The Real Brokerage Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2024

Commission File Number: 001-40442

THE REAL BROKERAGE INC.

(Registrant)

701 Brickell Avenue, 17^th Floor

Miami, Florida, 33131 USA

(Address of Principal Executive Offices)

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☐

Form 40-F ☒

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

DOCUMENTS INCORPORATED BY REFERENCE

Exhibits 99.1 and 99.2 included with this Form 6-K of the Real Brokerage Inc. (the “Company”) are hereby incorporated by reference as exhibits to the Registration Statement on Form F-10 (File No. 333-264481) of the Company, as amended or supplemented.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE REAL BROKERAGE INC.
	(Registrant)

Date August 7, 2024	By	/s/ Tamir Poleg
		Tamir Poleg
		Chief Executive Officer

EXHIBIT INDEX

Exhibit		Description of Exhibit

99.1		Interim Condensed Consolidated Financial Statements for the period ended June 30, 2024

99.2		Management’s Discussion and Analysis for the period ended June 30, 2024

99.3		Form 52-109F2 Certification of Interim Filings CEO dated August 7, 2024

99.4		Form 52-109F2 Certification of Interim Filings CFO dated August 7, 2024

99.5		Press Release dated August 7, 2024 – The Real Brokerage Inc. Announces Second Quarter 2024 Financial Results

Exhibit 99.1

Table of Contents

Interim Condensed Consolidated Financial Statements (Unaudited):

Interim Condensed Consolidated Statements of Financial Positions	3

Interim Condensed Consolidated Statements of Loss and Other Comprehensive Loss	4

Interim Condensed Consolidated Statements of Changes in Equity	5

Interim Condensed Consolidated Statement of Cash Flows	6

Notes to the Interim Condensed Consolidated Financial Statements	7-21

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

UNAUDITED

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

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

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

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

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

UNAUDITED

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

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

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

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

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

UNAUDITED

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

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

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

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

UNAUDITED

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

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

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

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

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

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

UNAUDITED

1.	General Information

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

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

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

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

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

2.	SUMMARY OF MATERIAL ACCOUNTING POLICIES

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

A.	Basis of preparation

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

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

B.	Recent Accounting Pronouncements

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

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

3.	Revenue

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

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

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

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

UNAUDITED

4.	Expenses By Nature

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

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

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

Finance Expenses

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

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

5.	OPERATING segments disclosures

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

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

UNAUDITED

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

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

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

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

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

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

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

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

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

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

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

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

UNAUDITED

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

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

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

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

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

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

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

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

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

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

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

UNAUDITED

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

6.	BASIC AND DILUTED Loss Per Share

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

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

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

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

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

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

7.	Share-Based Payment Arrangements

A.	Description of share-based payment arrangements

Stock option plan (equity-settled)

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

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

UNAUDITED

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

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

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

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

B.	Measurement of fair value

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

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

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

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

UNAUDITED

C.	Reconciliation of outstanding stock-options

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

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

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

D.	Restricted share unit plan

Restricted share unit plan

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

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

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

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

UNAUDITED

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

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

Stock Based Compensation Expense

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

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

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

UNAUDITED

8.	Investments in Available for Sale Securities at Fair Value

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

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

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

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

9.	Property and Equipment

Reconciliation of Carrying Amounts (in thousands)

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

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

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

UNAUDITED

10.

INTANGIBLE ASSETS

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

Reconciliation of Carrying Amounts (in thousands)

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

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

11.

GOODWILL

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

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

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

UNAUDITED

12.

Capital and Reserves

Share capital and share premium

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

Authorized

Issued and Paid

June 30, 2024

December 31, 2023

June 30, 2024

December 31, 2023

Ordinary shares

no-par value

unlimited

194,496

183,605

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

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

13.

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

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

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

UNAUDITED

14.

Financial Instruments – Fair Value and Risk Management

Accounting classifications and fair value (in thousands)

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

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

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

UNAUDITED

A.	Transfers between levels

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

B.	Valuation techniques and inputs for level 2 instruments

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

C.	Financial risk management

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

‒	credit risk (see (ii));

‒	liquidity risk (see (iii));

‒	market risk (see (iv)); and

‒	investment risk (see (v)).

i.	Risk management framework

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

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

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

ii.

Credit risk

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

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

Trade receivables

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

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

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

UNAUDITED

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

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

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

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

iii.

Liquidity risk

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

iv.

Market risk

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

Currency risk

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

Sensitivity analysis

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

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

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

UNAUDITED

Foreign Currency Risk Management

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

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

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

v.	Investment risk

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

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

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

15.

COMMITMENTS AND CONTINGENCIES

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

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

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

16.

RELATED PARTY TRANSACTIONS

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

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

Exhibit 99.2

Building Your Future, Together

The Real Brokerage Inc. (the “Company” or “Real”) is a technology-powered real estate brokerage that uses its innovative approach to change the way people buy and sell homes. Real’s model focuses on creating value and financial opportunity for agents, enabling them to deliver a better experience to their clients.

Real creates financial opportunities for agents in four key ways:

2024 Highlights

Real was founded in 2014 and is domiciled in Canada and headquartered in New York City. We provide brokerage services for the real estate market in the United States and Canada. On June 30, 2024, Real was licensed in 50 states and the District of Columbia in the United States and in Alberta, Ontario, British Columbia, and Manitoba, Canada. Real’s fast-growing network of agents allows for strong relationship building, access to a nationwide referral network and seamless expansion opportunities.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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 June 30, 2024, and 2023. This MD&A is dated August 7, 2024 and should be read in conjunction with the unaudited interim condensed consolidated financial statements and related notes for the period ended June 30, 2024 and 2023 (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. The common shares of the Company (“Common Shares”) are listed and traded on the NASDAQ under the symbol “REAX”

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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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 identified under the heading “Risks and Uncertainties”.

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.

BUSINESS OVERVIEW AND STRATEGY

Real is a growing real estate technology company located in the United States and Canada. 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. 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.

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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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 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 a debit card product. Initial testing of these products is expected to take place in the second 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.

MARKET CONDITIONS AND INDUSTRY TRENDS

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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

2023 was characterized by a significant slowdown in the market, a continuation of a trend that began during 2022, following robust market activity in 2021. During the second quarter of 2024, macroeconomic conditions in North America continued to impact the residential real estate market, with mortgage rates remaining elevated compared to levels homebuyers had become accustomed to since the 2008 financial crisis, and home sales volumes near a generational low.

Key Market Trends:

	●	Uncertain Interest Rate Environment. 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 to a range of 5.25% to 5.50%. 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. Mortgage rates have trended higher again in 2024, averaging over 7% during the second quarter of 2024. Although inflation has consistently moderated toward the Federal Reserve’s 2% target, market participants see risks to the path ahead, and as a result current pricing implies just two or three 25 basis point reductions by year-end, compared to four or more expected at the beginning of the year.
	●	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 (NAR). Existing home sales volumes during the first half of 2024 eased an additional 3% compared to the same period in 2023.
	●	Stabilizing Pricing. 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 during the second quarter of 2024. The median sale price during the quarter was $417,000, up from $397,000 for the year-ago quarter, according to NAR data.

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.

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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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 after three years into 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. These RSUs vest immediately but have a one-year restriction on transfer. 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.

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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

●

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.
	●	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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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 70% year-over-year during the first quarter of 2024 (17% compared to the first quarter of 2024) to 19,540 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.

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. On May 14, 2024, the Company announced that it renewed its NCIB again pursuant to which, Real may purchase up to approximately 9.47 million Common Shares, representing approximately 5% of the total 189 million Common Shares issued and outstanding as of May 1, 2024. Purchases are made at prevailing market prices and may be conducted during the twelve-month period ended May 28, 2025.

The NCIB is being conducted to acquire Common Shares for the purposes of satisfying restricted share unit 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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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

Trading Plan

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 May 21, 2024, Guy Gamzu, a member of the Company’s Board of Directors, 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 2,000,000 Common Shares. The first sale of Common Shares will not take place until at least September 18, 2024. The Plan end date is September 19, 2025. Under the Plan, Mr. Gamzu 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.

On June 8, 2024, Tamir Poleg, Chief Executive Officer of the Company and a member of the Company’s Board of Directors, entered into a 10b5-1 trading 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. The first sale of Common Shares will not take place until at least January 1, 2025. The plan end date is December 31, 2025. 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 Period

Ended June 30, 2024 and 2023

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 “Summary 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.

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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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

SUMMARY RESULTS FROM OPERATIONS

Select information (in thousands)

	For the Three Months Ended						For the Six Months Ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
Operating Results
Total Revenues		340,778			185,332			541,521			293,177
Loss from Continuing Operations		(1,110	)		(3,972	)		(17,207	)		(11,287	)
Total Comprehensive Loss Attributable to Owners of the Company		(788	)		(4,161	)		(16,723	)		(11,316	)

Per Share Basis
Basic and diluted loss per share ⁽ⁱⁱ⁾		(0.01	)		(0.02	)		(0.09	)		(0.06	)

EBITDA ^{(i) (iii)}		129			(3,501	)		(14,971	)		(10,095	)
Adjusted EBITDA ^{(i) (iii)}		14,034			2,618			17,635			1,826

	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.	Basic and diluted loss per share are calculated based on weighted average of Common Shares outstanding during the period.
	iii.	EBITDA and Adjusted EBITDA are calculated on a trailing three-month basis. Refer to non-IFRS measures section of this MD&A for further details.

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

	For the Three Months Ended						For the Six Months Ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
Total Comprehensive Loss Attributable to Owners of the Company		(788	)		(4,161	)		(16,723	)		(11,316	)
Add/(Deduct):
Finance Expenses, net		523			272			1,075			577
Net Income Attributable to Noncontrolling Interest		105			146			105			226
Cumulative (Gain)/Loss on Investments in Debt Instruments Classified as at FVTOCI Reclassified to Profit or Loss		(51	)		(42	)		(94	)		(135	)
Depreciation and Amortization		340			284			666			553
EBITDA		129			(3,501	)		(14,971	)		(10,095	)

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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, and expenses incurred as part of the settlement agreement to resolve the class action litigation, Umpa v. NAR, 4:23-cv-00945 (W.D. Mo.) (the “Anti-Trust Litigation Settlement”). Also, see the disclosure in the section “Risks and Uncertainties” under the heading “adverse litigation judgments or settlements resulting from legal proceedings could reduce the Company’s profits or limit its ability to operate”. 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 7 of the Financial Statements, Share-Based Payment arrangements, of the Financial Statements.

	For the Three Months Ended						For the Six Months Ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
Total Comprehensive Loss Attributable to Owners of the Company		(788	)		(4,161	)		(16,723	)		(11,316	)
Add/(Deduct):
Finance Expenses, net		523			272			1,075			577
Net Income Attributable to Noncontrolling Interest		105			146			105			226
Cumulative (Gain)/Loss on Investments in Debt Instruments Classified as at FVTOCI Reclassified to Profit or Loss		(51	)		(42	)		(94	)		(135	)
Depreciation and Amortization		340			284			666			553
Stock-Based Compensation		13,536			6,075			22,380			11,836
Restructuring Expenses		-			44			-			85
Expenses related to Anti-Trust Litigation Settlement		369			-			10,226			-
Adjusted EBITDA⁽ⁱ⁾		14,034			2,618			17,635			1,826

REVENUE

For the period ended June 30, 2024, total revenues were $541.5 million compared to $293.2 million for the period ended June 30, 2023, demonstrating the effects of the Company’s growth. The Company generates substantially all its revenue from commissions from the sale of real estate properties. Other sources of revenue include fee income from the brokerage-platform and other revenues relating to ancillary services. The increase in revenues is attributable to an increase in productive agents on our platform, as well as expanding the number of states and provinces in which we operate. 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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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

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

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

BUSINESS SEGEMENT INFORMATION

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

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

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

Other income, net		57			-			57
Finance expenses, net		(499	)		(24	)		(523	)
Net Loss		(119	)		(991	)		(1,110	)
Net income attributable to noncontrolling interests		-			105			105
Net Loss Attributable to the Owners of the Company		(119	)		(1,096	)		(1,215	)
Other comprehensive income/(loss):
Cumulative (gain)/loss on investments in debt instruments classified as FVTOCI reclassified to profit or loss		51			-			51
Foreign currency translation adjustment		375			1			376
Total Comprehensive Loss Attributable to Owners of the Company		307			(1,095	)		(788	)
Total Comprehensive Income Attributable to NCI		-			105			105
Total Comprehensive Loss		307			(990	)		(683	)

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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

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

Other income, net		230			-			230
Finance expenses, net		(1,041	)		(34	)		(1,075	)
Net Loss		(15,125	)		(2,082	)		(17,207	)
Net income attributable to noncontrolling interests		-			105			105
Net Loss Attributable to the Owners of the Company		(15,125	)		(2,187	)		(17,312	)
Other comprehensive income/(loss):
Cumulative (gain)/loss on investments in debt instruments classified as FVTOCI reclassified to profit or loss		94			-			94
Foreign currency translation adjustment		496			(1	)		495
Total Comprehensive Loss Attributable to Owners of the Company		(14,535	)		(2,188	)		(16,723	)
Total Comprehensive Income Attributable to NCI		-			105			105
Total Comprehensive Loss		(14,535	)		(2,083	)		(16,618	)

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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

	For the Three Months Ended June 30, 2024
	North American Brokerage			Other Segments			Total
Total Comprehensive Loss Attributable to Owners of the Company		307			(1,095	)		(788	)
Add/(Deduct):
Finance Expenses, net		499			24			523
Net Income Attributable to Noncontrolling Interests		-			105			105
Cumulative (Gain)/Loss on Investments in Debt Instruments Classified as at FVTOCI Reclassified to Profit or Loss		(51	)		-			(51	)
Depreciation and Amortization		144			196			340
Stock Based Compensation Adjustments		13,536			-			13,536
Expenses related to Anti-Trust Litigation Settlement		369			-			369
Adjusted EBITDA		14,804			(770	)		14,034

	For the Six Months Ended June 30, 2024
	North American Brokerage			Other Segments			Total
Total Comprehensive Loss Attributable to Owners of the Company		(14,535	)		(2,188	)		(16,723	)
Add/(Deduct):
Finance Expenses, net		1,041			34			1,075
Net Income Attributable to Noncontrolling Interests		-			105			105
Cumulative (Gain)/Loss on Investments in Debt Instruments Classified as at FVTOCI Reclassified to Profit or Loss		(94	)		-			(94	)
Depreciation and Amortization		276			390			666
Stock Based Compensation Adjustments		22,380			-			22,380
Expenses related to Anti-Trust Litigation Settlement		10,226			-			10,226
Adjusted EBITDA		19,294			(1,659	)		17,635

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

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

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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

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 3.2% for the period ended June 30, 2024 and 3.8% for the period ended June 30, 2023.

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

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

Operating Expenses
General and Administrative Expenses		14,015		9,654		26,151		18,292
Salaries and Benefits		6,566		4,689		12,434		9,167
Stock Based Compensation		2,066		1,128		3,420		2,087
Administrative Expenses		933		905		1,769		1,590
Professional Fees		3,304		1,968		6,422		3,615
Depreciation Expense		340		284		666		553
Other General and Administrative Expenses		806		680		1,440		1,280
Marketing Expenses		15,889		10,266		28,518		17,950
Salaries and Benefits		237		203		442		310
Stock Based Compensation for Employees		1		11		5		22
Stock Based Compensation for Agents		2,335		1,640		4,472		3,181
Revenue Share		12,475		7,684		21,539		13,118
Other Marketing and Advertising Cost		841		728		2,060		1,319
Research and Development Expenses		2,608		1,579		5,070		3,103
Salaries and Benefits		1,322		748		2,713		1,406
Stock Based Compensation		198		75		333		124
Other Research and Development		1,088		756		2,024		1,573
Settlement of Litigation		-		-		9,250		-
Total Cost of Sales and Operating Expenses		341,422		189,072		557,883		303,955

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

Cost of Sales

	For the Six Months Ended
	June 30, 2024			June 30, 2023
Revenues		541,521			293,177
Cost of Sales		488,894			264,610
Cost of Sales as a Percentage of Revenues		90	%		90	%

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 period ended June 30, 2024, total cost of sales were $489 million compared to $265 million for the period ended June 30, 2023. 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 period ended June 30, 2024 was $21.5 million compared to $13.1 million for the period ended June 30, 2023. 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 June 30, 2024 and June 30, 2023, Revenue Share expense is included in the marketing expense category.

Stock Based Compensation

Our stock based compensation expense for the period ended June 30, 2024 was $22.4 million compared to $11.8 million for the period June 30, 2023. The increase in stock based compensation expense is primarily due to an increase in our agent base, resulting in higher number of awards granted as part of our agent incentive program. For the period ended June 30, 2024 and June 30, 2023, stock-based compensation expense related to full-time employees (“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 Period

Ended June 30, 2024 and 2023

The following table is presented in thousands:

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

Salaries and Benefits

Our salaries and benefits expenses for the period ended June 30, 2024 was $15.6 million in comparison to $10.9 million for the period ended June 30, 2023. The increase in salaries and benefits expenses were mainly due to an increase in number of full-time employees from 145 on June 30, 2023 to 231 on June 30, 2024. 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 FTEs excluding One Real Title and One Real Mortgage employees to Agent ratio as of June 30, 2024 is 1:138 compared to 1:113 as of June 30, 2023.

Professional Fees

Our professional fees for the period ended June 30, 2024 were $6.4 million in comparison to $3.6 million for the period ended June 30, 2023. 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 period ended June 30, 2024 were $5.1 million compared to $3.1 million for the period ended June 30, 2023. 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 Period

Ended June 30, 2024 and 2023

Marketing Expenses

Our marketing expenses for the period ended June 30, 2024 were $28.5 million compared to $18.0 million for the period ended June 30, 2023, primarily due to our efforts to attract agents. This increase is primarily comprised of $8.4 million increase in revenue share paid to agents as part of our revenue share model and an increase in agent related stock-based compensation expense of $1.3 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.

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 – 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 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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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.

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

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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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. A breakdown of financial instruments (in thousands) for the period ended June 30, 2024 is included below:

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

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

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 June 30, 2024. 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.

	2024									2023						2022
	Q2			Q1			Q4			Q3			Q2			Q1			Q4			Q3
Revenue		340,778			200,743			181,341			214,640			185,332			107,845			96,118			111,633
Cost of Sales		308,910			179,984			165,810			195,865			167,573			97,037			87,898			103,057
Gross Profit		31,868			20,759			15,531			18,775			17,759			10,808			8,220			8,576
Administrative Expenses		14,015			12,136			15,387			9,234			9,654			8,638			7,121			5,544
Marketing Expenses		15,889			12,629			9,084			11,577			10,266			7,684			7,061			6,197
Research and Development Expenses		2,608			2,462			2,325			1,931			1,579			1,524			1,002			1,146
Settlement of Litigation		-			9,250			-			-			-			-			-			-
Operating Income (Loss)		(644	)		(15,718	)		(11,265	)		(3,967	)		(3,740	)		(7,038	)		(6,964	)		(4,311	)
Other Loss (Income)		(57	)		(173	)		693			(38	)		(40	)		(28	)		(62	)		(231	)
Listing Expenses		-			-			-			-			-			-			16			135
Finance Expenses, net		523			552			32			10			272			305			(159	)		954
Income (Loss) Before Tax		(1,110	)		(16,097	)		(11,990	)		(3,939	)		(3,972	)		(7,315	)		(6,759	)		(5,169	)
Non-controlling interest		(105	)		-			26			(85	)		(146	)		(80	)		(50	)		(78	)
Income (Loss) Attributable to the Owners of the Company		(1,215	)		(16,097	)		(11,964	)		(4,024	)		(4,118	)		(7,395	)		(6,809	)		(5,247	)
Other Comprehensive Incomes (loss):
Unrealized Gains (Losses) on Available for Sale Investment Portfolio		51			43			116			79			42			93			128			(142	)
Foreign Currency Translation Adjustment		376			119			(38	)		(52	)		(85	)		147			(58	)		(51	)
Comprehensive Income (Loss)		(788	)		(15,935	)		(11,886	)		(3,997	)		(4,161	)		(7,155	)		(6,739	)		(5,440	)
Non-Operating Expenses:
Finance Costs		577			509			(110	)		16			376			292			(237	)		1,174
Depreciation and Amortization		340			326			298			277			284			269			108			87
Stock-Based Compensation		13,536			8,844			19,423			7,144			6,075			5,761			6,132			4,506
Goodwill Impairment		-			-			723			-			-			-			-			-
Listing Expenses		-			-			-			-			-			-			16			135
Restructuring Expense		-			-			58			80			44			41			160			62
Expenses related to Anti-Trust Litigation Settlement		369			9,857			-			-			-			-			-			-
Other Expenses		-			-			-			-			-			-			456			25
Adjusted EBITDA		14,034			3,601			8,506			3,520			2,618			(792	)		(104	)		549
Non-Recurring Stock-Based Compensation Adjustments		-			-			6,208			-			-			-			-			-
Adjusted EBITDA Excluding Non-Recurring Stock Based Compensation Adjustment		14,034			3,601			2,298			3,520			2,618			(792	)		(104	)		549
Earnings per Share
Basic and Diluted Loss per Share		(0.006	)		(0.087	)		(0.066	)		(0.022	)		(0.023	)		(0.041	)		(0.038	)		(0.029	)

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

Revenue

Our revenue is primarily driven by the number of transactions closed by our agents and the revenue per transaction, which is typically calculated as a percentage of the property’s sale or lease value. While we observe quarterly seasonality in our revenue, aligning with the traditional home sales cycle—slower during the fall and winter months and busier during spring and summer—the year-over-year trend shows sustained growth. This growth results from the increasing number of real estate agents joining our platform, thereby expanding our transaction volume.

Cost of Sales

Our cost of sales primarily represents the commissions paid to our agents, which are a percentage of our revenue. Similar to revenue, there is quarterly seasonality in our cost of sales, largely influenced by the percentage of agents who reach their annual commission cap.

Administrative Expenses

Administrative expenses primarily consist of salaries for employees who manage the daily operations of our company, alongside ongoing administrative and professional fees. As our company has grown, we have increased our headcount to support this expansion, resulting in higher administrative expenses. This investment in human capital is essential for maintaining and scaling our operational capabilities to match our growth trajectory.

Marketing Expenses

Marketing expenses are primarily driven by our Revenue Share Expense. Agents earn revenue share by referring new agents to Real, and as a result, Revenue Share Expense tends to increase in line with revenue growth. This structure incentivizes our agents to expand our network and aligns their financial success with the company’s.

R&D Expenses

R&D expenses reflect the costs associated with salaries and benefits for employees responsible for developing and maintaining Real’s technology platform. Investing in our technology platform is critical to our strategy, as it enhances our agents’ efficiency and effectiveness, provides a seamless experience for clients, and supports our long-term growth objectives.

Operating Income (Loss)

The seasonality in our operating income (loss) is primarily driven by revenue and gross profit within a given quarter. Operating loss tends to be higher during the seasonally slower periods of fall and winter (the fourth and first calendar quarters) and lower during the periods of higher revenue in spring and summer (the second and third calendar quarters). This pattern is consistent with the overall seasonality of the real estate market.

LIQUIDITY AND CAPITAL RESOURCES

The Company has a capital structure comprised of Common Shares, contributed capital, retained deficit, and accumulated other comprehensive loss. 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.

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

Balance Sheet overview (in thousands)

	June 30, 2024		December 31, 2023
ASSETS
Current Assets		96,194		50,513
Non-Current Assets		13,966		14,035
TOTAL ASSETS		110,160		64,548

LIABILITIES
Current Liabilities		79,333		27,195
Non-Current Liabilities		-		269
TOTAL LIABILITIES		79,333		27,464
TOTAL EQUITY		30,827		37,084
TOTAL LIABILITIES AND EQUITY		110,160		64,548

Assets overview by geographical segment (in thousands)

	As of June 30, 2024
	Canada		Israel		United States		Total
ASSETS
CURRENT ASSETS
Cash and cash equivalents		4,832		142		18,342		23,316
Restricted cash		23,385		-		9,739		33,124
Funds held in restricted escrow account		-		-		9,250		9,250
Investment in financial assets		75		-		10,201		10,276
Trade receivables		7,176		-		11,455		18,631
Other receivables		-		56		-		56
Prepaid expenses and deposits		-		-		1,541		1,541
TOTAL CURRENT ASSETS		35,468		198		60,528		96,194
NON-CURRENT ASSETS
Intangible assets		-		-		2,996		2,996
Goodwill		-		-		8,993		8,993
Property and equipment		28		11		1,938		1,977
TOTAL NON-CURRENT ASSETS		28		11		13,927		13,966
TOTAL ASSETS		35,496		209		74,455		110,160

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

As of June 30, 2024, cash and cash equivalents and investments totaled $33.6 million, compared to $28.9 million as of December 31, 2023. Cash is comprised of cash held in our banking accounts.

For the period ended June 30, 2024:

	●	Cash flows generated in operations was $37.5 million, in comparison to $32.9 million for the period ended June 30, 2023. The increase in operating cash flows was primarily due to the increase in overall growth of the company.

	●	Cash flows from investing activities was $3.4 million, primarily due to withdrawals from debt instruments.

	●	Cash flows from financing activities was a cash use of $12.4 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 $15.2 million, which was partially offset by proceeds of $3.6 million from the exercise of stock options.

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 following table presents liquidity (in thousands):

	For the Period Ended
	June 30, 2024		December 31, 2023
Cash and Cash Equivalents		23,316		14,707
Other Receivables		56		63
Investment in Financial Assets ^[iii]		10,276		14,222
Total ^{[i] [ii]}		33,648		28,992

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

The Real Brokerage Inc.

Management’s Discussion and Analysis Period

Ended June 30, 2024 and 2023

The Company holds no debt obligations.

The Company has no future material contractual obligations or payments due with respect to debt, finance leases, operating leases, purchase obligations, or other capital commitments.

Capital management framework

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 June 30, 2024 and 2023.

INVESTMENT IN AVAILABLE FOR SALE SECURITIES AT FAIR VALUE

The Company invested surplus funds from operating activities 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 June 30, 2024, the total investment in securities available for sale at fair value was $10.3 million and is more fully disclosed in Note 8 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 Period

Ended June 30, 2024 and 2023

OTHER METRICS

Year-over-year quarterly revenue growth (in thousands)

	2024									2023						2022
	Q2			Q1			Q4			Q3			Q2			Q1			Q4			Q3
Revenue
Commissions		338,574			199,252			180,417			213,319			184,022			107,115			95,622			111,149
Commissions – YoY QTR		84	%		86	%		89	%		92	%		65	%		75	%		89	%		186	%
Title Revenue		1,255			795			480			964			948			598			477			484
Title Revenue – YoY QTR		32	%		33	%		1	%		99	%		87	%		49	%		-	%		-	%
Mortgage Income		949			696			444			357			362			132			19			-
Mortgage Income – YoY QTR		162	%		427	%		2,237	%		-	%		-	%		-	%		-	%		-	%
Total Revenue		340,778			200,743			181,341			214,640			185,332			107,845			96,118			111,633
Total Revenue – YoY QTR		84	%		86	%		89	%