Exhibit 99.2
TABLE OF CONTENTS
| Interim Condensed Consolidated Financial Statements (Unaudited): | |
| Interim Condensed Consolidated Balance Sheets | 2 |
| Interim Condensed Consolidated Statements of Comprehensive Loss | 3 |
| Interim Condensed Consolidated Statements of Shareholders’ Equity | 4 |
| Interim Condensed Consolidated Statements of Cash Flows | 5 |
| Notes to the Interim Condensed Consolidated Financial Statements | 6-20 |
| 1 |
THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. dollars)
UNAUDITED
| As of | ||||||||
| March 31, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Investments in financial assets | ||||||||
| Trade receivables | ||||||||
| Other receivables | ||||||||
| Prepaid expenses and deposits | ||||||||
| TOTAL CURRENT ASSETS | $ | $ | ||||||
| NON-CURRENT ASSETS | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Property and equipment, net | ||||||||
| Long-term financing receivables, net | ||||||||
| TOTAL NON-CURRENT ASSETS | $ | $ | ||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities | ||||||||
| Customer deposits | ||||||||
| Other payables | ||||||||
| TOTAL CURRENT LIABILITIES | $ | $ | ||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| EQUITY | ||||||||
| EQUITY ATTRIBUTABLE TO OWNERS | ||||||||
| Common Shares, $ par value, Common Shares authorized, Shares issued and outstanding (in thousands) at March 31, 2025; and Shares issued and outstanding (in thousands) at December 31, 2024 | ||||||||
| Additional paid in capital | ||||||||
| Deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Treasury stock, at cost, and Common Shares (in thousands) at March 31, 2025 and December 31, 2024, respectively | ( | ) | ( | ) | ||||
| EQUITY ATTRIBUTABLE TO OWNERS | $ | $ | ||||||
| Non-controlling interests | ( | ) | ( | ) | ||||
| TOTAL EQUITY | $ | $ | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
The accompanying notes form an integral part of the condensed consolidated financial statements.
| 2 |
THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Expressed in thousands of U.S. dollars, except for per share amounts)
UNAUDITED
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | $ | ||||||
| Cost of Sales | ||||||||
| Gross Profit | $ | $ | ||||||
| General and administrative expenses | ||||||||
| Marketing expenses | ||||||||
| Research and development expenses | ||||||||
| Settlement of litigation | ||||||||
| Operating Expenses | $ | $ | ||||||
| Operating Loss | $ | ( | ) | $ | ( | ) | ||
| Other income (expenses), net | ||||||||
| Finance expenses, net | ( | ) | ( | ) | ||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Net loss attributable to noncontrolling interests | ( | ) | ||||||
| Net Loss Attributable to the Owners of the Company | $ | ( | ) | $ | ( | ) | ||
Other comprehensive income/(loss), Items that will be reclassified subsequently to profit or loss: | ||||||||
| Unrealized gain on investments in financial assets | ||||||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Total Comprehensive Loss Attributable to Owners of the Company | $ | ( | ) | $ | ( | ) | ||
| Total Comprehensive Loss Attributable to Non-Controlling Interest | ( | ) | ||||||
| Total Comprehensive Loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share | ||||||||
| Basic and diluted loss per share | $ | ) | $ | ) | ||||
| Weighted-average shares, basic and diluted | ||||||||
The accompanying notes form an integral part of the condensed consolidated financial statements.
| 3 |
THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(U.S. dollar in thousands)
UNAUDITED
| Additional Paid in Capital | Deficit | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Equity Attributable to Owners | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||
| Balance at, January 1, 2025 | $ | $ | ( | ) | $ | | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||
| Total net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Distributions to non-controlling interests | ( | ) | ( | ) | ||||||||||||||||||||||||
| Acquisition of common shares for Restricted Share Unit (RSU) Plan | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Release of treasury stock | ( | ) | ||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||
| Shares withheld for taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Equity-settled share-based payment | ||||||||||||||||||||||||||||
| Balance at, March 31, 2025 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||
| Balance at, January 1, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||
| Total net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Total other comprehensive income (loss) | ||||||||||||||||||||||||||||
| Distributions to non-controlling interests | ( | ) | ( | ) | ||||||||||||||||||||||||
| Acquisition of common shares for Restricted Share Unit (RSU) Plan | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Release of treasury stock | ( | ) | ||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||
| Shares withheld for taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Equity-settled share-based payment | ||||||||||||||||||||||||||||
| Balance at, March 31, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||
The accompanying notes form an integral part of the condensed consolidated financial statements.
| 4 |
THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollar in thousands)
UNAUDITED
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments for: | ||||||||
| Depreciation and amortization | ||||||||
| Equity-settled share-based payment | ||||||||
| Finance costs | ( | ) | ||||||
| Change in fair value of warrants liability | ||||||||
| Changes in operating asset and liabilities: | ||||||||
| Trade receivables | ( | ) | ( | ) | ||||
| Other receivables | ( | ) | ||||||
| Long-term financing receivables | ( | ) | ||||||
| Prepaid expenses and deposits | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities | ||||||||
| Customer deposits | ||||||||
| Other payables | ||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||
| INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Purchase of financial assets | ( | ) | ( | ) | ||||
| Sale of financial assets | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Purchase of common shares for Restricted Share Unit (RSU) Plan | ( | ) | ( | ) | ||||
| Payment of employee taxes on certain share-based arrangements | ( | ) | ( | ) | ||||
| Proceeds from exercise of stock options | ||||||||
| Distributions to non-controlling interest | ( | ) | ( | ) | ||||
| NET CASH USED IN FINANCING ACTIVITIES | ( | ) | ( | ) | ||||
| Net change in cash, cash equivalents and restricted cash | ||||||||
| Cash, cash equivalents and restricted cash, beginning of year | ||||||||
| Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | ( | ) | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE | $ | $ | ||||||
The accompanying notes form an integral part of the condensed consolidated financial statements.
| 5 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
| 1. | BUSINESS |
Description of the Business
The Real Brokerage Inc. (“Real” or the “Company”) is a growing real estate technology company located in the United States and Canada. As a licensed real estate brokerage, the Company’s revenue is generated primarily by processing real estate transactions which entitle us to commissions. The Company pays a portion of its commission revenue to real estate agents who are affiliated with the Company. Unlike traditional brokerages, who rely on costly physical offices with high overhead expense, Real operates as a fully digital brokerage, offering agents what it believes is a flexible, efficient, and financially compelling model. The Company’s vision is to transform home buying under the guidance of an agent through an integrated consumer technology product, while growing its ancillary services, including mortgage broker and title services. In addition, the Company plans to expand its suite of tools and products tailored for agents, including Company-branded financial products.
The consolidated operations of Real include the subsidiaries of Real, including those involved in the brokerage, title, mortgage broker and wallet operations.
Common Shares
On May 24, 2023, the Company announced that it renewed its normal course issuer bid (“NCIB”) to be transacted through the facilities of the Nasdaq Capital Market 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 million common shares of the Company (“Common Shares”), representing approximately % of the total million Common Shares issued and outstanding as of May 18, 2023. On May 14, 2024, the Company announced that it renewed its NCIB pursuant to which Real may purchase up to approximately million Common Shares, representing approximately % of the total 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.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The significant accounting policies described below have been applied consistently to all periods presented.
| A. | Basis of preparation |
The Interim Condensed Consolidated Financial Statements and accompanying notes have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”).
The financial information as of December 31, 2024 that is included in this quarterly report is derived from the audited Consolidated Financial Statements and notes for the year ended December 31, 2024. Such financial information should be read in conjunction with the notes of the Consolidated Financial Statements included in our annual report.
All dollar amounts are in U.S. dollars unless otherwise stated.
| 6 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
| B. | Basis of Consolidation |
The condensed consolidated financial statements incorporate the financial statements of the Company, its wholly-owned subsidiaries and entities in which we have a controlling voting interest in. Intercompany transactions and balances are eliminated upon consolidation.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in profit or loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to ensure subsidiaries’ accounting policies are in line with Company’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions between the members of the Company and its subsidiaries are eliminated on consolidation.
| C. | Use of Estimates |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to legal contingencies, income taxes, revenue recognition, stock-based compensation, intangible assets, goodwill and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
| D. | Cash and Cash Equivalents and Restricted Cash |
In the condensed consolidated balance sheets, cash and bank balances comprise cash (i.e. cash on hand and demand deposits) and cash equivalents. Cash equivalents consist primarily of money market fund and other short-term (generally with original maturity of three months or less), highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.
Bank balances for which use by the Company is subject to third party contractual restrictions are included in Restricted cash in the condensed consolidated balance sheets. Restricted cash consists of cash held in escrow by the Company’s brokers and agents on behalf of real estate buyers. The Company recognizes a corresponding Customer deposit liability until the funds are released. Once the cash is transferred from escrow, the Company reduces the respective Customers deposit liability.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash further reported within the condensed balance sheet that sum to the total of the same amounts shown on the statement of cash flows.
| As of | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents, and restricted cash, ending balance | $ | $ | ||||||
| 7 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
| E. | Income Taxes |
The Company accounts for income taxes under the asset and liability method pursuant to ASC 740, Income Taxes. Under this method, the Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized based on all available positive and negative evidence.
Tax benefits related to uncertain tax positions are recognized when it is more likely than not that a tax position will be sustained during an audit. Interest and penalties related to unrecognized tax benefits are included within the provision for income tax.
| F. | Financing Receivables, net |
The
Company provides financial services to its agents with credit terms of three years. The balances reported in the consolidated balance
sheets were at the outstanding principal amount less allowance of credit losses. The accrued interest receivables are also included in
financing receivables as of the balance sheet date. There was
| G. | Accounting Policy Developments |
New Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), to require disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information on income taxes paid. The new requirements should be applied on a prospective basis with an option to apply them retrospectively. ASU 2023-09 will be effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact ASU 2023-09 will have on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE) requiring additional disclosure of the nature of expenses included in the income statement. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. DISE will be effective for annual reporting periods beginning after December 15, 2026 with early adoption permitted. The Company is evaluating the impact ASU 2024-03 will have on its consolidated financial statements and related disclosures.
| 3. | REVENUE |
In the following table, Revenue (in thousands) from contracts with customers is disaggregated by major service lines.
| For the Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Main revenue streams | ||||||||
| Commissions | $ | $ | ||||||
| Title | ||||||||
| Mortgage Income | ||||||||
| Wallet | ||||||||
| Total Revenue | $ | $ | ||||||
| 8 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
| 4. | EXPENSES BY NATURE |
The following table presents a breakdown of operating expenses (in thousands):
| For the Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Cost of Sales | $ | $ | ||||||
| Operating Expenses | ||||||||
| General and Administrative Expenses | ||||||||
| Salaries and Benefits | ||||||||
| Stock-Based Compensation | ||||||||
| Administrative Expenses | ||||||||
| Professional Fees | ||||||||
| Depreciation and Amortization Expense | ||||||||
| Other General and Administrative Expenses | ||||||||
| Marketing Expenses | ||||||||
| Salaries and Benefits | ||||||||
| Stock-Based Compensation for Employees | ||||||||
| Stock-Based Compensation for Agents | ||||||||
| Revenue Share | ||||||||
| Other Marketing and Advertising Cost | ||||||||
| Research and Development Expenses | ||||||||
| Salaries and Benefits | ||||||||
| Stock-Based Compensation | ||||||||
| Other Research and Development | ||||||||
| Settlement of Litigation | ||||||||
| Total Operating Expenses | $ | $ | ||||||
| Total Cost of Sales and Operating Expenses | $ | $ | ||||||
Finance Expenses
The following table provides a detailed breakdown of finance costs (in thousands) as reported in the Condensed Consolidated Statement of Comprehensive Loss:
| For the Three Months Ended | ||||||||
| Description | March 31, 2025 | March 31, 2024 | ||||||
| Change in Fair Value of Warrants Liability | $ | $ | ||||||
| Realized Losses | ||||||||
| Bank Fees | ||||||||
| Finance Costs | ( | ) | ||||||
| Total Finance Expenses | $ | $ | ||||||
| 9 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
| 5. | OPERATING SEGMENTS DISCLOSURES |
Segment
information aligns with how the Chief Operating Decision Maker (“CODM”), the Chief Executive Officer, manages the business
and allocates resources into
| ● | 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. | |
| ● | Real Wallet: derives revenue from fees associated with the program and the offering of financial products. |
The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information and is (iii) regularly reviewed by the CODM. Once operating segments are identified, the Company performs a quantitative analysis of the current and historic revenues and profitability for each operating segment, together with a qualitative assessment to determine if operating segments have similar operating characteristics.
The Company has determined that it operates as a single reporting segment, North American Brokerage which comprises more than 90% of Group’s total revenue and income (loss) from operations. The other three segments One Real Title, One Real Mortgage and Real Wallet are not considered reporting segments as their revenue and net loss do not meet quantitative threshold set for reporting segments. These three segments are disclosed in an ‘other segments’ category below.
The CODM uses revenues, gross profit and operating income (loss) as key metrics to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions. All segments follow the same basis of presentation and accounting policies as those described throughout the Notes to the Audited Consolidated Financial Statements included herein. The following table provides information about the Company’s reportable segments (in thousands).
| For the Three Months Ended March 31, 2025 | ||||||||||||
North American Brokerage | Other Segments | Total | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Cost of sales | ||||||||||||
| Gross Profit | $ | $ | $ | |||||||||
| Operating Expenses(1)(2) | ||||||||||||
| Operating Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Reconciliation of profit or loss (segment profit/loss) | ||||||||||||
| Other income (expenses), net | ||||||||||||
| Finance expenses, net | ( | ) | ||||||||||
| Net Loss | $ | ( | ) | |||||||||
| 1 |
| 2 |
| 10 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
| For the Three Months Ended March 31, 2024 | ||||||||||||
North American Brokerage | Other Segments | Total | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Cost of sales | ||||||||||||
| Gross Profit | $ | $ | $ | |||||||||
| Operating Expenses(1)(2) | ||||||||||||
| Operating Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Reconciliation of profit or loss (segment profit/loss) | ||||||||||||
| Other income (expenses), net | ||||||||||||
| Finance expenses, net | ( | ) | ||||||||||
| Net Loss | $ | ( | ) | |||||||||
| 1 |
| 2 |
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.
| 11 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
Depreciation and Amortization (in thousands)
| For the Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| North American Brokerage | $ | $ | ||||||
| Other Segments | ||||||||
| Total | $ | $ | ||||||
The amount of revenue from external customers, by geography, is shown in the table below (in thousands):
| For the Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| United States | $ | $ | ||||||
| Canada | ||||||||
| Total revenue by region | $ | $ | ||||||
| 6. | INCOME TAXES |
The Company has not recorded any income tax expense or benefit in either the period ended March 31, 2025 or March 31, 2024 as it has had cumulative tax losses in all jurisdictions where it conducts business. Since our inception, we have not recorded any income tax benefits for the net losses we have incurred or for our other deferred tax assets, as we believe that it is more likely than not that all of our deferred tax assets will not be realized. Accordingly, we have recorded a full valuation allowance against our net deferred tax assets.
| 7. | 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.
| For the Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Issued Common Shares, Balance at the beginning of the period | ||||||||
| Effect of Treasury Purchases | ( | ) | ( | ) | ||||
| Release of Shares | ||||||||
| Effect of Treasury Issuance | ||||||||
| Effect of Share Options Exercise | ||||||||
| Weighted-average numbers of Common Shares | ||||||||
| Loss per share | ||||||||
| Basic and diluted loss per share | $ | ) | $ | ) | ||||
| For the Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Options | ||||||||
| RSU | ||||||||
| Total | ||||||||
| 12 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
| 8. | 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 acquire Common Shares upon the exercise of Company options (“Options”). Under the Stock Option Plan, holders of vested Options are entitled to purchase Common Shares for the exercise price as determined at the grant date.
On
February 26, 2022, the Company established an omnibus incentive plan providing for up to
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
| Grant Date | Number of Options | Vesting Conditions | Contractual Life of Options | |||||
| Balance January 1, 2024 | ||||||||
| On April, 2024 | years | |||||||
| On August, 2024 | years | |||||||
| On November, 2024 | years | |||||||
| Balance December 31, 2024 | ||||||||
| Balance January 1, 2025 | ||||||||
| On March, 2025 | years | |||||||
| Balance March 31, 2025 | ||||||||
| 13 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
| B. | Measurement of fair value |
| March 31, 2025 | March 31, 2024 | |||||||
| Share price | $ | $ | ||||||
| Expected volatility (weighted-average) | % | % | ||||||
| Expected life (weighted-average) | years | — | ||||||
| Expected dividends | % | % | ||||||
| Risk-free interest rate (based on US government bonds) | % | % | ||||||
| Weighted-average grant date fair value | $ | $ | ||||||
Expected volatility has been based on an evaluation of historical volatility of the Company’s share price.
| C. | Reconciliation of outstanding stock options |
| March 31, 2025 | December 31, 2024 | |||||||||||||||
Number of Options | Weighted- Average Exercise Price | Number of Options | Weighted- Average Exercise Price | |||||||||||||
| Outstanding at beginning of year | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Forfeited/ Expired | ( | ) | ( | ) | ||||||||||||
| Exercised | ( | ) | ( | ) | ||||||||||||
| Outstanding at end of period | $ | $ | ||||||||||||||
| Exercisable at end of period | $ | $ | ||||||||||||||
The Options outstanding as of March 31, 2025 had a weighted average exercise price of $ (December 31, 2024: $) and a weighted-average remaining contractual life of years (December 31, 2024: years).
| D. | Restricted share units |
Restricted share units
Under
the Company’s agent awards stock grant program, the Company issues RSUs to agents based on an agent meeting certain performance
metrics, including successfully attracting other performing agents to the Company. . 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 additional paid-in capital.
The expense recognized from the issuance of RSU awards for the period ended March 31, 2025 was $
Under the Company’s agent stock purchase program, agents purchase RSUs, which vest 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. .
| 14 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
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 condensed consolidated statements of comprehensive loss.
The Company also awards performance-based RSUs which require certain conditions, communicated within each individual award, to be met for vesting to occur. Expense related to the issuance of performance-based RSUs is recorded over the vesting period, is initially based on the fair value of the award on the grant date, and is subsequently remeasured at each reporting date based upon the probability that the performance target will be met. Remeasurement may result in the reversal of expenses previously recorded if it is determined that the performance target will not be met. During the period ended March 31, 2025 the Company recorded a $ million reversal of previously recorded stock-based compensation expense with respect to performance-based RSU grants to executive officers which are not expected to vest.
Restricted Share Units | ||||
| Balance at, December 31, 2023 | ||||
| Granted | ||||
| Vested and Issued | ( | ) | ||
| Forfeited | ( | ) | ||
| Balance at, December 31, 2024 | ||||
| Granted | ||||
| Vested and Issued | ( | ) | ||
| Forfeited | ( | ) | ||
| Balance at, March 31, 2025 | ||||
| 15 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
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 statements of comprehensive loss.
| For the Three Months Ended | ||||||||||||||||||||||||
| March 31, 2025 | March 31, 2024 | |||||||||||||||||||||||
Options Expense | RSU Expense | Total | Options Expense | RSU Expense | Total | |||||||||||||||||||
| Cost of Sales – Agent Stock-Based Compensation | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Marketing Expenses – Agent Stock-Based Compensation | ||||||||||||||||||||||||
| Marketing Expenses – FTE Stock-Based Compensation | ||||||||||||||||||||||||
| Research and Development – FTE Stock-Based Compensation | ||||||||||||||||||||||||
| General and Administrative – FTE Stock-Based Compensation | ||||||||||||||||||||||||
| Total Stock-Based Compensation | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
9. 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 balance sheets:
| Description | Cost or Amortized Cost December 31, 2024 | Cost or Amortized Cost March 31, 2025 | Estimated Fair Value December 31, 2024 | Deposit / (Withdraw) | Dividends, Interest & Income | Gross Unrealized Gains | Estimated Fair Value March 31, 2025 | |||||||||||||||||||||
| Fixed Income | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Investment Certificate | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
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
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).
At each balance sheet date, the Company assesses available-for-sale securities in an unrealized loss position to determine whether the decline in fair value below amortized cost is a result of credit losses or other factors, whether the Company expects to recover the amortized cost of the security, the Company’s intent to sell and if it is more likely than not that the Company will be required to sell the securities before the recovery of amortized cost. For the fiscal years ended March 31, 2025 and December 31, 2024, no allowance for credit losses was recorded.
| 16 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
10. PROPERTY AND EQUIPMENT
Property and equipment, net consisted of the following (in thousands)
| March 31, 2025 | December 31, 2024 | |||||||
| Computer hardware and software | $ | $ | ||||||
| Furniture, fixture, and equipment | ||||||||
| Total property and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
For
the periods ended March 31, 2025 and March 31, 2024, depreciation expense was $
11. 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
Reconciliation of Carrying Amounts (in thousands)
| Intangible Assets | ||||
| Cost | ||||
| Balance at December 31, 2023 | $ | |||
| Additions | ||||
| Balance at December 31, 2024 | ||||
| Additions | ||||
| Balance at March 31, 2025 | ||||
| Accumulated Amortization | ||||
| Balance at December 31, 2023 | ||||
| Amortization | ||||
| Balance at December 31, 2024 | ||||
| Amortization | ||||
| Balance at March 31, 2025 | ||||
| Carrying Amounts | ||||
| Balance at December 31, 2024 | ||||
| Balance at March 31, 2025 | $ | |||
| 17 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
As of March 31, 2025, expected amortization (in thousands) related to intangible assets will be:
| Expected Amortization | ||||
| 2025, excluding the three months ended March 31, 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 and thereafter | ||||
| Total | $ | |||
12. 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. The following tables are presented in thousands:
| Realty Crunch | Expetitle | LemonBrew | Total | |||||||||||||
| Cost | ||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | | $ | |||||||||||
| Impairment | ||||||||||||||||
| Balance at December 31, 2024 | ||||||||||||||||
| Impairment | ||||||||||||||||
| Balance at March 31, 2025 | ||||||||||||||||
| Carrying Amounts | ||||||||||||||||
| Balance at December 31, 2024 | ||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ||||||||||||
| Realty Crunch | Expetitle | LemonBrew | Total | |||||||||||||
| Accumulated Impairment Loss at December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| Goodwill Impairment | ||||||||||||||||
| Accumulated Impairment Loss at December 31, 2024 | ||||||||||||||||
| Goodwill Impairment | ||||||||||||||||
| Accumulated Impairment Loss at March 31, 2025 | $ | $ | $ | $ | ||||||||||||
| 18 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
13. CAPITAL AND RESERVES
Common Shares
All Common Shares rank equally with regards to the Company’s residual assets. The following table is presented in thousands:
| March 31, 2025 | December 31, 2024 | |||||||
| Ordinary Shares, Beginning Balance | ||||||||
| Stock Options Exercised | ||||||||
| Release of Restricted Stock Units | ||||||||
| Warrants Exercised | ||||||||
| Ordinary Shares, Ending Balance | ||||||||
Treasury Stock
Treasury Stock, which is stock held by the Trustee, is recognized at cost of purchase and presented as a deduction from equity. The following table shows the changes in treasury stock shares for the periods presented in thousands:
| March 31, 2025 | December 31, 2024 | |||||||
| Treasury Stock, Beginning Balance | ||||||||
| Repurchases of Common Shares | ||||||||
| Issuance of Treasury Stock | ( | ) | ( | ) | ||||
| Treasury Stock, Ending Balance | ||||||||
14. LIQUIDITY AND CAPITAL RESOURCES
Real defines capital as its equity. It is comprised of common shares, additional paid in capital, accumulated other comprehensive income, deficit, 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 manage its capital structure, the Company may take actions such as repurchasing shares, returning capital to shareholders, issuing new securities, or incurring or repaying 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 March 31, 2025, and December 31, 2024.
The following table presents the Company’s liquidity (in thousands):
| As of | ||||||||
| March 31, 2025 | December 31, 2024 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Other Receivables | ||||||||
| Investments in Financial Assets | ||||||||
| Total | $ | $ | ||||||
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THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2025 AND 2024
UNAUDITED
15. FINANCIAL INSTRUMENTS – FAIR VALUE
Items measured at fair value (in thousands)
| As of March 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||||||||
| Financial Assets Measured at Fair Value (FV) | ||||||||||||||||||||||||
| Investments in Financial Assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Total Financial Assets Measured at Fair Value (FV) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
During the periods ended March 31, 2025 and December 31, 2024, there have been no transfers between Level 1, Level 2 and Level 3.
16. COMMITMENTS AND CONTINGENCIES
The Company may have various other contractual obligations in the normal course of operations. The Company is not materially contingently liable with respect to litigation, claims and environmental matters. Any settlement of claims in excess of amounts recorded will be charged to profit or loss as and when such determination is made.
In
December 2023, the Company was named as a defendant in a putative class action lawsuit, captioned Umpa v. The National Association
of Realtors, et al., which was filed in the United States District Court for the Western District of Missouri (the “Umpa Class
Action”). The Umpa 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 Umpa Class Action on a nationwide basis. This settlement conclusively addresses all claims asserted against
the Company in the Umpa 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 $
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 also agreed to develop training materials to support these practice changes. The settlement agreement received final court approval on October 31, 2024, and will take effect following the appeals process. There were no changes to the settlement agreement between preliminary and 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 (“Miholich Class Action”). The Miholich Class Action alleges that real estate agents acting as independent contractors to the Company under an Independent Contractor Agreement sent text messages that violated the federal Telephone Consumer Protection Act. The Company’s policies require the independent contractor real estate agents to comply with the Telephone Consumer Protection Act. The plaintiffs are seeking certification of the Miholich Class Action, injunctive relief prohibiting future violations of the Telephone Consumer Protection 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 Miholich Class Action, and the Company is unable to predict the outcome of the Miholich Class Action or whether an outcome unfavorable to the Company would have a material adverse effect on its results of operations or financial condition.
| 20 |