UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ——————— ——————— ——————— Emerging growth company ☐ FORM 10-Q ——————— (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 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 001-32277 Crexendo, Inc. (Exact name of registrant ...

Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2020 increased 12% to $4.1 million compared to $3.6 million in Q2 2019 [17] - Service revenue for Q2 2020 increased 15% to $3.6 million compared to $3.1 million in Q2 2019 [17] - Net income for Q2 2020 was $508,000 or $0.03 per share, an increase from $338,000 or $0.02 per share in Q2 2019 [20] - Non-GAAP net income for Q2 2020 was $660,000 or $0.04 per share, compared to $447,000 or $0.03 per share in the same period of the prior year [21] - EBITDA for Q2 2020 was $568,000, up from $362,000 in the same period of the prior year [21] Business Line Data and Key Metrics Changes - Cloud-telecommunications segment service revenue for Q2 2020 increased 16% to $3.5 million compared to $3 million in Q2 2019 [18] - Product revenue for Q2 2020 decreased 4% to $449,000 compared to $467,000 in Q2 2019 [19] - Web service segment revenue decreased by 18% or $29,000 in Q2 2020 [18] Market Data and Key Metrics Changes - The company reported a sales backlog increase of $750,000 to $27.4 million during the quarter [34][80] - Cash, cash equivalents, and restricted cash balance at June 30, 2020, was $5.1 million, up from $4.3 million at December 31, 2019 [27] Company Strategy and Development Direction - The company aims to grow both organically and through creative acquisitions following its NASDAQ up listing [13][14] - Management believes the digital transformation accelerated by COVID-19 positions the company well to capitalize on the demand for cloud services [9][16] - The focus remains on maintaining profitability while investing in marketing and R&D to enhance offerings [36][38] Management's Comments on Operating Environment and Future Outlook - Management noted a rebound in sales after an initial slowdown due to COVID-19, with increased urgency from customers needing cloud technology [30][33] - The company expects to continue its growth momentum and is optimistic about the second half of the year [41][66] - Management highlighted the importance of adapting to the new normal of remote workforces and the ongoing demand for communication infrastructure [40][66] Other Important Information - The company has a strong balance sheet and is focused on increasing shareholder value while managing costs effectively [16][35] - Management indicated that they are continuously enhancing their platform with new features and capabilities [38] Q&A Session Summary Question: Inquiry about operating expenses and COVID impact - Management indicated that operating expenses have been managed carefully, with some increases year-over-year but overall focus on cost control [45] Question: Changes in sales cycle due to demand return - Management noted a significant rebound in sales in May and June as businesses recognized the need for better infrastructure to support remote work [48] Question: Marketing spend and ROI expectations - Management expressed confidence that increased marketing efforts could lead to higher revenue growth, aiming to push service revenue growth into the low 20% range [51][53] Question: Customer concentration and partner channel sales - Management acknowledged that while a few partners contribute significantly to sales, they are focused on improving performance across all partners [58] Question: Churn rates before and during COVID - Management reported a slight increase in churn rates during COVID but emphasized that they remain low historically [78] Question: Backlog status - The backlog increased by $750,000 to $27.4 million during the quarter [80] Question: Impact of promotions on gross margins - Management stated that promotions have not significantly impacted gross margins, as many are structured as deferred payments [86] Question: Acquisition strategy and market landscape - Management indicated that they are seeing more acquisition opportunities as smaller companies seek to combine with larger firms for stability [70][96]

Revenue Performance - Cloud Telecommunications service revenue increased 16% or $487,000 to $3,469,000 for the three months ended June 30, 2020 compared to $2,982,000 for the same period in 2019[137]. - Total revenue for the three months ended June 30, 2020 was $4,054,000, an increase of 12% or $440,000 from $3,614,000 for the same period in 2019[147]. - Net income for the three months ended June 30, 2020 was $508,000, up 50% from $338,000 for the same period in 2019[147]. - For the six months ended June 30, 2020, service revenue increased 15% or $938,000 to $7,093,000 compared to $6,155,000 for the same period in 2019[152]. - Non-GAAP net income for Q2 2020 was $660,000, a 47% increase from $447,000 in Q2 2019[163]. - Total revenue for the Cloud Telecommunications segment was $3,918,000 in Q2 2020, up from $3,449,000 in Q2 2019, representing a 14% increase[168]. - Service revenue for Cloud Telecommunications increased 17% or $989,000, to $6,801,000 for the six months ended June 30, 2020 compared to $5,812,000 for the same period in 2019[179]. Product Revenue - Cloud Telecommunications product revenue decreased 4% or $18,000 to $449,000 for the three months ended June 30, 2020 compared to $467,000 for the same period in 2019[137]. - Product revenue for the six months ended June 30, 2020 decreased 13% or $123,000 to $828,000 compared to $951,000 for the same period in 2019[154]. - Product revenue decreased by 4% or $18,000 to $449,000 for Q2 2020, influenced by the timing of installations[170]. Backlog and Future Prospects - As of June 30, 2020, the backlog was $27,349,000, an increase from $24,772,000 as of June 30, 2019[137]. - Backlog increased by 10% or $2,577,000 to $27,349,000 as of June 30, 2020, compared to $24,772,000 as of June 30, 2019[172]. - Backlog increased 10% or $2,577,000 to $27,349,000 as of June 30, 2020 compared to $24,772,000 as of June 30, 2019[181]. Expenses - Research and development expenses rose by 26% or $49,000 to $236,000 for Q2 2020, driven by increased costs for customer interface maintenance and mobile application development[174]. - Selling and marketing expenses increased by 10% or $99,000 to $1,062,000 for Q2 2020, primarily due to higher salaries and commissions[175]. - General and administrative expenses increased 11% or $209,000, to $2,105,000 for the six months ended June 30, 2020 compared to $1,896,000 for the same period in 2019[187]. - Research and development expenses increased 27% or $105,000, to $498,000 for the six months ended June 30, 2020 compared to $393,000 for the same period in 2019[185]. - Selling and marketing expenses increased 13% or $238,000, to $2,100,000 for the six months ended June 30, 2020 compared to $1,862,000 for the same period in 2019[186]. Cost of Service Revenue - Cost of service revenue increased by 3% or $22,000 to $883,000 for Q2 2020, attributed to higher salaries and bandwidth costs[172]. - Cost of service revenue increased 7% or $124,000, to $1,828,000 for the six months ended June 30, 2020 compared to $1,704,000 for the same period in 2019[183]. - Cost of service revenue for Web Services increased 92% or $12,000, to $25,000 for the three months ended June 30, 2020 compared to $13,000 for the same period in 2019[192]. - Cost of service revenue increased by 6% or $3,000, to $50,000 for the six months ended June 30, 2020, primarily due to increased customer service salaries and benefits[199]. Financial Position - Working capital increased by 29% or $813,000, to $3,658,000 as of June 30, 2020, compared to $2,845,000 at December 31, 2019[205]. - Cash, cash equivalents, and restricted cash increased by 19% or $809,000, to $5,089,000 at June 30, 2020, compared to $4,280,000 at December 31, 2019[206]. - Total stockholders' equity increased by 32% or $1,387,000, to $5,774,000 as of June 30, 2020, compared to $4,387,000 at December 31, 2019[218]. - Notes payable increased to $2,979,000 at June 30, 2020, compared to $0 at December 31, 2019, due to financing for the corporate office building purchase and a Paycheck Protection Program loan[213]. - Inventories increased by 17% or $66,000, to $448,000 at June 30, 2020, compared to $382,000 at December 31, 2019[207]. - Prepaid expenses increased by 128% or $181,000, to $322,000 at June 30, 2020, compared to $141,000 at December 31, 2019[208]. Other Income and Expenses - Income before income taxes increased 49% or $169,000 to $511,000 for the three months ended June 30, 2020 compared to $342,000 for the same period in 2019[150]. - Net other expense increased 575% or $23,000, to $27,000 for the six months ended June 30, 2020 compared to $4,000 for the same period in 2019[189]. - Net other income decreased by 543% or $38,000, to $(31,000) for the six months ended June 30, 2020, due to increased foreign exchange losses[202]. Web Services Performance - Web Services revenue decreased 18% or $29,000 to $136,000 for the three months ended June 30, 2020 compared to $165,000 for the same period in 2019[138]. - Service revenue decreased by 15% or $51,000, to $292,000 for the six months ended June 30, 2020, compared to $343,000 for the same period in 2019[198].

Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2020 increased by 11% to $3.9 million compared to $3.5 million in Q1 2019 [11] - Service revenue for Q1 2020 increased by 16% to $3.5 million compared to $3 million in Q1 2019 [11] - Net income for Q1 2020 was $140,000 or $0.01 per share, down from $239,000 or $0.02 per share in Q1 2019 [11] - Non-GAAP net income for Q1 2020 was $275,000 or $0.02 per share, compared to $343,000 or $0.02 per share in the same period of the prior year [12] - EBITDA for Q1 2020 was $284,000, up from $263,000 in the same period of the prior year [12] Business Line Data and Key Metrics Changes - UCaaS service revenue increased by 18% to $3.3 million in Q1 2020 compared to $2.8 million in Q1 2019 [11] - Product revenue decreased by 22% to $379,000 in Q1 2020 compared to $484,000 in Q1 2019 [11] - Web Service Segment service revenue decreased by 12% or $22,000 in Q1 2020 [11] Market Data and Key Metrics Changes - The company reported a 172% increase in usage of collaboration tools in March 2020 [16] - Sales backlog increased to $26.6 million, a 10% increase year-over-year [20] Company Strategy and Development Direction - The company is focused on increasing investment in the business to support long-term growth [9] - Plans to list on NASDAQ as the company has met all organic requirements [10] - The company is looking for accretive acquisitions to accelerate growth while maintaining focus on sales and service [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing the essential nature of their services during the COVID-19 pandemic [5] - The pandemic is expected to accelerate the migration of businesses to cloud communications [16] - Management believes the company is well-positioned to capitalize on post-COVID-19 opportunities [8] Other Important Information - The company took the FCC's Keep America Connected Pledge, agreeing not to disconnect customers for nonpayment during the crisis [7] - The company purchased its office building for $2.5 million, which is expected to save over $100,000 annually on facility costs [22] Q&A Session Summary Question: Changes in customer phone usage during lockdown - Management noted an increase in talk time due to remote work, with significant spikes in calling traffic [26] Question: Uptick in small business churn due to economic shutdown - Management indicated it is too early to assess the full impact but noted low attrition rates of less than 1% per quarter [27][28] Question: Impact of COVID-19 on product segments - Management attributed the decline in product revenue primarily to COVID-19, with previous high product revenue in Q1 2019 due to a rush install [30] Question: Changes in sales cycle since the pandemic - Management observed a slowdown in decision-making during the initial lockdown but noted that this is starting to recover [32] Question: Feedback from new partners - Management reported positive feedback from partners, especially those in non-telecom sectors who are now offering Crexendo products [34] Question: Competitive environment changes - Management acknowledged a competitive market but emphasized their strong positioning and focus on smaller, accretive acquisitions [41][42] Question: Metrics for purchasing the office building - Management evaluated the decision based on current lease rates and expected savings on operating expenses [44][45]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Q1 2020 financial statements show revenue growth to $3.87 million, a net income decrease to $140,000, total assets of $9.8 million, and negative operating cash flow [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2020, total assets increased to $9.81 million, primarily due to a new office building, with total liabilities rising to $5.10 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $5,251 | $5,731 | | **Total Assets** | **$9,812** | **$7,783** | | **Total Current Liabilities** | $2,671 | $2,886 | | **Total Liabilities** | **$5,096** | **$3,396** | | **Total Stockholders' Equity** | **$4,716** | **$4,387** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2020, total revenue increased 10.7% to $3.87 million, but net income declined 41.4% to $140,000 due to a 13.4% rise in operating expenses Statement of Operations Summary (in thousands) | Metric | Three Months Ended Mar 31, 2020 | Three Months Ended Mar 31, 2019 | | :--- | :--- | :--- | | **Total Revenue** | **$3,867** | **$3,492** | | Service Revenue | $3,488 | $3,008 | | Product Revenue | $379 | $484 | | **Total Operating Expenses** | **$3,686** | **$3,251** | | **Income from Operations** | **$181** | **$241** | | **Net Income** | **$140** | **$239** | | **Diluted EPS** | **$0.01** | **$0.02** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2020, net cash decreased by $745,000, primarily due to $288,000 used in operations and $528,000 for investing activities, including property purchases Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2020 | Three Months Ended Mar 31, 2019 | | :--- | :--- | :--- | | Net cash provided by/(used for) operating activities | $(288) | $294 | | Net cash used for investing activities | $(528) | $0 | | Net cash provided by/(used for) financing activities | $71 | $(49) | | **Net Increase/(Decrease) in Cash** | **$(745)** | **$245** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, segment reporting, and key events including the DoubleHorn acquisition, corporate office purchase, and a $1 million PPP loan - The company operates through two segments: Cloud Telecommunications and Web Services, with **over 90%** of total revenue generated from customers within North America[25](index=25&type=chunk)[62](index=62&type=chunk) - On December 31, 2019, the company acquired certain assets from DoubleHorn, LLC for approximately **$351,000**, accounted for as an asset acquisition[90](index=90&type=chunk) - In January 2020, the company entered into a **$2.0 million** term loan to finance the purchase of its corporate office building[97](index=97&type=chunk) - Subsequent to the quarter end, on April 21, 2020, the company received a **$1 million** loan pursuant to the Paycheck Protection Program (PPP) under the CARES Act[119](index=119&type=chunk) Revenue Disaggregation by Segment (Q1 2020 vs Q1 2019, in thousands) | Segment | Q1 2020 Revenue | Q1 2019 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | Cloud Telecommunications | $3,711 | $3,314 | +12.0% | | Web Services | $156 | $178 | -12.4% | | **Total** | **$3,867** | **$3,492** | **+10.7%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 10.7% revenue growth, net income decline due to higher expenses, 10% growth in Cloud Telecommunications backlog to $26.6 million, and reduced liquidity [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q1 2020 consolidated revenue increased due to services, but higher operating expenses led to a 41% decrease in income before tax to $143,000 - Service revenue increased **16% YoY**, driven by an **18%** increase in Cloud Telecommunications service revenue[135](index=135&type=chunk) - Product revenue decreased **22% YoY**, with management noting that revenue fluctuates based on the timing of customer installations[136](index=136&type=chunk) - The decrease in income before tax was primarily due to increased operating expenses, including a **$51,000** write-off of leasehold improvements and **$85,000** in additional salary and benefits related to employee profit sharing plans[137](index=137&type=chunk) [Use of Non-GAAP Financial Measures](index=32&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company uses Non-GAAP net income and Adjusted EBITDA, with Q1 2020 Non-GAAP net income at $275,000 and Adjusted EBITDA increasing to $389,000 Reconciliation of U.S. GAAP Net Income to Non-GAAP Measures (in thousands) | Metric | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | U.S. GAAP net income | $140 | $239 | | Share-based compensation | $105 | $91 | | Amortization of intangible assets | $30 | $13 | | **Non-GAAP net income** | **$275** | **$343** | | **EBITDA** | **$284** | **$263** | | **Adjusted EBITDA** | **$389** | **$354** | [Segment Operating Results](index=34&type=section&id=Segment%20Operating%20Results) Cloud Telecommunications revenue grew 12% to $3.7 million with backlog increasing 10% to $26.6 million, while Web Services revenue declined 12% to $156,000 - Cloud Telecommunications service revenue increased **18% YoY**, driven by growth in contracted services and usage charges[151](index=151&type=chunk) - The Cloud Telecommunications backlog increased **10%** to **$26.6 million** as of March 31, 2020, compared to **$24.2 million** a year prior[154](index=154&type=chunk) - Web Services revenue decreased **12% YoY** primarily due to a decline in hosting revenue[164](index=164&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and equivalents decreased by $745,000 to $3.5 million due to cash used in operations and the corporate office building purchase - Cash and cash equivalents stood at **$3.5 million** as of March 31, 2020, down from **$4.3 million** at year-end 2019[169](index=169&type=chunk) - The company purchased its corporate office building from a related party (a company owned by the CEO) for **$2.5 million** in January 2020[187](index=187&type=chunk) - A new **$2.0 million** note payable was taken on to finance the building purchase[179](index=179&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not required for smaller reporting companies - Disclosure is not required for this item[189](index=189&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2020[189](index=189&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[190](index=190&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any material pending or threatened legal proceedings - There are no material legal proceedings pending or threatened against the company[192](index=192&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The COVID-19 outbreak is identified as a new material risk factor, potentially impacting customer demand, collections, and the supply chain, with uncertain future effects - The novel coronavirus (COVID-19) outbreak is identified as a **significant risk factor** that could adversely affect business operations, customer demand, and supply chain[193](index=193&type=chunk) - Potential impacts include reduced customer spending, contract terminations, supply chain disruptions from China, and challenges for the sales team due to travel restrictions[194](index=194&type=chunk)[196](index=196&type=chunk) - As of the filing date, the outbreak had not yet had a material adverse impact on operations, but the future impact remains **highly uncertain**[195](index=195&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None reported[198](index=198&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data - Lists required certifications from the CEO and CFO (pursuant to Rules 13a-14(a) and 18 U.S.C. Section 1350) and XBRL interactive data files as exhibits[199](index=199&type=chunk)

Crexendo, Inc. (NASDAQ:CXDO) Q4 2019 Earnings Conference Call March 3, 2020 5:30 PM ET Company Participants Steve Mihaylo - Chairman and CEO Doug Gaylor - President and COO Ron Vincent - CFO Jeff Korn - General Counsel Conference Call Participants Andrew King - Dougherty & Company Allen Klee - National Securities Kevin Dede - H.C. Wainright Maj Soueidan - GeoInvesting Edward Gilmore - Little Grapevine Michael Kaufman - MK Investments Operator Good day, ladies and gentlemen, and welcome to your Crescendo Fou ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ——————— Nevada 001-32277 87-0591719 (State or Other Jurisdiction of Incorporation or Organization) (Commission File Number) (I.R.S. Employer Identification No.) Title of each class Name of each exchange on which registered Common Stock, par value $0.001 per share OTCQX Marketplace FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019: Or ☐ TRANSITION ...

Crexendo, Inc (NASDAQ:CXDO) Q3 2019 Earnings Conference Call November 5, 2019 5:30 PM ET Company Participants Jeffrey Korn - General Counsel, Secretary Steve Mihaylo - Chairman and CEO Ron Vincent - CFO Doug Gaylor - COO and President Conference Call Participants William Gibson - ROTH Capital Partners Kevin Dede - H.C. Wainwright & Co Michael Kaufman - MK Investments Operator Good day, ladies and gentlemen, and welcome to the Crexendo’s Third Quarter 2019 Earnings Call. [Operator Instructions] At this time, ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ——————— ——————— ——————— FORM 10-Q ——————— (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 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 001-32277 Crexendo, Inc. (Exact name of registrant as specified in its chart ...

Crexendo, Inc. (NASDAQ:CXDO) Q2 2019 Earnings Conference Call August 6, 2019 5:30 PM ET Company Participants Steven Mihaylo - Chairman and CEO Jeffrey Korn - Secretary Ronald Vincent - CFO Douglas Gaylor - COO and President Conference Call Participants William Gibson - ROTH Capital Partners Kevin Dede - H.C. Wainwright & Co Michael Kaufman - MK Investments Arham Khan - Eden Capital Operator Good day, ladies and gentlemen, and welcome to the Crexendo’s Second Quarter 2019 Earnings Call. [Operator Instructio ...