10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended  June 30, 2020

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: 001-38493

EXP WORLD HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	98-0681092
(State or other jurisdiction	(IRS Employer
of incorporation)	Identification No.)

2219 Rimland Drive, Suite 301

Bellingham, WA 98226

(Address of principal executive offices and Zip Code)

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

Common Stock, par value $0.00001 per share	EXPI	NASDAQ
(Title of Each Class)	(Trading Symbol)	(Name of each exchange on which registered)

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 required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒    No ☐

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

Yes ☒    No ☐

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

Large accelerated filer ☐	Accelerated filer ☒	Non-accelerated filer ☐	Smaller reporting company ☐
Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has selected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐    No ☒

There were, 68,532,510 shares of the registrant’s Common Stock, $0.00001 par value, outstanding as of June 30, 2020.

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	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	31
Item 5.	Other information	31
Item 6.	Exhibits	31

2

FORWARD LOOKING STATEMENTS

This Quarterly Report and our other public filings contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. Forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,” “would,” “potential” and similar expressions to future periods. Forward-looking statements are not based on historical facts but rather represent current expectations and assumptions. Forward-looking statements include statements we make 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; productivity, business process, rationalization, investment, acquisition and acquisition integrations, consulting, operational, tax, financial and capital projects and initiatives; changes in the regulatory environment; and future working capital, costs, revenues, business opportunities, cash flows, margins, earnings and growth.

Forward-looking statements relate to the future and are subject to many risks, assumptions, and uncertainties, including those risks set forth in this report and as described in our Annual Report on Form 10-K, Part I, Item IA Risk Factors incorporated by reference. Although we believe the expectations reflected in the forward-looking statements are reasonable, actual results, developments and business decisions could differ materially from those contemplated by such forward-looking statements. The environment in which we operate is highly competitive and rapidly changing and it is not possible for our management to predict all risks, as new risks emerge from time to time, such as the rapidly evolving environment and uncertainties relating to the outbreak of a novel strain of coronavirus, that causes COVID-19. The coronavirus continues to spread globally and was declared a pandemic by the World Health Organization in March 2020. As of the end of the second quarter of fiscal year 2020, the COVID -19 pandemic has not had a significant impact on our results of operations, however given the continuous volatility resulting from the ongoing pandemic, the potential effect of COVID-19 may not be fully reflected in our results of operations and financial performance until future periods, if at all.

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 statements whether as a result of new information, future developments or otherwise, except as may be required by law.

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PART 1 – FINANCIAL INFORMATION

Item 1.FINANCIAL STATEMENTS

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	June 30, 2020	December 31, 2019
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$ 63,551	$ 40,087
Restricted cash	17,405	6,987
Accounts receivable, net of allowance for credit losses of $1,260 and allowance for bad debt of $137, respectively	52,543	28,196
Prepaids and other assets	3,302	3,549
TOTAL CURRENT ASSETS	136,801	78,819
Property, plant, and equipment, net	6,080	5,428
Operating lease right-of-use assets	902	1,264
Other noncurrent assets	7	16
Intangible assets, net	2,837	2,677
Goodwill	8,248	8,248
TOTAL ASSETS	$ 154,875	$ 96,452
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$ 1,642	$ 2,593
Customer deposits	17,405	6,987
Accrued expenses	53,839	31,034
Current portion of long-term payable	970	916
Current portion of lease obligation - operating lease	727	435
TOTAL CURRENT LIABILITIES	74,583	41,965
Long-term payable, net of current portion	1,585	1,530
Long-term lease obligation - operating lease, net of current portion	175	829
TOTAL LIABILITIES	76,343	44,324
EQUITY
Common Stock, $0.00001 par value 220,000 shares authorized; 70,579 issued and 68,532 outstanding in 2020; 66,199 issued and 65,274 outstanding in 2019	1	1
Additional paid-in capital	160,643	130,682
Treasury stock, at cost: 2,047 and 925 shares held, respectively	(20,610)	(8,623)
Accumulated deficit	(61,853)	(70,293)
Accumulated other comprehensive income	147	200
Total eXp World Holdings, Inc. stockholders' equity	78,328	51,967
Equity attributable to noncontrolling interest	204	161
TOTAL EQUITY	78,532	52,128
TOTAL LIABILITIES AND EQUITY	$ 154,875	$ 96,452

See Notes to the Condensed Consolidated Financial Statements

4

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

(UNAUDITED)

​	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Revenues	$ 353,525	$ 266,705	$ 624,946	$ 423,739
Operating expenses
Commissions and other agent-related costs	319,164	244,587	562,570	387,129
General and administrative expenses	25,155	23,204	52,015	42,905
Sales and marketing expenses	887	1,071	1,831	1,960
Total operating expenses	345,206	268,862	616,416	431,994
Operating income (loss)	8,319	(2,157)	8,530	(8,255)
Other expense (income)
Other expense (income), net	11	(10)	49	25
Equity in losses of unconsolidated affiliates	12	-	34
Total other expense (income), net	23	(10)	83	25
Income (loss) before income tax expense	8,296	(2,147)	8,447	(8,280)
Income tax expense	61	48	70	212
Net income (loss)	8,235	(2,195)	8,377	(8,492)
Net loss attributable to noncontrolling interest	40	-	63	-
Net income (loss) attributable to eXp World Holdings, Inc.	$ 8,275	$ (2,195)	$ 8,440	$ (8,492)
Earnings (loss) per share
Basic	$ 0.12	$ (0.04)	$ 0.13	$ (0.14)
Diluted	$ 0.11	$ (0.04)	$ 0.12	$ (0.14)
Weighted average shares outstanding
Basic	67,756	61,526	66,751	61,138
Diluted	72,661	61,526	72,050	61,138
Comprehensive income (loss):
Net income (loss)	$ 8,235	$ (2,195)	$ 8,377	$ (8,492)
Comprehensive loss attributable to noncontrolling interests	40	-	63
Net income (loss) attributable to eXp World Holdings, Inc.	8,275	(2,195)	8,440	(8,492)
Other comprehensive income (loss):
Foreign currency translation (loss) gain, net of tax	244	48	(53)	63
Comprehensive income (loss) attributable to eXp World Holdings Inc.	$ 8,519	$ (2,147)	$ 8,387	$ (8,429)

See Notes to the Condensed Consolidated Financial Statements

5

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(UNAUDITED)

							Accumulated
					Additional		Other
	Common Stock		Treasury Stock		Paid-In	Accumulated	Comprehensive	Noncontrolling	Total
	Shares	Amount	Shares	Amount	Capital	Deficit	Income (Loss)	Interest	Equity
Balance, December 31, 2018	60,609	$ 1	-	$ -	$ 90,756	$ (60,765)	$ (11)	$ -	$ 29,981
	-	-	-	-	-	-	-	-
Net loss	-	-	-	-	-	(6,296)	-	-	(6,296)
Shares issued for stock options exercised	134	-	-	-	216	-	-	-	216
Agent growth incentive stock compensation	136	-	-	-	3,669	-	-	-	3,669
Stock option compensation	-	-	-	-	1,215	-	-	-	1,215
Agent equity stock compensation	620	-	-	-	6,210	-	-	-	6,210
Foreign currency translation gain	-	-	-	-	-	-	15	-	15
Repurchase of common stock	-	-	358	(3,647)	-	-	-	-	(3,647)
Balance, March 31, 2019	61,499	$ 1	358	$ (3,647)	$ 102,066	$ (67,061)	$ 4	$ -	$ 31,363
Net loss	-	-	-	-	-	(2,195)	-	-	(2,195)
Shares issued for stock options exercised	537	-	-	-	690	-	-	-	690
Agent growth incentive stock compensation	149	-	-	-	3,587	-	-	-	3,587
Stock option compensation		-	-	-	1,831	-	-	-	1,831
Agent equity stock compensation	935	-	-	-	10,234	-	-	-	10,234
Foreign currency translation gain	-	-	-	-	-	-	48	-	48
Repurchase of common stock	-	-	460	(4,898)	-	-	-	-	(4,898)
Balance, June 30, 2019	63,120	$ 1	818	$ (8,545)	$ 118,408	$ (69,256)	$ 52	$ -	$ 40,660
								-
Balance, December 31, 2019	66,199	$ 1	925	$ (8,623)	$ 130,682	$ (70,293)	$ 200	$ 161	$ 52,128
Net income (loss)						165		(23)	142
Shares issued for stock options exercised	1,785				1,828				1,828
Agent growth incentive stock compensation	127				2,551				2,551
Stock option compensation					1,073				1,073
Agent equity stock compensation	917				8,794				8,794
Foreign currency translation (loss)							(297)		(297)
Repurchase of common stock			991	(10,305)					(10,305)
Contributions by noncontrolling interests								86	86
Balance, March 31, 2020	$ 69,028	$ 1	1,916	$ (18,928)	$ 144,928	$ (70,128)	$ (97)	$ 224	$ 56,000
Net income (loss)	-	-	-	-	-	8,275	-	(40)	8,235
Shares issued for stock options exercised	415	-	-	-	639	-	-	-	639
Agent growth incentive stock compensation	208	-	-	-	3,346	-	-	-	3,346
Stock option compensation	-	-	-	-	1,227	-	-	-	1,227
Agent equity stock compensation	928	-	-	-	10,503	-	-	-	10,503
Foreign currency translation (loss)	-	-	-	-	-	-	244	-	244
Repurchase of common stock	-	-	131	(1,682)	-	-	-	-	(1,682)
Contributions by noncontrolling interests	-	-	-	-	-	-	-	20	20
Balance, June 30, 2020	70,579	$ 1	2,047	$ (20,610)	$ 160,643	$ (61,853)	$ 147	$ 204	$ 78,532

See Notes to the Condensed Consolidated Financial Statements

6

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(UNAUDITED)

	Six Months Ended June 30,
	2020	2019
OPERATING ACTIVITIES
Net income (loss)	$ 8,377	$ (8,492)
Reconciliation of net income (loss) to net cash provided by operating activities:
Depreciation expense	1,551	823
Amortization expense - intangible assets	230	151
Amortization expense - long-term payable	107	100
Allowance for credit losses/bad debt on receivables	1,123	1
Equity in loss of unconsolidated affiliates	34	-
Agent growth incentive stock compensation expense	6,765	7,257
Stock option compensation	2,300	3,046
Agent equity stock compensation expense	19,297	16,444
Changes in operating assets and liabilities:
Accounts receivable	(25,471)	(33,356)
Prepaids and other assets	318	(35)
Customer deposits	10,418	3,597
Accounts payable	(951)	431
Accrued expenses	21,938	34,809
NET CASH PROVIDED BY OPERATING ACTIVITIES	46,036	24,776
INVESTING ACTIVITIES
Purchases of property, plant and equipment	$ (2,273)	$ (1,907)
Acquisition of businesses, net of cash acquired	-	(500)
Intangible assets acquired	(389)	(178)
Other investing activities	(25)	-
NET CASH USED IN INVESTING ACTIVITIES	(2,687)	(2,585)
FINANCING ACTIVITIES
Repurchase of common stock	(11,987)	(8,545)
Proceeds from exercise of options	2,467	906
Transactions with noncontrolling interests	106	-
NET CASH USED IN FINANCING ACTIVITIES	(9,414)	(7,639)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash	(53)	96
Net change in cash, cash equivalents and restricted cash	33,882	14,648
Cash, cash equivalents and restricted cash, beginning balance	47,074	23,041
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE	$ 80,956	$ 37,689
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for income taxes	$ 224	$ 229
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Lease liabilities arising from obtaining right-of-use assets	$ 18	$ 357
Termination of lease liabilities	183	-
Property, plant and equipment purchases in accounts payable	24	22

See Notes to the Condensed Consolidated Financial Statements

7

eXp World Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements

(UNAUDITED)

(Amounts in thousands, except per share data and as noted otherwise)

1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

eXp World Holdings, Inc. (collectively with its subsidiaries, the “Company” or “eXp”) was incorporated in the State of Delaware on July 30, 2008. Through various operating subsidiaries, the Company primarily operates a cloud-based real estate brokerage operating throughout the United States and most of the Canadian provinces, as well as an emerging innovation and technology services company that supports the real estate brokerage operations and third party customers operating in a number of industries. In the fourth quarter of 2019, the Company began real estate brokerage operations in the United Kingdom (U.K.) and Australia. The Company focuses on 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. eXp World Technologies, LLC, a wholly-owned direct subsidiary of the Company, represents its innovation and technology division, which now holds the VirBELA brand. VirBELA is an immersive technology platform for businesses, events, and education that provides a virtual experience for workers, attendees, students, and other users to communicate, collaborate, meet, and socialize.

In the fourth quarter of 2019, the Company made capital contributions in consideration for an ownership interest in First Cloud Investment Group, LLC (“First Cloud”), a Nevada limited liability company, with the remaining ownership interest held by certain independent agents and brokers. First Cloud was organized for the purpose of managing IntroLend First Cloud, LLC (“IntroLend First Cloud”), a Delaware limited liability company and an indirect subsidiary of the Company that provides mortgage origination for end-consumers. Under the terms of the operating agreement, the Company will maintain 50% equity ownership interest in First Cloud. During the start-up phase, eXp holds an interest in First Cloud greater than 50%. As eXp agents invest in First Cloud, agents’ interests will increase until the interest for both eXp and the aggregate agents’ interests each equal 50%. Refer to Note 11 – Variable Interest Entities for more information.

In the fourth quarter of 2019, the Company and its newly formed subsidiary, eXp Silverline Ventures, LLC, entered into an agreement to purchase a 50% ownership interest in Silverline Title & Escrow, LLC (“Silverline”) with the remaining ownership interest held by a third-party investment entity. Silverline represents an unconsolidated equity investment by eXp Silverline Ventures, LLC. Silverline is a title agency that performs, among other functions, core title agent services (for which liabilities arises), including the evaluation of searches to determine the insurability of title, the clearance of underwriting objections, the issuance of polices on behalf of insurance companies, and, where customary, the issuance of title commitments and the conducting of title searchers.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10-01 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.

These interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 12, 2020 (“2019 Annual Report”). The Company’s condensed consolidated financial statements as of and for the six months ended June 30, 2020 are reported in thousands, whereas the Company’s consolidated financial statements as of and for the year ended December 31, 2019 were reported in whole dollars in the 2019 Annual Report.

In our opinion, the accompanying interim unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. Operating results for the three- and six-month periods ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of eXp World Holdings, Inc., its wholly-owned subsidiaries, and those entities where the Company has greater than 50% ownership or where the Company exercises control over the operations. If the Company has a variable interest in an entity but it is not the primary beneficiary of the entity or exercises control over the operations and has less than 50% ownership, it will use the

8

equity method or the cost method of accounting for investments. The Company uses the equity method of accounting for entities in which the Company holds a 50% or less investment and exercises significant influence. Entities in which the Company has less than a 20% investment and where the Company does not exercise significant influence are accounted for under the cost method. Intercompany transactions and balances are eliminated upon consolidation. See Note 11 – Variable Interest Entities.

Noncontrolling Interest

The Company determined that First Cloud is a variable interest entity (“VIE”), as the Company is the primary beneficiary that has both the power to direct the activities that most significantly impact the VIE and a variable interest that potentially could be significant to the VIE. The Company treats the interest in First Cloud that it does not own as noncontrolling interest. The noncontrolling interest balance is adjusted each period to reflect the allocation of net income (loss) and other comprehensive income (loss) attributable to the noncontrolling interest, as shown in the condensed consolidated statements of comprehensive income (loss). The noncontrolling interest balance in the condensed consolidated balance sheets represents the proportional share of the equity of the joint venture entities, which is attributable to the minority shareholders.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, legal contingencies, income taxes, revenue recognition, stock-based compensation, goodwill, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Reclassifications

The Company has reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation, specifically the allowance for credit losses/bad debt on receivables is now separately disclosed as its own line item on the Company’s Condensed Consolidated Statement of Cash Flows, previously it was included in the accounts receivable line item.

Cash and cash equivalents

The Company considers all highly liquid investments with maturity when purchased of three months or less to be cash equivalents. From time to time, the Company’s cash deposits exceed federally insured limits. The Company has not experienced any losses resulting from holding deposits in accounts in excess of federal insurance limits.

Restricted cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows.

	December 31, 2019	December 31, 2018
Cash and cash equivalents	$ 40,087	$ 20,538
Restricted cash	6,987	2,503
Total cash, cash equivalents, and restricted cash, beginning balance	$ 47,074	$ 23,041
	June 30, 2020	June 30, 2019
Cash and cash equivalents	$ 63,551	$ 31,523
Restricted cash	17,405	6,166
Total cash, cash equivalents, and restricted cash, ending balance	$ 80,956	$ 37,689

9

Restricted cash consists of cash held in escrow by the Company’s brokers and agents on behalf of real estate buyers. The Company recognizes a corresponding customer deposit liability until the funds are released. Once the cash transfers from escrow, the Company reduces the respective customers’ deposit liability.

Stock-based compensation

Stock-based compensation is comprised of agent growth incentive programs, agent equity program, and stock option awards. Stock-based compensation is more fully disclosed in Note 6 – Equity. The Company accounts for stock-based compensation granted to employees and non-employees using a fair value method. Stock-based compensation awards are measured at the grant date fair value and stock based compensation is recognized over the requisite service period of the awards, usually the vesting period, on a straight-line basis, net of forfeitures. The Company reduces recorded stock-based compensation for forfeitures when they occur.

Recognition of compensation cost for an award with a performance condition is based on the probable outcome of that performance condition being met.

Goodwill

Goodwill represents the excess of the consideration paid over the estimated fair value of assets acquired and liabilities assumed in a business combination. The Company evaluates goodwill for impairment on an annual basis in the fiscal fourth quarter or on an interim basis if an event occurs or circumstances change that would more likely than not indicate that the fair value of the goodwill is below its carrying value. Generally, this evaluation begins with a qualitative assessment to determine if the fair value of the reporting unit is more likely than not less than its carrying value. The test for impairment requires management to make judgments relating to future cash flows, growth rates and economic and market conditions. In addition to the annual impairment evaluation, the Company evaluates at least quarterly whether events or circumstances have occurred in the period subsequent to the annual impairment testing which indicate that it is more likely than not an impairment loss has occurred.

Revenue recognition

The Company generates substantially all of its revenue from real estate brokerage services and generates a de minimis portion of its revenues from software subscription and professional services.

Real Estate Brokerage Services

The Company serves as a licensed broker in the areas in which it operates for the purpose of processing residential real estate transactions. The Company is contractually obligated to provide services for the fulfillment of transfers of residential real estate between buyers and sellers. The Company provides these services itself and controls the services necessary to legally transfer the residential real estate. Correspondingly, the Company is defined as the principal.  The Company, as principal, satisfies its obligation upon the closing of a residential real estate transaction. As principal, and upon satisfaction of the performance obligation, the Company recognizes revenue in the gross amount of consideration to which the Company expects to be entitled.

Revenue is derived from assisting home buyers and sellers in listing, marketing, selling, and finding residential real estate. Commissions earned on real estate transactions are recognized at the completion of a residential real estate transaction once the Company has satisfied the performance obligation. Agent related fees are currently recorded as a reduction to commissions and other agent related costs.  

Software Subscription and Professional Services

Subscription revenue is derived from fees from customers to access the Company’s virtual reality software platform. The terms of subscriptions do not provide customers the right to take possession of the software. Subscription revenue is generally recognized ratably over the contract term.

Professional services revenue is derived from implementation and consulting services. Professional services revenue is typically recognized over time as the services are rendered, using an efforts-expended (labor hours) input method. 

Software subscription and professional services revenue accounts for less than 1% of all revenue for the three and six months ended June 30, 2020 and 2019.

The Company does not currently collect sales and use taxes on fees from agents and brokers and assumes responsibility to pay these costs to the appropriate taxing authorities.

Disaggregated revenue

10

The Company primarily operates as a real estate brokerage firm. The vast majority of the Company’s revenue is derived from providing a single service, real estate brokerage services, to purchasers and sellers of homes in the U.S. See Note 10 – Segment information for details regarding segment and geographic information.

Management believes that no disaggregation of revenue from services to customers currently exists that would provide additional insight into the future recognition of revenue and cash flows.

Recently Adopted Accounting Principles and Change in Accounting Principle

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 modifies the measurement of expected credit losses of certain financial instruments, requiring entities to estimate an expected lifetime credit loss on financial assets. The ASU amends the impairment model to utilize an expected loss methodology and replaces the incurred loss methodology for financial instruments including trade receivables. The amendment requires entities to consider other factors, such as economic conditions and future economic conditions. The Company adopted ASU 2016-13 effective January 1, 2020 and concluded it did not have a material impact on either the financial position, results of operations, cash flows, or related disclosures of the Company. There was no impact on beginning balance retained earnings upon adoption of this ASU. See Note 3 – Expected Credit Losses for more information.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which removes certain disclosure requirements related to the fair value hierarchy, such as removing the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements, such as disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurement. The Company adopted ASU 2018-13 on January 1, 2020 and concluded it did not have an impact on the Company’s consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15 – Intangibles – Goodwill and Other Internal-Use Software (Subtopic 350-40) – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). The amendments in this update apply to an entity who is a customer in a hosting arrangement accounted for as a service contract. ASU 2018-15 requires a customer in a hosting arrangement to capitalize certain implementation costs. Costs associated with the application development stage of the implementation should be capitalized and costs with the other stages should be expensed. The Company adopted ASU 2018-15 on January 1, 2020 and concluded it did not have an impact on the Company’s consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12 – Income Taxes (Topic 740) (“ASU 2019-12”). ASU 2019-12 removes certain exceptions for investments, intraperiod allocations and interim calculations and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020; early adoption is permitted. The Company is still assessing the amendments of ASU 2019-12 and the impact the amendments will have on the Company’s consolidated financial statements and related disclosures.

3.EXPECTED CREDIT LOSSES

The Company is exposed to credit losses primarily through trade and other financing receivables arising from revenue transactions. The Company uses the aging schedule method to estimate current expected credit losses (“CECL”) based on days of delinquency, including information about past events and current economic conditions. The Company’s accounts receivable is separated into three categories to evaluate allowance under the CECL impairment model. The receivables in each category share similar risk characteristics. The three categories include agent non-commission based fees, agent short-term advances, and commissions receivable for real estate property settlements.

The Company analyzed collectability for the three categories of receivables and concluded that only agent non-commission based fees receivables and agent short-term advances carry any risk of expected credit losses. Current economic conditions and forecasts of future economic conditions do not affect expected credit losses or collectability of real estate property settlements. The collection of these payments are in-substance guaranteed because they represent commission payments on closed transactions, and the Company has no historical experience or expectation of losses related to these receivables. Receivables from real estate property settlements totaled $49,186 as of June 30, 2020. As of

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June 30, 2020, agent non-commission based fees receivable and short-term advances totaled $3,357, of which the Company recognized expected credit losses of $1,260.

The Company increases the allowance for expected credits losses when the Company determines all or a portion of a receivable is uncollectible. The Company recognizes recoveries as a decrease to the allowance for expected credit losses.

Changes in the allowance were not material for the six months ended June 30, 2020.

4.PLANT, PROPERTY AND EQUIPMENT, NET

Fixed assets, net consisted of the following:

	June 30, 2020	December 31, 2019
Computer hardware and software	$ 10,983	$ 8,431
Furniture, fixture, and equipment	20	21
Total depreciable property and equipment	11,003	8,452
Less: accumulated depreciation	(4,929)	(3,378)
Depreciable property, net	6,074	5,074
Assets under development	6	354
Property, plant and equipment, net	$ 6,080	$ 5,428

For the three months ended June 30, 2020 and 2019, depreciation expense was $794 and $455, respectively. For the six months ended June 30, 2020 and 2019, depreciation expense was $1,551 and $823, respectively.

5.GOODWILL AND INTANGIBLE ASSETS

Goodwill was $8,248 as of June 30, 2020 and December 31, 2019.

Due to the ongoing COVID-19 pandemic, the Company assessed the current economic environment, and its goodwill for impairment during the six months ended June 30, 2020. The current performance and expected forecast in relation to the results of the annual impairment test performed for 2019 indicated that it was not more likely than not that goodwill was impaired.

Definite-lived intangible assets were as follows:

	June 30, 2020			December 31, 2019
	Gross	Accumulated	Net Carrying	Gross	Accumulated	Net Carrying
	Amount	Amortization	Amount	Amount	Amortization	Amount
Trade name	$ 1,169	$ (185)	$ 984	$ 1,169	$ (127)	$ 1,042
Existing technology	948	(206)	742	559	(99)	460
Non-competition agreements	125	(66)	59	125	(45)	80
Customer relationships	740	(117)	623	740	(80)	660
Software	225	-	225	225	-	225
Licensing agreement	210	(6)	204	210	-	210
Total intangible assets	$ 3,417	$ (580)	$ 2,837	$ 3,028	$ (351)	$ 2,677

Definite-lived intangible assets are amortized using the straight-line method over its estimated useful life. Amortization expense for definite-lived intangible assets for the three months ended June 30, 2020 and 2019 was $126 and $78, respectively. Amortization expense for definite-lived intangible assets for the six months ended June 30, 2020 and 2019 was $230 and $151, respectively.

6.EQUITY

As of June 30, 2020, the Company had 70,579 shares of common stock issued and 68,532 shares outstanding.

The Company’s shareholder approved equity plans are administered under the 2013 Stock Option Plan and the 2015 Equity Incentive Plan. The purpose of the equity plans is to retain the services of valued employees, directors, officers, agents, and consultants and to incentivize such persons to make contributions to the Company and motivate excellent performance.

Agent Equity Program

The Company provides agents and brokers the opportunity to elect to receive 5% of commissions earned from each completed residential real estate transaction in the form of common stock. If agents and brokers elect to receive portions

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of their commissions in common stock, they are entitled to receive the equivalent number of shares of common stock, based on the fixed monetary value of the commission payable. Prior to January 1, 2020, the Company recognized a 20% discount on these issuances as an additional cost of sales charge during the periods presented. Beginning in January 2020, the Company amended the Agent Equity Plan and changed the discount on issued shares from 20% to 10%.

During the three months ended June 30, 2020 and 2019, the Company issued approximately 928 and 935 shares of common stock, respectively, to agents and brokers for $10,503 and $10,234, respectively, net of discount. During the six months ended June 30, 2020 and 2019, the Company issued approximately 1,563 and 1,555 shares of common stock, respectively, to agents and brokers for $19,297 and $16,444, respectively, net of discount.

Agent Growth Incentive Program

The Company administers an equity incentive program whereby agents and brokers become eligible to receive awards of the Company’s common stock through agent attraction and performance benchmarks. The incentive program encourages greater performance and awards agents with common stock based on achievement of performance milestones. Awards typically vest after performance benchmarks are reached and three years of subsequent service is provided to the Company. Share-based performance awards are based on a fixed-dollar amount of shares based on the achievement of performance metrics. As such, the awards are classified as liabilities until the number of share awards becomes fixed once the performance metric is achieved. For the three months ended June 30, 2020, the Company’s stock compensation attributable to the Agent Growth Incentive Program was $3,246, of which the total amount of stock compensation attributable to liability classified awards was $483. For the six months ended June 30, 2020, the Company’s stock compensation attributable to the Agent Growth Incentive Program was $6,765, of which the total amount of stock compensation attributable to liability classified awards was $1,525. Stock compensation expense related to the Agent Growth Incentive Program is included in general and administrative expense in the condensed consolidated statements of comprehensive income (loss).

The following table illustrates changes in the Company’s stock compensation liability for the six months ended June 30, 2020:

Balance, December 31, 2019	$ 277
Stock grant liability increase at March 31, 2020	1,042
Stock grants reclassified from liability at March 31, 2020	(75)
Stock grant liability increase at June 30, 2020	483
Stock grants reclassified from liability at June 30, 2020	(582)
Balance, June 30, 2020	$ 1,145

Stock Option Awards

During the three and six months ended June 30, 2020, the Company granted 248 and 399 stock options, respectively, to employees with an estimated grant date fair value of $10 and $9.69 per share, respectively. The fair value was calculated using a Black Scholes-Merton option pricing model.

Stock Repurchase Plan

In December 2018, the Company’s board of directors (“the Board”) approved a stock repurchase program authorizing the Company to purchase up to $25 million of its common stock, which was later amended in November of 2019 to increase the authorized repurchase amount to $75 million. Purchases under the repurchase program may be made in the open market or through a 10b5-1 plan and are expected to comply with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The timing and number of shares repurchased depends upon market conditions. The repurchase program does not require the Company to acquire a specific number of shares. The cost of the shares that are repurchased is funded from available working capital.

The repurchase program began on January 2, 2019 and was discontinued in March 2020. In June 2020 the stock repurchase plan resumed due to the Company’s better than expected performance for the first half of 2020.

For accounting purposes, common stock repurchased under the stock repurchase programs is recorded based upon the settlement date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method. During the three and six months ended June 30, 2020, the Company repurchased 131 and 1,122 shares, respectively, of common stock at a total cost of $1,682 and $11,987, respectively. These shares are considered issued but not outstanding.

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7.EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed based on net income (loss) attributable to eXp World Holdings Inc. shareholders divided by the basic weighted-average shares outstanding during the period. Dilutive earnings per share is computed consistently with the basic computation while giving effect to all dilutive potential common shares and common share equivalents that were outstanding during the period. The Company uses the treasury stock method to reflect the potential dilutive effect of unvested stock awards and unexercised options. The Company uses the if-converted method to reflect the potential dilutive effect of the stock settled consideration in connection with the VirBELA acquisition.

The following table sets forth the calculation of basic and diluted earnings per share attributable to common stock during the periods presented:

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Numerator:
Net income (loss) attributable to common stock	$ 8,275	$ (2,195)	$ 8,440	$ (8,492)
Denominator:		-
Weighted average shares - basic	67,756	61,526	66,751	61,138
Weighted average shares - diluted	72,661	61,526	72,050	61,138
Earnings (loss) per share:		-
Earnings (loss) per share attributable to common stock- basic	0.12	(0.04)	0.13	(0.14)
Earnings (loss) per share attributable to common stock- diluted	0.11	(0.04)	0.12	(0.14)

Total outstanding shares of common stock for the three months ended June 30, 2020 excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive were 411.

Total outstanding shares of common stock for the six months ended June 30, 2020 excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive were 402.

8.FAIR VALUE MEASUREMENT

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

● Level 1 – Inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs).

● Level 2 – Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or prices that vary substantially).

● Level 3 – Inputs are unobservable inputs that reflect the entity's own assumptions in pricing the asset or liability (used when little or no market data is available).

The Company holds funds in a money market account, which are considered Level 1 assets. The Company values its money market funds at fair value on a recurring basis.

As of June 30, 2020 and December 31, 2019, the fair value of the Company’s money market funds was $18,369 and $18,281, respectively.

There have been no transfers between Level 1, Level 2 and Level 3 in the period presented. The Company did not have any Level 2 or Level 3 financial assets or liabilities in the period presented.

9.LEASES

The Company’s lease portfolio consists of office leases with lease terms ranging from less than one year to seven years, with the weighted average lease term being three years.

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Certain leases provide for increases in future lease payments once the term of the lease has expired, as defined in the lease agreements. These leases generally also include real estate taxes.

Short term leases, having a lease term at commencement of 12 months or less, are not capitalized and the expenses are recognized in the period incurred.

Included below is other information regarding leases for the six months ended June 30, 2020:

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Other information
Operating lease expense	$ 104	$ 28	$ 208	$ 52
Short-term lease expense	5	8	10	14
Cash paid for operating leases	107	29	204	59
Weighted-average remaining lease term (years)– operating leases (1)	3.7	3	3.7	3
Weighted-average discount rate – operating leases	4.851%	4.850%	4.851%	4.850%

(1) The Company’s lease terms include options to extend the lease when it is reasonably certain the Company will exercise its option. Additionally, the Company considered any historical and economic factors in determining if a lease renewal or termination option would be exercised.

As of June 30, 2020, maturities of lease liabilities by fiscal year were as follows:

Remaining 2020	$ 198
2021	314
2022	277
2023	165
2024	5
2025 and thereafter	6
Total lease payments	965
Less: interest	(63)
Total operating lease liabilities	$ 902

10.SEGMENT INFORMATION

Historically, management has not made operating decisions nor assessed performance based on geographic locations. Rather, the chief operating decision maker makes operating decisions and assesses performance based on the products and services of identified operating segments. While management does consider real estate and brokerage services, technology services, and affiliated services to be identified operating segments, the profits and losses and assets of the acquired technology and affiliated services segment are not material.

Operating Segments

The Company primarily operates as a cloud-based real estate brokerage. The real estate brokerage business represents 99.8% and 99.9% of the total revenue of the Company for the six months ended June 30, 2020 and 2019, respectively. The real estate brokerage business represents 94.4% and 95.8% of the total assets of the Company as of June 30, 2020 and December 31, 2019, respectively.

The Company offers software subscriptions to customers to access its virtual reality software platform. Additionally, the Company offers professional services for implementation and consulting services. However, the operations and assets of the technology segment are not managed by the Company’s chief operating decision-maker as a separate reportable segment.

Services provided through First Cloud and eXp Silverline are in the emerging stages of development as contributing segments and are not material to the Company’s total revenue, total net income (loss) or total assets as of June 30, 2020.

The Company aggregates the identified operating segments for reporting purposes.

Geographical Information

The Company primarily operates within the real estate brokerage markets in the United States and Canada. During the fourth quarter of 2019, the Company expanded operations into the UK and Australia.

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The Company’s management analyzes geographical locations on a forward-looking basis to identify growth opportunities. For the six months ended June 30, 2020 and 2019, approximately 4% and 2%, respectively, of the Company’s total revenue was generated outside of the U.S. Assets held outside of the U.S. were 9% as of both June 30, 2020 and December 31, 2019.

The Company’s technology services and affiliated services are currently provided primarily in the U.S.

11.VARIABLE INTEREST ENTITIES

A company is deemed to be the primary beneficiary of a VIE and must consolidate the entity if the company has both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company has concluded that First Cloud is a VIE and that it is the primary beneficiary as it has the power to direct the activities of First Cloud and has an economic interest that will absorb the losses and/or receive benefits that could be significant to the VIE. Accordingly, the Company consolidates the assets and liabilities and operating results of First Cloud in the condensed consolidated financial statements. The Company recognizes noncontrolling interest in the condensed consolidated balance sheets. The income or loss allocations reflected on the condensed consolidated statements of comprehensive income (loss) may create volatility in the reported results of operations, including net losses attributable to common stockholders.

The financial information of First Cloud is presented below.

	June 30, 2020	December 31, 2019
Assets
Cash	$ 320	$ 424
Accounts Receivable	24	-
Prepaids and other assets	42	2
Total assets	$ 386	$ 426
Liabilities & Equity
Membership interests payable	37	45
Accounts payable	3	15
Total liabilities	40	60
Total equity	346	366
Total liabilities & equity	$ 386	$ 426
	Six Months Ended June 30,
	2020	2019
Revenues	$ 78	$ -
Expenses	205	-
Net loss	$ (127)	$ -

12.SUBSEQUENT EVENTS

COVID-19

In December 2019, a novel strain of coronavirus, COVID-19, was identified in Wuhan, China. COVID-19 has caused a global health emergency and was declared a pandemic by the World Health Organization in March 2020.  In an effort to slow and contain the spread of COVID-19, local, state, and national governments implemented various measures, which have impacted businesses worldwide.

As of the date of this quarterly report, the Company’s results of operations, liquidity and financial condition have not been significantly impacted; however, the Company will continue to monitor events and/or changes in circumstances. While the Company is positioned to survive and thrive in a series of fluctuations in economic activity, the full impact the economic situation will have on the Company’s results of operations or financial condition, and management’s judgment could change in the future due to the ongoing pandemic and the uncertainty around its magnitude and duration.

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Showcase Acquisition

On July 31, 2020, the Company acquired the equity ownership interests in Showcase Web Sites, L.L.C. (“Showcase”) for cash consideration of $1.5 million and promissory notes totaling $1.5 million (the “Showcase Acquisition”). Showcase is a technology company focused on agent website and consumer real estate portal technology. With this acquisition, the Company will be able to strategically focus on creating consumer home-search technology for utilization by our independent agents and brokers, as well as continued services offerings to third party clients of Showcase.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to inform the reader about matters affecting the financial condition and results of operations of eXp World Holdings, Inc. (the “Holding Company” or “eXp”) and its subsidiaries (collectively, “we,” “us”, “our”, or the “Company”). The following discussion should be read together with our condensed consolidated financial statements and related notes included elsewhere within this report. Management’s Discussion and Analysis of Financial Conditions and Results of Operations contain forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements. See “Forward-Looking Statements” and “Part II – Item 1A. – Risk Factors” of this Quarterly Report and “Item 1 A. – Risk Factors” in our Annual Report on Form 10- K for the fiscal year ended December 31, 2019, for a discussion of certain risks, uncertainties and assumptions associated with these statements. All dollar amounts are in thousands except per share data and as otherwise noted.

OVERVIEW

MARKET CONDITIONS AND INDUSTRY TRENDS

Our business is dependent on the economic conditions within the markets for which we operate. Changes in these conditions can have a positive or negative impact on our business. The economic conditions influencing the housing markets primarily include economic growth, interest rates, unemployment, consumer confidence, mortgage availability and supply and demand.

In periods of economic growth, demand typically increases resulting in increasing home sales transactions and home sales prices. Similarly, a decline in economic growth, increasing interest rates and declining consumer confidence generally decreases demand. Additionally, regulations imposed by local, state, and federal government agencies, and geopolitical instability, can also negatively impact the housing markets for which we operate.

In December 2019, a novel strain of coronavirus, COVID-19, was identified in Wuhan, China. This new coronavirus has caused a global health emergency and was declared a pandemic by the World Health Organization in March 2020. Risks relating to the spread of coronavirus pushed the Federal Reserve to cut interest rates as part of an emergency action to protect the economy from its impact. In an effort to contain and slow the spread of COVID-19, throughout the first half of 2020 governments have implemented various measures, such as, ordering non-essential businesses to close, issuing travel advisories, cancelling large scale public events, ordering shelter-in-place for residents and requiring the public to practice social distancing. During the end of the second quarter, businesses slowly re-opened with certain restrictions and social distance practices.

For the first half of 2020, the COVID-19 pandemic has materially and adversely affected businesses worldwide. The magnitude and duration of the impact from COVID-19 are not fully known and cannot be reasonably estimated. While the pandemic has been ongoing for much of the fiscal year, there is still significant volatility and uncertainty surrounding the outlook of the global economy. The impact to the Company for the second quarter has been less significant than anticipated. We believe that once COVID-19 is further contained the economy will continue to rebound depending on the continued pace, rate, and effectiveness of lifting public health restrictions on businesses and individuals and how quickly people become comfortable engaging in public activities.

According to the National Association of Realtors (“NAR”), the coronavirus is leading to fewer homebuyers, as well as listings being delayed. The decline in consumer confidence and measures taken to prevent the spread of COVID-19 is bringing caution to buyers and sellers. The NAR is predicting COVID-19 could accelerate economic corrections and contribute to sharper but temporary drags on housing activity. While the effect of lower interest rates should offset some of the negative impacts on housing demand, it is too early to determine whether the lower interest rates can overcome the current economic concerns and rising uncertainty. According to the NAR housing statistics, existing home sales fell 9.7% in May, then increased a record 20.7%, in June 2020. The NAR reported that pending home sales had a record comeback in May of 44.3% and increased another 16.6% in June, which is an encouraging statistic as pending home sales are a forward-looking indicator of future home sales. The index measures housing contract activity and is based on signed real estate contracts for existing single-family homes and condos. However, since the NAR released this data there has been an increase in COVID-19 infection rates in key states in which we operate. As such, we continue to monitor and assess any potential impacts of the pandemic on our business, results of operations and financial condition as well as recognize the uncertainty inherent in the NAR forecast.

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The Company is positioned to continue to survive and thrive in a series of fluctuations in economic activity and is performing better than expected at the of the first half of 2020. However, depending on the continued course of the COVID-19 pandemic, specifically in key areas of operations, it is too early to predict the full extent of the effects the COVID-19 pandemic will have on our Company moving into the latter part of the year.

Inventory

Prior to June 30, 2020, increased demand and low mortgage rates caused inventory levels to decline to record lows. With government implemented actions in response to COVID-19, fewer individuals are listing their homes and as a result year over year inventory has decreased further. According to the NAR, inventory of existing homes for sale in the U.S. was 1.6 million as of June 2020 (preliminary) compared to 1.9 million at the end of June 2019. The NAR indicated the need for new home construction due to the high demand of homes and the record-low inventory levels.

Mortgage Rates

According to the NAR, mortgage rates on commitments for 30-year, conventional, fixed-rate mortgages averaged 3.2% for the second quarter of 2020, compared to 4.0% for the second quarter of 2019. Mortgage rates are forecasted to decrease to 3.0% throughout 2020 and increase minimally to 3.1% in 2021. Despite forecasts, mortgage rates continue to be volatile. Although the Federal Reserve cut interest rates in an effort to stabilize the economy in response to COVID-19, some lenders have increased interest rates in an effort to slow refinance activity. There is still uncertainty regarding the impact fluctuations in interest rates will have on the housing market and the economy due to the ongoing COVID-19 pandemic.

Housing Affordability Index

Also, according to the NAR, the composite housing affordability index increased to 169.4 for May 2020 (preliminary) from 150.8 for May 2019. The housing affordability index continues to be at historically favorable levels. When the index is above 100, it indicates that a family earning the median income has sufficient income to purchase a median-priced home, assuming a 20 percent down payment and ability to qualify for a mortgage. The favorable housing affordability index is due to favorable mortgage rate conditions. However, despite a cut in rates by the Federal Reserve in an effort to stabilize the economy, unemployment increased sharply throughout the second quarter of 2020. It is still too early to predict the extent of the effects the ongoing COVID-19 pandemic will have on housing affordability.

Home Sales Transactions

According to the NAR, existing home sale transactions for June 2020 (preliminary) decreased to 4.7 million compared to 5.3 million for June 2019. For the six months ended June 30, 2020, eXp Realty settled home sales units were 81,535 (whole units) resulting in sales volume of $23.9 billion. Our home sale transactions growth was directly related to the growth of our agent base, which increased 54% to 31,091 agents from 20,162 agents the prior comparative period. While home sales transactions remained strong during the second quarter of 2020, home sales transactions are expected to decline as a result of government implemented actions and rising uncertainty among buyers and sellers. The NAR indicated that home sale transactions will continue to be temporarily interrupted for the next couple months. Beyond this, it is still too early to predict the full extent of the effects of COVID-19 on transactions.

Existing Home Sales Price

According to the NAR, nationwide existing home sales average price for June 2020 (preliminary) was $295 compared to $285 in June 2019. During this same period, eXp Realty homes sales price averaged $297 in the second quarter of 2020 compared to $286 in the second quarter of 2019. With rising uncertainly and fewer listings in an already housing shortage environment, home sale prices are likely to remain steady. However, it is still too early to predict the extent of the effects COVID-19 will have on home sales prices.

Continued Accelerated Growth

Our strength is attracting real estate agent and broker professionals that have contributed to our growth. As of June 30, 2020, we have grown our agent and broker base 54% to 31,091 agents and brokers compared to 20,162 as of the June 30, 2019.

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The following table sets forth the number of transactions, sales volume and commission revenue earned on real estate transactions:

Six Months Ended June 30,
(in thousands, except transactions)
2020			2019			Change
Transactions	Volume	Revenue	Transactions	Volume	Revenue	Transactions	Volume	Revenues
81,535	$ 23,954,123	$ 624,946	58,144	$ 16,031,589	$ 423,739	23,391	$ 7,922,534	$ 201,207

We continue to increase our presence in the United States and Canada through the execution of our growth strategies, and in the fourth quarter of 2019, we expanded operations to the U.K. and Australia. The Company is looking to expand into other countries by the end of 2020. The rate of growth of our agent and broker base is difficult to predict and is subject to many factors outside of our control, including actions taken by our competitors and macroeconomic factors affecting the real estate industry in general. The Company expects that the economic consequences of the COVID-19 pandemic will slow our agent growth rate and our transaction in the latter half of 2020 depending on the duration of government implemented restrictions due to the COVID-19 pandemic.

Agent Ownership

The Company maintains an equity incentive program whereby agents and brokers of eXp Realty can become eligible for awards of the Company’s common stock through the achievement of production and agent attraction benchmarks. Under our equity incentive program, agents and brokers who qualify are issued shares of the Company’s common stock.

The Company also administers a program whereby agents and brokers can establish a direct ownership interest in the Company as a stockholder. Agents and brokers can elect to receive 5% of their commission payable in the form of Company common stock which, as of January 2020, is now issued at a 10% discount to market on the date of issuance. This agent equity program continues to be another element in creating a culture of agent-ownership.

RECENT BUSINESS DEVELOPMENTS

Real Estate Brokerage Initiatives

Global Real Estate Cloud Brokerage

In the fourth quarter of 2019, the Company announced its first international expansions outside of North America into Australia and the U.K. This is part of the Company’s initiative to operate as a Global Real Estate Cloud Brokerage. We look forward to our cloud campus being populated by real estate professionals from around the globe as they conduct business, collaborate with each other, and develop meaningful personal and professional relationships across borders and cultures. In addition to these new countries, the Company continues to also focus on growth in the United States. We continue to expand in Canada.

Agent and Employee Experience

The Company has embarked on an initiative to better understand both its agents and employee experience. In doing so, we have adopted many of the principles of the Net Promoter Score® (NPS) across many aspects of our organization. NPS is a measure of customer satisfaction and is measured on a scale between -100 and 100. A NPS above 50 is considered excellent. Whether it be the overall question "How likely are you to recommend eXp to your colleagues, friends, or family?" or more granular inquiries as to specific workflows or service offerings, we believe this will ensure we are delivering on the most important values to our agents and employees. In turn, this often leads to enthusiastic fans of eXp who will promote our Company and continue leading us through strong organic growth.

This also ties into one of our core values, transparency. While we strive for high satisfaction, a low or trending lower NPS is equally important to identify. The Company’s agent NPS is 70 in the second quarter of 2020. As NPS scores are often leading indicators to agents and employees’ future actions, we are able to learn quickly what may be a ‘pain point’ or product that is not meeting its desired objective. We then take that information and translate it into action with an effort to remediate the specific root cause(s) driving the lower score. This fast and iterative approach has already led to improvements in such parts of our business such as agent onboarding, commission transaction processing, and employee benefits.

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Equity

Our agent compensation plans represent a key lever in our strategy to attract and retain independent agents and brokers. The costs attributable to these plans are also a significant component of our commission structure and results of operations. Prior to January 1, 2020, we issued share-based compensation to our agents and brokers at a 20% discount to the market price of our common stock, which changed to a 10% discount for issuances beginning in January 2020. Our operational strategy and the importance of the agent compensation plans to our strategy have not changed, however the financial impact of the change in the discount is expected to have a meaningful effect on our results of operations going forward. Our stock repurchase program and agent growth incentive program are more fully disclosed in Note 6 – Equity of the Notes to the Condensed Consolidated Financial Statements.

Technology Products and Services

We continue developing the core VirBELA software platform and its underlying infrastructure to accommodate for the ever-increasing use and scale required to support our eXp Realty division. In 2019, we released a new product centered on the concept of an open campus whereby small and independent organizations may utilize sub spaces as part of a larger campus similar to collaborative environments that currently exist in the physical brick and mortar world. In the first quarter of 2020, VirBELA began offering virtual events in conjunction with Event Farm. In the second quarter of 2020, VirBELA entered into a partnership with HTC VIVE, a premier virtual reality (VR) platform, to introduce VIVE Campus, a branded virtual campus to be part of a software launch in Q3 2020 in China. Given the current environment due to the COVID-19 pandemic, there is an acute need for virtual meetings and VirBELA is poised to grow with the increase in demand. Lastly, we expect to continue to service existing and new business-to-business enterprise level contracts in the coming year.

Affiliated Services

Recent acquisitions and partnerships have allowed us to begin offering to customers more products and services complimentary to our real estate brokerage business. These affiliated services include mortgage origination, title, escrow, and settlement services, which we can now provide as a more inclusive offering in addition to our brokerage services. We anticipate continued growth and investment in these service offerings in 2020; however, actual performance will depend directly on utilization by eXp Realty agents and brokers and the on-going and fluctuating government implemented restrictions due to the COVID-19 pandemic.

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Results of Operations

Three Months Ended June 30, 2020 compared to the Three Months Ended June 30, 2019

	Three Months Ended	% of	Three Months Ended	% of	Change
	June 30, 2020	Revenue	June 30, 2019	Revenue	$	%
	(In thousands, except per share data)
Statement of Operations Data:
Revenues	$ 353,525	100%	$ 266,705	100%	$ 86,820	33%
Operating expenses
Commissions and other agent-related costs	319,164	90%	244,587	92%	74,577	30%
General and administrative expenses	25,155	7%	23,204	9%	1,951	8%
Sales and marketing expenses	887	-%	1,071	-%	(184)	(17)%
Total operating expenses	345,206	98%	268,862	101%	76,344	28%
Operating income (loss)	8,319	2%	(2,157)	(1)%	10,476	486%
Other expense (income)
Other expense (income), net	11	-%	(10)	-%	21	214%
Equity in losses (earnings) of unconsolidated affiliates	12	-%	-	-%	12	100%
Total other expense (income), net	23	-%	(10)	-%	33	328%
Income (loss) before income tax expense	8,296	2%	(2,147)	(1)%	10,443	486%
Income tax expense	61	-%	48	-%	13	27%
Net income (loss)	8,235	2%	(2,195)	(1)%	10,430	475%
Net loss attributable to noncontrolling interest	40	-%	-	-%	40	100%
Net income (loss) attributable to eXp World Holdings, Inc.	8,275	2%	(2,195)	(1)%	10,470	477%
Adjusted EBITDA (1)	$ 13,648	4%	$ 3,795	1%	$ 9,853	260%
Earnings per share
Basic	$ 0.12		$ (0.04)		$ 0.16	405%
Diluted	$ 0.11		$ (0.04)		$ 0.15	385%
Weighted average shares outstanding
Basic	67,756		61,526
Diluted	72,661		61,526

(1) Adjusted EBITDA is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, see “Non-U.S. GAAP Financial Measures.”

Revenue

Our total revenues were $353.5 million for the three months ended June 30, 2020 compared to $266.7 million for the same period in 2019, an increase of $86.8 million, or 33%. Total revenues increased for the second quarter of 2020 primarily as a result of an increase in real estate brokerage commissions, which is directly attributable to increases in our agent count and closed transactions compared to the same period in 2019. Additionally, the average home sale price for eXp closed transactions increased 3.8% to $297 during the three months ended June 30, 2020 from $286 for the same period in 2019.

Commission and Other Agent Related Costs

Commission and other agent-related costs were $319.2 million for the three months ended June 30, 2020 compared to $244.5 million for the same period in 2019, an increase of $74.5 million, or 30%. Commission and other agent related

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costs increased primarily as a result of a higher volume of settled real estate transactions related to the increase in our agent base.

General and Administrative Expense

General and administrative expenses were $25.2 million for the three months ended June 30, 2020 compared to $23.2 million for the same period in 2019, an increase of $2 million or 8%. General and administrative expenses include costs related to wages, including stock compensation, and other general overhead expenses. General and administrative expenses increased primarily as a result of an increase of $1.7 million in compensation related expenses including salaries, employee benefits, and payroll taxes and processing. These increases are a result of the Company’s increase in employee and agent count compared to the prior period in 2019. This was offset by a decrease in travel expenses, $0.7 million due travel restrictions as a result of the COVID-19 pandemic.

Sales and Marketing

Sales and marketing expenses were relatively consistent at $1 million and $1.1 million for the three months ended June 30, 2020 compared to the same periods in 2019.

Other Income (Expense)

There were no significant changes in other income (expense) for the three months ended June 30, 2020 compared to the same period in 2019.

Income Tax Benefit (Expense)

There were no significant changes in income tax expenses for the three months ended June 30, 2020 compared to the same period in 2019. On March 27, 2020, Congress passed The Coronavirus Aid, Relief, and Economic Security Act (“The CARES Act”) in response to the COVID-19 pandemic. The CARES Act provides assistance to businesses in the form on loans and tax relief. At this time, the CARES Act has not materially impacted the Company’s results of operations.

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Six Months Ended June 30, 2020 compared to the Six Months Ended June 30, 2019

	Six Months Ended	% of	Six Months Ended	% of	Change
	June 30, 2020	Revenue	June 30, 2019	Revenue	$	%
	(In thousands, except per share data)
Statement of Operations Data:
Revenues	$ 624,946	100%	$ 423,739	100%	$ 201,207	47%
Operating expenses
Commissions and other agent-related costs	562,570	90%	387,129	91%	175,441	45%
General and administrative expenses	52,015	8%	42,905	10%	9,110	21%
Sales and marketing expenses	1,831	-%	1,960	-%	(129)	(7)%
Total operating expenses	616,416	99%	431,994	102%	184,422	43%
Operating income (loss)	8,530	1%	(8,255)	(2)%	16,785	203%
Other expense (income)
Other expense (income), net	49	-%	25	-%	24	96%
Equity in losses of unconsolidated affiliates	34	-%	-	-%	34	100%
Total other expense (income), net	83	-%	25	-%	58	230%
Income (loss) before income tax expense	8,447	1%	(8,280)	(2)%	16,727	202%
Income tax expense	70	-%	212	-%	(142)	(67)%
Net income (loss)	8,377	1%	(8,492)	(2)%	16,869	199%
Net loss attributable to noncontrolling interest	63	-%	-	-%	63	100%
Net income (loss) attributable to eXp World Holdings, Inc.	8,440	1%	(8,492)	(2)%	16,932	199%
Adjusted EBITDA (1)	$ 19,376	3%	$ 3,022	1%	$ 16,354	541%
Earnings (loss) per share
Basic	$ 0.13		$ (0.14)		$ 0.27	190%
Diluted	$ 0.12		$ (0.14)		$ 0.26	185%
Weighted average shares outstanding
Basic	66,751		61,526
Diluted	72,050		61,526

(1) Adjusted EBITDA is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, see “Non-U.S. GAAP Financial Measures.”

Revenue

Our total revenues were $624.9 million for the six months ended June 30, 2020 compared to $423.7 million for the same period in 2019, an increase of $201.2 million, or 47%. Total revenues increased primarily as a result of an increase in real estate brokerage commissions, which is directly attributable to increases in our agent count and closed transactions compared to the same period in 2019. Additionally, the average home sale price for the six month period ended June 30, 2020 for eXp closed transactions increased 7% to $294 compared to $275.7 for the same period in 2019.

Commission and Other Agent Related Costs

Commission and other agent-related costs were $562.6 million for the six months ended June 30, 2020 compared to $387.1 million for the same period in 2019, an increase of $175.4 million, or 45%. Commission and other agent related costs increased primarily as a result of a higher volume of settled real estate transactions related to the increase in our agent base.

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General and Administrative Expense

General and administrative expenses were $52.0 million for the six months ended June 30, 2020 compared to $42.9 million for the same period in 2019, an increase of $9.1 million or 21%. General and administrative expenses include costs related to wages, including stock compensation, and other general overhead expenses. General and administrative expenses increased primarily as a result of an increase of $6.7 million in compensation related expenses including salaries, employee benefits, and payroll taxes and processing. These increases are a direct result of the Company’s increase in employee and agent count from the prior period. Additionally, $1.4 million of the increase is from professional fees including accounting, legal, and other consulting. These expense increases are to support the Company’s sustained growth.

Sales and Marketing

Sales and marketing expenses were relatively consistent at $2.0 million for the six months ended June 30, 2020 compared to the same period in 2019.

Other Income (Expense)

There were no significant changes in other income (expense) for the six months ended June 30, 2020 compared to the same period in 2019.

Income Tax Benefit (Expense)

There were no significant changes in income tax expenses for the six months ended June 30, 2020 compared to the same period in 2019. On March 27, 2020, Congress passed The Coronavirus Aid, Relief, and Economic Security Act (“The CARES Act”) in response to the COVID-19 pandemic. The CARES Act provides assistance to businesses in the form on loans and tax relief. At this time, the CARES Act has not materially impacted the Company’s results of operations.

NON-U.S. GAAP FINANCIAL MEASURES

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use Adjusted EBITDA, a non-U.S. GAAP financial measure, to understand and evaluate our core operating performance. This non-GAAP financial measure, which may be different than similarly titled measures used by other companies, is presented to enhance investors’ overall understanding of our financial performance, and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S.GAAP.

We define the non-U.S. GAAP financial measure of Adjusted EBITDA to mean net income (loss), excluding other income (expense), income tax benefit (expense), depreciation and amortization; stock-based compensation expense, and stock option expense.

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

We are presenting the non-U.S. GAAP measure of Adjusted EBITDA to assist investors in seeing our financial performance through the eyes of management, and because we believe this measure provides an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of Adjusted EBITDA compared to Net Income (Loss), the closest comparable U.S. GAAP measure. Some of these limitations are that:

● Adjusted EBITDA excludes stock-based compensation expense not related to the agent equity program (and related payroll tax expense) and stock option expense, which have been, and will continue to be for the foreseeable future, significant recurring expenses in our business and an important part of our compensation strategy; and

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● Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of fixed assets and amortization of acquired intangible assets and, although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future.

The following tables present a reconciliation of Adjusted EBITDA to net income (loss), the most comparable U.S. GAAP financial measure, for each of the periods presented:

	Three Months Ended June 30,
	2020	2019
Net income (loss)	$ 8,235	$ (2,195)
Other expense (income), net	23	(10)
Income tax expense	61	48
Depreciation & amortization expense (1)	856	534
Stock compensation expense	3,246	3,587
Stock option expense	1,227	1,831
Adjusted EBITDA	$ 13,648	$ 3,795

(1) Note, amortization to stock payable is included in the “Other expense (income)” line item.

	Six Months Ended June 30,
	2020	2019
Net income (loss)	$ 8,377	$ (8,492)
Other expense (income), net	83	25
Income tax expense	70	212
Depreciation & amortization expense (1)	1,781	974
Stock compensation expense	6,765	7,257
Stock option expense	2,300	3,046
Adjusted EBITDA	$ 19,376	$ 3,022

(1) Note, amortization to stock payable is included in the “Other expense (income)” line item.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are our cash and cash equivalents on hand and cash flows generated from our business operations. Our ability to generate sufficient cash flow from operations or to access certain capital markets is necessary to fund our operations and capital expenditures and meet obligations as they become due.

For the six month period ended June 30, 2020, the coronavirus (“COVID-19”) has not had a material impact on our operations, and we anticipate that our existing balances of cash and cash equivalents and cash flows expected to be generated from our operations will be sufficient to satisfy our operating requirements for at least the next twelve months. Our future capital requirements depend on many factors, including our level of investment in technology and, our rate of growth into new markets. Our capital requirements may also be affected by factors which we cannot control such as the residential real estate market, interest rates, and other monetary and fiscal policy changes to the manner in which we currently operate. Additionally, as the impact of the COVID-19 on the economy and operations evolves, we will continuously assess our liquidity needs. In the event of a sustained market deterioration, we may need or seek advantageously to obtain additional funding through equity or debt financing.

We currently do not hold any bank debt. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would likely suffer. As of June 30, 2020, our cash and cash equivalents totaled $63.6 million. Cash equivalents are comprised of financial instruments with an original maturity of 90 days or less from the date of purchase, primarily money market funds. We hold no marketable securities.

For the three and six month period ended June 30, 2020, we purchased shares at an aggregate purchase price of $1,682 and $11,987, respectively pursuant to our stock repurchase plan. These repurchases did not have a material effect on our liquidity or capital resources.

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Net Working Capital

Net working capital is calculated as the Company’s total current assets less its total current liabilities. The following table presents our net working capital as of June 30, 2020 and December 31, 2019:

	June 30, 2020	December 31, 2019	Change
Current assets	$ 136,801	$ 78,819	$ 57,982
Current liabilities	(74,583)	(41,965)	(32,618)
Net working capital	$ 62,218	$ 36,854	$ 25,364

For the six months ended June 30, 2020, net working capital increased $25.4 million, or 69%, compared to December 31, 2019 primarily due to an increase in cash generated from operations during the first half of 2020.

Cash Flows

The following table presents our cash flows for the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,
	2020	2019	Change
Cash provided by operating activities	$ 46,036	$ 24,776	$ 21,261
Cash used in investment activities	(2,687)	(2,585)	(102)
Cash used in financing activities	(9,414)	(7,639)	(1,775)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash	(53)	96	(149)
Net change in cash, cash equivalents and restricted cash	$ 33,882	$ 14,648	$ 19,235

For the six months ended June 30, 2020, cash provided by operating activities increased $21.2 million compared to the same period in 2019. The change resulted primarily from the increased volume of our sales transactions, decrease in net losses, increase in customer deposits and participation by our agents and brokers in our Agent Equity Program and Agent Growth Incentive Program.

For the six months ended June 30, 2020, cash used in our investing activities were relatively flat compared to the prior year period.

For the six months ended June 30, 2020, the increase in cash flows used in financing activities primarily were related to the repurchase of our common stock, partially offset by proceeds received from the exercise of stock options.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with U.S. GAAP requires us to make certain judgments and assumptions, based on information available at the time of our preparation of the financial statements, in determining accounting estimates used in the preparation of the statements.

Accounting estimates are considered critical if the estimate requires us to use judgments and/or make assumptions about matters that were uncertain at the time the accounting estimate was made and if different accounting estimates could have been used in the reporting period or changes in the accounting estimates are likely to occur that would have a material impact on our financial condition, results of operations or cash flows.

The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2019, which provides a description of our critical accounting policies. There were no changes to critical accounting policies or estimates as reflected in our 2019 Annual Report. For additional information regarding our critical accounting policies and estimates, see the Critical Accounting Policies and Estimates section of MD&A included in our 2019 Annual Report.

OFF-BALANCE SHEET ARRANGEMENTS

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

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Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to market risk in the ordinary course of business. Our exposure to market risk results from fluctuations in interest rates and foreign currency exchange rates. Our primary operations are within the United States and most of the Canadian provinces. In the fourth quarter of 2019, the Company began operations in the U.K. and Australia. We do not enter into investments for trading purpose.

Interest Rate Risk

The Company holds funds in a money market account. We do not have material exposure to changes in fair value of these assets as a result of interest rates due to the short-term nature of our cash and cash equivalents.

Foreign Currency Risk

We have de minimis foreign currency risk related to our operations denominated in currencies other than the U.S. dollar. To date, foreign currency transactions gains and losses have not been material to our financial statements and we do not have a formal hedging program with respect to foreign currency.

Item 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2020 pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures as of June 30, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as a result of material weaknesses in our internal control over financial reporting and discussed below, our disclosure controls and procedures were not effective as of June 30, 2020.

In addition, no significant changes in the Company’s internal control over financial reporting occurred during the quarter ended June 30, 2020, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. As the Company’s workforce already operates in a remote environment, there was no material impact of COVID-19 on our day-to-day operations or our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2020. In making its evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework (2013).

The Company’s internal control over financial reporting was not effective as of June 30, 2020 due to the material weaknesses identified in connection with the preparation and audit of our consolidated financial statements for the year ended December 31, 2019, described below.

Under standards established by the Public Company Accounting Oversight Board of the United States, a material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Material Weaknesses:

General Information Technology Controls (“GITCs”) - We identified a material weakness related to GITCs in certain areas related to user access and program change-management over information technology (“IT”) systems utilized by the

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Company. Some of our business process controls (automated and manual) are dependent on the affected GITCs they too were deemed ineffective because they could have been adversely impacted. We believe that these control deficiencies were a result of: IT control processes lacking sufficient documentation; insufficient testing of changes; lack of training for our personnel on the importance of GITCs; and a lack of access control considerations in the design of the systems that could impact internal control over financial reporting.

Information and Communication, Control Activities and Monitoring – The Company also identified that it did not fully implement key components of the COSO framework, including control and monitoring activities relating to: (i) providing oversight over the system of internal control, (ii) overseeing the nature and scope of monitoring activities and management's evaluation and remediation of deficiencies, (iii) using appropriate processes and technology to assign responsibility and segregate duties as necessary, (iv) maintaining quality through processing, and (v) attracting, developing, and retaining sufficient and competent personnel to support the achievement of internal control objectives.

The Company’s independent registered public accounting firm, Deloitte and Touche LLP has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019 and expressed an adverse opinion, which is disclosed in Item 9A. of the Company’s Annual Report on Form 10-K.

Planned Remediation Actions:

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively in addition to implementing new monitoring controls to help mitigate the risks associated with the ineffective GITCs. The remediation actions include: (i) establishing an internal audit team to support the Company’s entire control environment and its ongoing internal controls development and monitoring; (ii) creating and filling an IT compliance oversight function; (iii) educating control owners concerning the principles and requirements of each control, with a focus on those related to user access and change-management over IT systems impacting financial reporting; (iv) developing and maintaining documentation underlying GITCs to promote knowledge transfer upon personnel and function changes; (v) developing enhanced controls and reviews related to changes in IT systems; (vi) performing an in-depth analysis of who should have access to perform key functions within the system that impact financial reporting and redesigning aspects of the system to better allow the access rights to be implemented; and (vii) adding additional manual controls to monitor information and data produced by the system to help mitigate the risks associated with ineffective GITCs.

We believe that these actions will remediate the material weaknesses. The weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control Over Financial Reporting

Other than the efforts noted above to remediate the previously reported material weaknesses, there have been no changes in our internal control over financial reporting during the period covered by this interim report on Form 10-Q that has materially affected or, are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Internal Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II – OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

From time to time, we are involved in ordinary routine litigation incidental to the conduct of our business, including matters that may be certified as class or collective actions.

There are no legal proceedings pending or, to our knowledge, threatened that we believe could have a material adverse impact on our business, reputation, results of operations or financial condition.

Item 1A. RISK FACTORS

There were no material changes to the risk factors reported in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020. Because of the continuing uncertainty and potential consequences of the ongoing COVID-19 pandemic, we are restating the new risk factor that we included in our last Quarterly Report.

The coronavirus (“COVID-19”) pandemic may have a material adverse effect on our businesses, financial condition, and results of operations.

The COVID-19 pandemic is having a profound effect on the global economy and financial markets. In the United States, federal, state, and local governments continue to react to this evolving public health crisis by, among other actions, recommending or requiring the avoidance of gatherings of people or significantly or entirely curtailing activities categorized as non-essential. This unprecedented situation has created considerable risks and uncertainties for the U.S. real estate services industry in general and for the Company in particular, including those arising from the potential adverse effects on the economy as well as risks related to employees, independent agents, and consumers. The extent of the impact of the pandemic on our business and financial results will depend largely on future developments, including the extent and duration of the spread of the outbreak, the extent of governmental regulation (including, but not limited to, local, state and/or federally mandated “shelter in place” or other regulations that, for example, preclude or strictly limit open houses or in-person showings of properties), the impact on capital and financial markets and the related impact on consumer confidence and spending, and the magnitude of the financial and operational consequences to our agents and brokers, all of which are highly uncertain and cannot be predicted. However, we believe the COVID-19 pandemic could have a material adverse impact on our business, results of operations and financial condition.

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

Issuer Purchases of Equity Securities

The following table provides information about repurchases of our common stock through the quarter ended June 30, 2020:

Period	Total number of shares purchased	Average price paid per share	Total number of shares purchased as part of publicly announced plans or programs (1)	Approximate dollar value of shares that may yet be purchased under the plans or programs
4/1/20 - 4/30/20	-	$ -	-	$ -
5/1/20 - 5/31/20	-	-	-	-
6/1/20 - 6/30/20	131,173	12.82	131,173	60,824,199
Total	131,173	$ 12.82	131,173

(1) The repurchase program began on January 2, 2019 and was set to expire on June 28, 2019. On June 12, 2019, the Company, under authorization from the Board of Directors, amended the plan. The amended plan extended the repurchase program through December 31, 2019. On November 26, 2019, the Company announced the approval to increase the authorization limits of the Company’s stock repurchase program by the Board. The Board agreed to extend the stock repurchase program through the fourth quarter of 2020 and to increase the authorization for the stock repurchase program from $25 million to $75 million of the Company’s common stock. The Company discontinued the repurchase program in March 2020 and subsequently reinstated it in June 2020. The stock repurchase program is more fully disclosed in Note 6 – Equity of the Notes to the Condensed Consolidated Financial Statements.

Item 3.DEFAULTS UPON SENIOR SECURITIES

None.

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Item 4.MINE SAFETY DISCLOSURES

Not applicable.

Item 5.OTHER INFORMATION

On June 24, 2020, Penny Sanford, a principal stockholder, entered into a stock trading plan in accordance with the requirement specified in Rule 10b5-1 of the Securities Exchange Act of 1934 (“Rule 10b5-1 Trading Plan”). The purpose of this plan is to achieve broader diversification of investments, while reducing the risk of over concentration in a particular investment. Under the terms of the Rule 10b5-1 Trading Plan, an authorized third-party broker will sell up to an aggregate of 240,000 shares of common stock of the Company beginning in July 2020. This Rule 10b5-1 Trading Plan is scheduled to terminate no later than July 29, 2021.

Item 6.EXHIBITS

Exhibit	Exhibit
Number	Description
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference from Appendix A to the Company’s Definitive Information Statement filed on October 9, 2018)
3.2	Certificate of Correction to the Amended and Restated Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 24, 2020
3.3	Amended and Restated Bylaws (incorporated by reference from Appendix B to the Company’s Definitive Information Statement on Schedule 14C filed on October 9, 2018.
10.1	2020 Independent Contractor Agreement and Agent Equity Enrollment Form
31.1	Certification of the Chief Executive 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
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 pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the 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	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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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 5, 2020	/s/ Jeff Whiteside
	Jeff Whiteside
	Chief Financial Officer (Principal Financial Officer)

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EX-10.1

Exhibit 10.1

Independent Contractor Agreement

This Independent Contractor Agreement is entered into by and between:

Name of Licensee:
	(List entity name only if license is held in the name of an entity approved by the applicable state real estate commission. Must include entity designation if listing an entity name. DBAs not accepted.)
Address:
City:
State:
ZIP code:

(the “Independent Contractor” or “Contractor” or “You”), and eXp Realty, LLC, a Washington limited liability company; or eXp Realty of California, Inc., a Washington corporation; or eXp Realty of Connecticut, LLC, a Connecticut limited liability company; or eXp Realty North, LLC, a North Dakota limited liability company, or eXp Realty Associates, LLC, a Georgia limited liability company, whichever is the applicable entity licensed as Contractor’s applicable jurisdiction, all with their corporate office located at 2219 Rimland Dr., Suite 301, Bellingham, WA 98226 (hereinafter referred to as "eXp Realty" or "Company"). eXp Realty/Company and Contractor/Independent Contractor are each referred to individually herein as a "Party" and collectively as the "Parties".

Whereas Contractor is duly licensed with each of the state(s) listed below to do business as a real estate licensee and whereas Contractor wishes to affiliate and place his or her license with the Company and the Company desires to allow Contractor to affiliate with it on the terms and conditions set forth herein.

Primary/Domicile State:	License No.:
Additional States Contractor is licensed in & License No.’s (if applicable):

Now, therefore, the Parties agree as follows:

STATEMENT OF AGENCY

Effective as of the date of this Independent Contractor Agreement (“Agreement” or “ICA”), Company shall retain Contractor as an "Independent Contractor" as defined under Section 3508 of the Internal Revenue Code with the title of "Real Estate Salesperson" or other such equivalent title as the state recognizes (i.e., real estate licensee, broker, qualifying broker, principal broker, associate broker, etc.) exclusively for the Company. This Agreement does not constitute a hiring by either party, and neither party shall be liable for any obligation incurred by the other, except as provided hereunder.

Contractor shall be free to devote to his or her real estate service business such portion of his or her time, energy, effort and skill, as Contractor sees fit and to establish his or her own endeavors. Contractor shall not be required to keep definite office hours, attend sales meetings or adhere to sales quotas. Contractor shall not have mandatory duties except those specifically set out in this Agreement. Nothing contained in this Agreement shall be regarded as creating any relationship (employer/employee, joint venture, partnership, shareholder) between the parties, other than the independent contractor relationship as set forth herein. Contractor understands this is an “at will” agreement.

Contractor understands that Company is legally accountable for the activities of the Contractor.

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Contractor further agrees that they will follow all local, state, and federal laws regarding business permits and licenses that may be required to carry out their business.

A.    Workers’ Compensation Insurance Coverage. Contractor is an Independent Contractor. To the maximum extent permitted and required by law, Contractor shall acquire on his or her own behalf, as a self-employed person, such workers’ compensation insurance coverage as he or she deems appropriate, but no less than is required by law, and consistent with his or her status as an independent contractor and the mutual intent of the Company and the Contractor not to create an employer/employee relationship. Contractor hereby agrees not to claim or assert, or to support any third-party assertion of, the existence of an employee/employer relationship. Any specific state exceptions and requirements shall be covered in a state-specific addendum. Contractor shall name the Company, its affiliates and subsidiaries as additional insureds on any workers’ compensation policy that Contractor obtains on his or her own behalf and shall also obtain a waiver of subrogation endorsement from the workers’ compensation insurer in favor of the Company, its affiliates and subsidiaries. Contractor shall, uponwritten request, provide evidence of the above insurance requirements for any policy of workers’ compensation insurance he or she obtains on his or her own behalf.

B.    Taxation. Independent Contractor understands that Independent Contractor is entering into this Agreement as an Independent Contractor and not as an employee. Company will have no responsibility to withhold or pay any income or other taxes on Independent Contractor’s compensation or to provide any insurance, retirement or other employee benefits to Independent Contractor. Independent Contractor will not be treated as an employee with respect to services rendered by Independent Contractor pursuant to the Agreement for federal/state/local tax purposes.

TERMINATION

This Agreement shall be deemed terminated (i) upon the occurrence of expiration, suspension, revocation or termination of Contractor’s real estate license for any cause or reason whatsoever, (ii) upon written notice, with or without cause, from either party to the other party of the intent to terminate this Agreement for breach of any provision hereof, and (iii) upon written notice from either party to the other party of the intent, with or without cause, to terminate this Agreement.

Upon termination of this Agreement, for any reason, Contractor agrees to cease use of any and all sales materials or similar items that bear the name, logos, registered trademarks or inscription of Company, in any manner whatsoever.

Upon termination of this Agreement, for any reason, Company will release those listings without an existing contract of sale, provided the account of Contractor is paid in full, and the property owner wishes the listing released. After Contractor’s association with Company terminates, Company will continue to pay Contractor’s commission less any fees or other monies owed (e.g., commission advances, garnishments or required withholdings, past due balances owed to Company, etc.) on Transactions (as defined in Addendum A, below) in a pending status as of termination date, upon successful close of escrow, in accordance with the terms set forth on Addendum A of this Agreement. Company shall be deemed released from all claims for commissions not yet earned under the law by Contractor.

Upon termination of this Agreement, for any reason, Contractor is aware that such termination could result in a significant financial loss, including but not limited to, pending transactions, revenue share, and stock awards. Contractor agrees that, on such an occasion, Company may not have any adequate remedies at law and understands and agrees that Company may seek any and all available equitable remedies, in addition to or instead of any and all available legal remedies. See relevant sections relating to transactions upon termination, revenue share guidelines and stock awards in the eXp Realty U.S. Policies and Procedures Manual.

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DUTIES OF CONTRACTOR

Contractor shall act as an independent real estate sales professional in carrying out the customary activities of a licensed real estate agent, including, but not limited to:

A.    Maintain an active real estate license with eXp Realty as required in every state that Contractor engagesin activities requiring a real estate license.

B.    Maintain a funding source on file for auto withdrawal of fees and any amounts due to Company.

C.    List all properties for sale under the eXp Realty brokerage brand.

D.    Promptly upload all listing contracts, purchase contracts, leases, referrals and any other transaction documentation into the transaction management system within two business days of execution date.

E.    Represent buyers and sellers in the sale of real property.

F.    Represent landlords and tenants in the leasing of property.

G.    Such other services pertaining to the real estate business of the Company.

H.    Adhere to the rules of conduct as laid out by each applicable State(s)’ Department of Licensing, MLS Rules, Federal and State Fair Housing, National Association of REALTORSⓇ Code of Ethics and the Association of REALTORS to which the Contractor belongs.

I.     Abide by all Company policies and procedures, including the Unauthorized Real Estate Activities section of the Policies and Procedures manual.

J.     Notify the Company in writing and each applicable State(s)’ Department of Licensing, as required, within10 calendar days of a criminal conviction, an adverse judgment, or disciplinary action against the Contractor.

K.    Contractor must notify their Designated Managing Broker and/or Managing Broker in writing prior to removing their license from Company and terminating this agreement. All fees shall continue to be billed and charged to Contractor’s funding source(s) until such notice is received.

L.     Contractor shall not be affiliated with a competing firm. For purposes hereof, “Affiliate with a competitor of the Company” shall mean that the Contractor or Contractor’s spouse or partner is an individual proprietor, partner, majority stockholder, officer, employee, director, consultant, agent, joint venturer, investor, lender, or in any other capacity, alone or in association with others, owning, managing, operating, controlling or participating in the ownership, management, operation or control of, or working for or permitting the use of his or her name by, a residential real estate brokerage other than eXp Realty.

Contractor agrees that any and all real estate listings, or any interest therein, and all other real estate related service contracts approved by the Company, including, but not limited to, those pertaining to the purchase, sale, rental or lease of real estate, or any interest therein or services in relation thereto, any of which Contractor is required under applicable law to hold and maintain a real estate license in order to perform the service or have an interest in, shall be taken in the name of the Company and its Designated Managing Broker in the state, as required under applicable state law and regulation. Contractor shall ensure that all fees, commissions or other compensation earned by Contractor, and for which Contractor must be a licensed real estate professional in order to receive such commission or compensation, in connection with the sale, lease or rental of real estate and any interest therein or service in relation thereto are made payable to the Company.

Contractor understands that the Designated Managing Broker and Managing Broker(s) (hereinafter collectively referred to as “Broker”) will rely on the accuracy, completeness and competence of Independent Contractor's services performed under this Agreement in fulfilling the Broker's contractual commitments to the public. Contractor shall strive at all times to perform in a manner that will increase the goodwill, reputation and business of Broker, and Contractor shall do nothing which would serve to disturb, discredit or devalue Broker or Broker's goodwill, reputation and/or business.

ANNIVERSARY DATE AND GOOD STANDING

Contractor’s join date (“Join Date”) shall be the date on which the Contractor completes the onboarding process and

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transfers his or her license to eXp Realty. The anniversary date (“Anniversary Date”) for Contractor will be ◻        ◻ the first day of the calendar month following Contractor’s Join Date with the Company.

To be considered a Contractor in Good Standing, Contractor must be current on all financial obligations, including all fees and/or amounts owed to the Company. In addition, all required licenses, local, state and national dues and subscriptions which are required to conduct real estate business in Contractor’s state(s) must be current and in effect.

COMMISSIONS ON TRANSACTIONS (See Addendum A: Fee Schedule)

Should transactions be subject to any state or local taxes, the 80/20 commission split will be calculated after the Company portion of the tax is deducted.

AGENCY RELATIONSHIPS

Contractor acknowledges that all agency relationships entered into for any real estate transactions exist solely between the Company and the client. The Contractor owes a duty of reasonable care to all parties in the transaction. During the period of this Agreement, Contractor shall diligently represent eXp Realty with all reasonable skill and care expected of a licensed real estate professional.

REALTOR AFFILIATION

Contractor shall maintain an active membership in a local association or board of REALTORS affiliated with the National Association of REALTORS as determined by Company. Contractor agrees to be a dues paying member of, and abide by the REALTOR Code of Ethics and Standards of Practice of the National Association of REALTORS as well as the statutes and rules of the state within which they are licensed and any requirements of the multiple listing service if Contractor is a member. For any REALTOR boards that require the brokerage to pay the fees upfront, the Contractor shall reimburse the company within 10 days of invoice for the same.

EXPAND MENTORING PROGRAM

Contractors who have not yet completed and closed a minimum of three residential real estate sales transactions within the previous 12-month period in each state he or she is licensed in prior to joining eXp Realty shall be automatically enrolled in the eXpand Mentoring Program. If this requirement is applicable, the eXpand Mentoring Program Agreement will be attached and will apply.

REVENUE SHARE PLAN

The Company’s Sustainable Revenue Share Plan exists to provide a financial incentive to the real estate licensees with the Company (“eXp Agents”) who have helped grow company sales through the agent ranks of eXp Realty. The Sustainable Revenue Share Plan guidelines are defined in the attached Addendum B and shall be executed and acknowledged by Contractor concurrently with this ICA.

SPONSOR IN REVENUE SHARE PLAN

Selecting a sponsor is an important decision and should be based on who has been most influential in your decision to join eXp Realty. Sponsor selection is part of this legally binding Agreement.

A sponsor's sole requirement to qualify as a sponsor is selection by the joining agent as having been the most influential person in his or her decision to join eXp Realty. Sponsors are encouraged to support joining agents throughout the joining process and beyond, but are not required by eXp Realty to do so. If the selected sponsor has made representations or promises above and beyond referring a joining agent to eXp Realty, it is the sole responsibility of the joining agent to confirm the sponsor's ability and intent to deliver all additional support promised. eXp Realty is not responsible for enforcing agreements between agents made outside of this ICA.

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If an agent removes his or her license from eXp Realty, terminates this ICA, and rejoins eXp Realty within 180 days from the date the agent’s license disassociated from eXp Realty, the previously named sponsor will continue to be named as that agent’s sponsor. However, after 180 days from the date agent’s license was disassociated from eXp Realty, the agent is free to rejoin eXp Realty and select a different sponsor.

If there is no individual who most influenced you to join eXp Realty, or you prefer not to select a sponsor for any reason, eXp Realty may be selected as the sponsor and will hold that position going forward.

THE FOLLOWING IS A SIGNIFICANT DECISION WHICH IS IRREVOCABLE. PLEASE PAUSE TO CONSIDER CAREFULLY WHO THE MOST INFLUENTIAL INDIVIDUAL IN YOUR DECISION TO JOIN EXP REALTY WAS. CHANGES IN SPONSORSHIP WILL NOT BE MADE.

IF THERE ARE ANY UNANSWERED QUESTIONS ABOUT SPONSORSHIP, STOP NOW AND RETURN TO THE ICA ONCE THE SELECTION OF SPONSORSHIP IS FULLY UNDERSTOOD.

Contractor was most influenced to join eXp Realty by                                                                          and selects this individual to be his or her eXp Realty sponsor. Contractor is aware the sponsor has no binding authority for Company and this ICA overrides any and all verbal or written representations made by the sponsor. Upon execution of this ICA, and pursuant to the terms and conditions herein, sponsor selection shall be permanent and may notchange.

CONTRACTOR EXPENSES TO CONDUCT INDEPENDENT BUSINESS

Contractor is responsible for all expenses related to being a real estate licensee unless otherwise provided in this Agreement. In no way limiting the generality of the foregoing, Contractor shall be responsible for the following expenses: REALTOR dues, MLS dues, cell phone expenses, business cards, signs, sign-posts, advertising, personal branding, continuing education, licensing, printing, copying, faxing, digital camera, computer(s), printer/scanner/fax, high-speed Internet, automobile expenses, auto insurance, individual E&O insurance for a real estate agent where so required by state law, local, state, federal and municipality taxes of any kind, and any and all government, regulatory or agency licensure, compliance, or other fees and expenses.

AUTOMOBILE INSURANCE

Company does not maintain commercial automobile insurance coverage that extends coverage to Contractor or any other independent contractor of Company. For the duration of this ICA, Contractor shall maintain automobile insurance coverage with minimum liability limits of $100,000 per occurrence, $300,000 aggregate, and a minimum limit of $100,000 in property damage coverage. If available by the insurer, Contractor shall cause the insurance policy to name Company as an additional insured. In any event, such insurance shall be primary and noncontributory to any insurance available to Company and Company’s insurance shall be in excess thereto. In no event shall the limits of such insurance be considered as limiting the liability of Contractor under this Agreement and in no event shall the above insurance limits be any indication that such insurance limits are adequate insurance coverage for Contractor.

POLICIES AND PROCEDURES

Contractor acknowledges Contractor has read, asked any questions of his or her Broker or eXp Realty management, and fully understands the eXp Realty U.S. Policies and Procedures Manual, which is incorporated into the ICA by this reference and which can be found at http://policies.exprealty.com. Contractor agrees to fully review any amendments and/or additions to the Company’s Policies and Procedures, ICA or any Addenda thereto.

Contractor agrees to abide by the Company’s Policies and Procedures. In the event of any direct conflict between any of the Company’s Policies and Procedures and the terms and provisions of the ICA, the terms and provisions of the ICA shall control.

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By signing this Agreement, Contractor acknowledges having read the Company’s Policies and Procedures and certifies Contractor’s compliance therewith effective as of the date of this Agreement.

NON-DISCLOSURE OF TRADE SECRETS

Contractor recognizes and acknowledges that much of the information that will be furnished to him/her concerning the Company’s customers, listings, holdings, investments, transactions, company-generated leads and other confidential matters constitutes valuable, special and unique assets and are trade secrets of the Company.

Accordingly, Contractor will not, during or after the term of his or her affiliation with the Company, disclose any such information or any part thereof to any person, firm, corporation, association or other entity for any reason or purpose whatsoever without the express written consent of the Company.

TRADEMARK USAGE

eXp Realty, eXp and the associated logo graphics and color placement used (or designed and intended for use) by Company, are trademarks of the Company. In order to maintain the strength of the Company’s brands, the Company must maintain strict guidelines as to how its trademarks are used. Contractor agrees not to use eXp Realty, eXp, eXp World Technologies, VirBELA, eXp World Holdings, or any other Company trademark, in any manner (including in or with, any font, style or design) that is not expressly permitted by the Company in writing in Company’s Policies and Procedures, or that is otherwise determined by Company, at Company’s sole discretion, to be prejudicial to the goodwill associated with the Company’s trademarks, or to weaken Company’s ability to enforce its trademark rights. Contractor shall not use Company’s trademarks (including eXp Realty or eXp) in any domain name, email address, online account ID, Twitter ID, or Facebook Group, or in any other social or business media context that would conflict with the Company’s Policies and Procedures.

COMPLIANCE WITH LAW AND GOOD BUSINESS PRACTICES

Contractor shall abide by all applicable laws, ordinances and regulations, including, without limitation, local, state and federal laws and regulations relating to real estate licensing, real estate transactions, real estate service businesses, telemarketing, marketing, intellectual property rights, etc. Contractor shall also abide by the rules of ethical conduct established by the National Association of REALTORS®. Contractor’s advertising and promotion must be completely factual and ethical. In all dealings, Contractor shall adhere to the highest standards of professionalism, ethics and integrity.

CONTENT LICENSE AND MODEL RELEASE PROVIDED BY CONTRACTOR

Unless otherwise expressly agreed upon in writing between eXp Realty and Contractor, to the extent Contractor provides to eXp Realty or any of its affiliates or licensees (collectively, “eXp Licensees”), any photographs, images or content of any type created or otherwise owned by Contractor (collectively, “Contractor Content”) including, without limitation, by uploading such Contractor Content via any online network operated by an eXp Licensee, Contactor retains ownership to such Contractor Content but Contractor hereby grants eXp Licensees a royalty-free, irrevocable, world-wide, perpetual, non-exclusive license to publicly display, distribute, reproduce and create derivative works of the Contractor Content, in whole or in part, in any media, including on any eXp Licensee website, for any purpose, including advertising and promotion of eXp Licensee services and/or products.

Contractor warrants and represents that Contractor Content provided by Contractor to eXp Licensees does not violate the intellectual property of others. eXp Licensees will not be required to pay any additional consideration or seek any additional approval in connection with using the Contractor Content provided by Contractor, and eXp Licensees retain exclusive and sole discretion as to whether to use such Contractor Content or reject or remove such Contractor Content from any online systems operated by any of the eXp Licensees.

Moreover, to the extent the Contractor provides to any eXp Licensees, or otherwise consents to allow eXp Licensees to receive, any photographs of Contractor as a model, Contractor hereby provides eXp Licensees with the irrevocable

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right to use Contractor’s name (or any fictional name), likeness, picture, portrait, or photograph in all forms and in all media and in all manner, without any restriction as to changes or alterations (including but not limited to composite or distorted representations or derivative works made in any medium) for advertising, trade, promotion, exhibition, or any other lawful purposes, and Contractor waives any right to inspect or approve such photograph(s) or finished version(s) incorporating such photograph(s), including any written materials or other content that may be created and appear in connection therewith.

Contractor hereby waives all moral rights as to such photographs and releases and agrees to hold harmless eXp Licensees, and their assigns, licensees, successors in interest, agents, employees and representatives from any liability by virtue of any blurring, distortion, alteration, or use in composite form whether intentional or otherwise, that may occur or be produced in the taking of the photographs, or in any processing thereof.

AGREEMENTS, COMPLIANCE FORMS, INSURANCE FORMS

Contractor will submit any documents necessary for the Company to keep Contractor in compliance with all local, state and federal laws as well as Company Policies and Procedures. The Company will share all materials with Contractor that the Company has relating to the Contractor's independent contractor relationship with the Company in an agent file.

The Company reserves the right to assess penalties, financial and otherwise, in accordance with the Company Policies and Procedures, against Contractors who fail or refuse to provide completed documentation as required by the Company or by any state, federal or local law in order to achieve and maintain compliance.

ERRORS & OMISSIONS COVERAGE

Company carries comprehensive errors and omissions (“E&O”) insurance coverage in each state in which the Company conducts business. This coverage provides varying degrees of protection against claims arising out of professional services. Even though the Company’s E&O coverage may typically cover such claims, Contractor agrees to defend, indemnify and hold Company harmless against any and all claims that may arise in connection with Contractor practicing real estate. In the event a Contractor receives notice of a lawsuit, a demand letter, a threat of a lawsuit, or a complaint before the Department of Real Estate or any REALTOR Association, Contractor shall notify the Broker immediately. Contractor agrees to actively cooperate and assist the Company, Broker and/or the insurance company in defending such claim or complaint until it is resolved.

Currently, the deductible on Company’s E&O policy is $25,000 (twenty-five thousand dollars) in most states, but is subject to a potential change at each renewal term. Where the deductible differs from the Company’s E&O policy deductible amount, a state-specific addendum will be executed with contractors of that state. Contractor shall be responsible for and shall reimburse Company up to $2,500 (two thousand five hundred dollars) incurred in the defense or resolution of any claim made against the Contractor and/or Company as a result of Contractor’s actions or inactions, regardless of whether or not the claim is eligible for insurance coverage. Even where Contractor does not believe the claim or cause of action has merit and/or does not believe any money should be expended in the defense or resolution of the matter, Contractor agrees in advance, by signing this Agreement, that he or she will reimburse Company up to $2,500 expended in defense or resolution of the matter within 30 days of receipt of a request for reimbursement from Company. Contractor may elect to have all or any portion of the reimbursable amount withheld from any commissions and/or revenue share payments due Contractor in lieu of making payment directly to Company. However, if Contractor does not reimburse the Company directly within the 30 day period then Company shall deduct the full amount due from any and all commissions and revenue share payments due Contractor until Company has been fully reimbursed.

Contractor acknowledges that if it is determined that Contractor acted fraudulently, grossly or recklessly negligent, or willfully, Contractor shall be responsible for the full amount of the damages and costs recovered against Company,

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along with all costs of defense. This language in no way limits the liability of Contractor to Company.

INDEMNIFICATION AND HOLD HARMLESS

Contractor hereby agrees to indemnify and hold harmless the Company, its owners, officers, affiliates, subsidiaries, agents or representatives from any and all claims which may arise out of, in the course of, or relate in any way to the Contractor’s performance of his or her duties hereunder. Additionally, Contractor acknowledges that if Contractor is subject to any non-compete agreement or covenant from a previous brokerage that Contractor will not violate that covenant or agreement or put the Company at risk of liability by violating it. Contractor shall indemnify, defend and hold Company harmless for any action or failure to act by Contractor, including, without limitation, any unauthorized representations and any failure to fulfill any of Contractor's responsibilities or obligations set forth herein.

LEADS UPON DEPARTURE

It is Company’s policy that upon departure from the Company a Contractor who is remaining in the real estate brokerage business (“Departing Agent”), Company shall maintain and preserve the Departing Agent’s database of leads (“Leads”) in any of the company provided consumer relationship management applications) Contractor’s accounts for a period of 30 days (“Preservation Period”) measured from the date on which the Contractor formally exits the organization with Agent Services and Administration (“Exit Date”).

If the Departing Agent would like to obtain a list of their Leads, then the Leads can be exported upon written request to eXp Realty’s Technology and Technical Support at support@exprealty.com (an “Export Request”) provided the Export Request is received within the Preservation Period.

If Departing Agent does not provide an Export Request as set forth herein during the Preservation Period, then the Departing Agent’s Leads are subject to forfeiture and deletion after the Preservation Period expires.

COVENANT OF COOPERATION

In the event of any dispute, complaint, claim, or allegation concerning or involving Contractor, either directly or indirectly, Contractor agrees to cooperate fully and in good faith by providing documents, testimony and any other items or information that may be needed to respond to and defend a complaint, claim, or allegation. This covenant shall survive termination of this Agreement, whether voluntary and involuntary, and is without time limitations in its obligation. Contractor’s breach of this provision shall constitute a material breach of this Agreement and Company shall be entitled to recover reasonable legal fees and costs expended or incurred as a result of Contractor’s noncooperation.

EMERGENCY CONTACT INFORMATION AND CHANGE OF ADDRESS NOTIFICATIONS

Contractor agrees to provide emergency contact information in case eXp Realty needs to get hold of someone on Contractor’s behalf. Contractor agrees to update this information along with keeping current any personal information, including a change of address within 10 days of any change. Please provide the current information below:

Emergency Contact:

Relationship to Contractor:

Phone Number:

Email:

WRITTEN CONTRACT AS CONSTITUTING ENTIRE AGREEMENT

This Agreement, along with any and all addenda, exhibits, attachments and Company’s Policies and Procedures identified in this Agreement, constitute the entire Agreement between the parties and are hereby expressly and specifically incorporated herein by reference in their entirety as if fully set forth in this Agreement. There are no verbal understandings or other agreements of any nature with respect to the subject matter hereof except those contained in

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this Agreement as set forth herein.

CONTRACT REVISIONS/MODIFICATIONS

Certain portions of this Agreement may be modified from time to time by the Company in its sole discretion. Company will provide a minimum of seven days’ notice of any material revision for review by Contractor by sending an email communication to the email address on file in Company’s Enterprise system (www.expenterprise.com) (“Enterprise”). For material changes, after the seven-day review period has elapsed, unless Contractor has notified the Company in writing that Contractor objects to the revisions, Contractor is deemed to have accepted all revisions. The Company strives to update the Policies and Procedures manuals bi-annually in May and November, as needed, but may be updated at any time necessary. Contractor will receive timely communications from Company regarding any such Policy & Procedures update. However, it is the Contractor’s responsibility to remain informed of and familiar with the most current version of the Company’s Policies and Procedures at all times.

If Contractor fails to provide an email address in Company’s Enterprise system, or fails to provide Company with notice of changes to Contractor’s email address, to the extent Company is required to provide notice of amendment by email, Company’s notice of amendment will nonetheless be effective upon the date Company attempts to send the amendment to Contactor at an email address that is the last known email address to Company of Contractor.

It is the Contractor’s responsibility to remain informed at all times of his or her responsibilities and obligations under the most current version of the Company’s ICA.

NOTICE

Delivery of all notices and documentation shall be in writing and deemed delivered and received when: (i) sent via electronic mail to the email address on file in Company’s eXp Enterprise system; or (ii) sent by mail to Contractor’s address on file. Company’s address for physical delivery of notices and documentation sent by Contractor is eXp Realty, ATTN: Legal Department, 2219 Rimland Dr., Suite 301, Bellingham, WA 98226.

BINDING EFFECT

This Agreement shall be binding upon and inure to the benefit of the respective heirs, successors and assigns of the parties hereto.

GOVERNING LAW

This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the state in which the Contractor is licensed as a real estate agent and if Contractor is licensed in multiple states, then the laws of the state in which the Contractor is both domiciled and licensed.

MANDATORY BINDING ARBITRATION AND DISPUTE RESOLUTION

A.    Mediation in Advance of Arbitration

1.     The parties agree that any and all disputes, claims or controversies arising out of or relating to this Agreement shall be submitted to JAMS, a private alternative dispute resolution provider, or its successor, for mediation, and if the matter is not resolved through mediation, then it shall be submitted to JAMS, or its successor, for final and binding arbitration pursuant to the clause set forth in subparagraph A.5below.

2.    Either party may commence mediation by providing to JAMS and the other party a written request for mediation, setting forth the subject of the dispute and the relief requested.

3.    The parties will cooperate with JAMS and with one another in selecting a mediator from the JAMS panel of neutrals and in scheduling the mediation proceedings. The parties agree that they will participate in the mediation in good faith and that they will share equally in its costs.

4.    All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator or any JAMS

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employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in themediation.

5.    Either party may initiate arbitration with respect to the matters submitted to mediation by filing a written demand for arbitration at any time following the initial mediation session or at any time following 45 days from the date of filing the written request for mediation, whichever occurs first (“Earliest Initiation Date”). The mediation may continue after the commencement of arbitration if the parties so desire.

6.    At no time prior to the Earliest Initiation Date shall either side initiate an arbitration or litigation related to this Agreement except to pursue a provisional remedy that is authorized by law or by JAMS rules or by agreement of the parties. However, this limitation is inapplicable to a party if the other party refuses to comply with the requirements of paragraph 3 above.

7.    All applicable statutes of limitation and defenses based upon the passage of time shall be tolled until 15 days after the Earliest Initiation Date. The parties will take such action, if any, required to effectuate suchtolling.

B.    Binding Final Arbitration; Appeal. The parties to this Agreement agree that any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, not resolved pursuant to paragraphs A, 1 through 7 above, shall be determined by arbitration in the state that issued the Contractor’s real estate license, and if Contractor is licensed in more than one state then the state in which the transaction that is the subject of the dispute closed in, or if there is no applicable transaction, the state in which the agent was domiciled at the time the dispute arose, before three arbitrator(s). The arbitration shall be administered by JAMS pursuant to and in accordance with the expedited procedures in those rules or pursuant to JAMS’ Streamlined Arbitration Rules & Procedures and which can be found at www.jamsadr.com. Judgment on the award may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction. Of the three arbitrators, the Chair must previously have served as Chair or sole arbitrator in at least 10 arbitrations where an award was rendered following a hearing on the merits and one of the wing arbitrators must be an expert in the area of residential real estate brokerage transactions.

The aggrieved party must file and give written notice of any claim to the other party no later than the expiration of the statute of limitations (filing deadline) that the law imposes for the claim. Otherwise, the claim shall be null and void and deemed waived. The arbitrators shall apply the substantive law (and the law of remedies, if applicable) of the applicable state, or federal law, or both, as applicable to the claim(s) asserted. In the event of a dispute, the arbitrators shall decide which substantive laws shall apply. The arbitrators are authorized to award any remedy allowed by applicable law. The arbitrators shall issue a written and signed statement of the basis of their decision, including findings of fact and conclusions of law. EACH PARTY, THEREFORE, ACKNOWLEDGES THAT IT IS WAIVING ANY RIGHT TO A TRIAL BY JURY.

This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State in which the Contractor is licensed as a real estate agent and if Contractor is licensed in multiple states, then the laws of the state in which the transaction that was the basis of the dispute was located, or if there is no applicable transaction, the state in which the Contractor is domiciled at the time the dispute arose.

Notwithstanding the provision in the preceding sentence with respect to applicable substantive law, any arbitration conducted pursuant to the terms of this Agreement shall be governed by the Federal Arbitration Act (9 U.S.C., Secs. 1-16).

The parties adopt and agree to implement the JAMS Optional Arbitration Appeal Procedure (as it exists on the effective date of this Agreement) with respect to any final award in an arbitration arising out of or related to this Agreement.

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C.    Damages and Limitation of Liability. In any arbitration arising out of or related to this Agreement, the arbitrator(s) are not empowered to award punitive or exemplary damages, except where permitted by statute, and the parties waive any right to recover any such damages. In any arbitration arising out of or related to this Agreement, the arbitrator(s) may not award any incidental, indirect or consequential damages, includingdamages for lost profits.

D.    Class Action Waiver

1.    Company and Contractor agree that any and all claims pursued against each other will be on an individual basis, and not on behalf of or as a part of any purported class, collective, representative, or consolidated action. Both Company and Contractor waive their right to comment, become a party to or remain aparticipant in any group, representative, class collective or hybrid class collective or group action in any court, arbitration proceeding, or any other forum, against the other. The parties agree that any claim by or against Company or Contractor shall be heard in arbitration without joinder of parties or consolidation of such claim with any other person or entity’s claim, except as otherwise agreed to in writing by Company and Contractor. This class action waiver shall supersede any contrary agreements, statements or rules in the JAMS rules.

2.    The waiver of class action claims and proceedings is an essential and material term of this arbitration agreement in this section, and the parties agree that if it is determined that the waiver in this section is prohibited or invalid in its entirety in a case in which a class action, representative action or similar allegations have been made, then the remainder of this section shall also be void. If however, some, but not all, of the waivers are found to be unenforceable for any reason in a case in which class action, representative action or similar allegations have been made, the Contractor’s individual claims shall be decided in arbitration. Any class action, representative action or similar action as to which the class action waiver in the paragraph is found to be unenforceable shall be decided in court and not in arbitration.

E.    Fees and Costs to Prevailing Party. In any arbitration arising out of or related to this Agreement, the arbitrator(s) shall award to the prevailing party, if any, the costs and attorneys’ fees reasonably incurred by the prevailing party in connection with the arbitration. If the arbitrator(s) determine a party to be the prevailing party under circumstances where the prevailing party won on some but not all of the claims and counterclaims, the arbitrator(s) may award the prevailing party an appropriate percentage of the costs and attorneys’ fees reasonably incurred by the prevailing party in connection with the arbitration.

F.    Confidentiality. The parties shall maintain the confidential nature of the arbitration proceeding and the Award, including the Hearing, except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as may be necessary in connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by law or judicial decision.

ATTORNEYS FEES

In the event of any legal or equitable action, including any appeals, which may arise hereunder between or among the parties hereto, the prevailing party shall be entitled to recover reasonable attorneys fees and costs. Attorneys fees shall also include hourly charges for paralegals, law clerks and other staff members operating under the supervision of an attorney.

SEVERABILITY

The invalidity or unenforceability of any portion of this Agreement shall not affect the remaining provisions and portions thereof.

HEADINGS

The paragraph headings contained herein are for convenience of reference only and are not to be used in the construction or interpretation hereof.

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INTERPRETATION

Any ambiguities in this Agreement will not be strictly construed against the drafter of the language concerned, but will be resolved by applying the most reasonable interpretation under the circumstances, giving full consideration to the intentions of the parties at the time of contracting. Unless the context requires otherwise, all references to the singular include the plural and the plural the singular, and words importing any gender include the other genders and gender neutrality.

CONTRACTOR UNDERSTANDS ARBITRATION & WAIVER AGREEMENTS

Contractor represents and acknowledges that he or she understands the meaning and effect of the arbitration waiver and agreements in this Agreement and has been provided a reasonable time and opportunity to consult with his or her own legal counsel regarding the same.

This agreement is effective as of the date of the Contractor’s signature and shall remain in effect until its termination according to the TERMINATION section of this Agreement.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as follows:

Contractor
	Name
	Signature	Date
Company
	Name
	Signature	Date

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Addendum A: Current Fee & Commission Schedule

Sign-Up Fee: $149, includes first month’s Cloud Brokerage Fee.

Cloud Brokerage Fee: $85 per month, includes access to all platforms.

Payment/Funding Source: Both a primary and a secondary/backup electronic funds transfer funding source, one of which must be an Automatic Clearing House (ACH) source, for payment of any and all recurring and non-recurring fees and amounts due from Contractor under this ICA must be on file and kept current. Unused portions of any fees previously paid will not be credited/prorated. Unpaid fees, charges, repayments, and any other amounts Contractor owes to Company can and will be deducted directly from any and all of Contractor’s pending and future earnings that would otherwise be payable to Contractor by eXp Realty.

Broker Review Fee: $25 per Transaction. All Transactions (defined below) will include a Broker Review Fee taken as a charge against the Contractor Dollar Amount (defined below) and shall be deducted from all closings, excluding all referrals, Broker Price Opinions (“BPO’s”), and leasing/rental commissions under $1,000 Gross Commission Income (defined below) to Company.

Risk Management Fee: $40 per Transaction. All Transactions will include a Risk Management Fee taken as a charge against the Contractor Dollar Amount and shall be deducted from all closings, excluding all referrals, BPO’s, and leasing/rental commissions under $1,000 Gross Commission Income to Company. The annual per eXp Agent cap on payment of Risk Management Fees for non-commercial Transactions is $500. Commercial Transactions do not have a Risk Management Fee cap.

All fees are non-refundable. Sales tax laws and regulations for each state determine if a fee is subject to sales tax. If applicable, sales tax is applied as a separate line item on Contractor’s statement.

COMMISSIONS ON TRANSACTIONS

Contractor shall be entitled to a commission on sales, rental/lease transactions, broker price opinions (“BPOs”) and referrals (collectively “Transactions”) as follows: income retained by the Company after referrals and concessions, but prior to commission split (“Gross Commission Income”), shall be split at the rate of 80% to Contractor (“Contractor Dollar Amount”) and 20% to Company (“Company Dollar”) on all Transactions closed by the Contractor.

Should any Transaction be subject to any state or local taxes, the 80/20 commission split will be calculated after the tax is deducted.

Personal Transactions: A Personal Transaction is any Transaction for which Contractor has an ownership interest in the subject property, whether through Contractor’s own name, a spouse’s name, or a business entity or revocable trust that is owned and/or controlled by Contractor and/or Contractor’s spouse.

•Personal Transactions will carry a $250 Transaction Fee, plus Broker Review and Risk Management Fees. For eXp Agents in the Mentor Program, please see the Mentor Program Agreement for rules and fees involved in a Personal Transaction.

•Personal Transaction commissions are not included in Revenue Share Plan calculations.

•Contractor may exempt up to three Personal Transactions per anniversary year.

•Contractor must be in Good Standing with the Company (current on fees and/or amounts owed, etc.).

•Contractor’s name, Contractor and/or Contractor’s Spouse’s business or trust name, or Contractor’sspouse’s name must be on the title.

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COMPANY CAP

The first day of the calendar month following the Join Date shall be known annually as the “Anniversary Date.” If the Company Dollar reaches $16,000 since the last Anniversary Date, the Contractor will be in a “Capped Status” until the next Anniversary Date. When Contractor is in a Capped Status, the Company will no longer retain 20% of the commission received by the Company from Contractor’s Transactions. Instead, the Company will assess a “Capped Status Transaction Fee” of $250 per Transaction, up to $5,000 per anniversary year, at which point the Capped Status Transaction Fee is reduced to $75 per Transaction for the remainder of Contractor’s anniversary year. Because the Capped Status Transaction Fee is "per Transaction" and not "per agent," Capped Status Transaction Fee are always split between agents on a transaction equal to the percentage of commission each agent earns. Revenue Share (see Addendum B) will not be paid out on Transactions consummated by Contractors in a Capped Status. Capped Status Transaction Fees will be in addition to all other deductions and fees authorized by this Agreement.

Similar to the Minimum Company Dollar Rule outlined below, Contractor shall pay the lesser of either the applicable Capped Status Transaction Fee ($250 or $75), or 20% of at least a 3% commission. This applies to both sides of a Transaction closed by an eXp Agent/Contractor in a Capped Status, both listing and buying, unless the eXp/Contractor Agent is in a Single Agent Dual Agency transaction. In Single Agent Dual Agency, the eXp Agent/Contractor is charged one Capped Status Transaction Fee per sale, not per side.

As stated above, Capped Status Transaction Fees are assessed on a per Transaction basis. In the case of multiple eXp Agents on a Transaction side, the appropriate transaction fee shall be split out in accordance with the percentages used in the applicable Disbursement Agreement.

Example : If Contractor A and Contractor B, both in a Capped Status, both represented the buyer in a sale and Contractor A received 60% of the commission and Contractor B received 40% of the commission, Contractor A would pay $150 (60% of the $250) of the Capped Status Transaction Fee and Contractor B would pay $100 (40% of the $250) of the Capped Status Transaction Fee.

In the example above, the $250 Capped Status Transaction Fee would be reduced to $75 once Contractor has paid a total of $5,000 in Capped Status Transaction Fees as described above. Each Contractor will pay the percentage of their respective Capped Status Transaction Fee amount, if any, if the Contractors have different applicable Capped Status Transaction Fee amounts.

MINIMUM COMPANY DOLLAR RULE

Company Dollar on listing-side sale commissions below 3% of the closed selling price will be subject to a minimum of $500 or the regular 20% split based on 3% of the closed selling price, whichever is lower.

Example A: 2% listing commission on $100,000 sale = $2,000. 20% = $400.

Minimum: 3% listing commission on $100,000 sale = $3,000. 20% = $600 Take the lower of $600 or

$500. Company Dollar = $500, Agent gets $1,500.

Example B: 2% listing commission on $60,000 sale = $1,200. 20% = $240.

Minimum: 3% listing commission on $60,000 sale = $1,800. 20% = $360 Take the lower of $360 or

$500. Company Dollar = $360, Agent gets $840.

NOTE: The Minimum Company Dollar Rule applies to listing transactions only, because the Contractor does not always have the opportunity to set or control the commission received on other transaction types. We DO NOT mandate any fees or percentages that a Contractor must charge to his or her clients.

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Exempt: REO/HUD Listings and Short Sales - All REO/HUD and Short Sale Listings with a defined non-negotiable listing commission rate are exempt from the Minimum Company Dollar Rule and will be paid out according to the Contractor’s regular payment plan, per this Addendum A of the ICA.

Exempt: All Other Commission Types - The Minimum Company Dollar Rule only applies to listing-side sales commissions. Buyer-side commissions, residential leasing/rental commissions, referral commissions, fees for BPO’s, and any other fees received are not subject to the Minimum Company Dollar Rule.

RETAINER FEES

All fees, deposits, or monetary amounts requested from a client or potential client by Contractor which are designed to retain the professional real estate services of Contractor (“Retainer Fee”) shall be paid directly to the Company and be subject to any applicable splits.

LATE FEES

All payments billed to the agent from the Company for recurring payments, monthly Cloud Brokerage Fees, programs opted in, and any other fees billed or back-billed for reimbursement per written agreements and policies are due within 10 days from the date of billing.

Any billing that is more than 30 days past due will be assessed a minimum of $25 interest per month or the maximum amount allowed under state law.

If a Contractor’s account reaches 90 days past due/delinquent, the Company may terminate this Agreement pursuant to the Termination clause and any/all pending commission payments and/or revenue share payments shall be forfeited to the company

Contractor agrees to pay Company in full any past due fees upon demand. Company retains the right to deduct from payment of commissions, revenue share, funding source on file, or any other means necessary, any past due amounts of any kind, overpayments of commissions or revenue share and/or late fees assessed. Any unpaid balances shall be subject to collections and/or formal legal proceedings. Additionally, if Contractor has elected to participate in the 2015 Agent Equity Program as described in Addendum C, Contractor’s participation will be temporarily suspended until Company has been paid in full.

The Company reserves the right to adjust this fee schedule.

Contractor
	Name
	Signature	Date

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Addendum B: Sustainable Revenue Share Plan

eXp Realty has a Sustainable Revenue Share Plan (“Revenue Share Plan”) that all eXp Agents are automatically enrolled in which aims to pay out approximately 50% of Company Dollar to eXp Agents who help the Company’s sales grow by attracting fellow agents to join its ranks. As explained in Addendum A, Company Dollar is the percentage of GCI, usually 20%, that the Company retains from commission earned on a Transaction.

DEFINITIONS

Adjusted Gross Commission Income: Adjusted Gross Commission Income (AGCI) is the GCI adjusted by a factor to achieve 50% of the Company Dollar in the overall monthly Revenue Share Plan.

Tier: The hierarchy of eXp Agents that are sponsored in succession beginning with the Contractor and each group of eXp Agents thereafter, as follows:

● Contractor.

● Tier 1: the group of eXp Agents sponsored by the Contractor.

● Tier 2: the group of eXp Agents sponsored by Tier 1 eXp Agents.

● Tier 3: the group of eXp Agents sponsored by Tier 2 eXp Agents.

● Tier 4: the group of eXp Agents sponsored by Tier 3 eXp Agents.

● Tier 5: the group of eXp Agents sponsored by Tier 4 eXp Agents.

● Tier 6: the group of eXp Agents sponsored by Tier 5 eXp Agents.

● Tier 7: the group of eXp Agents sponsored by Tier 6 eXp Agents.

Revenue Share Group: A Contractor’s Revenue Share Group consists of the eXp Agents he or she personally sponsors to join the sales ranks of the Company and those eXp Agents sponsored thereafter as a result of Contractor’s original sponsorship(s).

Qualifying Sale Transaction: A Qualifying Sale Transaction is a Transaction that earns Company Dollar of at least $200 and is not a Personal Transaction.

For Qualifying Sale Transactions that are the purchase or sale of real property (each a “Sale”) where one eXp Agent represents a Seller or Buyer, the Sale will be counted as a full credit Sale to the eXp Agent. For Qualifying Sale Transactions that are the purchase or sale of real property where multiple eXp Agents are involved in the representation of the same principal party, each side of the Sale will be counted to each eXp Agent in an amount that is proportionate to the distribution of the total Contractor Dollar Amount.

By way of illustration, if eXp Agent “A” receives 50% of the total Contractor Dollar Amount on a Sale, then the Sale will be counted as a one-half credit Sale for each of the eXp Agents involved and four of such Transactions would be needed to achieve two full credit Sales (within the prior rolling six full months to be classified as an FLQA).

eXpansion Share: eXpansion Share is revenue share generated from AGCI received from Qualifying Sale Transactions closed by a Contractor’s Revenue Share Group, and that is paid out to the Contractor in an amount that is based on the Tier group of the eXp Agent(s) who closed the Transaction(s). See the REVENUE SHARE PLAN CHART (“Revenue Share Chart”) below for a breakdown of the amount of eXpansion Share paid for each Tier group.

eXponential Share: eXponential Share is revenue share generated from AGCI received from Qualifying Sale Transactions closed by a Contractor’s Revenue Share Group, and that is paid out to the Contractor in an amount that is based on the Tier group of the eXp Agent(s) who closed the Transaction(s). In order to unlock eXponential Share

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earning potential beyond Tier 1, the Contractor must have the minimum number of Front-Line Qualifying Active agents (as defined below). See the REVENUE SHARE PLAN CHART (“Revenue Share Chart”) below for a breakdown of the amount of eXponential Share paid for each Tier.

Front-Line Qualifying Active (FLQA): A Front-Line Qualifying Active agent is a licensed agent who has been personally sponsored into eXp Realty and that has been active and productive with the Company during the prior rolling six- month period by closing: 1) a minimum of two full credit Sales, or the equivalent; or 2) $5,000 in Gross Commission Income. All FLQA agents are Tier 1 eXp Agents that have been directly sponsored by the Contractor; however, not all Tier 1 eXp Agents sponsored by Contractor are FLQA Agents.

Revenue Share Eligible: For a Contractor to remain eligible to collect revenue share (also referred to as “Revenue Share Eligibility”), the Contractor must meet the following requirements:

1.    Be in Good Standing;

2.    Be current on any of the fees due such as Cloud Brokerage Fee, etc., and not be past due on other outstanding invoices with the Company; and

3.    Be current in all association fees, MLS dues and/or mandatory market-based fees, if applicable.

Revenue Share Grace Period: The Revenue Share Grace Period (also referred to as the “Grace Period”) is a one hundred eighty (180) day period that begins with the day following the date that an eXp Agent satisfies the Revenue Share Grace Period Productivity Requirement, during which time the eXp Agent will be classified as an FLQA agent for his or her sponsor.

Revenue Share Grace Period Productivity Requirement: A new eXp Agent satisfies the Revenue Share Grace Period Productivity Requirement (also referred to as the “Productivity Requirement”) when he/she closes either 1) one full credit Sale, or 2) $5,000 in Gross Commission Income.

Vested: Subject to certain qualifications and conditions, a Contractor that is Vested in the Revenue Share Plan continues to receive benefits payable thereunder.

Affiliate with a competitor of Company: For purposes hereof, “affiliates with a competitor of the Company” shall mean that the Contractor or Contractor’s spouse or partner is an individual proprietor, partner, stockholder, officer, employee, director, consultant, agent, joint venturer, investor, lender, or in any other capacity, alone or in association with others, owning, managing, operating, controlling or participating in the ownership, management, operation or control of, or working for or permitting the use of his or her name by, a residential real estate brokerage other than eXp Realty.

Straw Agent: Straw Agents are agents who are not engaged in the business of selling real estate or engaged in the process of attracting other productive agents to join the Company and help grow company sales.

[This Space Intentionally Left Blank.]

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REVENUE SHARE EXPLAINED

The Revenue Share Plan is paid out as a percentage of AGCI which is the GCI adjusted by a factor and calculated each month in an effort to achieve and pay out 50% of Company Dollar in the overall monthly Revenue Share Plan in the form of revenue share. Actual payouts on individual Transactions can be higher or lower than the 50% payout target depending on how many FLQAs are counted on each Tier.

As a Contractor encourages fellow active and productive agents to join the ranks of the Company and the Contractor is named as the sponsor of those new eXp Agents, the Contractor will begin earning the standard Tier 1 3.5% of AGCI revenue share amount on the Qualifying Sale Transactions of the Contractor’s Tier 1 group of eXp Agents. As the Contractor’s Tier 1 group of eXp Agents (Contractor’s direct sponsored agents) become sponsors themselves of more new eXp Agents, each new eXp Agent added to the Contractor’s Revenue Share Group can potentially expand and unlock the Contractor’s ability to earn more revenue share in two different ways: 1) eXpansion Share; and 2) eXponential Share.

Illustration: Contractor directly sponsors 15 new eXp Agents (Tier 1 group), who in turn sponsor 25 more new eXp Agents (Tier 2), who in turn sponsor 40 more new eXp Agents (Tier 3), who in turn sponsor 30 more new eXp Agents (Tier 4). Of the Tier 1 group of eXp Agents, 10 are classified as FLQA which unlocks Tiers 2 & 3 of eXponential Share for the Contractor. Contractor will now earn:

1.    3.5% of AGCI in eXponential Share on all Qualifying Sale Transactions of the 15 Tier 1 group of eXp Agents; and

2.    0.2% in eXpansion Share + 3.8% in eXponential Share, for a total of 4% of AGCI on all Qualifying Sale Transactions of the 25 Tier 2 group of eXp Agents; and

3.    0.1% in eXpansion Share + 2.4% in eXponential Share, for a total of 2.5% of AGCI on all Qualifying Sale Transactions of the 40 Tier 3 group of eXp Agents; and

4.    0.1% of AGCI in eXpansion Share on all Qualifying Sale Transactions of the 30 Tier 4 group of eXp Agents.

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For all Company Dollar earned from Qualifying Sale Transactions of each of the eXp Agents in Contractor’s Tier groups, the Contractor will receive revenue share from each of those Qualifying Sale Transactions as long as the eXp Agent that closed the Transaction is not in a Capped Status. This is because there is no Company Dollar from which to pay out revenue share that is retained from the Transactions of an agent who is in a Capped Status.

The Revenue Share Plan pays out a percentage of AGCI per Qualifying Sale Transaction of the Contractor’s Revenue Share Group and pays in the calendar month following the closing of the Qualifying Sale Transactions by the Contractor’s Revenue Share Group.

When an eXp Agent who is not Vested leaves the Company, the position that the departing agent held within other sponsors’ Revenue Share Groups immediately becomes a Company position. The revenue share structure does not compress or roll up.

The Revenue Share Grace Period is available only for new eXp Agents who have Join Dates of March 1, 2020 or later. For eXp Agents with a Join Date that falls on or in between September 3, 2019 through February 29, 2020, will continue to be classified as an FLQA agent for their sponsor for the first one hundred and eighty (180) days from their respective Join Date, after which the FLQA qualification requirements will apply

The Revenue Share Plan is funded entirely by the percentage of the Gross Commission Income that the Company retains on closed Transactions. Therefore, no revenue share dollars are paid out on any Transaction where the Contractor who consummated the Transaction was in Capped Status, as that term is defined in the ICA, or where no Company Dollar is earned.

Qualifications To Receive Revenue Share

In order to be qualified to receive revenue share under both the eXpansion Share and the eXponential Share Contractor must be Revenue Share Eligible on the date when a Qualifying Sale Transaction closes, and Contractor’s license must be active and affiliated with eXp Realty in every state that Contractor engages in activities requiring a real estate license.

Manipulating Revenue Share Plan Prohibited

Contractor agrees that he or she will not attempt to manipulate the Revenue Share Plan by engaging in the practice of sponsoring Straw Agents. Additionally, Contractor shall not add any agent(s)’s name to transaction documentation who was not a true party to the Transaction solely for the purpose of artificially qualifying that eXp Agent as an FLQA. The Company shall have the right and sole discretion to determine who is considered a Straw Agent, and further reserves the right to terminate Contractors who are, in the sole discretion of the Company, determined to be Straw Agents and which would reduce the number of Front-Line Active Agents and/or Front-Line Qualifying Active Agents that an eXp Agent has directly caused to join Company.

The Company will also notify Contractor that it has released the licenses of the eXp Agent(s) that it believes are Straw Agents and review the recruiting practices of Contractor with Contractor.

If, after reviewing the recruiting practices with Contractor, Contractor continues to engage in, or appears to be engaged in, the practice of manipulating the Revenue Share Plan, Contractor may be restricted from sponsoring agents and/or released from the Company.

Revenue Share Vesting Policy

To qualify for revenue share vesting, Contractor must satisfy the following conditions: 1) hold a current real estate license and be authorized to receive commissions; 2) be affiliated with the Company as a Contractor/real estate agent for not less than 36 consecutive months; and 3) and meet all requirements under the Revenue Share Eligible definition

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above for not less than 36 consecutive months.

Subject to meeting the qualification requirements above, the Contractor shall be considered Vested in the Revenue Share Plan’s eXpansion Share and will continue to receive the benefits provided under the eXpansion Share even after Contractor disassociates from the Company. The Contractor's Vesting in the Revenue Share Plan’s eXponential Share shall continue, as long as Contractor’s real estate license is actively associated with a brokerage that is an affiliate of the Company and the Contractor does not Affiliate with a competitor of the Company.

Vested agents that are retired need to qualify in the jurisdiction they are domiciled in order to receive revenue share. In many states, revenue share is considered a distribution of real estate commission in which case one would need an active real estate license to continue to receive revenue share payments.

Incapacitation Or Death of an eXp Agent

In the event that Contractor is unable to carry out his or her work as a real estate agent and unable to engage in the process of attracting and supporting other productive agents into the Company due to Contractor’s permanent incapacity or death, Contractor shall automatically be considered Vested in the Revenue Share Plan regardless of whether Contractor has met the second and third requirements to qualify for revenue share vesting as explained above. Any heir, legal representative or guardian of Contractor who is legally authorized to act on Contractor's behalf or Contractor's estate's behalf, may be substituted as the agent of record for Contractor in the Company Revenue Share Plan. For a plan of substitution to be approved, the proposed substitute must meet the following conditions, in the order in which they are listed: 1) be approved by the Company and the Company's Broker for the state where the substituting contractor will be licensed; 2) submit a written legal opinion from a duly licensed attorney in substitute’s state of licensing that states that the plan of substitution contemplated complies with all applicable local, state and federal laws, rules and regulations; and 3) complete all application and onboarding steps to properly join Company as a duly licensed real estate agent within 12 months of the date of permanent incapacitation or death of Contractor. If the plan of substitution is approved and the substitute properly joins Company, the terms and conditions of the Revenue Share Vesting Policy shall then apply to the approved substitute.

Company is not required to approve a plan of substitution for a Contractor who was not in Good Standing with Company prior to the Contractor's permanent incapacitation or death.

The stated revenue share payout structure may be modified to allow the Company to better compete, attract and retain agents as well as to maintain a base level of profitability. Should a change to this Addendum B be made, Contractor shall be notified in accordance with contract revisions/modification section of the ICA.

The terms and conditions of this policy, or to the eXp Sustainable Revenue Share Plan, are subject to modification as determined by the Executive Management of the Company and/or the Board of Directors of eXp World Holdings, Inc. An explanation about revenue sharing calculations as well as other aspects of the Revenue Share Plan can be obtained by visiting the Company’s Accounting Team in eXp World. The Company’s long-term goal is to payout 50% of Company Dollar through the Sustainable Revenue Share System. Any modification to the Revenue Share model does not require future signatures from a recipient in order for a recipient to continue to receive revenue share under any new terms.

Contractor
	Name
	Signature	Date

**In acknowledgment of certain contributions made to the Company’s growth and infrastructure, the Company reserves the right to designate

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certain managing brokers, executives and key personnel as being in Good Standing with the Company notwithstanding any discrepancies that may exist from time to time between their own personal production and the criteria set forth in the ICA. In addition, such personnel may be deemed to be in Good Standing even though no monthly Cloud Brokerage Fee is assessed against such personnel.

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Addendum C: 2015 Agent Equity Program Participation Election Form

eXp World Holdings, Inc. (“EXPI”) previously adopted the 2015 Equity Incentive Plan, as adopted on March 12, 2015 and amended August 28, 2017 (the “Plan”). Pursuant to the Plan, EXPI created the 2015 Agent Equity Program (the “Program”) to be administered at the board’s discretion, and may issue shares of EXPI’s common stock to the Company’s agents and brokers who elect to participate (“Participant(s)”) as payment of five percent (5%) of the commission compensation earned by a Participant.

Eligibility: All agents and brokers in Good Standing with the Company are eligible to participate in the Program.

Issuance of Shares As Payment of Commission: By submitting this Form of Election, Participant authorizes the Company to set aside five percent (5%) of Participant’s net Contractor Dollar Amount (after splits, fees, and any other required withholdings) (“Shares for Payment”) on Transactions which close in Participant’s name, commencing with Transactions closing on or after Participant’s Join Date.

Price of Issued Shares: All Shares for Payment on Transactions that close and the commission payment is received by Company by 5:00 PM Pacific Time on December 31, 2019, the price for shares issued under the Program shall be at a twenty percent (20%) discount to the fair market value of EXPI’s common stock, as determined by the closing market price of EXPI’s common stock on the last trading day of the month. Effective January 1, 2020, the price for shares issued under the Program shall be at a ten percent (10%) discount to the fair market value of EXPI’s common stock, as determined by the closing market price of EXPI’s common stock on the last trading day of the month.

Issuance Date: Shares under the Program shall be issued on the last trading day of the month during which the closing on the sales of any properties from which a Shares for Payment has been authorized results in an accumulated Shares for Payment of not less than $250 USD (each a “Issue Date”).

Custody of Shares: All shares issued under the Program shall initially be placed and held in an account created in Participant’s name with Solium Financial Services LLC.

Associated Costs: Ownership of shares issued under the Program may come with associated costs imposed by third parties, including but not limited to, fees that may be imposed by a stockbroker, financial services broker of Participant’s choosing, or others.

Cancellation of Participation: Any Participant may cancel his or her participation in the Program by providing email notification of cancellation (“Cancellation Notice”) not less than thirty (30) calendar days prior to the next scheduled Issue Date. In order to be effective, Cancellation Notices must be sent to stock@exprealty.com.

Modification or Termination: The Program is subject to modification or termination at the discretion of the Company’s Board of Directors.

Acknowledgments: Participant understands that participation in this Program is subject to the terms and conditions contained in the Independent Contractor Agreement, in this Agent Equity Program Participation Election Form, in the Program itself, and in the Plan. Participant has read and fully understands both the Program and the Plan. By participating in the Plan, Participant agrees to be bound by the terms and conditions of the ICA, the Program and the Plan. By acceptance of this opportunity to receive shares, Participant consents to the electronic delivery of all related documents, including the Program, the Plan, any account statements and Plan prospectuses, as applicable, and all other documents that EXPI is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to an investment in EXPI’s stock. Electronic delivery

22

may include the delivery of a link to a Company intranet or the internet site of a third party, the delivery of the document via email or such other delivery determined at EXPI’s discretion.

By signing this enrollment form, Participant certifies that he or she is of legal age in the state or country of his or her residence.

Participant, by signing this enrollment form, certifies that: Participant is not subject to backup withholding because

(a)    Participant is exempt from backup withholding, or (b) Participant has been notified by the Internal Revenue Service (IRS) that Participant is not subject to backup withholding, or (c) the IRS has notified Participant that Participant is no longer subject to backup withholding.

Participant, by signing this enrollment form, certifies that: Participant is receiving the shares solely for Participant’s own account, and not for the benefit of any other person. Participant is being issued the shares solely for investment purposes and not with a view to distribution or resale, nor with the intention of selling, transferring or otherwise disposing of all or any part thereof for any particular price, or at any particular time, or upon the happening of any particular event or circumstance, except selling, transferring, or disposing of the shares, in full compliance with all applicable provisions of the Securities Act, the rules and regulations promulgated by the Securities and Exchange Commission thereunder, and applicable state securities laws.

Participant confirms that she or he has had the opportunity to ask questions of, and receive answers from, EXPI or any authorized person acting on its behalf concerning EXPI and its business, and to obtain any additional information, to the extent possessed by EXPI (or to the extent it could have been acquired by EXPI without unreasonable effort or expense) necessary to verify the accuracy of the information received by Participant.

Participant has carefully considered and has discussed (or accepts the responsibility to discuss) with its own legal, tax, accounting and financial advisors, to the extent the Participant has deemed necessary, the suitability of this investment and the transactions contemplated by this Agreement for the Participant’s particular federal, state, provincial, local and foreign tax and financial situation and has independently determined that this investment and the transactions contemplated by this Agreement are a suitable investment for the Participant. Participant understands that it (and not EXPI) shall be responsible for Participant’s own tax liability that may arise as a result of the receipt of the shares or the transactions contemplated by this Agreement.

Participant understands that participation in this Program does not change the at will nature of Participant’s independent contractor consulting relationship with the Company.

NO AGENT, BROKER OR ELIGIBLE INDIVIDUAL SHALL BE DEEMED A PARTICIPANT UNLESS AND UNTIL SUBMITTING THIS COMPLETED FORM OF ELECTION.

Please check the appropriate choice below and sign:

              YES, I would like to participate in the Program

              NO, I do not wish to participate in the Program at this time.

Contractor
	Name
	Signature	Date

23

EXP WORLD HOLDINGS, INC.

Insider Trading Policy for Employees, Agents and Contractors

Adopted as of November 18, 2016

Background

The Board of Directors of eXp World Holdings, Inc., or the Company, has adopted this Insider Trading Policy, most recently amended as of the date above, for our employees, agents and contractors. Federal and state securities laws prohibit the purchase or sale of a company’s securities by persons who are aware of material information about that company that is not generally known or available to the public. Likewise, these laws prohibit persons who are aware of such material nonpublic information from disclosing this information to others who may trade.

This Policy is designed to prevent insider trading (or allegations of insider trading) and to protect the Company’s reputation for integrity and ethical conduct. It is your obligation to understand and comply with this Policy. Should you have any questions regarding this Policy, please submit them in writing to compliance@exprealty.com, and they will be reviewed by the Company’s Compliance Officer.

Statement of Policy

No Trading on Inside Information. You may not trade in the securities of the Company directly or through family members or other persons or entities, if you are aware of material nonpublic information relating to the Company. In other words, you may not buy or sell the Company’s stock, or help others to do so, on the basis of “inside information.” “Inside information” consists of information that is both “material” and “nonpublic,” as further explained in the bullets below.

•Information is considered “material” if it could reasonably be expected to affect the price of a stock, orwould be considered important in determining whether or not to buy or sell the stock.

Examples of “material” information include, but are not limited to:

○projections of future earnings or losses, or other earnings guidance;

○earnings or operating results that are different from the expectations of the investmentcommunity;

○a pending or proposed merger, acquisition or an acquisition or disposition of significantassets;

○the Company’s stock becoming listed on a national exchange;

○a new business line or product available from the Company; or

○a change in senior management.

•Information is “nonpublic” if it is not generally known or available to the public.

○One common misconception is that material information loses its “nonpublic” status as soon asa press release is issued disclosing the information.

○In fact, information is considered to be available to the public only when it has been released broadly to the marketplace (such as by a press release or an SEC filing) and the investing public has had time to absorb the information fully.

○As a general rule, information is considered nonpublic until the close of the second full trading day after the information is released.

1

Similarly, you may not trade in the securities of any other company if you are aware of material nonpublic information about the other company that you obtained in the course of your employment or business affiliation with the Company.

No Tipping. Similarly, you may not pass material nonpublic information on to others or recommend to others the purchase or sale of any securities when you are aware of such information. This practice, known as “tipping,” also violates the securities laws and can result in the same civil and criminal penalties that apply to insider trading, even though you did not trade and did not gain any benefit from the other person’s trading.

No Assisting Others. You may not assist anyone in engaging in any activity prohibited by this Policy.

No Exception for Hardship. The existence of a personal financial emergency or hardship does not excuse you from compliance with this Policy.

No Exception for Transactions Unrelated to Inside Information. It does not matter that you may have decided to engage in a transaction before becoming aware of material nonpublic information or that the material nonpublic information did not affect your decision to engage in the transaction. It is also irrelevant that publicly disclosed information about the Company might, even aside from the material nonpublic information, provide a sufficient basis for engaging in the transaction.

Penalties for Non-Compliance

It is important that you understand the breadth of activities that constitute illegal insider trading and the consequences, which can be severe. Both the U.S. Securities and Exchange Commission, or the SEC, and the Financial Industry Regulatory Authority, together with the Department of Justice, pursue insider trading violations vigorously. For example, cases have been prosecuted successfully against trading by employees through foreign accounts, trading by family members and friends, and trading involving only a small number of shares.

Potential penalties for insider trading violations include imprisonment, criminal fines and civil fines of up to three times the profit gained or loss avoided. Failure to comply with this Policy may also subject you to Company-imposed sanctions, including dismissal, whether or not your failure to comply with this Policy results in a violation of law.

Scope of Policy

Persons Covered. As an employee, agent or contractor of the Company or any of its subsidiaries, this Policy applies to you. The same restrictions that apply to you also apply to:

•your family members who reside with you;

•anyone else who lives in your household;

•any family members who do not live in your household but whose transactions in Company securities are directed by you or are subject to your influence or control (such as parents or children who consult with you before they trade in Company securities); and

•any entities that you influence or control, including any corporations, partnerships or trusts.

You are responsible for making sure that the purchase or sale of any security covered by this Policy by any such person complies with this Policy. You should make them aware of the need to confer with you before they trade in securities covered by this Policy.

2

Companies Covered. The prohibition on insider trading in this Policy is not limited to trading in the Company’s own securities. It includes trading in the securities of other firms, such as companies and firms with which the Company may be negotiating major transactions, such as an acquisition, investment or sale.

Limited Exceptions. The only exceptions to this Policy’s prohibitions of trading in securities as outlined above are the following:

•Stock Option Exercises. Exercises in stock options granted under the Company's equity compensation plans for cash; however, this exception does not include the subsequent sale of the shares acquired pursuant to the exercise of a stock option; and

•Bona Fide Gifts. Bona fide gifts of securities are not deemed to be transactions for the purposes of this Policy. Whether a gift is truly bona fide will depend on the circumstances surrounding a specific gift. The more unrelated the donee is to the donor, the more likely the gift would be considered “bona fide” and not a “transaction.” For example, gifts to charities, churches or non-profit organizations would generally not be deemed to be “transactions.” However, gifts to dependent children followed by a sale of the“gifted securities” in close proximity to the time of the gift may imply some economic benefit to the donor and, therefore, may be deemed to be a “transaction” and not a “bona fide gift.”

Blackout Periods and Trading Windows

If your position is described in Appendix 1 to the Insider Trading Policy, that means you regularly learn about information that is important to the Company and you are subject to this provision regarding Blackout Periods. If your position is described in Appendix 1, you may only buy or sell the Company’s stock within certain windows of time during each calendar year. Such periods of the year in which you may trade, so long as you do not possess inside information at the time, are referred to as “Open Windows.” On the other hand, if you are subject to this provision, you may not buy and sell the Company’s stock during “Blackout Periods,” which generally correspond to times of the year when important information about the Company’s financial performance is being prepared prior to its publication to the public. Open Windows and Blackout Periods may be amended from time to time by the Compliance Officer or the Company’s Board. Currently, Blackout Periods and Open Windows occur as follows:

Blackout Period • Begins at the close of market on the last day of each fiscal quarter (i.e. March 31, June 30, September 30 and December 31) for each quarterly period, and • Ends at the close of market on the second trading day after the Company files its Quarterly Report on Form 10-Q (or Annual Report on Form 10-K) for the preceding calendar quarter (or year).

Open Window •Begins two full trading days after the Company files its Quarterly Reporton Form 10-Q (or Annual Report on Form 10-K) for the preceding calendar quarter (or year), and •Ends at the close of market on the last day of each fiscal quarter(i.e. March 31, June 30, September 30 and December 31).

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Open Window

In addition, the Company, through the Compliance Officer (as defined below), may authorize longer or additional trading windows in which buying, selling or otherwise effecting transactions in the Company’s securities shall be permitted. Similarly, the Company, through the Compliance Officer, may impose special black-out periods during which certain persons will be prohibited from buying, selling or otherwise effecting transactions in any stock or other securities of the Company or derivative securities thereof, even though the trading window would otherwise be open. If a special black-out period is imposed, the Company will notify affected individuals, who should thereafter not engage in any transaction involving the purchase or sale of the Company’s securities and should not disclose to others the fact of such suspension of trading.

It should be noted that even during the Open Window, if you possess material nonpublic information, you should not engage in any transactions in the Company’s securities until the end of the second trading day following the date on which such information is publicly disclosed, regardless of anything else in this Policy.

Unauthorized Disclosure

Maintaining the confidentiality of Company information is essential for competitive, security and other business reasons, as well as to comply with securities laws. You should treat all information you learn about the Company or its business plans in connection with your employment as confidential and proprietary to the Company. Employees, agents and contractors should treat all corporate information with discretion and discuss confidential data only with those Company employees who have a right and a need to know. In particular, do not discuss confidential information with relatives, friends or acquaintances. Inadvertent disclosure of confidential or inside information may expose the Company and you to significant risk of investigation and litigation.

The timing and nature of the Company’s disclosure of material information to outsiders is subject to legal rules, the breach of which could result in substantial liability to you, the Company and its management. Accordingly, it is important that responses to inquiries about the Company by the press, investment analysts or others in the financial community be made on the Company’s behalf only through authorized individuals.

Social Media and Internet Postings

For purposes hereof, all social media comments or postings, or comments, blog posts, wikis and other forms of online communication, including any website, social media platforms, Internet-based application, or Internet message boards or chat rooms (e.g., Twitter, Facebook, LinkedIn, Google+, YouTube, blogs, Wikis such as Wikipedia and any other site where text can be posted and Yahoo Discussion Groups) are referred to as “Internet postings.”

Company Postings. All Internet postings made on behalf of the Company must be approved by an Executive Officer and otherwise be made in compliance with any related Company policy that may be in effect from time to time.

Personal Postings. In your personal Internet postings or other online activity, you should never disclose any information that is confidential to the Company (or to any third party) that has been disclosed to the Company or to you in your capacity as an employee or representative of the Company. If you comment in a personal posting on any aspect of the company’s business or any policy issue in which the company is involved and in which you have responsibility, you must clearly identify yourself as a Company employee in your postings or blog site(s) and include a disclaimer that the views are your own and not those of the Company. Because you are legally responsible for your postings, you may be subject to liability if your personal posts are found defamatory, harassing, or in violation of any other applicable law. You may also be liable if you make postings which include confidential or copyrighted information (music, videos, text, etc.) belonging to third parties.

In addition to the foregoing, the Company may request that you avoid certain subjects or withdraw certain posts if it

4

believes that doing so will help ensure compliance with applicable laws, including the SEC’s regulations. For example, in your personal Internet postings, you should not comment on the potential or projected growth of the Company’s stock, or encourage people to buy the stock or join the Company based on the stock’s growth. You should not discuss the agent equity program or similar stock incentives the Company offers in any detail, but you should merely point out that such a program or incentives exist, and direct potential agents to Company approved resources or publicly available information. The Company reserves the right to remove any posted comment on Company-operated site that is not appropriate for the topic discussed or uses inappropriate language.

Post-Termination Transactions

This Policy continues to apply to your transactions in Company securities even after you have separated from service with the Company or a subsidiary. If you are aware of material nonpublic information when your employment or service relationship terminates, you may not trade in Company securities until that information has become public or is no longer material.

Compliance Officer

The Company’s General Counsel, or another individual appointed by the Board, if applicable, shall serve as the Insider Trading Compliance Officer (the “Compliance Officer”). The duties of the Compliance Officer shall include, but not be limited to, the following:

•Circulating the Policy (and/or a summary thereof) to all employees, including Section 16 reporting persons, on an annual basis and ensuring that the Company obtain and maintain written acknowledgments from employees that they have read the policy.

•Overseeing the responses to questions from individual employees.

•Ensuring that relevant files on policy compliance and implementation are maintained.

Personal Responsibility

You should remember that the ultimate responsibility for adhering to this Policy and avoiding improper trading rests with you. As an insider of the Company, this may mean that, from time to time, you have to forego a proposed transaction in the Company’s securities even if you planned to make the transaction before learning of material nonpublic information and even though you believe you may suffer an economic loss or forego anticipated profit by waiting. Trading in the Company’s securities during the trading window should not be considered a “safe harbor,” and all directors, officers and other persons should use good judgment at all times. If you violate this Policy, the Company may take disciplinary action against you up to and including dismissal.

Company Assistance

Your compliance with this Policy is of the utmost importance both for you and for the Company. The Board, a Board Committee or an employee designated by the Board (e.g. the Compliance Officer), shall be responsible for the administration of this Policy. All determinations and interpretations by the Board or its designee shall be final and not subject to further review. Please do not try to resolve uncertainties on your own, as the rules relating to insider trading are often complex and not always intuitive while violations entail severe consequences.

Certification

All persons covered by this policy must certify their understanding of, and intent to comply with this Policy. A copy of the certification that you must sign is enclosed with this Policy.

5

Appendix 1

Persons subject to trading window restrictions include:

•All members of the Board of Directors of the Company;

•All officers of the Company;

•All employees/contractors who report into the Company’s Finance and Accounting departments;

•All employees/contractors working on press release, investor relations, financial results, SEC filings, and news or announcements related to similar events;

•All employees/contractors working in the Company’s legal department;

•Any assistant to any of the foregoing;

•Any other employees or individuals designated from time to time by the Compliance Officer or the Board of Directors.

6

CERTIFICATION FORM

For Employees, Agents and Contractors

TO:            Board of Directors of eXp World Holdings, Inc.

RE:            Insider Trading Policy for Employees, Agents and Contractors

This certifies that:

I.       I have received eXp World Holdings Inc.’s Insider Trading Policy for Employees, Agents and Contractors.

II.        I understand the policies and procedures as outlined in the Insider Trading Policy for Employees, Agents and Contractors and agree to comply with them.

By:

(Printed Name)

Dated:

7

Monthly Cloud Brokerage Fee Agreement

I,                                                                   , in conjunction with that Independent Contractor Agreement executed concurrently herewith, do hereby authorize eXp Realty to use the payment method indicated below to pay the monthly Cloud Brokerage Fee of $85 on a recurring basis.

I understand any delinquencies regarding the monthly Cloud Brokerage Fees may result in a default status of my account. I further understand that if I am earning revenue share in the Sustainable Revenue Share Plan, in order to remain eligible to collect revenue share I must remain current on all fees and/or amounts due to eXp Realty and that any default status may result in a loss of pending revenue share earnings. If any payment method provided below is not honored by the applicable bank or credit card issuer, I agree to promptly contact eXp Realty’s Accounting Department to resolve the issue or offer an alternate method of payment.

Additionally, if I am new to eXp Realty and my Sign-up Fee is due, I also authorize my one-time Sign-Up Fee of $149 to be immediately processed through the authorized method indicated below.

Please select an option (Debit/Credit Card OR Checking Account) below:

❑Debit/Credit Card ❏Checking Account (ACH)

Credit Card:

I authorize eXp Realty to bill my Debit/Credit Card eachmonth by providing the information as follows:

Debit/Credit Card Number:
Exp Date:	/	Security Code on back of card:
Name on Card:
Billing Address:
Billing City:		State:	Zip:

Checking Account (ACH):

I authorize a draft against my Checking Account each month by providing the information as follows:

Name on Account:
Bank Name:
Routing #:		Account #:
Print Contractor Name:
	Signature		Date

1

EX-31.1

Exhibit 31.1

Certification of the Chief Executive 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 5, 2020

By:	/s/ Glenn Sanford
	Glenn Sanford
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of the 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, Jeff Whiteside, 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 5, 2020

By:	/s/ Jeff Whiteside
	Jeff Whiteside
	Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive 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, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Glenn Sanford, as Chief Executive Officer of the Company, hereby certify 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), as applicable, 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 5, 2020

By:	/s/ Glenn Sanford
	Glenn Sanford
	Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification of 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, 2020 as filed with the Securities and Exchange Commission on the date hererof (the “Report”), I, Jeff Whiteside, as Chief Financial Officer of the Company, hereby certify 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), as applicable, 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 5, 2020

By:	/s/ Jeff Whiteside
	Jeff Whiteside
	Chief Financial Officer (Principal Financial Officer)

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2020 shares
Document And Entity Information
Document Type	10-Q
Document Period End Date	Jun. 30, 2020
Document Quarterly Report	true
Document Transition Report	false
Entity Registrant Name	EXP WORLD HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-38493
Entity Tax Identification Number	98-0681092
Entity Address, Address Line One	2219 Rimland Drive, Suite 301
Entity Address, City or Town	Bellingham
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98226
City Area Code	360
Local Phone Number	685-4206
Title of 12(b) Security	Common Stock, par value $0.00001 per share
Trading Symbol	EXPI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	68,532,510
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001495932
Amendment Flag	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$ 63,551	$ 40,087
Restricted cash	17,405	6,987
Accounts receivable, net of allowance for credit losses of $1,260 and allowance for bad debt of $137, respectively	52,543	28,196
Prepaids and other assets	3,302	3,549
TOTAL CURRENT ASSETS	136,801	78,819
OTHER ASSETS:
Property, plant and equipment, net	6,080	5,428
Operating lease right-of-use assets	902	1,264
Other noncurrent assets	7	16
Intangible assets, net	2,837	2,677
Goodwill	8,248	8,248
TOTAL ASSETS	154,875	96,452
CURRENT LIABILITIES
Accounts payable	1,642	2,593
Customer deposits	17,405	6,987
Accrued expenses	53,839	31,034
Current portion of long-term payable	970	916
Current portion of lease obligation - operating lease	727	435
TOTAL CURRENT LIABILITIES	74,583	41,965
Long-term payable, net of current portion	1,585	1,530
Long-term lease obligation - operating lease, net of current portion	175	829
TOTAL LIABILITIES	76,343	44,324
EQUITY
Common Stock, $0.00001 par value 220,000 shares authorized; 70,579 issued and 68,532 outstanding in 2020; 66,199 issued and 65,274 outstanding in 2019	1	1
Additional paid-in capital	160,643	130,682
Treasury stock, at cost: 2,047 and 925 shares held, respectively	(20,610)	(8,623)
Accumulated deficit	(61,853)	(70,293)
Accumulated other comprehensive income	147	200
Total eXp World Holdings, Inc, stockholders' equity	78,328	51,967
Equity attributable to noncontrolling interest	204	161
TOTAL EQUITY	78,532	52,128
TOTAL LIABILITIES AND EQUITY	$ 154,875	$ 96,452

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for credit losses and bad debt	$ 1,260	$ 137
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, shares authorized	220,000	220,000
Common stock, shares issued	70,579	66,199
Common stock, shares outstanding	68,532	65,274
Treasury stock, shares	2,047	925

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Revenues	$ 353,525	$ 266,705	$ 624,946	$ 423,739
Operating expenses
Commissions and other agent-related costs	319,164	244,587	562,570	387,129
General and administrative expenses	25,155	23,204	52,015	42,905
Sales and marketing expenses	887	1,071	1,831	1,960
Total operating expenses	345,206	268,862	616,416	431,994
Operating income (loss)	8,319	(2,157)	8,530	(8,255)
Other expense (income)
Other expense (income), net	11	(10)	49	25
Equity in losses of unconsolidated affiliates	12		34
Total other expense (income), net	23	(10)	83	25
Income (loss) before income tax expense	8,296	(2,147)	8,447	(8,280)
Income tax expense	61	48	70	212
Net income (loss)	8,235	(2,195)	8,377	(8,492)
Net loss attributable to noncontrolling interest	40		63
Net income (loss) attributable to eXp World Holdings, Inc.	$ 8,275	$ (2,195)	$ 8,440	$ (8,492)
Earnings (loss) per share - Basic	$ 0.12	$ (0.04)	$ 0.13	$ (0.14)
Earnings (loss) per share - Diluted	$ 0.11	$ (0.04)	$ 0.12	$ (0.14)
Weighted average shares outstanding - Basic	67,756	61,526	66,751	61,138
Weighted average shares outstanding - Diluted	72,661	61,526	72,050	61,138
Comprehensive income (loss):
Net income (loss)	$ 8,235	$ (2,195)	$ 8,377	$ (8,492)
Comprehensive loss attributable to noncontrolling interests	40		63
Net income (loss) attributable to eXp World Holdings, Inc.	8,275	(2,195)	8,440	(8,492)
Other comprehensive income (loss):
Foreign currency translation (loss) gain, net of tax	244	48	(53)	63
Comprehensive income (loss) attributable to eXp World Holdings Inc.	$ 8,519	$ (2,147)	$ 8,387	$ (8,429)

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interest	Total
Beginning balance, shares at Dec. 31, 2018	60,609
Beginning balance, value at Dec. 31, 2018	$ 1		$ 90,756	$ (60,765)	$ (11)		$ 29,981
Net income (loss)				(6,296)			(6,296)
Shares issued for stock options exercised, shares	134
Shares issued for stock options exercised, value			216				216
Agent growth incentive stock compensation, shares	136
Agent growth incentive stock compensation, value			3,669				3,669
Stock option compensation			1,215				1,215
Agent equity stock compensation, shares	620
Agent equity stock compensation, value			6,210				6,210
Foreign currency translation gain (loss)					15		15
Repurchase of common stock, shares		358
Repurchase of common stock, value		$ (3,647)					(3,647)
Ending balance, shares at Mar. 31, 2019	61,499	358
Ending balance, value at Mar. 31, 2019	$ 1	$ (3,647)	102,066	(67,061)	4		31,363
Beginning balance, shares at Dec. 31, 2018	60,609
Beginning balance, value at Dec. 31, 2018	$ 1		90,756	(60,765)	(11)		29,981
Net income (loss)							(8,492)
Foreign currency translation gain (loss)							63
Ending balance, shares at Jun. 30, 2019	63,120	818
Ending balance, value at Jun. 30, 2019	$ 1	$ (8,545)	118,408	(69,256)	52		40,660
Beginning balance, shares at Mar. 31, 2019	61,499	358
Beginning balance, value at Mar. 31, 2019	$ 1	$ (3,647)	102,066	(67,061)	4		31,363
Net income (loss)				(2,195)			(2,195)
Shares issued for stock options exercised, shares	537
Shares issued for stock options exercised, value			690				690
Agent growth incentive stock compensation, shares	149
Agent growth incentive stock compensation, value			3,587				3,587
Stock option compensation			1,831				1,831
Agent equity stock compensation, shares	935
Agent equity stock compensation, value			10,234				10,234
Foreign currency translation gain (loss)					48		48
Repurchase of common stock, shares		460
Repurchase of common stock, value		$ (4,898)					(4,898)
Ending balance, shares at Jun. 30, 2019	63,120	818
Ending balance, value at Jun. 30, 2019	$ 1	$ (8,545)	118,408	(69,256)	52		40,660
Beginning balance, shares at Dec. 31, 2019	66,199	925
Beginning balance, value at Dec. 31, 2019	$ 1	$ (8,623)	130,682	(70,293)	200	$ 161	52,128
Net income (loss)				165		(23)	142
Shares issued for stock options exercised, shares	1,785
Shares issued for stock options exercised, value			1,828				1,828
Agent growth incentive stock compensation, shares	127
Agent growth incentive stock compensation, value			2,551				2,551
Stock option compensation			1,073				1,073
Agent equity stock compensation, shares	917
Agent equity stock compensation, value			8,794				8,794
Foreign currency translation gain (loss)					(297)		(297)
Repurchase of common stock, shares		991
Repurchase of common stock, value		$ (10,305)					(10,305)
Contributions by noncontrolling interests						86	86
Ending balance, shares at Mar. 31, 2020	69,028	1,916
Ending balance, value at Mar. 31, 2020	$ 1	$ (18,928)	144,928	(70,128)	(97)	224	56,000
Beginning balance, shares at Dec. 31, 2019	66,199	925
Beginning balance, value at Dec. 31, 2019	$ 1	$ (8,623)	130,682	(70,293)	200	161	52,128
Net income (loss)							8,377
Foreign currency translation gain (loss)							$ (53)
Repurchase of common stock, shares							1,122
Repurchase of common stock, value							$ (11,987)
Ending balance, shares at Jun. 30, 2020	70,579	2,047
Ending balance, value at Jun. 30, 2020	$ 1	$ (20,610)	160,643	(61,853)	147	204	78,532
Beginning balance, shares at Mar. 31, 2020	69,028	1,916
Beginning balance, value at Mar. 31, 2020	$ 1	$ (18,928)	144,928	(70,128)	(97)	224	56,000
Net income (loss)				8,275		(40)	8,235
Shares issued for stock options exercised, shares	415
Shares issued for stock options exercised, value			639				639
Agent growth incentive stock compensation, shares	208
Agent growth incentive stock compensation, value			3,346				3,346
Stock option compensation			1,227				1,227
Agent equity stock compensation, shares	928
Agent equity stock compensation, value			10,503				10,503
Foreign currency translation gain (loss)					244		$ 244
Repurchase of common stock, shares		131					131
Repurchase of common stock, value		$ (1,682)					$ (1,682)
Contributions by noncontrolling interests						20	20
Ending balance, shares at Jun. 30, 2020	70,579	2,047
Ending balance, value at Jun. 30, 2020	$ 1	$ (20,610)	$ 160,643	$ (61,853)	$ 147	$ 204	$ 78,532

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
OPERATING ACTIVITIES
Net income (loss)	$ 8,377	$ (8,492)
Reconciliation of net income (loss) to net cash provided by operating activities:
Depreciation expense	1,551	823
Amortization expense - intangible assets	230	151
Amortization expense - long-term payable	107	100
Allowance for credit losses/bad debt on receivables	1,123	1
Equity in losses of unconsolidated affiliates	34
Agent growth incentive stock compensation expense	6,765	7,257
Stock option compensation	2,300	3,046
Agent equity stock compensation expense	19,297	16,444
Changes in operating assets and liabilities:
Accounts receivable	(25,471)	(33,356)
Prepaids and other assets	318	(35)
Customer deposits	10,418	3,597
Accounts payable	(951)	431
Accrued expenses	21,938	34,809
NET CASH PROVIDED BY OPERATING ACTIVITIES	46,036	24,776
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(2,273)	(1,907)
Acquisition of businesses, net of cash acquired		(500)
Intangible assets acquired	(389)	(178)
Other investing activities	(25)
NET CASH USED IN INVESTING ACTIVITIES	(2,687)	(2,585)
FINANCING ACTIVITIES
Repurchase of common stock	(11,987)	(8,545)
Proceeds from exercise of options	2,467	906
Transactions with noncontrolling interests	106
NET CASH USED IN FINANCING ACTIVITIES	(9,414)	(7,639)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash	(53)	96
Net change in cash, cash equivalents and restricted cash	33,882	14,648
Cash, cash equivalents and restricted cash, beginning balance	47,074	23,041
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE	80,956	37,689
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for income taxes	224	229
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Lease liabilities arising from obtaining right-of-use assets	18	357
Termination of lease liabilities	183
Property, plant and equipment purchases in accounts payable	$ 24	$ 22

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DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2020

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION [Abstract]

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

eXp World Holdings, Inc. (collectively with its subsidiaries, the “Company” or “eXp”) was incorporated in the State of Delaware on July 30, 2008. Through various operating subsidiaries, the Company primarily operates a cloud-based real estate brokerage operating throughout the United States and most of the Canadian provinces, as well as an emerging innovation and technology services company that supports the real estate brokerage operations and third party customers operating in a number of industries. In the fourth quarter of 2019, the Company began real estate brokerage operations in the United Kingdom (U.K.) and Australia. The Company focuses on 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. eXp World Technologies, LLC, a wholly-owned direct subsidiary of the Company, represents its innovation and technology division, which now holds the VirBELA brand. VirBELA is an immersive technology platform for businesses, events, and education that provides a virtual experience for workers, attendees, students, and other users to communicate, collaborate, meet, and socialize.

In the fourth quarter of 2019, the Company made capital contributions in consideration for an ownership interest in First Cloud Investment Group, LLC (“First Cloud”), a Nevada limited liability company, with the remaining ownership interest held by certain independent agents and brokers. First Cloud was organized for the purpose of managing IntroLend First Cloud, LLC (“IntroLend First Cloud”), a Delaware limited liability company and an indirect subsidiary of the Company that provides mortgage origination for end-consumers. Under the terms of the operating agreement, the Company will maintain 50% equity ownership interest in First Cloud. During the start-up phase, eXp holds an interest in First Cloud greater than 50%. As eXp agents invest in First Cloud, agents’ interests will increase until the interest for both eXp and the aggregate agents’ interests each equal 50%. Refer to Note 11 – Variable Interest Entities for more information.

In the fourth quarter of 2019, the Company and its newly formed subsidiary, eXp Silverline Ventures, LLC, entered into an agreement to purchase a 50% ownership interest in Silverline Title & Escrow, LLC (“Silverline”) with the remaining ownership interest held by a third-party investment entity. Silverline represents an unconsolidated equity investment by eXp Silverline Ventures, LLC. Silverline is a title agency that performs, among other functions, core title agent services (for which liabilities arises), including the evaluation of searches to determine the insurability of title, the clearance of underwriting objections, the issuance of polices on behalf of insurance companies, and, where customary, the issuance of title commitments and the conducting of title searchers.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10-01 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.

These interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 12, 2020 (“2019 Annual Report”). The Company’s condensed consolidated financial statements as of and for the six months ended June 30, 2020 are reported in thousands, whereas the Company’s consolidated financial statements as of and for the year ended December 31, 2019 were reported in whole dollars in the 2019 Annual Report.

In our opinion, the accompanying interim unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. Operating results for the three- and six-month periods ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of eXp World Holdings, Inc., its wholly-owned subsidiaries, and those entities where the Company has greater than 50% ownership or where the Company exercises control over the operations. If the Company has a variable interest in an entity but it is not the primary beneficiary of the entity or exercises control over the operations and has less than 50% ownership, it will use the

equity method or the cost method of accounting for investments. The Company uses the equity method of accounting for entities in which the Company holds a 50% or less investment and exercises significant influence. Entities in which the Company has less than a 20% investment and where the Company does not exercise significant influence are accounted for under the cost method. Intercompany transactions and balances are eliminated upon consolidation. See Note 11 – Variable Interest Entities.

Noncontrolling Interest

The Company determined that First Cloud is a variable interest entity (“VIE”), as the Company is the primary beneficiary that has both the power to direct the activities that most significantly impact the VIE and a variable interest that potentially could be significant to the VIE. The Company treats the interest in First Cloud that it does not own as noncontrolling interest. The noncontrolling interest balance is adjusted each period to reflect the allocation of net income (loss) and other comprehensive income (loss) attributable to the noncontrolling interest, as shown in the condensed consolidated statements of comprehensive income (loss). The noncontrolling interest balance in the condensed consolidated balance sheets represents the proportional share of the equity of the joint venture entities, which is attributable to the minority shareholders.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, legal contingencies, income taxes, revenue recognition, stock-based compensation, goodwill, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Reclassifications

The Company has reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation, specifically the allowance for credit losses/bad debt on receivables is now separately disclosed as its own line item on the Company’s Condensed Consolidated Statement of Cash Flows, previously it was included in the accounts receivable line item.

Cash and cash equivalents

The Company considers all highly liquid investments with maturity when purchased of three months or less to be cash equivalents. From time to time, the Company’s cash deposits exceed federally insured limits. The Company has not experienced any losses resulting from holding deposits in accounts in excess of federal insurance limits.

Restricted cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows.

	December 31, 2019	December 31, 2018
Cash and cash equivalents	$ 40,087	$ 20,538
Restricted cash	6,987	2,503
Total cash, cash equivalents, and restricted cash, beginning balance	$ 47,074	$ 23,041
	June 30, 2020	June 30, 2019
Cash and cash equivalents	$ 63,551	$ 31,523
Restricted cash	17,405	6,166
Total cash, cash equivalents, and restricted cash, ending balance	$ 80,956	$ 37,689

Restricted cash consists of cash held in escrow by the Company’s brokers and agents on behalf of real estate buyers. The Company recognizes a corresponding customer deposit liability until the funds are released. Once the cash transfers from escrow, the Company reduces the respective customers’ deposit liability.

Stock-based compensation

Stock-based compensation is comprised of agent growth incentive programs, agent equity program, and stock option awards. Stock-based compensation is more fully disclosed in Note 6 – Equity. The Company accounts for stock-based compensation granted to employees and non-employees using a fair value method. Stock-based compensation awards are measured at the grant date fair value and stock based compensation is recognized over the requisite service period of the awards, usually the vesting period, on a straight-line basis, net of forfeitures. The Company reduces recorded stock-based compensation for forfeitures when they occur.

Recognition of compensation cost for an award with a performance condition is based on the probable outcome of that performance condition being met.

Goodwill

Goodwill represents the excess of the consideration paid over the estimated fair value of assets acquired and liabilities assumed in a business combination. The Company evaluates goodwill for impairment on an annual basis in the fiscal fourth quarter or on an interim basis if an event occurs or circumstances change that would more likely than not indicate that the fair value of the goodwill is below its carrying value. Generally, this evaluation begins with a qualitative assessment to determine if the fair value of the reporting unit is more likely than not less than its carrying value. The test for impairment requires management to make judgments relating to future cash flows, growth rates and economic and market conditions. In addition to the annual impairment evaluation, the Company evaluates at least quarterly whether events or circumstances have occurred in the period subsequent to the annual impairment testing which indicate that it is more likely than not an impairment loss has occurred.

Revenue recognition

The Company generates substantially all of its revenue from real estate brokerage services and generates a de minimis portion of its revenues from software subscription and professional services.

Real Estate Brokerage Services

The Company serves as a licensed broker in the areas in which it operates for the purpose of processing residential real estate transactions. The Company is contractually obligated to provide services for the fulfillment of transfers of residential real estate between buyers and sellers. The Company provides these services itself and controls the services necessary to legally transfer the residential real estate. Correspondingly, the Company is defined as the principal.  The Company, as principal, satisfies its obligation upon the closing of a residential real estate transaction. As principal, and upon satisfaction of the performance obligation, the Company recognizes revenue in the gross amount of consideration to which the Company expects to be entitled.

Revenue is derived from assisting home buyers and sellers in listing, marketing, selling, and finding residential real estate. Commissions earned on real estate transactions are recognized at the completion of a residential real estate transaction once the Company has satisfied the performance obligation. Agent related fees are currently recorded as a reduction to commissions and other agent related costs.  

Software Subscription and Professional Services

Subscription revenue is derived from fees from customers to access the Company’s virtual reality software platform. The terms of subscriptions do not provide customers the right to take possession of the software. Subscription revenue is generally recognized ratably over the contract term.

Professional services revenue is derived from implementation and consulting services. Professional services revenue is typically recognized over time as the services are rendered, using an efforts-expended (labor hours) input method. 

Software subscription and professional services revenue accounts for less than 1% of all revenue for the three and six months ended June 30, 2020 and 2019.

The Company does not currently collect sales and use taxes on fees from agents and brokers and assumes responsibility to pay these costs to the appropriate taxing authorities.

Disaggregated revenue

The Company primarily operates as a real estate brokerage firm. The vast majority of the Company’s revenue is derived from providing a single service, real estate brokerage services, to purchasers and sellers of homes in the U.S. See Note 10 – Segment information for details regarding segment and geographic information.

Management believes that no disaggregation of revenue from services to customers currently exists that would provide additional insight into the future recognition of revenue and cash flows.

Recently Adopted Accounting Principles and Change in Accounting Principle

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 modifies the measurement of expected credit losses of certain financial instruments, requiring entities to estimate an expected lifetime credit loss on financial assets. The ASU amends the impairment model to utilize an expected loss methodology and replaces the incurred loss methodology for financial instruments including trade receivables. The amendment requires entities to consider other factors, such as economic conditions and future economic conditions. The Company adopted ASU 2016-13 effective January 1, 2020 and concluded it did not have a material impact on either the financial position, results of operations, cash flows, or related disclosures of the Company. There was no impact on beginning balance retained earnings upon adoption of this ASU. See Note 3 – Expected Credit Losses for more information.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which removes certain disclosure requirements related to the fair value hierarchy, such as removing the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements, such as disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurement. The Company adopted ASU 2018-13 on January 1, 2020 and concluded it did not have an impact on the Company’s consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15 – Intangibles – Goodwill and Other Internal-Use Software (Subtopic 350-40) – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). The amendments in this update apply to an entity who is a customer in a hosting arrangement accounted for as a service contract. ASU 2018-15 requires a customer in a hosting arrangement to capitalize certain implementation costs. Costs associated with the application development stage of the implementation should be capitalized and costs with the other stages should be expensed. The Company adopted ASU 2018-15 on January 1, 2020 and concluded it did not have an impact on the Company’s consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12 – Income Taxes (Topic 740) (“ASU 2019-12”). ASU 2019-12 removes certain exceptions for investments, intraperiod allocations and interim calculations and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020; early adoption is permitted. The Company is still assessing the amendments of ASU 2019-12 and the impact the amendments will have on the Company’s consolidated financial statements and related disclosures.

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EXPECTED CREDIT LOSSES

6 Months Ended

Jun. 30, 2020

EXPECTED CREDIT LOSSES [Abstract]

EXPECTED CREDIT LOSSES

3.EXPECTED CREDIT LOSSES

The Company is exposed to credit losses primarily through trade and other financing receivables arising from revenue transactions. The Company uses the aging schedule method to estimate current expected credit losses (“CECL”) based on days of delinquency, including information about past events and current economic conditions. The Company’s accounts receivable is separated into three categories to evaluate allowance under the CECL impairment model. The receivables in each category share similar risk characteristics. The three categories include agent non-commission based fees, agent short-term advances, and commissions receivable for real estate property settlements.

The Company analyzed collectability for the three categories of receivables and concluded that only agent non-commission based fees receivables and agent short-term advances carry any risk of expected credit losses. Current economic conditions and forecasts of future economic conditions do not affect expected credit losses or collectability of real estate property settlements. The collection of these payments are in-substance guaranteed because they represent commission payments on closed transactions, and the Company has no historical experience or expectation of losses related to these receivables. Receivables from real estate property settlements totaled $49,186 as of June 30, 2020. As of

June 30, 2020, agent non-commission based fees receivable and short-term advances totaled $3,357, of which the Company recognized expected credit losses of $1,260.

The Company increases the allowance for expected credits losses when the Company determines all or a portion of a receivable is uncollectible. The Company recognizes recoveries as a decrease to the allowance for expected credit losses.

Changes in the allowance were not material for the six months ended June 30, 2020.

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PROPERTY, PLANT AND EQUIPMENT, NET

6 Months Ended

Jun. 30, 2020

PROPERTY, PLANT AND EQUIPMENT, NET [Abstract]

PROPERTY, PLANT AND EQUIPMENT, NET

4.PLANT, PROPERTY AND EQUIPMENT, NET

Fixed assets, net consisted of the following:

	June 30, 2020	December 31, 2019
Computer hardware and software	$ 10,983	$ 8,431
Furniture, fixture, and equipment	20	21
Total depreciable property and equipment	11,003	8,452
Less: accumulated depreciation	(4,929)	(3,378)
Depreciable property, net	6,074	5,074
Assets under development	6	354
Property, plant and equipment, net	$ 6,080	$ 5,428

For the three months ended June 30, 2020 and 2019, depreciation expense was $794 and $455, respectively. For the six months ended June 30, 2020 and 2019, depreciation expense was $1,551 and $823, respectively.

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GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2020

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

5.GOODWILL AND INTANGIBLE ASSETS

Goodwill was $8,248 as of June 30, 2020 and December 31, 2019.

Due to the ongoing COVID-19 pandemic, the Company assessed the current economic environment, and its goodwill for impairment during the six months ended June 30, 2020. The current performance and expected forecast in relation to the results of the annual impairment test performed for 2019 indicated that it was not more likely than not that goodwill was impaired.

Definite-lived intangible assets were as follows:

	June 30, 2020			December 31, 2019
	Gross	Accumulated	Net Carrying	Gross	Accumulated	Net Carrying
	Amount	Amortization	Amount	Amount	Amortization	Amount
Trade name	$ 1,169	$ (185)	$ 984	$ 1,169	$ (127)	$ 1,042
Existing technology	948	(206)	742	559	(99)	460
Non-competition agreements	125	(66)	59	125	(45)	80
Customer relationships	740	(117)	623	740	(80)	660
Software	225	-	225	225	-	225
Licensing agreement	210	(6)	204	210	-	210
Total intangible assets	$ 3,417	$ (580)	$ 2,837	$ 3,028	$ (351)	$ 2,677

Definite-lived intangible assets are amortized using the straight-line method over its estimated useful life. Amortization expense for definite-lived intangible assets for the three months ended June 30, 2020 and 2019 was $126 and $78, respectively. Amortization expense for definite-lived intangible assets for the six months ended June 30, 2020 and 2019 was $230 and $151, respectively.

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EQUITY

6 Months Ended

Jun. 30, 2020

EQUITY [Abstract]

EQUITY

6.EQUITY

As of June 30, 2020, the Company had 70,579 shares of common stock issued and 68,532 shares outstanding.

The Company’s shareholder approved equity plans are administered under the 2013 Stock Option Plan and the 2015 Equity Incentive Plan. The purpose of the equity plans is to retain the services of valued employees, directors, officers, agents, and consultants and to incentivize such persons to make contributions to the Company and motivate excellent performance.

Agent Equity Program

The Company provides agents and brokers the opportunity to elect to receive 5% of commissions earned from each completed residential real estate transaction in the form of common stock. If agents and brokers elect to receive portions

of their commissions in common stock, they are entitled to receive the equivalent number of shares of common stock, based on the fixed monetary value of the commission payable. Prior to January 1, 2020, the Company recognized a 20% discount on these issuances as an additional cost of sales charge during the periods presented. Beginning in January 2020, the Company amended the Agent Equity Plan and changed the discount on issued shares from 20% to 10%.

During the three months ended June 30, 2020 and 2019, the Company issued approximately 928 and 935 shares of common stock, respectively, to agents and brokers for $10,503 and $10,234, respectively, net of discount. During the six months ended June 30, 2020 and 2019, the Company issued approximately 1,563 and 1,555 shares of common stock, respectively, to agents and brokers for $19,297 and $16,444, respectively, net of discount.

Agent Growth Incentive Program

The Company administers an equity incentive program whereby agents and brokers become eligible to receive awards of the Company’s common stock through agent attraction and performance benchmarks. The incentive program encourages greater performance and awards agents with common stock based on achievement of performance milestones. Awards typically vest after performance benchmarks are reached and three years of subsequent service is provided to the Company. Share-based performance awards are based on a fixed-dollar amount of shares based on the achievement of performance metrics. As such, the awards are classified as liabilities until the number of share awards becomes fixed once the performance metric is achieved. For the three months ended June 30, 2020, the Company’s stock compensation attributable to the Agent Growth Incentive Program was $3,246, of which the total amount of stock compensation attributable to liability classified awards was $483. For the six months ended June 30, 2020, the Company’s stock compensation attributable to the Agent Growth Incentive Program was $6,765, of which the total amount of stock compensation attributable to liability classified awards was $1,525. Stock compensation expense related to the Agent Growth Incentive Program is included in general and administrative expense in the condensed consolidated statements of comprehensive income (loss).

The following table illustrates changes in the Company’s stock compensation liability for the six months ended June 30, 2020:

Balance, December 31, 2019	$ 277
Stock grant liability increase at March 31, 2020	1,042
Stock grants reclassified from liability at March 31, 2020	(75)
Stock grant liability increase at June 30, 2020	483
Stock grants reclassified from liability at June 30, 2020	(582)
Balance, June 30, 2020	$ 1,145

Stock Option Awards

During the three and six months ended June 30, 2020, the Company granted 248 and 399 stock options, respectively, to employees with an estimated grant date fair value of $10 and $9.69 per share, respectively. The fair value was calculated using a Black Scholes-Merton option pricing model.

Stock Repurchase Plan

In December 2018, the Company’s board of directors (“the Board”) approved a stock repurchase program authorizing the Company to purchase up to $25 million of its common stock, which was later amended in November of 2019 to increase the authorized repurchase amount to $75 million. Purchases under the repurchase program may be made in the open market or through a 10b5-1 plan and are expected to comply with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The timing and number of shares repurchased depends upon market conditions. The repurchase program does not require the Company to acquire a specific number of shares. The cost of the shares that are repurchased is funded from available working capital.

The repurchase program began on January 2, 2019 and was discontinued in March 2020. In June 2020 the stock repurchase plan resumed due to the Company’s better than expected performance for the first half of 2020.

For accounting purposes, common stock repurchased under the stock repurchase programs is recorded based upon the settlement date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method. During the three and six months ended June 30, 2020, the Company repurchased 131 and 1,122 shares, respectively, of common stock at a total cost of $1,682 and $11,987, respectively. These shares are considered issued but not outstanding.

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EARNINGS (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2020

EARNINGS (LOSS) PER SHARE [Abstract]

EARNINGS (LOSS) PER SHARE

7.EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed based on net income (loss) attributable to eXp World Holdings Inc. shareholders divided by the basic weighted-average shares outstanding during the period. Dilutive earnings per share is computed consistently with the basic computation while giving effect to all dilutive potential common shares and common share equivalents that were outstanding during the period. The Company uses the treasury stock method to reflect the potential dilutive effect of unvested stock awards and unexercised options. The Company uses the if-converted method to reflect the potential dilutive effect of the stock settled consideration in connection with the VirBELA acquisition.

The following table sets forth the calculation of basic and diluted earnings per share attributable to common stock during the periods presented:

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Numerator:
Net income (loss) attributable to common stock	$ 8,275	$ (2,195)	$ 8,440	$ (8,492)
Denominator:		-
Weighted average shares - basic	67,756	61,526	66,751	61,138
Weighted average shares - diluted	72,661	61,526	72,050	61,138
Earnings (loss) per share:		-
Earnings (loss) per share attributable to common stock- basic	0.12	(0.04)	0.13	(0.14)
Earnings (loss) per share attributable to common stock- diluted	0.11	(0.04)	0.12	(0.14)

Total outstanding shares of common stock for the three months ended June 30, 2020 excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive were 411.

Total outstanding shares of common stock for the six months ended June 30, 2020 excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive were 402.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2020

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

8.FAIR VALUE MEASUREMENT

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

● Level 1 – Inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs).

● Level 2 – Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or prices that vary substantially).

● Level 3 – Inputs are unobservable inputs that reflect the entity's own assumptions in pricing the asset or liability (used when little or no market data is available).

The Company holds funds in a money market account, which are considered Level 1 assets. The Company values its money market funds at fair value on a recurring basis.

As of June 30, 2020 and December 31, 2019, the fair value of the Company’s money market funds was $18,369 and $18,281, respectively.

There have been no transfers between Level 1, Level 2 and Level 3 in the period presented. The Company did not have any Level 2 or Level 3 financial assets or liabilities in the period presented.

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LEASES

6 Months Ended

Jun. 30, 2020

LEASES

Leases

9.LEASES

The Company’s lease portfolio consists of office leases with lease terms ranging from less than one year to seven years, with the weighted average lease term being three years.

Certain leases provide for increases in future lease payments once the term of the lease has expired, as defined in the lease agreements. These leases generally also include real estate taxes.

Short term leases, having a lease term at commencement of 12 months or less, are not capitalized and the expenses are recognized in the period incurred.

Included below is other information regarding leases for the six months ended June 30, 2020:

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Other information
Operating lease expense	$ 104	$ 28	$ 208	$ 52
Short-term lease expense	5	8	10	14
Cash paid for operating leases	107	29	204	59
Weighted-average remaining lease term (years)– operating leases (1)	3.7	3	3.7	3
Weighted-average discount rate – operating leases	4.851%	4.850%	4.851%	4.850%

(1) The Company’s lease terms include options to extend the lease when it is reasonably certain the Company will exercise its option. Additionally, the Company considered any historical and economic factors in determining if a lease renewal or termination option would be exercised.

As of June 30, 2020, maturities of lease liabilities by fiscal year were as follows:

Remaining 2020	$ 198
2021	314
2022	277
2023	165
2024	5
2025 and thereafter	6
Total lease payments	965
Less: interest	(63)
Total operating lease liabilities	$ 902

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SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2020

SEGMENT INFORMATION [Abstract]

SEGMENT INFORMATION

10.SEGMENT INFORMATION

Historically, management has not made operating decisions nor assessed performance based on geographic locations. Rather, the chief operating decision maker makes operating decisions and assesses performance based on the products and services of identified operating segments. While management does consider real estate and brokerage services, technology services, and affiliated services to be identified operating segments, the profits and losses and assets of the acquired technology and affiliated services segment are not material.

Operating Segments

The Company primarily operates as a cloud-based real estate brokerage. The real estate brokerage business represents 99.8% and 99.9% of the total revenue of the Company for the six months ended June 30, 2020 and 2019, respectively. The real estate brokerage business represents 94.4% and 95.8% of the total assets of the Company as of June 30, 2020 and December 31, 2019, respectively.

The Company offers software subscriptions to customers to access its virtual reality software platform. Additionally, the Company offers professional services for implementation and consulting services. However, the operations and assets of the technology segment are not managed by the Company’s chief operating decision-maker as a separate reportable segment.

Services provided through First Cloud and eXp Silverline are in the emerging stages of development as contributing segments and are not material to the Company’s total revenue, total net income (loss) or total assets as of June 30, 2020.

The Company aggregates the identified operating segments for reporting purposes.

Geographical Information

The Company primarily operates within the real estate brokerage markets in the United States and Canada. During the fourth quarter of 2019, the Company expanded operations into the UK and Australia.

The Company’s management analyzes geographical locations on a forward-looking basis to identify growth opportunities. For the six months ended June 30, 2020 and 2019, approximately 4% and 2%, respectively, of the Company’s total revenue was generated outside of the U.S. Assets held outside of the U.S. were 9% as of both June 30, 2020 and December 31, 2019.

The Company’s technology services and affiliated services are currently provided primarily in the U.S.

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VARIABLE INTEREST ENTITIES (VIEs)

6 Months Ended

Jun. 30, 2020

VARIABLE INTEREST ENTITIES (VIEs)

VARIABLE INTEREST ENTITIES (VIEs)

11.VARIABLE INTEREST ENTITIES

A company is deemed to be the primary beneficiary of a VIE and must consolidate the entity if the company has both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company has concluded that First Cloud is a VIE and that it is the primary beneficiary as it has the power to direct the activities of First Cloud and has an economic interest that will absorb the losses and/or receive benefits that could be significant to the VIE. Accordingly, the Company consolidates the assets and liabilities and operating results of First Cloud in the condensed consolidated financial statements. The Company recognizes noncontrolling interest in the condensed consolidated balance sheets. The income or loss allocations reflected on the condensed consolidated statements of comprehensive income (loss) may create volatility in the reported results of operations, including net losses attributable to common stockholders.

The financial information of First Cloud is presented below.

	June 30, 2020	December 31, 2019
Assets
Cash	$ 320	$ 424
Accounts Receivable	24	-
Prepaids and other assets	42	2
Total assets	$ 386	$ 426
Liabilities & Equity
Membership interests payable	37	45
Accounts payable	3	15
Total liabilities	40	60
Total equity	346	366
Total liabilities & equity	$ 386	$ 426
	Six Months Ended June 30,
	2020	2019
Revenues	$ 78	$ -
Expenses	205	-
Net loss	$ (127)	$ -

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2020

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

12.SUBSEQUENT EVENTS

COVID-19

In December 2019, a novel strain of coronavirus, COVID-19, was identified in Wuhan, China. COVID-19 has caused a global health emergency and was declared a pandemic by the World Health Organization in March 2020.  In an effort to slow and contain the spread of COVID-19, local, state, and national governments implemented various measures, which have impacted businesses worldwide.

As of the date of this quarterly report, the Company’s results of operations, liquidity and financial condition have not been significantly impacted; however, the Company will continue to monitor events and/or changes in circumstances. While the Company is positioned to survive and thrive in a series of fluctuations in economic activity, the full impact the economic situation will have on the Company’s results of operations or financial condition, and management’s judgment could change in the future due to the ongoing pandemic and the uncertainty around its magnitude and duration.

Showcase Acquisition

On July 31, 2020, the Company acquired the equity ownership interests in Showcase Web Sites, L.L.C. (“Showcase”) for cash consideration of $1.5 million and promissory notes totaling $1.5 million (the “Showcase Acquisition”). Showcase is a technology company focused on agent website and consumer real estate portal technology. With this acquisition, the Company will be able to strategically focus on creating consumer home-search technology for utilization by our independent agents and brokers, as well as continued services offerings to third party clients of Showcase.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of eXp World Holdings, Inc., its wholly-owned subsidiaries, and those entities where the Company has greater than 50% ownership or where the Company exercises control over the operations. If the Company has a variable interest in an entity but it is not the primary beneficiary of the entity or exercises control over the operations and has less than 50% ownership, it will use the

equity method or the cost method of accounting for investments. The Company uses the equity method of accounting for entities in which the Company holds a 50% or less investment and exercises significant influence. Entities in which the Company has less than a 20% investment and where the Company does not exercise significant influence are accounted for under the cost method. Intercompany transactions and balances are eliminated upon consolidation. See Note 11 – Variable Interest Entities.

Noncontrolling Interest

Noncontrolling Interest

The Company determined that First Cloud is a variable interest entity (“VIE”), as the Company is the primary beneficiary that has both the power to direct the activities that most significantly impact the VIE and a variable interest that potentially could be significant to the VIE. The Company treats the interest in First Cloud that it does not own as noncontrolling interest. The noncontrolling interest balance is adjusted each period to reflect the allocation of net income (loss) and other comprehensive income (loss) attributable to the noncontrolling interest, as shown in the condensed consolidated statements of comprehensive income (loss). The noncontrolling interest balance in the condensed consolidated balance sheets represents the proportional share of the equity of the joint venture entities, which is attributable to the minority shareholders.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, legal contingencies, income taxes, revenue recognition, stock-based compensation, goodwill, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Reclassifications

Reclassifications

The Company has reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation, specifically the allowance for credit losses/bad debt on receivables is now separately disclosed as its own line item on the Company’s Condensed Consolidated Statement of Cash Flows, previously it was included in the accounts receivable line item.

Cash and cash equivalents

Cash and cash equivalents

The Company considers all highly liquid investments with maturity when purchased of three months or less to be cash equivalents. From time to time, the Company’s cash deposits exceed federally insured limits. The Company has not experienced any losses resulting from holding deposits in accounts in excess of federal insurance limits.

Restricted Cash

Restricted cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows.

	December 31, 2019	December 31, 2018
Cash and cash equivalents	$ 40,087	$ 20,538
Restricted cash	6,987	2,503
Total cash, cash equivalents, and restricted cash, beginning balance	$ 47,074	$ 23,041
	June 30, 2020	June 30, 2019
Cash and cash equivalents	$ 63,551	$ 31,523
Restricted cash	17,405	6,166
Total cash, cash equivalents, and restricted cash, ending balance	$ 80,956	$ 37,689

Restricted cash consists of cash held in escrow by the Company’s brokers and agents on behalf of real estate buyers. The Company recognizes a corresponding customer deposit liability until the funds are released. Once the cash transfers from escrow, the Company reduces the respective customers’ deposit liability.

Stock-based compensation

Stock-based compensation

Stock-based compensation is comprised of agent growth incentive programs, agent equity program, and stock option awards. Stock-based compensation is more fully disclosed in Note 6 – Equity. The Company accounts for stock-based compensation granted to employees and non-employees using a fair value method. Stock-based compensation awards are measured at the grant date fair value and stock based compensation is recognized over the requisite service period of the awards, usually the vesting period, on a straight-line basis, net of forfeitures. The Company reduces recorded stock-based compensation for forfeitures when they occur.

Recognition of compensation cost for an award with a performance condition is based on the probable outcome of that performance condition being met.

Goodwill

Goodwill

Goodwill represents the excess of the consideration paid over the estimated fair value of assets acquired and liabilities assumed in a business combination. The Company evaluates goodwill for impairment on an annual basis in the fiscal fourth quarter or on an interim basis if an event occurs or circumstances change that would more likely than not indicate that the fair value of the goodwill is below its carrying value. Generally, this evaluation begins with a qualitative assessment to determine if the fair value of the reporting unit is more likely than not less than its carrying value. The test for impairment requires management to make judgments relating to future cash flows, growth rates and economic and market conditions. In addition to the annual impairment evaluation, the Company evaluates at least quarterly whether events or circumstances have occurred in the period subsequent to the annual impairment testing which indicate that it is more likely than not an impairment loss has occurred.

Revenue Recognition

Revenue recognition

The Company generates substantially all of its revenue from real estate brokerage services and generates a de minimis portion of its revenues from software subscription and professional services.

Real Estate Brokerage Services

The Company serves as a licensed broker in the areas in which it operates for the purpose of processing residential real estate transactions. The Company is contractually obligated to provide services for the fulfillment of transfers of residential real estate between buyers and sellers. The Company provides these services itself and controls the services necessary to legally transfer the residential real estate. Correspondingly, the Company is defined as the principal.  The Company, as principal, satisfies its obligation upon the closing of a residential real estate transaction. As principal, and upon satisfaction of the performance obligation, the Company recognizes revenue in the gross amount of consideration to which the Company expects to be entitled.

Revenue is derived from assisting home buyers and sellers in listing, marketing, selling, and finding residential real estate. Commissions earned on real estate transactions are recognized at the completion of a residential real estate transaction once the Company has satisfied the performance obligation. Agent related fees are currently recorded as a reduction to commissions and other agent related costs.  

Software Subscription and Professional Services

Subscription revenue is derived from fees from customers to access the Company’s virtual reality software platform. The terms of subscriptions do not provide customers the right to take possession of the software. Subscription revenue is generally recognized ratably over the contract term.

Professional services revenue is derived from implementation and consulting services. Professional services revenue is typically recognized over time as the services are rendered, using an efforts-expended (labor hours) input method. 

Software subscription and professional services revenue accounts for less than 1% of all revenue for the three and six months ended June 30, 2020 and 2019.

The Company does not currently collect sales and use taxes on fees from agents and brokers and assumes responsibility to pay these costs to the appropriate taxing authorities.

Disaggregated revenue

The Company primarily operates as a real estate brokerage firm. The vast majority of the Company’s revenue is derived from providing a single service, real estate brokerage services, to purchasers and sellers of homes in the U.S. See Note 10 – Segment information for details regarding segment and geographic information.

Management believes that no disaggregation of revenue from services to customers currently exists that would provide additional insight into the future recognition of revenue and cash flows.

Change in Accounting Principle, Recently Adopted and Issued Accounting Principles

Recently Adopted Accounting Principles and Change in Accounting Principle

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 modifies the measurement of expected credit losses of certain financial instruments, requiring entities to estimate an expected lifetime credit loss on financial assets. The ASU amends the impairment model to utilize an expected loss methodology and replaces the incurred loss methodology for financial instruments including trade receivables. The amendment requires entities to consider other factors, such as economic conditions and future economic conditions. The Company adopted ASU 2016-13 effective January 1, 2020 and concluded it did not have a material impact on either the financial position, results of operations, cash flows, or related disclosures of the Company. There was no impact on beginning balance retained earnings upon adoption of this ASU. See Note 3 – Expected Credit Losses for more information.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which removes certain disclosure requirements related to the fair value hierarchy, such as removing the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements, such as disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurement. The Company adopted ASU 2018-13 on January 1, 2020 and concluded it did not have an impact on the Company’s consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15 – Intangibles – Goodwill and Other Internal-Use Software (Subtopic 350-40) – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). The amendments in this update apply to an entity who is a customer in a hosting arrangement accounted for as a service contract. ASU 2018-15 requires a customer in a hosting arrangement to capitalize certain implementation costs. Costs associated with the application development stage of the implementation should be capitalized and costs with the other stages should be expensed. The Company adopted ASU 2018-15 on January 1, 2020 and concluded it did not have an impact on the Company’s consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12 – Income Taxes (Topic 740) (“ASU 2019-12”). ASU 2019-12 removes certain exceptions for investments, intraperiod allocations and interim calculations and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020; early adoption is permitted. The Company is still assessing the amendments of ASU 2019-12 and the impact the amendments will have on the Company’s consolidated financial statements and related disclosures.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of Cash

	December 31, 2019	December 31, 2018
Cash and cash equivalents	$ 40,087	$ 20,538
Restricted cash	6,987	2,503
Total cash, cash equivalents, and restricted cash, beginning balance	$ 47,074	$ 23,041
	June 30, 2020	June 30, 2019
Cash and cash equivalents	$ 63,551	$ 31,523
Restricted cash	17,405	6,166
Total cash, cash equivalents, and restricted cash, ending balance	$ 80,956	$ 37,689

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PROPERTY, PLANT AND EQUIPMENT, NET (Tables)

6 Months Ended

Jun. 30, 2020

PROPERTY, PLANT AND EQUIPMENT, NET [Abstract]

Schedule of Fixed assets

	June 30, 2020	December 31, 2019
Computer hardware and software	$ 10,983	$ 8,431
Furniture, fixture, and equipment	20	21
Total depreciable property and equipment	11,003	8,452
Less: accumulated depreciation	(4,929)	(3,378)
Depreciable property, net	6,074	5,074
Assets under development	6	354
Property, plant and equipment, net	$ 6,080	$ 5,428

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GOODWILL AND INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2020

GOODWILL AND INTANGIBLE ASSETS

Schedule of Definite-Lived Assets

	June 30, 2020			December 31, 2019
	Gross	Accumulated	Net Carrying	Gross	Accumulated	Net Carrying
	Amount	Amortization	Amount	Amount	Amortization	Amount
Trade name	$ 1,169	$ (185)	$ 984	$ 1,169	$ (127)	$ 1,042
Existing technology	948	(206)	742	559	(99)	460
Non-competition agreements	125	(66)	59	125	(45)	80
Customer relationships	740	(117)	623	740	(80)	660
Software	225	-	225	225	-	225
Licensing agreement	210	(6)	204	210	-	210
Total intangible assets	$ 3,417	$ (580)	$ 2,837	$ 3,028	$ (351)	$ 2,677

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EQUITY (Tables)

6 Months Ended

Jun. 30, 2020

EQUITY [Abstract]

Changes in the Company's stock compensation liability

Balance, December 31, 2019	$ 277
Stock grant liability increase at March 31, 2020	1,042
Stock grants reclassified from liability at March 31, 2020	(75)
Stock grant liability increase at June 30, 2020	483
Stock grants reclassified from liability at June 30, 2020	(582)
Balance, June 30, 2020	$ 1,145

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EARNINGS (LOSS) PER SHARE (Tables)

6 Months Ended

Jun. 30, 2020

EARNINGS (LOSS) PER SHARE [Abstract]

Schedule of calculation of basic and diluted earnings (loss) per share

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Numerator:
Net income (loss) attributable to common stock	$ 8,275	$ (2,195)	$ 8,440	$ (8,492)
Denominator:		-
Weighted average shares - basic	67,756	61,526	66,751	61,138
Weighted average shares - diluted	72,661	61,526	72,050	61,138
Earnings (loss) per share:		-
Earnings (loss) per share attributable to common stock- basic	0.12	(0.04)	0.13	(0.14)
Earnings (loss) per share attributable to common stock- diluted	0.11	(0.04)	0.12	(0.14)

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LEASES (Tables)

6 Months Ended

Jun. 30, 2020

LEASES

Schedule of other lease information

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Other information
Operating lease expense	$ 104	$ 28	$ 208	$ 52
Short-term lease expense	5	8	10	14
Cash paid for operating leases	107	29	204	59
Weighted-average remaining lease term (years)– operating leases (1)	3.7	3	3.7	3
Weighted-average discount rate – operating leases	4.851%	4.850%	4.851%	4.850%

(1) The Company’s lease terms include options to extend the lease when it is reasonably certain the Company will exercise its option. Additionally, the Company considered any historical and economic factors in determining if a lease renewal or termination option would be exercised.

Schedule of future operating lease payments

Remaining 2020	$ 198
2021	314
2022	277
2023	165
2024	5
2025 and thereafter	6
Total lease payments	965
Less: interest	(63)
Total operating lease liabilities	$ 902

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VARIABLE INTEREST ENTITIES (VIEs) (Tables)

6 Months Ended

Jun. 30, 2020

VARIABLE INTEREST ENTITIES (VIEs)

Schedule of Financial information of VIE

	June 30, 2020	December 31, 2019
Assets
Cash	$ 320	$ 424
Accounts Receivable	24	-
Prepaids and other assets	42	2
Total assets	$ 386	$ 426
Liabilities & Equity
Membership interests payable	37	45
Accounts payable	3	15
Total liabilities	40	60
Total equity	346	366
Total liabilities & equity	$ 386	$ 426
	Six Months Ended June 30,
	2020	2019
Revenues	$ 78	$ -
Expenses	205	-
Net loss	$ (127)	$ -

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DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Narrative) (Details)	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Minimum ownership interest retained (as a percent)	50.00%
Minimum ownership interest retained during start-up phase (as a percent)	50.00%
Minimum ownership percentage by parties (as a percent)	50.00%
Silverline Title & Escrow, LLC
Ownership interest ( as a percent)		50.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Minimum ownership interest retained during start-up phase (as a percent)			50.00%
Maximum threshold percentage of equity ownership interest			50.00%
Maximum threshold ownership percentage for equity method accounting of investment			20.00%
Sales Revenue, Net [Member] | Maximum
Concentration risk percentage	1.00%	1.00%	1.00%	1.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Cash) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents	$ 63,551	$ 40,087	$ 31,523	$ 20,538
Restricted cash	17,405	6,987	6,166	2,503
Total cash, cash equivalents, and restricted cash	$ 80,956	$ 47,074	$ 37,689	$ 23,041

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EXPECTED CREDIT LOSSES (Narrative) (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Accounts receivable, allowance for credit losses and bad debt	$ 1,260,000	$ 137,000
Agent Noncommission Based Fees [Member]
Accounts Receivable, before Allowance for Credit Loss	3,357
Commissions Receivable for Real Estate Property Settlements [Member]
Accounts Receivable, before Allowance for Credit Loss	$ 49,186

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PROPERTY, PLANT AND EQUIPMENT, NET (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
PROPERTY, PLANT AND EQUIPMENT, NET [Abstract]
Depreciation expense	$ 794	$ 455	$ 1,551	$ 823

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PROPERTY, PLANT AND EQUIPMENT, NET (Schedule of Fixed assets) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Total depreciable property and equipment	$ 11,003	$ 8,452
Less: accumulated depreciation and amortization	(4,929)	(3,378)
Depreciable property, net	6,074	5,074
Assets under development	6	354
Property, plant and equipment, net	6,080	5,428
Computer hardware and software
Total depreciable property and equipment	10,983	8,431
Furniture, fixtures and equipment
Total depreciable property and equipment	$ 20	$ 21

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GOODWILL AND INTANGIBLE ASSETS (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
GOODWILL AND INTANGIBLE ASSETS
Goodwill	$ 8,248		$ 8,248		$ 8,248
Amortization of intangible assets	$ 126	$ 78	$ 230	$ 151

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GOODWILL AND INTANGIBLE ASSETS (Schedule of Definite-Lived Assets) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Gross Amount	$ 3,417	$ 3,028
Accumulated Amortization	(580)	(351)
Net Carrying Amount	2,837	2,677
Trade name
Finite-Lived Intangible Assets [Line Items]
Gross Amount	1,169	1,169
Accumulated Amortization	(185)	(127)
Net Carrying Amount	984	1,042
Existing technology
Finite-Lived Intangible Assets [Line Items]
Gross Amount	948	559
Accumulated Amortization	(206)	(99)
Net Carrying Amount	742	460
Non-competition agreements
Finite-Lived Intangible Assets [Line Items]
Gross Amount	125	125
Accumulated Amortization	(66)	(45)
Net Carrying Amount	59	80
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Amount	740	740
Accumulated Amortization	(117)	(80)
Net Carrying Amount	623	660
Software
Finite-Lived Intangible Assets [Line Items]
Gross Amount	225	225
Net Carrying Amount	225	225
Licensing agreement
Finite-Lived Intangible Assets [Line Items]
Gross Amount	210	210
Accumulated Amortization	(6)
Net Carrying Amount	$ 204	$ 210

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EQUITY (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Common stock issued	70,579				70,579		66,199
Common stock outstanding	68,532				68,532		65,274
Stock issued for services, value	$ 10,503	$ 8,794	$ 10,234	$ 6,210
Stock based compensation					$ 2,300	$ 3,046
Stock Options
Granted	248				399
Grant date fair value	$ 10				$ 9.69
Agent Equity Award Program
Percentage of commission potentially redeemed in common stock					5.00%
Percentage of discount of market price, date of issuance					10.00%		20.00%
Stock issued for services, shares	928		935		1,563	1,555
Stock issued for services, value	$ 10,503		$ 10,234		$ 19,297	$ 16,444
Agent Growth Incentive Program
Stock based compensation	3,246				6,765
Estimated stock awards year to date	$ 483				$ 1,525

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EQUITY (Changes in the Company's stock compensation liability) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2020	Jun. 30, 2020
EQUITY [Abstract]
Balance, at beginning of period	$ 277	$ 277
Stock grant liability increase	1,042	483
Stock grants reclassified from liability	$ (75)	(582)
Balance, at end of period		$ 1,145

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EQUITY (Stock Repurchase Plan) (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Nov. 30, 2019	Dec. 31, 2018
EQUITY [Abstract]
Stock repurchase program authorized amount						$ 75,000	$ 25,000
Total number of shares repurchased	131				1,122
Total cost of shares repurchased	$ 1,682	$ 10,305	$ 4,898	$ 3,647	$ 11,987

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EARNINGS (LOSS) PER SHARE (Schedule of calculation of basic and diluted earnings (loss) per share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
EARNINGS (LOSS) PER SHARE [Abstract]
Net income (loss) attributable to common stock	$ 8,275	$ (2,195)	$ 8,440	$ (8,492)
Weighted average shares - basic	67,756	61,526	66,751	61,138
Weighted average shares - diluted	72,661	61,526	72,050	61,138
Earnings (loss) per share attributable to common stock- basic	$ 0.12	$ (0.04)	$ 0.13	$ (0.14)
Earnings (loss) per share attributable to common stock- diluted	$ 0.11	$ (0.04)	$ 0.12	$ (0.14)
Shares excluded, anti-dilutive	411		402

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FAIR VALUE MEASUREMENTS (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Money Market Funds [Member]
Money market funds	$ 18,369	$ 18,281

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LEASES (Narrative) (Details)	Jun. 30, 2020
Minimum
Term of lease	1 year
Maximum
Term of lease	7 years
Weighted Average
Term of lease	3 years

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LEASES (Summary of components of our lease cost) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
LEASES
Operating lease expense	$ 104	$ 28	$ 208	$ 52
Short term lease expense	5	8	10	14
Cash paid for operating leases	$ 107	$ 29	$ 204	$ 59
Weighted-average remaining lease term (years)- operating leases	3 years 8 months 12 days	3 years	3 years 8 months 12 days	3 years
Weighted-average discount rate - operating leases	4.851%	4.85%	4.851%	4.85%

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LEASES (Schedule of future minimum lease payments) (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Rent Payments
Remaining 2020	$ 198
2021	314
2022	277
2023	165
2024	5
2025 and Thereafter	6
Total lease payments	965
Less: interest	(63)
Total operating lease liabilities	$ 902

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SEGMENT INFORMATION (Narrative) (Details)	6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Assets, Total [Member] | Real Estate Brokerage Segment [Member]
Concentration risk percentage	94.40%		95.80%
Sales Revenue, Net [Member] | Real Estate Brokerage Segment [Member]
Concentration risk percentage	99.80%	99.90%
Non Domestic [Member] | Assets, Total [Member]
Concentration risk percentage	9.00%		9.00%
Non Domestic [Member] | Sales Revenue, Net [Member]
Concentration risk percentage	4.00%	2.00%

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VARIABLE INTEREST ENTITIES (VIEs) (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018
ASSETS:
TOTAL ASSETS	$ 154,875				$ 154,875		$ 96,452
Liabilities & Equity
TOTAL LIABILITIES	76,343				76,343		44,324
TOTAL EQUITY	78,532	$ 56,000	$ 40,660	$ 31,363	78,532	$ 40,660	52,128	$ 29,981
TOTAL LIABILITIES AND EQUITY	154,875				154,875		96,452
Net income (loss)	8,235	$ 142	$ (2,195)	$ (6,296)	8,377	$ (8,492)
Primary beneficiary
ASSETS:
Cash	320				320		424
Accounts Receivable	24				24
Prepaids and other assets	42				42		2
TOTAL ASSETS	386				386		426
Liabilities & Equity
Membership interests payable	37				37		45
Accounts payable	3				3		15
TOTAL LIABILITIES	40				40		60
TOTAL EQUITY	346				346		366
TOTAL LIABILITIES AND EQUITY	$ 386				386		$ 426
Revenues					78
Expenses					205
Net income (loss)					$ (127)

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SUBSEQUENT EVENTS (Narrative) (Details) - Subsequent Event [Member] $ in Millions	Jul. 31, 2020 USD ($)
Cash consideration	$ 1.5
Notes receivable, related parties	$ 1.5