Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | EXP World Holdings, Inc. | ||
Entity Central Index Key | 1,495,932 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 21,321,475 | ||
Entity Common Stock, Shares Outstanding | 52,372,181 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1,684,608 | $ 571,814 |
Restricted cash | 481,704 | 148,613 |
Accounts receivable, net of allowance $133,845 and $2,342, respectively | 3,015,767 | 341,643 |
Prepaids and other assets | 383,563 | 84,451 |
TOTAL CURRENT ASSETS | 5,565,642 | 1,146,521 |
OTHER ASSETS | ||
Fixed assets, net | 538,405 | 110,195 |
TOTAL OTHER ASSETS | 538,405 | 110,195 |
TOTAL ASSETS | 6,104,047 | 1,256,716 |
CURRENT LIABILITIES | ||
Accounts payable | 317,420 | 89,984 |
Customer deposits | 481,704 | 148,613 |
Accrued expenses | 2,742,119 | 425,613 |
Notes payable | 35,778 | 0 |
TOTAL CURRENT LIABILITIES | 3,577,021 | 664,210 |
Commitments and contingencies | ||
STOCKHOLDERS' EQUITY | ||
Common Stock, $0.00001 par value 220,000,000 shares authorized; 52,316,679 shares and 50,168,195 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively | 523 | 502 |
Additional paid-in capital | 34,526,859 | 6,611,781 |
Accumulated deficit | (32,004,561) | (5,991,088) |
Accumulated other comprehensive (loss) | 4,205 | (9,113) |
Total eXp World Holdings, Inc. stockholders' equity | 2,527,026 | 612,082 |
Non-controlling interests in subsidiary | 0 | (19,576) |
TOTAL STOCKHOLDERS' EQUITY | 2,527,026 | 592,506 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 6,104,047 | $ 1,256,716 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 133,845 | $ 2,342 |
Common stock shares authorized | 220,000,000 | 220,000,000 |
Common stock par value | $ .00001 | $ 0.00001 |
Common stock shares issued | 52,316,679 | 50,168,195 |
Common stock shares outstanding | 52,316,679 | 50,168,195 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||
Net Revenues | $ 54,179,511 | $ 22,866,787 |
Operating expenses | ||
Cost of revenues | 46,726,533 | 19,456,409 |
General and administrative | 32,237,501 | 7,257,961 |
Professional fees | 645,024 | 439,763 |
Sales and marketing | 570,844 | 211,456 |
Total expenses | 80,179,902 | 27,365,589 |
Net income (loss) from operations | (26,000,391) | (4,498,802) |
Other income and (expenses) | ||
Other income | 15 | 23 |
Interest expense | (370) | (1,127) |
Total other income and (expenses) | (355) | (1,104) |
Income (Loss) before income tax expense | (26,000,749) | (4,499,906) |
Income tax expense | (42,528) | (103,069) |
Net income (loss) | (26,043,274) | (4,602,975) |
Net loss attributable to non-controlling interest in subsidiary | 29,801 | 21,526 |
Net income (loss) attributable to common shareholders | $ (26,013,473) | $ (4,581,449) |
Net income (loss) per share - basic | $ (.51) | $ (0.09) |
Net income (loss) per share - diluted | $ (.51) | $ (0.09) |
Weighted average shares outstanding - basic | 51,081,949 | 49,409,266 |
Weighted average shares outstanding - diluted | 51,081,949 | 49,409,266 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ (26,043,274) | $ (4,602,975) |
Other comprehensive income (loss): | ||
Foreign currency translation loss, net of tax | 13,318 | (7,571) |
Comprehensive income (loss) | (26,029,956) | (4,610,546) |
Comprehensive loss attributable to non-controlling interest in subsidiary | 29,801 | 21,526 |
Comprehensive income (loss) attributable to common shareholders | $ (26,000,155) | $ (4,589,020) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Other Comprehensive Income / Loss | Noncontrolling Interest | Total |
Beginning balance, shares at Dec. 31, 2014 | 48,566,909 | |||||
Beginning balance, value at Dec. 31, 2014 | $ 486 | $ 1,824,361 | $ (1,409,639) | $ (1,542) | $ 0 | $ 413,666 |
Stock compensation expense, shares | 1,613,816 | |||||
Stock compensation expense, value | $ 16 | 1,293,061 | 1,293,077 | |||
Stock option expense | 3,497,491 | 3,497,491 | ||||
Issuance of subsidiary common stock, value | 1,950 | 1,950 | ||||
Repurchase and retirement of shares, shares | (12,530) | |||||
Repurchase and retirement of shares, value | (3,132) | (3,132) | ||||
Foreign currency translation (loss) | (7,571) | (7,571) | ||||
Net loss | (4,581,449) | (21,526) | (4,602,975) | |||
Ending balance, shares at Dec. 31, 2015 | 50,168,195 | |||||
Ending balance, value at Dec. 31, 2015 | $ 502 | 6,611,781 | (5,991,088) | (9,113) | (19,576) | 592,506 |
Stock issued for cash, shares | 184,615 | |||||
Stock issued for cash, value | $ 2 | 532,204 | 532,206 | |||
Exercise of options, shares issued | 159,678 | |||||
Exercise of options, value | $ 2 | 4,898 | 4,900 | |||
Stock compensation expense, shares | 1,804,191 | |||||
Stock compensation expense, value | $ 17 | 5,559,881 | 5,559,898 | |||
Stock option expense | 21,964,472 | 21,964,472 | ||||
Issuance of subsidiary common stock, value | 0 | |||||
Acquisition of non-controlling interest | (146,377) | 49,377 | (97,000) | |||
Foreign currency translation (loss) | 13,318 | 13,318 | ||||
Net loss | (26,013,473) | (29,801) | (26,043,274) | |||
Ending balance, shares at Dec. 31, 2016 | 52,316,679 | |||||
Ending balance, value at Dec. 31, 2016 | $ 523 | $ 34,526,859 | $ (32,004,561) | $ 4,205 | $ 0 | $ 2,527,026 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
OPERATING ACTIVITIES | ||
Net loss | $ (26,043,274) | $ (4,602,975) |
Adjustments to reconcile net loss to cash provided by operating activities: | ||
Depreciation | 58,374 | 26,304 |
Stock compensation expense | 5,559,898 | 1,293,077 |
Stock option expense | 21,964,472 | 3,497,491 |
Deferred tax asset | 0 | 75,196 |
Changes in operating assets and liabilities | ||
Accounts receivable | (2,692,198) | (158,617) |
Accounts receivable, related party | 0 | 6,000 |
Prepaids and other assets | (359,112) | (9,778) |
Restricted cash | (333,091) | (7,105) |
Customer deposits | 333,091 | 7,105 |
Accounts payable | 227,436 | 10,595 |
Accrued expenses | 2,308,681 | 218,290 |
Accrued interest | 0 | (9,397) |
CASH PROVIDED BY OPERATING ACTIVITIES | 1,024,277 | 346,186 |
INVESTMENT ACTIVITIES | ||
Acquisition of property and equipment | (416,672) | (57,116) |
CASH USED BY INVESTMENT ACTIVITIES | (416,672) | (57,116) |
FINANCING ACTIVITIES | ||
Proceeds from issuance of common stock | 600,000 | 0 |
Common stock issuance transaction costs | (49,980) | 0 |
Proceeds from issuance of subsidiary common stock | 0 | 1,950 |
Repurchase and retirement of subsidiary common stock | (97,000) | 0 |
Proceeds from exercise of options | 4,900 | 0 |
Repurchase and retirement of shares | 0 | (3,132) |
Proceeds from issuance of notes payable | 53,498 | 0 |
Principal payments of notes payable | (17,720) | (61,877) |
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 493,698 | (63,059) |
Effect of changes in exchange rates on cash and cash equivalents | 11,491 | (7,571) |
Net change in cash and cash equivalents | 1,112,794 | 218,440 |
Cash and cash equivalents, beginning of period | 571,814 | 353,374 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 1,684,608 | 571,814 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS FOR: | ||
Cash paid for interest | 369 | 10,524 |
Cash paid for income taxes | 42,013 | 24,313 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Fixed asset purchases in accounts payable | 69,912 | 0 |
Common stock issuance costs in accounts payable | $ 17,814 | $ 0 |
1. Background
1. Background | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background | eXp World Holdings, Inc. (“Company” or “eXp”; formerly known as eXp Realty International Corporation) was incorporated in the State of Delaware in 2008. The Company is a cloud-based real estate brokerage operating in most U.S. states and one Canadian Province. As a cloud-based real estate brokerage for the residential real estate market, eXp has embraced and adopted a number of cloud-based technologies in order to grow an international brokerage without the burden of physical bricks and mortar or redundant staffing costs. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Principles | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Principles | Basis of presentation and fiscal year The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), and are expressed in US dollars. The Company’s fiscal year end is December 31. We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation. Principles of consolidation The accompanying consolidated financial statements include the accounts of eXp World Holdings, Inc., and its subsidiaries; eXp Realty Holdings, Inc.; First Cloud Mortgage, Inc. (dormant as of December 31, 2016); eXp Realty Associates, LLC; eXp Realty, LLC; eXp Realty of California, Inc.; eXp Realty of Canada, Inc.; and eXp Realty of Connecticut, LLC. All inter-company accounts and transactions have been eliminated upon consolidation. Non-controlling interests Non-controlling interests in the Company’s subsidiaries are reported as a component of equity, separate from the parent company’s equity. Results of operations attributable to the non-controlling interests are included in the Company’s consolidated statements of operations and consolidated statements of comprehensive income (loss). As of December 31, 2016, the Company acquired the previously outstanding non-controlling interest in First Cloud Mortgage, Inc. Upon obtaining 100% interest, the Company inactivated First Cloud. For the years ended December 31, 2016 and 2015, the activities of First Cloud did not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows. Use of estimates The preparation of financial statements in conformity with 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 for doubtful accounts, legal contingencies, income taxes, revenue recognition, stock-based compensation, expense accruals, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Cash and cash equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance 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 these excess deposits. Restricted cash The Company’s restricted cash balance of $481,704 and $148,613 at December 31, 2016 and 2015, respectively, 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 from escrow. Fair value measurements The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The methodology establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below: • 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 fair value of cash and cash equivalents, accounts and other receivables, accounts payable, accrued expenses, and notes payable approximates their carrying value due to their short-term maturities. Allowance for doubtful accounts A portion of the Company’s accounts receivable are derived from non-commission based technology fees. These accounts receivable are typically unsecured. Allowances for doubtful accounts are estimated based on historical collection experience and periodically reviewed by management. The Company typically does not experience material uncollectible accounts. Foreign currency translation The Company’s functional and reporting currency is the United States dollar and the functional currency of the Company’s foreign subsidiaries is the local currency of their country of domicile. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company does not employ any derivative or hedging strategy to offset the impact of foreign currency fluctuations. Fixed assets Fixed assets are stated at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful lives. Computer hardware and software: 3 to 5 years Furniture, fixtures and equipment: 5 to 7 years Maintenance and repairs are expensed as incurred. Expenditures that substantially increase an asset’s useful life or improve an asset’s functionality are capitalized. The Company capitalizes the costs associated with developing its internal-use cloud-based residential real-estate transaction system. Capitalized costs are primarily related to costs incurred in relation to internally created software during the application development stage including costs for upgrades and enhancements that result in additional functionality. Impairment of long-lived assets The Company periodically evaluates the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is less than its carrying value. When assets are considered impaired, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost of disposal. Stock based compensation The Company issues unregistered and restricted equity and equity linked instruments to employees and non-employees in lieu of cash for the receipt of goods and services. Share-based payment transactions with non-employees are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable and expensed in the periods the goods and services are received. The Company expenses the grant date fair value of its employee stock based compensation over the requisite service period and / or upon the achievement of certain performance milestones. Revenue recognition Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been delivered, and collectability of the resulting receivable is reasonably assured. Commission Revenue The Company derives the majority of its revenue from assisting home buyers and sellers in listing, marketing, selling, and finding residential real estate. Commissions earned as agents in residential real estate transactions are recorded on a gross basis upon closing of a transaction (purchase or sale), commonly referred to gross commission income (presented net of fees and expenses in accompanying consolidated statement of operations). Real estate agent commissions paid, concurrently recognized with the closing of each transaction, are presented as costs of revenues in the accompanying consolidated statements of operations. Non-Commission Revenue Non-commission revenues are derived primarily from agent and broker training fees, known as “eXp University tuition” and technology fees. Technology fee revenues are recognized monthly as the contracted services are delivered. Advertising costs Advertising costs are generally expensed in the period incurred. Advertising expenses are included in the sales and marketing expense line item on the accompanying consolidated statements of operations. For the years ended December 31, 2016 and 2015, the Company incurred advertising expenses of $503,121 and $163,905 respectively. Income taxes Deferred tax assets and liabilities arise from the differences between the tax basis of an asset or liability and its reported amount in the financial statements as well as from net operating loss and tax credit carry forwards. The measurement of current and deferred tax assets and liabilities is based on provisions of enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable, respectively, for the period adjusted for the change during the period in deferred tax assets and liabilities. For U.S. income tax returns, the open taxation years subject to examination range from 2013 to 2016. The Company establishes reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that it becomes uncertain based upon one of the following conditions: (1) the tax position is not "more likely than not" to be sustained, (2) the tax position is "more likely than not" to be sustained, but for a lesser amount, or (3) the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information; (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position; and (3) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken. A number of years may elapse before a particular uncertain tax position is audited and finally resolved or when a tax assessment is raised. The number of years subject to tax assessments varies depending on the tax jurisdiction. The tax benefit that has been previously reserved because of a failure to meet the "more likely than not" recognition threshold would be recognized in income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is "more likely than not" to be sustained, (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or (3) the statute of limitations for the tax position has expired. Comprehensive income (loss) The Company’s only component of comprehensive income (loss) is foreign currency translation adjustments. Net income (loss) per share Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock outstanding plus, if dilutive, potential common shares outstanding during the period. Recently issued accounting pronouncements In October 2016, the FASB issued ASU No. 2016-16 - Income Taxes In March 2016, the FASB issued ASU No. 2016-09 Compensation – Stock Compensation In May 2014, the FASB began issuing several accounting standards updates associated with accounting for revenue from contracts with customers. The objective of the updates, and subsequent clarifying and industry specific updates, are to 1) remove inconsistencies and weaknesses in revenue requirements, 2) provide a robust framework for addressing revenue recognition issues, 3) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets 4) provide more useful information to users of financial statements through improved disclosure requirements, and 5) simplify the preparation of financial statements. The updates are effective in annual reporting periods beginning after December 15, 2017 and the interim periods within that year. The Company is still evaluating the potential impacts that the implementation of these new revenue standards may have on its financial position, operational results, or cash flows. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 - Leases In November 2016, the FASB issued Accounting Standards Update No. 2016-18 – Statement of Cash Flows |
3. Prepaid and Other Current As
3. Prepaid and Other Current Assets | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid and Other Current Assets | Prepaid and other current assets consisted of the following: Year Ended December 31, 2016 2015 Prepaid expenses $ 199,066 $ 63,611 Prepaid insurance 145,825 2,905 Rent deposits 28,047 15,478 Other assets 10,625 2,457 $ 383,563 $ 84,451 |
4. Fixed Assets, Net
4. Fixed Assets, Net | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets, Net | Fixed assets, net consisted of the following: Year Ended December 31, 2016 2015 Computer hardware and software $ 219,590 $ 143,127 Furniture, fixture and equipment 5,910 5,910 Total depreciable property and equipment 225,500 149,037 Less: accumulated depreciation and amortization (97,216 ) (49,757 ) Depreciable property, net 128,284 99,280 Assets under development 410,121 10,915 Fixed assets, net $ 538,405 $ 110,195 Depreciation and amortization expense for the years ended December 31, 2016 and 2015 was $58,374 and $26,304, respectively. |
5. Accrued Expenses
5. Accrued Expenses | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued expenses consisted of the following: Year Ended December 31, 2016 2015 Commissions payable $ 2,417,621 $ 282,525 Payroll payable 54,402 51,669 Vacation payable 78,294 37,360 Taxes payable 58,714 33,891 Other accrued expenses 133,088 20,168 $ 2,742,119 $ 425,613 |
6. Notes Payable
6. Notes Payable | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | In 2016, the Company entered into a financing arrangement to fund portions of its insurance premiums. As of December 31, 2016, the Company had a remaining outstanding obligation associated with this funding totaling $35,778, exclusive of accrued interest totaling $1,034, included in current portion of notes payable in the accompanying consolidated balance sheet. The Company did not have any such financing arrangements as of December 31, 2015, and incurred immaterial interest expense for the year then ended. |
7. Stockholders' Equity
7. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | As of December 31, 2016, the Company had 52,316,679 shares of common stock issued and outstanding. The following provides a detailed description of the stock based transactions completed during the periods presented in this report: During December 2016, the Company issued 184,615 shares of restricted and unregistered shares of common stock to accredited investors in private placement transactions for gross cash proceeds totaling $600,000. In conjunction with the issuance, we incurred expenses of $67,794 (of which $49,980 were paid as of December 31, 2016). During the year ended December 31, 2016, the Company issued 159,678 shares of restricted and unregistered common stock for cash proceeds totaling $4,900 related to the exercise of stock options. During the year ended December 31, 2016, the Company issued a total of 1,804,191 shares of restricted and unregistered common stock for employee and non-employee compensation totaling $5,559,898. During the year ended December 31, 2016, the Company paid $97,000 to acquire the 10.6% non-controlling interest in First Cloud Mortgage. As a result of the acquisition, the Company owned 100% of First Cloud Mortgage as of December 31, 2016. During the year ended December 31, 2015, the Company issued a total of 1,613,816 shares of restricted and unregistered common stock for employee and non-employee compensation totaling $1,293,077. In February of 2015 the Company re-purchased and retired 12,530 shares of common stock for $3,132 in cash. 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 and unregistered common stock. If agents and brokers elect to receive portions of their commissions in restricted and unregistered 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, at a 20% discount to the trailing 30-day volume weighted average closing market price for unrestricted shares. During the years ended December 31, 2016 and 2015, the Company issued 785,504 and 436,184 shares, respectively, of restricted and unregistered shares of common stock to agents and brokers for total consideration of $1,442,232 and $284,105, respectively for the settlement of commissions payable. Real Estate Agent Growth and Other Incentive Programs The Company administers an equity incentive program whereby agents and brokers become eligible for awards of the Company’s common stock through agent attraction and performance benchmarks. Agents who qualify, and who remain with the Company in good standing for the term of the applicable agreement, are awarded shares of restricted and unregistered shares of common stock based on production milestones. Under this program, the Company awards restricted and unregistered shares of common stock to non-employees that become issuable upon the achievement of certain milestones for the both individual and the recruited agents. Subsequent to achieving and maintaining the milestones, the awards vest ratably over service periods of three years. Prior to becoming a member of the Company’s Board of Directors, Mr. Gene Frederick, was engaged by the Company under an Independent Contractor Agreement (“ICA”) for the purpose of introducing and attracting real estate agents and brokers, and to be a regional leader in the State of Texas. In accordance with the terms of the ICA, Mr. Frederick was provided with incentives in which 3,000,000 shares of restricted common stock would be issuable upon the achievement of certain agent attraction and revenue production milestones. Upon reaching and maintaining these performance milestones, the awards vest yearly over a three-year period. As of December 31, 2016, the Company has granted Mr. Frederick 1,000,000 shares of restricted common stock, with cost recognition totaling $2,056,875 during the year ended December 31, 2016. Of the 1,000,000 share of restricted common stock under this award, 500,000 of the shares have vested and issued as of December 31, 2016. The Company re-measures and recognizes the lowest aggregate fair value of certain awards granted to non-employees at each reporting date using expected performance achievement and corresponding vesting assumptions until the services are complete. The following table illustrates the Company’s restricted stock activity for the following periods: Shares Weighted Balance, December 31, 2014 354,700 $ 0.30 Granted 1,011,956 0.50 Forfeited (73,600 ) 0.48 Balance, December 31, 2015 1,293,056 0.45 Granted 2,452,965 3.75 Forfeited (688,142 ) 0.62 Balance, December 31, 2016 3,057,879 3.06 Unvested at December 31, 2016 1,813,672 3.09 Vested at December 31, 2016 1,244,207 $ 3.04 As of December 31, 2016, the Company had 1,813,672 unvested restricted and unregistered stock awards with unrecognized compensation costs totaling $5,512,247. Pre 2013 Stock Options As of December 31, 2016, as a result of being a private company prior to September 2013, 6,384,808 outstanding options were accounted for in accordance with the intrinsic value method. In accordance with the intrinsic value method, the Company re-measures the intrinsic value of the vested portion of the outstanding options at each reporting date through the date of settlement. The change related to the intrinsic value of the applicable awards is included in general and administrative costs in the accompanying consolidated statements of operations. As of December 31, 2016 and 2015, the outstanding options subject to re-measurement had intrinsic values of $3.92 and $0.68 per option, respectively. The re-measurement of the intrinsic value of the awards resulted in the recognition of additional stock option expense of $20,495,234 and $3,371,363 for the years ended December 31, 2016 and 2015, respectively, included in general and administrative expenses in accompanying consolidated statements of operations. As of December 31, 2016, the fully vested outstanding options subject to re-measurement in accordance with the intrinsic value method had a weighted average remaining contractual term of 5.92 years. Post 2013 Stock Option Awards Stock option awards issued subsequent to September 2013 are recognized based on their grant date value as estimated through the utilization of a Black-Scholes option pricing model. Compensation expense associated with stock option awards granted after September 2013 is ratably recognized over the vesting period, commensurate with the goods and services received. During the year ended December 31, 2016, the Company granted 4,130,000 stock options with an estimated grant date fair value of $6,737,951. The assumptions used to estimate the grant date fair value of the awards issued for the year ended December 31, 2016 include: 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 Intrinsic Weighted Balance, December 31, 2014 7,211,479 $ 0.15 $ 0.17 8.0 Granted 337,750 0.56 – 10 Exercised – – – – Forfeited (267,979 ) – – 7.1 Balance, December 31, 2015 7,281,250 0.17 0.17 7.0 Granted 4,130,000 1.53 – 10.0 Exercised (159,678 ) 0.13 1.42 6.8 Forfeited (504,014 ) 1.19 3.36 7.2 Balance, December 31, 2016 10,747,558 0.67 3.56 8.0 Exercisable at December 31, 2016 7,064,808 0.24 3.99 8.0 Vested at December 31, 2016 7,153,466 $ 0.26 $ 4.02 8.0 For the years ended December 31, 2016 and 2015, the Company recognized compensation cost associated with all equity and equity-linked awards of $27,524,370 and $4,790,568, respectively, inclusive of intrinsic value re-measurement. As of December 31, 2016, the Company had 10,747,558 outstanding options with unrecognized compensation cost totaling $5,860,912. |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The components of the provision for income tax expense are as follows: Year Ended December 31, 2016 2015 Current: Federal $ – $ – State 37,070 14,875 Foreign 5,458 6,691 42,528 21,566 Deferred: Federal – 77,428 State – 4,075 – 81,503 Total provision (benefit) for income taxes $ 42,528 $ 103,069 The Company is subject to United States federal and state income taxes at an approximate rate of 38.25%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows: Year Ended December 31, 2016 2015 Statutory tax rate 38.25 % 38.25 % Permanent differences (.03 )% (3.00 )% Stock options (44.30 )% 0.00 % Foreign tax rate differential 0.00 % 0.10 % Prior year true up (0.01 )% (0.15 )% Valuation allowance 5.93 % (37.49 )% Total (.16 )% (2.29 )% Deferred tax assets consist of the following at: Year Ended December 31, 2016 2015 Deferred tax assets: Net operating loss carryforward $ 679,797 $ 339,052 Temporary differences 63,172 5,679 Stock-based compensation – 1,715,623 Total gross deferred tax assets 742,969 2,060,354 Less: valuation allowance (742,969 ) (2,060,354 ) Net deferred tax assets $ – $ – At December 31, 2016, the Company had federal net operating losses of approximately $1.113 million which will begin to expire in 2029 and could be subject to certain limitations under section 382 of the Internal Revenue Code. The Company has provided a valuation allowance at December 31, 2016 and 2015 of $742,969 and $2,060,354 respectively for its net deferred tax assets as it cannot conclude it is more likely than not all of the estimated net deferred tax assets will be realized. The valuation allowance decreased by $1,317,385 and increased $1,676,214 in 2016 and 2015, respectively. As of December 31, 2016 and 2015, the Company did not have any unrecognized tax benefits. The Company's policy is to recognize interest and penalties related to income tax matters in income tax expense. The Company currently has no federal or state tax examinations in progress nor has it had any federal or state tax examinations since its inception. |
9. Commitments and Contingencie
9. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Operating leases The Company leases its office spaces with the latest expiration date under non-cancelable arrangements of December 31, 2018. The following table illustrates the Company’s future obligations related to its non-cancellable operating leases: Year Amount 2017 $ 94,835 2018 34,504 Total $ 129,339 Legal proceedings The Company is subject to legal proceedings and claims that arise in the ordinary course of business. In the opinion of management, the ultimate liability with respect to current proceedings and claims will not have a material adverse effect upon the Company’s financial position, operational results, or cash flows. |
10. Segment Information
10. Segment Information | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | The Company primarily operates within residential real estate markets in the United States and Canada. The Company’s management generally does not rely on historical geographical results in making operational decisions. The Company’s management analyzes geographical locations on a forward looking basis to identify growth opportunities. The Company enters into residential real estate transactions within the United States and Canada. For the year ended December 31, 2016, approximately 2% of the Company’s total net revenue of $54,179,511 was generated in Canada. For the period ended December 31, 2015, the Company generated approximately 6.7% of its total revenue from Canada. The Company did not possess material assets located outside of the United States as of December 31, 2016 and 2015. |
11. Related Party Transactions
11. Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
11. Related Party Transactions | During the year ended December 31, 2016, and as part of their agreements to join the Company’s Board of Directors, Mr. Richard Miller and Mr. Randall Miles were granted an option to purchase a total of 700,000 (350,000 each) shares of common stock from a significant shareholder at an exercise price of $1.76 per share. The Company estimated the grant date fair value of these options using a Black-Scholes model with the assumptions described in Footnote 6. The aggregate grant date fair value of these awards was $1,248,534 and the options vest monthly over a three-year period. During the year ended December 31, 2016, the Company recognized compensation cost totaling $186,995. As of December 31, 2016, the Company had unrecognized compensation cost associated with these awards totaling $1,061,539. Upon the exercise of the options, the Company will not receive any cash proceeds nor, will it be obligated to issue additional shares. |
12. Subsequent Events
12. Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | In January 2017, we issued the remaining 49,231 shares of restricted and unregistered shares of common stock to accredited investors subsequent to the 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. |
2. Summary of Significant Acc20
2. Summary of Significant Accounting Principles (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of presentation and fiscal year | Basis of presentation and fiscal year The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), and are expressed in US dollars. The Company’s fiscal year end is December 31. We have reclassified certain amounts in prior-period financial statements to conform to the current period’s presentation. |
Principles of consolidation | Principles of consolidation The accompanying consolidated financial statements include the accounts of eXp World Holdings, Inc., and its subsidiaries; eXp Realty Holdings, Inc.; First Cloud Mortgage, Inc. (dormant as of December 31, 2016); eXp Realty Associates, LLC; eXp Realty, LLC; eXp Realty of California, Inc.; eXp Realty of Canada, Inc.; and eXp Realty of Connecticut, LLC. All inter-company accounts and transactions have been eliminated upon consolidation. |
Non-controlling interests | Non-controlling interests Non-controlling interests in the Company’s subsidiaries are reported as a component of equity, separate from the parent company’s equity. Results of operations attributable to the non-controlling interests are included in the Company’s consolidated statements of operations and consolidated statements of comprehensive income (loss). As of December 31, 2016, the Company acquired the previously outstanding non-controlling interest in First Cloud Mortgage, Inc. Upon obtaining 100% interest, the Company inactivated First Cloud. For the years ended December 31, 2016 and 2015, the activities of First Cloud did not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with 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 for doubtful accounts, legal contingencies, income taxes, revenue recognition, stock-based compensation, expense accruals, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance 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 these excess deposits. |
Restricted cash | Restricted cash The Company’s restricted cash balance of $481,704 and $148,613 at December 31, 2016 and 2015, respectively, 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 from escrow. |
Fair value measurements | Fair value measurements The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The methodology establishes consistency and comparability by providing a fair value hierarchy that prioritizes the inputs to valuation techniques into three broad levels, which are described below: • 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 fair value of cash and cash equivalents, accounts and other receivables, accounts payable, accrued expenses, and notes payable approximates their carrying value due to their short-term maturities. |
Allowance for doubtful accounts | Allowance for doubtful accounts A portion of the Company’s accounts receivable are derived from non-commission based technology fees. These accounts receivable are typically unsecured. Allowances for doubtful accounts are estimated based on historical collection experience and periodically reviewed by management. The Company typically does not experience material uncollectible accounts. |
Foreign currency translation | Foreign currency translation The Company’s functional and reporting currency is the United States dollar and the functional currency of the Company’s foreign subsidiaries is the local currency of their country of domicile. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company does not employ any derivative or hedging strategy to offset the impact of foreign currency fluctuations. |
Fixed assets | Fixed assets Fixed assets are stated at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful lives. Computer hardware and software: 3 to 5 years Furniture, fixtures and equipment: 5 to 7 years Maintenance and repairs are expensed as incurred. Expenditures that substantially increase an asset’s useful life or improve an asset’s functionality are capitalized. The Company capitalizes the costs associated with developing its internal-use cloud-based residential real-estate transaction system. Capitalized costs are primarily related to costs incurred in relation to internally created software during the application development stage including costs for upgrades and enhancements that result in additional functionality. |
Impairment of long-lived assets | Impairment of long-lived assets The Company periodically evaluates the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is less than its carrying value. When assets are considered impaired, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost of disposal. |
Stock-based compensation | Stock based compensation The Company issues unregistered and restricted equity and equity linked instruments to employees and non-employees in lieu of cash for the receipt of goods and services. Share-based payment transactions with non-employees are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable and expensed in the periods the goods and services are received. The Company expenses the grant date fair value of its employee stock based compensation over the requisite service period and / or upon the achievement of certain performance milestones. |
Revenue recognition | Revenue recognition Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been delivered, and collectability of the resulting receivable is reasonably assured. Commission Revenue The Company derives the majority of its revenue from assisting home buyers and sellers in listing, marketing, selling, and finding residential real estate. Commissions earned as agents in residential real estate transactions are recorded on a gross basis upon closing of a transaction (purchase or sale), commonly referred to gross commission income (presented net of fees and expenses in accompanying consolidated statement of operations). Real estate agent commissions paid, concurrently recognized with the closing of each transaction, are presented as costs of revenues in the accompanying consolidated statements of operations. Non-Commission Revenue Non-commission revenues are derived primarily from agent and broker training fees, known as “eXp University tuition” and technology fees. Technology fee revenues are recognized monthly as the contracted services are delivered. |
Advertising costs | Advertising costs Advertising costs are generally expensed in the period incurred. Advertising expenses are included in the sales and marketing expense line item on the accompanying consolidated statements of operations. For the years ended December 31, 2016 and 2015, the Company incurred advertising expenses of $503,121 and $163,905 respectively. |
Income taxes | Income taxes Deferred tax assets and liabilities arise from the differences between the tax basis of an asset or liability and its reported amount in the financial statements as well as from net operating loss and tax credit carry forwards. The measurement of current and deferred tax assets and liabilities is based on provisions of enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable, respectively, for the period adjusted for the change during the period in deferred tax assets and liabilities. For U.S. income tax returns, the open taxation years subject to examination range from 2013 to 2016. The Company establishes reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that it becomes uncertain based upon one of the following conditions: (1) the tax position is not "more likely than not" to be sustained, (2) the tax position is "more likely than not" to be sustained, but for a lesser amount, or (3) the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information; (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position; and (3) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken. A number of years may elapse before a particular uncertain tax position is audited and finally resolved or when a tax assessment is raised. The number of years subject to tax assessments varies depending on the tax jurisdiction. The tax benefit that has been previously reserved because of a failure to meet the "more likely than not" recognition threshold would be recognized in income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is "more likely than not" to be sustained, (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or (3) the statute of limitations for the tax position has expired. |
Comprehensive income (loss) | Comprehensive income (loss) The Company’s only component of comprehensive income (loss) is foreign currency translation adjustments. |
Net income (loss) per share | Net income (loss) per share Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock outstanding plus, if dilutive, potential common shares outstanding during the period. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In October 2016, the FASB issued ASU No. 2016-16 - Income Taxes In March 2016, the FASB issued ASU No. 2016-09 Compensation – Stock Compensation In May 2014, the FASB began issuing several accounting standards updates associated with accounting for revenue from contracts with customers. The objective of the updates, and subsequent clarifying and industry specific updates, are to 1) remove inconsistencies and weaknesses in revenue requirements, 2) provide a robust framework for addressing revenue recognition issues, 3) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets 4) provide more useful information to users of financial statements through improved disclosure requirements, and 5) simplify the preparation of financial statements. The updates are effective in annual reporting periods beginning after December 15, 2017 and the interim periods within that year. The Company is still evaluating the potential impacts that the implementation of these new revenue standards may have on its financial position, operational results, or cash flows. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 - Leases In November 2016, the FASB issued Accounting Standards Update No. 2016-18 – Statement of Cash Flows |
3. Prepaid and Other Current 21
3. Prepaid and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid and other current assets | Year Ended December 31, 2016 2015 Prepaid expenses $ 199,066 $ 63,611 Prepaid insurance 145,825 2,905 Rent deposits 28,047 15,478 Other assets 10,625 2,457 $ 383,563 $ 84,451 |
4. Fixed Assets, Net (Tables)
4. Fixed Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of fixed assets | Year Ended December 31, 2016 2015 Computer hardware and software $ 219,590 $ 143,127 Furniture, fixture and equipment 5,910 5,910 Total depreciable property and equipment 225,500 149,037 Less: accumulated depreciation and amortization (97,216 ) (49,757 ) Depreciable property, net 128,284 99,280 Assets under development 410,121 10,915 Fixed assets, net $ 538,405 $ 110,195 |
5. Accrued Expenses (Tables)
5. Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Year Ended December 31, 2016 2015 Commissions payable $ 2,417,621 $ 282,525 Payroll payable 54,402 51,669 Vacation payable 78,294 37,360 Taxes payable 58,714 33,891 Other accrued expenses 133,088 20,168 $ 2,742,119 $ 425,613 |
7. Stockholders' Equity (Tables
7. Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Restricted stock activity table | Shares Weighted Balance, December 31, 2014 354,700 $ 0.30 Granted 1,011,956 0.50 Forfeited (73,600 ) 0.48 Balance, December 31, 2015 1,293,056 0.45 Granted 2,452,965 3.75 Forfeited (688,142 ) 0.62 Balance, December 31, 2016 3,057,879 3.06 Unvested at December 31, 2016 1,813,672 3.09 Vested at December 31, 2016 1,244,207 $ 3.04 |
Stock option activity table | Options Weighted Intrinsic Weighted Balance, December 31, 2014 7,211,479 $ 0.15 $ 0.17 8.0 Granted 337,750 0.56 – 10 Exercised – – – – Forfeited (267,979 ) – – 7.1 Balance, December 31, 2015 7,281,250 0.17 0.17 7.0 Granted 4,130,000 1.53 – 10.0 Exercised (159,678 ) 0.13 1.42 6.8 Forfeited (504,014 ) 1.19 3.36 7.2 Balance, December 31, 2016 10,747,558 0.67 3.56 8.0 Exercisable at December 31, 2016 7,064,808 0.24 3.99 8.0 Vested at December 31, 2016 7,153,466 $ 0.26 $ 4.02 8.0 |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense | Year Ended December 31, 2016 2015 Current: Federal $ – $ – State 37,070 14,875 Foreign 5,478 6,691 42,528 21,566 Deferred: Federal – 77,428 State – 4,075 – 81,503 Total provision (benefit) for income taxes $ 42,528 $ 103,069 |
Reconciliation of provision for income taxes | Year Ended December 31, 2016 2015 Statutory tax rate 38.25 % 38.25 % Permanent differences (.03 )% (3.00 )% Stock options (44.30 )% 0.00 % Foreign tax rate differential 0.00 % 0.10 % Prior year true up (0.01 )% (0.15 )% Valuation allowance 5.93 % (37.49 )% Total (.16 )% (2.29 )% |
Schedule of deferred tax assets | Year Ended December 31, 2016 2015 Deferred tax assets: Net operating loss carryforward $ 679,797 $ 339,052 Temporary differences 63,172 5,679 Stock-based compensation – 1,715,623 Total gross deferred tax assets 742,969 2,060,354 Less: valuation allowance (742,969 ) (2,060,354 ) Net deferred tax assets $ – $ – |
9. Commitments and Contingenc26
9. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future operating lease payments | Year Amount 2017 $ 94,835 2018 34,504 Total $ 129,339 |
2. Summary of Significant Acc27
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Restricted cash | $ 481,704 | $ 148,613 |
Impairment of long lived assets | 0 | 0 |
Advertising expense | $ 503,121 | $ 163,905 |
Computer Equipment [Member] | ||
Property and equipment useful lives | 3 to 5 years | |
Furniture and Fixtures [Member] | ||
Property and equipment useful lives | 5 to 7 years |
3. Prepaid and Other Current 28
3. Prepaid and Other Current Assets (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 199,066 | $ 63,611 |
Prepaid insurance | 145,825 | 2,905 |
Rent deposits | 28,047 | 15,478 |
Other assets | 10,625 | 2,457 |
Prepaid and other current assets | $ 383,563 | $ 84,451 |
4. Fixed Assets, Net (Details)
4. Fixed Assets, Net (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Property and equipment, gross | $ 225,500 | $ 149,037 |
Less: accumulated depreciation and amortization | (97,216) | (49,757) |
Depreciable property, net | 128,284 | 99,280 |
Assets under development | 410,121 | 10,915 |
Property and equipment, net | 538,405 | 110,195 |
Computer hardware and software [Member] | ||
Property and equipment, gross | 219,590 | 143,127 |
Furniture, fixtures and equipment [Member] | ||
Property and equipment, gross | $ 5,910 | $ 5,910 |
4. Fixed Assets, Net (Details N
4. Fixed Assets, Net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization | $ 58,374 | $ 26,304 |
5. Accrued Expenses (Details)
5. Accrued Expenses (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Commissions payable | $ 2,417,621 | $ 282,525 |
Payroll payable | 54,402 | 51,669 |
Vacation payable | 78,294 | 37,360 |
Taxes payable | 58,714 | 33,891 |
Other accrued expenses | 133,088 | 20,168 |
Total accrued expenses | $ 2,742,119 | $ 425,613 |
6. Notes Payable (Details Narra
6. Notes Payable (Details Narrative) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Notes Payable Details Narrative | ||
Notes payable current portion | $ 35,778 | $ 0 |
Accrued interest | $ 1,034 | $ 0 |
7. Stockholders' Equity (Detail
7. Stockholders' Equity (Details - Restricted stock activity) - Restricted Stock [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restricted stock outstanding, beginning balance | 1,293,056 | 354,700 | |
Restricted stock granted | 2,452,965 | 1,011,956 | |
Restricted stock forfeited | (688,142) | (73,600) | |
Restricted stock outstanding, ending balance | 3,057,879 | 1,293,056 | |
Unvested restricted stock ending balance | 1,813,672 | ||
Vested restricted stock balance | 1,244,207 | ||
Weighted average price - Restricted stock granted | $ 3.47 | $ 0.74 | |
Weighted average price - Restricted stock vested | 3.04 | ||
Weighted average price - Restricted stock forfeited | 1.11 | $ .48 | |
Weighted average price - Restricted stock outstanding, ending balance | 3.06 | ||
Weighted average price - Unvested restricted stock ending balance | 3.09 | $ 0.30 | |
Weighted average price - Vested restricted stock balance | $ 3.04 |
7. Stockholders' Equity (Deta34
7. Stockholders' Equity (Details - Option activity) - Stock Options [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Options | |||
Beginning balance | 7,281,250 | 7,211,479 | |
Granted | 4,130,000 | 337,750 | |
Exercised | (159,678) | ||
Forfeited | (504,014) | (267,979) | |
Ending balance | 10,747,558 | 7,281,250 | 7,211,479 |
Exercisable | 7,064,808 | ||
Vested | 7,153,466 | ||
Weighted Average Price | |||
Beginning balance | $ 0.17 | $ 0.15 | |
Granted | 1.53 | 0.56 | |
Exercised | .13 | ||
Forfeited | 1.19 | ||
Ending balance | 0.67 | 0.17 | $ 0.15 |
Exercisable | 0.24 | ||
Vested | 0.26 | ||
Intrinsic Value | |||
Beginning balance | 0.17 | 0.17 | |
Exercised | 1.42 | ||
Forfeited | 3.36 | ||
Ending balance | $ 0.17 | $ 0.17 | |
Exercisable | 3.99 | ||
Vested | $ 4.02 | ||
Weighted average remaining contractual term | |||
Beginning balance | 8 years | 7 years | 8 years |
Granted | 10 years | 10 years | |
Exercised | 6 years 9 months 18 days | ||
Forfeited | 7 years 2 months 12 days | 7 years 1 month 6 days | |
Exercisable | 8 years | ||
Vested | 8 years |
7. Stockholders' Equity (Deta35
7. Stockholders' Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Proceeds from options exercised | $ 4,900 | $ 0 |
Payment to acquire noncontrolling interest | $ 97,000 | |
Shares authorized for issuance | 1,813,672 | |
Stock based compensation | $ 27,524,370 | $ 4,790,568 |
Unvested Restricted and Unregistered Stock Awards [Member] | ||
Unvested stock awards | 1,813,672 | |
Unrecognized compensation expense | $ 5,512,247 | |
Stock Options [Member] | ||
Stock issued for options exercised, shares | 159,678 | |
Stock options granted, shares | 4,130,000 | 337,750 |
Unvested stock awards | 10,747,558 | |
Unrecognized compensation expense | $ 5,860,912 | |
Pre 2013 Stock Options [Member] | ||
Per share intrinsic value of options under remeasurement | $ 3.92 | $ 0.68 |
Stock based compensation | $ 20,495,234 | $ 3,371,363 |
Weighted average remaining contractual term | 5 years 11 months 1 day | |
Post 2013 Stock Options [Member] | ||
Stock options granted, shares | 4,130,000 | |
Stock options granted fair value | $ 6,737,951 | |
First Cloud Mortgage [Member] | ||
Payment to acquire noncontrolling interest | $ 97,000 | |
Equity ownership percentage | 100.00% | |
Stock Options Exercised [Member] | ||
Stock issued for options exercised, shares | 159,678 | |
Proceeds from options exercised | $ 4,900 | |
Compensation [Member] | ||
Stock issued for compensation, shares | 1,804,191 | 1,613,816 |
Stock issued for compensation, value | $ 5,559,881 | $ 1,293,077 |
Accredited Investors [Member] | ||
Stock issued new, shares | 184,615 | |
Proceeds from private placement | $ 600,000 | |
Agents and Brokers [Member] | ||
Stock issued for settlement of commissions payable, shares | 785,504 | 436,184 |
Stock issued for settlement of commissions payable, value | $ 1,442,232 | $ 284,105 |
Gene Frederick [Member] | ||
Restricted stock granted | 1,000,000 | |
Fair value of restricted stock granted | $ 2,056,875 | |
Restricted stock vested | 500,000 |
8. Income Taxes (Details-Provis
8. Income Taxes (Details-Provision for income taxes) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 37,070 | 14,875 |
Foreign | 5,458 | 6,691 |
Total Current | 42,528 | 21,566 |
Deferred: | ||
Federal | 0 | 77,428 |
State | 0 | 4,075 |
Total Deferred | 0 | 81,503 |
Total provision (benefit) for income taxes | $ 42,528 | $ 103,069 |
8. Income Taxes (Details-Federa
8. Income Taxes (Details-Federal Statutory Rate) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Federal Statutory Tax Rate | 38.25% | 38.25% |
Permanent differences | (0.03%) | (3.00%) |
Stock options | (44.30%) | 0.00% |
Foreign tax rate differential | 0.00% | 0.10% |
Prior year true up | (0.01%) | (0.15%) |
Valuation allowance | 5.93% | (37.49%) |
Total Tax Expense | (0.16%) | (2.29%) |
8. Income Taxes (Details-Deferr
8. Income Taxes (Details-Deferred Tax Assets) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Tax Assets: | ||
Net operating loss carry-forwards | $ 679,797 | $ 339,052 |
Temporary differences | 63,172 | 5,678 |
Stock based compensation | 0 | 1,715,623 |
Gross deferred tax assets | 742,969 | 2,060,354 |
Less Valuation Allowance | (742,969) | (2,060,354) |
Net Deferred Tax Asset | $ 0 | $ 0 |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Federal net operating loss | $ 1,113,000 | |
Net operating loss expiration date | Dec. 31, 2029 | |
Change in valuation allowance | $ (317,385) | $ 1,676,214 |
Unrecognized tax benefits | $ 0 |
9. Commitments and Contingenc40
9. Commitments and Contingencies (Details) | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Future operating lease expense 2017 | $ 94,835 |
Future operating lease expense 2018 | 34,504 |
Operating lease expense | $ 129,339 |
10. Segment Information (Detail
10. Segment Information (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Net revenues | $ 54,179,511 | $ 22,866,787 |
CANADA | ||
Net revenues | $ 54,179,511 | |
CANADA | Sales Revenue, Net [Member] | ||
Concentration risk percentage | 2.00% | 6.70% |
11. Related Party Transactions
11. Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share based compensation expense | $ 5,559,898 | $ 1,293,077 |
Options granted to Board Members [Member] | ||
Fair value of options granted | 1,248,534 | |
Share based compensation expense | 186,995 | |
Unrecognized compensation cost | $ 1,061,539 | |
Miller [Member] | ||
Options granted | 350,000 | |
Miles [Member] | ||
Options granted | 350,000 |