer first, including mortgage, title and insurance offerings that contribute to a seamless experience and offer them a better product and experience.

Our vision extends beyond mere transactions; we are building a community where every interaction and every service is designed to redefine what’s possible in real estate. Through our commitment to innovation, collaboration, and service excellence, we are not just changing the industry — we’re creating a whole new one.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

MARKET CONDITIONS AND INDUSTRY TRENDS

Key 2023 Trends:

	●	Continued Rise in Interest Rates. As a result of a persistently high inflation rate in the U.S., the Federal Reserve Board increased the Federal Funds Rate by an aggregate of 100 basis points in 2023, which followed an increase of 425 basis points in 2022. In connection with the rise in the Federal Funds Rate, mortgage rates also increased, with average 30-year fixed mortgage rates rising as high as 7.8% in November 2023, before declining to 6.6% at the end of December 2023. This rate level reflects an increase from 6.4% at the end of 2022 and 3.1% at the end of 2021, according to Freddie Mac data, and has significantly dampened buyer demand.

	●	Declining Transaction Volume. As a consequence of rising interest rates, total existing-home sales in the U.S., which consists of completed transactions that include single-family homes, townhomes, condominiums and co-ops, contracted by 19% to 4.1 million in 2023 compared to 2022, according to data reported by the National Association of Realtors. Volumes declined in each month of 2023 compared to 2022, both on an absolute and seasonally adjusted basis. Notably, in November 2023, the seasonally adjusted annualized rate of existing home sales reached 3.82 million, a sequential improvement from the 3.79 million level reached in October 2023, and indicating signs of market stabilization.

	●	Stabilizing Pricing. The median sale price on a U.S. existing home was $387,382,60 as of November December 2023, an increase of 4% from November December 2022, but 67.5% below the peak price of $413,800 reached in June 2022. Given low available for sale inventory, average home prices remain well above levels experienced prior to the COVID-19 pandemic, and home price appreciation was still slightly positive on a year-over-year basis in 2023, with a decline in home prices in the first half of the year offset by an increase in home prices during the second half. With the exception of 2022 and 2023, prices and transaction volumes in recent years have been strong, boosted by historically low mortgage rates and a strong labor market.

We continue to monitor market trends closely and note that despite stagnating transaction volumes in the market, the overall impact on the Company has been offset by the significant growth demonstrated in the number of agents transacting on our platform.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Business Model

Commission Structure

As a licensed real estate brokerage, our primary revenue source is derived by processing real estate transactions which entitle us to commissions. We distribute a portion of this commission revenue to our agents and brokers, according to Real’s commission structure. Under this model, agents receive 85% of the commission from real estate transactions, with the remaining 15% allocated to Real. This arrangement continues until an agent contributes $12,000 in commission splits to Real, at which point the agent qualifies to receive 100% of their gross commission income per transaction for the remainder of their annual cycle, minus a transaction fee of $285 and a $30 fee for broker review and E&O insurance.

Revenue Share Model

We offer agents the opportunity to earn revenue-share, paid out of Real’s portion of commissions, for new, productive agents that they personally refer and who join the Real platform. Launched in November 2019, this program has had a major impact on our agent count and revenue growth. This momentum across various markets is largely driven by the enthusiasm of key influential agents who have embraced Real, actively bringing peers and others in their network to our growing community. In February 2023, we expanded the program to allow new agents to select two sponsors that split 90% of the revenue share stream equally while paying the remaining 10% back to Real.

Agent Equity Participation

In an effort to incentivize and reward our agents, Real agents have the opportunity to earn restricted share units (each an “RSU”) based on achievement of certain performance criteria. These RSUs vest over three years into common shares of the Company (“Common Shares”), directly linking their success to the Company’s. Additionally, our Agent Stock Purchase Program enables agents to buy RSUs, with a portion of their commissions, which vests immediately but have a one year restriction period. To encourage participation, Real provides agents participating in the program with Bonus RSUs, enhancing the financial benefits for agents. This equity incentive plan is part of our broader strategy to foster a culture of ownership and alignment.

Agent Experience

We focus on creating an unparalleled agent experience through development of a unique and comprehensive software platform. Our strength is our ability to offer real estate agents a higher value, through a proprietary technology stack - a set of technologies, software and tools essential for developing and deploying digital products - at a lower cost, compared to other brokerages. At its core, our technology is an operating system that allows agents to build their businesses rapidly and efficiently, enhancing productivity, and providing support for marketing, education, community-building, transaction management and more.

As part of those efforts, on August 8, 2021, we launched a new and improved agent mobile application leveraging Real’s proprietary technology platform called reZEN that delivers our agents better visibility into their business, transactions, and financials. On October 20, 2022, reZEN was further enhanced with new features and benefits for agents and launched to all U.S. and Canada-based agents.

reZEN software is the backbone of our transaction processing efficiency and is a key to unlocking operating leverage as we continue to scale. With reZEN, agents do not need a third-party system for inputting new transactions, which gives us greater control over the transaction experience, increases our brokerage oversight, allows us to better integrate our own technology as we enhance our consumer app, and drives productivity and efficiency for agents. Further, by offering an open application programming interface, Real provides agents the flexibility to integrate technology partners of their choosing, while maintaining more control over their own data.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Focus on teams

Real estate teams have a unique structure and are typically formed by a high producing agent who attracts other agents to work with them and enjoy the leadership and mentoring provided by the team leader. Teams who join our platform are entitled to receive the same commission split, revenue sharing and equity incentive programs offered to all agents. These incentive programs allow agents and brokers a financial mechanism to build teams across geographical boundaries in any of the markets that we serve, without incurring significant additional expense, oversight responsibility or liability, while at the same time preserving and enhancing their own personal brands. The growth in brokerage teams joining Real continues to have a positive impact on our agent growth, and in January 2024 we announced two programs to make it easier for teams and independent brokerages to join Real:

	●	Private Label - Specifically designed for independent brokerages that have spent years building a brand in their local marketplace, Real’s Private Label program empowers brokerages to benefit from Real’s cutting-edge transaction management platform while maintaining and continuing to invest in their local brand, which often comes with a strong customer base and emotional attachment. The Private Label program is available to brokerages through an application process in states that allow this type of representation.
	●	ProTeams - Real’s ProTeams program gives team leaders the flexibility to customize their team members’ caps, splits and fee payments down to the individual team member level, allowing them to continue to embrace the structure that works best for them, while still reaping the benefits associated with being a part of the Real platform.

Consumer Vision

We believe the home buying experience is broken. It is an outdated process riddled with problems in need of enhanced technology. In particular, the current home buying and selling experience is too often:

	●	Unpredictable: From a buyer’s perspective, unforeseen issues arise based on lack of awareness of potential outcomes;
	●	Chaotic: Requires interactions with multiple parties (lender, insurer, etc.) with communication through multiple channels; and
	●	Nontransparent: There is often no clear understanding in a seemingly complex and unintuitive process.

A core component of our strategy going forward is building and improving our consumer-facing portal that provides a seamless end-to-end home buying experience for consumers, including access to ancillary services such as mortgage and title services. This consumer-focused portal is in addition to the technology we provide to agents, and is a natural next step in supporting both our agents with another benefit that can be provided to their clients, and consumers who can enjoy a real estate transaction with less friction.

Brokerage Fees and Additional Benefits

In addition to real estate commissions, Real generates revenue from fees charged to agents for being affiliated with Real and for closing transactions on our platform. On January 24, 2023, Real announced changes to U.S. brokerage fees and additional benefits as we seek to grow sustainably while still offering industry-leading incentives for our agents. These changes include:

●

A co-sponsored revenue share program that allows new agents to select two sponsors that split 90% of the revenue share stream equally while paying the remaining 10% back to Real.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

	●	Expanded access to Real’s share purchase program, giving agents the ability to buy shares of Real stock beyond the company-issued equity awards.
	●	A $30 fee on each transaction to cover broker review, E&O insurance and processing expenses.
	●	A $175 annual fee to participate in our revenue sharing program, and a 1.2% fee on all revenue share payments.
	●	A $100 increase of the joining fee to $249 and a $250 increase of the annual brokerage fee to $750.
	●	A $60 increase of the post-capping transaction fee to $285, and a $29 increase to the Elite Agent transaction fee to $129.

These changes went into effect in February 2023 for new agents and in April 2023 for existing agents.

Growth in Market Share

Our non-brick and mortar-based model is becoming increasingly desirable, enabling agents to work from anywhere by leveraging our best-in-class technology, without being tied to a costly physical office. This appeal has led to a significant period of growth, underscored by a steady increase in the number of agents joining our platform. This trend is reflected in our results, with agents on our platform growing 67% year-over-year in 2023 and an additional 12% in the fourth quarter of 2023 (as compared to the third quarter of 2023) to 13,650 agents. We expect to continue to capture market share in 2024.

Focus on Technology

The real estate industry is generally considered to be very slow at adopting technology and as such, real estate transactions remain notoriously difficult to manage. We see an opportunity to produce agent focused software products that will further differentiate Real from other brokerages. We also believe that margin expansion is closely tied to the improvement of internal operational efficiency through automation, providing the ability to rapidly grow revenue at a faster pace than expenses.

In May 2023, Real launched Leo, an artificial intelligence-powered assistant that serves as a 24/7 concierge to its agents and brokers throughout the U.S. and Canada. Leveraging Real’s proprietary transaction management platform, reZEN, Leo provides real-time answers to user inquiries. Beyond responding to questions, Leo has been enhanced to predict agents’ needs by analyzing their past interactions and drawing insights from similar patterns across Real’s entire agent base. By utilizing AI to manage the most frequently asked questions, Real aims to maintain its efficient staff-to-agent ratio scaling its agent base and increasing overall agent productivity.

We see a tremendous potential in improving the home buying and selling experience for consumers using technology, while keeping real estate agents in the center of the transaction. This approach will enable consumers to experience a faster, smoother, and more enjoyable digital based journey, while still benefiting from the expert guidance of a real estate agent throughout this exciting and highly emotional transaction.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Recent Developments

Normal Course Issuer Bid

On May 17, 2021, the TSX Venture Exchange (“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, 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 9.0 million Common Shares, representing approximately 5% of the total 180 million Common Shares issued and outstanding as of May 18, 2023. Purchases will be made at prevailing market prices, and may be conducted during the twelve-month period ending May 28, 2024.

The NCIB is being conducted to acquire Common Shares for the purposes of satisfying restricted share unit 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 deal with other administrative matters. Through the Trustee, RBC Capital Markets was engaged to undertake purchases under the NCIB.

During the year ended December 31, 2023, the Company repurchased 2 million Common Shares for $2.9 million.

Our policy governing transactions in our securities by our directors, officers, and employees permits our officers, directors, funds affiliated with our directors, and certain other persons to enter into trading plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. On December 14, 2023, Tamir Poleg, the Company’s Chief Executive Officer, entered into a 10b5-1 trading plan (the “Plan”), which is intended to satisfy the affirmative defense of Rule 10b5-1(c), for the sale of up to 1,500,000 common shares of the Company. The first sale of common shares of the Company will not take place until at least April 13, 2024. The plan end date is December 31, 2024. Under the Plan, Mr. Poleg will relinquish control over the sale transactions. Accordingly, sales under the Plans may occur at any time, including possibly before, simultaneously with, or immediately after significant events involving the Company.

We anticipate that, as permitted by Rule 10b5-1 and our policy governing transactions in our securities, some or all of our officers, directors and employees may establish trading plans in the future. We intend to disclose the names of our executive officers and directors who establish a trading plan in compliance with Rule 10b5-1 and the requirements of our policy governing transactions in our securities in our future quarterly and annual reports. We, however, undertake no obligation to update or revise the information provided herein, including for revision or termination of an established trading plan, other than in such quarterly and annual reports.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Expetitle Acquisition

On January 20, 2022, the Company completed the acquisition of 100% of the issued and outstanding equity interests of Expetitle, Inc. (“Expetitle”) pursuant to a stock purchase agreement (the “Expetitle Transaction”). The aggregate purchase price for 100% of the issued and outstanding equity interests of Expetitle was for aggregate cash consideration of $8.2 million with $7.4 million payable in cash at the closing of the Expetitle Transaction and $600,000 in cash subject to escrow, that would be released after twelve (12) months upon the satisfaction or waiver of the following terms and conditions: (i) the key employees remain at their current position with the Company for at least twelve (12) months after the closing of the Expetitle Transaction and (ii) Expetitle will become licensed to operate in at least fifteen states, including then current states of operation, Florida, Georgia, and Texas. In addition, certain Expetitle employees were entitled to a cash payment of $200,000 subject to the same terms as set out for the contingent consideration. As of the reporting date, the contingent terms were met and the $800,000 that was in escrow was released on January 23, 2023. In connection with the Expetitle Transaction, Real also granted an aggregate of 700,000 incentive stock options (“Options”) and an aggregate of 1.1 million in value of RSUs to members of the Expetitle team. The Options vest quarterly over 3 years and are exercisable for a period of 3 years at $3.60 per share. The RSUs vest quarterly over 3 years.

Subsequent to the completion of the Expetitle Transaction, Expetitle was renamed The Real Title Inc, and has subsequently been rebranded to One Real Title Inc. We offer, primarily through joint ventures in which our wholly owned subsidiary, One Real Title, Inc. is a managing member and majority owner, title insurance, and closing services for residential and/or commercial transactions.

Redline Acquisition

On November 3, 2022, the Company acquired, through a wholly owned subsidiary, all of the issued and outstanding common shares of Redline Real Estate Group (BC) Inc. (“Redline BC”) pursuant to a share purchase agreement between the Company, Redline BC and Redline Realty Investments Inc. (“Redline Realty”). The acquisition, which includes Redline’s real estate license to operate in British Columbia, fueled the Company’s expansion into Canada’s third largest province.

LemonBrew Acquisition

On December 9, 2022, the Company completed the acquisition of LemonBrew Lending Corp. (“LemonBrew Lending”), a tech-enabled home loan platform, pursuant to the terms of a share purchase agreement dated September 23, 2022 between the Company, LemonBrew Lending and LemonBrew Technologies Corp. (“LemonBrew Technologies”). The Company acquired 100% of the issued and outstanding equity interests of LemonBrew Lending from the Seller for an aggregate purchase price of $1,250,000 (the “LemonBrew Transaction”). The purchase price was satisfied by (i) cash in the amount of $800,000 and (ii) the issuance of 351,837 Common Shares (the “Consideration Shares”) at a deemed issue price of $1.279 per share. The issued price of the Consideration Shares was equal to the product of $450,000 divided by the 5-day volume weighted average trading price of Real’s Common Shares on the NASDAQ immediately prior to the closing of the LemonBrew Transaction.

●

LemonBrew achieving at least $500 thousand in EBITDA for the first 12-month period following closing, $1 million in EBITDA for the second 12-month period following closing, and $2 million in EBITDA for the third 12-month period following closing; and

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

●

Certain employees remaining in their roles to be established with Real during the transaction

PRESENTATION OF FINANCIAL INFORMATION AND NON-IFRS MEASURES

Presentation of financial information

Unless otherwise specified herein, financial results, including historical comparatives, contained in this MD&A are based on the Financial Statements, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and the interpretations of the IFRS Interpretations Committee.

Non-IFRS measures

In addition to the reported IFRS measures, industry practice is to evaluate entities giving consideration to certain non-IFRS performance measures, such as earnings before interest, taxes, depreciation and amortization (“EBITDA”) or adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”).

Management believes that these measures are helpful to investors because they are measures that the Company uses to measure performance relative to other entities. In addition to IFRS results, these measures are also used internally to measure the operating performance of the Company.

These measures are not in accordance with IFRS and have no standardized definitions, and as such, our computations of these non-IFRS measures may not be comparable to measures by other reporting issuers. In addition, Real’s method of calculating non-IFRS measures may differ from other reporting issuers, and accordingly, may not be comparable.

Earnings before Interest, Taxes, Depreciation and Amortization

EBITDA is used as an alternative to net income because it excludes major non-cash items such as interest, taxes, and amortization, which management considers non-operating in nature. It provides useful information about our core profit trends by eliminating our taxes, amortization, and interest which provides a more accurate comparison between our competitors. A reconciliation of EBITDA to IFRS net income is presented under the section “Results from Operations” in this MD&A.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization

Management believes that Adjusted EBITDA provides useful information about our financial performance and allows for greater transparency with respect to a key metric used by the Company for financial and operational decision-making. We believe that Adjusted EBITDA helps identify underlying trends in our business that otherwise could be masked by the effect of the expenses that we exclude in Adjusted EBITDA. In particular, we believe the exclusion of stock and stock option expenses provides a useful supplemental measure in evaluating the performance of our operations and provides additional transparency into our results of operations.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Adjusted EBITDA is used as an addition to net income (loss) and comprehensive income (loss) because it excludes major non-cash items such as amortization, interest, stock-based compensation, current and deferred income tax expenses and other items management considers non-operating in nature.

A reconciliation of Adjusted EBITDA to IFRS net income is presented under the section “Results from Operations” of this MD&A.

SUMMARY RESULTS FROM OPERATIONS

Select information (in thousands)

	For the Year Ended
	December 31, 2023			December 31, 2022			December 31, 2021
Operating Results
Total Revenues		689,158			381,756			121,681
Loss from Continuing Operations		(27,216	)		(20,335	)		(11,679	)
Total Comprehensive Loss Attributable to Owners of the Parent		(27,199	)		(20,699	)		(12,026	)

Per Share Basis
Basic and diluted loss per share (i)		(0.15	)		(0.12	)		(0.07	)

Basic and diluted loss per share are calculated based on weighted average of Common Shares outstanding during the period.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) (in thousands)

	For the Year Ended
	December 31, 2023			December 31, 2022
Total Comprehensive Loss Attributable to Owners of the Company		(27,199	)		(20,699	)
Add/(Deduct):
Finance Expenses, net		619			1,167
Net Income Attributable to Noncontrolling Interest		285			242
Cumulative (Gain)/Loss on Investments in Debt Instruments Classified as at FVTOCI Reclassified to Profit or Loss		(330	)		407
Depreciation		1,128			333
EBITDA ^{(i) (ii)}		(25,497	)		(18,550	)

	i.	Represents a non-IFRS measure. Real’s method for calculating non-IFRS measures may differ from other reporting issuers’ methods and accordingly may not be comparable. For definitions and basis of presentation of Real’s non-IFRS measures, refer to the non-IFRS measures section.
	ii.	EBITDA is calculated on a trailing twelve-month basis. Refer to non-IFRS measures section of this MD&A for further details.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Adjusted earnings before interest, taxes, depreciation, and amortization (in thousands)

Adjusted EBITDA excludes stock-based compensation expense related to RSUs and options granted pursuant to our equity plans, including our A&R Omnibus Plan, depreciation expense, goodwill impairment and restructuring expenses. Stock-based compensation expense is affected by awards granted and/or awards forfeited throughout the year as well as increases in fair value and is more fully disclosed in Note 10 of the Financial Statements, Share-Based Payment arrangements.

	For the Year Ended
	December 31, 2023			December 31, 2022
Total Comprehensive Loss Attributable to Owners of the Company		(27,199	)		(20,699	)
Add/(Deduct):
Finance Expenses, net		619			1,167
Net Income Attributable to Noncontrolling Interest		285			242
Cumulative (Gain)/Loss on Investments in Debt Instruments Classified as at FVTOCI Reclassified to Profit or Loss		(330	)		407
Depreciation		1,128			333
Stock-Based Compensation Adjustments		38,403			16,700
Goodwill Impairment		723			-
Listing Expenses		-			151
Restructuring Expenses		223			222
Other Professional Expenses		-			762
Adjusted EBITDA^{(i) (ii) (iii)}		13,852			(715	)

	i.	Represents a non-IFRS measure. Real’s method for calculating non-IFRS measures may differ from other reporting issuers’ methods and accordingly may not be comparable. For definitions and basis of presentation of Real’s non-IFRS measures, refer to the non-IFRS measures section.
	ii.	Adjusted EBITDA is calculated on a trailing twelve-month basis. Refer to non-IFRS measures section of this MD&A for further details.
	iii.	Adjusted EBITDA for December 31, 2022 has been restated to account for Stock-Based Compensation recognized in Cost of Goods Sold.

REVENUE

For the year ended December 31, 2023, total revenues were $689.2 million compared to $381.8 million for year ended December 31, 2022, demonstrating the effects of the Company’s growth. The Company generates substantially all its revenue from commissions from the sale of real estate properties and other revenues relating to ancillary services. The increase in revenues is attributable to an increase in productive agents on our platform, expansion of the number of states and provinces in which we operate, and increase in the closed transaction count. We are continually investing in our platform to provide agents with the tools they need to maximize their productivity, which we anticipate will further translate into a larger transaction volume closed by our agents. As we further widen our footprint within the United States and Canada, we expect this momentum to progress.

A breakdown in revenues (in thousands) generated during the year is included below:

	For the Year Ended
	December 31, 2023		December 31, 2022
Main revenue streams
Commissions		684,873		379,868
Title		2,990		1,869
Mortgage Income		1,295		19
Total Revenue		689,158		381,756

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

BUSINESS SEGEMENT INFORMATION

A further breakdown of the Consolidated Statement of Loss and Comprehensive Loss by Business Segment (in thousands) during the year is included below:

	For the Year Ended December 31, 2023
	North American Brokerage			Other Segments			Total
Revenues		684,873			4,285			689,158
Commissions and other agent-related costs		625,016			1,269			626,285
Gross Profit		59,857			3,016			62,873

General and administrative expenses		35,653			7,260			42,913
Marketing expenses		38,458			153			38,611
Research and development expenses		7,284			75			7,359
Operating Loss		(21,538	)		(4,472	)		(26,010	)

Other income, net		136			(723	)		(587	)
Finance expenses, net		(614	)		(5	)		(619	)
Net Loss		(22,016	)		(5,200	)		(27,216	)
Net income attributable to noncontrolling interests		-			285			285
Net Loss Attributable to the Owners of the Company		(22,016	)		(5,485	)		(27,501	)
Other comprehensive income/(loss):
Cumulative (gain)/loss on investments in debt instruments classified as FVTOCI reclassified to profit or loss		330			-			330
Foreign currency translation adjustment		(29	)		1			(28	)
Total Comprehensive Loss Attributable to Owners of the Company		(21,715	)		(5,484	)		(27,199	)
Total Comprehensive Income Attributable to NCI		-			285			285
Total Comprehensive Loss		(22,715	)		(5,199	)		(26,914	)

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

A reconciliation of Comprehensive Loss Attributable to Owners of the Company to Adjusted EBITDA by business segment is presented below:

	For the Year Ended December 31, 2023
	North American Brokerage			Other Segments			Total
Total Comprehensive Loss Attributable to Owners of the Company		(21,715	)		(5,484	)		(27,199	)
Add/(Deduct):
Finance Expenses, net		614			5			619
Net Income Attributable to Noncontrolling Interests		-			285			285
Cumulative (Gain)/Loss on Investments in Debt Instruments Classified as at FVTOCI Reclassified to Profit or Loss		(330	)		-			(330	)
Depreciation		446			682			1,128
Stock Based Compensation Adjustments		38,403			-			38,403
Goodwill Impairment		-			723			723
Restructuring Expense		223			-			223
Adjusted EBITDA		17,641			(3,789	)		13,852

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

	For the Year Ended
	December 31, 2023		December 31, 2022
United States		573,658		320,181
Canada		115,500		61,575
Total revenue by region		689,158		381,756

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

EXPENSES

We believe that growth can and should be balanced with profits and therefore plan and monitor spend responsibly to ensure we decrease our losses. Our loss as a percentage of total revenue was 3.9% for year ended December 31, 2023 and 5.4% for the year ended December 31, 2022.

A breakdown in expenses (in thousands) during the year is included below:

	For the Year Ended
	December 31, 2023		December 31, 2022
Commissions and other agent-related costs		626,285		349,806

Operating Expenses
General and Administrative Expenses		42,913		24,155
Salaries and Benefits		18,940		11,733
Stock Based Compensation		8,607		2,778
Administrative Expenses		3,244		1,803
Professional Fees		8,425		5,893
Depreciation Expense		1,128		333
Other General and Administrative Expenses		2,569		1,615
Marketing Expenses		38,611		22,674
Salaries and Benefits		767		478
Stock Based Compensation for Employees		14		1
Stock Based Compensation for Agents		7,780		5,519
Revenue Share		27,905		14,975
Other Marketing and Advertising Cost		2,145		1,701
Research and Development Expenses		7,359		4,867
Salaries and Benefits		3,749		2,012
Stock Based Compensation		440		212
Other Research and Development		3,170		2,643
Total Cost of Sales and Operating Expenses		715,168		401,502

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Cost of Sales

	For the Year Ended
	December 31, 2023			December 31, 2022
Revenues		689,158			381,756
Cost of Sales		626,285			349,806
Cost of Sales as a Percentage of Revenues		90.9	%		91.6	%

Cost of sales represents real estate commission paid to Real agents, and in Canada this also includes commissions paid to outside brokerages, as part of the Canadian regulatory process, title fees, and mortgage expenses. For the year ended December 31, 2023, total cost of sales were $626.3 million compared to $349.8 million for the year ended December 31, 2022. We typically pay our agents 85% of the gross commission earned on every real estate transaction with 15% of said commissions being paid to the Company. Agents pay the Company 15% of commissions until the commission paid to the Company totals their respective “cap” amount (the “Cap”). Each agent Cap cycle resets on an annual basis on an agent’s anniversary date. As the total revenue increases, the total commission to agents’ expense increases respectively. Our margins are affected by the increase in the number of agents who achieve their Cap (which is affected by an increase in transaction volume and increases in home prices), resulting in downward pressure as we continue to attract high producing agents. We expect to offset this pressure and increase margins through the growth of title and escrow services offered by One Real Title and mortgage services offered by One Real Mortgage, and by adding additional ancillary services that will be integrated into our consumer-facing platform.

Revenue Share

Our Revenue Share expense for the year ended December 31, 2023 was $27.9 million compared to $15.0 million for the year ended December 31, 2022. The increase in Revenue Share expense is primarily due to an increase in our agent base, which resulted in a higher number of agents participating in our Revenue Share program. For the period ended December 31, 2023 and December 31, 2022, Revenue Share expense is included in the marketing expense category.

Stock Based Compensation

Our stock based compensation expense for the year ended December 31, 2023 was $38.4 million compared to $16.5 million for the year ended December 31, 2022. The increase in stock based compensation expense is primarily due to an increase in our agent base, resulting in a higher number of awards granted as part of our agent incentive program and an out of period adjustment recorded in the current period. For the period ended December 31, 2023 and December 31, 2022, stock-based compensation expense related to FTEs within marketing and research and development are included in the marketing and research and development expense categories.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

The following table is presented in thousands:

	For the Year Ended
	December 31, 2023						December 31, 2022
	Options Expense		RSU Expense		Total		Options Expense		RSU Expense		Total
Stock Based Compensation – COGS		-		21,562		21,562		-		8,008		8,008
Marketing Expenses – Agent Stock Based Compensation		2,209		5,571		7,780		1,215		4,304		5,519
Marketing Expenses – FTE Stock Based Compensation		7		7		14		-		1		1
Research and Development – FTE Stock Based Compensation		142		298		440		111		101		212
General and Administrative – FTE Stock Based Compensation		5,914		2,693		8,607		1,702		1,076		2,778
Total Stock Based Compensation		8,272		30,131		38,403		3,028		13,490		16,518

Salaries and Benefits

Our salaries and benefits expenses for the year ended December 31, 2023 was $23.5 million in comparison to $14.2 million for the year ended December 31, 2022. The increase in salaries and benefits expenses were mainly due to an increase in number of full-time employees from 118 on December 31, 2022 to 167 on December 31, 2023. The increase is attributable to Real’s commitment to serve its agents and to the growth with excellence and expansion of the Company. These investments in key management and employee personnel allow us to offer best-in-class service to our agents. As the Company continues in this period of growth, it is necessary to scale operations in order to support that growth. Increases in headcount, as well as the investments Real is making in its technology infrastructure, allow us to scale at an accelerated pace and serve as key contributors to our growth. We believe we have been able to scale in an efficient manner and with a proportionately minimal impact on our operational costs. Real’s full-time employee (“FTEs”) excluding One Real Title and One Real Mortgage employees to Agent ratio as of December 31, 2023 is 1:115 compared to 1:69 as of December 31, 2022.

Professional Fees

Our professional fees for the year ended December 31, 2023 were $8.4 million in comparison to $5.9 million for the year ended December 31, 2022. The increase in professional fees was largely due to an increase in our broker and recruiter consulting fees, as a result of our expanding geographic footprint.

Research and Development Expenses

Our research and development expenses for the year ended December 31, 2023 were $7.4 million compared to $4.9 million for the year ended December 31, 2022. The increase is primarily due to an increase in headcount and increase in costs related to upgrades and enhancements made to reZEN, our internal-use cloud-based residential real-estate transaction system.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Marketing Expenses

Our marketing expenses for the year ended December 31, 2023 were $38.6 million compared to $22.7 million for the year ended December 31, 2022, primarily due to our efforts to attract agents. This increase is primarily comprised of $12.9 million increase in revenue share paid to agents as part of our revenue share model and an increase in stock-based compensation expense of $2.3 million. Agents earn revenue share for new agents that they personally refer to Real. Agents are eligible for the agent incentive program based on certain attracting and performance criteria. Real works to limit its marketing expenses paid using traditional marketing channels and focuses primarily on marketing through its agents as the main cost of acquisition. Therefore, as agent count increases so does our expense related to the revenue share and equity incentive programs.

Financial Instruments

Financial assets and financial liabilities are recognized on the Company’s consolidated statements of financial position when Real becomes party to the contractual provisions of the instrument.

Classification and subsequent measurement

Financial assets – Business model assessment

	–	the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows;

	–	how the performance of the portfolio is evaluated and reported to the Company’s management;

	–	the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

	–	how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

	–	the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and the expectations of future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales, consistent with the Company’s continuing recognition of the assets.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets – Subsequent measurement and gains and losses

Financial assets at

amortized cost

These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

Debt investments at

FVOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Financial liabilities – Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and their net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

Derecognition

Financial assets

Financial liabilities

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Offsetting

	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)
Short Term Investments		-		-		-		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.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

SUMMARY OF QUARTERLY INFORMATION

The following table provides selected quarterly financial information (in thousands, except per share data) for the eight most recently completed financial quarters ended December 31, 2023. This information reflects all adjustments of a recurring nature that are, in the opinion of management, necessary to present a fair statement of the results of operations for the periods presented. Quarter-to-quarter comparisons of financial results are not necessarily meaningful and should not be relied upon as an indication of future performance. The general increase in revenue and expense quarter over quarter is due to growth and expansion of the Company.

	2023												2022
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Revenue		181,341			214,640			185,332			107,845			96,118			111,633			112,356			61,649
Cost of Sales		165,810			195,865			167,573			97,037			87,898			103,057			103,064			55,787
Gross Profit		15,531			18,775			17,759			10,808			8,220			8,576			9,292			5,862
General and Administrative Expenses		15,387			9,234			9,654			8,638			7,121			5,544			6,116			5,374
Marketing Expenses		9,084			11,577			10,266			7,684			7,061			6,197			5,700			3,716
Research and Development Expenses		2,325			1,931			1,579			1,524			1,002			1,146			1,680			1,039
Other Loss (Income)		693			(38	)		(40	)		(28	)		(62	)		(231	)		(257	)		(179	)
Operating Income (Loss)		(11,958	)		(3,929	)		(3,700	)		(7,010	)		(6,902	)		(4,080	)		(3,947	)		(4,088	)
Listing Expenses		-			-			-			-			16			135			-			-
Finance Expenses, net		32			10			272			305			(159	)		954			208			164
Income (Loss) Before Tax		(11,990	)		(3,939	)		(3,972	)		(7,315	)		(6,759	)		(5,169	)		(4,155	)		(4,252	)
Non-controlling interest		26			(85	)		(146	)		(80	)		(50	)		(78	)		(53	)		(61	)
Income (Loss) Attributable to the Owners of the Parent		(11,964	)		(4,024	)		(4,118	)		(7,395	)		(6,809	)		(5,247	)		(4,208	)		(4,313	)
Other Comprehensive Incomes (loss):
Unrealized Gains (Losses) on Available for Sale Investment Portfolio		116			79			42			93			128			(142	)		(116	)		(277	)
Foreign Currency Translation Adjustment		(38	)		(52	)		(85	)		147			(58	)		(51	)		190			204
Comprehensive Income (Loss)		(11,886	)		(3,997	)		(4,161	)		(7,155	)		(6,739	)		(5,440	)		(4,134	)		(4,386	)
Non-Operating Expenses:
Finance Costs		(110	)		16			376			292			(237	)		1,174			377			502
Depreciation		298			277			284			269			108			87			135			3
Stock-Based Compensation Adjustments		19,423			7,144			6,075			5,761			6,132			4,506			2,884			3,178
Goodwill Impairment		723			-			-			-			-			-			-			-
Listing Expenses		-			-			-			-			16			135			-			-
Restructuring Expense		58			80			44			41			160			62			-			-
Other Expenses		-			-			-			-			456			25			155			126
Adjusted EBITDA		8,506			3,520			2,618			(792	)		(104	)		549			(583	)		(577	)
Non-Recurring Stock-Based Compensation Adjustments		6,208			-			-			-			-			-			-			-
Adjusted EBITDA Excluding Non-Recurring Stock Based Compensation Adjustment		2,298			3,520			2,618			(792	)		(104	)		549			(583	)		(577	)
Earnings per Share
Basic and Diluted Loss per Share		(0.066	)		(0.022	)		(0.023	)		(0.041	)		(0.038	)		(0.029	)		(0.023	)		(0.025	)

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

LIQUIDITY AND CAPITAL RESOURCES

The Company has a capital structure comprised of share premium, stock-based compensation reserves, deficit, other reserves, treasury stock, and non-controlling interests. Our primary sources of liquidity are cash and cash flows from operations as well as cash raised from investors in exchange for issuance of Common Shares. The Company expects to meet all of its obligations and other commitments as they become due. The Company has various financing sources to fund operations and will continue to fund working capital needs through these sources along with cash flows generated from operating activities.

Balance Sheet overview (in thousands)

	As of
	December 31, 2023		December 31, 2022		December 31, 2021
ASSETS
Current Assets		50,513		28,369		38,665
Non-Current Assets		14,035		15,393		1,332
TOTAL ASSETS		64,548		43,762		39,997

LIABILITIES
Current Liabilities		27,195		21,105		12,314
Non-Current Liabilities		269		242		679
TOTAL LIABILITIES		27,464		21,347		12,993
TOTAL EQUITY		37,084		22,415		27,004
TOTAL LIABILITIES AND EQUITY		64,548		43,762		39,997

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Asset overview by geographical segment (in thousands)

	As of December 31, 2023
	Canada			Israel		United States			Total
ASSETS
CURRENT ASSETS
Cash and cash equivalents		1,853			115		12,739			14,707
Restricted cash		9,998			-		2,950			12,948
Investment in financial assets		95			-		14,127			14,222
Trade receivables		1,837			-		4,604			6,441
Other receivables		-			63		-			63
Related parties		(6,864	)		7,305		(441	)		-
Prepaid expenses and deposits		2			-		2,130			2,132
TOTAL CURRENT ASSETS		6,921			7,483		36,109			50,513
NON-CURRENT ASSETS
Intangible assets		-			-		3,442			3,442
Goodwill		-			-		8,993			8,993
Property and equipment		30			11		1,559			1,600
TOTAL NON-CURRENT ASSETS		30			11		13,994			14,035
TOTAL ASSETS		6,951			7,494		50,103			64,548

As of December 31, 2023, cash and cash equivalents and investments totaled $28.9 million, compared to $18.8 million as of December 31, 2022. Cash is comprised of cash held in our banking accounts.

For the year ended December 31, 2023:

	●	Cash flows generated in operations was $19.9 million, in comparison to $6 million for the year ended December 31, 2022. The increase in operating cash flows was primarily due to the increase in overall growth of the company.
	●	Cash flows from investing activities was a cash use of $6.6 million, primarily due to investments in debt instruments.
	●	Cash flows from financing activities was a cash use of $4.0 million. Cash flow used in financing activities primarily related to the repurchases of the Common Shares for satisfying RSU obligations pursuant to the NCIB totaling $2.9 million.

We believe that our existing balances of cash and cash equivalents, and cash flows expected to be generated from our operations will be sufficient to satisfy our immediate and ongoing operating requirements.

Our future capital requirements will depend on many factors, including our level of investment in technology, our rate of growth into new markets, and potential mergers and acquisitions. Our capital requirements may be affected by factors that we cannot control such as the residential real estate market, interest rates, and other monetary and fiscal policy changes. To support and achieve our future growth plans, however, we may need or seek to obtain additional funding, including through equity or debt financing.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

The following table presents liquidity (in thousands):

	For the Year Ended
	December 31, 2023		December 31, 2022
Cash and Cash Equivalents		14,707		10,846
Other Receivables		63		74
Investment in Financial Assets ^[iii]		14,222		7,892
Total ^{[i] [ii]}		28,992		18,812

[i] – Total Capital is not a standard financial measure under IFRS and may not be comparable to similar measures reported by other entities.

[ii] – Represents a non-IFRS measure. Real’s method for calculating non-IFRS measures may differ from other reporting issuers’ methods and accordingly may not be comparable.

[iii] – Investment securities are presented in the table below.

The following table presents Investments in Available for Sale Securities at Fair Value (in thousands):

Description	Estimated Fair Value December 31, 2022		Deposits / (Withdrawals)			Dividends, Interest & Income		Gross Unrealized Gains / (Losses)		Estimated Fair Value December 31, 2023
Cash Investments		-		6,368			163		-		6,531
Fixed Income		6,997		277			-		323		7,597
Fixed Income - Mutual Funds		840		(847	)		-		7		-
Investment Certificate		55		39			-		-		94
Total		7,892		5,837			163		330		14,222

The Company holds no debt obligations.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Contractual obligations

As of December 31, 2023, the Company had no guarantees, leases or off-balance sheet arrangements other than those noted in our consolidated financial statement. We had a lease for our New York office that expired on June 30, 2023. The following is a schedule of Company’s future lease payments under lease obligations (in thousands):

	For the Year Ended
	December 31, 2023		December 31, 2022
Maturity analysis – contractual undiscounted cash flows
Less than one year		-		96
One year to five years		-		-
More than five years		-		-
Total undiscounted lease liabilities		-		96
Lease liabilities included in the balance sheet		-		96
Current		-		96
Non-current		-		-

Capital management framework

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 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 strategy is to retain adequate liquidity to mitigate the effect of the risk 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 December 31, 2023 and 2022.

INVESTMENT IN AVAILABLE FOR SALE SECURITIES AT FAIR VALUE

The Company invested surplus funds from the financing activities with Insight Partners into a managed investment portfolio. Securities are purchased on behalf of the Company and are actively managed through multiple investment accounts. 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.

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. As of December 31, 2023, the total investment in securities available for sale at fair value was $14.2 million and is more fully disclosed in Note 11 of the Financial Statements, Investment Securities Available for Sale Securities at Fair Value, of the Financial Statements.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

OTHER METRICS

Year-over-year quarterly revenue growth (in thousands)

	2023												2022
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Revenue
Commissions		180,417			213,319			184,022			107,115			95,622			111,149			111,850			61,247
Commissions – YoY QTR		89	%		92	%		65	%		75	%		89	%		186	%		384	%		558	%
Title Revenue		480			964			948			598			477			484			506			402
Title Revenue – YoY QTR		1	%		99	%		87	%		49	%		-	%		-	%		-	%		-	%
Mortgage Income		444			357			362			132			19			-			-			-
Mortgage Income – YoY QTR		2,237	%		-	%		-	%		-	%		-	%		-	%		-	%		-	%
Total Revenue		181,341			214,640			185,332			107,845			96,118			111,633			112,356			61,649
Total Revenue – YoY QTR		89	%		92	%		65	%		75	%		90	%		188	%		386	%		562	%

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Quarterly key performance metrics

	2022								2023
Key Performance Metrics	Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4
Closed Transaction Sides		6,248		10,224		11,233		9,745		10,963		17,537		20,397		17,749
Total Value of Home Side Transactions ($, billions)		2.4		4.2		4.2		3.5		4.0		7.0		8.1		6.8
Median Home Sale Price ($, thousands)		345		375		360		348		350		369		370		355

Total Agents		4,500		5,600		6,700		8,200		10,000		11,500		12,175		13,650
Agent Churn Rate (%)		7.9		7.2		7.3		4.4		8.3		6.5		10.8		6.2
Revenue Churn Rate (%)		1.6		2.1		2.5		2.4		4.3		3.8		4.5		4.9

Full-Time Employees		112		121		122		118		127		145		162		159
Full-Time Employees, Excluding One Real Title and One Real Mortgage		82		91		87		84		88		102		120		118
Headcount Efficiency Ratio¹		1:55		1:62		1:77		1:98		1:114		1:113		1:101		1:116
Revenue Per Full Time Employee ($, thousands)²		752		1,235		1,283		1,144		1,226		1,817		1,789		1,537
Operating Expense Excluding Revenue Share ($, thousands)		7,426		9,120		9,010		11,164		12,412		13,815		14,796		19,956
Operating Expense Per Transaction Excluding Revenue Share ($)		1,189		892		802		1,146		1,132		788		725		1,124

¹Defined as full-time brokerage employees excluding One Real Title and One Real Mortgage employees, divided by the number of agents on our platform.

²Excluding One Real Title and One Real Mortgage.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

MATERIAL ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION

The preparation of the Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures as of the date of the Financial Statements. Actual results may differ from estimates under different assumptions and conditions.

Significant judgments include measure of share-based payment arrangements, goodwill impairment, and deferred taxes. Our significant judgments have been reviewed and approved by the Audit Committee for completeness of disclosure on what management believes would be relevant and useful to investors in interpreting the amounts and disclosures in the Financial Statements.

–	Deferred taxes

–	Goodwill

–	Stock options

ACCOUNTING POLICY DEVELOPMENT

New and amended IFRS Accounting Standards that are effective for the current year

Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements – Disclosure of Accounting Policies

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING

Disclosure controls and procedures

The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have designed controls to provide reasonable cash assurance that: (i) material information relating to the Company is made known to management by others, particularly during the period in which the annual and interim filings are being prepared; and (ii) information required to be disclosed by the Company in its annual and interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time frame specified in the securities legislation.

Based on the evaluations, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were adequate and effective as of December 31, 2023.

Internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Canada by National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings, and in the United States by Rule 13a-15(e) under the Securities Exchange Act of 1934). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with IFRS. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2023, based on the criteria described in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of its evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2023.

Inherent limitations

It should be noted that in a control system, no matter how well conceived and operated, provide only reasonable, not absolute, assurance that the objectives of the control system are met. Given the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, including instances of fraud, if any, have been detected. These inherent limitations include, among other items: (i) that management’s assumptions and judgments could ultimately prove to be incorrect under varying conditions and circumstances; (ii) the impact of any undetected errors; and (iii) controls may be circumvented by unauthorized acts of individuals, by collusion of two or more people, or by management override.

The Real Brokerage Inc.
Management’s Discussion and Analysis for the Year Ended

December 31, 2023 and 2022

Changes in Internal Control over Financial Reporting

There were no changes in Internal Control over Financial Reporting during the period ended December 31, 2023 that have materially affected or are reasonably likely to materially affect the adequacy and effectiveness of the Company’s Internal Control over Financial Reporting.

Related party transactions

The Company’s key management personnel are comprised of its CEO, CFO, President, Chief Technology Officer, the Chief Marketing Officer, and other members of its executive team. 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 Year Ended
	December 31, 2023		December 31, 2022
Salaries and Benefits		3,465		2,435
Stock-Based Compensation		7,470		2,164
Compensation Expenses for Related Parties		10,934		4,599

RISKS AND UNCERTAINTIES

There are a number of risk factors that could cause future results to differ materially from those described herein. The risks and uncertainties are not the only ones the Company faces. Additional risks and uncertainties, including those that the Company does not know about as of the date of this MD&A, or that it currently deems immaterial, may also adversely affect the Company’s business. If any of the these risks occur, the Company’s business may be harmed, and its financial condition and the results of operation may suffer significantly. Please refer to the risks in Section 5.2 under the caption “Risk Factors” in the Company’s Annual Information Form for the fiscal year ended December 31, 2023, available on SEDAR+ under the Company’s profile at www.sedarplus.com, for a list of risks that could materially adversely affect our business, financial condition or results of operations.

OUTSTANDING SHARE DATA

As of March 6, 2024, the Company had 185.3 million Common Shares issued and outstanding.

In addition, as of March 6, 2024, there are 22.3 million Options issued and outstanding with exercise prices ranging from $0.03 to $3.40 per share and expiration dates ranging from January 2025 to August 2033. Each Option is exercisable for one Common Share. As of March 6, 2024, a total of 28.1 million RSUs are issued and outstanding. Once vested, each RSU will settle for a Common Share or cash equal to the value of a Common Share.

SUBSEQUENT EVENTS

ADDITIONAL INFORMATION

These documents, the Company’s Annual Information Form for the year ended December 31, 2023, as well as additional information regarding Real, have been filed electronically on Real’s website at www.onereal.com and is available on SEDAR+ under the Company’s profile at www.sedarplus.com.

EXHIBIT 99.4

CERTIFICATION

I, Tamir Poleg, Chief Executive Officer of The Real Brokerage Inc., certify that;

1.	I have reviewed this Annual Report on Form 40-F of The Real Brokerage Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles:

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 14, 2024

By:	/s/ Tamir Poleg
Name:	Tamir Poleg
Title:	Chief Executive Officer

EXHIBIT 99.5

CERTIFICATION

I, Michelle Ressler, Chief Financial Officer of The Real Brokerage Inc., certify that;

1.	I have reviewed this Annual Report on Form 40-F of The Real Brokerage Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles:

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.		The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 14, 2024

By:	/s/ Michelle Ressler
Name:	Michelle Ressler
Title:	Chief Financial Officer

EXHIBIT 99.6

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Tamir Poleg, Chief Executive Officer of The Real Brokerage Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

	a.	the Annual Report on Form 40-F of the Company for the fiscal year ended December 31, 2023 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

	b.	the information contained in the Annual Report fairly presents in all material respects the financial condition and results of operations of the Company.

Date: March 14, 2024

	By:	/s/ Tamir Poleg
	Name:	Tamir Poleg
	Title:	Chief Executive Officer

EXHIBIT 99.7

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michelle Ressler, Chief Financial Officer of The Real Brokerage Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

	a.	the Annual Report on Form 40-F of the Company for the fiscal year ended December 31, 2023 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

	b.	the information contained in the Annual Report fairly presents in all material respects the financial condition and results of operations of the Company.

Date: March 14, 2024

	By:	/s/ Michelle Ressler
	Name:	Michelle Ressler
	Title:	Chief Financial Officer

Exhibit 99.8

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-262142 on Form S-8 and to the use of our report dated March 14, 2024 relating to the consolidated financial statements of The Real Brokerage Inc., appearing in this Annual Report on Form 40-F for the year ended December 31, 2023.

/s/ Brightman Almagor Zohar & Co

Brightman Almagor Zohar & Co

Certified Public Accountants

A Firm in the Deloitte Global Network

Tel Aviv, Israel

March 14, 2024