EXP WORLD HOLDINGS, INC. (OTCMKTS:EXPI) Files An 8-K Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

On April 3, 2018, the Company filed a Form 8-K disclosing that, after discussion with management and with BDO USA, LLP, the Company’s independent registered public accounting firm, the Company’s Board of Directors, based on a recommendation of the Audit Committee, had concluded that the Company’s previously issued financial statements for the fiscal years ended December 31, 2016 (“Fiscal 2016”) and the first three fiscal quarters of the fiscal year ended December 31, 2017 (“Fiscal 2017”) , should no longer be relied upon, and determined that the financial statements will be restated due to the identification of accounting errors. The Company also disclosed that it would restate certain quarterly data for Fiscal 2016 and would reassess its internal controls as a result of the identification of the errors.

On April 12, 2018, after discussion with management and with BDO USA, LLP, the Company’s independent registered public accounting firm, the Company’s Board of Directors, based on a recommendation of the Audit Committee, concluded that the Company’s previously issued financial statements for the fiscal year ended December 31, 2015 (“Fiscal 2015”) , should no longer be relied upon, and determined that such financial statements will be restated due to the identification of accounting errors. The Company also will restate certain quarterly data for Fiscal 2015.

The restatement disclosed on April 3, 2018, resulted from accounting errors in the treatment of equity instruments granted to non-employees in 2012 and 2013 and materially impacted our financial statements for the fiscal year ended December 31, 2016. The restatement disclosed today results from accounting errors in the treatment of equity instruments granted to employees in 2012 and 2013 which materially impacted our financial statements Fiscal 2015, Fiscal 2016, and the first three quarters in Fiscal 2017.

The accounting errors had no effect on cash and no impact on the Company’s assets, liabilities, or net cash flows from operating, investing, and financing activities on the statement of cash flows during Fiscal 2015, Fiscal 2016 or the quarterly periods in Fiscal 2017. The Company estimates that the combined non-cash effect of both the April 3, 2018 restatement disclosure and today’s disclosure of the accounting errors would lead to a net reduction in previously recognized stock-based compensation expense of approximately $2.5 million and $18.6 million for Fiscal 2015 and Fiscal 2016, respectively and an increase in previously recognized stock-based compensation expense of approximately of $5.7 million for the first three fiscal quarters of Fiscal 2017.

In addition, the Company will make correction of certain immaterial errors in revenue and cost of revenue, which will decrease previously reported net revenues and cost of revenues by approximately $0.6 million for Fiscal 2016 and by approximately $1.8 million for the first three fiscal quarters of Fiscal 2017. These errors had no impact on the previously reported net loss.

These errors were discovered by management during the course of its preparation of the Annual Report on Form 10-K for Fiscal 2017, and the audit of the financial results for Fiscal 2017. None of the errors implicate misconduct with respect to the Company or its management or employees.

The Company will restate its financial statements for Fiscal 2015, Fiscal 2016, certain quarterly data for Fiscal 2015, certain quarterly data for Fiscal 2016, and the first three fiscal quarters of Fiscal 2017, in its Annual Report on Form 10-K for Fiscal 2017, which the Company expects to file with the Securities and Exchange Commission on or before April 17, 2018.

About EXP WORLD HOLDINGS, INC. (OTCMKTS:EXPI)

eXp World Holdings, Inc., formerly eXp Realty International Corporation, is a cloud-based real estate company. The Company’s segments include Real Estate Brokerage Services, Mortgage Origination Services, and Corporate and Other. It operates over the Internet through its Website, http://exprealty.com and a cloud-based platform to provide its residential real estate brokerage services. Through its Website, buyers can search real-time property listings, and sellers list their properties and gain exposure across the various markets it operates within. It also provides buyers and sellers access to a network of professional, consumer-centric agents and brokers. It provides agents, teams of agents and brokerage-owners with the systems, support, professional development and infrastructure. This includes delivering around the clock access to collaborative tools and training for real estate brokers and agents. The Company also operates a loan brokerage origination company.