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 | 4-5 |
| Interim Condensed Consolidated Statements of Cash Flows | 6 |
| Notes to the Interim Condensed Consolidated Financial Statements | 7-22 |
| 1 |
THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars and shares in thousands)
UNAUDITED
| As of | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Investments in financial assets | ||||||||
| Trade receivables | ||||||||
| Short-term financing receivables, net | ||||||||
| Other current assets | ||||||||
| TOTAL CURRENT ASSETS | $ | $ | ||||||
| NON-CURRENT ASSETS | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Property and equipment, net | ||||||||
| Investment in equity securities | ||||||||
| 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, | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Treasury stock, at cost, and Common Shares at September 30, 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 interim condensed consolidated financial statements.
| 2 |
THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(U.S. dollars and shares in thousands, except per share amounts)
UNAUDITED
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 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, net | ||||||||||||||||
| Finance expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss Before Tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Tax Expense | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | |||||
| Net income attributable to non-controlling 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 (loss) on investments in financial assets | ( | ) | ( | ) | ||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||
| Total Comprehensive Loss Attributable to Owners of the Company | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Total Comprehensive Income Attributable to Non-Controlling Interest | ||||||||||||||||
| Total Comprehensive Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Earnings (Loss) per share | ||||||||||||||||
| Basic loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted-average shares, basic | ||||||||||||||||
| Weighted-average shares, diluted | ||||||||||||||||
The accompanying notes form an integral part of the interim condensed consolidated financial statements.
| 3 |
THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(U.S. dollars in thousands)
UNAUDITED
| Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Equity Attributable to Owners | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||
| Balance at, June 30, 2025 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||
| Total net income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Total other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Distributions to non-controlling interests | ||||||||||||||||||||||||||||
| Repurchase of common shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Release of treasury stock | ||||||||||||||||||||||||||||
| Retirement of treasury stock | ( | ) | ||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||
| Shares withheld for taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Equity-settled stock-based payment | ||||||||||||||||||||||||||||
| Balance at, September 30, 2025 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Balance at, June 30, 2024 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||
| Total net income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Total other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Distributions to non-controlling interests | ( | ) | ( | ) | ||||||||||||||||||||||||
| Repurchase of common shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Release of treasury stock | ( | ) | ||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||||||||||
| Shares withheld for taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Equity-settled stock-based payment | ||||||||||||||||||||||||||||
| Balance at, September 30, 2024 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||
The accompanying notes form an integral part of the interim condensed consolidated financial statements.
| 4 |
THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(U.S. dollars in thousands)
UNAUDITED
| Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Equity Attributable to Owners | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||
| Balance at, January 1, 2025 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||
| Total net income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Total other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Distributions to non-controlling interests | ( | ) | ( | ) | ||||||||||||||||||||||||
| Repurchase of common shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Release of treasury stock | ( | ) | ||||||||||||||||||||||||||
| Retirement of treasury stock | ( | ) | ||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||
| Shares withheld for taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Equity-settled stock-based payment | ||||||||||||||||||||||||||||
| Balance at, September 30, 2025 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Balance at, January 1, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||
| Total net income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Total other comprehensive income | ||||||||||||||||||||||||||||
| Distributions to non-controlling interests | ( | ) | ( | ) | ||||||||||||||||||||||||
| Repurchase of common shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Release of treasury stock | ( | ) | ||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||||||||||
| Shares withheld for taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Equity-settled stock-based payment | ||||||||||||||||||||||||||||
| Balance at, September 30, 2024 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||
The accompanying notes form an integral part of the interim condensed consolidated financial statements.
| 5 |
THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
UNAUDITED
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| OPERATING ACTIVITIES | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Equity-settled stock-based payment | ||||||||||||||||
| Finance costs | ( | ) | ( | ) | ||||||||||||
| Change in fair value of warrants liability | ||||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Funds held in restricted escrow account | ( | ) | ||||||||||||||
| Trade receivables | ( | ) | ( | ) | ( | ) | ||||||||||
| Short-term and long-term financing receivables, net | ( | ) | ( | ) | ||||||||||||
| Other current assets | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Accounts payable | ( | ) | ( | ) | ( | ) | ||||||||||
| Accrued liabilities | ( | ) | ( | ) | ||||||||||||
| Customer deposits | ( | ) | ( | ) | ||||||||||||
| Other payables | ||||||||||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||||||||
| INVESTING ACTIVITIES | ||||||||||||||||
| Purchase of investment in equity securities | ( | ) | ||||||||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Purchase of intangible assets | ( | ) | ( | ) | ||||||||||||
| Purchase of financial assets | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Proceeds from sale of financial assets | ||||||||||||||||
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | ( | ) | ( | ) | ||||||||||||
| FINANCING ACTIVITIES | ||||||||||||||||
| Repurchase of common shares | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Payment of employee taxes on certain share-based arrangements | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Proceeds from exercise of stock options | ||||||||||||||||
| Contributions from (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 period | ||||||||||||||||
| Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | ( | ) | ( | ) | ( | ) | ||||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE | $ | $ | $ | $ | ||||||||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES | ||||||||||||||||
| Warrants exercised | ||||||||||||||||
The accompanying notes form an integral part of the interim condensed consolidated financial statements.
| 6 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| 1. | NATURE OF BUSINESS |
The Real Brokerage Inc. (“Real” or the “Company”) is a growing real estate technology company that operates across all 50 U.S. states, the District of Columbia, and five Canadian provinces. 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 physical offices for service delivery, Real operates as a fully digital brokerage, providing agents with reZEN, our proprietary transaction management and brokerage operations software. 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, title and fintech services.
The consolidated operations of Real include the subsidiaries of Real, including those involved in the brokerage, mortgage broker, title, and wallet operations.
| 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.
| B. | Basis of Consolidation |
The interim 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. 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 upon consolidation.
| 7 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| 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 |
The following table (in thousands) provides a reconciliation of cash, cash equivalents, and restricted cash further reported within the interim condensed consolidated balance sheets that sum to the total of the same amounts shown on the interim condensed consolidated statements of cash flows.
| As of | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents, and restricted cash, ending balance | $ | $ | ||||||
| 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 financing services to its agents with credit terms of up to three years. The balances reported in the interim condensed 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. In estimating the amount of the allowance for credit losses, the Company considers a combination of historical loss data, agent-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. Both the allowance for credit losses and the interest income related to financing receivables were immaterial for the three and nine months ended September 30, 2025 and the three and nine months ended September 30, 2024.
| G. | Investments in Equity Securities |
The
Company’s investments in equity securities include securities without readily determinable fair values. For investments without
readily determinable fair values, the Company has elected to use the measurement alternative, under which the investment is measured
at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical
or a similar investment of the same issuer. This election is reassessed each reporting period to determine whether non-marketable equity
investments have a readily determinable fair value, in which case they would no longer be eligible for this election. Indicators of impairment
may include negative changes in the industry, unfavorable market conditions, weak financial performance, or other relevant events and
factors.
| 8 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| H. | 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 is effective for annual periods beginning after December 15, 2024. The Company is currently 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” or “ASU 2024-03”) which requires enhanced disclosure of the nature of expenses included in the income statement. The new standard requires disclosures about specific types of expenses included in the functional 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 currently evaluating the impact ASU 2024-03 will have on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which introduces an optional practical expedient for all entities in developing reasonable and supportable forecasts when estimating expected credit losses. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact ASU 2025-05 will have on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) (“ASU 2025-06”), which amends the requirements for the capitalization of internal-use software. ASU 2025-06 is effective for annual periods beginning after December 15, 2027. The Company is currently evaluating the impact ASU 2025-06 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.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Main revenue streams | ||||||||||||||||
| Commissions | $ | $ | $ | $ | ||||||||||||
| Title | ||||||||||||||||
| Mortgage Broker Income | ||||||||||||||||
| Wallet | ||||||||||||||||
| Total Revenue | $ | $ | $ | $ | ||||||||||||
| 9 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| 4. | EXPENSES BY NATURE |
The following table presents cost of sales and a breakdown of operating expenses (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Cost of Sales | $ | $ | $ | $ | ||||||||||||
| Operating Expenses | ||||||||||||||||
| General and Administrative Expenses | ||||||||||||||||
| Salaries and Benefits | ||||||||||||||||
| Stock-Based Compensation for Employees | ||||||||||||||||
| Administrative Expenses | ||||||||||||||||
| Professional Fees | ||||||||||||||||
| Depreciation and Amortization Expense | ||||||||||||||||
| Other | ||||||||||||||||
| Marketing Expenses | ||||||||||||||||
| Salaries and Benefits | ||||||||||||||||
| Stock-Based Compensation for Employees | ||||||||||||||||
| Stock-Based Compensation for Agents | ||||||||||||||||
| Revenue Share | ||||||||||||||||
| Other | ||||||||||||||||
| Research and Development Expenses | ||||||||||||||||
| Salaries and Benefits | ||||||||||||||||
| Stock-Based Compensation for Employees | ||||||||||||||||
| Other | ||||||||||||||||
| Settlement of Litigation | ||||||||||||||||
| Total Operating Expenses | $ | $ | $ | $ | ||||||||||||
| Total Cost of Sales and Operating Expenses | $ | $ | $ | $ | ||||||||||||
| 10 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| 5. | OPERATING SEGMENTS DISCLOSURES |
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 (iii) is regularly reviewed by the Chief Operating Decision Maker (“CODM”).
Segment
information aligns with how the Company’s CODM, the Chief Executive Officer, manages the business and allocates resources. The
Company has identified the following
| ● | 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 - generates revenue from premiums associated with facilitating mortgage transactions between borrowers and lenders. |
| ● | Real Wallet - generates revenue from fees and interest associated with the program and the offering of financial products. |
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. Each operating segment is assessed both quantitatively and qualitatively to determine whether it meets the thresholds for separate disclosure under ASC 280.
The Company has determined that it operates as three reportable segments - North American Brokerage, One Real Title and One Real Mortgage, which comprise more than 90% of the Company’s total revenue and income (loss) from operations. The other segment, Real Wallet does not meet the quantitative thresholds for a reportable segment under ASC 280 and is therefore presented within “Other Segments”. The Company elected to separately disclose Title and Mortgage segments as management expects that the segments will continue to be significant. Both segments were previously classified as part of “Other Segments. As a result of this change, prior period segment information has been recast to conform to the current presentation.
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 and as included herein.
| For the Three Months Ended September 30, 2025 | ||||||||||||||||||||
North American Brokerage | One Real Title | One Real Mortgage | Other Segments | Total | ||||||||||||||||
| Revenues | $ | | $ | $ | $ | $ | ||||||||||||||
| Cost of sales | ||||||||||||||||||||
| Gross Profit | $ | $ | $ | $ | $ | |||||||||||||||
| Operating Expenses(1)(2) | ||||||||||||||||||||
| Operating Income (Loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
| Reconciliation of profit or (loss) (segment profit/(loss)) | ||||||||||||||||||||
| Other income, net | ||||||||||||||||||||
| Finance expense, net | ( | ) | ||||||||||||||||||
| Loss Before Tax | $ | ( | ) | |||||||||||||||||
| 1 |
| 2 |
| 11 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| For the Nine Months Ended September 30, 2025 | ||||||||||||||||||||
North American Brokerage | One Real Title | One Real Mortgage | Other Segments | Total | ||||||||||||||||
| Revenues | $ | | $ | $ | $ | $ | ||||||||||||||
| Cost of sales | ||||||||||||||||||||
| Gross Profit | $ | $ | $ | $ | $ | |||||||||||||||
| Operating Expenses(1)(2) | ||||||||||||||||||||
| Operating Income (Loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
| Reconciliation of profit or (loss) (segment profit/(loss)) | ||||||||||||||||||||
| Other income, net | ||||||||||||||||||||
| Finance expense, net | ( | ) | ||||||||||||||||||
| Loss Before Tax | $ | ( | ) | |||||||||||||||||
| 1 |
| 2 |
| For the Three Months Ended September 30, 2024 | ||||||||||||||||
North American Brokerage | One Real Title | One Real Mortgage | Total | |||||||||||||
| Revenues | $ | | $ | $ | $ | |||||||||||
| Cost of sales | ||||||||||||||||
| Gross Profit | $ | $ | $ | $ | ||||||||||||
| Operating Expenses(1)(2) | ||||||||||||||||
| Operating Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Reconciliation of profit or loss (segment profit/loss) | ||||||||||||||||
| Other income, net | ||||||||||||||||
| Finance expenses, net | ( | ) | ||||||||||||||
| Loss Before Tax | $ | ( | ) | |||||||||||||
| 1 |
| 2 |
| 12 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| For the Nine Months Ended September 30, 2024 | ||||||||||||||||
North American Brokerage | One Real Title | One Real Mortgage | Total | |||||||||||||
| Revenues | $ | | $ | $ | $ | |||||||||||
| Cost of sales | ||||||||||||||||
| Gross Profit | $ | $ | $ | $ | ||||||||||||
| Operating Expenses(1)(2) | ||||||||||||||||
| Operating Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Reconciliation of profit or loss (segment profit/loss) | ||||||||||||||||
| Other income, net | ||||||||||||||||
| Finance expenses, net | ( | ) | ||||||||||||||
| Loss Before Tax | $ | ( | ) | |||||||||||||
| 1 |
| 2 |
Segment
revenue reported above represents revenue generated from external customers. There were
Segment specific assets and liabilities are not disclosed in these interim condensed consolidated financial statements because the CODM is not regularly provided with that information.
Depreciation and Amortization (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| North American Brokerage | $ | $ | $ | $ | ||||||||||||
| One Real Title | ||||||||||||||||
| One Real Mortgage | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The amount of revenue from external customers, by geography, is shown in the table below (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| Canada | ||||||||||||||||
| Total revenue by region | $ | $ | $ | $ | ||||||||||||
| 6. | INCOME TAXES |
The
Company recorded income tax expense of $
| 13 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
In July 2025, the One Big Beautiful Bill Act (the “OBBB”) was enacted into law, extending key provisions of the 2017 Tax Cuts and Jobs Act. The OBBB brought back accelerated depreciation for property acquired and placed in service after January 19, 2025, and restored expensing of domestic research expenditures for years beginning after December 31, 2024. Additionally, the bill amended the interest expenses limitation to EBITDA-based instead of EBIT, international tax provisions on global intangible low-tax income, foreign derived intangible income, and base erosion and anti-abuse tax. The OBBB does not currently have a material impact on the Company’s consolidated financial statements.
| 7. | BASIC AND DILUTED LOSS PER SHARE |
Basic loss per share is computed by dividing the net income available to common shareholders for the period by the weighted average number of common shares of the Company (“Common Shares”) outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income available to common shareholders less any preferred dividends for the period by the weighted average number of Common Shares outstanding plus any potentially dilutive securities outstanding during the period. The Company uses the treasury stock method to reflect the potential dilutive effect of unvested RSUs and unexercised stock options. The Company does not pay dividends or have participating shares outstanding.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Weighted-average numbers of Common Shares - basic | ||||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||
| RSUs | ||||||||||||||||
| Options | ||||||||||||||||
| Weighted-average numbers of Common Shares - diluted | ||||||||||||||||
| Loss per share | ||||||||||||||||
| Basic loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Options | ||||||||||||||||
| RSU | ||||||||||||||||
| Total | ||||||||||||||||
| 14 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| 8. | STOCK-BASED PAYMENT ARRANGEMENTS |
| A. | Description of stock-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 was limited to
On April 14, 2025, the Company established the 2025 Stock Incentive Plan (the “2025 Plan”) and the Company’s shareholders approved the 2025 Plan on May 30, 2025. Pursuant to the 2025 Plan, the Company is authorized to issue up to Common Shares to its directors, employees and other service providers, including agents, as stock-based compensation. The Company may grant options, restricted stock awards, restricted stock units, and other stock-based awards under the 2025 Plan. As of September 30, 2025, shares remain available for issuance under the 2025 plan.
Share Repurchases
On
May 30, 2025, the Company announced a new share repurchase authorization, pursuant to which it may repurchase up to the lesser of
million shares, or $
| B. | Measurement of fair value |
| As of | ||||||||
| September 30, 2025 | September 30, 2024 | |||||||
| Share price | $ | to $ | $ | to $ | ||||
| Expected volatility (weighted-average) | % to | % | % to | % | ||||
| Expected life (weighted-average) | to years | to 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.
| 15 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| C. | Reconciliation of outstanding stock options |
| As of | ||||||||||||||||
| September 30, 2025 | September 30, 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 September 30, 2025 had a weighted average exercise price of $ (September 30, 2024: $) and a weighted-average remaining contractual life of years (September 30, 2024: years).
| D. | Restricted share units |
Restricted share units
The Company issues RSUs to agents based on an agent meeting certain performance metrics. . 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. These expenses are classified as marketing expenses and are disclosed in the stock-based compensation expense tables below within this footnote, under the caption “Marketing Expenses – Agent Stock-Based Compensation.”
Under the Company’s agent stock purchase program (“Agent Purchase Program”), agents purchase RSUs, which are not subject to forfeiture and will be settled after a year from the date of grant, using a percentage of the agent’s commission that is withheld by the Company. Each RSU entitles the holder to one Common Share, but may be settled in cash at the Company’s sole discretion in accordance with the equity plan under which the RSUs were issued. The RSUs are expensed in the period in which they are issued with a corresponding increase in equity. .
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 interim condensed consolidated statements of comprehensive income (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. As of September 30, 2025, there are thousand performance-based RSUs outstanding and the Company believes the performance conditions for these shares will be met at December 31, 2025.
| 16 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
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, September 30, 2025 | ||||
Stock-Based Compensation Expense
The following tables provide a detailed breakdown of the stock-based compensation expense (in thousands) as reported in the interim condensed consolidated statements of comprehensive income (loss).
| Three Months Ended September 30, | ||||||||||||||||||||||||
| 2025 | 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 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2025 | 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 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| 17 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| 9. | INVESTMENTS |
Available-for-Sale Securities at Fair Value
The following table provides a detailed breakdown of investments in financial assets (in thousands) as reported in the interim condensed consolidated balance sheets:
| Description | Cost or Amortized Cost December 31, 2024 | Cost or Amortized Cost September 30, 2025 | Estimated Fair Value December 31, | Deposit / (Withdraw) | Dividends, Interest & Income | Gross Unrealized Gains | Estimated Fair Value September 30, | |||||||||||||||||||||
| Fixed Income | $ | | $ | | $ | | $ | $ | $ | ( | ) | $ | | |||||||||||||||
| Investment Certificate | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Investment
securities are recorded at fair value. The Company’s investment securities portfolio consists primarily of 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 three and nine months ended September 30, 2025 and three and nine months
ended September 30, 2024,
Equity Investment
On
June 30, 2025, the Company executed an agreement to acquire a
| 10. | PROPERTY AND EQUIPMENT |
Property and equipment, net consisted of the following (in thousands):
| As of | ||||||||
| September 30, 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 three and nine months ended September 30, 2025 depreciation expense was $
| 18 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| 11. | INTANGIBLE ASSETS |
The
Company’s intangible assets are finite lived and consist primarily of acquired technology, customer relationships and other identifiable
assets, which are amortized on a straight-line basis over their useful life of
On
July 1, 2025, pursuant to the terms of an asset purchase agreement dated the same day, between the Company and Flyhomes, the Company
acquired the AI-powered consumer home search portal and related technology assets of Flyhomes for an aggregate purchase price of $
Reconciliation of Carrying Amounts (in thousands):
| December 31, 2023 | Additions | December 31, 2024 | Additions | September 30, 2025 | ||||||||||||||||
| Cost | ||||||||||||||||||||
| Indefinite-lived trademarks | $ | $ | $ | $ | $ | |||||||||||||||
| Acquired Technology | ||||||||||||||||||||
| Customer Relationships | ||||||||||||||||||||
| Other | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| Accumulated Amortization | ||||||||||||||||||||
| Acquired Technology | $ | $ | $ | $ | $ | |||||||||||||||
| Customer Relationships | ||||||||||||||||||||
| Other | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| Carrying Amounts | $ | $ | $ | |||||||||||||||||
The
Company recorded amortization expense of $
As of September 30, 2025, expected amortization (in thousands) related to intangible assets will be:
| Expected Amortization | ||||
| 2025, excluding the nine months ended September 30, 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 and thereafter | ||||
| Total | $ | |||
| 19 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| 12. | GOODWILL |
Goodwill
is recorded when the purchase price of the business exceeds the fair value of the net tangible and intangible assets acquired. In accordance
with ASC 350, we evaluate goodwill for impairment on at least 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. We first assess qualitative factors to determine whether
it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If necessary, a quantitative analysis
is performed to measure any impairment.
| North American Brokerage | One Real Title | One Real Mortgage | Total | |||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ||||||||||||
| Accumulated Impairment Loss at September 30, 2025 | $ | $ | $ | $ | ||||||||||||
| 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:
| As of | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Common Shares Issued, Beginning Balance | ||||||||
| Stock Options Exercised | ||||||||
| Release of Restricted Stock Units | ||||||||
| Retirement of Shares | ( | ) | ||||||
| Warrants Exercised | ||||||||
| Common Shares Issued, Ending Balance | ||||||||
Treasury Stock
Treasury Stock, which is stock repurchased and held by the Trustee, is recognized at cost of purchase and presented as a deduction from Shareholder’s equity. All treasury stock acquired during the period were subsequently reissued in connection with stock-based compensation awards or retired. As of September 30, 2025 the Company held no Treasury Stock. The following table shows the changes in treasury stock shares for the periods presented in thousands:
| As of | ||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Treasury Stock, Beginning Balance | ||||||||
| Repurchases of Common Shares | ||||||||
| Issuance of Treasury Stock | ( | ) | ( | ) | ||||
| Retirement of Treasury Stock | ( | ) | ||||||
| Treasury Stock, Ending Balance | ||||||||
| 20 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
| 14. | FINANCIAL INSTRUMENTS – FAIR VALUE |
Items measured at fair value (in thousands):
| As of | ||||||||||||||||||||||||||||||||
| September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Financial Assets Measured at Fair Value (FV) | ||||||||||||||||||||||||||||||||
| Investments in Financial Assets | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total Financial Assets Measured at Fair Value (FV) | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
In the periods presented there have been no transfers between Level 1, Level 2 and Level 3.
| 21 |
THE REAL BROKERAGE INC.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2025 AND 2024
UNAUDITED
15. COMMITMENTS AND CONTINGENCIES
From time to time, the Company may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. Claims or regulatory actions against the Company, whether meritorious or not, could have an adverse impact on the Company due to legal costs, diversion of management resources and other elements. Except as identified with respect to the matters below, the Company does not believe that the outcome of any individual existing legal or regulatory proceeding to which it is a party will have a material adverse effect on its results of operations, financial condition or overall business in each case, taken as a whole.
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 October 2023, a jury found that the National Association of Realtors (“NAR”) and several brokerage agencies had violated the antitrust laws by artificially inflating commissions through, among other things, the practice of having sellers pay both the sellers’ agents’ and the buyers’ agents’ commissions. The Company was not a party to that litigation. In March 2024, NAR announced a settlement agreement that would resolve litigation of claims brought on behalf of home sellers related to broker commissions. Pursuant to the settlement, which is subject to court approval, NAR agreed to put in place a new Multiple Listing Service (“MLS”) rule prohibiting offers of broker compensation on any MLS. In Nosalek, a prior similar case that has since been resolved, the U.S. Department of Justice Antitrust Division (the “DOJ”) submitted a Statement of Interest objecting that the proposed settlement did not do enough to address alleged anticompetitive practices and that the settlement should prohibit sellers from making commission offers to buyer’s brokers at all. While the DOJ withdrew its objection to the settlement in Nosalek, if the DOJ were to take action in the future to prohibit sellers from making commission offers to buyer’s brokers, it could reduce commissions to real estate agents in transactions, and could have an adverse effect on our results of operations. A similar complaint has been filed in Canada. In addition, a few complaints have been filed in U.S. courts alleging that buyers paid increased home prices as a result of the practice of sellers paying both the sellers’ agents’ and the buyers’ agents’ commissions.
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 if the appellants are unsuccessful. Certain objectors filed notice of appeal, and the appeal is pending. 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 April 23, 2025, the employment of Ms. Ressler, the Company’s former Chief Financial Officer, was terminated based on the Company’s opinion that she engaged in actions that violated Company policies related to personal expenses. On June 10, 2025, the Company was named as a defendant in the matter captioned Ressler v. The Real Brokerage Inc., et al., which was filed in the United States District Court for the Southern District Of New York (the “Ressler Matter”). Ms. Ressler alleges gender and pregnancy discrimination, retaliation and defamation. The Company is unable to predict the outcome of the Ressler Matter or to reasonably estimate the possible loss or range of loss, if any, arising from the claim asserted therein. The ultimate resolution of the Ressler Matter could have a material adverse effect on the Company’s financial position, results of operations, and cash flow.
On June 28, 2025, the Company was named as a defendant along with other brokerages in a putative class action lawsuit, captioned Cwynar v. The Real Brokerage Inc., et al., which was filed in the United States District Court Northern District of Illinois Eastern Division (the “Cwynar Class Action”). The Cwynar Class Action alleges that the defendants entered into a continuing contract, combination, or conspiracy to unreasonably restrain interstate trade and commerce in violation of Section 1 of the Sherman Act and the Illinois Antitrust Act and made misrepresentations as to the payment of brokerage commissions in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, which increased prices of homes sold due to elevated broker commissions resulting in harm to homebuyers. The Company is unable to predict the outcome of the Cwynar Class Action or to reasonably estimate the possible loss or range of loss, if any, arising from the claim asserted therein. The ultimate resolution of the Cwynar Class Action could have a material adverse effect on the Company’s financial position, results of operations, and cash flow.
| 22 |