~~Statement Regarding Forward-Looking Statements~~FORWARD LOOKING STATEMENTS

~~Certain statements contained in this report on Form 10-Q constitute~~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. ~~These~~Forward-looking statements can be identified by ~~the fact that they do not relate strictly to historical or current facts. The~~ words such as “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,” “would,” “potential” and similar expressions ~~identify forward-looking~~to future periods. Forward-looking statements ~~but~~ are not ~~the exclusive means of doing so.~~based on historical facts but rather represent current expectations and assumptions. Forward-looking statements ~~may~~ 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; ~~nature and timing of restructuring charges and the impact thereof;~~ productivity, business process, rationalization, investment, acquisition and acquisition integrations, consulting, operational, tax, financial and capital projects and initiatives; ~~contingencies; environmental compliance and~~ changes in the regulatory environment; and future working capital, costs, revenues, business opportunities, ~~debt levels,~~ cash flows, margins, earnings and growth.

These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical and current trends, current conditions, possible future developments and other factors they believe to be appropriate. Forward-looking statements ~~are not guarantees, representations or warranties~~relate to the future and are subject to many risks, assumptions, and uncertainties, ~~that could cause~~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 tocould differ materially from those contemplated by such forward-looking statements. ~~Some of those~~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 ~~include~~relating to the ~~risk factors set forth~~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 ~~this report and our Annual Report on Form 10-K for our prior~~March 2020. As of the end of the second quarter of fiscal year ~~ended December 31, 2016, and~~2020, the following: current global economic and capital market uncertainties; potential dilution to our stockholders from our recapitalization and balance sheet restructuring activities; potential inability to continue to comply with government regulations; adoption of, or changes in legislation or regulations adversely affecting our businesses; permitting constraints or delays, business opportunities that may be presented to, or pursued by, us; changes in the United States or other monetary or fiscal policies or regulations; changes in generally accepted accounting principles; geopolitical events; potential inability to implement our business strategies; potential inability to grow revenues organically; potential inability to attract and retain key personnel; assertion of claims, lawsuits and proceedings against us; potential inability to maintain an effective system of internal controls over financial reporting; potential inability or failure to timely file periodic reports with the SEC; and potential inability to list our securities on any securities exchange or market. Occurrence of such events or circumstances could haveCOVID -19 pandemic has not had a ~~material adverse effect~~significant impact on our ~~business, financial condition,~~ results of operations, ~~or cash flows or~~however given the ~~market price~~continuous volatility resulting from the ongoing pandemic, the potential effect of COVID-19 may not be fully reflected in our ~~securities.~~ 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 ~~statement.~~statements whether as a result of new information, future developments or otherwise, except as may be required by law.

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PART I1 – FINANCIAL INFORMATION

Item 1.FINANCIAL STATEMENTS

~~eXp World Holdings, Inc.~~

~~(unaudited)~~

~~September 30, 2017~~

	~~Page~~

~~Condensed Consolidated Balance Sheets~~	5

~~Condensed Consolidated Statements of Operations~~	6

~~Condensed Consolidated Statements of Comprehensive Income (Loss)~~	7

~~Condensed Consolidated Statements of Cash Flows~~	8

~~Notes to the Condensed Consolidated Financial Statements~~	9

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(UNAUDITED)~~(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

September 30, December 31,
2017 2016

ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,347,910 $ 1,684,608
Restricted cash 1,134,109 481,704
Accounts receivable, net of allowance $177,563 and $133,845, respectively 7,549,469 3,015,767
Prepaids and other assets 587,904 383,563

TOTAL CURRENT ASSETS 12,619,392 5,565,642

OTHER ASSETS
Fixed assets, net 1,298,215 538,405

TOTAL OTHER ASSETS 1,298,215 538,405

TOTAL ASSETS $ 13,917,607 $ 6,104,047

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable $ 412,439 $ 317,420
Customer deposits 1,134,109 481,704
Accrued expenses 7,745,153 2,742,119
Notes payable – 35,778

TOTAL CURRENT LIABILITIES 9,291,701 3,577,021

Commitments and contingencies – –

STOCKHOLDERS' EQUITY
Common Stock, $0.00001 par value 220,000,000 shares authorized; 53,995,962 shares and 52,316,679 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 540 523
Additional paid-in capital 41,238,713 34,526,859
Accumulated deficit (36,621,221 ) (32,004,561 )
Accumulated other comprehensive income (loss) 7,874 4,205

TOTAL STOCKHOLDERS' EQUITY 4,625,906 2,527,026

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,917,607 $ 6,104,047

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

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EXP WORLD HOLDINGS, INC.

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(UNAUDITED)~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016

Net revenues $ 48,105,769 $ 15,756,956 $ 109,691,317 $ 36,181,796

Operating expenses
Cost of revenues 43,291,473 13,294,452 97,620,066 30,868,564
General and administrative 11,987,268 16,810,567 14,697,040 25,801,423
Professional fees 223,811 140,804 906,654 414,197
Sales and marketing 380,452 158,968 1,030,497 358,396

Total expenses 55,883,004 30,404,791 114,254,257 57,442,580

Net loss from operations (7,777,235 ) (14,647,835 ) (4,562,940 ) (21,260,784 )

Other income and (expenses)
Other income – (432 ) – 14
Interest expense (58 ) – (2,105 ) –

Total other income and (expenses) (58 ) (432 ) (2,105 ) 14

Loss from before income tax expense (7,777,293 ) (14,648,267 ) (4,565,045 ) (21,260,770 )

Income tax expense (3,277 ) (7,444 ) (51,615 ) (33,015 )

Net loss (7,780,570 ) (14,655,711 ) (4,616,660 ) (21,293,785 )

Net loss attributable to non-controlling interest in subsidiary – 8,613 – 20,913

Net loss attributable to common shareholders $ (7,750,570 ) $ (14,647,098 ) $ (4,616,660 ) $ (21,272,872 )

Net loss per share attributable to common shareholders
     Basic from continuing operations $ (0.15 ) $ (0.29 ) $ (0.09 ) $ (0.42 )
     Diluted from continuing operations $ (0.15 ) $ (0.29 ) $ (0.09 ) $ (0.42 )

Weighted average shares outstanding
     Basic 53,335,822 51,225,817 52,837,134 50,929,102
     Diluted 53,335,822 51,225,817 52,837,134 50,929,102

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

~~EXP WORLD HOLDINGS, INC.~~

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

~~(UNAUDITED)~~(In thousands, except per share data)

(UNAUDITED)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016

Net loss $ (7,780,570 ) $ (14,655,711 ) $ (4,616,660 ) $ (21,293,785 )
Other comprehensive loss:
Foreign currency translation adjustments, net of tax 856 10,515 3,669 15,604
Comprehensive loss (7,779,714 ) (14,645,196 ) (4,612,991 ) (21,278,181 )
Comprehensive loss attributable to non-controlling interest in subsidiary – 8,613 – 20,913
Comprehensive loss attributable to common shareholders $ (7,779,714 ) $ (14,636,583 ) $ (4,612,991 ) $ (21,257,268 )


	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

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

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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

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EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

~~(UNAUDITED)~~(In thousands)

(UNAUDITED)

Nine Months Ended September 30,
2017 2016

OPERATING ACTIVITIES
Net loss $ (4,616,660 ) $ (21,293,785 )
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation 207,189 38,110
Stock compensation expense 7,076,363 1,527,110
Stock option expense (benefit) (523,043 ) 21,183,498

Changes in operating assets and liabilities:
Accounts receivable (4,533,702 ) (992,031 )
Prepaids and other assets (321,576 ) (320,114 )
Restricted cash (652,405 ) (384,761 )
Customer deposits 652,405 384,761
Accounts payable 95,019 305,438
Accrued expenses 5,013,111 189,655

          CASH PROVIDED BY OPERATING ACTIVITIES 2,396,701 637,881

INVESTING ACTIVITIES
Acquisition of property and equipment (849,764 ) (281,203 )

          CASH USED IN INVESTING ACTIVITIES (849,764 ) (281,203 )

FINANCING ACTIVITIES
Proceeds from issuance of common stock 142,158 –
Common stock issuance transaction costs – –
Repurchase and retirement of common stock (3,607 ) –
Repurchase and retirement of subsidiary common stock – (1,000 )
Proceeds from exercise of options 20,000 1,000
Principal payments of notes payable (35,778 ) –

          CASH PROVIDED BY FINANCING ACTIVITIES 122,773 –

Effect of changes in exchange rates on cash and cash equivalents (6,408 ) 15,604

Net change in cash and cash equivalents 1,663,302 372,282

Cash and cash equivalents, beginning of period 1,684,608 571,814

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,347,910 $ 944,096
– –
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for interest $ 920 $ –
Cash paid for income taxes $ 57,484 $ 33,015

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Fixed asset purchases in accounts payable $ 117,235 $ –


	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

~~The accompanying notes are an integral part~~

Table of ~~these condensed consolidated financial statements.~~Contents

eXp World Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements

~~September 30, 2017~~(UNAUDITED)

(~~Expressed~~Amounts in ~~U.S. dollars)~~thousands, except per share data and as noted otherwise)

1. ~~BACKGROUND~~DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

eXp World Holdings, Inc. ~~(the~~(collectively with its subsidiaries, the “Company” ~~or “we”~~ or “eXp”) was incorporated in the State of Delaware on July 30, 2008. Through various operating subsidiaries, the Company isprimarily 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 ~~most U.S. States,~~a number of industries. In the ~~District~~fourth quarter of ~~Columbia~~2019, the Company began real estate brokerage operations in the United Kingdom (U.K.) and ~~the provinces of Alberta and Ontario, Canada.~~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~~10-Q and Article ~~8-03~~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 have been included.~~presentation. Operating results for the ~~three-month~~three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017 and 2016~~2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2020.

2.SUMMARY OF SIGNIFICANT ACCOUNTING ~~PRINCIPLES~~POLICIES

Principles of Consolidation

The accompanying ~~unaudited~~ condensed consolidated financial statements include the accounts of eXp World Holdings, Inc., its wholly-owned subsidiaries, and ~~its subsidiaries; eXp Realty Holdings, Inc.;~~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

Table of Contents

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 ~~Mortgage, Inc. (dormant~~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 ~~December 31, 2016~~net income (loss) and ~~through September 30, 2017); eXp Realty Associates, LLC; eXp Realty, LLC; eXp Realty~~other comprehensive income (loss) attributable to the noncontrolling interest, as shown in the condensed consolidated statements of ~~California, Inc.; eXp Realty~~comprehensive income (loss). The noncontrolling interest balance in the condensed consolidated balance sheets represents the proportional share of ~~Canada, Inc.; and eXp Realty~~the equity of ~~Connecticut, LLC. All inter-company accounts and transactions have been eliminated upon consolidation.~~the joint venture entities, which is attributable to the minority shareholders.

Use of ~~Estimates~~

Estimates

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

~~Recently Issued Accounting Pronouncements~~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

~~In January 2017,~~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

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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 ~~implemented accounting treatment as promulgated by FASB as issued~~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 ~~ASU No. 2016-09 Compensation~~Note 6 – Stock Compensation (Topic 718). The new standard simplifies several aspects of the accounting for share-based payments, including accounting for income taxes, forfeitures and statutory tax withholding requirements, and classification within the statement of cash flows.Equity. The Company ~~made an election~~accounts for stock-based compensation granted to ~~account for forfeitures of non-vested equity~~employees and non-employees using a fair value method. Stock-based compensation awards ~~in the periods in which they occur. The treatments implemented did not have a material impact on the accompanying unaudited condensed consolidated financial statements as presented.~~

~~In May 2016, the FASB issued ASU 2016-02 Leases (Topic 842). Under the new guidance a lessee is required to recognize lease liabilities and corresponding right-of-use assets, initially~~are measured at the ~~present~~grant date fair value and stock based compensation is recognized over the requisite service period of ~~lease payments, on~~ the balance sheet for operating leases with terms greater than one year. Lessor accounting remains largely unchanged from existing lease accounting. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities. Ifawards, usually the ~~lessee makes the election, the lessee would recognize lease expense~~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 ~~lease term.~~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 ~~still evaluating our lease contracts however, we do not expect material changes~~contractually obligated to provide services for the ~~timing~~fulfillment of transfers of residential real estate between buyers and ~~recognition~~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 ~~lease expense as~~ a ~~result of adoption~~residential real estate transaction. As principal, and upon satisfaction of the ~~ASU. This ASU update is effective in annual reporting periods beginning after December 15, 2018 and the interim periods within that year.~~

In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers (Topic 606). The objective of the revenue standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to remove inconsistencies in requirements, provide a robust framework, improve comparability across entities and industries, provide more useful information to users and simplify the preparation of financial statements. The Company is still evaluating the potential impacts the new revenue standard may have as a result of adoption of the ASU however, we do not expect the new standard to have a material impact on financial results asperformance 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 ~~sale~~ 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

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The Company primarily operates as a ~~gross basis,~~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 ~~will~~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 ~~result~~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 ~~change~~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 ~~timing~~application development stage of the implementation should be capitalized and ~~recognition of revenue. This~~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 ~~in annual reporting~~for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2017~~2020; early adoption is permitted. The Company is still assessing the amendments of ASU 2019-12 and the ~~interim periods within~~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 ~~year.~~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.

~~3. FIXED ASSETS,~~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:

	As of September 30, 2017			As of December 31, 2016


							June 30, 2020	December 31, 2019
Computer hardware and software	$	1,518,785		$	219,590		$ 10,983	$ 8,431
Furniture, fixture and equipment		5,910			5,910
Furniture, fixture, and equipment							20	21
Total depreciable property and equipment		1,524,695			225,500		11,003	8,452
Less: accumulated depreciation and amortization		(304,405	)		(97,216	)
Less: accumulated depreciation							(4,929)	(3,378)
Depreciable property, net		1,220,290			128,284		6,074	5,074
Assets under development		77,925			410,121		6	354
Fixed assets, net	$	1,298,215		$	538,405
Property, plant and equipment, net							$ 6,080	$ 5,428

~~Depreciation~~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 ~~the nine months ended September 30, 2017 and 2016 was $207,189 and $38,110, respectively. Depreciation expense~~definite-lived intangible assets for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 was ~~$112,487~~$126 and ~~$12,555,~~$78, respectively. Amortization expense for definite-lived intangible assets for the six months ended June 30, 2020 and 2019 was $230 and $151, respectively.

~~4. STOCKHOLDERS’~~ 6.EQUITY

As of ~~September~~June 30, ~~2017,~~2020, the Company had ~~53,995,962~~70,579 shares of common stock issued and 68,532 shares outstanding.

The ~~following provides a detailed description~~Company’s shareholder approved equity plans are administered under the 2013 Stock Option Plan and the 2015 Equity Incentive Plan. The purpose of the ~~stock based transactions completed since January 1, 2017:~~

~~In January 2017,~~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 issued the remaining 49,231 shares of restricted common stock to accredited investors following receipt of $160,000 of gross proceeds from the Company’s December 2016 private placement. The Company received total gross cash proceeds from the private placement of $760,000.and motivate excellent performance.

During the nine months ended September 30, 2017, the Company issued 25,000 shares of restricted common stock upon the exercise of stock options, and received cash consideration totaling $20,000 upon payment of the exercise price for the options.

~~During the nine months ended September 30, 2017, the Company repurchased and retired 1,307 shares of common stock for cash consideration totaling $3,607.~~

During the nine months ended September 30, 2017, the Company issued 1,655,590 shares of restricted common stock in exchange for services totaling $7,076,363, which includes the expense activity in our 2015 Agent Equity Program ~~and Real Estate Agent Growth and Other Incentive Programs.~~

~~2015 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 ~~restricted~~ common stock. If agents and brokers elect to receive portions

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of their commissions in ~~restricted~~ 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 ~~nine~~three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, the Company issued ~~1,197,567~~approximately 928 and ~~648,608~~935 shares ~~respectively,~~ of ~~restricted~~ common stock, respectively, to agents and brokers for ~~$3,173,490~~$10,503 and ~~$844,811,~~$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 ~~the settlement~~$19,297 and $16,444, respectively, net of ~~commissions payable.~~discount.

~~Real Estate~~ Agent Growth ~~and Other~~ Incentive ~~Programs~~

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. ~~Agents who qualify,~~The incentive program encourages greater performance and ~~who remain~~awards agents with ~~the Company in good standing for the term of the applicable agreement, are awarded restricted~~ common stock based on ~~production~~achievement of performance milestones.

~~Under this program,~~ Awards typically vest after performance benchmarks are reached and three years of subsequent service is provided to the ~~Company~~Company. Share-based performance awards ~~restricted common stock to our agents and brokers that become issuable upon~~are based on a fixed-dollar amount of shares based on the achievement of ~~certain milestones for both the individual and the recruited agents. Subsequent to achieving and maintaining the milestones,~~performance metrics. As such, the awards ~~vest ratably over service periods~~are classified as liabilities until the number of share awards becomes fixed once the performance metric is achieved. For the three ~~years.~~

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 ~~restricted~~ stock ~~activity~~compensation liability for the ~~following periods:~~

Shares
Weighted
Average Grant
Date Fair Value

Balance, December 31, 2015 1,293,056 $ 0.45
Granted 2,452,965 3.65
Issued (503,922 ) 4.30
Forfeited (688,142 ) 0.62
Balance, December 31, 2016 2,553,957 2.82
Granted 1,719,744 3.27
Issued (383,492 ) 2.57
Forfeited (313,875 ) 2.24
Balance, September 30, 2017 3,576,334 $ 2.99

~~As of September 30, 2017, unvested restricted stock awards of approximately 2,084,000 shares had total unrecognized compensation costs totaling approximately $6,570,000.~~

~~Pre-2013 Stock Options~~

As of September 30, 2017, the Company had outstanding options to purchase 6,006,838 shares of common stock, accounted for in accordance with the intrinsic value method. The required re-measurement of the intrinsic value of the awards resulted in the recognition of a stock option benefit of $5,502,948 for the ninesix months ended ~~September~~June 30, 2017; and an expense of $2,478,062 for the three months ended September 30, 2017; included in general and administrative expenses in accompanying consolidated statements of operations. As of September 30, 2017, the fully vested outstanding options subject to re-measurement in accordance with the intrinsic value method had a weighted average remaining contractual term of 4.98 years.2020:

	11
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

~~Post-2013~~ Stock Option Awards

During the ~~nine~~three and six months ended ~~September~~June 30, ~~2017,~~2020, theCompany granted 248 and 399 stock options, respectively, to ~~purchase 2,783,231 shares of common stock,~~employees with an estimated grant date fair value of ~~$9,586,791.~~$10 and $9.69 per share, respectively. The ~~assumptions~~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 ~~estimate~~determine fair values. Categorization within the ~~grant date~~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 ~~awards issued~~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 ~~nine~~six months ended ~~September~~June 30, ~~2017 include:~~expected volatility based on historical stock prices ranging from 142% to 157%; an average expected term of 6.25 years; risk free rates based on U.S. Treasury instruments for the expected term of approximately 2.2%; and no dividend payments.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.

In January 2017, the Company modified certain terms of previously outstanding option awards to purchase 500,000 shares of common stock, including accelerating portions of the award to vest prior to the original terms and the forfeiture of unvested options to purchase 275,000 shares of common stock. As a result of this modification, the Company recognized approximately $368,000 of additional stock option expense during the nine months ended September 30, 2017.

~~The following table illustrates the Company’s stock option activity (inclusive of awards accounted for under the intrinsic value and fair value) for the following periods:~~

Options Weighted Average Price Intrinsic Value Weighted Average Remaining Contractual Term (Years)
Balance, December 31, 2015 7,281,250 $ 0.17 $ 0.17 6.75
Granted 4,130,000 1.53 – 9.75
Exercised (159,678 ) 0.13 1.42 –
Forfeited (504,014 ) 1.19 3.36 –
Balance, December 31, 2016 10,747,558 0.67 3.56 7.75
Granted 2,783,231 3.75 – 6.23
Exercised (25,000 ) 0.80 2.62 –
Forfeited (2,537,970 ) 2.30 1.06 –
Balance, September 30, 2017 10,967,819 1.47 2.80 6.81
Exercisable at September 30, 2017 7,274,946 0.42 3.00 5.65
Vested at September 30, 2017 7,607,170 $ 0.50 $ 2.97 5.79

For the nine months ended September 30, 2017 and September 30, 2016, the Company recognized total stock-based compensation of ($523,043) and $21,183,498, respectively, associated with all equity and equity-linked awards, inclusive of intrinsic value re-measurement.

For the three months ended September 30, 2017 and September 30, 2016, the Company recognized total stock-based compensation of $4,979,213 and $14,632,458, respectively, associated with all equity and equity-linked awards, inclusive of intrinsic value re-measurement.

As of ~~September~~June 30, ~~2017,~~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 ~~unrecognized compensation cost associated with options was approximately $8,518,000.~~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.

~~5. RELATED PARTY TRANSACTIONS~~

~~In January 2017,~~The Company offers software subscriptions to customers to access its virtual reality software platform. Additionally, the Company offers professional services for implementation and ~~as part~~consulting services. However, the operations and assets of ~~her agreement to join~~the technology segment are not managed by the Company’s ~~Board~~chief operating decision-maker as a separate reportable segment.

Services provided through First Cloud and eXp Silverline are in the emerging stages of ~~Directors, Ms. Laurie Hawkes was granted an option~~development as contributing segments and are not material to ~~purchase a~~the Company’s total revenue, total net income (loss) or total assets as of ~~350,000 shares of common stock from a significant stockholder at an exercise price of $4.22 per share.~~ June 30, 2020.

The Company ~~estimated~~aggregates the ~~grant~~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 ~~fair value of these options using a Black-Scholes model with the assumptions described in Footnote 4. The aggregate grant date fair value~~ of this ~~award was $1,333,501. During~~quarterly report, the ~~nine months ended September 30, 2017, the Company recognized compensation cost totaling $254,522 associated with this award.~~

~~Because the options were granted by a significant stockholder~~Company’s results of operations, liquidity and financial condition have not ~~the Company, upon the exercise of the options,~~been significantly impacted; however, the Company will ~~not receive any~~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 ~~proceeds~~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 ~~not~~ be ~~obligated~~able to ~~issue additional shares.~~

~~6. DEBT~~

~~Line of Credit~~

~~We have a $500,000 line of credit with a variable interest rate computed~~strategically focus on ~~a 360-day year. The line of credit agreement requires us to comply with various financial covenants~~creating consumer home-search technology for utilization by our independent agents and brokers, as well as ~~customary affirmative and negative covenants that restrict our ability~~continued services offerings to ~~among other things, incur debt and liens, make significant investments, dispose~~third party clients of ~~assets and make distributions without prior consent. The line~~Showcase.

Table of credit is secured by accounts receivable. The line of credit contains certain financial covenants, including a fixed charge coverage ratio and a tangible net worth. At September 30, 2017, we were in compliance with all of the financial covenants under the line of credit.Contents

~~As of September 30, 2017, we had no amount outstanding under the line of credit and have the entire amount remaining available of $500,000.~~

~~Item 2.~~

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 ~~unaudited~~ condensed consolidated financial statements and related notes ~~appearing~~included elsewhere inwithin this report. ~~This discussion contains~~Management’s Discussion and Analysis of Financial Conditions and Results of Operations contain forward-looking ~~statements based upon current expectations that involve numerous risks, uncertainties and assumptions.~~statements. Our actual results could differ materially from those anticipated in these forward-looking ~~statements for many reasons. Those reasons include, without limitation, those described at the beginning~~statements. See “Forward-Looking Statements” and “Part II – Item 1A. – Risk Factors” of this ~~report under “Statement regarding forward-looking statements,” as well as those that may be set forth elsewhere~~Quarterly Report and “Item 1 A. – Risk Factors” in this report. Except as otherwise required by law, we do not intend to update any information contained in these forward-looking statements. The following discussion also addresses matters we consider important for an understanding of our ~~financial position as of September 30, 2017, and the results of operations~~Annual Report on Form 10- K for the ~~three and nine months ended September 30, 2017, which may not be indicative of our future results through the~~fiscal year ended December 31, ~~2017 or beyond.~~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

~~OVERVIEW~~MARKET CONDITIONS AND INDUSTRY TRENDS

~~eXp World Holdings, Inc., (the “Company”, “eXp”, “we”, “us”, “our”),~~Our business is ~~a cloud-based residential real estate brokerage. Our operations are focused~~dependent on the ~~use~~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 ~~cloud-based technologies~~economic growth, demand typically increases resulting in ~~order to grow an international brokerage without~~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 ~~burden~~housing markets for which we operate.

In December 2019, a novel strain of ~~physical bricks~~coronavirus, COVID-19, was identified in Wuhan, China. This new coronavirus has caused a global health emergency and ~~mortar or redundant staffing costs. Our technology focus includes~~was declared a pandemic by the ~~development of a proprietary cloud based real estate transactional platform.~~

~~Continued Accelerated Growth~~ – During the nine-month period ended September 30, 2017, we increased our net real estate brokerage agent and broker base by 104%, from approximately 2,400 as of December 31, 2016 to over 4,900. These increases were incurredWorld Health Organization in ~~both new and existing geographical markets and contributed to net revenue increases of 203% and 205% as compared~~March 2020. Risks relating to the ~~nine months and three months ended September 30, 2016, respectively.~~

~~RECENT BUSINESS DEVELOPMENTS~~

~~Advancements during~~spread of coronavirus pushed the ~~three months ended September 30, 2017 centered on~~Federal Reserve to cut interest rates as part of an emergency action to protect the addition of scaling the corporate operations of the Company to match current and ongoing growth of the business. During this period the Company hired a new chief operating officer for our eXp Realty division who most recently held leadership positions at both Realty Executives and HomeSmart International. This new role will focus on cross collaboration efforts across the entire organization in addition to working with our agent advisory council. We also hired a new vice president of employee experience. As the organization continues to grow ineconomy from its impact. In an effort to ~~support our rapidly growing agent base, we believe it is important~~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 ~~continue building our culture in alignment with long term goals~~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 ~~Company.~~second quarter, businesses slowly re-opened with certain restrictions and social distance practices.

~~On September 27, 2017,~~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 ~~and Alan Goldman, Chief Financial Officer, entered into an employment agreement memorializing~~for the ~~terms of his employment as previously disclosed.~~

As detailed in a Current Report on Form 8-K filed on August 2, 2017, on July 27, 2017 we entered into a separation agreement and release with Mr. Russell Cofano our former President and General Counsel who resigned on July 28, 2017. A summary ofsecond quarter has been less significant than anticipated. We believe that ~~agreement~~once COVID-19 is further contained ~~in Form 8-K, and~~ the ~~agreement is filed as Exhibit 10.1 to the Form 8-K.~~

The Company launched eXp Enterprise (“Enterprise”) earlier this year. Enterprise is a new proprietary platform that manages all of the Company’s critical processes and information, including agent details, transactions, commissions and revenue share. It allows for a flow of real time information to eXp agents, while also providing a singular platform for eXp staff to perform a variety of back office functions in a scalable and efficient manner. The platform has already led to improvements in the areas of agent onboarding, transaction processing, and financial oversight. This platformeconomy will lend itself to constantly enhance and build out capabilities that meet the needs of company stakeholders into the future. To provide additional support to eXp agents in 44 states, the Company redefined the role of the State Administrative Broker and created a new role: Regional Development Leader (“RDL”). The RDL role is designed to deal with the multitude of request from agents considering moving to eXp, allowing the State Administrative Broker to work more closely with a growing base of current agents.

During the nine months ended September 30, 2017, the Company also created a variety of new marketing and communications collateral, allowing stakeholders to have more transparency into the organization while providing more ways to provide feedback. Collateral provided to agents included tools to assist with social media, public relations, and a variety of internal communication pieces to help agents be more productive and in-the-know.

~~The Company expects to~~ continue to ~~add staff~~rebound depending on the continued pace, rate, and ~~make strategic additions to its executive team~~effectiveness of lifting public health restrictions on businesses and individuals and how quickly people become comfortable engaging in ~~future periods.~~public activities.

~~MARKET CONDITIONS AND TRENDS~~

According to the National Association of ~~REALTORS~~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 ~~sale transactions~~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 ~~single family~~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 ~~volume was projected~~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 ~~increase 10.4%~~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 ~~third quarter~~NAR forecast.

Table of ~~2017 as compared~~Contents

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 ~~same period~~of the first half of 2020. However, depending on the continued course of the COVID-19 pandemic, specifically in ~~2016~~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 ~~both an increase~~existing homes for sale in the ~~number~~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 ~~sale transactions, combined with average home sale price growth (preliminary).~~ 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 ~~has continued~~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 ~~composite housing affordability index was~~ ~~149.9 for August (preliminary) 2017 and163.7 for 2016.~~ ~~The housing affordability index remains significantly higher than the average of 127 for the period from 1970 through 2016.~~

~~The~~ favorable housing affordability index is due ~~in part~~ to favorable mortgage rate conditions. ~~Mortgage~~However, despite a cut in rates by the Federal Reserve in an effort to stabilize the economy, unemployment increased ~~approximately 60 basis points from September 30, 2016~~sharply throughout the second quarter of 2020. It is still too early to ~~September 30, 2017, but continue to be at historically low levels. While any increase to mortgage rates can adversely impact~~predict the extent of the effects the ongoing COVID-19 pandemic will have on housing ~~affordability, we believe that rising wages, improving consumer confidence and continued low inventory levels will result in favorable demand conditions and existing home sale volume growth.~~affordability.

Home Sales Transactions

According to the Federal Housing Finance Agency, mortgage rates on commitments for 30-year, conventional, fixed-rate first mortgages averaged 3.88% for 2016 and the rate rose to 4.19% in August 2017. To the extent that mortgage rates increase further, consumers continue to have financing alternatives such as adjustable rate mortgages or shorter term mortgages which can be utilized to obtain a mortgage rate that is lower than a comparable 30-year fixed-rate mortgage.

Partially offsetting the positive impact of low mortgage rates are low housing inventory levels. According to NAR, the inventory of existing homes for sale in the U.S. is 1.90 million (preliminary) and 2.03 million at the end of September 2017 and September 2016, respectively. The July 2017 inventory represents a national average supply of 4.2 months at the current home sales pace which is below the 6.1 months 25-year average.

~~Additional factors offsetting the positive impact of low mortgage rates include the ongoing rise in home prices,less than favorable mortgage underwriting standards and some would-be home sellers having limited or negative equity in homes.~~ Mortgage credit conditions tightened significantly during the housing downturn, with banks limiting credit availability to more creditworthy borrowers and requiring larger down payments, stricter appraisal standards, and more extensive mortgage documentation. Although mortgage credit conditions appear to be easing, mortgages remain less available to some borrowers and it frequently takes longer to close a residential transaction due to current mortgage and underwriting requirements.

The Company continues to monitor developments in our regulatory environment. Currently, federal officials are discussing various potential changes to laws and regulations that could impact the Company’s businesses, including tax reform that could affect the mortgage interest deductions and state and local tax deductions. Changes in these tax incentives for homeownership, and more generally in the regulatory environment in which the Company and our customers operate could impact the volume of mortgage originations in the United States and the Company’s competitive position and results of operations. At this time, the nature and impact of any future changes is unknown.

~~Existing Home Sales~~

~~According to NAR, for the year ended December 31, 2016, existing home sale transactions increased to 5.5 million~~.~~In the first nine months of 2017,~~ NAR, existing home sale transactions ~~increased 4.2~~for June 2020 (preliminary) decreased to 4.7 million ~~year to date, but decreased 4.3%~~ compared to 5.3 million for June 2019. For the ~~same period of 2016.During the same period,~~six months ended June 30, 2020, eXp Realty settled home ~~sale transactions increased 223% compared to the same period~~sales units were 81,535 (whole units) resulting in ~~2016.~~sales volume of $23.9 billion. Our home sale transactions ~~were impacted by~~growth was directly related to the growth of our agent base, which ~~grew~~increased 54% to 31,091 agents from ~~approximately 2,400 at~~20,162 agents the ~~end~~prior comparative period. While home sales transactions remained strong during the second quarter of ~~2016~~2020, home sales transactions are expected to ~~over 4,900~~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 ~~the third quarter~~2020. The rate of ~~2017.~~

~~As of their most recent releases, NAR is forecasting existing home sales to increase 3% in 2017 and another 2% in 2018.~~

~~Existing Home Sale Price~~

~~We believe primary drivers to the long-term demand for housing and the~~ growth of our ~~company~~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 ~~demand are housing affordability,~~currently exist in the ~~general economic health~~physical brick and mortar world. In the first quarter of 2020, VirBELA began offering virtual events in conjunction with Event Farm. In the ~~U.S. economy, demographic trends such as population growth,~~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 ~~household formation, mortgage rate levels~~demand. Lastly, we expect to continue to service existing and ~~mortgage availability,job growth,~~new business-to-business enterprise level contracts in the ~~inherent benefits of owning a home versus renting~~coming year.

Affiliated Services

Recent acquisitions and ~~the influence of local housing dynamics of supply versus demand.~~ ~~As of September 30, 2017, we believe that these factors are generally favorable.However, significant changes~~partnerships have allowed us to ~~one or~~begin offering to customers more ~~of these drivers could cause the demand for housing~~products and services complimentary to ~~slow, negatively affecting all~~our real estate brokerage ~~firms, including~~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.~~ ~~Regardless of whether the housing market continues to grow or slows, eXp~~ Realty ~~expects to adhere to its low-cost, high-engagement model, affording a growing number of~~ agents and brokers ~~increased income~~ and ~~ownership opportunities while offering a scalable solution~~the on-going and fluctuating government implemented restrictions due to ~~brokerage owners looking to survive and thrive in a wide range~~the COVID-19 pandemic.

Table of ~~economic conditions.~~Contents

Results of Operations

~~Comparison of the~~ Three Months Ended ~~September~~June 30, ~~2017~~2020 compared to the Three Months Ended ~~September~~June 30, ~~2016~~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

~~Revenues~~

~~During~~Our total revenues were $353.5 million for the ~~three-month~~three months ended June 30, 2020 compared to $266.7 million for the same period ~~ended September 30, 2017 net~~in 2019, an increase of $86.8 million, or 33%. Total revenues increased ~~$32.35 million~~for the second quarter of 2020 primarily as a result of an increase in real estate brokerage commissions, which is directly attributable to ~~$48.11 million as~~increases in our agent count and closed transactions compared to the ~~three-month~~same period in 2019. Additionally, the average home sale price for eXp closed transactions increased 3.8% to $297 during the three months ended ~~September~~June 30, ~~2016 when we generated $15.76 million. The increase as~~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 ~~prior~~same period isin 2019, an increase of $74.5 million, or 30%. Commission and other agent related

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costs increased primarily as a ~~direct~~ result of a higher volume of settled real estate transactions related to the increase in our ~~sales~~ agent ~~base by over 173% to over 4,900.~~base.

~~Operating Expenses~~

Three Months Ended
September 30,

2017 2016 Change

Operating expenses:
Cost of revenues $ 43,291,473 $ 13,294,452 $ 29,997,021
General and administrative 11,987,268 16,810,567 (4,823,299 )
Professional fees 223,811 140,804 83,007
Sales and marketing 380,452 158,968 221,484
Total operating expenses $ 55,883,004 $ 30,404,791 $ 25,478,213

~~Cost of revenues includes costs related to sales agent commissions~~General and revenue sharing. These costs are highly correlated with recognized net revenues. As such, the increase of $30.0 million in the current three-month period ended September 30, 2017 as compared to the three-month period ended September 30, 2016 was driven by the higher amount of net revenues and agent commission rates.

Administrative Expense

General and administrative ~~includes~~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, ~~dues, operating leases, utilities, travel~~ and other general overhead expenses. ~~The decrease~~General and administrative expenses increased primarily as a result of ~~$4.82~~an increase of $1.7 million in ~~general~~compensation related expenses including salaries, employee benefits, and ~~administrative costs~~payroll taxes and processing. These increases are a result of the Company’s increase in ~~the three-month period ended September 30, 2017 as~~employee and agent count compared to the ~~three-month~~prior period ~~ended September 30, 2016~~in 2019. This was ~~driven primarily~~offset by a decrease in travel expenses, $0.7 million due travel restrictions as a result of the ~~increase in compensation of $2.57~~COVID-19 pandemic.

Sales and Marketing

Sales and marketing expenses were relatively consistent at $1 million and $1.1 million for the ~~decrease in stock options and stock compensation expense of $7.90 million.~~

~~Professional fees include costs related to legal, accounting and other consultants. Costs increased $0.08 million during the three-month period~~three months ended ~~September~~June 30, ~~2017 as~~2020 compared to the ~~three-month period~~same periods in 2019.

Other Income (Expense)

There were no significant changes in other income (expense) for the three months ended ~~September~~June 30, ~~2016. Professional fees were higher due to higher audit costs as~~2020 compared to the same period ~~last year~~ in ~~addition~~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)

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 ~~non-recurring~~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 ~~specifically as it relates~~related to ~~performing diligence~~the increase in our agent base.

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General and ~~contract review~~Administrative Expense

General and ~~preparation~~administrative expenses were $52.0 million for the six months ended June 30, 2020 compared to ~~support~~$42.9 million for the ~~growth~~same period in 2019, an increase of ~~new agent~~$9.1 million or 21%. General and ~~broker bases as well as entry into new geographical markets.~~

~~Sales and marketing includes~~administrative expenses include costs related to ~~lead capture, digital~~wages, including stock compensation, and ~~print media,~~other general overhead expenses. General and ~~trade shows, in addition to other promotional materials. The cost~~administrative expenses increased primarily as a result of an increase of ~~approximately $0.22~~$6.7 million ~~was due to increased cost~~ in ~~lead capture~~compensation related expenses including salaries, employee benefits, and ~~other internet marketing related to our growth in agent~~payroll taxes and ~~broker headcount for the three-month period ended September 30, 2017 as compared to the three-month period ended September 30, 2016.~~

~~Results of Operations~~

~~Comparison of the Nine Months Ended September 30, 2017 to the Nine Months Ended September 30, 2016~~

~~Revenues~~

During the nine-month period ended September 30, 2017 net revenues increased $73.51 million to $109.69 million as compared to the nine-month period ended September 30, 2016 when we generated $36.18 million. The increase as compared to the prior period isprocessing. These increases are a direct result of the ~~increases~~Company’s increase in ~~sales~~employee and agent ~~base by over 173% to over 4,900.~~

~~Operating Expenses~~

Nine Months Ended
September 30,

2017 2016 Change

Operating expenses:
Cost of revenues $ 97,620,066 $ 30,868,564 $ 66,751,502
General and administrative 14,697,040 25,801,423 (11,104,383 )
Professional fees 906,654 414,197 492,457
Sales and marketing 1,030,497 358,396 672,101
Total operating expenses $ 114,254,257 $ 57,442,580 $ 56,811,677

~~Cost~~count from the prior period. Additionally, $1.4 million of ~~revenues includes costs related to sales agent commissions and revenue sharing. These costs are highly correlated with recognized net revenues. As such,~~ the increase of $66.75 million in the current nine-month period ended September 30, 2017 as compared to the nine-month period ended September 30, 2016 was driven by the higher amount of net revenues and agent commission rates.

~~General and administrative includes costs related to wages, stock compensation, dues, operating leases, utilities, travel,~~is from professional fees including accounting, legal, and other ~~general overhead expenses. The decrease of $11.10~~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 ~~in general and administrative costs in~~for the ~~nine-month period~~six months ended ~~September~~June 30, 2017 as compared to the nine-month period ended September 30, 2016 was driven primarily by the increase in compensation of $5.81 million and the decrease in stock options and stock compensation expense of $ 18.47 million.

Professional fees include costs related to legal, accounting, and other consultants. Costs increased $0.49 million during the nine-month period ended September 30, 2017 as compared to the nine-month period ended September 30, 2016. Professional fees were higher due to higher audit costs as2020 compared to the same period ~~last year~~ in ~~addition to~~2019.

Other Income (Expense)

There were no significant changes in other non-recurring transactions, specifically as it relates to performing diligence and contract review and preparation to support the growth of new agent and broker bases as well as entry to new geographical markets.

Sales and marketing includes costs related to lead capture, digital and print media, and trade shows, in addition to other promotional materials. The cost increase of approximately $0.67 million was due to increased cost in lead capture and other internet marketing related to our growth in agent and broker headcountincome (expense) for the ~~nine-month period~~six months ended ~~September~~June 30, ~~2017 as~~2020 compared to the ~~nine-month~~same period in 2019.

Income Tax Benefit (Expense)

There were no significant changes in income tax expenses for the six months ended ~~September~~June 30, ~~2016.~~

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

September 30, December 31,
2017 2016

Current assets $ 12,619,392 $ 5,565,642
Current liabilities (9,291,701 ) (3,577,021 )
Net working capital $ 3,327,691 $ 1,988,621

Our ~~working capital as~~primary sources of September 30, 2017 increased as compared to December 31, 2016. Our increased sales volumes, resulting in increased receivables and restricted cash were off-set by corresponding increases in accrued expenses related to commissions payable.

~~The following table presents~~liquidity are our cash and cash equivalents on hand and cash flows ~~for the nine months ended September 30, 2017 and 2016:~~

Nine Months ended
September 30,
2017 2016 Change

Cash provided by operating activities $ 2,396,701 $ 637,881 $ 1,758,820
Cash used in investment activities (849,764 ) (281,203 ) (568,561 )
Cash provided by financing activities 122,773 – 122,773

~~Net cash provided by operating activities for the nine months ended September 30, 2017 primarily resulted~~generated from ~~the increased volume in~~ our sales transactions and higher commissions receivable. As a result of the increased sales volume, we also incurred higher accrued expenses, specifically commissions payable. If we are successful in our growth plans, which would result in further increases in sales volumes, we expectbusiness operations. Our ability to generate ~~positive operating~~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.

During the nine months ended September 30, 2017, our investing activities consisted of additional expenditures related to the on-going development of our internal use software. As we continue to develop and refine our cloud-based platforms, we expect to continue to use our existing cash resources on similar expenditures for the next twelve months.

We generated approximately $0.12 million in cash flows from financing activities primarily related to the completion of our December 31, 2016 private placement and the exercise of 25,000 options to purchase 25,000 shares of common stock.

Our future capital requirements ~~will~~ depend on many factors, including our level of investment in technology and, our rate of growth into new markets. Our capital requirements may 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. ~~We anticipate that between~~Additionally, as the impact of the COVID-19 on the economy and operations evolves, we will continuously assess our ~~current cash position and cash flow from ongoing operations we have~~liquidity needs. In the ~~necessary resources to continue operating our business over the next 12 months. In order to support and achieve our future growth plans, however,~~event of a sustained market deterioration, we may need or seek advantageously to obtain additional funding through equity or debt financing.

~~During the period, we secured a line of credit which provides that the Company may borrow up to $500,000.~~ We currently ~~have no borrowings against the line of credit facility or~~do not hold any ~~other term loan~~ bank debt. ~~In the event that additional financing is required in the future, we may not be able to raise it on terms acceptable to us or at all.~~ If we are unable to raise additional capital when desired, our business, ~~and~~ results of operations, ~~will~~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

~~There has been no change~~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 ~~critical~~preparation of the financial statements, in determining accounting estimates ~~as previously disclosed~~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, ~~2016.~~

~~Non-GAAP Measurements~~

As2019, which provides a description of ~~September 30, 2017 we have outstanding options~~our critical accounting policies. There were no changes to purchase approximately 6.0 million shares of common stock at a weighted average exercise price of $0.14 per share, measured using the intrinsic value method. In accordance with US GAAP and Rules and Regulationscritical accounting policies or estimates as promulgated by the Securities and Exchange Commission (“SEC”), we were unable to retroactively apply the fair value method to awards previously outstanding under the intrinsic value method. In accordance with the intrinsic value method, we are required to re-measure the intrinsic value at each reporting date through the date of exercise or other settlement, while recognizing the applicable changes in the intrinsic value as a component of operations in the accompanying consolidated statements of operations.

As a public company, we value stock options at their grant date fair value, and recognize the associated compensation cost systematically over the requisite service or performance period, with no consideration given to market changes in the underlying equity instruments or other assumptions used for valuation purposes on the grant date. If we had the ability to reasonably estimate the fair value of options issued at our inception as a private company, all associated expenses would have been recognized in prior periods as the awards vested without giving effect to re-measurement through the date of exercise or expiration.

The SEC has adopted rules to regulate the use in filings with the SEC, and in other public disclosures of financial measures, that are not calculated in accordance with US GAAP, such as EBITDA, omission of non-recurring or infrequent items, and other omissions of non-cash items whether recurring or non-recurring. These measures are derived from methodologies other than in accordance with US GAAP.

We believe that the omission of non-cash income or expense based on fluctuations in the Company’s stock price, which is significantly outside of its control, is more reflective of the key factors that affect our operating performance. Since the equity-linked instruments were issued earlyreflected in our ~~existence,~~2019 Annual Report. For additional information regarding our critical accounting policies and ~~there are no further performance requirements associated with earning~~estimates, see the ~~awards, we believe that omitting these fluctuations provides a useful supplemental measure~~Critical Accounting Policies and Estimates section of MD&A included in ~~evaluating the performance of~~ our operations and provides better transparency into our results of operations. Our management does not evaluate the Company’s performance, either financial or operational, inclusive of fluctuations in the intrinsic value of the awards issued prior becoming a public company.2019 Annual Report.

Eliminating non-cash fluctuations for awards fully earned in prior periods, has limitations as an analytical tool, and you should not consider these omissions either in isolation or as a substitute for analyzing our results as reported under US GAAP. Some of these limitations are:

~~this measure does not reflect changes in, or cash requirements for, our working capital needs;~~

	·	~~this measure does not reflect the further issuance of equity and equity-linked instruments based on grant date fair values with continuing performance and service requirements;~~
	·	~~this measure does not reflect historical cash expenditures or future requirements for expenditures or contractual commitments.~~
	·	~~the recognition of significant intrinsic value fluctuations may result in the recognition of net income or losses that are not correlated to our business operations.~~

~~The following table represents the impacts of the intrinsic value variances on our results of operations for the periods presented:~~

Nine Months Ended
September 30,
2017 2016

Net loss $ (4,616,660 ) $ (21,272,872 )
Adjustment for change in intrinsic value 5,502,948 (20,456,078 )
Adjusted net loss $ (10,119,608 ) $ (816,794 )

Three Months Ended
September 30,
2017 2016
Net loss $ (7,780,570 ) $ (14,647,098 )
Adjustment for change in intrinsic value (2,478,062 ) (14,088,341 )
Adjusted net loss $ (5,302,508 ) $ (558,757 )

OFF-BALANCE SHEET ARRANGEMENTS

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

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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.

AsInterest Rate Risk

The Company holds funds in a ~~“smaller reporting company”,~~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 ~~are~~do not ~~required~~have a formal hedging program with respect to ~~provide the information required by this Item.~~foreign currency.

Item 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES~~

~~We maintain~~Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as ~~defined in~~of June 30, 2020 pursuant to Rule ~~13a-15(e) and Rule 15d-15(e) promulgated~~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 usa company in the reports that ~~we file~~it files or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of September 30, 2017, the end of the period covered by this report we carried out an evaluation of the effectiveness of our disclosure controls and procedures with the participation of our Chief Executive Officer and Chief Financial Officer. In making this assessment, management used the criteria for effective internal control over financial reporting described in the “Internal Control-Integrated Framework” (2013) set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in the reports we file or submitsubmits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and ~~forms,~~forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that ~~such~~ information ~~was not~~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, ~~to allow timely decisions regarding required disclosure.~~

~~The determination that our disclosure controls and procedures were not effective was based on~~conducted an evaluation of the ~~following material weaknesses in~~effectiveness of our internal control over financial reporting ~~which were~~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 ~~described in detail in~~audit of our ~~Annual Report on Form 10-K~~consolidated financial statements for the year ended December 31, ~~2016,~~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 ~~summarized below:~~program change-management over information technology (“IT”) systems utilized by the

~~Failure to properly recognize and measure the fair value of equity and equity-linked awards issued to employees and non-employees.~~

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~~Insufficient corporate governance policies.~~

Despite the addition of two new independent directors and an independent Audit Committee during 2016, at December 31, 2016, our level of independent director oversight still posed risk of management override and potential fraud.

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.

~~During 2017~~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 ~~September 30, we continued our remediation activities related~~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 ~~summarized above, including~~are remediated, such that these controls are designed, implemented, and operating effectively in addition to implementing new monitoring controls to help mitigate the ~~following:~~

~~In January 2017, we appointed Laurie Hawkes~~risks associated with the ineffective GITCs. The remediation actions include: (i) establishing an internal audit team to support the ~~Board as~~Company’s entire control environment and its ongoing internal controls development and monitoring; (ii) creating and filling an ~~additional independent director, resulting~~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 ~~a majority~~IT systems; (vi) performing an in-depth analysis of ~~independent directors for~~who should have access to perform key functions within the ~~first time on the Board. However, Ms. Hawkes resigned as a director, effective August 9, 2017.~~

~~In March 2017, we constituted a Compensation Committee which is now comprised of two independent directors. Each of our standing committees, including the Audit Committee, Governance Committee~~system that impact financial reporting and ~~Compensation Committee, has been specifically charged with certain oversight functions. During 2017 to date, our Board committees have been active.~~

~~CHANGES IN INTERNAL CONTROL~~

~~Outside~~redesigning aspects of the ~~remediation activities described~~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 ~~under Controls and Procedures – Evaluation of Disclosure Controls and Procedures,~~to remediate the previously reported material weaknesses, there have been no changes in our internal control over financial reporting ~~(as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act)~~ during the period ~~ended September 30, 2017~~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.

Table of Contents

PART II – OTHER INFORMATION

~~Item 1.~~

Item 1.LEGAL PROCEEDINGS

From time to time, we are involved in ~~lawsuits, claims, investigations and proceedings~~ordinary routine litigation incidental to the conduct of our business, including matters that ~~arise in the ordinary course of business.~~ may be certified as class or collective actions.

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

~~Item 1A.~~

Item 1A. RISK FACTORS

~~As a “smaller reporting company”,~~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 ~~required~~limited to, ~~provide~~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 ~~information required by this Item.~~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.~~

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

Issuer Purchases of Equity Securities

The following table provides ~~a discussion~~information about repurchases of our ~~recent sales of unregistered securities that have not been previously disclosed:~~

~~During the nine months ended September 30, 2017, the Company issued 25,000 shares of restricted~~ common stock ~~upon~~through the ~~exercise of stock options, a connection with which it received cash consideration totaling $20,000.~~

~~During the nine months~~quarter ended ~~September~~June 30, ~~2017, the Company issued 1,655,590 shares of restricted common stock for services totaling $7,076,363.~~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

All of the securities issued to employees and consultants were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act. In addition, all service providers receiving equity as compensation pursuant to the 2015 Agent Equity Program have made representations to the Company, including, without limitation, that it is knowledgeable, sophisticated and experienced in making investment decisions of this kind, or has consulted with its legal and financial advisers regarding the suitability of receiving equity as compensation; understands the restricted nature of the securities issued; and (iii) has had adequate access to information about the Company.

(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.~~

Item 3.DEFAULTS UPON SENIOR SECURITIES

None.

Table of Contents

~~Item 4.~~

Item 4.MINE SAFETY DISCLOSURES

Not applicable.

~~Item 5.~~

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

~~Not applicable.~~

~~Item 6.~~

~~EXHIBITS~~

Exhibit ~~Number~~		Exhibit ~~Description~~
Number	Description
~~3.1~~
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference from ~~our Registration~~Appendix A to the Company’s Definitive Information Statement ~~on Form S-1,~~ filed on ~~July 7, 2010)~~October 9, 2018)

3.2	Certificate of ~~Amendment of~~Correction to the Amended and Restated Certificate of Incorporation ~~dated effective September 9, 2013~~ (incorporated by reference from ~~our~~Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on ~~September 9, 2013)~~March 24, 2020

3.3	~~Certificate of Amendment of Certificate of Incorporation~~

~~3.4~~	Amended and Restated Bylaws (incorporated by reference from ~~our Registration Statement on Form S-1, filed on July 7, 2010)~~

~~10.1~~	~~First Amendment~~Appendix B to ~~eXp Realty International Corporation 2015 Equity Incentive Plan (incorporated by reference to~~the Company’s Definitive Information Statement on Schedule 14C filed on October ~~6, 2017)~~9, 2018.

~~10.2~~ 10.1	~~eXp Realty International Corporation 2015~~2020 Independent Contractor Agreement and Agent Equity ~~Program~~ Enrollment Form ~~(incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on April 30, 2015)~~

~~10.3~~ 31.1	~~Employment Agreement of Alan Goldman, dated September 27, 2017~~

~~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)

Table of Contents

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: ~~November 14, 2017~~August 5, 2020		/s/ ~~Alan Goldman~~Jeff Whiteside
	~~Alan Goldman~~	Jeff Whiteside
		Chief Financial Officer (Principal Financial Officer)

~~Delaware~~	~~000-533000~~	~~98-0681092~~
Delaware		98-0681092
(State or other jurisdiction	~~(Commission~~	(IRS Employer
of incorporation)	~~File Number)~~	Identification No.)


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


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

		~~Page~~
				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	14	18
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	20	28
Item 4.		Controls and Procedures	20	28

	PART II –		OTHER INFORMATION
Item 1.		Legal Proceedings	22	30
Item 1A.		Risk Factors		30
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	22	30
Item 3.		Defaults Upon Senior Securities	22	30
Item 4.		Mine Safety Disclosures	22	31
Item 5.		Other information	22	31
Item 6.	~~Exhibits~~	23 Exhibits		31

	September 30,			December 31,
	2017			2016

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	3,347,910		$	1,684,608
Restricted cash		1,134,109			481,704
Accounts receivable, net of allowance $177,563 and $133,845, respectively		7,549,469			3,015,767
Prepaids and other assets		587,904			383,563

TOTAL CURRENT ASSETS		12,619,392			5,565,642

OTHER ASSETS
Fixed assets, net		1,298,215			538,405

TOTAL OTHER ASSETS		1,298,215			538,405

TOTAL ASSETS	$	13,917,607		$	6,104,047


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	412,439		$	317,420
Customer deposits		1,134,109			481,704
Accrued expenses		7,745,153			2,742,119
Notes payable		–			35,778

TOTAL CURRENT LIABILITIES		9,291,701			3,577,021

Commitments and contingencies		–			–

STOCKHOLDERS' EQUITY
Common Stock, $0.00001 par value 220,000,000 shares authorized; 53,995,962 shares and 52,316,679 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		540			523
Additional paid-in capital		41,238,713			34,526,859
Accumulated deficit		(36,621,221	)		(32,004,561	)
Accumulated other comprehensive income (loss)		7,874			4,205

TOTAL STOCKHOLDERS' EQUITY		4,625,906			2,527,026

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	13,917,607		$	6,104,047

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016

Net revenues	$	48,105,769		$	15,756,956		$	109,691,317		$	36,181,796

Operating expenses
Cost of revenues		43,291,473			13,294,452			97,620,066			30,868,564
General and administrative		11,987,268			16,810,567			14,697,040			25,801,423
Professional fees		223,811			140,804			906,654			414,197
Sales and marketing		380,452			158,968			1,030,497			358,396

Total expenses		55,883,004			30,404,791			114,254,257			57,442,580

Net loss from operations		(7,777,235	)		(14,647,835	)		(4,562,940	)		(21,260,784	)

Other income and (expenses)
Other income		–			(432	)		–			14
Interest expense		(58	)		–			(2,105	)		–

Total other income and (expenses)		(58	)		(432	)		(2,105	)		14

Loss from before income tax expense		(7,777,293	)		(14,648,267	)		(4,565,045	)		(21,260,770	)

Income tax expense		(3,277	)		(7,444	)		(51,615	)		(33,015	)

Net loss		(7,780,570	)		(14,655,711	)		(4,616,660	)		(21,293,785	)

Net loss attributable to non-controlling interest in subsidiary		–			8,613			–			20,913

Net loss attributable to common shareholders	$	(7,750,570	)	$	(14,647,098	)	$	(4,616,660	)	$	(21,272,872	)

Net loss per share attributable to common shareholders
Basic from continuing operations	$	(0.15	)	$	(0.29	)	$	(0.09	)	$	(0.42	)
Diluted from continuing operations	$	(0.15	)	$	(0.29	)	$	(0.09	)	$	(0.42	)

Weighted average shares outstanding
Basic		53,335,822			51,225,817			52,837,134			50,929,102
Diluted		53,335,822			51,225,817			52,837,134			50,929,102

	Shares			Weighted Average Grant Date Fair Value
Balance, December 31, 2015		1,293,056		$	0.45
Granted		2,452,965			3.65
Issued		(503,922	)		4.30
Forfeited		(688,142	)		0.62
Balance, December 31, 2016		2,553,957			2.82
Granted		1,719,744			3.27
Issued		(383,492	)		2.57
Forfeited		(313,875	)		2.24
Balance, September 30, 2017		3,576,334		$	2.99

	Options			Weighted Average Price		Intrinsic Value		Weighted Average Remaining Contractual Term (Years)
Balance, December 31, 2015		7,281,250		$	0.17	$	0.17		6.75
Granted		4,130,000			1.53		–		9.75
Exercised		(159,678	)		0.13		1.42		–
Forfeited		(504,014	)		1.19		3.36		–
Balance, December 31, 2016		10,747,558			0.67		3.56		7.75
Granted		2,783,231			3.75		–		6.23
Exercised		(25,000	)		0.80		2.62		–
Forfeited		(2,537,970	)		2.30		1.06		–
Balance, September 30, 2017		10,967,819			1.47		2.80		6.81
Exercisable at September 30, 2017		7,274,946			0.42		3.00		5.65
Vested at September 30, 2017		7,607,170		$	0.50	$	2.97		5.79

	Three Months Ended September 30,
	2017		2016		Change

Operating expenses:
Cost of revenues	$	43,291,473	$	13,294,452	$	29,997,021
General and administrative		11,987,268		16,810,567		(4,823,299	)
Professional fees		223,811		140,804		83,007
Sales and marketing		380,452		158,968		221,484
Total operating expenses	$	55,883,004	$	30,404,791	$	25,478,213

	Nine Months Ended September 30,
	2017		2016		Change

Operating expenses:
Cost of revenues	$	97,620,066	$	30,868,564	$	66,751,502
General and administrative		14,697,040		25,801,423		(11,104,383	)
Professional fees		906,654		414,197		492,457
Sales and marketing		1,030,497		358,396		672,101
Total operating expenses	$	114,254,257	$	57,442,580	$	56,811,677