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What changed in Crexendo, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Crexendo, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+237 added−205 removedSource: 10-K (2026-03-03) vs 10-K (2025-03-04)

Top changes in Crexendo, Inc.'s 2025 10-K

237 paragraphs added · 205 removed · 180 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur Software Solutions technology includes a full suite of Voice over Internet Protocol (VoIP)/UC features with one low cost universal license, built out either in a client's own data centers, or on our Managed Infrastructure as a Service.
Biggest changeIt also provides users instant access to visual voicemail and call logs. · End User Portal and Unified Messaging with Voicemail, Call Recording and eFax inbox. · Collaboration products like group chat, SMS/MMS, document sharing, video and web conferencing. 5 Table of Contents Our Software Solutions technology includes a full suite of Voice over Internet Protocol (VoIP)/UC features with one low cost universal license, built out either in a client's own data centers, or on our Managed Infrastructure as a Service.
When we provide a free trial period, we do not begin to recognize recurring revenue until the trial period has ended and the customer has been billed for the services. 1 We generate software license revenue from the sale of perpetual software licenses, term-based software licenses that expire, and Software-as-a-Service ("SaaS") based software which are referred to as subscription arrangements.
When we provide a free trial period, we do not begin to recognize recurring revenue until the trial period has ended and the customer has been billed for the services. 1 Table of Contents We generate software license revenue from the sale of perpetual software licenses, term-based software licenses that expire, and Software-as-a-Service ("SaaS") based software which are referred to as subscription arrangements.
Our current functionality includes: · Carrier Grade with Geo-Redundant Reliability · Scalability to support communications service providers of all sizes · Video Conferencing and Collaboration ○ Webinars ○ Scheduling ○ Meeting Recordings ○ Content/Screen Sharing ○ Chat · Multi Tenant Architecture to support multiple resellers, agents and retail clients · Contact Center as a Service (CCaaS) ○ All-in-One Cloud Native Contact Center ○ Workforce Engagement ○ Call Recording ○ Employee Performance Management ○ Quality Assurance & Monitoring ○ Reporting, Analytics & Insights · Unified Communications as a Service (UCaaS) ○ PBX functionality in the Cloud ○ Natively integrated with messaging, team collaboration, meetings and contact center ○ Unified mobile and device experience ○ Full integration with Microsoft Teams ○ HD Audio ○ Call Transcription ○ Sentiment Analysis ○ Customizable Emergency Notifications ○ E911 Dynamic Routing ○ Cradle to Grave Reporting 4 Table of Contents · Infrastructure as a Service ○ Eliminate CAPEX and startup costs ○ Slash time to market with immediacy of HW, resources, and expertise ○ Client’s own SNAPsolution running in redundant Top-tier data centers both in the US and Europe ○ Public vs Private Network Separation ○ Multi-Layer Network Security ○ Access Control Tracking and Change Control Procedures ○ Offloads operations, upgrade and maintenance to Crexendo ○ Disaster recovery and business continuity ○ Operational flexibility with on-demand scaling ○ 5 “9”s service uptime reliability RESEARCH AND DEVELOPMENT We invested $5,552 and $4,860 for the years ended December 31, 2024 and 2023, respectively, in the research and development of our technologies and data centers.
Our current functionality includes: · Carrier Grade with Geo-Redundant Reliability · Scalability to support communications service providers of all sizes · Video Conferencing and Collaboration ○ Webinars ○ Scheduling ○ Meeting Recordings ○ Content/Screen Sharing ○ Chat · Multi Tenant Architecture to support multiple resellers, agents and retail clients · Contact Center as a Service (CCaaS) ○ All-in-One Cloud Native Contact Center ○ Workforce Engagement ○ Call Recording ○ Employee Performance Management ○ Quality Assurance & Monitoring ○ Reporting, Analytics & Insights · Unified Communications as a Service (UCaaS) ○ PBX functionality in the Cloud ○ Natively integrated with messaging, team collaboration, meetings and contact center ○ Unified mobile and device experience ○ Full integration with Microsoft Teams ○ HD Audio ○ Call Transcription ○ Sentiment Analysis ○ Customizable Emergency Notifications ○ E911 Dynamic Routing ○ Cradle to Grave Reporting · Infrastructure as a Service ○ Eliminate CAPEX and startup costs ○ Slash time to market with immediacy of HW, resources, and expertise ○ Client’s own SNAPsolution running in redundant Top-tier data centers both in the US and Europe ○ Public vs Private Network Separation ○ Multi-Layer Network Security ○ Access Control Tracking and Change Control Procedures ○ Offloads operations, upgrade and maintenance to Crexendo ○ Disaster recovery and business continuity ○ Operational flexibility with on-demand scaling ○ 5 “9”s service uptime reliability RESEARCH AND DEVELOPMENT We invested $5,720 and $5,552 for the years ended December 31, 2025 and 2024, respectively, in the research and development of our technologies and data centers.
The Company announces material information to the public about the Company, its products and services and other matters through a variety of means, including the Company’s website (www.crexendo.com), the investor relations section of its website (www.crexendo.com/company/investors), press releases, filings with the SEC, and public conference calls, in order to achieve broad, non-exclusionary distribution of information to the public.
The Company announces material information to the public about the Company, its products and services and other matters through a variety of means, including the Company’s website (www.crexendo.com), the investor relations section of its website (www.crexendo.com/why-crexendo/for-investors), press releases, filings with the SEC, and public conference calls, in order to achieve broad, non-exclusionary distribution of information to the public.
The majority of these expenditures were for enhancements to our cloud telecommunications products and services and continued development of our software solutions products. COMPETITION The market for cloud business communications services is large and increasingly competitive. We expect competition to continue to increase in the future.
The majority of these expenditures were for enhancements to our cloud telecommunications products and services and continued development of our software solutions products. 6 Table of Contents COMPETITION The market for cloud business communications services is large and increasingly competitive. We expect competition to continue to increase in the future.
We may not be able to obtain such licenses or develop such tools in a timely fashion, on acceptable terms, or at all. Companies participating in the software, Internet technology, and telecommunication industries are frequently involved in disputes relating to intellectual property.
We may not be able to obtain such licenses or develop such tools in a timely fashion, on acceptable terms, or at all. 7 Table of Contents Companies participating in the software, Internet technology, and telecommunication industries are frequently involved in disputes relating to intellectual property.
Future federal or state legislation or regulation could have a material adverse effect on our business prospects, financial condition and results of operations.
Future federal or state legislation or regulation could have a material adverse effect on our business prospects, financial condition and results of operations. 8 Table of Contents
Our cloud communications software solutions currently support over five million end users globally, through an extensive network of over 235 cloud communication platform software subscribers and our direct retail offering.
Our cloud communications software solutions currently support over seven million end users globally, through an extensive network of over 240 cloud communication platform software subscribers and our direct retail offering.
We also rely upon trade secrets and the know-how and expertise of our key employees. To protect our proprietary technology and other intellectual property, we rely on a combination of the protections provided by applicable copyright, trademark and trade secret laws, as well as confidentiality procedures and licensing arrangements.
To protect our proprietary technology and other intellectual property, we rely on a combination of the protections provided by applicable copyright, trademark and trade secret laws, as well as confidentiality procedures and licensing arrangements.
Segment revenue and income/(loss) before income tax benefit/(provision) was as follows (in thousands): Year Ended December 31, 2024 2023 Revenue: Cloud telecommunications services $ 37,464 $ 35,152 Software solutions 23,374 18,047 Total revenue $ 60,838 $ 53,199 Year Ended December 31, 2024 2023 Income/(loss) before income tax: Cloud telecommunications services $ 413 $ (124 ) Software solutions 1,476 (140 ) Income/(loss) before income tax $ 1,889 $ (264 ) 3 Table of Contents TECHNOLOGY We believe our proprietary implementation of standard Web, IP, Cloud, Mobile and Internet technologies represent a key component of our business model.
Segment revenue and income/(loss) before income tax benefit/(provision) was as follows (in thousands): Year Ended December 31, 2025 2024 Revenue: Cloud telecommunications services $ 38,503 $ 37,464 Software solutions 29,664 23,374 Total revenue $ 68,167 $ 60,838 Year Ended December 31, 2025 2024 Income/(loss) before income tax: Cloud telecommunications services $ 1,386 $ 413 Software solutions 3,985 1,476 Income/(loss) before income tax $ 5,371 $ 1,889 TECHNOLOGY We believe our proprietary implementation of standard Web, IP, Cloud, Mobile and Internet technologies represent a key component of our business model.
EMPLOYEES As of December 31, 2024, we had 185 employees; 179 full-time and 6 part-time, including 7 executives, 44 sales representatives and sales management, 9 in marketing, 33 engineers and IT support, 77 in operations and customer support, and 15 in accounting, finance, and legal.
EMPLOYEES As of December 31, 2025, we had 193 employees; 187 full-time and 6 part-time, including 7 executives, 50 sales representatives and sales management, 8 in marketing, 35 engineers and IT support, 77 in operations and customer support, and 16 in accounting, finance, and legal.
We anticipate that we can compete successfully by relying on our infrastructure, marketing strategies and techniques, systems and procedures, and by adding additional products and services in the future.
We anticipate that we can compete successfully by relying on our infrastructure, marketing strategies and techniques, systems and procedures, and by adding additional products and services in the future. We believe we can continue the operation of our business by periodic review and revision to our product offerings and marketing approach.
Please note that this list may be updated from time to time. 6 Table of Contents GOVERNMENTAL REGULATION As a provider of Internet communications services, we are subject to regulation in the U.S. by the FCC.
The Company encourages investors and others to review the information it makes public in these locations, as such information could be deemed to be material information. Please note that this list may be updated from time to time. GOVERNMENTAL REGULATION As a provider of Internet communications services, we are subject to regulation in the U.S. by the FCC.
Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. · Professional Services and Other - The Company's professional services include consulting, technical support, resident engineer services, design services and installation services. SEGMENT INFORMATION The Company has two operating segments, which consist of cloud telecommunications services and software solutions.
Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. · Professional Services and Other - The Company's professional services include consulting, technical support, resident engineer services, design services and installation services. KEY BUSINESS METRICS In addition to United States generally accepted accounting principles (“U.S.
We believe we can continue the operation of our business by periodic review and revision to our product offerings and marketing approach. 5 Table of Contents INTELLECTUAL PROPERTY Our success depends in part on using and protecting our proprietary technology and other intellectual property. Furthermore, we must conduct our operations without infringing on the proprietary rights of third parties.
INTELLECTUAL PROPERTY Our success depends in part on using and protecting our proprietary technology and other intellectual property. Furthermore, we must conduct our operations without infringing on the proprietary rights of third parties. We also rely upon trade secrets and the know-how and expertise of our key employees.
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It also provides users instant access to visual voicemail and call logs. · End User Portal and Unified Messaging with Voicemail, Call Recording and eFax inbox. · Collaboration products like group chat, SMS/MMS, document sharing, video and web conferencing.
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GAAP”) and financial measures such as total revenues, gross margin, and cash flows from operations, we review a number of key business metrics to evaluate growth trends, measure our performance, and make strategic decisions.
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The Company encourages investors and others to review the information it makes public in these locations, as such information could be deemed to be material information.
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We discuss revenues and operating expenses under “Results of Operations”, and cash flow from operations under “Liquidity and Capital Resources.” Other key business metrics are discussed below. Annualized Exit Monthly Recurring Subscriptions We believe that our Annualized Exit Monthly Recurring Subscriptions (“AERR”) is a leading indicator of our anticipated subscriptions revenues.
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We believe that trends in revenue are important to understanding the overall health of our business, and we use these trends to formulate financial projections and make strategic business decisions. Our AERR equals our Monthly Recurring Subscriptions multiplied by 12. Our Monthly Recurring Subscriptions equals the monthly value of all customer recurring charges at the end of a given month.
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For example, our Monthly Recurring Subscriptions at December 31, 2025 were $4,794. As such, our AERR at December 31, 2025 was $57,529 compared to $51,568 at December 31, 2024.
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Net Monthly Subscription Dollar Retention Rate We believe that our Net Monthly Subscription Dollar Retention Rate provides insight into our ability to retain and grow subscriptions revenue, as well as our customers’ potential long-term value to us.
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We believe that our ability to retain our customers and expand their use of our solutions over time is a leading indicator of the stability of our revenue base and we use these trends to formulate financial projections and make strategic business decisions.
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We define our Net Monthly Subscription Dollar Retention Rate as (i) one plus (ii) the quotient of Dollar Net Change divided by Average Monthly Recurring Subscriptions.
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We define Dollar Net Change as the quotient of (i) the difference of our Monthly Recurring Subscriptions at the end of a period minus our Monthly Recurring Subscriptions at the beginning of a period minus our Monthly Recurring Subscriptions at the end of the period from new customers we added during the period, all divided by (ii) the number of months in the period.
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We define our Average Monthly Recurring Subscriptions as the average of the Monthly Recurring Subscriptions at the beginning and end of the measurement period. 3 Table of Contents For example, if our Monthly Recurring Subscriptions were $122 at the end of a quarterly period and $100 at the beginning of the period, and $24 at the end of the period from new customers we added during the period, then the Dollar Net Change would be equal to ($0.67), or the amount equal to the difference of $122 minus $100 minus $24, all divided by three months.
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Our Average Monthly Recurring Subscriptions would equal $111, or the sum of $100 plus $122, divided by two. Our Net Monthly Subscription Dollar Retention Rate would then equal 99.4%, or approximately 99%, or one plus the quotient of the Dollar Net Change divided by the Average Monthly Recurring Subscriptions.
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Adjusted EBITDA In addition, we use Adjusted EBITDA to manage our business, evaluate our performance and make planning decisions.
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We consider this metric to be a useful measure of our operating performance, because it contains adjustments for unusual events or factors that do not directly affect what management considers the core operating performance, and are used by our management for that purpose.
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We also believe this measure enables us to better evaluate our performance by facilitating a meaningful comparison of our core operating results in a given period to those in prior and future periods. Investors often use similar measures to evaluate the operating performance with competitors.
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Adjusted EBITDA represents net income before interest and other income, income taxes, depreciation, amortization of intangible assets, and share-based compensation and related taxes. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
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Some of these limitations are: · Adjusted EBITDA does not consider any expenses for assets being depreciated and amortized that are necessary to our business; · Adjusted EBITDA does not consider the impact of interest and other income/(expense), income taxes, share-based compensation and related taxes, and amortization of intangible assets; and · Other companies, including companies in our industry, may calculate diluted EBITDA differently, which reduces its usefulness as a comparative measure.
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Because of these limitations, Adjusted EBITDA should be considered alongside other financial performance measures, including net income/(loss) and our other GAAP results.
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Our key business metrics for the years ended December 31, 2025 and December 31, 2024, were as follows (in thousands, except for percentages): As of December 31, 2025 As of December 31, 2024 Cloud Telecommunications Services Software Solutions Consolidated Cloud Telecommunications Services Software Solutions Consolidated Annualized exit recurring revenue $ 35,442 $ 22,087 $ 57,529 $ 33,264 $ 18,304 $ 51,568 Net dollar subscription retention rate 98 % 102 % 100 % 100 % 101 % 100 % Adjusted EBITDA 3,837 7,368 11,205 3,709 4,448 8,157 4 Table of Contents SEGMENT INFORMATION The Company has two operating segments, which consist of cloud telecommunications services and software solutions.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur strategy to expand through acquisitions or investments in other companies may divert our management’s attention, increase expenses, disrupt our operations and harm our results of operations. Our business strategy may, from time to time, include acquiring or investing in complementary services, technologies or businesses.
Biggest changeIf we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow and support our business and to respond to business challenges could be significantly limited. 11 Table of Contents Our strategy to expand through acquisitions or investments in other companies may divert our management’s attention, increase expenses, disrupt our operations and harm our results of operations.
Migration to Oracle Cloud Infrastructure We are in the process of migrating from our own physical data centers to the Oracle Cloud Infrastructure (OCI). While this transition is expected to improve operational efficiency, scalability, and cost-effectiveness in the long term, migration presents several risks and challenges including duplicate costs during migration.
We are in the process of migrating from our own physical data centers to the Oracle Cloud Infrastructure (OCI). While this transition is expected to improve operational efficiency, scalability, and cost-effectiveness in the long term, migration presents several risks and challenges including duplicate costs during migration.
In addition, the financing of any acquisition may require us to raise additional funds through public or private sources. Additional funds may not be available on terms that are favorable to us and, in the case of equity financings, may result in dilution to our stockholders.
In addition, the financing of any acquisition may require us to raise additional funds through public or private sources. Additional funds may not be available on terms that are favorable to us and, in the case of equity financings, may result in dilution to our stockholders.
Future acquisitions by us could also result in large and immediate write-offs or assumptions of debt and contingent liabilities, any of which may have a material adverse effect on our consolidated financial position, results of operations, and cash flows.
Future acquisitions by us could also result in large and immediate write-offs or assumptions of debt and contingent liabilities, any of which may have a material adverse effect on our consolidated financial position, results of operations, and cash flows.
If small and medium-sized businesses experience financial hardship as a result of a weak economy, industry consolidation, or any other reason, the overall demand for our subscriptions could be materially and adversely affected. 15 Table of Contents We must acquire new customers on an ongoing basis to maintain and increase our customers and revenues while the significant costs to acquire new customers may reduce our profitability.
If small and medium-sized businesses experience financial hardship as a result of a weak economy, industry consolidation, or any other reason, the overall demand for our subscriptions could be materially and adversely affected. 18 Table of Contents We must acquire new customers on an ongoing basis to maintain and increase our customers and revenues while the significant costs to acquire new customers may reduce our profitability.
In addition, a single protracted service outage or a series of service disruptions, whether due to our services or those of our bandwidth carriers, may result in a sharp increase in customer cancellations. 16 Table of Contents We may not be able to scale our business efficiently or quickly enough to meet our customers’ growing needs, in which case our operating results could be harmed.
In addition, a single protracted service outage or a series of service disruptions, whether due to our services or those of our bandwidth carriers, may result in a sharp increase in customer cancellations. 19 Table of Contents We may not be able to scale our business efficiently or quickly enough to meet our customers’ growing needs, in which case our operating results could be harmed.
If we fail to maintain reliable connectivity or performance with our upstream carriers it could then significantly reduce customer demand for our services and damage our business. 17 Table of Contents · A portion of our customer service responses, delivery of calls to and from PSTN and other public telephone VoIP/Wireless service providers and provision of aspects of our E-911 service.
If we fail to maintain reliable connectivity or performance with our upstream carriers it could then significantly reduce customer demand for our services and damage our business. 20 Table of Contents · A portion of our customer service responses, delivery of calls to and from PSTN and other public telephone VoIP/Wireless service providers and provision of aspects of our E-911 service.
Acts of God or terrorism or vandalism or negligence or gross negligence including failure to properly update and maintain infrastructure may result in loss of revenue, profitability and failure to retain and acquire new customers. 13 Table of Contents Our ability to recover from disasters or failures, if and when they occur, is paramount to offering continued service to our existing customers.
Acts of God or terrorism or vandalism or negligence or gross negligence including failure to properly update and maintain infrastructure may result in loss of revenue, profitability and failure to retain and acquire new customers. 16 Table of Contents Our ability to recover from disasters or failures, if and when they occur, is paramount to offering continued service to our existing customers.
We stopped paying a quarterly dividend in April 2023. The Cash position of the Company and revenue generation has changed materially since that time. The Board may consider a dividend if it appears unlikely the Company will make accretive acquisitions in 2025. There is, however, no assurance that we will start paying a dividend again in the near term.
We stopped paying a quarterly dividend in April 2023. The Cash position of the Company and revenue generation has changed materially since that time. The Board may consider a dividend if it appears unlikely the Company will make accretive acquisitions in 2026. There is, however, no assurance that we will start paying a dividend again in the near term.
Our future operating results, including revenues, expenses, profits and losses may vary substantially from period to period and may be difficult to predict. We stopped paying a quarterly dividend in April 2023, the Company may consider a dividend in the future if there do not appear to be accretive acquisitions in 2025.
Our future operating results, including revenues, expenses, profits and losses may vary substantially from period to period and may be difficult to predict. We stopped paying a quarterly dividend in April 2023, the Company may consider a dividend in the future if there do not appear to be accretive acquisitions in 2026.
Increasing Complexity in Managed Service Offerings Crexendo's Managed Service Provider (MSP) division may face challenges in scaling services, managing cybersecurity risks, and meeting the increasing expectations of customers. High turnover in MSP clients or failure to deliver consistent service quality could negatively impact revenue and reputation.
Crexendo's Managed Service Provider (MSP) division may face challenges in scaling services, managing cybersecurity risks, and meeting the increasing expectations of customers. High turnover in MSP clients or failure to deliver consistent service quality could negatively impact revenue and reputation.
If some or all of the options were exercised in a net settlement exercise at the same time, it could negatively affect the stock price for shares of the Company. There is no guarantee that Crexendo and recently acquired companies will fully integrate operations or failure to properly manage the acquisitions could impact financial results and our stock price.
If some or all of the options were exercised in a net settlement exercise at the same time, it could negatively affect the stock price for shares of the Company. 28 Table of Contents There is no guarantee that Crexendo and recently acquired companies will fully integrate operations or failure to properly manage the acquisitions could impact financial results and our stock price.
For example, public and private sector policies and initiatives to reduce the transmission of COVID-19 and initiatives the Company took in response to the health crisis to promote the health and safety of our employees and provide critical infrastructure and connectivity to our customers, along with the related global slowdown in economic activity, resulted in slower revenue growth, increased costs and lower earnings per share and a sustained decrease in our stock price, which resulted in an impairment of goodwill of $32.1 million in 2022.
For example, public and private sector policies and initiatives to reduce the transmission of contagious diseases and initiatives the Company took in response to the health crisis to promote the health and safety of our employees and provide critical infrastructure and connectivity to our customers, along with the related global slowdown in economic activity, resulted in slower revenue growth, increased costs and lower earnings per share and a sustained decrease in our stock price, which resulted in an impairment of goodwill of $32.1 million in 2022.
Our earnings, if any, and cash resources would be materially and adversely affected if we cannot receive the full benefit of the remaining NOL carry-forwards. An ownership change could occur as a result of circumstances that are not within our control. 10 Table of Contents The telecommunications industry is highly competitive.
Our earnings, if any, and cash resources would be materially and adversely affected if we cannot receive the full benefit of the remaining NOL carry-forwards. An ownership change could occur as a result of circumstances that are not within our control. The telecommunications industry is highly competitive.
In addition, the outcome of examinations may impact the valuation of certain deferred income tax assets (such as NOL carry-forwards) in future periods. It is not possible to estimate the impact of the amount of such changes, if any, to previously recorded uncertain tax positions. The FCC net neutrality rules have changed.
In addition, the outcome of examinations may impact the valuation of certain deferred income tax assets (such as NOL carry-forwards) in future periods. It is not possible to estimate the impact of the amount of such changes, if any, to previously recorded uncertain tax positions. 24 Table of Contents The FCC net neutrality rules have changed.
While non-US revenue has not been material to our business, that segment of our business has been expanding and may become material in 2025. Our business, revenues and profitability are impacted by global macroeconomic conditions.
While non-US revenue has not been material to our business, that segment of our business has been expanding and may become material in 2026. Our business, revenues and profitability are impacted by global macroeconomic conditions.
If some of our stockholders or investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and the market price of our common shares may be more volatile. 23 Table of Contents Our actual operating results may not meet expectations, which could likely cause our stock price to decline.
If some of our stockholders or investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and the market price of our common shares may be more volatile. Our actual operating results may not meet expectations, which could likely cause our stock price to decline.
There may be substantial selling of stock by stockholders who received shares of Crexendo stock in the acquisitions. We expect to continue to undertake acquisitions, mergers or change to our capital structure to expand our business, which may pose risks to our business and dilute the ownership of our existing stockholders.
There may be substantial selling of stock by stockholders who received shares of Crexendo stock in the acquisitions. 29 Table of Contents We expect to continue to undertake acquisitions, mergers or change to our capital structure to expand our business, which may pose risks to our business and dilute the ownership of our existing stockholders.
The loss of a key vendor could disrupt operations and require costly adjustments. 18 Table of Contents Changes in laws and regulations and the interpretation and enforcement of such laws and regulations could adversely impact our financial results or ability to conduct business.
The loss of a key vendor could disrupt operations and require costly adjustments. Changes in laws and regulations and the interpretation and enforcement of such laws and regulations could adversely impact our financial results or ability to conduct business.
In addition, margins on MSP services tend to be lower than on UCaaS services and on the Software Solutions Divisions which can lower our total margins and can have a deleterious effect on our performance, results and stock price. 12 Table of Contents Cyber-attacks impacting our networks or systems could have an adverse effect on our business.
In addition, margins on MSP services tend to be lower than on UCaaS services and on the Software Solutions Divisions which can lower our total margins and can have a deleterious effect on our performance, results and stock price. Cyber-attacks impacting our networks or systems could have an adverse effect on our business.
If there is a determination that we have infringed third-party proprietary rights, we could incur substantial monetary liability and be prevented from using the rights in the future. 22 Table of Contents Risks Related to Our Common Stock Our stock price may be volatile and may decline.
If there is a determination that we have infringed third-party proprietary rights, we could incur substantial monetary liability and be prevented from using the rights in the future. Risks Related to Our Common Stock Our stock price may be volatile and may decline.
We may be unable to realize the efficiencies of primarily maintaining one communication platform. 25 Table of Contents Crexendo may have difficulty attracting, motivating and retaining executives and other key employees. Crexendo may have difficulty in attracting, retaining and motivating key personnel.
We may be unable to realize the efficiencies of primarily maintaining one communication platform. Crexendo may have difficulty attracting, motivating and retaining executives and other key employees. Crexendo may have difficulty in attracting, retaining and motivating key personnel.
As a small regional provider, many of Allegiant’s current and potential MSP competitors have longer operating histories providing managed services, significantly greater resources and brand awareness, and a larger base of customers than we have. As a result, these competitors may have greater credibility with our existing and potential customers.
As a small regional provider, many of Allegiant’s current and potential MSP competitors have longer operating histories providing managed services, significantly greater resources and brand awareness, and a larger base of customers than we have. As a result, these competitors may have greater credibility with our existing and potential customers. Increasing Complexity in Managed Service Offerings.
Mihaylo, who was previously our Chief Executive Officer and former Chairman of the Board of Crexendo, Inc., owns approximately 43% of the outstanding shares of our common stock based on the number of shares outstanding as of December 31, 2024. Mr.
Mihaylo, who was previously our Chief Executive Officer and former Chairman of the Board of Crexendo, Inc., owns approximately 36% of the outstanding shares of our common stock based on the number of shares outstanding as of December 31, 2025. Mr.
Accordingly, even though certain transactions may be in the best interests of other stockholders, this concentration of ownership may harm the market price of our common stock by, among other things, delaying, deferring or preventing a change in control of our Company, impeding a merger, amalgamation, consolidation, takeover or other business combination involving our Company, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company. 24 Table of Contents In addition, sales or other dispositions of our shares by Mr.
Accordingly, even though certain transactions may be in the best interests of other stockholders, this concentration of ownership may harm the market price of our common stock by, among other things, delaying, deferring or preventing a change in control of our Company, impeding a merger, amalgamation, consolidation, takeover or other business combination involving our Company, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company.
Long-Term Dependence on Oracle's Business Strategy Oracle’s future decisions regarding pricing, technology offerings, or strategic priorities may directly impact our operations and profitability. For example, changes in Oracle’s product roadmap, withdrawal of certain features, or discontinuation of services could force us to make additional investments or modifications to our infrastructure.
Oracle’s future decisions regarding pricing, technology offerings, or strategic priorities may directly impact our operations and profitability. For example, changes in Oracle’s product roadmap, withdrawal of certain features, or discontinuation of services could force us to make additional investments or modifications to our infrastructure.
Any delays, inadequacies, or failures in Oracle's support services could hinder our migration efforts and disrupt our operations; ● Exit Risks: In the event that Oracle Cloud no longer meets our business needs, transitioning away from Oracle to another provider or back to an on-premises solution could involve significant time, cost, and operational risk. 14 Table of Contents Operational Risks During Migration The migration process itself involves significant technical and operational risks.
Any delays, inadequacies, or failures in Oracle's support services could hinder our migration efforts and disrupt our operations; · Exit Risks: In the event that Oracle Cloud no longer meets our business needs, transitioning away from Oracle to another provider or back to an on-premises solution could involve significant time, cost, and operational risk. Operational Risks During Migration.
Our ability to use our net operating loss carry-forwards may be reduced in the event of an ownership change and could adversely affect our financial results. As of December 31, 2024, we had net operating loss (“NOL”) carry-forwards of approximately $17,372.
Our ability to use our net operating loss carry-forwards may be reduced in the event of an ownership change and could adversely affect our financial results. As of December 31, 2025, we had net operating loss (“NOL”) carry-forwards of approximately $27,770.
Due to the sensitive nature of retaining such information we have implemented policies and procedures to preserve and protect our data and our customers’ data against loss, misuse, corruption, misappropriation caused by systems failures, unauthorized access, or misuse.
We maintain credit card and other personal information in our systems. Due to the sensitive nature of retaining such information we have implemented policies and procedures to preserve and protect our data and our customers’ data against loss, misuse, corruption, misappropriation caused by systems failures, unauthorized access, or misuse.
Any failure or downtime could affect a significant percentage of our customers. The total destruction or severe impairment of our data center facilities could result in significant downtime of our services and the loss of customer data.
Any failure or downtime could affect a significant percentage of our customers. The total destruction or severe impairment of our data center facilities could result in significant downtime of our services and the loss of customer data. Migration to Oracle Cloud Infrastructure.
At December 31, 2024, approximately 2,627,321 remain available for conversion. Many of the options have an exercise price under $1.00, so there is no impediment to convert those options to commons shares of Crexendo stock. The right to exercise the options expires between March 11, 2026 through January 4, 2031.
At December 31, 2025, approximately 144,831 remain available for conversion. Many of the options have an exercise price under $1.00, so there is no impediment to convert those options to commons shares of Crexendo stock. The right to exercise the options expires between March 11, 2026 through January 1, 2031.
ITEM 1A. RISK FACTORS. Public health crises could materially adversely affect our business, financial condition and results of operations. We are subject to risks related to public health crises, such as the COVID-19 pandemic, or other pandemics which may occur. The COVID-19 pandemic had an adverse effect on our operating results in 2022.
ITEM 1A. RISK FACTORS. Public health crises could materially adversely affect our business, financial condition and results of operations. We are subject to risks related to public health crises, such as the COVID-19 pandemic, or other pandemics which may occur presently or in the future.
From time to time, we received inquiries from federal, national, state, city and local government officials in the various jurisdictions in which we operated.
We have received customer complaints and civil actions. From time to time, we received inquiries from federal, national, state, city and local government officials in the various jurisdictions in which we operated.
The PCI Data Security Standard (“PCI DSS”) is a specific set of comprehensive security standards required by credit card brands for enhancing payment account data security, including but not limited to requirements for security management, policies, procedures, network architecture, and software design. We maintain credit card and other personal information in our systems.
We collect personal and credit card information from our customers and employees could misuse this information. The PCI Data Security Standard (“PCI DSS”) is a specific set of comprehensive security standards required by credit card brands for enhancing payment account data security, including but not limited to requirements for security management, policies, procedures, network architecture, and software design.
While we try to comply with all applicable data protection laws, regulations, standards, and codes of conduct, as well as our own posted privacy policies and contractual commitments to the extent possible, any failure by us to protect our users’ privacy and data, including as a result of our systems being compromised by hacking or other malicious or surreptitious activity, could result in a loss of user confidence in our services and ultimately in a loss of users, which could materially and adversely affect our business as well as subject us to law suits, civil fines and criminal penalties.
While we try to comply with all applicable data protection laws, regulations, standards, and codes of conduct, as well as our own posted privacy policies and contractual commitments to the extent possible, any failure by us to protect our users’ privacy and data, including as a result of our systems being compromised by hacking or other malicious or surreptitious activity, could result in a loss of user confidence in our services and ultimately in a loss of users, which could materially and adversely affect our business as well as subject us to law suits, civil fines and criminal penalties. 22 Table of Contents Governmental entities, class action lawyers and consumer advocates are reviewing the data collection and use by companies that must maintain such data.
We cannot assure you that we will successfully identify suitable acquisition candidates, integrate or manage disparate technologies, lines of business, personnel and corporate cultures, realize our business strategy or the expected return on our investment, or manage a geographically dispersed company.
Our business strategy may, from time to time, include acquiring or investing in complementary services, technologies or businesses. We cannot assure you that we will successfully identify suitable acquisition candidates, integrate or manage disparate technologies, lines of business, personnel and corporate cultures, realize our business strategy or the expected return on our investment, or manage a geographically dispersed company.
Mihaylo may depress our stock price. Sales of a significant number of shares of our common stock in the public market could harm the market price of our common stock.
In addition, sales or other dispositions of our shares by Mr. Mihaylo may depress our stock price. Sales of a significant number of shares of our common stock in the public market could harm the market price of our common stock.
We may be subject to additional royalties, license or trademark infringement costs or other unknown costs when one or more of these third-party technologies are affected or need to be replaced due to end-of-support or end-of-sale of such third parties.
We may be subject to additional royalties, license or trademark infringement costs or other unknown costs when one or more of these third-party technologies are affected or need to be replaced due to end-of-support or end-of-sale of such third parties. Risks Related to Open‑Source Software Licensing. Our software incorporates open‑source components subject to various license obligations.
The inability to operate or use our networks and systems or those of our suppliers, vendors and other service providers as a result of cyber-attacks, even for a limited period of time, may result in significant expenses to the Company and/or a loss of market share to our competitors.
A breach in this infrastructure could disrupt customer communications and lead to financial losses. 15 Table of Contents The inability to operate or use our networks and systems or those of our suppliers, vendors and other service providers as a result of cyber-attacks, even for a limited period of time, may result in significant expenses to the Company and/or a loss of market share to our competitors.
We have in the past sustained operating losses and may have losses again in the future. We expect to invest in sales and marketing, engineering, design, and research and development, among other areas of our business.
We cannot be certain that we will be able to achieve or maintain operating profitability in the future. We have in the past sustained operating losses and may have losses again in the future. We expect to invest in sales and marketing, engineering, design, and research and development, among other areas of our business.
Barriers to entry into many of our businesses are low and many of the areas in which we compete evolve rapidly with changing and disruptive technologies, shifting user needs, and frequent introductions of new products and services.
Barriers to entry into many of our businesses are low and many of the areas in which we compete evolve rapidly with changing and disruptive technologies, shifting user needs, and frequent introductions of new products and services. Our ability to remain competitive depends on our success in making innovative products, devices, and services that appeal to businesses and consumers.
We face significant competition from competing platforms which are both operating and being developed. Popular products or services offered on competing platforms could increase their competitive strength as well as affect our revenue, margins, profit and growth potential. Competing platforms have significant installed bases. The content and applications available on a platform are important to device purchasing decisions.
We face significant competition from competing platforms which are both operating and being developed. Popular products or services offered on competing platforms could increase their competitive strength as well as affect our revenue, margins, profit and growth potential. 14 Table of Contents Competing platforms have significant installed bases.
Should this occur, the rates paid to our underlying carriers may increase, which could reduce our profitability. Future changes in tariffs by regulatory agencies or application of tariff requirements to currently un-tariffed products or services could affect the price and sales of our products for certain classes of customers.
Future changes in tariffs by regulatory agencies or application of tariff requirements to currently un-tariffed products or services could affect the price and sales of our products for certain classes of customers.
We collect, process, store, use, and transmit personal data on a daily basis. Personal data is increasingly subject to legal and regulatory protections around the world, which vary widely in approach and which possibly conflict with one another.
Personal data is increasingly subject to legal and regulatory protections around the world, which vary widely in approach and which possibly conflict with one another.
They choose one of two commercial options for licensing the core platform, namely purchase or subscription. The purchase option allows the customer to make an initial investment to procure a small license to begin its contractual relationship with the Company, with monthly maintenance and support fees along with other monthly services that the customer typically procures.
The purchase option allows the customer to make an initial investment to procure a small license to begin its contractual relationship with the Company, with monthly maintenance and support fees along with other monthly services that the customer typically procures.
We cannot predict how this issue will be resolved or its impact on our business at this time. 21 Table of Contents Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added, or similar taxes, and any such assessments could adversely affect our business, financial condition, and results of operations.
Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added, or similar taxes, and any such assessments could adversely affect our business, financial condition, and results of operations.
Many of our current and potential competitors have longer operating histories, significantly greater resources and brand awareness, and a larger base of customers than we have. As a result, these competitors may have greater credibility with our existing and potential customers. Our competitors may also offer bundled service arrangements that present a more differentiated or better integrated product to customers.
As a result, these competitors may have greater credibility with our existing and potential customers. Our competitors may also offer bundled service arrangements that present a more differentiated or better integrated product to customers.
In addition, customers may use our services to store protected health information, or PHI, that is protected under the Health Insurance Portability and Accountability Act, or HIPAA. Noncompliance with laws and regulations relating to privacy and HIPAA may lead to significant fines, penalties or civil liability.
In addition, customers may use our services to store protected health information, or PHI, that is protected under the Health Insurance Portability and Accountability Act, or HIPAA.
From time to time we had been the subject of governmental inquiries and investigations related to our discontinued seminar sales model and business practices that could require us to pay refunds, damages or fines, which could negatively impact our financial results or ability to conduct business. We have received customer complaints and civil actions.
We may incur significant expenses and devote substantial management effort toward strengthening our systems. 25 Table of Contents From time to time we had been the subject of governmental inquiries and investigations related to our discontinued seminar sales model and business practices that could require us to pay refunds, damages or fines, which could negatively impact our financial results or ability to conduct business.
Our ability to remain competitive depends on our success in making innovative products, devices, and services that appeal to businesses and consumers. 11 Table of Contents An important element of our business model, particularly relating to our NetSapiens software platform and the Software Solutions division has been to create a software platform from which our licensees can add their own solutions, license software to add to their solutions or tailor the solution to achieve their specific needs.
An important element of our business model, particularly relating to our NetSapiens software platform and the Software Solutions division has been to create a software platform from which our licensees can add their own solutions, license software to add to their solutions or tailor the solution to achieve their specific needs.
The Software Solutions Division previously sold licenses primarily as a “perpetual” license. We are now selling more subscriptions based licenses on a monthly recurring revenue model, how the sale is structured may affect results on a quarter-to-quarter basis. The Software Solutions division sells both perpetual licenses as well as a subscription model with monthly recurring revenue.
Efforts to compete with competitors’ content and application marketplaces may increase our cost of revenue and lower our margins and profits. The Software Solutions Division previously sold licenses primarily as a “perpetual” license. We are now selling more subscription-based licenses on a monthly recurring revenue model, how the sale is structured may affect results on a quarter-to-quarter basis.
The UCaaS infrastructure is particularly vulnerable to specific types of cyberattacks, such as SIP-based attacks, fraud, and eavesdropping. A breach in this infrastructure could disrupt customer communications and lead to financial losses.
The UCaaS infrastructure is particularly vulnerable to specific types of cyberattacks, such as SIP-based attacks, fraud, and eavesdropping.
If we fail to maintain compliance, we could be unable to report our financial results timely and accurately or prevent fraud. We may incur significant expenses and devote substantial management effort toward strengthening our systems.
If we fail to maintain compliance, we could be unable to report our financial results timely and accurately or prevent fraud.
We are incurring duplicative costs in running data centers which will be migrated to the Oracle Cloud Infrastructure (OCI) which we expect will enable us to more successfully compete for the business of companies that are transitioning to cloud communications and otherwise position ourselves to take advantage of long-term revenue-generating opportunities.
We are incurring duplicative costs in running data centers which will be migrated to the Oracle Cloud Infrastructure (OCI) which we expect will enable us to more successfully compete for the business of companies that are transitioning to cloud communications and otherwise position ourselves to take advantage of long-term revenue-generating opportunities. 10 Table of Contents The investments we have made and will continue to make may not generate the returns that we anticipate, which could adversely impact our financial condition and make it more difficult for us to grow revenue and/or maintain GAAP profitability.
Our failure to protect against fraud or breaches may subject us to costly breach notification and other mitigation obligations, class action lawsuits, investigations, fines, forfeitures, or penalties from governmental agencies that could adversely affect our operating results. We may be unable to prevent our customers from fraudulently receiving goods and services.
However, there is no guarantee that such systems and processes will not experience a failure. Our failure to protect against fraud or breaches may subject us to costly breach notification and other mitigation obligations, class action lawsuits, investigations, fines, forfeitures, or penalties from governmental agencies that could adversely affect our operating results.
Governmental entities, class action lawyers and consumer advocates are reviewing the data collection and use by companies that must maintain such data. Our own requirements as well as regulatory codes of conduct, enforcement actions by regulatory agencies, and lawsuits by other parties could impose additional compliance costs on us as well as subject us to unknown potential liabilities.
Our own requirements as well as regulatory codes of conduct, enforcement actions by regulatory agencies, and lawsuits by other parties could impose additional compliance costs on us as well as subject us to unknown potential liabilities.
We may be required to incur debt to fund acquisitions or mergers. As part of our growth strategy, we expect to attempt to acquire or merge with certain businesses.
We expect to undertake acquisitions, mergers or change to our capital structure to expand our business, which may pose risks to our business and dilute the ownership of our existing stockholders. We may be required to incur debt to fund acquisitions or mergers. As part of our growth strategy, we expect to attempt to acquire or merge with certain businesses.
Further, any U.S. federal government shutdown which may occur due to not having budget appropriations and other budgetary decisions limiting or delaying government spending, may negatively impact U.S. or global economic conditions, including corporate and consumer spending, and liquidity of capital markets. 8 Table of Contents Unfavorable economic conditions could increase our operating costs and because our typical contracts with customers lock in our price for multiple years, our profitability could be negatively affected.
Further, any U.S. federal government shutdown which may occur due to not having budget appropriations and other budgetary decisions limiting or delaying government spending, may negatively impact U.S. or global economic conditions, including corporate and consumer spending, and liquidity of capital markets.
If our existing anti-fraud procedures are not adequate or effective, consumer fraud and theft of service could have a material adverse effect on our business, financial condition, and operating results.
Customers have, in the past, obtained access to our service without paying for monthly service and international toll calls by unlawfully using fraudulently obtained codes. If our existing anti-fraud procedures are not adequate or effective, consumer fraud and theft of service could have a material adverse effect on our business, financial condition, and operating results.
Our liability could also increase if a large fraction of transactions using our services involve fraudulent or disputed credit card transactions. We may also experience losses due to customer fraud and theft of service. Customers have, in the past, obtained access to our service without paying for monthly service and international toll calls by unlawfully using fraudulently obtained codes.
We may be unable to prevent our customers from fraudulently receiving goods and services. Our liability could also increase if a large fraction of transactions using our services involve fraudulent or disputed credit card transactions. We may also experience losses due to customer fraud and theft of service.
Changes to rates by our suppliers and increasing regulatory charges or tariffs may require us to raise prices, which could impact results. Our upstream carriers, suppliers and vendors may increase their rates thus directly impacting our cost of sales, which would affect our margins. Interconnected VoIP traffic may be subject to increased charges.
Our upstream carriers, suppliers and vendors may increase their rates thus directly impacting our cost of sales, which would affect our margins. Interconnected VoIP traffic may be subject to increased charges. Should this occur, the rates paid to our underlying carriers may increase, which could reduce our profitability.
Delisting from the Nasdaq Capital Market could negatively affect the trading price of our stock and could also have other negative results, including the potential loss of confidence by suppliers and employees, the failure to attract the interest of institutional investors, and fewer business development opportunities.
Delisting from the Nasdaq Capital Market could negatively affect the trading price of our stock and could also have other negative results, including the potential loss of confidence by suppliers and employees, the failure to attract the interest of institutional investors, and fewer business development opportunities. 27 Table of Contents We may invest or spend the proceeds of our cash both from operations and from past and future offerings in ways with which you may not agree or in ways which may not yield a favorable return.
If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business, financial condition, and results of operations.
If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business, financial condition, and results of operations. 26 Table of Contents An active trading market in our equity securities may cease to exist, which would adversely affect the market price and liquidity of our common stock, in addition our stock price has been subject to fluctuating prices.
For us to continue to competitively compete with other platform providers we must continue to innovate, including providing applications for our platform and ensure that these applications have high quality, security, customer appeal, and value. Efforts to compete with competitors’ content and application marketplaces may increase our cost of revenue and lower our margins and profits.
The content and applications available on a platform are important to device purchasing decisions. For us to continue to competitively compete with other platform providers we must continue to innovate, including providing applications for our platform and ensure that these applications have high quality, security, customer appeal, and value.
If any of these companies entered our markets in a focused and concentrated fashion, we could lose customers, particularly more sophisticated and financially stable customers. Impact of AI and Automation on Core Business.
If any of these companies entered our markets in a focused and concentrated fashion, we could lose customers, particularly more sophisticated and financially stable customers. Service Level Agreement, Crexendo VIP 100% Uptime Guarantee and Customer Credit Exposure.
This variability and unpredictability could result in our failure to meet the expectations of research analysts or investors for any period, which could cause our stock price to decline. We sustained operating losses in 2023 and may experience losses in the future.
This variability and unpredictability could result in our failure to meet the expectations of research analysts or investors for any period, which could cause our stock price to decline. In addition, a significant percentage of our operating expenses is fixed in nature and is based on forecasted revenues trends.
Our competitors may reduce their rates, which may require us to reduce our rates, which would affect our margins and revenues, or otherwise make our pricing non-competitive. We may be at a disadvantage compared with those competitors who have substantially greater resources than us or may otherwise be better positioned to withstand an extended period of downward pricing pressure.
We may be at a disadvantage compared with those competitors who have substantially greater resources than us or may otherwise be better positioned to withstand an extended period of downward pricing pressure. Many of our current and potential competitors have longer operating histories, significantly greater resources and brand awareness, and a larger base of customers than we have.
Any determination to pay dividends to the Company’s stockholders in the future will be at the discretion of the board of directors and will depend on the Company's results of operations, financial condition and other factors deemed relevant by the board of directors. 9 Table of Contents We expect to undertake acquisitions, mergers or change to our capital structure to expand our business, which may pose risks to our business and dilute the ownership of our existing stockholders.
Any determination to pay dividends to the Company’s stockholders in the future will be at the discretion of the board of directors and will depend on the Company's results of operations, financial condition and other factors deemed relevant by the board of directors.
We believe that the FCC has pre-empted states from regulating VoIP providers in the same manner as providers of traditional telecommunications services.
We believe that the FCC has pre-empted states from regulating VoIP providers in the same manner as providers of traditional telecommunications services. We cannot predict how this issue will be resolved or its impact on our business at this time.
The Service Provider Partners license the core NetSapiens Platform and host it themselves or have us host it on their behalf. The size of such a license is dictated by the Service Provider’s capacity requirements and business objectives (e.g. number of customers they plan to service, etc.).
The size of such a license is dictated by the Service Provider’s capacity requirements and business objectives (e.g. number of customers they plan to service, etc.). They choose one of two commercial options for licensing the core platform, namely purchase or subscription.
Failure to do so may render certain products and services redundant, while over-reliance on automation could lead to service disruptions or job cuts that harm the company’s public image. Limited Patents and Intellectual Property Protection. Crexendo's reliance on proprietary technology without extensive patent protection may make the company vulnerable to intellectual property disputes and imitation by competitors.
Failure to do so may render certain products and services redundant, while over-reliance on automation could lead to service disruptions or job cuts that harm the company’s public image. 13 Table of Contents Risks Related to Artificial Intelligence and Automation .
If delays, problems or defects were to occur, it could adversely affect our business, cause claims for damages to be filed against us, and negatively impact our consolidated operations and cash flows. We depend upon industry standard protocols, best practices, solutions, third-party software, technology, and tools, including but not limited to open-source software.
If delays, problems or defects were to occur, it could adversely affect our business, cause claims for damages to be filed against us, and negatively impact our consolidated operations and cash flows. Risks Related to Number Portability and Carrier Dependency.
An increase in costs or limitation on our ability to source equipment including telephones and ancillary equipment may affect our results from operations as well as results and our stock price. Some of our international agreements provide for payment denominated in local currencies, and the majority of our local costs are denominated in local currencies.
The United States has imposed trade restrictions and tariffs on equipment we use, particularly from China and Canada. An increase in costs or limitation on our ability to source equipment including telephones and ancillary equipment may affect our results from operations as well as results and our stock price.
To the extent that we experience breaches in the security of proprietary information which we store and transmit, our reputation could be damaged, and we could be exposed to a risk of loss or litigation. 20 Table of Contents We collect personal and credit card information from our customers and employees could misuse this information.
We may be required to expend significant capital and other resources to protect against security breaches or to minimize problems caused by security breaches. To the extent that we experience breaches in the security of proprietary information which we store and transmit, our reputation could be damaged, and we could be exposed to a risk of loss or litigation.
If we fail to meet or exceed the expectations of research analysts or investors, the market price of our shares could fall substantially, and we could face costly lawsuits, including securities class-action suits. This may also impair our ability to raise capital, should we seek to do so.
Accordingly, in the event of revenue shortfalls, we may not be able to mitigate the negative impact on net income/(loss) and margins in the short term. If we fail to meet or exceed the expectations of research analysts or investors, the market price of our shares could fall substantially, and we could face costly lawsuits, including securities class-action suits.
Our growth and the evolving markets in which we operate make it difficult to evaluate our current business and future prospects, which may increase the risk of investing in our stock. We have encountered and expect to continue to encounter risks and uncertainties as a growing company, the market for our products changes frequently.
We have encountered and expect to continue to encounter risks and uncertainties as a growing company, the market for our products changes frequently.
Additional funds, however, may not be available when we need them on terms that are acceptable to us, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow and support our business and to respond to business challenges could be significantly limited.
Additional funds, however, may not be available when we need them on terms that are acceptable to us, or at all.
Additionally, third parties with whom we contract may violate or appear to violate laws or regulations which could subject us to the same risks.
Additionally, third parties with whom we contract may violate or appear to violate laws or regulations which could subject us to the same risks. Any new laws, regulations, other legal obligations or industry standards, or any changed interpretation of existing laws, regulations or other standards may require us to incur additional costs and restrict our business operations.
Any new laws, regulations, other legal obligations or industry standards, or any changed interpretation of existing laws, regulations or other standards may require us to incur additional costs and restrict our business operations. 19 Table of Contents Our collection, processing, storage, use, and transmission of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements, differing views on data privacy, or security breaches.
Our collection, processing, storage, use, and transmission of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements, differing views on data privacy, or security breaches. We collect, process, store, use, and transmit personal data on a daily basis.
We have systems and processes in place that we deem sufficient and industry standard that are designed to protect consumer information and prevent fraudulent credit card transactions and other security breaches. However, there is no guarantee that such systems and processes will not experience a failure.
We engage in electronic billing and processing of our customers using secure transmission of sometimes confidential information over public networks. We have systems and processes in place that we deem sufficient and industry standard that are designed to protect consumer information and prevent fraudulent credit card transactions and other security breaches.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIndependent service auditors have been engaged to measure the efficacy of implemented controls. 26 Table of Contents Threat/Vulnerability Assessment & Remediation – Third party security advisors have been engaged to periodically execute internal and external vulnerability scans for deployed production and organizational assets to flag any known vulnerabilities within deployed third-party components including but not limited to operating systems, web server software, hypervisor software etc.
Biggest changeThreat/Vulnerability Assessment & Remediation – Third party security advisors have been engaged to periodically execute internal and external vulnerability scans for deployed production and organizational assets to flag any known vulnerabilities within deployed third-party components including but not limited to operating systems, web server software, hypervisor software etc.
For more information on the risks from cybersecurity threats that we face, refer to “Risk Factors — Operational Risks — Cyber-attacks impacting our networks or systems could have an adverse effect on our business” in Part I, Item 1A of this Annual Report on Form 10-K.
For more information on the risks from cybersecurity threats that we face, refer to “Risk Factors — Cyber-attacks impacting our networks or systems could have an adverse effect on our business” in Part I, Item 1A of this Annual Report on Form 10-K.
Specifically, the company provides hosted Unified Communication as a Service (UCaaS), where the customer base is highly sensitive towards privacy, service quality and service availability. 27 Table of Contents With the growing number of threats from a combination of bad actors, process lapses, human errors, and third-party vulnerabilities, Crexendo is subject to increasing and evolving cybersecurity threats.
Specifically, the company provides hosted Unified Communication as a Service (UCaaS), where the customer base is highly sensitive towards privacy, service quality and service availability. With the growing number of threats from a combination of bad actors, process lapses, human errors, and third-party vulnerabilities, Crexendo is subject to increasing and evolving cybersecurity threats.
Worse than minimum required scores trigger actions to guide the person towards better security awareness and thereby score. Disciplinary actions are in store for employees/contractors who still fail to secure the minimum required score. Risk Management – Crexendo has instituted a security team that is responsible for security/compliance strategy and corporate governance policies.
Worse than minimum required scores trigger actions to guide the person towards better security awareness and thereby score. Disciplinary actions are in store for employees/contractors who still fail to secure the minimum required score. 30 Table of Contents Risk Management – Crexendo has instituted a security team that is responsible for security/compliance strategy and corporate governance policies.
Implemented controls cover trust services criteria of security, availability, processing integrity, confidentiality, and privacy.
Implemented controls cover trust services criteria of security, availability, processing integrity, confidentiality, and privacy. Independent service auditors have been engaged to measure the efficacy of implemented controls.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThere can be no assurance that the ultimate resolution of these matters will not have a material adverse effect on our business or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 28 Table of Contents PART II
Biggest changeThere can be no assurance that the ultimate resolution of these matters will not have a material adverse effect on our business or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 31 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES. 28 PART II 29 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. 29 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 29 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS. 45 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.. 46
Biggest changeITEM 4. MINE SAFETY DISCLOSURES. 31 PART II 32 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. 32 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 33 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS. 49 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 50

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHigh Low Year Ended December 31, 2024 October to December 2024 $ 6.29 $ 4.28 July to September 2024 5.45 3.01 April to June 2024 5.40 2.92 January to March 2024 7.59 4.18 Year Ended December 31, 2023 October to December 2023 $ 5.66 $ 1.54 July to September 2023 2.55 1.49 April to June 2023 2.01 1.24 January to March 2023 2.15 1.54 SECURITY HOLDERS As of December 31, 2024, there were 148 shareholders of record of our common stock.
Biggest changeHigh Low Year Ended December 31, 2025 October to December 2025 $ 7.65 $ 5.68 July to September 2025 7.01 5.26 April to June 2025 6.19 3.75 January to March 2025 7.34 4.82 Year Ended December 31, 2024 October to December 2024 $ 6.29 $ 4.28 July to September 2024 5.45 3.01 April to June 2024 5.40 2.92 January to March 2024 7.59 4.18 SECURITY HOLDERS As of December 31, 2025, there were 142 shareholders of record of our common stock.
In these instances, the brokers or other nominees are included in the number of record holders, but the underlying beneficial holders of the common stock held in “street name” are not.
In these instances, the brokers or other nominees are included in the number of record holders, but the underlying beneficial holders of the common stock held in “street name” are not. DIVIDENDS None ISSUER PURCHASES OF EQUITY SEQURITIES None RECENT SALES OF UNREGISTERED SECURITIES None
Removed
DIVIDENDS Our Board of Directors declared the following dividends payable in 2024 and 2023 (in thousands): Date Declared Record Date Dividend Per Share Total Amount Payment Date March 14, 2023 March 31, 2023 $ 0.005 $ 130 April 11, 2023 The declaration of dividends is solely at the discretion of our Board of Directors, which may change or terminate our dividend practice at any time for any reason without prior notice.
Removed
On March 14, 2023, our Board of Directors cancelled the quarterly dividends. ISSUER PURCHASES OF EQUITY SEQURITIES None RECENT SALES OF UNREGISTERED SECURITIES None

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating Results of our Cloud Telecommunications Services Segment (in thousands): Year Ended December 31, Cloud Telecommunications Services 2024 2023 Service revenue $ 31,849 $ 29,668 Product revenue 5,615 5,484 Total revenue 37,464 35,152 Operating expenses: Cost of service revenue 13,087 12,606 Cost of product revenue 3,215 3,331 Selling and marketing 11,564 10,251 General and administrative 8,556 9,275 Research and development 788 1,172 Total operating expenses 37,210 36,635 Income/(loss) from operations 254 (1,483 ) Other income/(expense), net 159 1,359 Income/(loss) before income tax $ 413 $ (124 ) 37 Table of Contents Quarterly Financial Information For the three months ended March 31, June 30, September 30, December 31, Cloud Telecommunications Services 2024 2024 2024 2024 Service revenue $ 7,845 $ 8,067 $ 7,953 $ 7,984 Product revenue 1,295 1,293 1,814 1,213 Total revenue 9,140 9,360 9,767 9,197 Operating expenses: Cost of service revenue 3,109 3,246 3,336 3,396 Cost of product revenue 730 696 1,081 708 Selling and marketing 2,796 2,808 2,976 2,984 General and administrative 2,158 2,232 2,278 1,888 Research and development 269 258 134 127 Total operating expenses 9,062 9,240 9,805 9,103 Income/(loss) from operations 78 120 (38 ) 94 Other income/(expense), net (5 ) 45 64 55 Income/(loss) before income tax $ 73 $ 165 $ 26 $ 149 For the three months ended March 31, June 30, September 30, December 31, Cloud Telecommunications Services 2023 2023 2023 2023 Service revenue $ 7,158 $ 7,308 $ 7,517 $ 7,685 Product revenue 1,225 1,432 1,666 1,161 Total revenue 8,383 8,740 9,183 8,846 Operating expenses: Cost of service revenue 3,044 3,095 3,173 3,294 Cost of product revenue 839 881 923 688 Selling and marketing 2,596 2,504 2,467 2,684 General and administrative 2,784 2,175 2,230 2,086 Research and development 299 291 317 265 Total operating expenses 9,562 8,946 9,110 9,017 Income/(loss) from operations (1,179 ) (206 ) 73 (171 ) Other income/(expense) (39 ) (26 ) 1,425 (1 ) Income/(loss) before income tax $ (1,218 ) $ (232 ) $ 1,498 $ (172 ) Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Service Revenue Cloud telecommunications service revenue consists primarily of fees collected for cloud telecommunications services, professional services, interest from sales-type leases, reselling broadband Internet services, managed IT service, and administrative fees.
Biggest changeSegment operating income is equal to segment net revenue less segment cost of service revenue, cost of software solution revenue, cost of product revenue, sales and marketing, research and development, and general and administrative expenses. 40 Table of Contents Operating Results of our Cloud Telecommunications Services Segment (in thousands): Year Ended December 31, Cloud Telecommunications Services 2025 2024 Service revenue $ 33,782 $ 31,849 Product revenue 4,721 5,615 Total revenue 38,503 37,464 Operating expenses: Cost of service revenue 14,153 13,087 Cost of product revenue 2,835 3,215 Selling and marketing 12,448 11,564 General and administrative 7,816 8,556 Research and development 481 788 Total operating expenses 37,733 37,210 Income/(loss) from operations 770 254 Other income/(expense), net 616 159 Income/(loss) before income tax $ 1,386 $ 413 Quarterly Financial Information For the three months ended March 31, June 30, September 30, December 31, Cloud Telecommunications Services 2025 2025 2025 2025 Service revenue $ 8,182 $ 8,374 $ 8,607 $ 8,619 Product revenue 1,007 1,203 1,369 1,142 Total revenue 9,189 9,577 9,976 9,761 Operating expenses: Cost of service revenue 3,487 3,556 3,664 3,446 Cost of product revenue 599 687 888 661 Selling and marketing 2,852 3,081 3,215 3,300 General and administrative 1,938 1,958 1,928 1,992 Research and development 132 115 122 112 Total operating expenses 9,008 9,397 9,817 9,511 Income/(loss) from operations 181 180 159 250 Other income/(expense), net 81 123 194 218 Income/(loss) before income tax $ 262 $ 303 $ 353 $ 468 41 Table of Contents For the three months ended March 31, June 30, September 30, December 31, Cloud Telecommunications Services 2024 2024 2024 2024 Service revenue $ 7,845 $ 8,067 $ 7,953 $ 7,984 Product revenue 1,295 1,293 1,814 1,213 Total revenue 9,140 9,360 9,767 9,197 Operating expenses: Cost of service revenue 3,109 3,246 3,336 3,396 Cost of product revenue 730 696 1,081 708 Selling and marketing 2,796 2,808 2,976 2,984 General and administrative 2,158 2,232 2,278 1,888 Research and development 269 258 134 127 Total operating expenses 9,062 9,240 9,805 9,103 Income/(loss) from operations 78 120 (38 ) 94 Other income/(expense), net (5 ) 45 64 55 Income/(loss) before income tax $ 73 $ 165 $ 26 $ 149 Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Service Revenue Cloud telecommunications service revenue consists primarily of fees collected for cloud telecommunications services, professional services, interest from sales-type leases, reselling broadband Internet services, managed IT service, and administrative fees.
We consider Non-GAAP net income to be an important indicator of overall business performance because it allows us to evaluate results without the effects of share-based compensation, acquisition related expenses, changes in fair value of contingent consideration, amortization of intangibles, and goodwill and long-lived asset impairment. We define EBITDA as U.S.
We consider Non-GAAP net income to be an important indicator of overall business performance because it allows us to evaluate results without the effects of share-based compensation and related taxes, acquisition related expenses, changes in fair value of contingent consideration, amortization of intangibles, and goodwill and long-lived asset impairment. We define EBITDA as U.S.
We define Adjusted EBITDA as EBITDA adjusted for acquisition related expenses, changes in fair value of contingent consideration and share-based compensation. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance.
We define Adjusted EBITDA as EBITDA adjusted for acquisition related expenses, changes in fair value of contingent consideration and share-based compensation and related taxes. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance.
GAAP net income/(loss) before interest expense, interest income and other expense/(income), the gain/(loss) on the sale of property and equipment, goodwill and long-lived asset impairments, provision/(benefit) for income taxes, and depreciation and amortization. We believe EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries.
GAAP net income/(loss) before interest expense, interest income and other expense/(income), the gain/(loss) on the sale of property and equipment, goodwill and long-lived asset impairments, benefit/(provision) for income tax, and depreciation and amortization. We believe EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries.
The loan agreement has a term of three (3) years with quarterly payments of Ninety-Eight Thousand Three Hundred Eighty-one Dollars ($98,381), including interest at 4.00%, beginning on April 1, 2023. As of December 31, 2024 and 2023, the outstanding balance of the related party note payable was $478 and $843, respectively.
The loan agreement has a term of three (3) years with quarterly payments of Ninety-Eight Thousand Three Hundred Eighty-one Dollars ($98,381), including interest at 4.00%, beginning on April 1, 2024. As of December 31, 2025 and 2024, the outstanding balance of the related party note payable was $98 and $478, respectively.
Changes in the allocation of the sales price between delivered and undelivered elements can impact the timing of revenue recognized but does not change the total revenue recognized on any agreement. The consideration (including any discounts) is allocated between separate products and services in a bundle based on their relative stand-alone selling prices.
Changes in the allocation of the sales price between delivered and undelivered elements can impact the timing of revenue recognized but does not change the total revenue recognized on any agreement. 37 Table of Contents The consideration (including any discounts) is allocated between separate products and services in a bundle based on their relative stand-alone selling prices.
We continually evaluate the adequacy of the allowance for credit losses and adjust as necessary. The contract assets allowance for credit losses is determined based on an assessment of historical collection experience using the loss-rate method as well as consideration of current and future economic conditions and changes in our loss-rate trends.
We continually evaluate the adequacy of the allowance for credit losses and adjust as necessary. 39 Table of Contents The contract assets allowance for credit losses is determined based on an assessment of historical collection experience using the loss-rate method as well as consideration of current and future economic conditions and changes in our loss-rate trends.
We recognized impairment losses of $0 in the Consolidated Statements of Operations for the years ended December 31, 2024 and 2023, respectively. Deferred Taxes Our provision for income taxes is comprised of a current and a deferred portion. The current income tax provision is calculated as the estimated taxes payable or refundable on tax returns for the current year.
We recognized impairment losses of $0 in the Consolidated Statements of Operations for the years ended December 31, 2025 and 2024. Deferred Taxes Our provision for income taxes is comprised of a current and a deferred portion. The current income tax provision is calculated as the estimated taxes payable or refundable on tax returns for the current year.
If after performing this assessment, the Company concluded it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then the Company performed the quantitative test. 34 Table of Contents Under the quantitative test, a goodwill impairment is identified by comparing the fair value of the reporting unit to the carrying amount, including goodwill.
If after performing this assessment, the Company concluded it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then the Company performed the quantitative test. Under the quantitative test, a goodwill impairment is identified by comparing the fair value of the reporting unit to the carrying amount, including goodwill.
A substantial portion of Cloud Telecommunications service revenue is generated through thirty-six to sixty month service contracts. 38 Table of Contents Product Revenue Product revenue consists primarily of fees collected from the sale of desktop phone devices, third-party equipment, and device as a service.
A substantial portion of Cloud Telecommunications service revenue is generated through thirty-six to sixty month service contracts. Product Revenue Product revenue consists primarily of fees collected from the sale of desktop phone devices, third-party equipment, and device as a service.
GAAP Net Income to Non-GAAP Net Income (Unaudited, in thousands, except per share and share data) Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 (In thousands) (In thousands) U.S.
GAAP Net Income to Non-GAAP Net Income (Unaudited, in thousands, except per share and share data) Three Months Ended December 31, Year Ended December 31, 2025 2024 2025 2024 (In thousands) (In thousands) U.S.
Below is a table which displays the Cloud Telecommunications segment remaining performance obligations as of December 31, 2024 and 2023, which we expect to recognize as revenue within the next thirty-six to sixty months (in thousands): Cloud Telecommunications Services RPOs as of December 31, 2024 $ 55,369 Cloud Telecommunications Services RPOs as of December 31, 2023 $ 44,810 Cost of Service Revenue Cost of service revenue consists primarily of fees we pay to third-party telecommunications carriers, broadband Internet providers, software providers, costs related to installations, contract labor costs, credit card processing fees, customer support salaries, benefits, bonuses, and share-based compensation.
Below is a table which displays the Cloud Telecommunications segment remaining performance obligations as of December 31, 2025 and 2024, which we expect to recognize as revenue within the next thirty-six to sixty months (in thousands): Cloud Telecommunications Services RPOs as of December 31, 2025 $ 60,694 Cloud Telecommunications Services RPOs as of December 31, 2024 $ 55,369 Cost of Service Revenue Cost of service revenue consists primarily of fees we pay to third-party telecommunications carriers, broadband Internet providers, software providers, costs related to installations, contract labor costs, credit card processing fees, customer support salaries, benefits, bonuses, and share-based compensation.
Below is a table which displays the Software solutions segment remaining performance obligations as of December 31, 2024 and 2023, which we expect to recognize as revenue within the next thirty-six months (in thousands): Software solutions RPOs as of December 31, 2024 $ 30,262 Software solutions RPOs as of December 31, 2023 $ 19,122 Cost of Software Solutions Revenue Cost of software solutions revenue consists primarily of salaries, benefits, bonuses, and share-based compensation, amortization expense for developed technologies intangible assets, cost of data center hosting, third-party software, annual user group meeting costs, and outsourced services required to install and support software solutions.
Below is a table which displays the Software solutions segment remaining performance obligations as of December 31, 2025 and 2024, which we expect to recognize as revenue within the next thirty-six months (in thousands): Software solutions RPOs as of December 31, 2025 $ 28,372 Software solutions RPOs as of December 31, 2024 $ 30,262 Cost of Software Solutions Revenue Cost of software solutions revenue consists primarily of salaries, benefits, bonuses, and share-based compensation, amortization expense for developed technologies intangible assets, cost of data center hosting, third-party software, annual user group meeting costs, and outsourced services required to install and support software solutions.
In exchange for his consulting services, Mr. Mihaylo is to receive monthly consideration of $14 or $168 annually. During the years ended December 31, 2024 and 2023, the company paid $154 and $0, respectively.
In exchange for his consulting services, Mr. Mihaylo is to receive monthly consideration of $14 or $168 annually. During the years ended December 31, 2025 and 2024, the company paid $168 and $154, respectively.
Reconciliation of Non-GAAP Financial Measures In accordance with the requirements of Regulation G issued by the SEC, we are presenting the most directly comparable U.S. GAAP financial measures and reconciling the unaudited Non-GAAP financial metrics to the comparable U.S. GAAP measures. Reconciliation of U.S.
Reconciliation of Non-GAAP Financial Measures In accordance with the requirements of Regulation G issued by the SEC, we are presenting the most directly comparable U.S. GAAP financial measures and reconciling the unaudited Non-GAAP financial metrics to the comparable U.S. GAAP measures. 36 Table of Contents Reconciliation of U.S.
GAAP Net Income to EBITDA to Adjusted EBITDA (Unaudited, in thousands) Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 (In thousands) (In thousands) U.S.
GAAP Net Income to EBITDA to Adjusted EBITDA (Unaudited, in thousands) Three Months Ended December 31, Year Ended December 31, 2025 2024 2025 2024 (In thousands) (In thousands) U.S.
General and Administrative General and administrative expenses consist of salaries, benefits, bonuses and share-based compensation for executives and administrative personnel, amortization of trademark and trade name intangible assets, legal, rent, equipment, accounting and other professional services, consulting fees and other administrative corporate expenses.
General and Administrative General and administrative expenses consist of salaries, benefits, bonuses and share-based compensation for executives and administrative personnel, amortization of trademark, trade name, and capitalized software development costs intangible assets, legal, rent, equipment, accounting and other professional services, consulting fees and other administrative corporate expenses.
For the year ended December 31, 2024, we recorded additional valuation allowance of $635 and for the year ended December 31, 2023, we recorded additional valuation allowance of $1,603. Use of Non-GAAP Financial Measures To evaluate our business, we consider and use non-generally accepted accounting principles (“Non-GAAP”) net income and Adjusted EBITDA as a supplemental measure of operating performance.
For the year ended December 31, 2025, we recorded additional valuation allowance of $2,270 and for the year ended December 31, 2024, we recorded additional valuation allowance of $635. Use of Non-GAAP Financial Measures To evaluate our business, we consider and use non-generally accepted accounting principles (“Non-GAAP”) net income and Adjusted EBITDA as a supplemental measure of operating performance.
Therefore, management determined that it is not more likely than not that we will be able to realize our deferred tax assets, and we have recorded a valuation allowance of $5,417 at December 31, 2024. Product Warranty We provide for the estimated cost of product warranties at the time we recognize revenue.
Therefore, management determined that it is not more likely than not that we will be able to realize our deferred tax assets, and we have recorded a valuation allowance of $7,687 at December 31, 2025. Product Warranty We provide for the estimated cost of product warranties at the time we recognize revenue.
Therefore, the sums of quarterly earnings per common share amounts do not necessarily equal the total for the twelve month periods presented. 31 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Total Revenue Total revenue consists of service revenue, software solutions revenue and product revenue.
Therefore, the sums of quarterly earnings per share amounts do not necessarily equal the total for the twelve month periods presented. Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Total Revenue Total revenue consists of service revenue, software solutions revenue and product revenue.
During the years ended December 31, 2024 and 2023, the Company paid principal of $365 and $257, respectively, and interest of $27 and $37, respectively. On February 1, 2024, the Company entered into a consulting agreement with Steven G. Mihaylo, Chairman Emeritus of the board of directors and a greater than five percent shareholder.
During the years ended December 31, 2025 and 2024, the Company paid principal of $380 and $365, respectively, and interest of $12 and $27, respectively. On February 1, 2024, the Company entered into a consulting agreement with Steven G. Mihaylo, Chairman Emeritus of the board of directors and a greater than five percent shareholder.
The following table reflects our net cash provided by/(used in) operating activities for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Net cash provided by/(used in) operating activities $ 6,284 $ 3,499 $ 2,785 80 % The net cash provided by operations for the year ended December 31, 2024 was primarily driven by non-cash expenses for depreciation and amortization of $3,331, share-based compensation of $3,028, our net income of $1,677, an increase in accounts payable and accrued expenses of $1,275, and an increase in contract liabilities of $784, offset by an increase in contract costs of $1,192, an increase in trade receivables of $876, an increase in equipment financing receivables of $822, an increase in prepaid expenses of $368, and an increase in other assets of $346 primarily related to the capitalization of professional service fees for our new accounting system of $234.
The net cash provided by operations for the year ended December 31, 2024 was primarily driven by non-cash expenses for depreciation and amortization of $3,331, share-based compensation of $3,028, our net income of $1,677, an increase in accounts payable and accrued expenses of $1,275, and an increase in contract liabilities of $784, offset by an increase in contract costs of $1,192, an increase in trade receivables of $876, an increase in equipment financing receivables of $822, an increase in prepaid expenses of $368, and an increase in other assets of $346 primarily related to the capitalization of professional service fees for our new accounting system of $234.
The following table reflects our research and development expense for the year end December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Research and development $ 4,764 $ 3,688 $ 1,076 29 % The increase in research and development expenses is primarily related to an increase in salaries, benefits, bonuses, and share-based compensation of $782 due to the allocation of resources from the Cloud Telecommunications Services segment as we finalize the migration of our customers to the VIP platform, and an increase in outsourced engineering services expenses of $306, offset by a decrease in other research and development expenses of $12.
The following table reflects our research and development expense for the year end December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Research and development $ 5,239 $ 4,764 $ 475 10 % The increase in research and development expenses is primarily related to an increase in salaries, benefits, bonuses, share-based compensation, and headcount of $344 due to the allocation of resources from the Cloud Telecommunications Services segment as we finalize the migration of our customers to the VIP platform, and an increase in outsourced engineering services expenses of $134, offset by a decrease in other research and development expenses of $3.
The following table reflects our net cash provided by/(used in) investing activities for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Net cash provided by/(used in) investing activities $ (27 ) $ 3,700 $ (3,727 ) -101 % Net cash used in investing activities for the year ended December 31, 2024 primarily relates to the purchases of property and equipment of $27.
The following table reflects our net cash provided by/(used in) investing activities for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Net cash provided by/(used in) investing activities $ (18 ) $ (27 ) $ 9 -33 % Net cash used in investing activities for the year ended December 31, 2025 primarily relates to the purchases of property and equipment of $18.
The following table reflects our product revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Product revenue $ 5,615 $ 5,484 $ 131 2 % Product revenue fluctuates from one period to the next based on timing of installations.
The following table reflects our product revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Product revenue $ 4,721 $ 5,615 $ (894 ) -16 % Product revenue fluctuates from one period to the next based on timing of installations.
Our typical customer installation is complete within 30-60 days. However, larger enterprise customers can take multiple months, depending on size and the number of locations. Product revenue is recognized when products have been installed and services commence. Additionally, product revenue can fluctuate due to the allocation of discounts or sales promotions across the performance obligations.
Our typical customer installation is complete within 30-60 days. However, larger enterprise customers can take multiple months, depending on size and the number of locations. Product revenue is recognized when products have been installed and services commence.
The following table reflects our net cash provided by financing activities for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Net cash provided by/(used in) financing activities $ 1,595 $ (2,306 ) $ 3,901 169 % Net cash provided by financing activities for the year ended December 31, 2024 primarily relates to cash received from the exercise of stock options of $2,370, offset by repayments made on notes payable of $457, the payments of employee tax withholdings from the net settlement of stock options and RSUs of $243, and repayments made on finance leases of $75.
The following table reflects our net cash provided by financing activities for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Net cash provided by/(used in) financing activities $ 3,882 $ 1,595 $ 2,287 -143 % Net cash provided by financing activities for the year ended December 31, 2025 primarily relates to cash received from the exercise of stock options of $4,870, offset by the payments of employee tax withholdings from the net settlement of stock options and RSUs of $489, repayments made on notes payable of $478, and repayments made on finance leases of $21.
RELATED PARTY TRANSACTIONS On November 1, 2022, the Company completed the acquisition of Allegiant Networks, LLC, a Kansas limited liability company (the “Allegiant Networks”) to acquire from Seller one hundred percent (100%) of the issued and outstanding shares of Allegiant Networks in exchange for (i) a cash payment at closing in the amount of $2.0 million, (ii) a three-year promissory note by the Company in favor of Seller in the amount of $1.1 million, and (iii) 2,461,538 shares of the Company’s common stock, par value $0.001 per share.
OFF BALANCE SHEET ARRANGEMENTS As of December 31, 2025, we are not involved in any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. 48 Table of Contents RELATED PARTY TRANSACTIONS On November 1, 2022, the Company completed the acquisition of Allegiant Networks, LLC, a Kansas limited liability company (the “Allegiant Networks”) to acquire from Seller one hundred percent (100%) of the issued and outstanding shares of Allegiant Networks in exchange for (i) a cash payment at closing in the amount of $2.0 million, (ii) a three-year promissory note by the Company in favor of Seller in the amount of $1.1 million, and (iii) 2,461,538 shares of the Company’s common stock, par value $0.001 per share.
We generate software license revenue from the sale of perpetual software licenses, term-based software licenses that expire, and Software-as-a-Service ("SaaS") based software which are referred to as subscription arrangements. The Company does not recognize software revenue related to the renewal of subscription software licenses earlier than the beginning of the subscription period.
We generate software license revenue from the sale of perpetual software licenses, term-based software licenses that expire, and Software-as-a-Service ("SaaS") based software which are referred to as subscription arrangements.
We also believe use of Adjusted EBITDA facilitates investors’ use of operating performance comparisons from period to period, as well as across companies. 32 Table of Contents In our March 4, 2025 earnings press release, as furnished on Form 8-K, we included Non-GAAP net income, EBITDA and Adjusted EBITDA.
We also believe use of Adjusted EBITDA facilitates investors’ use of operating performance comparisons from period to period, as well as across companies. In our March 3, 2026 earnings press release, as furnished on Form 8-K, we included Non-GAAP net income, EBITDA and Adjusted EBITDA. The terms Non-GAAP net income, EBITDA, and Adjusted EBITDA are not defined under U.S.
For the year ended December 31, 2023, one quarterly dividend of $0.005 was declared and paid, however we have assumed a 0% dividend yield for the year ended December 31, 2024. 36 Table of Contents We develop an estimate of the number of share-based awards that will be forfeited due to employee turnover.
For the year ended December 31, 2025, no quarterly dividends were declared and paid, therefore we have assumed a 0% dividend yield for the year ended December 31, 2025. We develop an estimate of the number of share-based awards that will be forfeited due to employee turnover.
Management periodically weighs the positive and negative evidence to determine if it is more likely than not that some or all of the deferred tax assets will be realized.
We currently have net deferred tax assets consisting of net operating loss carryforwards, tax credit carryforwards and deductible temporary differences. Management periodically weighs the positive and negative evidence to determine if it is more likely than not that some or all of the deferred tax assets will be realized.
The following table reflects our service revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Service revenue $ 31,849 $ 29,668 $ 2,181 7 % The increase in service revenue is due to an increase in telecommunications services fees of $1,899, an increase in fees, commissions, and other, recognized over time of $235, and an increase in sales-type lease interest of $175, offset by a decrease in one-time fees, commissions and other of $128.
The following table reflects our service revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Service revenue $ 33,782 $ 31,849 $ 1,933 6 % The increase in service revenue is due to an increase in telecommunications services fees of $1,749, an increase in fees, commissions, and other, recognized over time of $392, and an increase in sales-type lease interest of $165, offset by a decrease in one-time fees, commissions and other of $373.
The deferred income tax provision is calculated for the estimated future tax effects attributable to temporary differences and carryforwards using expected tax rates in effect during the years in which the differences are expected to reverse or the carryforwards are expected to be realized. 35 Table of Contents We currently have net deferred tax assets consisting of net operating loss carryforwards, tax credit carryforwards and deductible temporary differences.
The deferred income tax provision is calculated for the estimated future tax effects attributable to temporary differences and carryforwards using expected tax rates in effect during the years in which the differences are expected to reverse or the carryforwards are expected to be realized.
As of December 31, 2024, excluding the gain on the sale of property and equipment, we have three years of cumulative pretax losses and the weight of all other positive and negative evidence, such as forecasts and projections of future pretax income are inherently subjective and require management to make assumption or complex judgments about matters that are inherently uncertain and therefore are not sufficient to overcome the significant negative evidence of a three year lookback cumulative loss position.
As of December 31, 2025, excluding the gain on the sale of property and equipment in 2023, we no longer have three years of cumulative pretax losses, however the weight of all other positive and negative evidence, such as amortization expenses for future acquisitions and forecasts and projections of future pretax income are inherently subjective and require management to make assumption or complex judgments about matters that are inherently uncertain.
Income/(loss) Before Income Tax The following table reflects our income/(loss) before income tax for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Income/(loss) before income tax $ 1,889 $ (264 ) $ 2,153 816 % The increase in income/(loss) before income tax is primarily related to an increase in revenue of $7,639, offset by an increase in operating expenses of $4,126 and a decrease in other income/(expense) of $1,360.
Income/(loss) Before Income Tax The following table reflects our income/(loss) before income tax for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Income/(loss) before income tax $ 5,371 $ 1,889 $ 3,482 184 % The increase in income/(loss) before income tax is primarily related to an increase in revenue of $7,329 and an increase in other income/(expense) of $616, offset by an increase in operating expenses of $4,463.
The following table reflects our selling and marketing expenses for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Selling and marketing $ 4,974 $ 4,420 $ 554 13 % The increase in selling and marketing expense is primarily related to an increase in commission expense of $436 directly related to the increase in revenue, an increase in marketing materials and trade shows of $215, an increase in sales support software of $90, and an increase in other selling and marketing costs of $16, offset by a decrease in salaries, benefits, bonuses, and share-based compensation of $203 due to the allocation of marketing resources to the Cloud Telecommunications Services segment.
The following table reflects our selling and marketing expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Selling and marketing $ 5,323 $ 4,974 $ 349 7 % The increase in selling and marketing expense is primarily related to an increase in commission expense of $394 directly related to the increase in revenue, an increase in marketing materials and trade shows of $137, offset by a decrease in salaries, benefits, bonuses, and share-based compensation of $91 due to the allocation of marketing resources to the Cloud Telecommunications Services segment, a decrease in bad debt related to a decrease in our credit loss reserve of $50, and a decrease in other selling and marketing costs of $41.
Remaining Performance Obligations Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of December 31, 2024 and 2023. RPOs increased 58%, or $11,140 to $30,262 as of December 31, 2024 as compared to $19,122 as of December 31, 2023.
Remaining Performance Obligations Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of December 31, 2025 and 2024. RPOs decreased 6%, or $1,890 to $28,372 as of December 31, 2025 as compared to $30,262 as of December 31, 2024.
The following table reflects our service revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Software solutions revenue $ 23,374 $ 18,047 $ 5,327 30 % The increase in software solutions revenue is primarily related to an increase in recurring software license and maintenance and support subscriptions of $3,278, an increase in perpetual software license revenue of $1,420, and an increase in professional services and other revenue of $629.
The following table reflects our service revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Software solutions revenue $ 29,664 $ 23,374 $ 6,290 27 % 45 Table of Contents The increase in software solutions revenue is primarily related to an increase in recurring software license and maintenance and support subscriptions of $3,553, an increase in perpetual software license revenue of $2,667, and an increase in professional services and other revenue of $70.
Net cash used in financing activities for the year ended December 31, 2023 primarily relates to repayments made on finance leases and notes payable of $2,349, payments of employee tax withholdings related to the net settlement of stock options and RSUs of $264, dividend payments of $130, and repayments on the line of credit of $82, offset by proceeds from notes payable of $278 and cash proceeds from the exercise of stock options of $241.
Net cash provided by financing activities for the year ended December 31, 2024 primarily relates to cash received from the exercise of stock options of $2,370, offset by repayments made on notes payable of $457, the payments of employee tax withholdings from the net settlement of stock options and RSUs of $243, and repayments made on finance leases of $75.
The following table reflects our general and administrative expenses for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change General and administrative $ 5,273 $ 4,518 $ 755 17 % The increase in general and administrative expenses is primarily related to an increase in salaries, benefits, bonuses, and share-based compensation of $615, an increase in accounting software costs of $81 associated with service contract fees for our new accounting system, an increase in consulting fees of $42, and an increase in other general and administrative expenses of $17.
The following table reflects our general and administrative expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change General and administrative $ 6,907 $ 5,273 $ 1,634 31 % 46 Table of Contents The increase in general and administrative expenses is primarily related to an increase in salaries, benefits, bonuses, share-based compensation, and headcount of $1,013, an increase in legal expenses of $266, an increase in the amortization of intangible assets of $119, an increase in professional service costs of $60, an increase in bank and merchant fees of $49, an increase in consulting fees of $42, an increase in accounting software costs of $32 associated with service contract fees for our new accounting system, and an increase in other general and administrative expenses of $53.
Revenue for professional services and other is recognized when the performance obligation is complete and the customer has accepted the performance obligation.
We generate professional services and other revenue from consulting, technical support, resident engineer services, design services and installation services. Revenue for professional services and other is recognized when the performance obligation is complete and the customer has accepted the performance obligation.
The following table reflects our cost of service revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Cost of service revenue $ 13,087 $ 12,606 $ 481 4 % The increase in cost of service revenue was primarily related to an increase in contract labor costs to assist with the migration of our customers to our new VIP platform of $201, an increase in salaries, benefits, bonuses, and share-based compensation of $94, an increase in third-party telecommunications charges of $71, an increase in credit card processing fees of $68, and an increase in other cost of service revenue of $47.
The following table reflects our cost of service revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Cost of service revenue $ 14,153 $ 13,087 $ 1,066 8 % The increase in cost of service revenue was primarily related to an increase in third-party telecommunication charges of $590, an increase in contract labor costs to assist with the migration of our customers to our new VIP platform of $354, an increase in data center hosting costs of $114, an increase in software costs of $73, an increase in credit card processing fees of $39, and an increase in other cost of service revenue expense of $57, offset by a decrease in salaries, benefits, bonuses, and share-based compensation of $161.
Operating Results of our Software Solutions Segment (in thousands): Software Solutions 2024 2023 Software solutions revenue $ 23,374 $ 18,047 Operating expenses: Cost of software solutions revenue 6,793 5,627 Selling and marketing 4,974 4,420 General and administrative 5,273 4,518 Research and development 4,764 3,688 Total operating expenses 21,804 18,253 Income/(loss) from operations 1,570 (206 ) Other income/(expense), net (94 ) 66 Income/(loss) before income tax $ 1,476 $ (140 ) Quarterly Financial Information For the three months ended March 31, June 30, September 30, December 31, Software Solutions 2024 2024 2024 2024 Software solutions revenue $ 5,146 $ 5,325 $ 5,860 $ 7,043 Operating expenses: Cost of software solutions revenue 1,392 1,445 1,686 2,270 Selling and marketing 1,231 1,150 1,245 1,348 General and administrative 1,138 1,200 1,417 1,518 Research and development 980 1,070 1,339 1,375 Total operating expenses 4,741 4,865 5,687 6,511 Income/(loss) from operations 405 460 173 532 Other income/(expense), net (17 ) (10 ) (5 ) (62 ) Income/(loss) before income tax $ 388 $ 450 $ 168 $ 470 For the three months ended March 31, June 30, September 30, December 31, Software Solutions 2023 2023 2023 2023 Software solutions revenue $ 4,108 $ 3,930 $ 4,691 $ 5,318 Operating expenses: Cost of software solutions revenue 1,185 1,293 1,327 1,822 Selling and marketing 1,213 1,109 1,035 1,063 General and administrative 1,213 992 1,079 1,234 Research and development 892 847 959 990 Total operating expenses 4,503 4,241 4,400 5,109 Income/(loss) from operations (395 ) (311 ) 291 209 Other income/(expense), net 55 22 (52 ) 41 Income/(loss) before income tax $ (340 ) $ (289 ) $ 239 $ 250 41 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Software Solutions Revenue Software solutions revenue consists primarily of software license fees, subscription maintenance and support, professional services, and annual user group meeting fees.
Operating Results of our Software Solutions Segment (in thousands): Software Solutions 2025 2024 Software solutions revenue $ 29,664 $ 23,374 Operating expenses: Cost of software solutions revenue 8,275 6,793 Selling and marketing 5,323 4,974 General and administrative 6,907 5,273 Research and development 5,239 4,764 Total operating expenses 25,744 21,804 Income/(loss) from operations 3,920 1,570 Other income/(expense), net 65 (94 ) Income/(loss) before income tax $ 3,985 $ 1,476 44 Table of Contents Quarterly Financial Information For the three months ended March 31, June 30, September 30, December 31, Software Solutions 2025 2025 2025 2025 Software solutions revenue $ 6,868 $ 6,975 $ 7,521 $ 8,300 Operating expenses: Cost of software solutions revenue 1,490 1,813 1,924 3,048 Selling and marketing 1,437 1,290 1,307 1,289 General and administrative 1,581 1,627 1,852 1,847 Research and development 1,391 1,322 1,292 1,234 Total operating expenses 5,899 6,052 6,375 7,418 Income/(loss) from operations 969 923 1,146 882 Other income/(expense), net (16 ) 54 (6 ) 33 Income/(loss) before income tax $ 953 $ 977 $ 1,140 $ 915 For the three months ended March 31, June 30, September 30, December 31, Software Solutions 2024 2024 2024 2024 Software solutions revenue $ 5,146 $ 5,325 $ 5,860 $ 7,043 Operating expenses: Cost of software solutions revenue 1,392 1,445 1,686 2,270 Selling and marketing 1,231 1,150 1,245 1,348 General and administrative 1,138 1,200 1,417 1,518 Research and development 980 1,070 1,339 1,375 Total operating expenses 4,741 4,865 5,687 6,511 Income/(loss) from operations 405 460 173 532 Other income/(expense), net (17 ) (10 ) (5 ) (62 ) Income/(loss) before income tax $ 388 $ 450 $ 168 $ 470 Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Software Solutions Revenue Software solutions revenue consists primarily of software license fees, subscription maintenance and support, professional services, and annual user group meeting fees.
Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. Subscription and maintenance support revenue is recognized ratably over the term of the customer support agreement, which is typically one year. We generate professional services and other revenue from consulting, technical support, resident engineer services, design services and installation services.
The Company does not typically allow and has no history of accepting material product returns. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. Subscription and maintenance support revenue is recognized ratably over the term of the customer support agreement, which is typically one year.
Net cash provided by investing activities for the year ended December 31, 2023 primarily relates to the sale of the corporate headquarters located in Tempe, Arizona, which generated $3,792 in proceeds from the sale, offset by the purchases of property and equipment of $92. 44 Table of Contents Financing Activities Cash provided by or used in financing activities is driven by the proceeds from the exercise of options, taxes paid on the net settlement of stock options and RSUs, payments of contingent consideration, proceeds from notes payable, repayments made on finance leases and notes payable, proceeds and repayments on line of credit, dividend payments, and proceeds from the issuance of common stock in connection with an offering.
Financing Activities Cash provided by or used in financing activities is driven by the proceeds from the exercise of options, taxes paid on the net settlement of stock options and RSUs, payments of contingent consideration, proceeds from notes payable, repayments made on finance leases and notes payable, proceeds and repayments on line of credit, dividend payments, and proceeds from the issuance of common stock in connection with an offering.
The following table reflects our other income/(expense) for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Other income/(expense), net $ 159 $ 1,359 $ (1,200 ) -88 % 40 Table of Contents The change in other income/(expense) is primarily from the gain on sale of our corporate office building reported during the year ended December 31, 2023 of $1,459 and a decrease in other income of $3, offset by an increase in interest income of $189 and a decrease in interest expense of $73.
The following table reflects our other income/(expense) for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Other income/(expense), net $ 616 $ 159 $ 457 287 % The change in other income/(expense) is primarily from an increase in interest income of $435 and a decrease in interest expense of $23, offset by a decrease in other income of $1.
The following table reflects our cost of service revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Cost of software solutions revenue $ 6,793 $ 5,627 $ 1,166 21 % The increase in cost of software solutions revenue is primarily related to an increase in third-party hosting service costs of $399, an increase in salaries, benefits, bonuses, and share-based compensation of $322, an increase in software costs of $293, an increase in annual user group meeting expenses of $142, and an increase in other cost of software solutions revenue of $10. 42 Table of Contents Selling and Marketing Selling and marketing expenses consist primarily of sales and marketing salaries, benefits, bonuses, commissions, share-based compensation, travel expenses, lead generation services, trade shows, third-party marketing services, the production of marketing materials, annual user group meeting costs, and sales support software.
The following table reflects our cost of service revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Cost of software solutions revenue $ 8,275 $ 6,793 $ 1,482 22 % The increase in cost of software solutions revenue is primarily related to an increase in salaries, benefits, bonuses, share-based compensation, and headcount of $631, an increase in software costs of $310, an increase in third-party hosting service costs of $181, an increase in annual user group meeting expenses of $169, an increase in outsourced services of $169, and an increase in other cost of software solutions revenue of $22.
The following table reflects our research and development expenses for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Research and development $ 788 $ 1,172 $ (384 ) -33 % The decrease in research and development expenses is primarily related to the allocation of engineering resources to our Software Solutions segment of $380 as we finalize the migration of our customers to our VIP platform, and a decrease other research and development expenses of $4.
The following table reflects our research and development expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Research and development $ 481 $ 788 $ (307 ) -39 % The decrease in research and development expenses is primarily related to the allocation of engineering resources to our Software Solutions segment of $316, offset by an increase in other research and development expenses of $9.
The following table reflects our total revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Total revenue $ 60,838 $ 53,199 $ 7,639 14 % The increase in total revenue is due to an increase in software solutions revenue of $5,327, an increase in service revenue of $2,181, and an increase in product revenue of $131.
The following table reflects our total revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Total revenue $ 68,167 $ 60,838 $ 7,329 12 % The increase in total revenue is due to an increase in software solutions revenue of $6,290 and an increase in service revenue of $1,933, offset by a decrease in product revenue of $894.
Results of Consolidated Operations (in thousands, except for per share amounts) Year Ended December 31, Consolidated 2024 2023 Service revenue $ 31,849 $ 29,668 Software solutions revenue 23,374 18,047 Product revenue 5,615 5,484 Total revenue 60,838 53,199 Income/(loss) before income tax 1,889 (264 ) Income tax benefit/(provision) (212 ) (98 ) Net income/(loss) 1,677 (362 ) Basic earnings per common share $ 0.06 $ (0.01 ) Diluted earnings per common share $ 0.06 $ (0.01 ) For the three months ended March 31, June 30, September 30, December 31, Consolidated 2024 2024 2024 2024 Service revenue $ 7,845 $ 8,067 $ 7,953 $ 7,984 Software solutions revenue 5,146 5,325 5,860 7,043 Product revenue 1,295 1,293 1,814 1,213 Total revenue $ 14,286 $ 14,685 15,627 16,240 Income/(loss) before income tax 461 615 194 619 Income tax benefit/(provision) (27 ) (27 ) (46 ) (112 ) Net income/(loss) 434 588 148 507 Basic earnings per common share (1) $ 0.02 $ 0.02 $ 0.01 $ 0.02 Diluted earnings per common share (1) $ 0.01 $ 0.02 $ 0.00 $ 0.02 For the three months ended March 31, June 30, September 30, December 31, Consolidated 2023 2023 2023 2023 Service revenue $ 7,158 $ 7,308 $ 7,517 $ 7,685 Software solutions revenue 4,108 3,930 4,691 5,318 Product revenue 1,225 1,432 1,666 1,161 Total revenue 12,491 12,670 13,874 14,164 Income/(loss) before income tax (1,558 ) (521 ) 1,737 78 Income tax benefit/(provision) (24 ) (24 ) (33 ) (17 ) Net income/(loss) (1,582 ) (545 ) 1,704 61 Basic earnings per common share (1) $ (0.06 ) $ (0.02 ) $ 0.07 $ 0.00 Diluted earnings per common share (1) $ (0.06 ) $ (0.02 ) $ 0.06 $ 0.00 ____________________ (1) Earnings per common share is computed independently for each of the quarters presented.
Results of Consolidated Operations (in thousands, except for per share amounts) Year Ended December 31, Consolidated 2025 2024 Service revenue $ 33,782 $ 31,849 Software solutions revenue 29,664 23,374 Product revenue 4,721 5,615 Total revenue 68,167 60,838 Income/(loss) before income tax 5,371 1,889 Income tax (provision)/benefit (300 ) (212 ) Net income/(loss) 5,071 1,677 Basic earnings per share $ 0.17 $ 0.06 Diluted earnings per share $ 0.16 $ 0.06 For the three months ended Consolidated March 31, June 30, September 30, December 31, 2025 2025 2025 2025 Service revenue $ 8,182 $ 8,374 $ 8,607 $ 8,619 Software solutions revenue 6,868 6,975 7,521 8,300 Product revenue 1,007 1,203 1,369 1,142 Total revenue $ 16,057 $ 16,552 17,497 18,061 Income/(loss) before income tax 1,215 1,280 1,493 1,383 Income tax (provision)/benefit (44 ) (48 ) (43 ) (165 ) Net income/(loss) 1,171 1,232 1,450 1,218 Basic earnings per share (1) $ 0.04 $ 0.04 $ 0.05 $ 0.04 Diluted earnings per share (1) $ 0.04 $ 0.04 $ 0.05 $ 0.04 34 Table of Contents For the three months ended Consolidated March 31, June 30, September 30, December 31, 2024 2024 2024 2024 Service revenue $ 7,845 $ 8,067 $ 7,953 $ 7,984 Software solutions revenue 5,146 5,325 5,860 7,043 Product revenue 1,295 1,293 1,814 1,213 Total revenue $ 14,286 $ 14,685 15,627 16,240 Income/(loss) before income tax 461 615 194 619 Income tax (provision)/benefit (27 ) (27 ) (46 ) (112 ) Net income/(loss) 434 588 148 507 Basic earnings per share (1) $ 0.02 $ 0.02 $ 0.01 $ 0.02 Diluted earnings per share (1) $ 0.01 $ 0.02 $ 0.00 $ 0.02 ——————— (1) Earnings per share is computed independently for each of the quarters presented.
Once an indicator of potential impairment has occurred, the impairment test is based on whether the intent is to hold the asset for continued use or to hold the asset for sale.
The Company reviews the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Once an indicator of potential impairment has occurred, the impairment test is based on whether the intent is to hold the asset for continued use or to hold the asset for sale.
Based on the guidance in ASC 606, assurance-type warranties do not represent separate performance obligations. The Company also sells separately-priced maintenance service contracts, which qualify as service-type warranties and represent separate performance obligations. The Company does not typically allow and has no history of accepting material product returns.
Certain of the Company's warranties are considered to be assurance-type in nature and do not cover anything beyond ensuring that the product is functioning as intended. Based on the guidance in ASC 606, assurance-type warranties do not represent separate performance obligations. The Company also sells separately-priced maintenance service contracts, which qualify as service-type warranties and represent separate performance obligations.
The following table reflects our cost of product revenue for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Cost of product revenue $ 3,215 $ 3,331 $ (116 ) -3 % The decrease is primarily related to a higher margin product mix by eliminating the sale of low margin products. 39 Table of Contents Selling and Marketing Selling and marketing expenses consist primarily of direct and channel sales representative salaries, benefits, bonuses, and share-based compensation, partner channel commissions, amortization of costs to acquire contracts, travel expenses, lead generation services, trade shows, internal and third-party marketing costs, amortization of customer relationship intangible assets, the production of marketing materials, and sales support software.
Selling and Marketing Selling and marketing expenses consist primarily of direct and channel sales representative salaries, benefits, bonuses, and share-based compensation, partner channel commissions, amortization of costs to acquire contracts, travel expenses, lead generation services, trade shows, internal and third-party marketing costs, amortization of customer relationship intangible assets, the production of marketing materials, and sales support software.
The increase in operating expenses is primarily related to an increase in commission expense of $1,621, an increase in contract labor and outsourced engineering services of $549, an increase in hosting service fees of $399, an increase in marketing costs of $307, and an increase in salaries, benefits, bonuses and share-based compensation of $220.
The increase in operating expenses is primarily related to an increase in salaries, benefits, bonuses and share-based compensation of $1,267, an increase in commission expense of $986, an increase in contract labor and outsourced engineering services of $699, an increase in third-party telecommunication charges of $590, an increase in software costs of $415, an increase in hosting services fees of $295, an increase in annual user group meeting expenses of $169, and an increase in other expenses of $42.
GAAP net income/(loss) $ 507 $ 61 $ 1,677 $ (362 ) Share-based compensation 709 737 3,002 3,849 Acquisition related expenses - - - 1 Amortization of intangible assets 755 792 3,028 3,169 Non-GAAP net income $ 1,971 $ 1,590 $ 7,707 $ 6,657 Non-GAAP earnings per common share: Basic $ 0.07 $ 0.06 $ 0.29 $ 0.26 Diluted $ 0.06 $ 0.06 $ 0.26 $ 0.24 Weighted-average common shares outstanding: Basic 27,195,382 26,072,529 26,757,242 25,944,748 Diluted 30,547,245 28,314,527 30,019,359 27,792,813 33 Table of Contents Reconciliation of U.S.
GAAP net income/(loss) $ 1,218 $ 507 $ 5,071 $ 1,677 Share-based compensation and related taxes (1) 747 709 3,169 3,002 Acquisition related expenses 51 - 51 - Amortization of intangible assets 786 755 3,078 3,028 Non-GAAP net income $ 2,802 $ 1,971 $ 11,369 $ 7,707 Non-GAAP earnings per common share: Basic $ 0.09 $ 0.07 $ 0.38 $ 0.29 Diluted $ 0.09 $ 0.06 $ 0.36 $ 0.26 Weighted-average common shares outstanding: Basic 30,837,145 27,195,382 29,681,847 26,757,242 Diluted 32,151,192 30,547,245 31,641,294 30,019,359 Reconciliation of U.S.
Our Cloud Telecommunications service revenue increased 7% or $2,181 to $31,849 for the year ended December 31, 2024 as compared to $29,668 for the year ended December 31, 2023. Our Cloud Telecommunications product revenue increased 2% or $131 to $5,615 for the year ended December 31, 2024 as compared to $5,484 for the year ended December 31, 2023.
Our Cloud Telecommunications service revenue increased 6% or $1,933 to $33,782 for the year ended December 31, 2025 as compared to $31,849 for the year ended December 31, 2024. Our Cloud Telecommunications product revenue decreased 16% or $894 to $4,721 for the year ended December 31, 2025 as compared to $5,615 for the year ended December 31, 2024.
Our Software solutions revenue increased 30%, or $5,327 to $23,374 for the year ended December 31, 2024, compared to $18,047 for the year ended December 31, 2023. 30 Table of Contents Results of Consolidated Operations The following discussion of financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and Notes thereto and other financial information included herein this Annual Report.
Results of Consolidated Operations The following discussion of financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and Notes thereto and other financial information included herein this Annual Report.
We generate subscription and maintenance support revenue from customer support and other supportive services. The Company offers warranties on its products. The warranty period for our licensed software is generally 90 days. Certain of the Company's warranties are considered to be assurance-type in nature and do not cover anything beyond ensuring that the product is functioning as intended.
The Company does not recognize software revenue related to the renewal of subscription software licenses earlier than the beginning of the subscription period. 33 Table of Contents We generate subscription and maintenance support revenue from customer support and other supportive services. The Company offers warranties on its products. The warranty period for our licensed software is generally 90 days.
Income Tax Benefit/(Provision) The following table reflects our income tax benefit/(provision) for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Income tax benefit/(provision) $ (212 ) $ (98 ) $ (114 ) -116 % We had an income tax provision of $(212) for the year ended December 31, 2024 compared to an income tax provision of $(98) for the year ended December 31, 2023.
The increase in other income/(expense) is primarily related to an increase in interest income of $446, an increase in other income of $147, and a decrease in interest expense of $23. 35 Table of Contents Income Tax Benefit/(Provision) The following table reflects our income tax benefit/(provision) for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Income tax benefit/(provision) $ (300 ) $ (212 ) $ (88 ) -42 % We had an income tax provision of $(300) for the year ended December 31, 2025 compared to an income tax provision of $(212) for the year ended December 31, 2024.
Remaining Performance Obligations Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of December 31, 2024 and 2023. RPOs increased 24%, or $10,559 to $55,369 as of December 31, 2024 as compared to $44,810 as of December 31, 2023.
Additionally, product revenue can fluctuate due to the allocation of discounts or sales promotions across the performance obligations. 42 Table of Contents Remaining Performance Obligations Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of December 31, 2025 and 2024.
We expressly disclaim any obligation to update or alter our forward-looking statements, whether, as a result of new information, future events or otherwise after the date of this document. 29 Table of Contents OVERVIEW Crexendo, Inc. is an award-winning software technology company that is a premier provider of cloud communication platform and services, video collaboration and managed IT services tailored to businesses of all sizes.
OVERVIEW Crexendo, Inc. is an award-winning software technology company that is a premier provider of cloud communication platform and services, video collaboration and managed IT services tailored to businesses of all sizes.
Amortizable intangible assets are amortized over the estimated useful lives as follows: Customer relationships 6 to 16 years Developed technologies 2 to 6 years Trademark and trade names 4 years Valuation of Long-Lived Assets. The Company reviews the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
If an intangible asset is considered to be impaired, the amount of the impairment will be equal to the excess of the carrying value over the fair value of the asset. 38 Table of Contents Amortizable intangible assets are amortized over the estimated useful lives as follows: Customer relationships 6 to 16 years Developed technologies 2 to 6 years Trademark and trade names 4 years Capitalized software development costs 1 year Valuation of Long-Lived Assets.
The following table reflects our other income/(expense) for the year ended December 31, 2024, compared to the year ended December 31, 2023: 2024 2023 Dollar Change Percent Change Other income/(expense), net $ (94 ) $ 66 $ (160 ) -242 % The change in other income/(expense) is primarily related to a decrease in other income of $96 and a decrease in foreign exchange gains/(losses) of $64. 43 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations.
The following table reflects our other income/(expense) for the year ended December 31, 2025, compared to the year ended December 31, 2024: 2025 2024 Dollar Change Percent Change Other income/(expense), net $ 65 $ (94 ) $ 159 169 % The change in other income/(expense) is primarily related to an increase in foreign exchange gains/(losses) of $111, an increase in other income of $37, and an increase in interest income of $11.
The following table reflects our general and administrative expenses for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change General and administrative $ 8,556 $ 9,275 $ (719 ) -8 % The decrease in general and administrative expenses is primarily related to a decrease in executive and administrative salaries, benefits, bonuses, and share-based compensation of $1,010 primarily due to a decrease in share-based compensation of $733 and an allocation of costs to the Software Solutions segment of $203, and a decrease in other general and administrative expenses of $32, offset by an increase of rent expense of $242 due to the leaseback of our previously sold corporate headquarters land and building and rent on our new corporate office of $80, and an increase in accounting software costs of $81 associated with service contract fees for our new accounting system.
The following table reflects our general and administrative expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change General and administrative $ 7,816 $ 8,556 $ (740 ) -9 % The decrease in general and administrative expenses is primarily related to a decrease in executive and administrative salaries, benefits, bonuses, share-based compensation, and headcount of $508, a decrease in telecommunication annual taxes and fees of $138, a decrease in rent expense of $74, and a decrease in other general and administrative expenses of $20.
The net cash provided by operations for the year ended December 31, 2023 was primarily driven by non-cash expenses for depreciation and amortization of $3,573 and share-based compensation of $3,849, a decrease in inventories of $297, a decrease in other assets of $651, and an increase in accounts payable and accrued expenses of $623, offset by our net loss for the year ended December 31, 2023 of $362, the gain on disposal of property and equipment of $1,459, an increase in trade receivables of $164, an increase in contract assets of $109, an increase in equipment financing receivables of $905, an increase in contract costs of $1,473, and a decrease in contract liabilities of $997.
The following table reflects our net cash provided by/(used in) operating activities for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Net cash provided by/(used in) operating activities $ 9,297 $ 6,284 $ 3,013 48 % 47 Table of Contents The net cash provided by operations for the year ended December 31, 2025 was primarily driven by our net income of $5,071, non-cash expenses for depreciation and amortization of $3,295, share-based compensation of $2,932, an increase in accounts payable and accrued expenses of $1,045 and an increase in contract liabilities of $164, offset by an increase in equipment financing receivables of $1,124, an increase in contract costs of $827, and an increase in trade receivables of $539.
We finance our operations primarily through services, software solutions, and product sales to our customers. As of December 31, 2024 and 2023, we had cash and cash equivalents of $18,193 and $10,347, respectively.
As of December 31, 2025 and 2024, we had cash and cash equivalents of $31,378 and $18,193, respectively.
The following table reflects our selling and marketing expenses for the year ended December 31, 2024, compared to the year ended December 31, 2023: Year Ended December 31, 2024 2023 Dollar Change Percent Change Selling and marketing $ 11,564 $ 10,251 $ 1,313 13 % The increase in selling and marketing expense is primarily related to an increase in commission expense of $1,185 directly related to the increase in revenue, an increase in marketing costs of $92, and an increase in other sales and marketing expense of $36.
The following table reflects our cost of product revenue for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Cost of product revenue $ 2,835 $ 3,215 $ (380 ) -12 % The decrease in cost of product revenue is primarily related to the decrease in product revenue for the year ended December 31, 2025.
Removed
The decrease in other income/(expense) is primarily related to the gain on the sale of our corporate office recognized during the year ended December 31, 2023 of $1,459 offset by an increase in interest income of $189 and a decrease in interest expense of $73.
Added
We expressly disclaim any obligation to update or alter our forward-looking statements, whether, as a result of new information, future events or otherwise after the date of this document.
Removed
The terms Non-GAAP net income, EBITDA, and Adjusted EBITDA are not defined under U.S.
Added
Our Software solutions revenue increased 27%, or $6,290 to $29,664 for the year ended December 31, 2025, compared to $23,374 for the year ended December 31, 2024.
Removed
GAAP net income/(loss) $ 507 $ 61 $ 1,677 $ (362 ) Depreciation and amortization 826 878 3,331 3,573 Interest expense 11 4 42 115 Gain on sale of property and equipment - - - (1,459 ) Other, net (4 ) (44 ) (107 ) (81 ) Income tax provision 112 17 212 98 EBITDA 1,452 916 5,155 1,884 Acquisition related expenses - - - 1 Share-based compensation 709 737 3,002 3,849 Adjusted EBITDA $ 2,161 $ 1,653 $ 8,157 $ 5,734 CRITICAL ACCOUNTING POLICIES AND ESTIMATES The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.
Added
GAAP net income/(loss) $ 1,218 $ 507 $ 5,071 $ 1,677 Depreciation and amortization 829 826 3,295 3,331 Interest expense 1 11 19 42 Other, net (252 ) (4 ) (700 ) (107 ) Income tax provision 165 112 300 212 EBITDA 1,961 1,452 7,985 5,155 Acquisition related expenses 51 - 51 - Share-based compensation and related taxes (1) 747 709 3,169 3,032 Adjusted EBITDA $ 2,759 $ 2,161 $ 11,205 $ 8,187 ——————— (1) For the three months ended December 31, 2025 and 2024, employer payroll tax expense related to share-based compensation was $69 and $28, respectively.
Removed
If an intangible asset is considered to be impaired, the amount of the impairment will be equal to the excess of the carrying value over the fair value of the asset.
Added
For the twelve months ended December 31, 2025 and 2024, employer payroll tax expense related to share-based compensation was $237 and $59, respectively. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.
Removed
Segment operating income is equal to segment net revenue less segment cost of service revenue, cost of software solution revenue, cost of product revenue, sales and marketing, research and development, and general and administrative expenses.
Added
RPOs increased 10%, or $5,325 to $60,694 as of December 31, 2025 as compared to $55,369 as of December 31, 2024.
Removed
General and Administrative General and administrative expenses consist of salaries, benefits, bonuses and share-based compensation for executives, administrative personnel, legal, rent, equipment, accounting and other professional services, investor relations, depreciation, amortization of intangible assets, and other administrative corporate expenses.
Added
The following table reflects our selling and marketing expenses for the year ended December 31, 2025, compared to the year ended December 31, 2024: Year Ended December 31, 2025 2024 Dollar Change Percent Change Selling and marketing $ 12,448 $ 11,564 $ 884 8 % The increase in selling and marketing expense is primarily related to an increase in commission expense of $592 directly related to the increase in revenue, an increase in salaries, benefits, bonuses, share-based compensation, and headcount of $355, an increase in marketing costs of $134, and an increase in other selling and marketing expenses of $44, offset by a decrease in bad debt related to a decrease in our credit loss reserve of $110 and a decrease in the amortization of customer relationship intangible assets of $131. 43 Table of Contents General and Administrative General and administrative expenses consist of salaries, benefits, bonuses and share-based compensation for executives, administrative personnel, legal, rent, equipment, accounting and other professional services, investor relations, depreciation, amortization of intangible assets, and other administrative corporate expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur inability or failure to do so could harm our business, financial condition and results of operations. 45 Table of Contents
Biggest changeOur inability or failure to do so could harm our business, financial condition and results of operations. 49 Table of Contents

Other CXDO 10-K year-over-year comparisons