10-K: Crexendo, Inc. Details Capital Stock and Reports Financial Results in Annual Filing

Crexendo, Inc.'s annual 10-K filing details the company's capital stock structure, financial performance, and risk factors for the fiscal year ended December 31, 2023.

Summary

• Crexendo, Inc. has the authority to issue up to 55,000,000 shares, with 50,000,000 designated as Common Shares and 5,000,000 as Preferred Stock.
• As of December 31, 2023, 26,130,218 shares of Common Stock were issued and outstanding, and no shares of Preferred Stock were issued.
• The company's Common Stock is listed on the Nasdaq Capital Market under the symbol CXDO.
• The company operates through two segments: Cloud Telecommunications Services and Software Solutions.
• Cloud Telecommunications Services revenue was $35,152,000 in 2023, compared to $22,406,000 in 2022.
• Software Solutions revenue was $18,047,000 in 2023, compared to $15,148,000 in 2022.
• The company reported a consolidated revenue of $53,199,000 in 2023, compared to $37,554,000 in 2022.
• The company's loss before income tax was $264,000 in 2023, compared to a loss of $36,175,000 in 2022.
• The company had a net loss of $362,000 in 2023, compared to a net loss of $35,413,000 in 2022.
• The company's backlog increased 40% to $44,810,000 as of December 31, 2023, compared to $32,016,000 as of December 31, 2022.
• The company had net operating loss carry-forwards of approximately $21,480,000 as of December 31, 2023.

Sentiment

Score: 7

Explanation: The document shows a significant improvement in financial performance, with a substantial increase in revenue and a reduction in losses. However, the company still faces significant risks and competition, which tempers the overall positive outlook.

Positives

• The company experienced substantial revenue growth in both its Cloud Telecommunications Services and Software Solutions segments.
• The company significantly reduced its operating losses year-over-year.
• The company's backlog increased, indicating future revenue potential.
• The company has a substantial amount of net operating loss carry-forwards that could be used to offset future taxable income.

Negatives

• The company still reported a net loss for the year ended December 31, 2023.
• The company has a history of operating losses and may experience losses in the future.
• The company's ability to use its net operating loss carry-forwards may be limited in the event of an ownership change.

Risks

• The company is subject to risks related to public health crises, such as the COVID-19 pandemic, which had an adverse effect on operating results in 2022.
• Adverse conditions in the U.S. and international economies could impact the company's results of operations and financial condition.
• The company's quarterly and annual results of operations have fluctuated in the past and may continue to do so in the future.
• The company faces intense competition from traditional telephone companies, wireless companies, cable companies, and alternative voice communication providers.
• Cyber attacks impacting the company's networks or systems could have an adverse effect on its business.
• Natural disasters, extreme weather conditions, acts of war, terrorist or other hostile acts could cause damage to the company's infrastructure and result in significant disruptions to its operations.
• The company depends on its senior management and other key personnel, and a loss of these individuals could adversely impact its ability to execute its business plan and grow its business.
• The company's telecommunications and managed services success depends in part upon the capacity, reliability, and performance of its several third-party providers and their network infrastructure.
• Changes in laws and regulations and the interpretation and enforcement of such laws and regulations could adversely impact the company's financial results or ability to conduct business.
• The company's stock price may be volatile and may decline.

Future Outlook

The company expects to continue to invest in sales and marketing, and in research and development, among other areas of its business, in order to compete more successfully for the business of companies that are transitioning to cloud communications and otherwise position itself to take advantage of long-term revenue-generating opportunities.

Management Comments

• The company believes that its proprietary implementation of standard Web, IP, Cloud, Mobile and Internet technologies represent a key component of its business model.
• The company anticipates that it can compete successfully by relying on its infrastructure, marketing strategies and techniques, systems and procedures, and by adding additional products and services in the future.
• The company believes it can continue the operation of its business by periodic review and revision to its product offerings and marketing approach.

Industry Context

The market for cloud business communications services is large and increasingly competitive, with competition expected to continue to increase in the future. The company competes with traditional on-premise hardware providers, software providers, established communications providers, other cloud companies, large internet companies, and established contact center providers.

Comparison to Industry Standards

• The company competes with major players like Alcatel-Lucent, Avaya, Cisco, Microsoft, and RingCentral, all of whom have significantly greater resources.
• The company's UCaaS offering competes against established providers like 8x8 and RingCentral, who may offer comparable services at comparable or lower pricing.
• The company's Software Solutions division competes against numerous competitors including established well-financed competitors (such as Cisco and Microsoft).
• The company's managed services division competes with both large and regional providers, many of whom have longer operating histories and greater resources.

Legal Proceedings

• The company receives inquiries from federal, state, city and local government officials as well as the FCC and taxing authorities in the various jurisdictions in which it operates.
• The company also receives complaints and inquiries in the ordinary course of its business from both customers and governmental and non-governmental bodies on behalf of customers, and in some cases these customer complaints have risen to the level of litigation.

Related Party Transactions

• The company has a three-year promissory note with Bryan Dancer, a greater than five percent shareholder, in the amount of $1.1 million.

Stakeholder Impact

• The company's performance impacts shareholders through stock price and potential dividends.
• Employees are impacted through compensation, benefits, and job security.
• Customers are impacted through the quality and reliability of the company's products and services.
• Suppliers and creditors are impacted through the company's ability to pay its obligations.

Next Steps

• The company will continue to implement measures to protect its infrastructure and operations from the impacts of natural disasters and cyber attacks.
• The company will continue to invest in sales and marketing, and in research and development.
• The company expects to undertake additional acquisitions, mergers or change to its capital structure to expand its business.

Key Dates

Keywords

Cloud Telecommunications, Software Solutions, UCaaS, VoIP, SaaS, Managed IT Services, Telecommunications, Software Licenses, Recurring Revenue, Net Operating Loss