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Crexendo Reports First Quarter 2013 Financial Results

Crexendo Reports First Quarter 2013 Financial Results 
PHOENIX, AZ -- (Marketwired) -- 05/15/13 --  Crexendo, Inc. (NYSE
MKT: EXE), a hosted services company that provides web hosting,
hosted telecommunications services, search engine optimization
management, link building, e-commerce software, website development
and broadband internet services for businesses and entrepreneurs,
today reported financial results for its first quarter of 2013.  
Financial highlights for Crexendo's first quarter 2013 included:  
Consolidated revenue for the first quarter of 2013 decreased 42% to
$3.0 million compared to $5.3 million for the first quarter of prior
year.  
Net loss for the first quarter of 2013 was $(398,000) or $(0.04) per
diluted common share, compared to net income of $197,000 or $0.02 per
diluted common share for the first quarter of prior year.  
Cash used for operations for the first quarter of 2013 was $(1.8)
million compared to cash provided by operations of $652,000 for the
first quarter of prior year.  
Segment Results 
The Company has three operating segments, which consist of
StoresOnline, Crexendo Web Services and Crexendo Network Services.
Effective October 1, 2012, the Company changed its reporting segments
to reflect the allocation of previously unallocated corporate
expenses to each of the three operating segments. The Company revised
its segment reporting to reflect changes in how the Chief Operating
Decision Maker (CODM) internally measures performance and allocates
resources. Segment operating results for the prior year has been
revised to conform to current year segment operating results
presentation. 
StoresOnline 
Revenue for the first quarter of 2013 decreased 52% to $2.1 million
compared to $4.4 million for the prior year quarter. Following our
decision to suspend our direct mail seminar sales in July 2011,
revenue from our StoresOnline segment has been generated primarily
through principal amounts collected on historical sales of
StoresOnline products and services sold through EPTAs. Fees for our
StoresOnline products and services sold under EPTAs are recognized as
revenue as cash payments are received from the customer and not at
the time of sale. 
Total segment operating expenses decreased 61% to $1.1 million
compared to $2.7 million for the prior year quarter.  
Segment other income, primarily related to interest on the collection
of accounts receivable for the first quarter of 2013 decreased 73% to
$206,000 compared to $762,000 in the prior year quarter. 
Total segment income before income taxes for the first quarter of
2013 decreased 50% to $1.2 million compared to $2.4 million in the
prior year quarter.  
Crexendo Web Services 
Revenue for the first quarter of 2013 decreased 31% to $533,000, from
$770,000 in the prior year quarter. Web Services backlog, which is
anticipated to be recognized within the next twelve months, was $1.3
million at March 31, 2013 compared to a backlog of $1.2 million at
March 31, 2012.  
Total segment operating expenses for the first quarter of 2013
decreased 45% to $1.2 million compared to $2.2 million in the prior
year quarter. 
Crexendo Network Services  
Revenue for the first quarter of 2013 increased 413% to $385,000
compared to $75,000 in the prior year quarter. Network Services
backlog, which is anticipated to be recognized within the next
thirty-six months, was $3.4 million at March 31, 2013 compared to a
backlog of $965,000 at March 31, 2012.  
Total Network Services operating expenses for the first quarter of
2013 increased 60% to $1.6 million compared to $1.0 million in the
prior year quarter.  
Steven G. Mihaylo, Chief Executive Officer, commented "I have
confidence that this quarter's results show we are on a path toward
profitability. This is the second quarter in a row that sales results
are fully in line with our plan. Our backlog is at healthy levels,
and I am very pleased with our marketing and sales initiatives. We
continue to add resellers to our dealer program and sales are
beginning to increase. I have high expectations for continued growth
from that program. We are able to provide world class service to
customers of all sizes, and every day our products and services
improve. We continue to put our legacy issues firmly in the past; we
were able to resolve the dispute with the landlord in Orem, Utah on
terms that were reasonable and fair. Every day we continue to move
further away from the issues that burdened this company. While our
results are in line with our plan and my expectations, every day I
work with our management team to streamline operations, keep costs at
acceptable levels, improve sales and increase our product reach. We
continue to monitor productivity of our sales force improving the
efficiencies of our sales team. We continue to look at ways to
increase our organic sales while carefully reviewing strategic
accretive acquisitions." 
Mihaylo continued, "I understand that our shareholders will not be
satisfied until we are profitable and the results are fully in line
with our expectations. I will not be satisfied until this Company's
results demonstrate it is the world class company that I know it to
be. I am dedicated to working with this management team to realize
that goal. I do however look at the progress we have accomplished
over the last two years and realized we have done incredible work, we
have resolved mountains of issues that would have destroyed most
companies, completely retooled our business and have built a strong
company with amazing people and products. I am very proud of this
team and confident and excited about our future." 
Conference Call  
The Company is hosting a conference call today, May 15, 2013 at 5:00
PM EDT. The conference call will be broadcast live over the Internet
at http://www.crexendo.com. If you do not have Internet access, the
telephone dial-in number is 888-428-9480 for domestic participants
and 719-325-2323 for international participants. The conference ID to
join the call is 5131127. Please dial in five to ten minutes prior to
the beginning of the call at 5:00 PM EDT.  
About Crexendo  
Crexendo is a hosted services company that provides web hosting,
hosted telecommunications services, search engine optimization
management, link building, e-commerce software, website development
and broadband internet services for businesses and entrepreneurs. Our
services are designed to make enterprise-class hosting services
available to small and medium-sized businesses at affordable monthly
rates.  
Safe Harbor Statement 
This press release contains forward-looking statements. The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor" for
such forward-looking statements. The words "believe," "expect,"
"anticipate," "estimate," "will" and other similar statements of
expectation identify forward-looking statements. Specific
forward-looking statements in this press release include information
about Crexendo (i) backlogs being at healthy levels; (ii) being
pleased with its marketing and sales initiatives; adding resellers to
our dealer program and having high expectations for continued growth
from that program; (iii) providing world class service to customers
of all sizes with products and services improving; (iv) resolving the
Orem lawsuit on a fair basis while putting legacy issues firmly in
the past and continuing to move further away from the issues that
burdened the company; (v) working to streamline operations, keep
costs at acceptable levels, improve sales and incre
ase product reach;
(vi) continuing to look at ways to increase organic sales while
carefully reviewing strategic accretive acquisitions; (vii) being
profitable and results are fully in line with company expectations;
(vii) being a world class company and (ix) being proud of this team
and confident and excited about its future. 
For a more detailed discussion of risk factors that may affect
Crexendo's operations and results, please refer to the company's Form
10-K for the year ended December 31, 2012, and Form 10Q for the
period ending March 31, 2013. These forward-looking statements speak
only as of the date on which such statements are made, and the
company undertakes no obligation to update such forward-looking
statements, except as required by law.  


 
                                                                            
                      CREXENDO, INC. AND SUBSIDIARIES                       
                   Condensed Consolidated Balance Sheets                    
              (In thousands, except par value and share data)               
                                (Unaudited)                                 
                                                                            
                                                                            
                                                   March 31,   December 31, 
                                                     2013          2012     
                                                 ------------  ------------ 
Assets                                                                      
                                                                            
Current Assets:                                                             
  Cash and cash equivalents                      $      5,565  $      7,440 
  Restricted cash                                       1,444         1,444 
  Trade receivables, net of allowance of                                    
   doubtful accounts of $883 as of March 31,                                
   2013 and $1,326 as of December 31, 2012              1,937         3,043 
  Inventories                                             114           171 
  Equipment financing receivables                          38            28 
  Income taxes receivable                                  76           434 
  Prepaid expenses and other                              440           333 
  Certificate of Deposit                                  250             - 
                                                 ------------  ------------ 
    Total Current Assets                                9,864        12,893 
                                                                            
Certificate of deposit                                    250           500 
Long-term trade receivables, net of allowance of                            
 doubtful accounts of $145 as of March 31, 2013                             
 and $196 as of December 31, 2012                         259           395 
Long-term equipment financing receivables                 137            96 
Property and equipment, net                             2,915         3,172 
Deferred income tax assets, net                           105           103 
Intangible assets                                           -             6 
Goodwill                                                  265           265 
Other long-term assets                                     97            97 
                                                 ------------  ------------ 
    Total Assets                                 $     13,892  $     17,527 
                                                 ============  ============ 
                                                                            
Liabilities and Stockholders' Equity                                        
                                                                            
Current Liabilities:                                                        
  Accounts payable                               $        302  $        418 
  Accrued expenses and other                            1,176         3,010 
  Deferred income tax liability                           105           103 
  Deferred revenue, current portion                     1,921         3,052 
                                                 ------------  ------------ 
    Total Current Liabilities                           3,504         6,583 
                                                                            
Deferred revenue, net of current portion                  261           399 
Other long-term liabilities                                 -           253 
                                                 ------------  ------------ 
    Total Liabilities                                   3,765         7,235 
                                                 ------------  ------------ 
                                                                            
Stockholders' Equity:                                                       
  Preferred stock, par value $0.001 per share -                             
   authorized 5,000,000 shares; none issued                 -             - 
  Common stock, par value $0.001 per share -                                
   authorized 100,000,000 shares; 10,671,388                                
   shares outstanding as of March 31, 2013 and                              
   10,669,201 shares outstanding as of December                             
   31, 2012                                                11            11 
  Additional paid-in capital                           50,057        49,824 
  Accumulated deficit                                 (39,941)      (39,543)
                                                 ------------  ------------ 
    Total Stockholders' Equity                         10,127        10,292 
                                                 ------------  ------------ 
                                                                            
    Total Liabilities and Stockholders' Equity   $     13,892  $     17,527 
                                                 ============  ============ 
                                                                            
                                                                            
                      CREXENDO, INC. AND SUBSIDIARIES                       
              Condensed Consolidated Statements of Operations               
              (In thousands, except per share and share data)               
                                (Unaudited)                                 
                                                                            
                                               Three Months Ended March 31, 
                                               ---------------------------- 
                                                    2013           2012     
                                               -------------  ------------- 
                                                                            
Revenue                                        $       3,022  $       5,255 
                                                                            
Operating expenses:        
                                                 
  Cost of revenue                                      1,042          1,421 
  Selling and marketing                                  908            933 
  General and administrative                           1,438          3,033 
  Research and development                               481            594 
                                               -------------  ------------- 
    Total operating expenses                           3,869          5,981 
                                               -------------  ------------- 
                                                                            
Loss from operations                                    (847)          (726)
                                               -------------  ------------- 
                                                                            
Other income (expense):                                                     
  Interest income                                        219            742 
  Other income (expense), net                             (7)            28 
                                               -------------  ------------- 
    Total other income, net                              212            770 
                                               -------------  ------------- 
                                                                            
Income (loss) before income tax provision               (635)            44 
                                                                            
Income tax benefit                                       237            153 
                                                                            
                                               -------------  ------------- 
Net income (loss)                              $        (398) $         197 
                                               =============  ============= 
                                                                            
Net income (loss) per common share:                                         
  Basic                                        $       (0.04) $        0.02 
  Diluted                                      $       (0.04) $        0.02 
                                                                            
Dividends per common share:                    $           -  $        0.02 
                                                                            
Weighted average common shares outstanding:                                 
  Basic                                           10,669,513     10,530,066 
  Diluted                                         10,669,513     10,566,273 
                                                                            
                                                                            
                      CREXENDO, INC. AND SUBSIDIARIES                       
         Condensed Consolidated Statements of Stockholders' Equity          
                     Three Months Ended March 31, 2013                      
                     (In thousands, except share data)                      
                                (Unaudited)                                 
                                                                            
                                      Additional                  Total     
                       Common Stock     Paid-in  Accumulated  Stockholders' 
                    -----------------                                       
                      Shares   Amount   Capital    Deficit        Equity    
                    ---------- ------ ---------- -----------  ------------- 
Balance, January 1,                                                         
 2013               10,669,201 $   11 $   49,824 $   (39,543) $      10,292 
  Expense for stock                                                         
   options granted                                                          
   to employees                              230                        230 
  Proceeds from the                                                         
   exercise of                                                              
   stock options         2,187                 3                          3 
  Net loss                                              (398)          (398)
                    ---------- ------ ---------- -----------  ------------- 
Balance, March 31,                                                          
 2013               10,671,388 $   11 $   50,057 $   (39,941) $      10,127 
                    ========== ====== ========== ===========  ============= 
                                                                            
                                                                            
                      CREXENDO, INC. AND SUBSIDIARIES                       
              Condensed Consolidated Statements of Cash Flows               
                               (In thousands)                               
                                (Unaudited)                                 
                                                                            
                                                        Three Months Ended  
                                                             March 31,      
                                                       -------------------- 
                                                          2013       2012   
                                                       ---------  --------- 
                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES                                        
Net (loss) income                                      $    (398) $     197 
Adjustments to reconcile net (loss) income to net cash                      
 provided by (used for) operating activities:                               
  Release of lease abandonment accrual                      (606)           
  Depreciation and amortization                              317        391 
  Expense for stock options issued to employees              230        253 
  Change in uncertain tax positions                         (253)      (167)
Changes in assets and liabilities:                                          
  Trade receivables                                        1,242      3,179 
  Equipment financing receivables                            (51)         - 
  Inventories                                                 57        (31)
  Income taxes receivable                                    358         18 
  Prepaid expenses and other                                (107)       135 
  Other long-term assets                                       6          2 
  Accounts payable, accrued expenses and other            (1,344)      (128)
  Deferred revenue                                        (1,269)    (3,197)
                                                       ---------  --------- 
    Net cash provided by (used for) operating                               
     activities                                           (1,818)       652 
                                                       ---------  --------- 
CASH FLOWS FROM INVESTING ACTIVITIES                                        
  Acquisition of property and equipment                      (55)      (711)
  Sale of property and equipment                               1          - 
                                                       ---------  --------- 
    Net cash (used for) provided by investing                               
     activities                                              (54)      (711)
                                                       ---------  --------- 
CASH FLOWS FROM FINANCING ACTIVITIES                                        
  Proceeds from exercise of stock options                      3        336 
  Payments made on contingent
 consideration                   (6)        (1)
  Dividend payments                                            -       (211)
                                                       ---------  --------- 
      Net cash (used for) provided by financing                             
       activities                                             (3)       124 
                                                       ---------  --------- 
                                                                            
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS      (1,875)        65 
                                                                            
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD             7,440      8,658 
                                                       ---------  --------- 
CASH AND CASH EQUIVALENTS, END OF PERIOD               $   5,565  $   8,723 
                                                       =========  ========= 
                                                                            
Supplemental disclosure of cash flow information:                           
Cash (received) during the period:                                          
  Income taxes                                         $    (342) $      (4)
Supplemental disclosure of non-cash investing and                           
 financing information:                                                     
  Dividends declared                                           -        211 
  Purchase of property and equipment included in                            
   accounts payable                                            6        125 

  
Contact: 
Crexendo, Inc.
Steven G. Mihaylo
CEO
602-345-7777
Smihaylo@crexendo.com