UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________________
Commission File Number: 000-53300
EXP WORLD HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 98-0681092 | |
| (State or other jurisdiction | (IRS Employer | |
| of incorporation) | Identification No.) |
2219 Rimland Drive, Suite 301
Bellingham, WA 98226
(Address of principal executive offices and Zip Code)
Registrant’s telephone number, including area code: (360) 685-4206
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one).
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] | Smaller reporting company [X] |
| Emerging Growth Company[ ] |
If an emerging growth company, indicate by check mark if the registrant has selected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes [ ] No [X]
There were 56,303,864 shares of Common Stock, $.00001 par value, of the registrants outstanding as of April 15, 2018.
| 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 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 19 |
| Item 4. | Controls and Procedures | 19 |
| PART II | OTHER INFORMATION | |
| Item 1. | Legal Proceedings | 19 |
| Item 1A | Risk Factors | 9 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 19 |
| Item 3. | Defaults Upon Senior Securities | 19 |
| Item 4. | Mine Safety Disclosures | 19 |
| Item 5. | Other information | 19 |
| Item 6. | Exhibits | 20 |
| 2 |
Statement Regarding Forward-Looking Statements
Certain statements contained in this report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. Forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,�� “would,” “potential” and similar expressions to future periods. Forward-looking statements are not based on historical facts but rather represent current expectations and assumptions. Forward-looking statements include statements we make about matters such as: future revenues; future industry market conditions; future changes in our capacity and operations; future operating and overhead costs; operational and management restructuring activities (including implementation of methodologies and changes in the board of directors); future employment and contributions of personnel; tax and interest rates; capital expenditures and their impact on us; productivity, business process, rationalization, investment, acquisition, consulting, operational, tax, financial and capital projects and initiatives; contingencies; changes in the regulatory environment; and future working capital, costs, revenues, business opportunities, cash flows, margins, earnings and growth.
Forward-looking statements relate to the future and are subject to many risks, assumptions and uncertainties, including those risks set forth in this report and as described in Part I, Item IA Risk Factors of our Annual Report on Form 10-K for our prior fiscal year ended December 31, 2017. Although we believe the expectations reflected in the forward-looking statements are reasonable, actual results, developments and business decisions could differ materially from those contemplated by such forward-looking statements. The environment for which we operate in 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.
While no list of uncertainties could be complete, some factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation: current and future business and economic uncertainties may adversely affect our revenues, profitability and financial condition; changes in the residential mortgage markets and housing markets may adversely affect our earnings and financial condition; our earnings may decrease because of increases or decreases in interest rates; we are exposed to capital markets risk related to changes in foreign exchange rates which may adversely affect our results of operations, financial condition and cash flows; our business, financial condition and results of operations could be adversely affected by new government regulations; potential inability to attract and retain skilled personnel, including real estate agent, could harm our business; we may pursue strategic opportunities which could result in operating difficulties or dilution;; assertions of claims, lawsuits and proceedings against us could harm our business, results of operations and reputation; changes in the United States or other monetary or fiscal policies and regulations that impact the real estate market; and our potential inability to list our securities on any securities exchange or market.
All subsequent written and oral forward-looking statements by or attributable to us or persons acting on our behalf are expressly qualified in their entirely by these factors. We undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future developments or otherwise, except as may be required by law.
| 3 |
PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
eXp World Holdings, Inc.
(unaudited)
March 31, 2018
| 4 |
EXP WORLD HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| March 31, 2018 | December 31, 2017 | ||||||||
| ASSETS | |||||||||
| CURRENT ASSETS | |||||||||
| Cash and cash equivalents | $ | 8,340,851 | $ | 4,672,034 | |||||
| Restricted cash | 1,770,599 | 923,193 | |||||||
| Accounts receivable, net of allowance $174,464 and $179,759, respectively | 9,110,304 | 6,912,657 | |||||||
| Prepaids and other assets | 682,995 | 591,034 | |||||||
| TOTAL CURRENT ASSETS | 19,904,749 | 13,098,918 | |||||||
| OTHER ASSETS | |||||||||
| Fixed assets, net | 1,868,413 | 1,538,213 | |||||||
| TOTAL OTHER ASSETS | 1,868,413 | 1,538,213 | |||||||
| TOTAL ASSETS | $ | 21,773,162 | $ | 14,637,131 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| CURRENT LIABILITIES | |||||||||
| Accounts payable | $ | 750,657 | $ | 635,087 | |||||
| Customer deposits | 1,770,599 | 923,193 | |||||||
| Accrued expenses | 13,473,684 | 8,818,180 | |||||||
| TOTAL CURRENT LIABILITIES | 15,994,940 | 10,376,460 | |||||||
| Commitments and contingencies | – | – | |||||||
| STOCKHOLDERS' EQUITY | |||||||||
| Common Stock, $0.00001 par value 220,000,000 shares authorized; 56,303,864 and 54,962,535 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 563 | 550 | |||||||
| Additional paid-in capital | 49,063,199 | 36,848,041 | |||||||
| Accumulated deficit | (43,292,719 | ) | (32,596,374 | ) | |||||
| Accumulated other comprehensive income (loss) | 7,179 | 8,454 | |||||||
| TOTAL STOCKHOLDERS' EQUITY | 5,778,222 | 4,260,671 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 21,773,162 | $ | 14,637,131 | |||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
EXP WORLD HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Revenues | $ | 61,962,531 | $ | 21,528,183 | ||||
| Operating expenses | ||||||||
| Cost of revenues | 55,701,516 | 18,960,135 | ||||||
| General and administrative | 15,688,748 | 4,775,881 | ||||||
| Professional fees | 592,365 | 364,460 | ||||||
| Sales and marketing | 645,797 | 301,222 | ||||||
| Total expenses | 72,628,426 | 24,401,698 | ||||||
| Net loss from operations | (10,665,895 | ) | (2,873,515 | ) | ||||
| Other income and (expenses) | ||||||||
| Interest expense | – | (1,715 | ) | |||||
| Total other income and (expenses) | – | (1,715 | ) | |||||
| Loss before income tax expense | (10,665,895 | ) | (2,875,230 | ) | ||||
| Income tax expense | (30,450 | ) | (24,591 | ) | ||||
| Net loss | $ | (10,696,345 | ) | $ | (2,899,821 | ) | ||
| Net loss per share attributable to common shareholders | ||||||||
| Basic from continuing operations | $ | (0.19 | ) | $ | (0.06 | ) | ||
| Diluted from continuing operations | $ | (0.19 | ) | $ | (0.06 | ) | ||
| Weighted average shares outstanding | ||||||||
| Basic | 56,193,753 | 52,416,392 | ||||||
| Diluted | 56,193,753 | 52,416,392 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
EXP WORLD HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
| Three Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Net loss | $ | (10,696,345 | ) | $ | (2,899,821 | ) | ||
| Other comprehensive loss: | ||||||||
| Foreign currency translation adjustments, net of tax | (1,275 | ) | 1,037 | |||||
| Comprehensive loss | $ | (10,697,620 | ) | $ | (2,898,784 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
| 7 |
EXP WORLD HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (10,696,345 | ) | $ | (2,899,821 | ) | ||
| Adjustments to reconcile net loss | ||||||||
| to cash provided by operating activities: | ||||||||
| Depreciation | 183,321 | 13,265 | ||||||
| Stock compensation expense | 8,279,109 | 646,232 | ||||||
| Stock option expense | 1,301,702 | 1,467,735 | ||||||
| Agent equity program | 2,370,004 | 818,282 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,175,888 | ) | (320,156 | ) | ||||
| Prepaids and other assets | (91,961 | ) | (180,482 | ) | ||||
| Customer deposits | 847,406 | 304,542 | ||||||
| Accounts payable | 115,570 | 150,175 | ||||||
| Accrued expenses | 4,655,504 | 462,056 | ||||||
| CASH PROVIDED BY OPERATING ACTIVITIES | 4,788,422 | 461,828 | ||||||
| INVESTING ACTIVITIES | ||||||||
| Acquisition of property and equipment | (513,521 | ) | (213,625 | ) | ||||
| CASH USED IN INVESTING ACTIVITIES | (513,521 | ) | (213,625 | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of common stock | – | 160,000 | ||||||
| Repurchase and retirement of subsidiary common stock | – | (17,842 | ) | |||||
| Proceeds from exercise of options | 264,355 | 20,000 | ||||||
| Principal payments of notes payable | – | (13,804 | ) | |||||
| CASH PROVIDED BY FINANCING ACTIVITIES | 264,355 | 148,354 | ||||||
| Effect of changes in exchange rates on cash, cash equivalents and restricted cash | (23,033 | ) | 14,017 | |||||
| Net change in cash, cash equivalents and restricted cash | 4,516,223 | 410,574 | ||||||
| Cash, cash equivalents and restricted cash, beginning of period | 5,595,227 | 2,166,312 | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | $ | 10,111,450 | $ | 2,576,886 | ||||
| – | – | |||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | ||||||||
| Cash paid for interest | $ | – | $ | 558 | ||||
| Cash paid for income taxes | $ | 30,450 | $ | 30,675 | ||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Fixed asset purchases in accounts payable | $ | 71,890 | $ | 65,728 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 8 |
eXp World Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements
March 31, 2018
(Expressed in U.S. dollars)
(Unaudited)
| 1. | BASIS OF PRESENTATION |
eXp World Holdings, Inc. (the “Company” or “we” or “eXp”) was incorporated in the State of Delaware on July 30, 2008. Through various operating subsidiaries, the Company operates a cloud-based real estate brokerage operating in most U.S. States, the District of Columbia and the provinces of Alberta and Ontario, Canada. 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.
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In our opinion, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES |
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of eXp World Holdings, Inc., and its subsidiaries. All inter-company accounts and transactions have been eliminated upon consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to provisions for doubtful accounts, legal contingencies, income taxes, revenue recognition, stock-based compensation, expense accruals, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows.
| March 31, 2018 | December 31, 2017 | |||||||
| Cash and cash equivalents | $ | 8,340,851 | $ | 4,672,034 | ||||
| Restricted cash | 1,770,599 | 923,193 | ||||||
| Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ | 10,111,450 | $ | 5,595,227 | ||||
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. Restricted cash totaled $1,770,599 and $923,193 at March 31, 2018 and December 31, 2017, respectively.
| 9 |
Revenue Recognition
Effective January 1, 2018, the Company adopted the new revenue standard using the modified retrospective application in which the cumulative effect of initially applying the revenue standard is recognized as an adjustment to the opening balance of retained earnings. Adoption of the new standard did not require the Company to make an adjustment to the opening balance.
The Company serves as a licensed broker in the states in which it operates for the purpose of processing residential real estate transactions. The Company is contractually obligated to provide for the fulfillment of transfers of residential real estate between buyers and sellers. The Company provides these services itself and controls the service necessary to legally transfer the residential real estate. Correspondingly, the Company is defined as the Principal. The Company, as Principal, satisfies its obligation upon the closing of a residential real estate transaction. As Principal, and upon satisfaction of our obligation, the Company recognized revenue in the gross amount of consideration to which we expect to be entitled to.
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 transactions.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02 -Leases (Topic 842). Under the new guidance, a lessee is required to recognize lease liabilities and corresponding right-of-use assets, initially measured at the present value 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. If the lessee makes the election, the lessee would recognize lease expense on a straight-line basis over the lease term. This ASU is effective in annual reporting periods beginning after December 15, 2019 and the interim periods beginning after December 15, 2020. The Company is still evaluating the potential impacts that the implementation of ASU 2016-02 may have on its financial position, operational results, or cash flows.
Recently Adopted Accounting Pronouncements
In May 2017, the FASB issued ASU No. 2017-09 - Compensation (Topic 718): Scope of Modification Accounting. The FASB issued guidance to clarify when to account for a change in the terms or conditions of share-based payments awards as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The general model for modifications of share-based payment awards is to record the incremental value arising from the change as additional compensation costs. Previously, judgments about whether certain changes to an award were substantive may have impacted whether or not modification accounting was applied in these situations. The Company adopted the new standard on January 1, 2018. The standard did not have an impact on the Company’s financial position, operational results or cash flows.
In November 2016, the FASB issued ASU No. 2016-18 – Statement of Cash Flows (Topic 240). The FASB issued guidance to address the diversity in the classification and presentation of changes in restricted cash on the statement of cash flows under Topic 230, Statement of Cash Flows. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cashflows. The Company adopted the new standard on January 1, 2018. The standard did not have a material impact on the Company’s financial position, operational results or cash flows.
In May 2014, the FASB issued ASU No. 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 core principle of the revenue standard is that revenue be recognized upon the transfer of goods or services to customers in an amount that reflects the consideration to which we expect to receive in exchange for those goods or services. The new standard permits for two alternative implementation methods, the use of either (1) full retrospective application to each prior reporting presented or (2) modified retrospective application in which the cumulative effect of initially applying the revenue standard is recognized as an adjustment to the opting balance of retained earnings in the period of adoption. The Company adopted the new standard effective January 1, 2018 using the modified retrospective method. Since the Company currently recognizes revenue on a gross basis acting as a principal, upon completion of its performance obligations in the form of a completed residential real estate sale, the new standard did not have a material impact on the Company’s financial position, operational results or cash flows.
| 3. | FIXED ASSETS, NET |
Fixed assets, net consisted of the following:
As of March, 2018 | As of December 31, 2017 | |||||||
| Computer hardware and software | $ | 2,435,126 | $ | 1,982,749 | ||||
| Furniture, fixture and equipment | 5,910 | 5,910 | ||||||
| Total depreciable property and equipment | 2,441,036 | 1,988,659 | ||||||
| Less: accumulated depreciation and amortization | (633,766 | ) | (450,446 | ) | ||||
| Depreciable property, net | 1,807,270 | 1,538,213 | ||||||
| Assets under development | 61,143 | – | ||||||
| Fixed assets, net | $ | 1,868,413 | $ | 1,538,213 | ||||
Depreciation expense for the three months ended March 31, 2018 and 2017 was $183,321 and $13,265, respectively.
| 4. | STOCKHOLDERS’ EQUITY |
As of March 31, 2018, the Company had 56,303,864 shares of common stock issued and outstanding.
The following provides a detailed description of the stock-based transactions completed during the three months ended March 31, 2018:
During the three months ended March 31, 2018, the Company issued 208,324 shares of common stock in exchange for services totaling $2,370,004, which includes the expense activity in our 2015 Agent Equity Program.
| 10 |
During the three months ended March 31, 2018, the Company issued 61,598 shares of common stock in exchange for services totaling $8,279,109, which included the expense activity for 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 common stock. If agents and brokers elect to receive portions of their commissions in common stock, they are entitled to receive the equivalent number of shares of common stock, based on the fixed monetary value of the commission payable. The shares are issued at a 20% discount to market on the date of issuance. We recognize this 20% discount as an additional cost of sales charge during the periods presented.
All agents and brokers in good standing with the Company are eligible to participate in the Agent Equity Program. To be considered in good standing, agents and brokers must be current in their financial obligations, including all fees, to the Company. In addition, all required licenses, local, state and national dues and subscriptions which are required to conduct real estate business in their state must be current and in effect.
During the three months ended March 31, 2018 and 2017, the Company issued 208,324 and 212,829 shares, respectively, of common stock to agents and brokers for total consideration of $2,370,002 and $818,282, respectively, for the settlement of commissions payable.
Real Estate Agent Growth Incentive Program
The Company administers an equity incentive program whereby agents and brokers become eligible to receive awards of the Company’s common stock through agent attraction and performance benchmarks. Agents who qualify are awarded common stock based on achievement of performance milestones.
Under this program, the Company awards common stock to our agents and brokers that become issuable upon the achievement of certain milestones for both the individual and the recruited agents.
The following table illustrates the Company’s stock activity for the Real Estate Agent Growth Incentive Program for the following periods:
| Shares | Weighted Average Fair Value | |||||||
| Balance, December 31, 2016 | 3,057,879 | 4.05 | ||||||
| Granted | 2,024,498 | 7.60 | ||||||
| Issued | (1,457,538 | ) | 5.27 | |||||
| Forfeited | (565,774 | ) | 4.76 | |||||
| Balance, December 31, 2017 | 3,059,065 | 7.60 | ||||||
| Granted | 126,862 | 13.02 | ||||||
| Issued | (15,280 | ) | 0.25 | |||||
| Forfeited | (58,597 | ) | 13.14 | |||||
| Balance, March, 2018 | 3,112,050 | 13.02 | ||||||
As of March 31, 2018, the Company had 1,625,522 unvested stock awards and 3,112,050 expected to vest, respectively, with unrecognized compensation costs totaling $11,014,296.
| 11 |
Stock Option Awards
During the three months ended March 31, 2018, theCompany granted 150,000 stock options with an estimated grant date fair value of $1,756,128. The assumptions used to estimate the grant date fair value of the awards issued for the three months ended March 31, 2018 include:expected volatility based on historical stock prices of 137.5%; an average expected term between 6.25 and 10 years; risk free rates based on U.S. Treasury instruments for the expected term of approximately 2.9%; and no dividend payments.
The following table illustrates the Company’s stock option activity for the following periods:
| Options | Weighted Average Exercise Price | Intrinsic Value | Weighted Average Remaining Contractual Term (Years) | |||||||||||||
| Balance, December 31, 2016 | 10,747,558 | $ | 0.67 | 3.56 | 7.75 | |||||||||||
| Granted | 2,848,231 | 3.76 | – | 6.15 | ||||||||||||
| Exercised | (181,572 | ) | 0.26 | 6.86 | – | |||||||||||
| Forfeited | (2,540,925 | ) | 2.31 | 3.20 | – | |||||||||||
| Balance, December 31, 2017 | 10,873,292 | $ | 1.50 | 5.08 | 6.65 | |||||||||||
| Granted | 150,000 | 12.70 | – | 9.91 | ||||||||||||
| Exercised | (1,082,907 | ) | 0.25 | 11.48 | – | |||||||||||
| Forfeited | (75,224 | ) | 3.37 | 9.14 | – | |||||||||||
| Balance, March 31, 2018 | 9,865,161 | $ | 1.37 | 9.93 | 6.56 | |||||||||||
| Exercisable at March 31, 2018 | 6,627,257 | 0.64 | 10.66 | 5.54 | ||||||||||||
| Vested at March 31, 2018 | 7,293,640 | $ | 0.80 | 10.51 | 5.81 | |||||||||||
As of March 31, 2018, the total unrecognized compensation cost associated with options was approximately $7,334,000.
| 5. | DEBT |
We have a $500,000 line of credit with a variable interest rate computed on a 360-day year. The variable interest rate is the higher of either 1) the Prime Rate in effect on such day, 2) Daily One Month LIBOR plus one and one-half percent (1.5%), or 3) the Federal Funds Rate plus one and one-half percent (1.5%). The line of credit agreement requires us to comply with various financial covenants as well as customary affirmative and negative covenants that restrict our ability to, among other things, incur debt and liens, make significant investments, dispose of assets and make distributions without prior consent. The line 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 March 31, 2017, we were in compliance with all of the financial covenants under the line of credit.
As of March 31, 2018, we had no amount outstanding under the line of credit.
| 12 |
| Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion should be read together with our consolidated financial statements and related notes included elsewhere within this report. The Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements. See “Forward-Looking Statements” and “Item 1 A. – Risk Factors” for a discussion of certain risks, uncertainties and assumptions associated with these statements.
OVERVIEW
eXp World Holdings, Inc., (the “Company”, “eXp”, “we”, “us”, “our”), is a holding company with our main operating division being a cloud-based international residential real estate brokerage (“eXp Realty”) operating across the United States and in the provinces of Alberta and Ontario, Canada. Our operations are focused on the use of cloud-based technologies in order to grow an international brokerage without the burden of physical brick and mortar offices or redundant staffing costs. Our technology focus includes the development of a proprietary cloud based real estate transactional platform.
Continued Accelerated Growth
During the three-month period ended March 31, 2018, we increased our net real estate brokerage agent and broker base by 42.7%, from 6,511 at December 31, 2017 to 9,290 at March 31, 2018. These increases occurred in both new and existing geographical markets and contributed to our revenue increases of 37.0% and 187.8% as compared to the quarter ended December 31, 2017 and the quarter ended March 31, 2017, respectively.
Agent Ownership
The Company maintains equity incentive programs 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 this program, agents and brokers who qualify can be issued shares of the Company’s common stock.
The Company also administers a program whereby agents and brokers could elect to receive 5% of their commission payable in the form of Company common stock which is issued at a 20% discount to market on the date of issuance.
RECENT BUSINESS DEVELOPMENTS
Initiatives
As the organization continues to grow and in an effort to support our rapidly growing agent base, we believe it is important to continue building our culture in alignment with long term goals of the Company. During this period, we hired an executive director of eXp Realty University’s education and training program to build an even more robust education and training program that the Company offers to all of our agents. Our goal is to improve agent knowledge while building and enhancing their business skills as well as their productivity. Our new executive director of eXp Realty University has been a leader in the restate estate industry for more than 14 years and is a professional speaker, coach and certified continuing education instructor.
To foster our agents career growth, we have made improvements to our mentoring program which allows the Company to bring on new agents that are newer to the business with less experience and pair them with experienced agents in their local markets. Additionally, we continue to build our marketing department in an effort to to create and design all agent marketing materials to market listings of properties, as well as general marketing for business development.
The Company continues to build out its eXp Enterprise (“Enterprise”) operating platform. Enterprise is a proprietary platform that manages all of the Company’s critical processes and information, including onboarding new agents, transactions, commission payments and other back office processes. 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 platform will lend itself to constantly enhance and build out capabilities that meet the needs of company stakeholders into the future.
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The Company continues to focus its efforts on our engagement strategy to build a positive employee experience to advance creativity, productivity and service quality to retain top performing talent with the overall goal of growing and improving overall profitability. We continue to refine our organizational structure and leadership teams to drive our business forward by effectively managing and streamlining business operations, improving decision making and promoting the flow of information by way of monthly “all Company” meetings to update employees on new initiatives and timelines. Additionally, the Company has implemented a monthly recognition program to recognize employees who exemplify the Company’s core values and a weekly recognition program to award those who take the extra initiative to deliver excellent service.
Tax Cuts and Jobs Act of 2017
The Tax Cuts and Jobs Act of 2017 became law on December 22, 2017.
The law includes provisions that, among other things:
| · | reduce individual federal tax brackets at most income levels; |
| · | increase the standard deduction from $12,700 to $24,000 for married taxpayers filing a joint tax return; |
| · | caps the amount of property, sales and state and local income tax deductions at $10,000; |
| · | reduce the limit on deductible mortgage debt to $750,000, from $1 million on mortgage loans entered into after December 15, 2017, while entirely suspending interest deductibility of home equity loans; and |
| · | suspend the deductibility of certain home moving expenses. |
The provisions of the 2017 Tax Act may cause changes in the residential real estate market, the prices taxpayers are willing to pay for new homes and the terms of their financing. The effects of the 2017 Tax Act on average home sale prices may be more impactful in states with particularly high state income tax and property values. The impact of the income tax changes on individuals and potential impact on home sale transactions is difficult to predict.
MARKET CONDITIONS AND INDUSTRY TRENDS
According to the NAR, home sale transactions of single family homes volume decreased 1.5% in the first quarter of 2018 due to inventory constraints as compared to levels one year ago. Also, according to NAR,the housing affordability index has continued 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 decreased to159.6 for February (preliminary) 2018 from 163.4for February 2017.
The favorable housing affordability index is due in part to favorable mortgage rate conditions. Mortgage rates increased approximately 10 basis points from March 31, 2017 to March 31, 2018 but continue to be at historically low levels. While any increase to mortgage rates can adversely impact 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.
According to the Federal Housing Finance Agency, mortgage rates on commitments for 30-year, conventional, fixed-rate first mortgages averaged 4.0% for 2017 and the rate rose to 4.3% in March 2018. To the extent 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. decreased to 1.5 million (preliminary) as of March 31, 2018, from 1.6 million at three months ended March 31, 2017. The inventory represents a national average supply of 3.5 (preliminary) months, as of April 30, 2018, at the current home sales pace which is down from 3.9 months for 2017.
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.
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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
For the quarter ended March 31, 2018, NAR existing home sale transactions increased to 5.0 million (preliminary) but decreased 1.0% compared to the same period of 2017.During the same period, eXp Realty home sale transactions increased 202% compared to the same period in 2017. Our home sale transactions were impacted by the growth of our agent base which grew from approximately 6,500 at the end of 2017 to over 9,200 by the end of the first quarter of 2018.
As of their most recent releases, NAR is forecasting existing home sales to increase 1.8% in 2018 and another 1.4% in 2019.
Existing Home Sale Price
We believe primary drivers to the long-term demand for housing and the growth of our company to support that demand are housing affordability, the general economic health of the U.S. economy, demographic trends such as population growth, the increase in household formation, mortgage rate levels and mortgage availability,job growth, the inherent benefits of owning a home versus renting and the influence of local housing dynamics of supply versus demand. As of March 31, 2018, we believe that these factors are generally favorable.However, significant changes to one or more of these drivers could cause the demand for housing to slow, negatively affecting all real estate brokerage firms, including 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 to brokerage owners looking to survive and thrive in a wide range of economic conditions.
Results of Operations
Revenues
During the three-month period ended March 31, 2018 revenues increased $40.4 million to $62.0 million as compared to the three-month period ended March 31, 2017, or 187.8%. The increase as compared to the prior period is a direct result of the increase in our sales agent base by approximately 166% to over 9,200.
Operating Expenses
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2018 | 2017 | Change | ||||||||||
| Operating expenses: | ||||||||||||
| Cost of revenues | $ | 55,701,516 | $ | 18,960,135 | $ | 36,741,381 | ||||||
| General and administrative | 15,688,748 | 4,775,881 | 10,912,868 | |||||||||
| Professional fees | 592,365 | 364,460 | 227,905 | |||||||||
| Sales and marketing | 645,797 | 301,222 | 344,575 | |||||||||
| Total operating expenses | $ | 72,628,426 | $ | 24,401,698 | $ | 48,226,729 | ||||||
Cost of revenues was $55.7 million for the three-months ended March 31, 2018 compared to $19.0 million for the three-months ended March 31, 2017, an increase of $36.7 million, or 193.8%. Cost of revenues includes costs related to sales agent commissions and revenue sharing. These costs are highly correlated with recognized revenues. As such, the increase in cost of revenue was primarily attributable to a higher amount of revenues and increase in agent commissions paid.
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General and administrative expenses were $15.7 million for the three-months ended March 31, 2018 compared to $4.8 million for the three-months ended March 31, 2017, an increase of $10.9 million, or 228.5%. General and administrative expenses include costs related to wages, including stock compensation, dues, operating leases, utilities, travel and other general overhead expenses. The increase in general and administrative costs was driven primarily by the increase in compensation expenses of $2.0 million and increase in stock compensation expense of $7.6 million. The increase in stock options and stock compensation expense is affected by awards granted, awards exercised and/or awards forfeited throughout the year. Awards granted, issued and forfeited are more fully disclosed in Note 4, Stockholders’ Equity, of the Consolidated Financial Statements. Also impacting the increase in stock compensation expense was the increase in our stock price and the increase in shares granted for our equity incentive program whereby agents and brokers of eXp Realty become eligible for awards of the Company’s common stock through the achievement of production and agent attraction benchmarks.
Professional fees were $0.6 million for the three-months ended March 31, 2018 compared to $0.4 million for the three-months ended March 31, 2017, an increase of $0.2 million, or 62.5%. Professional fees include costs related to legal, accounting and other consultants. The increase in professional fees were primarily driven by an increase in audit costs of $0.2 million.
Sales and marking expenses were $0.6 million for the three-months ended March 31, 2018 compared to $0.3 million for the three-months ended March 31, 2017, an increase of $0.3 million, or 114.4%. Sales and marketing includes costs related to lead capture, digital and print media, and trade shows, in addition to other promotional materials. The increase in sales and marketing expenses was primarily due to increased cost in lead capture of $0.2 million and other internet marketing of $0.5 million related to our growth in agent and broker headcount.
LIQUIDITY AND CAPITAL RESOURCES
| March 31, | December 31, | |||||||||||
| 2018 | 2017 | Change | ||||||||||
| Current assets | $ | 19,904,749 | $ | 13,098,918 | $ | 6,805,831 | ||||||
| Current liabilities | (15,994,940 | ) | (10,376,460 | ) | (5,618,480 | ) | ||||||
| Net working capital | $ | 3,909,809 | $ | 2,722,458 | $ | 1,187,351 | ||||||
For the three-months ended March 31, 2018, net working capital increased $1.2 million, to $3.9 million, primarily due to an increase in cash of $3.7 million and commissions receivable of $3.2 million resulting from pending real estate transactions. In correlation to the number of pending real estate transactions, accrued expenses, which include commissions payable, and salaries payable, increased $4.7 million.
The following table presents our cash flows for the three-months ended March 31, 2018 and 2017:
| Three-Months ended | ||||||||||||
| March 31, | ||||||||||||
| 2018 | 2017 | Change | ||||||||||
| Cash provided by operating activities | $ | 4,788,421 | $ | 461,828 | $ | 4,326,594 | ||||||
| Cash used in investment activities | (513,521 | ) | (213,625 | ) | (299,896 | ) | ||||||
| Cash provided by financing activities | 264,355 | 148,354 | 116,001 | |||||||||
For the three-months ended March 31, 2018, cash provided by operating activities increased $4.3 compared to the same period in 2017. The change resulted primarily from the increased volume in our sales transactions and higher commissions receivable. In correlation with our increased volume in sales transactions, we incurred higher expenses, specifically commissions payable.
For the three-months ended March 31, 2018, 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.
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For the three-months ended March, 31, 2018, we generated approximately $0.3 million in cash flows from financing activities primarily related to the exercise of options to purchase 1,071,407 shares of common stock.
Our future capital requirements will depend on many factors, including our level of investment in technology and our rate of growth into new markets. Our capital requirements may be affected by factors which we cannot control such as the residential real estate market, interest rates, and other monetary and fiscal policy changes to the manner in which we currently operate. We anticipate that between our current cash position and cash flow from ongoing operations we have the necessary resources to continue operating our business over the next 12 months. In order to support and achieve our future growth plans, however, we may need or seek advantageously to obtain additional funding through equity or debt financing.
We have a line of credit which provides the Company may borrow up to $500,000. We currently have no borrowings against the line of credit facility or 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 likely suffer.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with U.S. GAAP requires us to make certain judgments and assumptions, based on information available at the time of our preparation of the financial statements, in determining accounting estimates used in the preparation of the statements. Our significant accounting policies are described in Note 2 of the Consolidated Financial 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.
Revenue Recognition
The Company serves as a licensed broker in the states in which it operates for the purpose of processing residential real estate transactions. The Company is contractually obligated to provide for the fulfillment of transfers of residential real estate between buyers and sellers. The Company provides these services itself and controls the service necessary to legally transfer the residential real estate. Correspondingly, the Company is defined as the Principal. The Company, as Principal, satisfies its obligation upon the closing of a residential real estate transaction. As Principal, and upon satisfaction of our obligation, the Company recognized revenue in the gross amount of consideration to which we expect to be entitled to.
Revenue is derived from assisting home buyers and sellers in listing, marketing, selling and finding residential real estate. Commissions earned on real estate transactions are recognized at the completion of a residential real estate transaction.
Income Taxes
We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. A valuation allowance against deferred tax assets would be established if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some or all of the deferred tax assets are not expected to be realized. Our assumptions, judgments, and estimates relative to the value of our deferred tax assets take into account predictions of the amount and category of future taxable income.
Since inception, we have incurred operating losses, and accordingly, we have generally not recorded a provision for income taxes. We generally do not expect any significant changes in the amount of our income tax provision until we are no longer incurring operating losses.
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Stock Based Compensation
The Company issues equity and equity linked instruments to employees and non-employees. Share-based payment transactions with non-employees are measured at the fair value which requires estimates to determine fair value in association with U.S. GAAP.
We measure expense associated with stock-based awards (usually stock options) to our employees and directors on the date of grant and recognize the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award.
We account for stock-based compensation arrangements with non-employees using a fair value approach. The estimated fair value of unvested awards granted to non-employee consultants is remeasured at each reporting date through the date of final vesting. As a result, the non-cash charge to operations for non-employee awards with vesting conditions is affected in each reporting period by changes in the fair value of the Company’s common stock.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.
| Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
As a “smaller reporting company”, we are not required to provide the information required by this Item.
| Item 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
As of the end of the period covered by this report, our Chief Executive Officer and our Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, due to the material weaknesses in our internal control over financial reporting discussed below, our Chief Executive and Chief Financial Officers each concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information was not accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017. 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).
Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2018.
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Our management determined that our internal control over financial reporting was not effective based on the identification of certain material weaknesses. 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.
The determination that our disclosure controls and procedures were not effective was based on the following material weaknesses in our internal control over financial reporting, which were identified and described in detail in our Annual Report on Form 10-K for the year ended December 31, 2017, and summarized below:
| · | Failure to properly recognize and measure the fair value of equity and equity-linked awards issued to employees and non-employees. Our policies and procedures failed to identify the need to consider certain areas of US GAAP applicable to stock awards issued to employees and non-employees. |
| · | Our internal controls failed to identify the need to consider certain areas of U.S. GAAP applicable to the classification of certain agent fees. Our agent fees are no longer classified as revenue, rather they are offset against costs of revenue. |
During 2018, Management has been actively engaged in remediation efforts to address the material weaknesses summarized above, including the following:
To address the above material weaknesses, management has implemented additional training programs associated with accounting for equity-based payments to employees and non-employees. The Company plans to engage the services of athird-party software servicer to ensure consistency in the identification and classification of share-based payments of current as well as future share-based payment arrangements. It will also ensure proper and consistent U.S. GAAP reporting for our equity instruments. The Company completed an analysis of the historical option grants to ensure that they have been correctly recorded. The Company has also reviewed its revenue recognition policies and trained staff to ensure compliance with US GAAP. We continue to hire qualified personnel who have a greater understanding of accounting principles. The Company will test the continued effectiveness of the new controls over stock compensation and revenue subsequent to implementation and consider the material weaknesses remediated after the applicable remedial controls operate effectively for a sufficient period of time.
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.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that has materially affected or, are reasonably likely to materially affect, our internal control over financial reporting.
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From time to time, we are subject to potential liability under laws and government regulations and various claims and legal actions that may be asserted against us that could have a material adverse effect on our business, reputation, results of operations or financial condition.
There are no matters pending or, to our knowledge, threatened that we expect to have a material adverse impact on our business, reputation, results of operations or financial condition.
Not applicable.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
Item 3.DEFAULTS UPON SENIOR SECURITIES
None.
Item 4.MINE SAFETY DISCLOSURES
Not applicable.
Item 5.OTHER INFORMATION
Not applicable.
| 20 |
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SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| eXp World Holdings, Inc. | |
| (Registrant) | |
| Date: May 15, 2018 | /s/ Alan Goldman |
| Alan Goldman | |
| Chief Financial Officer (Principal Financial Officer) |
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