PHOENIX, AZ
-- (Marketwire)
-- 10/24/12
Crexendo, Inc. (NYSE MKT: EXE), a hosted services company that provides e-commerce software, website development, web hosting, search engine optimization, link building, hosted telecommunication services and broadband internet for businesses and entrepreneurs, today reported suspension of its quarterly dividend program.
Steven G. Mihaylo, Chief Executive Officer, commented, "With the company successfully redeploying assets to complete the transition to B2B operations which has essentially put the Company in the position of being a "start up," the board determined this was the time to invest all available cash directly in the business. It was concluded that it is the most prudent option to deploy our capital towards expanding and further developing our core assets. There are substantial investments that the Company is currently engaged in, including the establishment of our telecom and web services dealer programs, expanding the Crexendo University Program, improving sales leads, adding additional redundancy and upgrading our cloud infrastructure, as well as adding features to continue to make our telecom and web services the best in the industry. These investments together with the fact that our legacy receivables are declining as expected, and that the core Crexendo operations are not yet performing profitably, make it clear that it is in the best interest of our shareholders and Company to use all available resources to continuing to improve the business. We continue to cut costs, increase efficiencies and run the Company as if it were a startup; therefore the quarterly dividend is an option we can no longer afford. Management and the board of directors unanimously believe this will be a far more accretive use of capital at this time."
Mihaylo continued, "As a management team we are spending all of our time making the business more efficient and working towards reducing costs and improving the bottom line. As discussed earlier, I am very excited by our product progress, which is why it was time to start a dealer program. I continue to be impressed by the prospect of the University Program. The University Program has the dual advantage of training bright interested leaders of tomorrow on our web products and introducing them to the entire suite of Crexendo products and services while providing us with the immediate benefit of sticky business customers who can use our products now. We continue to improve our other products and services ensuring our technology is world class and continuing to improve on our intellectual property so we may provide our customers the best web and telecom services that are available. Considering the investments that we need to make in the Company and what I see as great opportunities with those investments, suspending the quarterly dividend is the right decision for our shareholders, our Company, our employees and our customers."
About Crexendo
Crexendo is a hosted services company that provides e-commerce software, website development, web hosting, search engine optimization, link building, hosted telecommunication services and broadband internet for businesses and entrepreneurs. Crexendo's services are designed to make enterprise-class hosting services available to small and medium-sized businesses at affordable monthly rates without having to make large capital investments.
Safe Harbor Statement
This press release contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. The words "believe," "expect," "anticipate," "estimate," "will" and other similar statements of expectation identify forward-looking statements. Specific forward-looking statements in this press release include information about Crexendo (i) being in the position of being a "start up,"; (ii) determining this is the time to invest all available cash directly in the business; (iii) determining that the most prudent option is to deploy its capital towards expanding and further developing its core assets; (iv) being involved in substantial investments; (v) adding features to continue to make its telecom and web services the best in the industry; (vi) determining that it is in the best interest of its shareholders and the Company to use all available resources to continuing to improve the business; (vii) continuing to cut costs, increase efficiencies and run the Company as if it were a startup; (viii) determining that the quarterly dividend is an option it can no longer afford; (ix) management and board unanimously believing suspending the dividend will be a far more accretive use of capital; (x) management team spending all of its time making the business more efficient and working towards reducing costs and improving the bottom line; (xi) being excited by its product progress; (xii) University Program having the dual advantage of training bright interested leaders of tomorrow on its web products and introducing them to the entire suite of Company products and services as well as providing the immediate benefit of sticky business customers who can use products now; (xiii) continue to improve its other products and services ensuring its technology is world class and continuing to improve on our intellectual property; (xiv)providing its customers the best web and telecom services that are available; (xv) having very great opportunities and (xvi) determining that suspending the quarterly dividend is the right decision for its shareholders, Company, employees customers.
For a more detailed discussion of risk factors that may affect Crexendo's operations and results, please refer to the company's Form 10-K for the period ended December 31, 2011 and Forms 10Q for the periods ending March 31, 2012 and June 30, 2012. These forward-looking statements speak only as of the date on which such statements are made, and the company undertakes no obligation to update such forward-looking statements, except as required by law.
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except par value and share data)
(unaudited)
December 31,
June 30, 2012 2011
------------- ------------
Assets
Current Assets:
Cash and cash equivalents $ 8,443 $ 8,658
Restricted cash 1,965 1,965
Trade receivables, net of allowance of
doubtful accounts of $852 as of June 30,
2012 and $3,512 as of December 31, 2011 7,735 9,420
Inventories 204 232
Equipment financing receivables 9 -
Income taxes receivable 514 552
Prepaid expenses and other 762 725
------------- ------------
Total Current Assets 19,632 21,552
Certificate of deposit 500 500
Long-term trade receivables, net of allowance
of doubtful accounts of $185 as of June 30,
2012 and $1,949 as of December 31, 2011 1,625 6,097
Long term equipment financing receivables 16 -
Property and equipment, net 3,718 4,055
Deferred income tax assets, net 272 279
Intangible assets 42 79
Goodwill 265 265
Other long-term assets 213 233
------------- ------------
Total Assets $ 26,283 $ 33,060
============= ============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 463 $ 1,153
Accrued expenses and other 1,718 2,240
Dividend payable - 211
Deferred income tax liability 272 279
Deferred revenue, current portion 7,774 9,288
------------- ------------
Total Current Liabilities 10,227 13,171
Deferred revenue, net of current portion 1,637 6,123
Other long-term liabilities 250 419
------------- ------------
Total Liabilities 12,114 19,713
------------- ------------
Stockholders' Equity:
Preferred stock, par value $0.001 per share
- authorized 5,000,000 shares; none issued - -
Common stock, par value $0.001 per share -
authorized 100,000,000 shares; 10,669,201
shares outstanding as of June 30, 2012 and
10,523,078 shares outstanding as of
December 31, 2011 11 11
Additional paid-in capital 49,680 48,938
Accumulated deficit (35,522) (35,602)
------------- ------------
Total Stockholders' Equity 14,169 13,347
------------- ------------
Total Liabilities and Stockholders' Equity $ 26,283 $ 33,060
============= ============
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share and share data)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- --------------------------
2012 2011 2012 2011
------------- ------------- ------------ ------------
Revenue $ 4,914 $ 17,496 $ 10,169 $ 32,064
Operating
expenses:
Cost of revenue 1,298 7,675 2,719 13,980
Selling and
marketing 984 10,076 1,917 18,839
General and
administrative 2,741 3,333 5,774 6,092
Research and
development 505 871 1,099 1,743
------------- ------------- ------------ ------------
Total
operating
expenses 5,528 21,955 11,509 40,654
------------- ------------- ------------ ------------
Loss from
operations (614) (4,459) (1,340) (8,590)
------------- ------------- ------------ ------------
Other income
(expense):
Interest income 524 1,316 1,266 2,469
Interest expense - (1) - (2)
Other income
(expense), net (14) (39) 14 (33)
------------- ------------- ------------ ------------
Total other
income, net 510 1,276 1,280 2,434
------------- ------------- ------------ ------------
Loss before income
tax provision (104) (3,183) (60) (6,156)
Income tax benefit
(provision) (13) (6,162) 140 (5,040)
------------- ------------- ------------ ------------
Net (loss) income $ (117) $ (9,345) $ 80 $ (11,196)
============= ============= ============ ============
Net income (loss)
per common share:
Basic $ (0.01) $ (0.88) $ 0.01 $ (1.05)
Diluted $ (0.01) $ (0.88) $ 0.01 $ (1.05)
Dividends per
common share: $ 0.00 $ 0.02 $ 0.02 $ 0.04
Weighted average
common shares
outstanding:
Basic 10,634,104 10,642,384 10,582,372 10,640,489
Diluted 10,634,104 10,642,384 10,614,888 10,640,489
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' Equity
Six Months Ended June 30, 2012
(In thousands, except share data)
(unaudited)
Common Stock
------------------
Additional Total
Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
---------- ------ ---------- ----------- -------------
Balance, December
31, 2011 10,523,078 $ 11 $ 48,938 $ (35,602) $ 13,347
Expense for
stock options
granted to
employees - - 455 - 455
Proceeds from
the exercise
of stock
options 146,123 - 498 - 498
Dividends
declared - - (211) - (211)
Net income - - - 80 80
---------- ------ ---------- ----------- -------------
Balance, June 30,
2012 10,669,201 $ 11 $ 49,680 $ (35,522) $ 14,169
========== ====== ========== =========== =============
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Six Months Ended June 30,
--------------------------
2012 2011
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 80 $ (11,196)
Adjustments to reconcile net income to netcash
provided by (used for) operating activities:
Depreciation and amortization 759 704
Impariment of inventory and intangible assets - 1,075
Expense for stock options issued to employees 455 362
Deferred income tax provision - 5,973
Change in uncertain tax positions (167) -
Changes in assets and liabilities:
Trade receivables 6,157 (3,223)
Equipment financing receivables (25) -
Inventories 28 345
Income taxes receivable 38 570
Prepaid expenses and other (37) 411
Other long-term assets 20 (8)
Accounts payable, accrued expenses and other (573) (1,624)
Deferred revenue (6,000) 4,773
Other long-term liabilities 4 (931)
------------ ------------
Net cash provided by (used for) operating
activities 739 (2,769)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (1,024) (348)
Investment in subsidiary - (56)
------------ ------------
Net cash used for investing activities (1,024) (404)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options 498 60
Repurchase of common stock - (89)
Payments made on contingent consideration (6) -
Dividend payments (422) (427)
------------ ------------
Net cash provided by (used for) financing
activities 70 (456)
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (215) (3,629)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,658 14,207
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,443 $ 10,578
============ ============
Supplemental disclosure of cash flow
information:
Cash paid (received) during the period:
Interest $ - $ 1
Income taxes (11) (569)
Supplemental disclosure of non-cash investing
and financing information:
Dividends declared - 213
Purchase of property and equipment included in
accounts payable 16 395
Contact:
Crexendo, Inc.
Steven G. Mihaylo
CEO
775-530-3955
Stevemihaylo@crexendo.com