eXp Realty International, Inc.
Condensed Consolidated Financial Statements
As of and for the period ending June, 30 2013

eXp Realty International, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

The accompanying notes are an integral part of these statements

eXp Realty International, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

The accompanying notes are an integral part of these statements

eXp Realty International, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

The accompanying notes are an integral part of these statements

eXp Realty International, Inc.
Notes to Condensed Consolidated Financial Statements

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without an audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2013, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2012 audited financial statements. The results of operations for the period ended June 30, 2013 are not necessarily indicative of the operating results for the full year.

The accompanying condensed consolidated financial statements include the accounts of eXp Realty International, Inc. and its subsidiaries eXp Realty, LLC; eXp Realty Washington, Inc.; eXp Realty of Canada, Inc.; and eXp Realty of Connecticut, LLC. All inter-company accounts and transactions have been eliminated upon consolidation.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates

Cash and cash equivalents

The Company considers all highly liquid investments with remaining maturities at the date of purchase of three months or less to be cash equivalents. The Company did not have any cash equivalents during the periods presented.

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 range from 2009 to 2012. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period.

Recent accounting pronouncements

There are no recently issued accounting pronouncements that the Company expects will have a material effect on its financial position, results of operations, or cash flows.

Note 2 – Restricted Cash

The Company’s restricted cash balance of $109,092 and $61,687 at June 30, 2013 and December 31, 2012, respectively consists of cash held by our brokers and agents on behalf real estate buyers that are in escrow. Since the Company does not have rights to the cash a corresponding customer deposit liability in the same amounts are recognized the consolidated balance sheet. When a sales transaction closes the restricted cash transfers to the sellers and the corresponding deposit liability is reduced.

Note 3 – Stockholders’ Equity

The Company is authorized to issue 50,000,000 shares of no par value common stock. At June 30, 2013 and December 31, 2012 the Company had 5,058,485 and 4,941,123, shares of common stock outstanding respectively.

During the six months ended June 30, 2013 the Company issued 35,549 shares for cash of $44,234 and 81,813 shares for services of $122,720.

Note 4 – Stock-Based Compensation

During the periods ended June 30, 2013 and December 31, 2012 the Company approved the issuance of both stock based compensation and stock options to certain employees, officers, directors, and service providers at the sole discretion of the Board of Directors.

The Company accounts for stock based compensation based on the intrinsic value of the awards and re-measures the intrinsic value at each reporting date through the date of exercise or other settlement. The final measure of compensation cost is recognized at the intrinsic value of the instrument at the date it is settled. Compensation cost for each period until settlement is based on the change in the intrinsic value of the instrument in each reporting period.

The Company’s currently issued stock options vest over periods ranging from 0 to 4 years and are exercisable for a period of 10 years.

The Company’s stock option activity is as follows:

For the six months ended June 30, 2013 and June 30, 2012 the Company’s stock options had an intrinsic value between $0.00 and $0.50 and $0.00, respectively. The Company recognized stock option expense of $268,627 and $0 for the six months ended June 30, 2013 and June 30, 2012 respectively.

The Company issued 81,813 shares of common stock for services valued at $122,720 for the six months ended June 30, 2013. The Company did not issue any shares of common stock for services for the six months ended June 30, 2012.

Note 5 – Income Taxes

Prior to the fiscal year ended December 31, 2012 the Company was primarily operating as a limited liability company, and as such was not liable for federal or state income taxes. All taxable income and losses were passed through to its members in accordance with each member’s ownership interest and taxed individually and not at the partnership level.

Upon conversion to a corporation, the Company uses an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. Using this approach requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In management’s opinion, it is uncertain the Company will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. For the periods presented, the Company incurred income and statutory state tax expense of $27,907 and $10,392 for the six months ended June 30, 2013 and June 30, 2012 respectively. Of these amounts recognized, $13,617 and $0 is based on estimated federal income tax for the periods ended June 30, 2013 and June 30, 2012 respectively. The estimated income tax accrual is included in accrued expenses.

The Company is no longer subject to federal, state and local tax examinations by tax authorities for the fiscal years before 2009.

Note 6 – Commitments and Contingencies

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 affect upon the Company’s financial position or results of operations.

Note 7 – Proposed Merger Transaction

On April 8, 2013, the Company entered into a non-binding letter of intent with Desert Canadians Ltd. (the “DSET”), a public Company controlled by Glenn Sanford, the Company’s Chief Executive Officer and President. The proposed transaction would involve DSET acquiring all of the outstanding securities of the Company in exchange for shares of common stock of DSET.

Stock options outstanding in the Company will be exchanged for stock options in DSET with expiry dates remaining the same and the exercise price being reduced by a factor to be agreed upon. The total paid by each option holder upon exercise of all his/her options will remain the same.

Closing of the transaction is subject to both parties executing a merger agreement and obtaining shareholder approval.