Exhibit 99.1
Crexendo Announces Suspension of Dividend
PHOENIX, AZ--(Marketwire - October 24, 2012) - 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)
| | | June 30,
2012 | | | December 31,
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)
| | | 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
| | | | | | | | | Additional | | | | | | Total | |
| | | Common Stock | | | | | | 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 net | | | | | | | | |
| cash 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
