10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

or

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________________ to ______________________

Commission File Number: 333-168025

EXP WORLD HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware	333-168025	98-0681092
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

1321 King Street, Suite 1
Bellingham, WA 98229

(Address of principal executive offices and Zip Code)

Registrant’s telephone number, including area code: (360) 685-4206

                    N/A                    

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was require to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]     No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (of for such shorter period that the registrant was required to submit and post such files). 

Yes [X]     No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ]      Accelerated filer [   ]      Non-accelerated filer [   ]   Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 
Yes [   ]    No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of August 15, 2016 the registrant’s outstanding common stock consisted of 51,131,069 shares.

TABLE OF CONTENTS

		Page
	Forward Looking Statements	3
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other information	22
Item 6.	Exhibits	23

2

Statement Regarding Forward-Looking Statements

Certain statements contained in this report on Form 10-Q are forward-looking statements which are intended to be covered by the safe harbors created thereby. All statements, other than statements of historical facts, are forward-looking statements. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,” “would,” “potential” and similar expressions identify forward-looking statements, but are not the exclusive means of doing so. Forward-looking statements may include statements about matters such as: future revenues; future industry market conditions; future changes in our capacity and operations; future operating and overhead costs; operational and management restructuring activities (including implementation of methodologies and changes in the board of directors); future employment and contributions of personnel; tax and interest rates; capital expenditures and their impact on us; nature and timing of restructuring charges and the impact thereof; productivity, business process, rationalization, investment, acquisition, consulting, operational, tax, financial and capital projects and initiatives; contingencies; environmental compliance and changes in the regulatory environment; and future working capital, costs, revenues, business opportunities, debt levels, cash flows, margins, earnings and growth.

These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical and current trends, current conditions, possible future developments and other factors they believe to be appropriate. Forward-looking statements are not guarantees, representations or warranties and are subject to risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements. Some of those risks and uncertainties include the risk factors set forth in this report and our Annual Report on Form 10-K for our prior fiscal year ended December 31, 2015, and the following: current global economic and capital market uncertainties; potential dilution to our stockholders from our recapitalization and balance sheet restructuring activities; potential inability to continue to comply with government regulations; adoption of, or changes in legislation or regulations adversely affecting our businesses; permitting constraints or delays, business opportunities that may be presented to, or pursued by, us; changes in the United States or other monetary or fiscal policies or regulations; changes in generally accepted accounting principles; geopolitical events; potential inability to implement our business strategies; potential inability to grow revenues organically; potential inability to attract and retain key personnel; assertion of claims, lawsuits and proceedings against us; potential inability to maintain an effective system of internal controls over financial reporting; potential inability or failure to timely file periodic reports with the SEC; and potential inability to list our securities on any securities exchange or market. Occurrence of such events or circumstances could have a material adverse effect on our business, financial condition, results of operations or cash flows or the market price of our securities. All subsequent written and oral forward-looking statements by or attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. We undertake no obligation to publicly update or revise any forward-looking statement.

3

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

eXp World Holdings, Inc.

(unaudited)

June 30, 2016

	Page
Condensed Consolidated Balance Sheets	5
Condensed Consolidated Statements of Operations	6
Condensed Consolidated Statements of Comprehensive Loss	7
Condensed Consolidated Statements of Cash Flows	8
Notes to the Condensed Consolidated Financial Statements	9

4

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30,			December 31,
	2016			2015
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	886,193		$	571,814
Restricted cash		349,117			148,613
Accounts receivable, net of allowance $13,341 and $2,342, respectively		1,021,061			341,643
Prepaids and other assets		190,815			84,451
TOTAL CURRENT ASSETS		2,447,186			1,146,521
OTHER ASSETS
Fixed assets, net		233,967			110,195
TOTAL OTHER ASSETS		233,967			110,195
TOTAL ASSETS	$	2,681,153		$	1,256,716
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	61,662		$	89,984
Customer deposits		349,117			148,613
Accrued expenses		1,029,105			425,613
TOTAL CURRENT LIABILITIES		1,439,884			664,210
Commitments and contingencies		–			–
STOCKHOLDERS' EQUITY
eXp World Holdings, Inc. Stockholders' Equity:
Common Stock, $0.00001 par value 220,000,000 shares authorized; 51,131,069 shares and 50,168,195 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively		511			502
Additional paid-in capital		13,894,520			6,611,781
Accumulated deficit		(12,616,862	)		(5,991,088	)
Accumulated other comprehensive loss		(4,024	)		(9,113	)
Total eXp World Holdings, Inc. Stockholders' Equity		1,274,145			612,082
Non-controlling interests in subsidiary		(32,876	)		(19,576	)
TOTAL STOCKHOLDERS' EQUITY		1,241,269			592,506
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,681,153		$	1,256,716

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,			Three Months Ended June 30,			Six Months Ended June 30,			Six Months Ended June 30,
	2016			2015			2016			2015
Net revenues	$	13,282,028		$	5,584,963		$	20,424,840		$	9,034,204
Operating expenses
Cost of revenues		11,463,125			4,767,527			17,574,112			7,645,271
General and administrative		7,565,698			5,669,105			8,990,856			6,119,041
Professional fees		130,018			98,832			273,393			175,435
Sales and marketing		122,285			43,006			199,428			89,363
Total expenses		19,281,126			10,578,470			27,037,789			14,029,110
Net loss from operations		(5,999,098	)		(4,993,507	)		(6,612,949	)		(4,994,906	)
Other income and (expenses)
Other income		439			2,897			446			6,583
Interest expense		–			(464	)		–			(925	)
Total other income and (expenses)		439			2,433			446			5,658
Income (loss) before income tax expense		(5,998,659	)		(4,991,074	)		(6,612,503	)		(4,989,248	)
Income tax expense		(13,968	)		(7,080	)		(25,571	)		(25,723	)
Net loss		(6,012,627	)		(4,998,154	)		(6,638,074	)		(5,014,971	)
Net loss attributable to non-controlling interest in subsidiary		6,720			–			12,300			–
Net loss attributable to common shareholders	$	(6,005,907	)	$	(4,998,154	)	$	(6,625,774	)	$	(5,014,971	)
Net loss per share attributable to common shareholders
Basic	$	(0.12	)	$	(0.10	)	$	(0.13	)	$	(0.10	)
Diluted	$	(0.12	)	$	(0.10	)	$	(0.13	)	$	(0.10	)
Weighted average shares outstanding
Basic		50,940,460			49,182,952			50,779,114			48,955,168
Diluted		50,940,460			49,182,952			50,779,114			48,955,168

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net loss	$	(6,012,627	)	$	(4,998,154	)	$	(6,638,074	)	$	(5,014,971	)
Other comprehensive loss:
Foreign currency translation adjustments, net of tax		(1,919	)		(5,050	)		5,089			(14,462	)
Comprehensive loss		(6,014,546	)		(5,003,204	)		(6,632,985	)		(5,029,433	)
Comprehensive loss attributable to non-controlling interest in subsidiary		6,720			–			12,300			–
Comprehensive loss attributable to common shareholders	$	(6,007,826	)	$	(5,003,204	)	$	(6,620,685	)	$	(5,029,433	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June 30,
	2016			2015
OPERATING ACTIVITIES
Net loss	$	(6,638,074	)	$	(5,014,971	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation		25,555			13,147
Stock compensation expense		731,709			772,125
Stock option expense		6,551,040			4,212,731
Changes in operating assets and liabilities :
Accounts receivable		(679,418	)		(101,152	)
Accounts receivable, related party		–			2,477
Prepaids and other assets		(106,364	)		(55,627	)
Accounts payable		(28,322	)		15,707
Accrued expenses		603,492			157,126
Accrued interest		–			925
CASH PROVIDED BY OPERATING ACTIVITIES		459,618			2,488
INVESTING ACTIVITIES
Acquisition of property and equipment		(150,328	)		(34,974	)
CASH USED IN INVESTING ACTIVITIES		(150,328	)		(34,974	)
FINANCING ACTIVITIES
Repurchase and retirement of subsidiary common stock		(1,000	)		–
Exercise of options		1,000			–
Repurchase and retirement of shares		–			(3,132	)
Principal payments of notes payable		–			(15,000	)
CASH USED IN FINANCING ACTIVITIES		–			(18,132	)
Effect of changes in exchange rates on cash and cash equivalents		5,089			(14,462	)
Net change in cash and cash equivalents		314,379			(65,080	)
Cash and cash equivalents, beginning of period		571,814			353,374
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	886,193		$	288,294
		–			–
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for interest	$	–		$	–
Cash paid for income taxes	$	32,235		$	18,643

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

eXp World Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements

June 30, 2016

(Expressed in U.S. dollars)

1. BACKGROUND AND BASIS OF PRESENTATION

eXp World Holdings, Inc. formerly known as eXp Realty International Corporation (the “Company” or “we” or “eXp”) was incorporated in the State of Delaware on July 30, 2008.

The Company is a cloud-based real estate company. It currently operates a real estate brokerage operating in 40 States, the District of Columbia, and in Alberta, Canada. We also operate a loan brokerage origination company which currently operates in California, Arizona, New Mexico, Virginia, and Texas. As a cloud-based company, eXp has embraced and adopted a number of cloud-based technologies in order to grow an international brokerage without the burden of physical bricks and mortar or redundant staffing costs.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six-month period ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Principles of Consolidation

The accompanying condensed consolidated unaudited financial statements include the accounts of eXp World Holdings, Inc. (formerly eXp Realty International Corporation) and its subsidiaries eXp Realty Holdings, Inc. (formerly eXp Acquisition Corp); First Cloud Mortgage, Inc.; eXp Realty Associates, LLC; eXp Realty, LLC; eXp Realty of California, Inc. (formerly eXp Realty of Washington, Inc.); eXp Realty of Canada, Inc.; and eXp Realty of Connecticut, LLC. All material intercompany accounts and transactions have been eliminated upon consolidation.

Non-controlling interests

Non-controlling interests in the Company’s subsidiaries are reported as a component of equity, separate from the parent company’s equity. Results of operations attributable to the non-controlling interests are included in the Company’s condensed consolidated statements of operations and condensed consolidated statements of comprehensive loss.

On July 23, 2015 the Company formed First Cloud Mortgage, Inc. In January 2016 we repurchased and retired 1,000 shares of common stock in this subsidiary for $1,000 of which it currently holds an 89.4% majority and controlling interest. The other 10.6% non-controlling interest is owned by the President of First Cloud Mortgage, Inc.

9

Use of Estimates

The preparation of financial statements in conformity with US generally accepted accounting principles 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 provisions for doubtful accounts, legal contingencies, income taxes, revenue recognition, stock-based compensation, expense accruals, 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.

Foreign currency translation

The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Canadian dollars and management has adopted ASC 830, Foreign Currency Translation Matters. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, at the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Other Comprehensive Loss

Other comprehensive loss for the six months ended June 30, 2016 and June 30, 2015 consisted of foreign exchange translation gain in the amount of $5,089 and loss in the amount of $14,462, respectively.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. Under the new guidance a lessee will be required to recognize assets and liabilities for leases with lease terms more than 12 months, whether that lease be classified as a capital or operating lease. This update is effective in annual reporting periods beginning after December 15, 2018 and the interim periods within that year. The Company will be evaluating the impact of this update as it pertains to the Company’s financial statements and other required disclosures on an on-going basis until its eventual adoption and incorporation.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation. The update will simplify certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows and forfeitures. This update will be effective for the Company beginning in its first quarter of 2018. The Company is currently evaluating the impact of adopting the new stock compensation standard on its consolidated financial statements.

3. RELATED PARTY TRANSACTIONS

The Company had no known related party balances as of June 30, 2016 or December 31, 2015, respectively.

10

4. STOCKHOLDERS’ EQUITY

In January of 2016 we re-purchased and retired 1,000 shares of common stock in our subsidiary First Cloud Mortgage, Inc. for $1,000 in cash.

During the six months ended June 30, 2016, the Company issued 829,196 restricted shares of common stock to directors, employees, and contractors for services with a value of $731,709.

On April 22, 2016 the Company amended its articles of incorporation whereby we reduced our number of authorized shares of common stock with a par value of $0.00001 from 7,700,000,000 down to 220,000,000.

5. STOCK BASED COMPENSATION

Intrinsic Value Options

At June 30, 2016 the Company had 6,785,808 stock options outstanding that were granted prior to Company becoming public in September 2013, which the Company accounts for based on the intrinsic value method and re-measures the intrinsic value at each reporting date through the date of exercise or other settlement. Compensation cost or benefit is recognized based on the change in intrinsic value at each reporting date. For the six months ended June 30, 2016 the Company’s stock options had intrinsic values between $1.50 and $1.69 and the Company recognized a stock option expense of $6.45 million, which consisted of a $6.0 million change in intrinsic value and $450 thousand in vesting costs. For the six months ended June 30, 2015 the Company’s stock options had intrinsic values between $0.03 and $0.81 and the Company recognized stock option expense of $4.21 million, which consists of a $4.08 million change in intrinsic value and $123 thousand in current vesting costs.

Traditional Stock Options

During the six months ended June 30, 2016 the Company granted 1,380,000 stock options and has elected to account for the fair value using the Black-Scholes option-pricing model. Expected volatility has been determined using the historical stock price. The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to the vesting schedule. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company has not paid and does not anticipate paying dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. The company recognized $99 thousand and $6 thousand in stock option expense for the six months ended June 30, 2016 and June 30, 2015 respectively.

6. COMMITMENTS AND CONTINGENCIES

The Company is subject to legal proceedings and claims that arise in the ordinary course of business. In the opinion of Management, the ultimate liability with respect to current proceedings and claims will not have a material adverse effect upon the Company’s financial position or results of operations.

11

7. SEGMENT INFORMATION AND GEOGRAPHIC DATA

The reportable segments presented below represent the Company’s operating segments for which separate financial information is available and which is utilized on a regular basis by its chief operating decision maker to assess performance and to allocate resources. In identifying its reportable segments, the Company also considers the nature of services provided by its operating segments. Management evaluates the operating results of each of its reportable segments based upon net revenues.

	Net Revenues
	Six months Ended June 30,
	2016			2015
Real Estate Brokerage Services	$	20,448,528		$	9,082,289
Mortgage Origination Services		118,327			–
Corporate and Other (a)		(142,015	)		(48,085	)
	$	20,424,840		$	9,034,204

(a) Includes elimination of transactions between segments

The geographic segment information provided below is classified based on the geographic location of the Company’s subsidiaries.

For the six months ended June 30, 2016		US		CANADA		TOTAL
Net revenues	$	19,939,963	$	484,877	$	20,424,840
Total assets		2,442,715		238,438		2,681,154
For the six months ended June 30, 2015
Net revenues	$	8,388,468	$	645,736	$	9,034,204
Total assets		872,748		219,498		1,092,244

8. SUBSEQUENT EVENTS

As of August 15, 2016, management does not believe there are any subsequent events requiring recognition or disclosure to either the financial statements or notes to the financial statements.

12

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read together with our condensed consolidated financial statements and related notes appearing elsewhere in this report. This discussion contains forward-looking statements based upon current expectations that involve numerous risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons. Those reasons include, without limitation, those described at the beginning of this report under “Statement regarding forward-looking statements,” as well as those that may be set forth elsewhere in this report. Except as otherwise required by law, we do not intend to update any information contained in these forward-looking statements. The following discussion also addresses matters we consider important for an understanding of our financial condition as of June 30, 2016, and results of operations for the three and six month periods ended June 30, 2016, as well as our future results.

OVERVIEW

eXp World Holdings, Inc., formerly known as eXp Realty International Corporation (the “Company” or “eXp”), was incorporated in the State of Delaware on July 30, 2008. The Company operates a cloud-based real estate company division (“eXp Realty”) currently in 40 States, the District of Columbia, and in Alberta, Canada. We also operate a loan brokerage origination company which currently operates in California, Arizona, New Mexico, Virginia and Texas. As a cloud-based company, eXp has embraced and adopted a number of cloud-based technologies in order to grow an international brokerage without the burden of physical bricks and mortar or redundant staffing costs.

RECENT BUSINESS DEVELOPMENTS

On April 6, 2016, the company announced that it had entered into an agreement with Virbela, LLC (“VirBELA”), one of the leading developers of 3-D, avatar-based, immersive online worlds, the same type of environments that the Company has utilized since its inception in building its real estate brokerage. The agreement grants the Company exclusive worldwide rights within the real estate industry and an option for exclusive rights within the vertical industries of mortgage origination, mortgage lending, title and escrow, and title insurance. VirBELA was incubated at the University of California San Diego’s Rady School of Management with a $1.7 million grant from the Graduate Management Admission Council. VirBELA used that grant to develop and demonstrate an immersive, 3D virtual-reality campus environment that hosted a global business-simulation competition for management students at top universities on three continents. The Company continues to work with VirBELA in developing its new Cloud Campus and anticipates migrating its real estate agents, brokers and staff into the new environment to facilitate and accommodate engagement by and among the Company’s fast growing base of real estate professionals.

On April 7, 2016 the Company announced a name change to eXp World Holdings, Inc. in order to reflect its broader commitment to utilizing cloud-based technologies in order to create opportunities for service professionals in industries that are ancillary to or distinct from real estate brokerage operations. In addition to its real estate brokerage operations, the Company, as an example, owns an 89.4% interest in First Cloud Mortgage, Inc. , a loan brokerage origination company formed in Delaware in July of 2015. The formation of First Cloud provides the Company with the opportunity to leverage what it has learned from the real estate brokerage business and apply it to a related services industry in a way that will afford the Company the opportunity to generate revenues from transactions outside of, and with no relationship to the Company’s real estate brokerage operations. The Company’s overarching strategy is to derive revenues from ancillary services, including mortgage, title, and insurance. First Cloud represents the first step in the implementation of that strategy.

Significant Director Additions - On July 26, 2016, the Company introduced Rick Miller and Randall Miles as new independent members of its Board of Directors.

13

Rick Miller has held senior leadership positions in companies ranging from a Fortune 10 to a startup. His extensive experience as a turnaround specialist and an expert in sustainable growth has been applied as an executive inside organizations and as a confidant advising from outside companies. Mr. Miller began his career as a sales trainee at Sperry/Unisys and left 15 years later as Divisional VP/GM of North America. He later served as President, COO, and as a Board member at internet startup OPUS360 where he led the company's successful IPO. Mr. Miller was later recruited by Lucent Technologies to lead their $21B world-wide sales efforts. Later, he was named President, Lucent Government Solutions. Mr. Miller also served as CEO at the Balance & Stretch Center, a non-profit focused on supporting children with diabetes. Mr. Miller is currently CEO at Being Chief, LLC where he serves as an advisor to a broad range of Chiefs, across a diverse number of industries. He is also an author and public speaker. Mr. Miller's success and unconventional approach has been highlighted in Harvard Business Review, Selling Power, USA Today, Yahoo, and MSN Business. Most recently, Mr. Miller was named to serve on the Executive Committee for the Strategic Innovation Lab at Case University's Weatherhead School of Management, focusing on sustainable growth. Mr. Miller has earned a Bachelor of Arts degree in Management from Bentley University and a Master's degree in Business Administration from Columbia University.

Randall Miles has held senior leadership positions in global financial services, financial technology and investment banking companies for more than 25 years. His extensive investment banking background at bulge bracket, regional and boutique firms advising financial services companies on strategic and financial needs has crossed many disciplines.

Mr. Miles' transactional and advisory experience is complemented by leadership of public and private equity backed financial technology, specialty finance and software companies including as Chairman and CEO at LIONMTS, where he was nominated for the Ernst & Young Entrepreneur of the Year award; CEO at Syngence Corporation; COO of AtlasBanc Holdings Corp.; and, CEO of Advantage Funding/NAFCO Holdings which grew to in excess of $1 billion.

Mr. Miles is currently Managing Partner at SCM Capital Group, a global strategic and financial advisory firm and Senior Managing Director at Tigress Financial Partners, a full service institutional broker dealer where is he is head of Investment Banking. Most recently, Mr. Miles served as Senior Managing Director, Head of FIG and COO, Investment Banking at Cantor Fitzgerald & Co. Mr. Miles has held senior leadership roles at Oppenheimer & Co.; D.A. Davidson and & Co.; The First Boston Corporation (Credit Suisse); Meridian Capital; and, Greenwich Capital Markets. Mr. Miles has broad public, private and nonprofit board experience and has been active for many years in leadership roles with the Make-A-Wish Foundation. He presently serves on the boards of Kuity, Corp. and Posiba, Inc. as Vice Chairman and Chairman respectively. Mr. Miles holds a BBA from the University of Washington and holds FINRA licenses Series 7, 24, 63 and 79.

The Company believes that the additions of Mr. Miller and Mr. Miles to its Board of Directors will provide the Company with experienced counsel as it continues to grow and expand operationally and as it matures within the public markets. In addition, the Company believes that Mr. Miller and Mr. Miles will provide greater independence and oversight while being actively engaged in the Company’s progression.

On July 29, 2016, the Company announced that Russ Cofano had joined the Company as Chief Strategy Officer and General Counsel. Mr. Cofano brings more than twenty-five-years of real estate industry experience to the Company. Mr. Cofano most recently served as Senior Vice President of industry relations for MOVE, Inc. operator of REALTOR.com® developing strategy and building relationships with the real estate industry's leading organizations, MLSs and technology companies. Mr. Cofano has also served as Chief Executive Officer for the Missouri REALTORS®, the largest trade association in the state of Missouri, and as Vice President and General Counsel for John L. Scott Real Estate, consistently ranked as one of the largest real estate brokerage companies in the nation. He has also served as an advisor to a number of REALTOR® associations and MLSs and as CEO of a real estate CRM technology company. The Company believes that the addition of Mr. Cofano will help the Company manage the rapid rate of growth within its real estate division, and develop and pursue new strategic initiatives across each of its operating divisions while identifying and mitigating risk.

The Company and its subsidiaries are also planning to hire key employees in mid-level management over the next year to facilitate expanding operational growth and to help evaluate potential new business lines in strategic areas at the operational level.

Corporate Governance - The Company’s efforts to enhance corporate governance as the Company expands and matures include the significant addition of independent directors Miller and Miles. The Company believes the following developments represent steps to address some of the material weaknesses in the Company’s internal control over financial reporting:

· The Company now has three independent directors, representing half of the current Board seats.

· On July 26, 2016, the Board of Directors established an Audit Committee, comprised of independent directors Miller and Miles.

· The Board determined that Mr. Randall qualifies as an “audit committee financial expert” within the meaning of the rules and regulations promulgated by the SEC.

· The Company continues to make strategic hires of key employees.

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Continued Accelerated Growth - The Company increased its net real estate brokerage agent and broker base as of June 30, 2016 by 111%, from 665 to 1400 agents as compared to June 30, 2015; and increased its net sales by 126% from $ 9.03 million to $20.42 million for the six months ended June 30, 2016 as compared to June 30, 2015. The Company has continued and accelerated its rapid pace of year-over-year growth continuing to enter into new US States (and sub-markets within those states).

Making it Rain – Online Lead Generation- In 2015, the Company launched its “Making It Rain” program, a robust, high-quality lead generation program delivering leads to the Company’s agents and brokers at steep discounts compared to leads generated and sold by popular third-party syndicators which effectively have been using industry data to sell back past clients to industry agents. As noted in previously filings, as a national and non-franchise organization the Company maintains membership in more than 100 multiple listing services across North America and can aggregate data and generate leads effectively. With the Making it Rain program, the Company distributes those leads to an eXp agent exclusively (in contrast to the syndicators) and at a significant discount from what agents are paying to third parties.

Agent Ownership - In 2016 the Company extended equity incentive programs whereby agents and brokers could become eligible for awards of the Company’s common stock through the achievement of production and agent attraction benchmarks. Agents who qualify, and who remain with the Company in good standing for the duration of a 3-year period following their eligibility notice, can be awarded shares, thereby allowing them to increase their ownership stake in the organization, in further fulfillment of the Company’s objective to be an agent-owned brokerage. Towards the end of 2015 the Company set forth and announced what it anticipates will constitute the performance-based incentive programs for the foreseeable future and beyond any particular calendar year. Going forward, the number of shares awarded for performance-based achievements will correspond with the number of agents who are in the organization and, as a result, with the growth and value of our agent-owned company and its underlying stock. The Company, in this way, is maintaining value of awards for those agents who join us in the future, while recognizing the accomplishments and contributions of those who are with us today, minimizing dilution. In 2016, the Company is also continuing a program whereby agents and brokers can elect to receive 5% of their commission payable in the form of restricted Company common stock.

Enterprise Application - To date, the Company has evolved through substantial dependence on independent third-party software and applications which, when taken together, constitute a patchwork that has sustained and supported the Company’s growth but which could become unwieldy prospectively, both for the Company and for its agents and brokers. As the Company continues to introduce and execute on a number of initiatives aimed at accelerating expansion, it has commenced development of an enterprise application in order to move away from the integrations of external systems. Successful development of the enterprise application will enable the Company to scale the growth of its real estate brokerage operations without experiencing limitations on functionality.

MARKET CONDITIONS AND TRENDS

The United States housing market was adversely impacted beginning in 2006 by the combination of a number of factors, including but not limited to more stringent lending guidelines, increased unemployment, and an overall macroeconomic decline. Overall U.S. sales volume declined as did the market value of homes which in turn created a swell in foreclosures and mortgage defaults. It was this combination of factors which, in part, served as the impetus for the Company’s business model as traditional real estate brokerages on a large scale experienced a diminishment of revenues without, in many cases, a corresponding reduction in fixed expenses, resulting in an erosion of profits. While markets throughout much of the United States have recovered, recent commentary by the Chief Economist for the National Association of REALTORSⓇ suggests that the recovery may have reached its apex. The Company still estimates that a significant number of real estate brokerages today are not profitable or are marginally profitable due to the impact of high or fixed overhead and a costly struggle to drive higher productivity among their agents. In the event that market activity slows, many traditional real estate brokerage owners will again be pressured by an operating cost structure that isn’t responsive to cyclical turns in the market with overhead costs that hold steady or continue to climb.

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Market activity and home values are susceptible to macroeconomic conditions, including, among others, monetary policy decisions by the Federal Reserve Bank relative to interest rates; employment growth or decline; population trends; and, the re-entry into the market of former homeowners who suffered delinquencies, foreclosures, short-sales, or bankruptcies during the downturn. These factors, coupled with uncertain Federal Reserve policy, suggests that the real estate industry could continue to see growth in sales during the upcoming fiscal year but at the same time could experience a decline. In either turn, the Company expects to adhere to its low-cost, high-engagement model, affording a growing number of agents and brokers increased income and ownership opportunities while offering a scalable solution to brokerage owners looking to survive and thrive in a wide range of economic conditions.

Technology continues to disrupt traditional business models in many different ways. eXp Realty as a residential real estate brokerage generally speaking only maintains the physical footprint of a brokerage that is required by the states we operate in rather than trying to have an office on every corner. With the continual improvement of high speed internet availability, we tend to see the office be more and more mobile for all agents and brokers. We believe that in some cases the physical office actually detracts from collaboration rather than encourages it. We plan on continuing to pursue these efforts through the use of the Cloud-campus and other mobile collaboration platforms. We believe this is beneficial for agents, brokers, and consumers and is a far easier business model to facilitate and grow than one requiring management of the hundreds or thousands of physical offices that would be necessary in a traditional approach in order to cover the geographic footprint that eXp Realty currently covers. The eXp Cloud Office has enabled would be real estate brokers who join the Company to shed enormous overhead expenses and staffing costs while still retaining a percentage of commissions generated by the agents they attract while availing themselves of an opportunity to scale their business in a way that traditional models do not easily support.

Potential challenges for eXp Realty and other brokerages come our way through the large third party syndicators. The relevancy of a brokerage in the face of a significant percentage of lead generation for the agents who work for the firm being generated through third party portals does raise the question of relevancy to the agents that work for the brand. We see this as a real threat to us as a real estate brokerage and we are proactively developing low cost lead generation platforms that our agents can take advantage of which provide significant cost savings vs going through third party syndicators.

As a small brokerage covering a large geographic area it is relatively easy for eXp Realty to generate leads at a lower cost than the portals however as we grow this may become harder and harder to do. In the first quarter of 2015 we launched the Making It Rain program for our agents and brokers to take advantage of. Agents participating in this program have seen leads generated by participants in a range between $7.00 - $40.00 per lead. Leads may become more expensive over time and in some cases may exceed the cost of leads from other third party syndicators so we need to be aware of this and continually innovate on behalf of our agents and brokers again with the goal of being relevant in their business. If agents believe that their business is generated from third party syndicators then it may follow that agents may pursue the lowest expense brokerage in order to maximize their income.

One of the ways that we believe we have been able to grow into as many states and remain relevant is by adopting an agile mindset as a company. In this context eXp Realty continues to regularly deliver value to its agents and brokers, and by prioritizing work based on what our agents and brokers have told us they want, we have been able to develop a company framework that is relevant to our agents and brokers. We have started to implement the Net Promoter Score into how we evaluate ourselves as a company, as well as introducing NPS into how we support our agents and manage transaction flow. By using both NPS and more agile management style, systems we have been able to launch and implement value added features and benefits in short order. We believe this offers us a unique advantage in terms of developing value for our agents and brokers. We believe that using tools like NPS and having an Agile management mindset provides us with a way to stay more relevant to our agents and brokers in an always changing business. We expect that more and more brokerages will eventually use tools similar to NPS and Agile in their management process which may again reduce the speed at which we are able to add value compared to other brokerages however at this point in time we feel this does give us a competitive advantage in growing eXp Realty.

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COMPARATIVE FINANCIAL INFORMATION FROM OUR RESULTS OF OPERATIONS

Three months ended June 30, 2016, compared to the three months ended June 30, 2015

Revenues

During the current three-month period ended June 30, 2016 net revenues increased $7.70 million to $13.28 million as compared to the three-month period ended June 30, 2015 when we generated $5.58 million. The increase as compared to the prior period is a direct result of the increased sales agent base and higher sales volume realized.

Operating Expenses

	Three months Ended
	June 30,
	2016		2015		Change
Operating expenses:
Cost of revenues	$	11,463,125	$	4,767,527	$	6,695,598
General and administrative		7,565,698		5,669,105		1,896,593
Professional fees		130,018		98,832		31,186
Sales and marketing		122,285		43,006		79,279
Total operating expenses	$	19,281,126	$	10,578,470	$	8,702,656

Cost of revenues includes costs related to sales agent commissions and revenue sharing. These costs are highly correlated with recognized net revenues. As such, the increase of $6.70 million in the current three-month period ended June 30, 2016 as compared to the three-month period ended June 30, 2015 was driven by the higher amount of net revenues and agent commission rates.

General and administrative includes costs related to wages, stock compensation, dues, operating leases, utilities, travel, and other general overhead expenses. The increase of $1.90 million in general and administrative costs in the three-month period ended June 30, 2016 as compared to the three-month period ending June 30, 2015 was driven primarily from an increase of $1.73 million in stock option expense, $350 thousand in payroll expense, and $86 thousand in additional computer and software systems expense was all offset by a decrease in stock compensation expense.

Professional fees include costs related to legal, accounting, and other consultants. Costs increased $31 thousand during the three-month period ending June 30, 2016 as compared to the three-month period ended June 30, 2015 was primarily due to higher legal fees with the changes to our corporate governance during the period.

Sales and marketing include costs related to lead capture, digital and print media, and trade shows, in addition to other promotional materials. The cost increase of approximately $79 thousand was due to increased cost in lead capture and other internet marketing for the three-month period ending June 30, 2016 as compared to the three-month period ending June 30, 2015.

Six months ended June 30, 2016, compared to the six months ended June 30, 2015

Revenues

During the current six-month period ended June 30, 2016 net revenues increased $11.39 million to $20.42 million as compared to the six-month period ended June 30, 2015 when we generated $9.03 million. The increase as compared to the prior period is a direct result of the increased sales agent base and higher sales volume realized.

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Operating Expenses

	Six months Ended
	June 30,
	2016		2015		Change
Operating expenses:
Cost of revenues	$	17,574,112	$	7,645,271	$	9,928,841
General and administrative		8,990,856		6,119,041		2,871,815
Professional fees		273,393		175,435		97,958
Sales and marketing		199,428		89,363		110,065
Total operating expenses	$	27,037,789	$	14,029,110	$	13,008,679

Cost of revenues includes costs related to sales agent commissions and revenue sharing. These costs are highly correlated with recognized net revenues. As such, the increase of $9.93 million in the current six-month period ended June 30, 2016 as compared to the six-month period ended June 30, 2015 was driven by the higher amount of net revenues and agent commission rates.

General and administrative includes costs related to wages, stock compensation, dues, operating leases, utilities, travel, and other general overhead expenses. The increase of $2.87 million in general and administrative costs in the six-month period ended June 30, 2016 as compared to the six-month period ending June 30, 2015 was driven primarily from an increase of $2.34 million in stock option expense, $616 thousand in payroll expense, and $152 thousand in additional computer and software systems expense which was all offset by a decrease in stock compensation expense.

Professional fees include costs related to legal, accounting, and other consultants. Costs increased $98 thousand during the six-month period ending June 30, 2016 as compared to the six-month period ended June 30, 2015 due to higher accounting fees associated with the preparation of its annual report in addition to legal fees associated with the changes to our Corporate governance during the period.

Sales and marketing include costs related to lead capture, digital and print media, trade shows, in addition to other promotional materials. The cost increase of approximately $110 thousand was due to increased cost in lead capture, internet marketing, and printing materials for the six-month period ending June 30, 2016 as compared to the six-month period ending June 30, 2015.

LIQUIDITY AND CAPITAL RESOURCES

	June 30,			December 31,
	2016			2015			Change
Current assets	$	2,447,186		$	1,146,521		$	1,300,665
Current liabilities		(1,439,884	)		(664,210	)		(775,674	)
Net working capital	$	1,007,302		$	482,311		$	524,991

The Company’s net working capital increased $525 thousand during the six-month period ending June 30, 2016 as compared to December 31, 2015. This increase was primarily driven from an increase in its cash and cash equivalents as of June 30, 2015 as compared to December 31, 2015.

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The following table presents our cash flows for the six months ended June 30, 2016 and 2015:

	Six months Ended
	June 30,
	2016			2015			Change
Cash provided by operating activities	$	459,618		$	2,488		$	457,130
Cash used in investment activities		(150,328	)		(34,974	)		(115,354	)
Cash used in financing activities		–			(18,132	)		18,132
Net change in cash	$	309,290		$	(50,618	)	$	359,908

Net cash provided by operating activities for the six months ended June 30, 2016 was approximately $460 thousand as compared to $2 thousand for the six months ended June 30, 2015. Our increase in cash provided by operations for the first six months of 2016 was primarily caused by the increased participation in the Agent Equity Program which some agents have been paid a portion of their commission income in the form of common stock of the Company thus resulting in $459 thousand less cash outflows for the six months ended June 30, 2016.

Net cash used in investing activities for the acquisition of fixed assets was $150 thousand and $35 thousand for the six months ended June 30, 2016 and June 30, 2015, respectively. The increase in spending on investing activities is associated with the Company’s efforts devoted to creating its enterprise application.

Net cash used in financing activities for the six months ended June 30, 2016 was $0. Net cash used in financing activities for the six months ended June 30, 2015 was comprised of $15 thousand used to pay down principal on its notes payable while $3 thousand used for the repurchase and retirement of 12,530 shares of common stock.

Our future capital requirements will depend on many factors, including our level of investment in technology and our rate of growth into new markets. Our capital requirements may be affected by factors which we cannot control such as the residential real estate market, interest rates, and other monetary and fiscal policy changes in which we currently operate. We may have a greater need to fund our business by using our cash and cash equivalents, which could not continue indefinitely without raising additional capital. We believe that we currently have sufficient liquidity and capital resources to meet our existing obligations over the next twelve months.

The Company anticipates that it may desire to raise some financing to help expand operations during the next twelve months through debt and/ or equity instruments, depending on the availability of such financing on terms acceptable to the Company.

We currently have no bank debt or line of credit facilities. In the event that additional financing is required in the future, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business and results of operations will likely suffer.

CRITICAL ACCOUNTING ESTIMATES

Stock-Based Compensation (Intrinsic Value Method)

As of the date of this report, we had 6,785,808 options under our 2013 Incentive Plan outstanding accounted for in accordance with intrinsic value method that were issued prior to becoming a public company. In accordance with US GAAP, we are required to remeasure these awards at each reporting date through the date of exercise or other settlement. The changes are recorded as a component of earnings and included in general and administrative expenses. These fluctuations are based on, among other factors, our thinly traded market, volatility, and potentially wide bid/asks spreads result in the need for our management to use estimates and judgements related to compensation cost recognition associated with these awards.

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Based on our current analysis, a 10% change in fair value as of June 30, 2016 would potentially result in the recognition of approximately $1.17 million in compensation expense (benefit) during a six-month period.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

We have non-cancelable operating lease agreements with various expiration dates through November of 2018.

As previously disclosed, prior to his appointment as a director, Gene Frederick was given incentive compensation as an independent contractor whereby Mr. Frederick could potentially be issued up to an aggregate of 3,000,000 shares of restricted common stock. As of June 30, 2016 and the date of this report, a total of fully vested 250,000 shares had been issued to Mr. Frederick pursuant to that arrangement. The Company and Mr. Frederick are working on an agreement that sets forth the time and performance-based conditions upon which the future issuance and vesting of equity compensation is subject, which will be reported once completed.

As detailed in a Current Report on Form 8-K filed on August 3, 2016, on July 29, 2016 we were pleased to appoint Mr. Russ Cofano to serve as our Chief Strategy Officer and General Counsel. The summary of that agreement contained in the Form 8-K is qualified in its entirety by reference to the entire agreement with Mr. Cofano, which is attached hereto as Exhibit 10.3.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

Item 3.                   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Item 4.                   CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report we carried out an evaluation of the effectiveness of our disclosure controls and procedures with the participation of our Chief Executive Officer and Chief Financial Officer. In making this assessment, management used the criteria for effective internal control over financial reporting described in the “Internal Control-Integrated Framework” (2013) set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information was not accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

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The determination that our disclosure controls and procedures were not effective was based on the following material weaknesses in our internal control over financial reporting, which were identified in our Annual Report on Form 10-K for the year ended December 31, 2015:

·     Insufficient corporate governance policies. Not all of our corporate processes are formally documented. Decisions made by the board and carried out by management may not be consistently applied or completed timely thereby increasing the likelihood of potential misunderstandings or incorrect implementation regarding key decisions affecting our operations and management.

·     Lack of segregation of accounting duties. We currently do not have a sufficient number of employees to segregate our accounting and recording functions.

·     Our lack of independent directors exercising an oversight role increases the risk of management override and potential fraud.

·     We do not have an independent audit committee with a defined financial expert to provide the appropriate level of monitoring of our financial reporting process.

In light of these material weaknesses, we performed additional analysis and procedures in order to conclude that our financial statements included in this report were fairly stated in accordance with accounting principles generally accepted in the United States. Accordingly, we believe that despite our material weaknesses, our financial statements included in this report are fairly stated, in all material respects, in accordance with United States generally accepted accounting principles.

CHANGES IN INTERNAL CONTROL

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the three months ended June 30, 2016 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On July 20, 2016, subsequent to the end of the most recently completed quarter, our Board of Directors was expanded to six members and two new independent directors, Rick Miller and Randall Miles were appointed to the Board. We believe the following developments represent steps to address some of the material weaknesses in our internal control over financial reporting, which were identified in our Annual Report on Form 10-K for the year ended December 31, 2015:

· The Company now has three independent directors, representing half of the current Board seats.

· On July 26, 2016, the Board of Directors established an Audit Committee, comprised solely of independent directors of Messrs. Miller and Miles.

· The Board determined that Messr. Randall qualifies as an “audit committee financial expert” within the meaning of the rules and regulations promulgated by the SEC.

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PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

From time to time, we are involved in lawsuits, claims, investigations and proceedings that arise in the ordinary course of business. There are no matters pending or threatened that we expect to have a material adverse impact on our business, results of operations, financial condition or cash flows.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the six months ended June 30, 2016 the Company did not issue any restricted common stock for cash proceeds.

During the six months ended June 30, 2016 the Company repurchased and retired 1,000 shares of common stock in First Cloud Mortgage, Inc. for $1,000 in cash.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Not applicable.

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Item 6. EXHIBITS

Exhibit Index

Exhibit	Exhibit
Number	Description
2.1	Merger Agreement dated August 15, 2013 with eXp Realty International, Inc. and eXp Acquisition Corp. (incorporated by reference on Form 8-K, filed on August 20, 2013)
3.1	Certificate of Incorporation (incorporated by reference from our Registration Statement on Form S-1, filed on July 7, 2010)
3.2	Certificate of Amendment of Certificate of Incorporation dated effective September 9, 2013 (incorporated by reference from our Form 8-K, filed on September 9, 2013)
3.3	Certificate of Amendment of Certificate of Incorporation (incorporated by reference from Appendix A to our definitive information statement on Schedule 14C filed May 11, 2016)
3.4	Bylaws (incorporated by reference from our Registration Statement on Form S-1, filed on July 7, 2010)
10.1	Letter Agreement with Richard S. Miller dated July 20, 2016
10.2	Letter Agreement with Randall D. Miles dated July 20, 2016
10.3	Employment Offer Letter with Russ Cofano dated July 29, 2016
31.1	Certification of the Chief Executive pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

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

	eXp World Holdings, Inc.
	(Registrant)
Date: August 15, 2016	/s/ Alan Goldman
	Alan Goldman
	Chief Financial Officer

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EX-10.1

Exhibit 10.1

 

July 20, 2016

Rick Miller

Dear Rick,

On behalf of eXp World Holdings, Inc., a Delaware corporation (the "Company"), I am pleased to invite you to join the Company's Board of Directors (the "Board"), subject to your election to the Board by the requisite percentage of stockholders (the date of such election being the "Effective Date"), which we anticipate will be July 20, 2016. You will serve as a director from the Effective Date until the date upon which you are not re-elected or your earlier removal or resignation.

In consideration for your service on the Board and subject to approval by the Board, you will receive Seventy-Five Thousand and 00/100 USD ($75,000) in annual cash compensation and will be granted an option under the Company's 2015 Equity Incentive Plan (the "Plan") to purchase 1,000,000 shares of the Company's common stock at an exercise price equal to the fair market value of the common stock on the date the Board approves the option grant. The company has also negotiated with Penny Sanford to provide 350,000 additional options on the same terms as those from the company. We will recommend that the Board set your vesting schedule such that (i) the shares subject to the option shall vest in a series of equal monthly installments over a 36 month period measured from the Effective Date, subject to your continued service on the Board on any such date.

The Company will reimburse you for all reasonable travel expenses that you incur in connection with your attendance at meetings of the Board, in accordance with the Company's expense reimbursement policy as in effect from time to time.

In accepting this offer, you are representing to us that you have reviewed and understand the Board's expectations of you as a contributing member to it and to the company, and that you do not know of any conflict which would restrict your service on the Board.

This letter sets forth the entire compensation you will receive for your service on the Board. Nothing in this letter should be construed as an offer of employment. If the foregoing terms are agreeable, please indicate your acceptance by signing the letter in the space provided below and returning this letter to the Company.

		Yours very truly,
		/s/ Glenn Sanford
		Glenn Sanford, Chairman
Accepted:	/s/ Rick Miller	Date:    7-20-16
	Rick Miller

EX-10.2

Exhibit 10.2

 

July 20, 2016

Randall Miles

Dear Randall,

On behalf of eXp World Holdings, Inc., a Delaware corporation (the "Company"), I am pleased to invite you to join the Company's Board of Directors (the "Board"), subject to your election to the Board by the requisite percentage of stockholders (the date of such election being the "Effective Date"), which we anticipate will be July 20, 2016. You will serve as a director from the Effective Date until the date upon which you are not re-elected or your earlier removal or resignation.

In consideration for your service on the Board and subject to approval by the Board, you will receive Seventy-Five Thousand and 00/100 USD ($75,000) in annual cash compensation and will be granted an option under the Company's 2015 Equity Incentive Plan (the "Plan") to purchase 1,000,000 shares of the Company's common stock at an exercise price equal to the fair market value of the common stock on the date the Board approves the option grant. The company has also negotiated with Penny Sanford to provide 350,000 additional options on the same terms as those from the company. We will recommend that the Board set your vesting schedule such that (i) the shares subject to the option shall vest in a series of equal monthly installments over a 36 month period measured from the Effective Date, subject to your continued service on the Board on any such date.

The Company will reimburse you for all reasonable travel expenses that you incur in connection with your attendance at meetings of the Board, in accordance with the Company's expense reimbursement policy as in effect from time to time.

In accepting this offer, you are representing to us that you have reviewed and understand the Board's expectations of you as a contributing member to it and to the company, and that you do not know of any conflict which would restrict your service on the Board.

This letter sets forth the entire compensation you will receive for your service on the Board. Nothing in this letter should be construed as an offer of employment. If the foregoing terms are agreeable, please indicate your acceptance by signing the letter in the space provided below and returning this letter to the Company.

		Yours very truly,
		/s/ Glenn Sanford
		Glenn Sanford, Chairman
Accepted:	/s/ Randall Miles	Date:    7-20-16
	Randall Miles

EX-10.3

Exhibit 10.3

July 29, 2016

Russ Cofano

Re: Offer of Employment at eXp World Holdings, Inc.; eXp Realty

Dear Russ:

We are very pleased to invite you to join eXp World Holdings, Inc. (the “Company” or “eXp”) in the role of Chief Strategy Officer and General Counsel.

Duties and Responsibilities

Your initial assignment will be as Chief Strategy Officer and General Counsel, as more fully described at EXHIBIT A attached hereto and incorporated herein by reference, and reporting to me in my role as Chief Executive Officer. You will also be a member of our Executive Team. This offer is for a full time position with a start date of July 29, 2016.

Salary

Your initial annual base salary will be $175,000 for full-time employment, payable in accordance with the Company’s customary payroll practice. There will be an additional $25,000 per year in cash compensation based on achieving specific measurable milestones to be determined within the first 90 days of employment by me as CEO in consultation with you (“Measurable Milestones”). Salary is subject to periodic review and adjustment by the Company’s management.

Vacation and Holidays

You will accrue vacation at the rate of three (3) weeks per year. You also will be entitled to take all paid holidays under the Company’s then-current schedule.

Stock Compensation

You will also receive a stock grant of 96,000 restricted shares in restricted stock grants to be vested 1/16th upon the completion of each three-month period of employment with the Company commencing at the start date, such that the entire stock award shall be fully vested after four years of continuous employment. There will be an additional 32,000 as part of the stock grant that will be earned upon achievement of the Measurable Milestones.

Stock Options

The Board of Directors will grant you a stock option to purchase 500,000 shares of the Company’s Common Stock under the Company’s 2015 Equity Incentive Plan (“Plan”). There will be an additional 150,000 options as part of the grant that will be earned upon achievement of the Measurable Milestones. Unless otherwise stated below terms regarding this grant will coincide with the Plan. The Board of Directors has approved the grant of the award with the following terms:

The exercise price for this option will be based on the fair value of the Company’s stock as of the date the Board approved the option grant, Thursday, July 28, 2016.

Following your formal written acceptance of the stock option award, the option will become vested according to the following schedule:

· 1/16th of the option shares (6.25% of the total option grant) will vest each quarterly commencing from the start date, such that the entire option would be vested after four years of continuous employment.

All of the shares underlying the options issued to you will be restricted from transfer until such time as they are registered or an applicable exemption from registration is available.

1

Expense Reimbursement

The Company will reimburse you for all reasonable travel expenses that you incur in accordance with the Company’s expense reimbursement policy as in effect from time to time.

Other Benefits

The Company will allow you to participate with any benefits that, from time to time in its sole discretion, will provide. Though other formal benefits are not currently in place, the Executive Team is consistently considering putting in place additional benefits for its employees, such as a potential 401(k) plan, health insurances (medical, dental, and vision) or severance agreements. If and or when approved by the executive team you will be eligible to participate.

Confidential Information

In an effort for the Company to safeguard its proprietary and confidential information, we may ask you to sign a confidentiality agreement. We also wish to impress upon you that the Company does not want to receive the confidential or proprietary information of others, and will support you in respecting your lawful obligations to prior employers.

At-Will Employment

While we look forward to a long and mutually beneficial relationship, should you decide to accept the offer you will be an “at-will” employee of the Company. This means that either you or the Company may terminate the employment relationship with or without cause at any time. Participation in any stock option, benefit or incentive program does not assure continuing employment for any particular period of time.

Authorization to Work

Federal government regulations require that all prospective employees present documentation of their identity and demonstrate that they are authorized to work in the United States.

Noncompetition

You agree that, during your employment with eXp you will not engage in, or have any direct or indirect interest in any person, firm, corporation or business (whether as an employee, officer, director, agent, security holder, creditor, consultant, partner or otherwise) that is competitive with the business of eXp.

You also agree that for 3 years following the date on which you are no longer employed by the Company, you will not, and will cause its respective affiliates not to, directly or indirectly, hire or otherwise use or solicit any customer, client, account, employee, agent, consultant or representative of the Company or encourage any such party to terminate or diminish its relationship with Company.

Complete Offer and Agreement

This letter contains our complete understanding and agreement regarding the terms of your employment by the Company.

There are no other, different or prior agreements or understandings on this or related subjects. Changes to the terms of your employment can be made only in a writing signed by you and an authorized executive of the Company.

2

Start Date; Acceptance of Offer

We hope that you will accept this offer promptly, and begin your fulltime employment at eXp Realty International Corporation by July 29, 2016.

As we have discussed, Russ, our team was impressed by your accomplishments and potential, and we are enthusiastic at the prospect of you joining us. I look forward to your early acceptance of this offer, and to your contributions to the growth and success of eXp World Holdings, Inc.

Sincerely,

/s/ Glenn Sanford          

Glenn Sanford

Chief Executive Officer

Accepted:	7-29-16
/s/ Russell Cofano            Russ Cofano	Date

3

EXHIBIT A

Position Description – Chief Strategy Officer and General Counsel

Overview

Reporting to and partnering with the CEO of EXP World Holdings, Inc., the Chief Strategy Officer and General Counsel (CSO/GC) works closely with the Senior Leadership Team and the Board of Directors to formalize the company’s strategicplanning processes, leading the development of the strategy, translating it for people across functions and business units, driving organizational change and establishing greater transparency and accountability for those people carrying out the company’s strategy. In addition, the CSO/GC is responsible for assessing whether strategic initiatives, at all levels of the organization, are in line with the company’s standards and objectives. The CSO/GC is also responsible for the providing strategic human resources leadership to the Company and its subsidiaries and driving the growth strategy through empowering human capital. Finally, the CSO/GC acts as the chief legal officer of the Company and its subsidiaries and is accountable for the company's legal and compliance function and supports and manages all legal and related matters that arise within the business and operations of the Company and its subsidiaries.

Specific Responsibilities

Strategy

·                  Manages the development and refining of the vision, mission and strategy for the Company, and contributes to the overall process of management and corporate decision making to ensure the organization maximizes its short, medium and long term performance goals.

·                  Facilitates the execution of the strategy by providing guidance, expertise and advice to and working collaboratively with the other Senior Leadership Team members to ensure alignment of the same with the vision and mission of the Company.

·                  Creates actionable goals that make it possible to turn the vision into tangible results, ensures that appropriate metrics are in place to measure performance and progress towards those goals and ensures that actions are completed at various levels to achieve desired results.

·                  Clarifies the Company’s strategy for every business unit and function, ensuring that all employees understand the details of the strategic plan and how their work connects to corporate goals.

·                  Assesses the company's many different projects from the products down to the daily administrative activities to ensure they align with the Company's goals.

·                  Acts as a key advisor to CEO on critical changes in the competitive landscape and the external business environment.

·                  Engages external business and industry experts to learn and influence business

strategies, constantly remaining alert and forwardthinking about opportunities and risks in the industry.

·                  Directs the development and oversees the implementation of corporate policies covering all areas of the business in furtherance of the Company’s strategy.

·                  Directs the development of the mid and long term business plan including aspects such as technology planning, operational excellence, organizational issues analysis and investment optimization, ensuring consistency and integration with objectives and plans for each function.

·                  Identifies and studies new business opportunities relevant for the business, assess their feasibility and attractiveness.

·                  Develops new business opportunities by leveraging contacts, pursuing new product development, and improving project efficiency.

·                  Manages the study of all business development proposals and business cases to endorse the proposals for alignment with the overall corporate strategy.

People

·                  Leads Human Resources (HR) and Learning and Development (LD) initiatives including employment, employee relations, compensation, training and development, benefits administration and talent planning.

·                  Ensures consistent benefits administration, evaluate vendors, negotiate plans and strategies.

·                  Oversees company compensation policies, related regulations, and establish competitive pay scales.

·                  Enhances and/or develops, implements and enforces HR policies and procedures of the Company designed to improve the overall operations and effectiveness of the Company.

·                  Works closely with the Senior Leadership Team to improve employee work relationships, engagement, retention and performance.

·                  Resolves major and highly sensitive employee relations problems.

·                  Maintains knowledge of HR policies, programs, laws and issues.

·                  Supervises and/or investigates complaints, grievances, alleged harassment, theft, etc.

4

Legal

·          Provides legal counsel and representation to the Company, contributing to the Company’s values, vision, mission and goals with respect to legal implications of major decisions, strategies and transactions.

·          Directs the development and implementation of the overall risk management systems for the Company and the interests of all Company stakeholders by identifying and mitigating risks to the achievement of the business objectives.

·          Drives and promotes compliance with applicable laws and regulations relating to public company compliance, brokerage operations, employment relationships, intellectual property rights and obligations, and other matters of significance to the Company.

·          Provides a strategic-minded legal approach utilizing legal capabilities to maximize the business opportunities while applying sound risk management practices.

·          Serves as key adviser to the CEO and the Board of Directors on issues of governance, risk management, growth, policy implementation, internal and external communications relating to sensitive matters, strategic planning and execution.

·          Reviews major contracts in conjunction with the concerned department to ensure completeness in line with the agreed terms and conditions.

·          Develops standard forms for use in all brokerage operations.

·          Responsible for the maintenance of all corporate records including all material contracts and other legal obligations.

·          Selects and manages all outside counsel relationships with approval from the Board of Directors and/or CEO.

Affiliated Services

l Develop and oversee the Plan with the CEO and the Board around Affiliated Services

¡  Mortgage

¡  Title

¡  Escrow

¡  Home Warranty

¡  Etc.

l	Develop KPI’s around Affiliated Services to be able to recognize if the various Affiliated Service providers are operating at efficiency.
l	Oversee First Cloud Mortgage, Inc. and provide direction for FCM as it grows or makes other strategic decisions relative to its current state.

Brokerage Compliance

l	Audit Current Broker Compliance Infrastructure
l	Develop a scalable Broker Compliance Infrastructure

¡  Benchmark Compliance Broker Income

l In conjunction with the Exec and Management team implement plan to transition existing compliance brokers to new compliance plan.

Enterprise App Guidance

l	Review current App State
l	Look for Gaps in the current design of the App relative to brokerage best practices
l	Look for efficient places to integrate with other Apps that agents, brokers, staff or executives might want or need
l	Work with Product Owner to give guidance on product roadmap

Portal Strategy

l Help the company evaluate and choose the right long term Portal Strategy and to evaluate build vs buy options.

5

EX-31.1

Exhibit 31.1

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 
13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to 
Section 302 of the Sarbanes-Oxley Act of 2002

I, Glenn Sanford, hereby certify that:

1.	I have reviewed this quarterly report on Form 10-Q of eXp World Holdings, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 15, 2016
By:	/s/ Glenn Sanford
	Glenn Sanford
	Chief Executive Officer and Chairman of the Board of Directors

EX-31.2

Exhibit 31.2

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 
13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to 
Section 302 of the Sarbanes-Oxley Act of 2002

I, Alan Goldman, hereby certify that:

1.	I have reviewed this quarterly report on Form 10-Q of eXp World Holdings, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 15, 2016
By:	/s/ Alan Goldman
	Alan Goldman
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of eXp World Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2016 as filed with the Securities and Exchange Commission (the “Report”), Glenn Sanford, as Chief Executive Officer of the company, and Alan Goldman, as Chief Financial Officer of the Company, each hereby certifies pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:		August 15, 2016
By:		/s/ Glenn Sanford
		Glenn Sanford
		Chief Executive Officer and Chairman of the Board of Directors
By:	/s/ Alan Goldman
	Alan Goldman
	Chief Financial Officer

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 15, 2016
Document And Entity Information
Entity Registrant Name	EXP World Holdings, Inc.
Entity Central Index Key	0001495932
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		51,131,069
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2016

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
CURRENT ASSETS
Cash and cash equivalents	$ 886,193	$ 571,814
Restricted cash	349,117	148,613
Accounts receivable, net of allowance $13,341 and $2,342, respectively	1,021,061	341,643
Prepaids and other assets	190,815	84,451
TOTAL CURRENT ASSETS	2,447,186	1,146,521
OTHER ASSETS
Fixed assets, net	233,967	110,195
TOTAL OTHER ASSETS	233,967	110,195
TOTAL ASSETS	2,681,153	1,256,716
CURRENT LIABILITIES
Accounts payable	61,662	89,984
Customer deposits	349,117	148,613
Accrued expenses	1,029,105	425,613
TOTAL CURRENT LIABILITIES	1,439,884	664,210
Commitments and Contingencies
STOCKHOLDERS' EQUITY
Common Stock, $0.00001 par value 220,000,000 shares authorized; 51,131,069 shares and 50,168,195 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively	511	502
Additional paid-in capital	13,894,520	6,611,781
Accumulated deficit	(12,616,862)	(5,991,088)
Accumulated other comprehensive (loss)	(4,024)	(9,113)
Total eXp World Holdings, Inc. Stockholders' Equity	1,274,145	612,082
Non-controlling interests in subsidiary	(32,876)	(19,576)
TOTAL STOCKHOLDERS' EQUITY	1,241,269	592,506
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 2,681,153	$ 1,256,716

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 13,341	$ 2,342
Common stock shares authorized	220,000,000	7,700,000,000
Common stock par value	$ .00001	$ 0.00001
Common stock shares issued	51,131,069	50,168,195
Common stock shares outstanding	51,131,069	50,168,195

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Net Revenues	$ 13,282,028	$ 5,584,963	$ 20,424,840	$ 9,034,204
Operating expenses
Cost of revenues	11,463,125	4,767,527	17,574,112	7,645,271
General and administrative	7,565,698	5,669,105	8,990,856	6,119,041
Professional fees	130,018	98,832	273,393	175,435
Sales and marketing	122,285	43,006	199,428	89,363
Total expenses	19,281,126	10,578,470	27,037,789	14,029,110
Net loss from operations	(5,999,098)	(4,993,507)	(6,612,949)	(4,994,906)
Other income and (expenses)
Other income	439	2,897	446	6,583
Interest expense	0	(464)	0	(925)
Total other income and (expenses)	439	2,433	446	5,658
Income (loss) before income tax expense	(5,998,659)	(4,991,074)	(6,612,503)	(4,989,248)
Income tax expense	(13,968)	(7,080)	(25,571)	(25,723)
Net loss	(6,012,627)	(4,998,154)	(6,638,074)	(5,014,971)
Net loss attributable to non-controlling interest in subsidiary	6,720	0	12,300	0
Net loss attributable to common shareholders	$ (6,005,907)	$ (4,998,154)	$ (6,625,774)	$ (5,014,971)
Net loss per share attributable to common shareholders
Basic	$ (.12)	$ (.10)	$ (.13)	$ (.10)
Diluted	$ (0.12)	$ (0.10)	$ (0.13)	$ (0.10)
Weighted average shares outstanding
Basic	50,940,460	49,182,952	50,779,114	48,955,168
Diluted	50,940,460	49,182,952	50,779,114	48,955,168

XML

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Net loss	$ (6,012,627)	$ (4,998,154)	$ (6,638,074)	$ (5,014,971)
Other comprehensive loss:
Foreign currency translation adjustments, net of tax	(1,919)	(5,050)	5,089	(14,462)
Comprehensive loss	(6,014,546)	(5,003,204)	(6,632,985)	(5,029,433)
Comprehensive loss attributable to non-controlling interest in subsidiary	6,720	0	12,300	0
Comprehensive loss attributable to common shareholders	$ (6,007,826)	$ (5,003,204)	$ (6,620,685)	$ (5,029,433)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
OPERATING ACTIVITIES
Net loss	$ (6,638,074)	$ (5,014,971)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation	25,555	13,147
Stock compensation expense	731,709	772,125
Stock option expense	6,551,040	4,212,731
Changes in operating assets and liabilities
Accounts receivable	(679,418)	(101,152)
Accounts receivable, related party	0	2,477
Prepaids and other assets	(106,364)	(55,627)
Accounts payable	(28,322)	15,707
Accrued expenses	603,492	157,126
Accrued interest	0	925
CASH PROVIDED BY OPERATING ACTIVITIES	459,618	2,488
INVESTING ACTIVITIES
Acquisition of property and equipment	(150,328)	(34,974)
CASH USED IN INVESTING ACTIVITIES	(150,328)	(34,974)
FINANCING ACTIVITIES
Repurchase and retirement of subsidiary common stock	(1,000)	0
Exercise of options	1,000	0
Repurchase and retirement of shares	0	(3,132)
Principal payments of notes payable	0	(15,000)
CASH USED IN FINANCING ACTIVITIES	0	(18,132)
Effect of changes in exchange rates on cash and cash equivalents	5,089	(14,462)
Net change in cash and cash equivalents	314,379	(65,080)
Cash and cash equivalents, beginning of period	571,814	353,374
CASH AND CASH EQUIVALENTS, END OF PERIOD	886,193	288,294
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	0	0
Cash paid for income taxes	$ 32,235	$ 18,643

XML

1. Background and Basis of Presentation

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background and Basis of Presentation

eXp World Holdings, Inc. formerly known as eXp Realty International Corporation (the “Company” or “we” or “eXp”) was incorporated in the State of Delaware on July 30, 2008.

The Company is a cloud-based real estate company. It currently operates a real estate brokerage operating in 40 States, the District of Columbia, and in Alberta, Canada. We also operate a loan brokerage origination company which currently operates in California, Arizona, New Mexico, Virginia, and Texas. As a cloud-based company, eXp has embraced and adopted a number of cloud-based technologies in order to grow an international brokerage without the burden of physical bricks and mortar or redundant staffing costs.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six-month period ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

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2. Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated unaudited financial statements include the accounts of eXp World Holdings, Inc. (formerly eXp Realty International Corporation) and its subsidiaries eXp Realty Holdings, Inc. (formerly eXp Acquisition Corp); First Cloud Mortgage, Inc.; eXp Realty Associates, LLC; eXp Realty, LLC; eXp Realty of California, Inc.(formerly eXp Realty of Washington, Inc.); eXp Realty of Canada, Inc.; and eXp Realty of Connecticut, LLC. All material intercompany accounts and transactions have been eliminated upon consolidation.

Non-controlling interests

Non-controlling interests in the Company’s subsidiaries are reported as a component of equity, separate from the parent company’s equity. Results of operations attributable to the non-controlling interests are included in the Company’s condensed consolidated statements of operations and condensed consolidated statements of comprehensive loss.

On July 23, 2015 the Company formed First Cloud Mortgage, Inc. In January 2016 we repurchased and retired 1,000 shares of common stock in this subsidiary for $1,000 of which it currently holds an 89.4% majority and controlling interest. The other 10.6% non-controlling interest is owned by the President of First Cloud Mortgage, Inc..

Use of Estimates

The preparation of financial statements in conformity with US generally accepted accounting principles 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 provisions for doubtful accounts, legal contingencies, income taxes, revenue recognition, stock-based compensation, expense accruals, 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.

Foreign currency translation

The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Canadian dollars and management has adopted ASC 830, Foreign Currency Translation Matters. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, at the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Other Comprehensive Loss

Other comprehensive loss for the six months ended June 30, 2016 and June 30, 2015 consisted of foreign exchange translation gain in the amount of $5,089 and loss in the amount of $14,462, respectively.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. Under the new guidance a lessee will be required to recognize assets and liabilities for leases with lease terms more than 12 months, whether that lease be classified as a capital or operating lease. This update is effective in annual reporting periods beginning after December 15, 2018 and the interim periods within that year. The Company will be evaluating the impact of this update as it pertains to the Company’s financial statements and other required disclosures on an on-going basis until its eventual adoption and incorporation.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation. The update will simplify certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows and forfeitures. This update will be effective for the Company beginning in its first quarter of 2018. The Company is currently evaluating the impact of adopting the new stock compensation standard on its consolidated financial statements.

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3. Related Party Transactions

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

The Company had no known related party balances as of June 30, 2016 or December 31, 2015 respectively.

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4. Stockholders' Equity

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Stockholders' Equity

In January of 2016 we re-purchased and retired 1,000 shares of common stock in our subsidiary First Cloud Mortgage, Inc. for $1,000 in cash.

During the six months ended June 30, 2016, the Company issued 829,196 restricted shares of common stock to directors, employees, and contractors for services with a value of $731,709.

On April 22, 2016 the Company amended its articles of incorporation whereby we reduced our number of authorized shares of common stock with a par value of $0.00001 from 7,700,000,000 down to 220,000,000.

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5. Stock Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation

Intrinsic Value Options

At June 30, 2016 the Company had 6,785,808 stock options outstanding that were granted prior to Company becoming public in September 2013, which the Company accounts for based on the intrinsic value method and re-measures the intrinsic value at each reporting date through the date of exercise or other settlement. Compensation cost or benefit is recognized based on the change in intrinsic value at each reporting date. For the six months ended June 30, 2016 the Company’s stock options had intrinsic values between $1.50 and $1.69 and the Company recognized a stock option expense of $6.45 million, which consisted of a $6.0 million change in intrinsic value and $450 thousand in vesting costs. For the six months ended June 30, 2015 the Company’s stock options had intrinsic values between $0.03 and $0.81 and the Company recognized stock option expense of $4.21 million, which consists of a $4.08 million change in intrinsic value and $123 thousand in current vesting costs.

Traditional Stock Options

During the six months ended June 30, 2016 the Company granted 1,380,000 stock options and has elected to account for the fair value using the Black-Scholes option-pricing model. Expected volatility has been determined using the historical stock price. The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to the vesting schedule. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company has not paid and does not anticipate paying dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. The company recognized $99 thousand and $6 thousand in stock option expense for the six months ended June 30, 2016 and June 30, 2015 respectively.

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6. Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

The Company is subject to legal proceedings and claims that arise in the ordinary course of business. In the opinion of Management, the ultimate liability with respect to current proceedings and claims will not have a material adverse effect upon the Company’s financial position or results of operations.

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7. Segment Information and Geographic Data

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information and Geographic Data

The reportable segments presented below represent the Company’s operating segments for which separate financial information is available and which is utilized on a regular basis by its chief operating decision maker to assess performance and to allocate resources. In identifying its reportable segments, the Company also considers the nature of services provided by its operating segments. Management evaluates the operating results of each of its reportable segments based upon net revenues.

	Net Revenues
	Six months Ended June 30,
	2016			2015
Real Estate Brokerage Services	$	20,448,528		$	9,082,289
Mortgage Origination Services		118,327			–
Corporate and Other (a)		(142,015	)		(48,085	)
	$	20,424,840		$	9,034,204

(a) Includes elimination of transactions between segments

The geographic segment information provided below is classified based on the geographic location of the Company’s subsidiaries.

For the six months ended June 30, 2016		US		CANADA		TOTAL
Net revenues	$	19,939,963	$	484,877	$	20,424,840
Total assets		2,442,715		238,438		2,681,154
For the six months ended June 30, 2015
Net revenues	$	8,388,468	$	645,736	$	9,034,204
Total assets		872,748		219,498		1,092,244

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8. Subsequent Events

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

As of August 15, 2016, management does not believe there are any subsequent events requiring recognition or disclosure to either the financial statements or notes to the financial statements.

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2. Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated unaudited financial statements include the accounts of eXp World Holdings, Inc. (formerly eXp Realty International Corporation) and its subsidiaries eXp Realty Holdings, Inc. (formerly eXp Acquisition Corp); First Cloud Mortgage, Inc.; eXp Realty Associates, LLC; eXp Realty, LLC; eXp Realty of California, Inc.(formerly eXp Realty of Washington, Inc.); eXp Realty of Canada, Inc.; and eXp Realty of Connecticut, LLC. All material intercompany accounts and transactions have been eliminated upon consolidation.

Non-controlling interests

Non-controlling interests

Non-controlling interests in the Company’s subsidiaries are reported as a component of equity, separate from the parent company’s equity. Results of operations attributable to the non-controlling interests are included in the Company’s condensed consolidated statements of operations and condensed consolidated statements of comprehensive loss.

On July 23, 2015 the Company formed First Cloud Mortgage, Inc. In January 2016 we repurchased and retired 1,000 shares of common stock in this subsidiary for $1,000 of which it currently holds an 89.4% majority and controlling interest. The other 10.6% non-controlling interest is owned by the President of First Cloud Mortgage, Inc.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with US generally accepted accounting principles 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 provisions for doubtful accounts, legal contingencies, income taxes, revenue recognition, stock-based compensation, expense accruals, 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.

Foreign currency translation

Foreign currency translation

The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Canadian dollars and management has adopted ASC 830, Foreign Currency Translation Matters. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, at the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Other Comprehensive Loss

Other Comprehensive Loss

Other comprehensive loss for the six months ended June 30, 2016 and June 30, 2015 consisted of foreign exchange translation gain in the amount of $5,098 and loss in the amount of $14,462, respectively.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. Under the new guidance a lessee will be required to recognize assets and liabilities for leases with lease terms more than 12 months, whether that lease be classified as a capital or operating lease. This update is effective in annual reporting periods beginning after December 15, 2018 and the interim periods within that year. The Company will be evaluating the impact of this update as it pertains to the Company’s financial statements and other required disclosures on an on-going basis until its eventual adoption and incorporation.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation. The update will simplify certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows and forfeitures. This update will be effective for the Company beginning in its first quarter of 2018. The Company is currently evaluating the impact of adopting the new stock compensation standard on its consolidated financial statements.

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7. Segment Information and Geographic Data (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

	Net Revenues
	Six months Ended June 30,
	2016			2015
Real Estate Brokerage Services	$	20,448,528		$	9,082,289
Mortgage Origination Services		118,327			–
Corporate and Other (a)		(142,015	)		(48,085	)
	$	20,424,840		$	9,034,204

Revenue and Assets by Geographic Area

The geographic segment information provided below is classified based on the geographic location of the Company’s subsidiaries.

For the six months ended June 30, 2016		US		CANADA		TOTAL
Net revenues	$	19,939,963	$	484,877	$	20,424,840
Total assets		2,442,715		238,438		2,681,154
For the six months ended June 30, 2015
Net revenues	$	8,388,468	$	645,736	$	9,034,204
Total assets		872,748		219,498		1,092,244

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2. Summary of Significant Accounting Principles (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Foreign exchange translation loss	$ (1,919)	$ (5,050)	$ 5,089	$ (14,462)
First Cloud Mortgage, Inc. [Member]
Shares repurchased and retired, shares					1,000
Shares repurchased and retired, value					$ 1,000
Controlling percentage owned	89.40%		89.40%
Non-controlling percentage owned	10.60%		10.60%

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3. Related Party Transactions (Details Narrative) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Related Party Transactions [Abstract]
Due from related parties	$ 0	$ 0

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4. Stockholders' Equity (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Shares repurchased and retired, value	$ 0	$ 3,132
Stock issued to directors, employees and contractors for services, shares	829,196
Stock issued to directors, employees and contractors for services, value	$ 731,709
Stock authorized	220,000,000		7,700,000,000
First Cloud Mortgage, Inc. [Member]
Shares repurchased and retired, shares	1,000
Shares repurchased and retired, value	$ 1,000

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5. Stock Based Compensation (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Intrinsic Value Options [Member]
Stock options outstanding	6,785,808
Intrinsic stock price range	$1.50 to $1.69	$0.03 to $0.81
Stock option expense (benefit)	$ 6,450,000	$ 4,210,000
Intrinsic Value Options [Member] | Change in Intrinsic Value [Member]
Stock option expense (benefit)	6,000,000	4,080,000
Intrinsic Value Options [Member] | Vesting Costs [Member]
Stock option expense (benefit)	450,000	123,000
Stock Options [Member]
Stock option expense (benefit)	$ 99,000	$ 6,000
Stock options granted, shares	1,380,000

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7. Segment Information and Geographic Data (Details Segments) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net revenues	$ 13,282,028	$ 5,584,963	$ 20,424,840	$ 9,034,204
Corporate and Other [Member]
Net revenues			(142,015)	(48,085)
Real Estate Brokerage Services [Member]
Net revenues			20,448,528	9,082,289
Mortgage Origination Services [Member]
Net revenues			$ 118,327	$ 0

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7. Segment Information (Details Geographic) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Mar. 31, 2015
Net revenues	$ 13,282,028	$ 5,584,963	$ 20,424,840	$ 9,034,204
Total assets	2,681,153		2,681,153		$ 1,256,716	$ 1,092,244
UNITED STATES
Net revenues			19,939,963	8,338,468
Total assets	2,442,715		2,442,715			872,748
CANADA
Net revenues			484,877	$ 645,736
Total assets	$ 238,438		$ 238,438			$ 219,498