Crexendo (CXDO) 10-K 1 Mar 16 2015 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Feb. 10, 2016
Document And Entity Information
Entity Registrant Name	Crexendo, Inc.
Entity Central Index Key	1,075,736
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float	$ 4,868,000
Entity Common Stock, Shares Outstanding		13,245,246
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,015

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 1,497	$ 2,906
Restricted cash	112	133
Trade receivables, net of allowance for doubtful accounts of $35 as of December 31, 2015 and $49 as of December 31, 2014	364	543
Inventories	134	72
Equipment financing receivables	131	171
Prepaid expenses	1,046	1,031
Other current assets	15	1
Total Current Assets	3,299	4,857
Certificate of deposit	251	251
Long-term trade receivables, net of allowance for doubtful accounts of $24 as December 31, 2015 and $19 as of December 31, 2014	81	64
Long-term equipment financing receivables	319	455
Property and equipment, net	33	68
Deferred income tax assets, net	482	381
Intangible assets, net	466	676
Goodwill	272	272
Long-term prepaids	288	376
Other long-term assets	169	114
Total Assets	5,660	7,514
Current Liabilities:
Accounts payable	76	47
Accrued expenses	812	1,221
Income tax payable	0	7
Notes payable, current portion	57	110
Contingent Consideration	99	211
Deferred income tax liability	482	381
Deferred revenue, current portion	775	726
Total Current Liabilities	2,301	2,703
Deferred revenue, net of current portion	81	64
Notes payable, net of current portion	965	0
Other long-term liabilities	109	203
Total Liabilities	$ 3,456	$ 2,970
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.001 per share - authorized 5,000,000 shares; none issued	$ 0	$ 0
Common stock, par value $0.001 per share - authorized 25,000,000 shares, 13,227,489 shares issued and outstanding as of December 31, 2015 and 12,681,617 shares issued and outstanding as of December 31, 2014	13	13
Additional paid-in capital	57,614	55,413
Accumulated deficit	(55,423)	(50,882)
Total Stockholders' Equity	2,204	4,544
Total Liabilities and Stockholders' Equity	$ 5,660	$ 7,514

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Assets
Allowance for Doubtful Accounts - Trade Receivables	$ 35	$ 49
Allowance for Doubtful accounts - Long Term Trade Receivables	$ 24	$ 19
Stockholders Equity
Preferred Stock par value	$ 0.001	$ 0.001
Preferred Stock Shares Authorized	5,000,000	5,000,000
Preferred Stock Issued	0	0
Common Stock par value	$ 0.001	$ 0.001
Common Stock Shares Authorized	25,000,000	25,000,000
Common Stock Outstanding	13,227,489	12,681,617

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
Revenue	$ 7,823	$ 7,594
Operating expenses:
Cost of revenue	3,577	3,582
Selling and marketing	2,444	2,280
General and administrative	5,862	6,727
Research and development	779	1,604
Total operating expenses	12,662	14,193
Loss from operations	(4,839)	(6,599)
Other income:
Interest income	24	150
Interest expense	(28)	(3)
Other income, net	290	153
Total other income, net	286	300
Loss before income tax	(4,553)	(6,299)
Income tax benefit/(provision)	12	(77)
Net loss	$ (4,541)	$ (6,376)
Net loss per common share:
Basic	$ (0.35)	$ (0.57)
Diluted	$ (0.35)	$ (0.57)
Weighted-average common shares outstanding:
Basic	12,960,625	11,163,592
Diluted	12,960,625	11,163,592

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Contingent Consideration	Accumulated Deficit	Total
Beginning Balance, Amount at Dec. 31, 2013	$ 11	$ 50,998	$ 198	$ (44,506)	$ 6,701
Beginning Balance, Shares at Dec. 31, 2013	10,801,315
Expense for stock options granted to employees		784			784
Stock issued under stock award plans, Amount		70			70
Stock issued under stock award plans, Shares	28,418
Issuance of common stock for rent, Amount		966			966
Issuance of common stock for rent, Shares	300,000
Issuance of common stock in connection with a business acquisition, Amount		134			134
Issuance of common stock in connection with a business acquisition, Shares	40,521
Issuance of common stock from contingent consideration, Amount		198	$ (198)
Issuance of common stock from contingent consideration, Shares	62,088
Issuance of common stock in connection with stock purchase agreement, Amount	$ 2	1,998			2,000
Issuance of common stock in connection with stock purchase agreement, Shares	1,449,275
Issuance of common stock warrants in connection with stock purchase agreement, Amount		265			265
Net loss				(6,376)	(6,376)
Ending Balance, Amount at Dec. 31, 2014	$ 13	55,413		$ (50,882)	4,544
Ending Balance, Shares at Dec. 31, 2014	12,681,617
Expense for stock options granted to employees		1,306			1,306
Stock issued under stock award plans, Amount		50			50
Stock issued under stock award plans, Shares	26,865
Issuance of common stock in connection with a business acquisition, Amount		40			40
Issuance of common stock in connection with a business acquisition, Shares	19,007
Issuance of common stock warrants in connection with note payable		115			115
Issuance of common stock in connection with exercise of common stock warrants, Amount		690			690
Issuance of common stock in connection with exercise of common stock warrants, Shares	500,000
Net loss				$ (4,541)	(4,541)
Ending Balance, Amount at Dec. 31, 2015	$ 13	$ 57,614	$ 0	$ (55,423)	$ 2,204
Ending Balance, Shares at Dec. 31, 2015	13,227,489

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (4,541)	$ (6,376)
Adjustments to reconcile net loss to net cash used for operating activities:
Amortization of prepaid rent	322	268
Depreciation and amortization	270	663
Expense for warrants and stock options issued to employees	1,306	1,049
Loss on disposal of property and equipment	0	(1)
Amortization of deferred gain	(94)	(78)
Change in fair value of contingent consideration	(11)	3
Changes in assets and liabilities, net of effects of acquisitions:
Trade receivables	162	599
Equipment financing receivables	176	(134)
Inventories	(62)	145
Prepaid expenses	(112)	(89)
Other current assets	(14)	54
Other long-term assets	(55)	5
Accounts payable, accrued expenses and other	(380)	(38)
Income tax payable	(7)	7
Deferred revenue	66	(525)
Net cash used for operating activities	(2,974)	(4,448)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment	(25)	(8)
Proceeds from sale of property and equipment	0	2,002
Acquisition of certificate of deposit	0	(1)
Change in restricted cash	21	354
Business acquisitions	0	(195)
Net cash (used for)/provided by investing activities	(4)	2,152
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable and common stock warrants issued	1,000	110
Repayments of notes payable	(110)	0
Proceeds from exercise of options	50	70
Payments of contingent consideration	(61)	(54)
Proceeds from sale of common stock and warrants	690	2,000
Net cash provided by financing activities	1,569	2,126
NET DECREASE IN CASH AND CASH EQUIVALENTS	(1,409)	(170)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR	2,906	3,076
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	1,497	2,906
Supplemental disclosure of cash flow information:
Cash used during the year for: Income taxes, net	(1)	(14)
Supplemental disclosure of non-cash investing and financing information:
Prepayment of rent with common stock	0	966
Business acquisition with stock (Note 3)	0	134
Contingent consideration related to acquisition (Note 3)	0	211
Issuance of common stock from contingent consideration related to business acquisition	40	0
Prepaid assets financed through notes payable	137	0
Note payable discount	$ 115	$ 0

1. Description of Business and

1. Description of Business and Significant Accounting Policies	12 Months Ended
	Dec. 31, 2015
Description Of Business And Significant Accounting Policies
1. Description of Business and Significant Accounting Policies	Description of Business - The Company has transformed into a start-up company with the inherent risks and uncertainties of funding operations until profitability is achieved. We currently plan to fund our operations during the next twelve months using our cash and cash equivalents of $1,497,000. However, after considering the Company’s historical negative cash flow from operating activities as well as internal forecasts, such amount does not appear adequate to fund our anticipated cash needs for the next twelve months. Accordingly, the Company will be required to obtain additional debt or equity financing such as that available from its CEO to sustain operations. The Company received a commitment from the CEO, and majority shareholder, in February 2016 that he would exercise all warrants received in connection with the note payable agreement dated December 30, 2015 (Note 11) if additional capital is necessary to fund operations through March 31, 2017. Based on such commitment, along with its cash resources and loan borrowing availability, the Company believes it will have sufficient funds to sustain its operations during the next twelve months as a result of the sources of funding detailed above. Basis of Presentation – Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. Cash and Cash Equivalents Restricted Cash Trade Receivables Allowance for Doubtful Accounts Interest Income Inventory Certificate of Deposit Property and Equipment Computer and office equipment 2 to 5 years Computer software 3 years Furniture and fixtures 4 years Leasehold improvements 2 to 5 years Maintenance and repairs are expensed as incurred. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and any related gain or loss on disposition is reflected in net income or loss for the year. Use of Estimates - Revenue Recognition - Software licenses and DVD training courses sold under EPTAs are recognized as revenue upon receipt of cash from customers and not at the time of sale. Accounting standards require revenue to be deferred until customer payments are received if collection of the original principal balance is not probable. We enter into agreements where revenue is derived from multiple deliverables including any mix of products and/or services. For these arrangements, we determine whether the delivered item(s) has value to the customer on a stand-alone basis, and in the event the arrangement includes a general right of return relative to the delivered item(s), whether the delivery or performance of the undelivered item(s) is considered probable and substantially in our control. If these criteria are met, the arrangement consideration is allocated to the separate units of accounting based on each unit’s relative selling price. If these criteria are not met, the arrangement is accounted for as a single unit of accounting which would result in revenue being recognized ratably over the contract term or deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. The amount of product and services revenue recognized for arrangements with multiple deliverables is impacted by the allocation of arrangement consideration to the deliverables in the arrangement based on the relative selling prices. In determining our selling prices, we apply the selling price hierarchy using vendor specific objective evidence (VSOE) when available, third-party evidence of selling price (“TPE”) if VSOE does not exist, and best estimated selling price (“BESP”) if neither VSOE nor TPE is available. VSOE of fair value for elements of an arrangement is based upon the normal pricing and discounting practices for a deliverable when sold separately. In determining VSOE, we require that a substantial majority of the selling prices fall within a reasonably narrow pricing range, generally evidenced by a substantial majority of such historical stand-alone transactions falling within a reasonably narrow range of the median rate. In addition, we consider major service groups, geographies, customer classifications, and other variables in determining VSOE. We are typically not able to determine TPE for our products or services. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, our offerings contain a significant level of differentiation such that the comparable pricing of products with similar functionality is difficult to obtain. Furthermore, we are unable to reliably determine what similar competitor products’ selling prices are on a stand-alone basis. When we are unable to establish the selling price using VSOE or TPE, we use BESP in our allocation of arrangement consideration. The objective of BESP is to determine the price at which we would transact a sale if the product or service were sold on a stand-alone basis. We determine BESP for a product or service by considering multiple factors including, but not limited to, cost of products, gross margin objectives, pricing practices, geographies, customer classes and distribution channels. We recognize revenue for delivered elements only when we determine there are no uncertainties regarding customer acceptance. 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. Professional Services Revenue Web and Telecommunications Services Hosting Revenue - Equipment Sales and Financing Revenue - Fees generated from renting our hosted telecommunication equipment (IP or cloud telephone devices) through leasing contracts are recognized as revenue based on whether the lease qualifies as an operating lease or sales-type lease. The two primary accounting provisions which we use to classify transactions as sales-type or operating leases are: 1) lease term to determine if it is equal to or greater than 75% of the economic life of the equipment and 2) the present value of the minimum lease payments to determine if they are equal to or greater than 90% of the fair market value of the equipment at the inception of the lease. The economic life of most of our products is estimated to be three years, since this represents the most frequent contractual lease term for our products, and there is no residual value for used equipment. Residual values, if any, are established at the lease inception using estimates of fair value at the end of the lease term. The vast majority of our leases that qualify as sales-type leases are non-cancelable and include cancellation penalties approximately equal to the full value of the lease receivables. Leases that do not meet the criteria for sales-type lease accounting are accounted for as operating leases. Revenue from sales-type leases is recognized upon installation and the interest portion is deferred and recognized as earned. Revenue from operating leases in recognized ratably over the applicable service period. Commission Revenue - Cost of Revenue Prepaid Sales Commissions Research and Development Fair Value Measurements Level 1 Level 2 · Quoted prices for similar assets or liabilities in active markets; · Quoted prices for identical or similar assets in non-active markets; · Inputs other than quoted prices that are observable for the asset or liability; and · Inputs that are derived principally from or corroborated by other observable market data. Level 3 Notes Payable Income Taxes - Interest and penalties associated with income taxes are classified as income tax expense in the consolidated statements of operations. We do not intend to indefinitely reinvest the undistributed earnings of our United Kingdom subsidiary, therefore, we have provided for U.S. deferred income taxes on such undistributed foreign earnings. All other foreign subsidiaries are considered disregarded foreign entities for US tax purposes. Stock-Based Compensation - Comprehensive Loss Operating Segments Significant Customers Recent Accounting Pronouncements Balance Sheet Classification of Deferred Taxes, In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal Use Software, In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, Revenue from Contracts with Customers,

2. Net Loss Per Common Share

2. Net Loss Per Common Share	12 Months Ended
	Dec. 31, 2015
Net Loss Per Common Share
2. Net Loss Per Common Share	Basic net loss per common share is computed by dividing the net loss for the period by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is computed giving effect to all dilutive common stock equivalents, consisting of common stock options and warrants. Diluted net loss per common share for the year ended December 31, 2015 and 2014 is the same as basic net loss per common share as the common share equivalents were anti-dilutive due to the net loss. The following table sets forth the computation of basic and diluted net loss per common share: Year Ended December 31, 2015 2014 Net loss (in thousands) $ (4,541 ) $ (6,376 ) Weighted-average share reconciliation: Weighted-average shares outstanding 12,960,625 11,163,592 Weighted-average basic shares outstanding 12,960,625 11,163,592 Diluted shares outstanding 12,960,625 11,163,592 Net loss per common share: Basic $ (0.35 ) $ (0.57 ) Diluted $ (0.35 ) $ (0.57 ) Common stock equivalent shares are not included in the computation of diluted loss per share, as the Company has a net loss and the inclusion of such shares would be anti-dilutive due to the net loss. At December 31, 2015 and 2014, the common stock equivalent shares were, as follows: Year Ended December 31, 2015 2014 Shares of common stock issuable under equity incentive plans outstanding 4,380,698 2,147,561 Shares of common stock issuable upon conversion of warrants 250,000 500,000 Common stock equivalent shares excluded from diluted net loss per share 4,630,698 2,647,561

3. Acquisitions

3. Acquisitions	12 Months Ended
	Dec. 31, 2015
Acquisitions
3. Acquisitions	One Stop Tech Solutions, LLC Acquisition On June 1, 2014, we acquired certain assets from One Stop Tech Solutions, LLC, dba One Stop Voice (OSV), a privately-held provider of IP Telecom and Cloud communications located in Scottsdale, Arizona. The aggregate purchase price of approximately $540,000 consisted of $195,000 of cash paid at closing and 40,521 shares of our common stock with an estimated fair value of approximately $134,000. The fair value of the issuance of common stock issued as consideration for OSV was determined on the basis of the closing market price of the Company’s common stock on the acquisition date. In addition, the Company recorded as part of the purchase price approximately $211,000 of contingent consideration it estimates will be paid during the earn-out period. The contingent consideration of $211,000 will be paid out in cash and stock at a split of 60% cash and 40% stock. The Company’s consolidated financial statements include the results of operations of OSV from the date of acquisition. The historical results of operations of OSV were not significant to the Company’s consolidated results of operations for the periods presented. The total purchase consideration was allocated to the assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition, as determined by management based on a valuation performed by an independent third party valuation firm. The excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed has been recorded as goodwill. The goodwill arising from the acquisitions discussed above consists largely of the synergies and economies of scale we hope to achieve from combining the acquired assets and operations with our historical operations. In accordance with current accounting standards, goodwill associated with the OSV acquisition will not be amortized and will be tested for impairment at least annually. The following table presents the purchase price allocation of OSV (in thousands): Consideration (including estimated unpaid contingent consideration): Cash $ 195 Common stock 134 Contingent consideration 211 Total consideration $ 540 Recognized amounts of identifiable assets acquired and liabilities assumed: Identifiable intangible assets $ 353 Commission liability (10 ) Total identifiable net assets 343 Goodwill 197 Total consideration $ 540 The following were the identified intangible assets acquired and the respective estimated periods over which such assets will be amortized (in thousands): Intangible Assets: Amount Weighted Average useful life (in years) Customer relationships $ 335 7 Technology 18 3 Total intangible assets $ 353 In determining the purchase price allocation, the Company considered, among other factors, its intention to use the acquired assets and the historical and estimated future demand for One Stop Voice services. The estimated fair value of customer relationships was based upon the income approach. The income approach relies on an estimation of the present value of the future monetary benefits expected to flow to the owner of an asset during its remaining economic life. This approach requires a projection of the cash flow that the asset is expected to generate in the future. The projected cash flow is discounted to its present value using a rate of return, or discount rate that accounts for the time value of money and the degree of risk inherent in the asset. The income approach may take the form of a “relief from royalty” methodology, a cost savings methodology, a “with and without” methodology, or excess earnings methodology, depending on the specific asset under consideration. The relief from royalty approach was used to determine the fair value of the technology license acquired from One Stop Voice. The relief from royalty approach estimates the value of the intangible asset by quantifying the aggregate expenditures that would be required to replace the intangible asset. The customer relationships were valued using a form of the income approach known as the multi-period excess earnings method. Inherent in the multi-period excess earnings method is the recognition that, in most cases, all of the assets of the business, both tangible and intangible, contribute to the generation of the cash flow of the business and the net cash flows attributable to the subject asset must recognize the support of the other assets which contribute to the realization of the cash flows. This future cash flow was then discounted using an estimated required rate of return for the asset to determine the present value of the future cash flows attributable to the asset. The key assumptions used in valuing the customer relationships acquired are as follows: discount rate of 12.5%, tax rate of 39.3%, contributory asset charges for technology license and tangible assets used to deliver services, assembled workforce, and estimated economic life of 7 years. The total weighted average amortization period for the identified intangible assets acquired from One Stop Voice is 7 years. The goodwill resulting from the One Stop Voice acquisition is not currently deductible for income tax purposes.

4. Trade Receivables, net

4. Trade Receivables, net	12 Months Ended
	Dec. 31, 2015
Trade Receivables Net
4. Trade Receivables, net	Our trade receivables balance consists of traditional trade receivables and residual Extended Payment Term Agreements (EPTAs) sold prior to July 2011. Below is an analysis of the days outstanding of our trade receivables as shown on our balance sheet (in thousands): December 31, 2015 2014 Trade receivables $ 378 $ 433 Conforming EPTAs 94 192 Non-Conforming EPTAs: 1 - 30 days 11 19 31 - 60 days 4 28 61 - 90 days 17 3 Gross trade receivables 504 675 Less: allowance for doubtful accounts (59 ) (68 ) Trade receivables, net $ 445 $ 607 Current trade receivables, net $ 364 $ 543 Long-term trade receivables, net 81 64 Trade receivables, net $ 445 $ 607 All current and long-term EPTAs in the table above had original contract terms of greater than one year. The Company wrote off $66,000 and $158,000 of EPTAs during the years ended December 31, 2015 and 2014, respectively, of which, all had original contract terms of greater than one year.

5. Equipment Financing Receivab

5. Equipment Financing Receivables	12 Months Ended
	Dec. 31, 2015
Equipment Financing Receivables
5. Equipment Financing Receivables	We rent certain hosted telecommunication equipment (IP telephone devices) through leasing contracts that we classify as either operating leases or sale-type leases. Equipment finance receivables are expected to be collected over the next thirty-six to sixty months. Equipment finance receivables arising from the rental of our hosted telecommunications equipment through sales-type leases, were as follows (in thousands): December 31, 2015 2014 Gross financing receivables $ 1,030 $ 1,610 Less unearned income (580 ) (984 ) Financing receivables, net 450 626 Less: Current portion of finance receivables, net (131 ) (171 ) Finance receivables due after one year $ 319 $ 455

6. Prepaid Expenses

6. Prepaid Expenses	12 Months Ended
	Dec. 31, 2015
Prepaid Expenses
6. Prepaid Expenses	Prepaid expenses consisted of the following (in thousands): December 31, 2015 2014 Prepaid rent $ 376 $ 698 Prepaid commissions 456 308 Prepaid software support 181 49 Prepaid software subscription 103 92 Other prepaid expenses 218 260 Total prepaid assets $ 1,334 $ 1,407

7. Property and Equipment

7. Property and Equipment	12 Months Ended
	Dec. 31, 2015
Property And Equipment
7. Property and Equipment	Property and equipment consisted of the following (in thousands): December 31, 2015 2014 Software $ 681 $ 1,183 Computers and office equipment 1,685 1,790 Leasehold improvements 27 8 Furniture and fixtures - 4 Less accumulated depreciation and amortization (2,360 ) (2,917 ) Total property and equipment, net $ 33 $ 68 Depreciation and amortization expense is included in general and administrative expenses and totaled $60,000 and $415,000 for the years ended December 31, 2015 and 2014, respectively.

8. Intangible Assets

8. Intangible Assets	12 Months Ended
	Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
8. Intangible Assets	The net carrying amount of intangible assets is as follows (in thousands): December 31, 2015 2014 Customer relationships $ 941 $ 941 Technical know-how 60 60 Non-compete 60 60 Developed technology 198 198 Less accumulated amortization Customer relationships (482 ) (316 ) Technical know-how (60 ) (60 ) Non-compete (60 ) (60 ) Developed technology (191 ) (147 ) Total $ 466 $ 676 Amortization expense is included in general and administrative expenses and totaled $210,000 and $248,000 for the years ended December 31, 2015 and 2014, respectively. The following table outlines the estimated future amortization expense related to intangible assets held at December 31, 2015 (in thousands): Year ending December 31, 2016 $ 131 2017 97 2018 72 2019 53 2020 39 Thereafter 74 Total $ 466

9. Goodwill

9. Goodwill	12 Months Ended
	Dec. 31, 2015
Goodwill Tables
9. Goodwill	The Company has recorded goodwill as a result of its business acquisitions. Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. In each of the Company’s acquisitions, the objective of the acquisition was to expand the Company’s product offerings and customer base and to achieve synergies related to cross selling opportunities, all of which contributed to the recognition of goodwill The Company tests goodwill for impairment on an annual basis or more frequently if events or changes in circumstances indicate that goodwill might be impaired. The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 were as follows: Acquisition Related Goodwill Balance at January 1, 2014 $ 75 Additions - OSV 197 Balance at December 31, 2014 272 Increase (decrease) - Balance at December 31, 2015 $ 272

10. Accrued Expenses

10. Accrued Expenses	12 Months Ended
	Dec. 31, 2015
AccruedExpensesAbstract
10. Accrued Expenses	Accrued expenses consisted of the following (in thousands): December 31, 2015 2014 Accrued wages and benefits $ 298 $ 345 Accrued accounts payable 153 318 Accrued legal costs - 231 Accrued sales taxes 223 209 Other 138 118 Total accrued expenses $ 812 $ 1,221

11. Notes Payable

11. Notes Payable	12 Months Ended
	Dec. 31, 2015
Debt Disclosure [Abstract]
11. Notes Payable	Related Party Note Payable On December 30, 2015, Crexendo, Inc. (the "Company") entered into a Term Loan Agreement (the "Loan Agreement"), with Steven G. Mihaylo, as Trustee of The Steven G. Mihaylo Trust dated August 19, 1999 (the "Lender"). Mr. Mihaylo is the principal shareholder and Chief Executive Officer of the Company. Pursuant to the Loan Agreement, the Lender has agreed to make an unsecured loan to the Company in the initial principal amount of $1,000,000 (the “Loan”). The Loan Agreement contains a provision which requires the Lender to increase the amount of the Loan by up to an additional $1,000,000 on the same terms and conditions as the initial advance if the independent directors of the Company, in their reasonable discretion, determine such an increase is necessary for the funding needs of the Company and that the terms of the Loan are in the best interests of the Company and its stockholders. The term of the Loan is five years, with simple interest paid at 9% per annum until a balloon payment is due December 30, 2020. The Loan Agreement provides for interest to be paid in shares of common stock of the Company (the “Common Stock”) at a stock price of $1.20 (which is the average of the high and low adjust close price of the Common Stock of the Company for each business day for the period starting December 23, 2015 and ending December 29, 2015.). For the first two years of the Loan term, interest will be paid in advance at the beginning of each year; for the last three years of the Loan term, interest will be paid at the end of each year. After the second year of the Loan term, there is no pre-payment penalty for early repayment of the outstanding principal amount of the Loan. If the Loan is repaid within the first two years of the Loan term, the Company will forfeit prepaid interest as a pre-payment penalty. Contemporaneously with the execution of the Loan Agreement, the Company granted to the Lender a warrant to purchase 250,000 shares of Common Stock (the “Warrant”). The Warrant has a five-year term from the date of the Loan Agreement. The Warrant is exercisable by the Lender, at any time, and from time to time, during its term at a price of $1.20 per share of Common Stock. In the event the principal amount of the Loan is increased by an additional $1,000,000, as determined by the independent directors of the Company, the Company has agreed to issue to the Lender a warrant to purchase an additional 250,000 shares of Common Stock on the same terms and subject to the same conditions set forth in the Warrant. Other notes payable Other notes payable consists of short and long-term financing arrangements for software licenses, subscriptions, support and corporate insurance. The Company’s outstanding balances under its note payable agreements as of December 31, 2015 and 2014 were as follows (in thousands): Year Ended December 31, 2015 2014 Related party note payable $ 1,000 $ - Other notes payable 137 110 1,137 110 Less: notes payable discount (115 ) - Net carrying value of notes payable 1,022 110 Less: current portion of long-term notes payable (57 ) (110 ) Long-term notes payable $ 965 $ - As of December 31, 2015, future principal payments are scheduled as follows (in thousands): Year ending December 31, 2016 $ 57 2017 39 2018 41 2019 - 2020 1,000 Total $ 1,137

12. Fair Value Measurements

12. Fair Value Measurements	12 Months Ended
	Dec. 31, 2015
Fair Value Measurements
12. Fair Value Measurements	We have financial instruments as of December 31, 2015 and 2014 for which the fair value is summarized below (in thousands): December 31, 2015 December 31, 2014 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Trade receivables, net $ 445 $ 445 $ 607 $ 607 Equipment financing receivables 450 450 626 626 Certificate of deposit 251 251 251 251 Liabilities: Acquisition related contingent consideration 99 99 211 211 Related party note payable including discount from warrant grant 885 1,009 - - Assets and liabilities for which fair value is recognized in the balance sheet on a recurring basis are summarized below as of December 31, 2015 and 2014 (in thousands): Fair value measurement at reporting date Description As of December 31, 2015 Level 1 Level 2 Level 3 Assets: Certificate of deposit $ 251 $ - $ 251 $ - Liabilities: Acquisition related contingent consideration 99 - - 99 Description As of December 31, 2014 Level 1 Level 2 Level 3 Assets: Certificate of deposit $ 251 $ - $ 251 $ - Liabilities: Acquisition related contingent consideration 211 - - 211 The carrying amount of certificates of deposit approximates fair value, as determined by certificates of deposit with similar terms and conditions. The recurring Level 3 measurement of our contingent consideration liability includes the following significant unobservable inputs at December 31, 2015 and 2014, respectively (in thousands): Contingent consideration liability Fair Value at December 31, 2015 Valuation technique Unobservable inputs Range Revenue - based payments $ 99 Discounted cash flow Discount Rate 12.5 % Probability of milestone payment 100 % Projected year of payments 2016 Contingent consideration liability Fair Value at December 31, 2014 Valuation technique Unobservable inputs Range Revenue - based payments $ 211 Discounted cash flow Discount Rate 12.5 % Probability of milestone payment 90 % Projected year of payments 2014-2015 Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Future changes in fair value of the contingent financial milestone consideration, as a result of changes in significant inputs such as the discount rate and estimated probabilities of financial milestone achievements, could have a material effect on the statement of operations and balance sheet in the period of the change. The progression of the Company’s Level 3 instruments fair valued on a recurring basis for the year ended December 31, 2015 are shown in the table below (in thousands): Acquisition Related Contingent Consideration Balance at December 31, 2013 $ 51 Change in fair value 3 Cash payments (54 ) Additions 211 Balance at December 31, 2014 211 Change in fair value (11 ) Cash payments (61 ) Issuance of common stock from contingent consideration (40 ) Balance at December 31, 2015 $ 99

13. Equity

13. Equity	12 Months Ended
	Dec. 31, 2015
Equity [Abstract]
13. Equity	Common Stock Shares of common stock reserved for future issuance as of December 31, 2015 were as follows: Common stock warrants 250,000 Stock-based compensation plans: Outstanding option awards 4,380,698 Available for future grants 1,268,031 5,898,729 Warrants On December 30, 2015, the Company entered into a term loan agreement with a major shareholder and CEO of the Company, whereby the lender has agreed to make an unsecured loan to the Company in the initial principal amount of $1,000,000. The Loan Agreement contains a provision which requires the lender to increase the amount of the loan by up to an additional $1,000,000 on the same terms and conditions as the initial advance if the independent directors of the Company, in their reasonable discretion, determine such an increase is necessary for the funding needs of the Company and that the terms of the loan are in the best interests of the Company and its stockholders. In connection with the term loan agreement, the Company granted to the lender a warrant to purchase 250,000 shares of Common Stock. The warrant has a five-year term from the date of the loan agreement. The warrant is exercisable by the lender, at any time, and from time to time, during its term at a price of $1.20 per share of Common Stock. In the event the principal amount of the loan is increased by an additional $1,000,000, as determined by the independent directors of the Company, the Company has agreed to issue to the lender a warrant to purchase an additional 250,000 shares of Common Stock on the same terms and subject to the same conditions set forth in the warrant. The warrants are legally detachable and separately exercisable. The proceeds from the term loan agreement were allocated to note payable and the warrants based on the relative fair value of the instruments. Fair value of the warrants was calculated using the Black-Scholes option-pricing model with the following assumptions: Expected volatility 62 % Expected life (in years) 4.27 Risk-free interest rate 1.80 % Expected dividend yield 0.00 % On December 23, 2014, the Company entered into a stock purchase agreement with a major shareholder and CEO of the Company, whereby 1,449,275 shares of the Company’s common stock were sold at an aggregate purchase price of $2,000,000. In connection with the Stock Purchase Agreement, warrants to purchase 500,000 shares of the Company’s common stock at a price of $1.38 per share were provided to the purchaser. The warrants contain standard limitations and representations and are exercisable for a period of five years from the date of the stock purchase agreement. Further, for a period of two years from the date of the agreement, the Company shall be entitled to require the purchaser to exercise up to 500,000 of the warrants, upon it determining that it requires cash to meet liquidity needs. The warrants are legally detachable and separately exercisable. In addition, the warrants require the issuer to transfer a fixed number of shares at the stated price at inception of the contract and the holder is exposed to risk and rewards similar to those of an owner. As a result, the proceeds from the stock purchase agreement were allocated to stockholders’ equity and the warrants based on the relative fair value of the instruments, resulting in stock option expense of $265,000 being recorded, with a corresponding increase to additional paid-in-capital as part of stockholders’ equity. Fair value of the warrants was calculated using the Black-Scholes option-pricing model with the following assumptions: Expected volatility 55 % Expected life (in years) 5.00 Risk-free interest rate 1.76 % Expected dividend yield 0.00 % During the year ended December 31, 2015, the Company exercised its right to require the purchaser to exercise 500,000 warrants. The exercise generated an additional $690,000 in cash provided by financing activities.

14. Stock-Based Compensation

14. Stock-Based Compensation	12 Months Ended
	Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
14. Stock-Based Compensation	We have various incentive stock-based compensation plans that provide for the grant of stock options, restricted stock, and other share-based awards of up to 5,898,729 shares to eligible employees, consultants, and directors. As of December 31, 2015, we had 1,268,031 shares remaining in the plans available to grant. The following table summarizes the statement of operations effect of stock-based compensation for the years ended December 31, 2015 and 2014 (in thousands): Year Ended December 31, 2015 2014 Share based compensation expense by financial statement line item: Cost of revenue $ 80 $ 25 Research and development 166 129 Selling and marketing 115 64 General and administrative 945 566 Total cost related to share-based compensation expense $ 1,306 $ 784 Total cost allocated to share-based compensation expense related to warrants issued during the year ended December 31, 2015 and 2014 was $0 and $265,000, respectively (Note 13). There is no tax benefit related to stock compensation expense due to a full valuation allowance on net deferred tax assets at December 31, 2015 and 2014, respectively. Stock Options The weighted-average fair value of stock options on the date of grant and the assumptions used to estimate the fair value of stock options granted during the years ended December 31, 2015 and 2014 using the Black-Scholes option-pricing model were as follows: Year Ended December 31, 2015 Year Ended December 31, 2014 Weighted-average fair value of options and warrants granted $ 0.69 $ 1.01 Expected volatility 58 % 55 % Expected life (in years) 4.30 4.60 Risk-free interest rate 1.68 % 1.65 % Expected dividend yield 0.00 % 0.00 % The expected volatility of the options is determined using historical volatilities based on historical stock prices. The expected life of the options granted is based on our historical share option exercise experience. The risk-free interest rate is determined using the yield available for zero-coupon U.S. government issues with a remaining term equal to the expected life of the option. The Company has not declared any dividends, therefore, it is assumed to be zero. The following table summarizes the stock option activity for all plans for the years ended December 31, 2015 and 2014: Weighted-Average Aggregate Weighted-Average Remaining Intrinsic Value Number of Shares Exercise Price Contract Life (in thousands) Outstanding at January 1, 2014 2,130,239 $ 3.96 8.0 years $ 482 Granted 498,000 3.18 Exercised (28,418) 2.44 Cancelled/forfeited (452,260) 4.05 Outstanding at December 31, 2014 2,147,561 3.78 6.9 years - Granted 2,578,000 1.50 Exercised (26,865) 1.85 Cancelled/forfeited (317,998) 2.16 Outstanding at December 31, 2015 4,380,698 2.56 6.2 years - Shares vested and expected to vest 4,052,341 2.56 6.2 years - Exercisable as of December 31, 2015 2,716,262 3.04 6.1 years - Exercisable as of December 31, 2014 1,351,894 4.18 6.6 years - The total intrinsic value of options exercised during the years ended December 31, 2015 and 2014, was $8,000 and $21,000 respectively. As of December 31, 2015, the total future compensation expense related to non-vested options not yet recognized in the consolidated statements of operations was approximately $1,325,000 and the weighted-average period over which these awards are expected to be recognized is approximately 2.0 years.

15. Income Taxes

15. Income Taxes	12 Months Ended
	Dec. 31, 2015
Income Taxes
15. Income Taxes	The income tax expense/(benefit) consisted of the following for the years ended December 31, 2015 and 2014 (in thousands): Year Ended December 31, 2015 2014 Current income tax expense/(benefit): Federal $ - $ - State and local (12 ) 77 Foreign - - Current income tax expense/(benefit) $ (12 ) $ 77 There was no deferred income tax expense (benefit) for the years ended December 31, 2015 and 2014. The income tax provision attributable to loss before income tax benefit for the years ended December 31, 2015 and 2014 differed from the amounts computed by applying the U.S. federal statutory tax rate of 34.0% as a result of the following (in thousands): Year Ended December 31, 2015 2014 U.S. federal statutory income tax benefit $ (1,548 ) $ (2,142 ) Increase in income tax benefit resulting from: State and local income tax benefit, net of federal effect 213 104 Change in the valuation allowance for net deferred income tax assets 1,212 2,036 Other, net 111 79 Income tax expense/(benefit $ (12 ) $ 77 As of December 31, 2015 and 2014, significant components of net deferred income tax assets and liabilities were as follows (in thousands): As of December 31, 2015 As of December 31, 2014 Current Non-current Current Non-current Deferred income tax assets: Accrued expenses $ 168 $ - $ 302 $ - Deferred revenue 326 - 230 - Net operating loss carry-forwards - 8,024 - 7,132 Foreign tax credits - 892 - 892 Stock-based compensation - 3,277 - 2,895 Property and equipment - 58 - 118 Other - 833 - 708 Subtotal 494 13,084 532 11,745 Valuation allowance (485 ) (12,602 ) (511 ) (11,364 ) Total deferred income tax assets 9 482 21 381 Deferred income tax liabilities: Property and equipment - - - - Prepaid expenses and other (491 ) - (402 ) - Total deferred income tax liabilities (491 ) - (402 ) - Net deferred income tax assets (liabilities) $ (482 ) $ 482 $ (381 ) $ 381 During the fiscal year ended June 30, 2002 (our fiscal year was subsequently changed to December 31), we experienced a change in ownership, as defined by the Internal Revenue Code, as amended (the “Code”) under Section 382. A change of ownership occurs when ownership of a company increases by more than 50 percentage points over a three-year testing period of certain stockholders. As a result of this ownership change we determined that our annual limitation on the utilization of our federal net operating loss (“NOL”) carry-forwards is approximately $461,000 per year. We will only be able to utilize $5,761,000 of our pre-ownership change NOL carry-forwards and will forgo utilizing $14,871,000 of our pre-ownership change NOL carry-forwards as a result of this ownership change. We do not account for forgone NOL carryovers in our deferred tax assets and only account for the NOL carry-forwards that will not expire unutilized as a result of the restrictions of Code Section 382. As of December 31, 2015, we had NOL, research and development, and foreign tax credit carry-forwards for U.S. federal income tax reporting purposes of approximately $21,936,000, $129,000 and $892,000 respectively. The NOLs will begin to expire in 2020 through 2035, the research and development credits will begin to expire in 2019 through 2020, and the foreign tax credits will expire in 2017, if not utilized. We also have state NOL and research and development credit carry-forwards of approximately $5,746,000 and $61,000 which expire on specified dates as set forth in the rules of the various states to which the carry-forwards relate. We also have foreign NOL carry-forwards of approximately $710,000 which expire on specified dates as set forth in the rules of the various countries in which the carry-forwards relate. In assessing the recovery of the deferred tax assets, we considered whether it is more likely than not that some portion or all of our deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. We considered the scheduled reversals of future deferred tax liabilities, projected future taxable income, the suspension of the sale of product and services through the direct mail seminar sales channel for our Web Services segment, the restructuring of the Web Services division, and tax planning strategies in making this assessment. As a result, we determined it was more likely than not that the deferred tax assets would not be realized as of December 31, 2015 and 2014; accordingly, we recorded a full valuation allowance. The valuation allowance for deferred tax assets as of December 31, 2015 and 2014 was $13,087,000 and $11,875,000 respectively. The net change in our valuation allowance was an increase of $1,212,000 for the year ended December 31, 2015 and an increase of $2,036,000 for the year ended December 31, 2014. Accounting guidance clarifies the accounting for uncertain tax positions and requires companies to recognize the impact of a tax position in their financial statements, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Although we believe our estimates are reasonable, there can be no assurance that the final tax outcome of these matters will not be different from that which we have reflected in our historical income tax provisions and accruals. Such difference could have a material impact on our income tax provision and operating results in the period in which it makes such determination. The aggregate changes in the balance of unrecognized tax benefits during the years ended December 31, 2015 and 2014 were as follows (in thousands): Balance as of January 1, 2014 $ 891 Reductions due to lapsed statute of limitations - Balance as of December 31, 2014 891 Reductions due to lapsed statute of limitations - Balance as of December 31, 2015 $ 891 As of December 31, 2015, we had unrecognized tax benefits of $891,000, which if recognized, none would reduce our effective tax rate. Estimated interest and penalties related to the underpayment or late payment of income taxes are classified as a component of income tax provision (benefit) in the consolidated statements of operations. Accrued interest and penalties were approximately $0 and $0 as of December 31, 2015 and 2014, respectively. Our U.S. federal income tax returns for fiscal 2012 through 2015 are open tax years. The IRS recently completed an audit of fiscal years 2005 through 2007. We also file in various state and foreign jurisdictions. With few exceptions, we are no longer subject to state and non-U.S. income tax examinations by tax authorities for years prior to fiscal 2011.

16. Commitments and Contingenci

16. Commitments and Contingencies	12 Months Ended
	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
16. Commitments and Contingencies	Operating Leases We lease certain of our equipment and corporate offices under non-cancelable operating lease agreements expiring at various dates through 2018. The operating leases for our Reno, NV and Draper, UT offices contain customary escalation clauses. Future aggregate minimum lease obligations under operating leases as of December 31, 2015, exclusive of taxes and insurance, are as follows (in thousands): Years ending December 31, 2016 112 2017 20 2018 15 Total $ 147 Rental expense for the year ended December 31, 2015 and 2014 was approximately $120,000 and $119,000, respectively. The following schedule shows the composition of total rental expense for all operating leases except those with terms of a month or less that were not renewed: Years ending December 31, 2016 2017 2018 Minimum rentals $ 112 $ 20 $ 15 Less: Sublease rentals (92 ) - - Total $ 20 $ 20 $ 15 Sale-Leaseback On February 28, 2014, the Company sold and leased back the land, building and furniture associated with the corporate headquarters in Tempe, Arizona to a Company that is owned by the major shareholder and CEO of the Company for $2.0 million in cash. The Company recognized a deferred gain of $281,000 on sale-leaseback, which will be amortized over the initial lease term of 36 months to offset rent expense. The net deferred gain is included in other long-term liabilities in the consolidated balance sheets as of December 31, 2015 and 2014. The lease agreement called for rent payments for the initial three year term to be made in advance in the form of 300,000 shares of common stock of Crexendo, Inc. The fair value price per share at the time of the lease was $3.22 per share, resulting in rent expense of $322,000 per year for three years. At December 31, 2015 and 2014, prepaids included prepaid rent of $376,000 and $698,000, respectively. Rent expense incurred on the sale-leaseback, net of $171,000 deferred gain amortization, during the year ended December 31, 2015 and 2014 was $322,000 and $268,000, respectively. Legal Proceedings From time to time we receive inquiries from federal, state, city and local government officials as well as the FCC and taxing authorities in the various jurisdictions in which we operate. These inquiries and investigations related primarily to our discontinued seminar operations and concern compliance with various city, county, state, and/or federal regulations involving sales, representations made, customer service, refund policies, services and marketing practices. We respond to these inquiries and have generally been successful in addressing the concerns of these persons and entities, without a formal complaint or charge being made, although there is often no formal closing of the inquiry or investigation. There can be no assurance that the ultimate resolution of these or other inquiries and investigations will not have a material adverse effect on our business or operations, or that a formal complaint will not be initiated. We also receive complaints and inquiries in the ordinary course of our business from both customers and governmental and non-governmental bodies on behalf of customers, and in some cases these customer complaints have risen to the level of litigation. There 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. On November 4, 2013, the Company received a motion for leave to file an amended complaint and a request for scheduling conference (including a request for extending discovery) in the case entitled INFORMATION TECHNOLOGY CUSTOMER CARE, INC., Plaintiff v STORESONLINE, INC., Defendant; filed in IN THE FOURTH DISTRICT COURT, UTAH COUNTY, and STATE OF UTAH Case No. 090401169. In the original Complaint, Plaintiff ITCCI claimed that StoresOnline breached a contract with ITCCI by improperly moving its Philippine support to a new support center. ITCCI also alleged an action for tortious interference claiming that StoresOnline caused former employees of ITCCI to leave to work for that support center. There was also a claim for “civil conspiracy”. The original Complaint sought actual and punitive damages. The parties had completed discovery and filed various motions, including a motion for Summary Judgment by StoresOnline. The Company believes there was no evidence to support any of the claims raised by the Plaintiff, and that there was no contractual obligation which would have prohibited a change of support centers. The Plaintiff has filed motions to substitute new counsel, amend its Complaint and re-open discovery. The allegations included in the proposed Amended Complaint are that former officers and executives of StoresOnline acted fraudulently and secretly to improperly move support centers. The Company strongly disputes the allegations against it under both the original Complaint and the proposed Amended Complaint. Moreover, even if any of the allegations regarding former employees in the proposed Amended Complaint were true, the Company believes that it would have no liability for those alleged actions. In November 2014, the parties attended a mediation where the case was settled. The Plaintiffs have dismissed the case with prejudice. We are also subject to various claims and legal proceedings covering matters that arise in the ordinary course of business. We believe that the resolution of these other cases will not have a material adverse effect on our business, financial position, or results of operations. We have recorded liabilities of approximately $0 and $231,000 as of December 31, 2015 and 2014, respectively, for estimated losses resulting from various legal proceedings in which we are engaged. Attorney’s fees associated with the various legal proceedings are expensed as incurred. We are also subject to various claims and legal proceedings covering matters that arise in the ordinary course of business. We believe that the resolution of these other cases will not have a material adverse effect on our business, financial position, or results of operations.

17. Employee Benefit Plan

17. Employee Benefit Plan	12 Months Ended
	Dec. 31, 2015
Employee Benefit Plan
17. Employee Benefit Plan	We have established a retirement savings plan for eligible employees. The plan allows employees to contribute a portion of their pre-tax compensation in accordance with specified guidelines. For the year ended December 31, 2015 and 2014, we contributed approximately $133,000 and $146,000 to the retirement savings plan, respectively.

18. Segments

18. Segments	12 Months Ended
	Dec. 31, 2015
Segments
18. Segments	Management has chosen to organize the Company around differences based on its products and services. Hosted Telecommunications Services segment generates revenue from selling hosted telecommunication services and broadband internet services. Web Services segment generates revenue from website hosting, managing e-commerce or lead generation offerings, websites, search engine optimization/management and online promotional needs for small, medium, and enterprise sized businesses. The Company has two operating segments, which consist of Hosted Telecommunications Services and Web Services. Effective April 1, 2014, the Company changed its reporting segments to reflect changes in how the Chief Operating Decision Maker (CODM) internally measures performance and allocates resources. Segment operating results for the prior year have been revised to conform to current year segment operating results presentation. Segment revenue and income (loss) before income tax provision was as follows (in thousands): December 31, 2015 2014 Revenue: Hosted Telecommunications Services $ 5,989 $ 4,297 Web Services 1,834 3,297 Consolidated revenue 7,823 7,594 Gain/(Loss) from Operations: Hosted Telecommunications Services (4,904 ) (5,776 ) Web Services 65 (823 ) Total operating loss (4,839 ) (6,599 ) Other Income, net: Hosted Telecommunications Services 71 87 Web Services 215 213 Total other income 286 300 Gain/(Loss) before income tax provision Hosted Telecommunications Services (4,833 ) (5,689 ) Web Services 280 (610 ) Loss before income tax provision $ (4,553 ) $ (6,299 ) Depreciation and amortization was $210,000 and $400,000 for the Hosted Telecommunications Services segment for the years ended December 31, 2015 and 2014, respectively. Depreciation and amortization was $60,000 and $263,000 for the Web Services segment for the years ended December 31, 2015 and 2014, respectively. Interest income was $24,000 and $152,000 for the Web Services segment for the years ended December 31, 2015 and 2014, respectively. Interest expense was $16,000 and $3,000 for the Hosted Telecommunications Services segment for the years ended December 31, 2015 and 2014, respectively. Interest expense was $12,000 and $0 for the Web Services segment for the years ended December 31, 2015 and 2014, respectively.

19. Quarterly Financial Informa

19. Quarterly Financial Information (unaudited)	12 Months Ended
	Dec. 31, 2015
Quarterly Financial Information
19. Quarterly Financial Information (unaudited)	Year ended December 31, 2015 For the three months ended Consolidated March 31, June 30, September 30, December 31, 2015 2015 2015 2015 (In thousands, except per share data) Revenue $ 1,852 $ 1,890 $ 1,972 $ 2,109 Operating expenses: Cost of revenue 861 855 882 979 Selling and marketing 603 580 624 637 General and administrative 1,560 1,375 1,309 1,618 Research and development 203 165 209 202 Total operating expenses 3,227 2,975 3,024 3,436 Loss from operations (1,375 ) (1,085 ) (1,052 ) (1,327 ) Total other income, net 215 33 19 19 Loss before income taxes (1,160 ) (1,052 ) (1,033 ) (1,308 ) Income tax benefit/(provision) (10 ) (8 ) (10 ) 40 Net loss $ (1,170 ) $ (1,060 ) $ (1,043 ) $ (1,268 ) Basic net loss per common share (1) $ (0.09 ) $ (0.08 ) $ (0.08 ) $ (0.10 ) Diluted net loss per common share (1) $ (0.09 ) $ (0.08 ) $ (0.08 ) $ (0.10 ) Year ended December 31, 2014 For the three months ended Consolidated March 31, June 30, September 30, December 31, 2014 2014 2014 2014 (In thousands, except per share data) Revenue $ 2,072 $ 1,808 $ 1,725 $ 1,989 Operating expenses: Cost of revenue 930 884 790 978 Selling and marketing 653 504 546 577 General and administrative 1,750 1,548 1,549 1,880 Research and development 414 435 394 361 Total operating expenses 3,747 3,371 3,279 3,796 Loss from operations (1,675 ) (1,563 ) (1,554 ) (1,807 ) Total other income, net 77 82 61 80 Loss before income taxes (1,598 ) (1,481 ) (1,493 ) (1,727 ) Income tax provision (34 ) (13 ) (9 ) (21 ) Net loss $ (1,632 ) $ (1,494 ) $ (1,502 ) $ (1,748 ) Basic net loss per common share (1) $ (0.15 ) $ (0.13 ) $ (0.13 ) $ (0.15 ) Diluted net loss per common share (1) $ (0.15 ) $ (0.13 ) $ (0.13 ) $ (0.15 ) ——————— (1) Net income (loss) per common share is computed independently for each of the quarters presented. Therefore, the sums of quarterly net income (loss) per common share amounts do not necessarily equal the total for the twelve month periods presented. CREXENDO, INC. AND SUBSIDIARIES Schedule II- Valuation and Qualifying Accounts Year Ended December 31, 2015 and 2014 Balance at Balance at Beginning End of of Year Additions Deductions Year (in thousands) Year ended December 31, 2015 Allowance for doubtful accounts receivable $ 68 $ - $ (9 ) $ 59 Deferred income tax asset valuation allowance 11,875 1,212 - 13,087 Year ended December 31, 2014 Allowance for doubtful accounts receivable $ 200 $ - $ (132 ) $ 68 Deferred income tax asset valuation allowance 9,839 2,036 - 11,875

1. Description of Business an26

1. Description of Business and Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2015
Description Of Business And Significant Accounting Policies Policies
Description of Business	Description of Business - TThe Company has transformed into a start-up company with the inherent risks and uncertainties of funding operations until profitability is achieved. We currently plan to fund our operations during the next twelve months using our cash and cash equivalents of $1,497,000. However, after considering the Company’s historical negative cash flow from operating activities as well as internal forecasts, such amount does not appear adequate to fund our anticipated cash needs for the next twelve months. Accordingly, the Company will be required to obtain additional debt or equity financing such as that available from its CEO to sustain operations. The Company received a commitment from the CEO, and majority shareholder, in February 2016 that he would exercise all warrants received in connection with the note payable agreement dated December 30, 2015 (Note 11) if additional capital is necessary to fund operations through March 31, 2017. Based on such commitment, along with its cash resources and loan borrowing availability, the Company believes it will have sufficient funds to sustain its operations during the next twelve months as a result of the sources of funding detailed above.
Basis of Presentation	Basis of Presentation – Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.
Cash and Cash Equivalents	Cash and Cash Equivalents - We consider all highly liquid, short-term investments with maturities of three months or less at the time of purchase to be cash equivalents. As of December 31, 2015, we had cash and cash equivalents in financial institutions in excess of federally insured limits in the amount of $1,384,000.
Restricted Cash	Restricted Cash – We classified $112,000 and $133,000 as restricted cash as of December 31, 2015 and 2014, respectively. Cash is restricted for compensating balance requirements on purchasing card agreements. As of December 31, 2015, we had restricted cash in financial institutions in excess of federally insured limits in the amount of $112,000.
Trade Receivables	Trade Receivables – We have historically offered to our web site development software customers the option to finance, typically through 24 and 36-month extended payment term arrangements (“EPTAs”), purchases made at our suspended Internet Training Workshops through our Web Services segment. EPTAs are reflected as short-term and long-term trade receivables, as applicable, as we have the intent and ability to hold the receivables for the foreseeable future, until maturity or payoff. EPTAs are recorded on a nonaccrual cash basis beginning on the contract date. Trade receivables from our hosted telecommunications and web services segments are recorded at invoiced amounts.
Allowance for Doubtful Accounts	Allowance for Doubtful Accounts
Interest Income	Interest Income
Inventory	Inventory
Certificate of Deposit	Certificate of Deposit - We hold a $251,000 certificate of deposit as collateral for merchant accounts, which automatically renews every 12 months. The certificate of deposit is classified as long-term in the consolidated balance sheets.
Property and Equipment	Property and Equipment Computer and office equipment 2 to 5 years Computer software 3 years Furniture and fixtures 4 years Leasehold improvements 2 to 5 years Maintenance and repairs are expensed as incurred. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and any related gain or loss on disposition is reflected in net income or loss for the year.
Use of Estimates	Use of Estimates -
Revenue Recognition	Revenue Recognition - Software licenses and DVD training courses sold under EPTAs are recognized as revenue upon receipt of cash from customers and not at the time of sale. Accounting standards require revenue to be deferred until customer payments are received if collection of the original principal balance is not probable. We enter into agreements where revenue is derived from multiple deliverables including any mix of products and/or services. For these arrangements, we determine whether the delivered item(s) has value to the customer on a stand-alone basis, and in the event the arrangement includes a general right of return relative to the delivered item(s), whether the delivery or performance of the undelivered item(s) is considered probable and substantially in our control. If these criteria are met, the arrangement consideration is allocated to the separate units of accounting based on each unit’s relative selling price. If these criteria are not met, the arrangement is accounted for as a single unit of accounting which would result in revenue being recognized ratably over the contract term or deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. The amount of product and services revenue recognized for arrangements with multiple deliverables is impacted by the allocation of arrangement consideration to the deliverables in the arrangement based on the relative selling prices. In determining our selling prices, we apply the selling price hierarchy using vendor specific objective evidence (VSOE) when available, third-party evidence of selling price (“TPE”) if VSOE does not exist, and best estimated selling price (“BESP”) if neither VSOE nor TPE is available. VSOE of fair value for elements of an arrangement is based upon the normal pricing and discounting practices for a deliverable when sold separately. In determining VSOE, we require that a substantial majority of the selling prices fall within a reasonably narrow pricing range, generally evidenced by a substantial majority of such historical stand-alone transactions falling within a reasonably narrow range of the median rate. In addition, we consider major service groups, geographies, customer classifications, and other variables in determining VSOE. We are typically not able to determine TPE for our products or services. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, our offerings contain a significant level of differentiation such that the comparable pricing of products with similar functionality is difficult to obtain. Furthermore, we are unable to reliably determine what similar competitor products’ selling prices are on a stand-alone basis. When we are unable to establish the selling price using VSOE or TPE, we use BESP in our allocation of arrangement consideration. The objective of BESP is to determine the price at which we would transact a sale if the product or service were sold on a stand-alone basis. We determine BESP for a product or service by considering multiple factors including, but not limited to, cost of products, gross margin objectives, pricing practices, geographies, customer classes and distribution channels. We recognize revenue for delivered elements only when we determine there are no uncertainties regarding customer acceptance. 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.
Professional Services Revenue	Professional Services Revenue
Web and Telecommunications Services Hosting Revenue	Web and Telecommunications Services Hosting Revenue -
Equipment Sales and Financing Revenue	Equipment Sales and Financing Revenue - Fees generated from renting our hosted telecommunication equipment (IP or cloud telephone devices) through leasing contracts are recognized as revenue based on whether the lease qualifies as an operating lease or sales-type lease. The two primary accounting provisions which we use to classify transactions as sales-type or operating leases are: 1) lease term to determine if it is equal to or greater than 75% of the economic life of the equipment and 2) the present value of the minimum lease payments to determine if they are equal to or greater than 90% of the fair market value of the equipment at the inception of the lease. The economic life of most of our products is estimated to be three years, since this represents the most frequent contractual lease term for our products, and there is no residual value for used equipment. Residual values, if any, are established at the lease inception using estimates of fair value at the end of the lease term. The vast majority of our leases that qualify as sales-type leases are non-cancelable and include cancellation penalties approximately equal to the full value of the lease receivables. Leases that do not meet the criteria for sales-type lease accounting are accounted for as operating leases. Revenue from sales-type leases is recognized upon installation and the interest portion is deferred and recognized as earned. Revenue from operating leases in recognized ratably over the applicable service period.
Commission Revenue	Commission Revenue -
Cost of Revenue	Cost of Revenue
Prepaid Sales Commissions	Prepaid Sales Commissions - For arrangements where we recognize revenue over the relevant contract period, we defer related commission payments to our direct sales force and amortize these amounts over the same period that the related revenues are recognized. This is done to match commissions with the related revenues. Commission payments are nonrefundable unless amounts due from a customer are determined to be uncollectible or if the customer subsequently changes or terminates the level of service, in which case commissions which were paid are recoverable by us. We amortized commission expense of $266,000 and $103,000 for the years ended December 31, 2015 and 2014, respectively.
Research and Development	Research and Development
Fair Value Measurements	Fair Value Measurements Level 1 Level 2 · Quoted prices for similar assets or liabilities in active markets; · Quoted prices for identical or similar assets in non-active markets; · Inputs other than quoted prices that are observable for the asset or liability; and · Inputs that are derived principally from or corroborated by other observable market data. Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.
Notes Payable	Notes Payable
Income Taxes	Income Taxes - Interest and penalties associated with income taxes are classified as income tax expense in the consolidated statements of operations. We do not intend to indefinitely reinvest the undistributed earnings of our United Kingdom subsidiary, therefore, we have provided for U.S. deferred income taxes on such undistributed foreign earnings. All other foreign subsidiaries are considered disregarded foreign entities for US tax purposes.
Stock-Based Compensation	Stock-Based Compensation For equity-classified awards, compensation expense is recognized over the requisite service period based on the computed fair value on the grant date of the award. Equity classified awards include the issuance of stock options.
Comprehensive Loss	Comprehensive Loss
Operating Segments	Operating Segments
Significant Customers	Significant Customers
Recently Adopted Accounting Guidance	Recent Accounting Pronouncements Balance Sheet Classification of Deferred Taxes, In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal Use Software, In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, Revenue from Contracts with Customers,

1. Description of Business an27

1. Description of Business and Significant Accounting Policies (Tables)	12 Months Ended
	Dec. 31, 2015
Property and Equipment	December 31, 2015 2014 Software $ 681 $ 1,183 Computers and office equipment 1,685 1,790 Leasehold improvements 27 8 Furniture and fixtures - 4 Less accumulated depreciation and amortization (2,360 ) (2,917 ) Total property and equipment, net $ 33 $ 68
Useful Life
Property and Equipment	Computer and office equipment 2 to 5 years Computer software 3 years Furniture and fixtures 4 years Leasehold improvements 2 to 5 years

2. Net Loss Per Common Share (T

2. Net Loss Per Common Share (Tables)	12 Months Ended
	Dec. 31, 2015
Net Loss Per Common Share
Basic and diluted net loss per common share	Year Ended December 31, 2015 2014 Net loss (in thousands) $ (4,541 ) $ (6,376 ) Weighted-average share reconciliation: Weighted-average shares outstanding 12,960,625 11,163,592 Weighted-average basic shares outstanding 12,960,625 11,163,592 Diluted shares outstanding 12,960,625 11,163,592 Net loss per common share: Basic $ (0.35 ) $ (0.57 ) Diluted $ (0.35 ) $ (0.57 )
Common stock not included in the computation of diluted loss per share	Year Ended December 31, 2015 2014 Shares of common stock issuable under equity incentive plans outstanding 4,380,698 2,147,561 Shares of common stock issuable upon conversion of warrants 250,000 500,000 Common stock equivalent shares excluded from diluted net loss per share 4,630,698 2,647,561

3. Acquisition (Tables)

3. Acquisition (Tables) - OSV [Member]	12 Months Ended
	Dec. 31, 2015
Allocation of the purchase price	Consideration (including estimated unpaid contingent consideration): Cash $ 195 Common stock 134 Contingent consideration 211 Total consideration $ 540 Recognized amounts of identifiable assets acquired and liabilities assumed: Identifiable intangible assets $ 353 Commission liability (10 ) Total identifiable net assets 343 Goodwill 197 Total consideration $ 540
Identified intangible assets acquired and the respective estimated periods over which such assets will be amortized	Intangible Assets: Amount Weighted Average useful life (in years) Customer relationships $ 335 7 Technology 18 3 Total intangible assets $ 353

4. Trade Receivables, net (Tabl

4. Trade Receivables, net (Tables)	12 Months Ended
	Dec. 31, 2015
Trade Receivables Net Tables
Trade Receivables, net	December 31, 2015 2014 Trade receivables $ 378 $ 433 Conforming EPTAs 94 192 Non-Conforming EPTAs: 1 - 30 days 11 19 31 - 60 days 4 28 61 - 90 days 17 3 Gross trade receivables 504 675 Less: allowance for doubtful accounts (59 ) (68 ) Trade receivables, net $ 445 $ 607 Current trade receivables, net $ 364 $ 543 Long-term trade receivables, net 81 64 Trade receivables, net $ 445 $ 607

5. Equipment Financing Receiv31

5. Equipment Financing Receivables (Tables)	12 Months Ended
	Dec. 31, 2015
Equipment Financing Receivables Tables
Equipment Financing Receivables	December 31, 2015 2014 Gross financing receivables $ 1,030 $ 1,610 Less unearned income (580 ) (984 ) Financing receivables, net 450 626 Less: Current portion of finance receivables, net (131 ) (171 ) Finance receivables due after one year $ 319 $ 455

6. Prepaid Expenses (Tables)

6. Prepaid Expenses (Tables)	12 Months Ended
	Dec. 31, 2015
Prepaid Expenses Tables
Prepaid expenses	December 31, 2015 2014 Prepaid rent $ 376 $ 698 Prepaid commissions 456 308 Prepaid software support 181 49 Prepaid software subscription 103 92 Other prepaid expenses 218 260 Total prepaid assets $ 1,334 $ 1,407

7. Property and Equipment (Tabl

7. Property and Equipment (Tables)	12 Months Ended
	Dec. 31, 2015
Property And Equipment Tables
Property and equipment	December 31, 2015 2014 Software $ 681 $ 1,183 Computers and office equipment 1,685 1,790 Leasehold improvements 27 8 Furniture and fixtures - 4 Less accumulated depreciation and amortization (2,360 ) (2,917 ) Total property and equipment, net $ 33 $ 68

8. Intangible Assets (Tables)

8. Intangible Assets (Tables)	12 Months Ended
	Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Net carrying amount of intangible	December 31, 2015 2014 Customer relationships $ 941 $ 941 Technical know-how 60 60 Non-compete 60 60 Developed technology 198 198 Less accumulated amortization Customer relationships (482 ) (316 ) Technical know-how (60 ) (60 ) Non-compete (60 ) (60 ) Developed technology (191 ) (147 ) Total $ 466 $ 676
Estimated future amortization expense	Year ending December 31, 2016 $ 131 2017 97 2018 72 2019 53 2020 39 Thereafter 74 Total $ 466

9. Goodwill (Tables)

9. Goodwill (Tables)	12 Months Ended
	Dec. 31, 2015
Goodwill Tables
Goodwill for impairment on an annual basis	Acquisition Related Goodwill Balance at January 1, 2014 $ 75 Additions - OSV 197 Balance at December 31, 2014 272 Increase (decrease) - Balance at December 31, 2015 $ 272

10. Accrued Expenses (Tables)

10. Accrued Expenses (Tables)	12 Months Ended
	Dec. 31, 2015
AccruedExpensesTablesAbstract
Accrued expenses	December 31, 2015 2014 Accrued wages and benefits $ 298 $ 345 Accrued accounts payable 153 318 Accrued legal costs - 231 Accrued sales taxes 223 209 Other 138 118 Total accrued expenses $ 812 $ 1,221

11. Notes Payable (Tables)

11. Notes Payable (Tables)	12 Months Ended
	Dec. 31, 2015
Debt Disclosure [Abstract]
Summary of note payable	Year Ended December 31, 2015 2014 Related party note payable $ 1,000 $ - Other notes payable 137 110 1,137 110 Less: notes payable discount (115 ) - Net carrying value of notes payable 1,022 110 Less: current portion of long-term notes payable (57 ) (110 ) Long-term notes payable $ 965 $ -
Future principal payments	Year ending December 31, 2016 $ 57 2017 39 2018 41 2019 - 2020 1,000 Total $ 1,137

12. Fair Value Measurements (Ta

12. Fair Value Measurements (Tables)	12 Months Ended
	Dec. 31, 2015
Financial instruments	December 31, 2015 December 31, 2014 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Trade receivables, net $ 445 $ 445 $ 607 $ 607 Equipment financing receivables 450 450 626 626 Certificate of deposit 251 251 251 251 Liabilities: Acquisition related contingent consideration 99 99 211 211 Related party note payable including discount from warrant grant 885 1,009 - -
Assets for which fair value is disclosed	Fair value measurement at reporting date Description As of December 31, 2015 Level 1 Level 2 Level 3 Assets: Certificate of deposit $ 251 $ - $ 251 $ - Liabilities: Acquisition related contingent consideration 99 - - 99 Description As of December 31, 2014 Level 1 Level 2 Level 3 Assets: Certificate of deposit $ 251 $ - $ 251 $ - Liabilities: Acquisition related contingent consideration 211 - - 211
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation	Contingent consideration liability Fair Value at December 31, 2015 Valuation technique Unobservable inputs Range Revenue - based payments $ 99 Discounted cash flow Discount Rate 12.5 % Probability of milestone payment 100 % Projected year of payments 2016 Contingent consideration liability Fair Value at December 31, 2014 Valuation technique Unobservable inputs Range Revenue - based payments $ 211 Discounted cash flow Discount Rate 12.5 % Probability of milestone payment 90 % Projected year of payments 2014-2015
Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation	Acquisition Related Contingent Consideration Balance at December 31, 2013 $ 51 Change in fair value 3 Cash payments (54 ) Additions 211 Balance at December 31, 2014 211 Change in fair value (11 ) Cash payments (61 ) Issuance of common stock from contingent consideration (40 ) Balance at December 31, 2015 $ 99

13. Equity (Tables)

13. Equity (Tables)	12 Months Ended
	Dec. 31, 2015
Equity [Abstract]
Shares of common stock reserved for future issuance	Common stock warrants 250,000 Stock-based compensation plans: Outstanding option awards 4,380,698 Available for future grants 1,268,031 5,898,729
Fair value of the warrants was calculated using the Black-Scholes option-pricing model	Expected volatility 62 % Expected life (in years) 4.27 Risk-free interest rate 1.80 % Expected dividend yield 0.00 % Expected volatility 55 % Expected life (in years) 5.00 Risk-free interest rate 1.76 % Expected dividend yield 0.00 %

14. Stock-Based Compensation (T

14. Stock-Based Compensation (Tables)	12 Months Ended
	Dec. 31, 2015
Stock-based Compensation Tables
Statement of operations effect of stock-based compensation	Year Ended December 31, 2015 2014 Share based compensation expense by financial statement line item: Cost of revenue $ 80 $ 25 Research and development 166 129 Selling and marketing 115 64 General and administrative 945 566 Total cost related to share-based compensation expense $ 1,306 $ 784
Fair value of stock options granted	Year Ended December 31, 2015 Year Ended December 31, 2014 Weighted-average fair value of options and warrants granted $ 0.69 $ 1.01 Expected volatility 58 % 55 % Expected life (in years) 4.30 4.60 Risk-free interest rate 1.68 % 1.65 % Expected dividend yield 0.00 % 0.00 %
Stock option activity	Weighted-Average Aggregate Weighted-Average Remaining Intrinsic Value Number of Shares Exercise Price Contract Life (in thousands) Outstanding at January 1, 2014 2,130,239 $ 3.96 8.0 years $ 482 Granted 498,000 3.18 Exercised (28,418) 2.44 Cancelled/forfeited (452,260) 4.05 Outstanding at December 31, 2014 2,147,561 3.78 6.9 years - Granted 2,578,000 1.50 Exercised (26,865) 1.85 Cancelled/forfeited (317,998) 2.16 Outstanding at December 31, 2015 4,380,698 2.56 6.2 years - Shares vested and expected to vest 4,052,341 2.56 6.2 years - Exercisable as of December 31, 2015 2,716,262 3.04 6.1 years - Exercisable as of December 31, 2014 1,351,894 4.18 6.6 years -

15. Income Taxes (Tables)

15. Income Taxes (Tables)	12 Months Ended
	Dec. 31, 2015
Income Taxes Tables
Provision (benefit) for income taxes	Year Ended December 31, 2015 2014 Current income tax expense/(benefit): Federal $ - $ - State and local (12 ) 77 Foreign - - Current income tax expense/(benefit) $ (12 ) $ 77
Reconciliation of federal statutory income tax rate to our effective income tax rate	Year Ended December 31, 2015 2014 U.S. federal statutory income tax benefit $ (1,548 ) $ (2,142 ) Increase in income tax benefit resulting from: State and local income tax benefit, net of federal effect 213 104 Change in the valuation allowance for net deferred income tax assets 1,212 2,036 Other, net 111 79 Income tax expense/(benefit $ (12 ) $ 77
Net deferred income tax assets and liabilities	As of December 31, 2015 As of December 31, 2014 Current Non-current Current Non-current Deferred income tax assets: Accrued expenses $ 168 $ - $ 302 $ - Deferred revenue 326 - 230 - Net operating loss carry-forwards - 8,024 - 7,132 Foreign tax credits - 892 - 892 Stock-based compensation - 3,277 - 2,895 Property and equipment - 58 - 118 Other - 833 - 708 Subtotal 494 13,084 532 11,745 Valuation allowance (485 ) (12,602 ) (511 ) (11,364 ) Total deferred income tax assets 9 482 21 381 Deferred income tax liabilities: Property and equipment - - - - Prepaid expenses and other (491 ) - (402 ) - Total deferred income tax liabilities (491 ) - (402 ) - Net deferred income tax assets (liabilities) $ (482 ) $ 482 $ (381 ) $ 381
Unrecognized tax benefits	Balance as of January 1, 2014 $ 891 Reductions due to lapsed statute of limitations - Balance as of December 31, 2014 891 Reductions due to lapsed statute of limitations - Balance as of December 31, 2015 $ 891

16. Commitments and Contingen42

16. Commitments and Contingencies (Tables)	12 Months Ended
	Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
Future aggregate minimum lease obligations under operating leases	Years ending December 31, 2016 112 2017 20 2018 15 Total $ 147
Total rental expense	Years ending December 31, 2016 2017 2018 Minimum rentals $ 112 $ 20 $ 15 Less: Sublease rentals (92 ) - - Total $ 20 $ 20 $ 15

18. Segments (Tables)

18. Segments (Tables)	12 Months Ended
	Dec. 31, 2015
Notes to Financial Statements
Information on reportable segments and reconciliation to condensed consolidated net (loss) income	December 31, 2015 2014 Revenue: Hosted Telecommunications Services $ 5,989 $ 4,297 Web Services 1,834 3,297 Consolidated revenue 7,823 7,594 Gain/(Loss) from Operations: Hosted Telecommunications Services (4,904 ) (5,776 ) Web Services 65 (823 ) Total operating loss (4,839 ) (6,599 ) Other Income, net: Hosted Telecommunications Services 71 87 Web Services 215 213 Total other income 286 300 Gain/(Loss) before income tax provision Hosted Telecommunications Services (4,833 ) (5,689 ) Web Services 280 (610 ) Loss before income tax provision $ (4,553 ) $ (6,299 )

19. Quarterly Financial Infor44

19. Quarterly Financial Information (unaudited) (Tables)	12 Months Ended
	Dec. 31, 2015
Quarterly Financial Information Tables
Quarterly Financial Information	Year ended December 31, 2015 For the three months ended Consolidated March 31, June 30, September 30, December 31, 2015 2015 2015 2015 (In thousands, except per share data) Revenue $ 1,852 $ 1,890 $ 1,972 $ 2,109 Operating expenses: Cost of revenue 861 855 882 979 Selling and marketing 603 580 624 637 General and administrative 1,560 1,375 1,309 1,618 Research and development 203 165 209 202 Total operating expenses 3,227 2,975 3,024 3,436 Loss from operations (1,375 ) (1,085 ) (1,052 ) (1,327 ) Total other income, net 215 33 19 19 Loss before income taxes (1,160 ) (1,052 ) (1,033 ) (1,308 ) Income tax benefit/(provision) (10 ) (8 ) (10 ) 40 Net loss $ (1,170 ) $ (1,060 ) $ (1,043 ) $ (1,268 ) Basic net loss per common share (1) $ (0.09 ) $ (0.08 ) $ (0.08 ) $ (0.10 ) Diluted net loss per common share (1) $ (0.09 ) $ (0.08 ) $ (0.08 ) $ (0.10 ) Year ended December 31, 2014 For the three months ended Consolidated March 31, June 30, September 30, December 31, 2014 2014 2014 2014 (In thousands, except per share data) Revenue $ 2,072 $ 1,808 $ 1,725 $ 1,989 Operating expenses: Cost of revenue 930 884 790 978 Selling and marketing 653 504 546 577 General and administrative 1,750 1,548 1,549 1,880 Research and development 414 435 394 361 Total operating expenses 3,747 3,371 3,279 3,796 Loss from operations (1,675 ) (1,563 ) (1,554 ) (1,807 ) Total other income, net 77 82 61 80 Loss before income taxes (1,598 ) (1,481 ) (1,493 ) (1,727 ) Income tax provision (34 ) (13 ) (9 ) (21 ) Net loss $ (1,632 ) $ (1,494 ) $ (1,502 ) $ (1,748 ) Basic net loss per common share (1) $ (0.15 ) $ (0.13 ) $ (0.13 ) $ (0.15 ) Diluted net loss per common share (1) $ (0.15 ) $ (0.13 ) $ (0.13 ) $ (0.15 ) ——————— (1) Net income (loss) per common share is computed independently for each of the quarters presented. Therefore, the sums of quarterly net income (loss) per common share amounts do not necessarily equal the total for the twelve month periods presented.
Valuation and Qualifying Accounts	Balance at Balance at Beginning End of of Year Additions Deductions Year (in thousands) Year ended December 31, 2015 Allowance for doubtful accounts receivable $ 68 $ - $ (9 ) $ 59 Deferred income tax asset valuation allowance 11,875 1,212 - 13,087 Year ended December 31, 2014 Allowance for doubtful accounts receivable $ 200 $ - $ (132 ) $ 68 Deferred income tax asset valuation allowance 9,839 2,036 - 11,875

1. Description of Business an45

1. Description of Business and Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 2015
Computer software
Depreciable lives	3 years
Computer software | Minimum
Depreciable lives	2 years
Computer software | Maximum [Member]
Depreciable lives	5 years
Furniture and fixtures
Depreciable lives	4 years
Leasehold improvements | Minimum
Depreciable lives	2 years
Leasehold improvements | Maximum [Member]
Depreciable lives	5 years

1. Description of Business an46

1. Description of Business and Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Description Of Business And Significant Accounting Policies Details Narrative
Restricted cash	$ 112	$ 133
Cash and cash equivalents in financial institutions in excess of federally insured limits	1,384
Restricted cash federally insured limits	112
Interest Income	24	150
Amortization of deferred commissions	$ 266	$ 103

2. Net Loss Per Common Share (D

2. Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended																12 Months Ended
	Dec. 31, 2015		Sep. 30, 2015		Jun. 30, 2015		Mar. 31, 2015		Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2015	Dec. 31, 2014
Net Loss Per Common Share Details
Net loss (in thousands)	$ (1,268)		$ (1,043)		$ (1,060)		$ (1,170)		$ (1,748)		$ (1,502)		$ (1,494)		$ (1,632)		$ (4,541)	$ (6,376)
Weighted-average share reconciliation:
Weighted-average shares outstanding																	12,960,625	11,163,592
Weighted-average basic shares outstanding																	12,960,625	11,163,592
Diluted shares outstanding																	12,960,625	11,163,592
Net loss per common share:
Basic	$ (0.10)	[1]	$ (0.08)	[1]	$ (0.08)	[1]	$ (0.09)	[1]	$ (0.15)	[1]	$ (0.13)	[1]	$ (0.13)	[1]	$ (0.15)	[1]	$ (0.35)	$ (0.57)
Diluted	$ (0.10)	[1]	$ (0.08)	[1]	$ (0.08)	[1]	$ (0.09)	[1]	$ (0.15)	[1]	$ (0.13)	[1]	$ (0.13)	[1]	$ (0.15)	[1]	$ (0.35)	$ (0.57)
[1]	Net income (loss) per common share is computed independently for each of the quarters presented. Therefore, the sums of quarterly net income (loss) per common share amounts do not necessarily equal the total for the twelve month periods presented.

2. Net Loss Per Common Share 48

2. Net Loss Per Common Share (Details 1) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Securities excluded from earnings	4,630,698	2,647,561
Equity incentive plans
Securities excluded from earnings	4,380,698	2,147,561
Warrants
Securities excluded from earnings	250,000	500,000

3. Acquisition (Details 1)

3. Acquisition (Details 1) - OSV [Member] $ in Thousands	12 Months Ended
	Dec. 31, 2015USD ($)
Consideration (including estimated unpaid contingent consideration):
Cash	$ 195
Common Stock	134
Contingent consideration	211
Total Consideration	540
Recognized amounts of identifiable assets acquired and liabilities assumed:
Identifiable intangible assets	353
Commission liability	(10)
Total identifiable net assets	343
Goodwill	197
Total consideration	$ 540

3. Acquisition (Details 2)

3. Acquisition (Details 2) - OSV [Member] $ in Thousands	12 Months Ended
	Dec. 31, 2015USD ($)
Identified intangible assets acquired	$ 353
Customer Relationships [Member]
Identified intangible assets acquired	$ 335
Weighted Average useful life (In years)	7 years
Technology [Member]
Identified intangible assets acquired	$ 18
Weighted Average useful life (In years)	3 years

4. Trade Receivables, net (Deta

4. Trade Receivables, net (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Valuation and Qualifying Accounts Disclosure [Line Items]
Trade receivables	$ 378	$ 433
Conforming EPTAs	94	192
Gross trade receivables	504	675
Less allowance for doubtful accounts	(59)	(68)
Trade receivables, net	445	607
Current trade receivables, net	364	543
Long-term trade receivables, net	81	64
Trade receivables, net	445	607
Non-Conforming EPTAs [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
1 - 30 days	11	19
31 - 60 days	4	28
61 - 90 days	$ 17	$ 3

4. Trade Receivables, net (De52

4. Trade Receivables, net (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Trade Receivables Net Details Narrative
Write off	$ 66	$ 158

5. Equipment Financing Receiv53

5. Equipment Financing Receivables (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Equipment Financing Receivables Details
Gross financing receivables	$ 1,030	$ 1,610
Less unearned income	(580)	(984)
Financing receivables, net	450	626
Less: Current portion of finance receivables, net	(131)	(171)
Finance receivables due after one year	$ 319	$ 455

6. Prepaid Expenses (Details)

6. Prepaid Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Prepaid Expenses Details
Prepaid rent	$ 376	$ 698
Prepaid commissions	456	308
Prepaid software support	181	49
Prepaid software subscription	103	92
Other	218	260
Total prepaid assets	$ 1,334	$ 1,407

7. Property and Equipment (Deta

7. Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Property And Equipment Details
Software	$ 681	$ 1,183
Computers and office equipment	1,685	1,790
Leasehold improvements	27	8
Furniture and fixtures	0	4
Less accumulated depreciation and amortization	(2,360)	(2,917)
Total property and equipment, net	$ 33	$ 68

8. Intangible Assets (Details)

8. Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Carrying amount of intangible, Net	$ 466	$ 676
Customer Relationships [Member]
Carrying amount of intangible, Gross	941	941
Less accumulated amortization	(482)	(316)
Technical Know How [Member]
Carrying amount of intangible, Gross	60	60
Less accumulated amortization	(60)	(60)
Non Compete [Member]
Carrying amount of intangible, Gross	60	60
Less accumulated amortization	(60)	(60)
Developed technology
Carrying amount of intangible, Gross	198	198
Less accumulated amortization	$ (191)	$ (147)

8. Intangible Assets (Details 1

8. Intangible Assets (Details 1) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
2,016	$ 131
2,017	97
2,018	72
2,019	53
2,020	39
Thereafter	74
Total	$ 466	$ 676

9. Goodwill (Details)

9. Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Balance Beginning	$ 272	$ 75
Additions	0
Balance Ending	$ 272	272
OSV [Member]
Additions		$ 197

10. Accrued Expenses (Details)

10. Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Dilutive restricticed shares held in escrow
Accrued wages and benefits	$ 298	$ 345
Accrued accounts payable	153	318
Accrued legal costs	0	231
Accrued sales taxes	223	209
Other	138	118
Total accrued expenses	$ 812	$ 1,221

11. Notes Payable (Details)

11. Notes Payable (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Notes Payable Details
Related party note payable	$ 1,000	$ 0
Other notes payable	137	110
Total	1,137	110
Less: notes payable discount	(115)	0
Net carrying value of notes payable	1,022	110
Less: current portion of long-term notes payable	(57)	(110)
Long-term notes payable	$ 965	$ 0

11. Notes Payable (Details 1)

11. Notes Payable (Details 1) $ in Thousands	Dec. 31, 2015USD ($)
Notes Payable Details 1
2,016	$ 57
2,017	39
2,018	41
2,019	0
2,020	1,000
Total	$ 1,137

12. Fair Value Measurements (De

12. Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Assets:
Certificate of deposit	$ 251	$ 251
Liabilities:
Acquisition related contingent consideration	99	211	$ 51
Carrying Value [Member]
Assets:
Trade receivables, net	445	607
Equipment financing receivables	450	626
Certificate of deposit	251	251
Liabilities:
Acquisition related contingent consideration	99	211
Related party note payable including discount from warrant grant	885	0
Estimated Fair Value [Member]
Assets:
Trade receivables, net	445	607
Equipment financing receivables	450	626
Certificate of deposit	251	251
Liabilities:
Acquisition related contingent consideration	99	211
Related party note payable including discount from warrant grant	$ 1,009	$ 0

12. Fair Value Measurements (63

12. Fair Value Measurements (Details 1) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Assets:
Certificate of deposit	$ 251	$ 251
Liabilities:
Acquisition related contingent consideration	99	211	$ 51
Level 1 [Member]
Assets:
Certificate of deposit	0	0
Liabilities:
Acquisition related contingent consideration	0	0
Level 2 [Member]
Assets:
Certificate of deposit	251	251
Liabilities:
Acquisition related contingent consideration	0	0
Level 3 [Member]
Assets:
Certificate of deposit	0	0
Liabilities:
Acquisition related contingent consideration	$ 99	$ 211

12. Fair Value Measurements (64

12. Fair Value Measurements (Details 2) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Acquisition related contingent consideration	$ 99	$ 211	$ 51
Level 3 [Member]
Acquisition related contingent consideration	$ 99	$ 211

12. Fair Value Measurements (65

12. Fair Value Measurements (Details 3) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Fair Value Measurements Details 3
Acquistion Related Contingent Consideration	$ 211	$ 51
Change in fair value	(11)	3
Cash payments	(61)	(54)
Additions		211
Issuance of common stock from contingent consideration	(40)	0
Acquistion Related Contingent Consideration	$ 99	$ 211

13. Equity (Details)

13. Equity (Details) - shares	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Equity Details
Common stock warrants	250,000
Stock-based compensation plans:
Outstanding option awards	4,380,698	2,147,561	2,130,239
Available for future grants	1,268,031
Total	5,898,729

13. Equity (Details 1)

13. Equity (Details 1) - Warrants	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Expected volatility	62.00%	55.00%
Expected life (in years)	4 years 3 months 7 days	5 years
Risk-free interest rate	1.80%	1.76%
Expected dividend yield	0.00%	0.00%

14. Stock-Based Compensation (D

14. Stock-Based Compensation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Total cost related to share-based compensation expense	$ 1,306	$ 784
Cost of revenue [Member]
Total cost related to share-based compensation expense	80	25
Research and development [Member]
Total cost related to share-based compensation expense	166	129
Selling and marketing [Member]
Total cost related to share-based compensation expense	115	64
General and administrative [Member]
Total cost related to share-based compensation expense	$ 945	$ 566

14. Stock-Based Compensation 69

14. Stock-Based Compensation (Details 1) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Stock-based Compensation Details 1
Weighted-average fair value of options and warrants granted	$ .69	$ 1.01
Expected volatility	58.00%	55.00%
Expected life (in years)	4 years 3 months 18 days	4 years 7 months 6 days
Risk-free interest rate	1.68%	1.65%
Expected dividend yield	0.00%	0.00%

14. Stock-Based Compensation 70

14. Stock-Based Compensation (Details 2) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Number of Shares
Outstanding	2,147,561	2,130,239
Granted	2,578,000	498,000
Exercised	(26,865)	(28,418)
Cancelled/forfeited	(317,998)	(452,260)
Outstanding	4,380,698	2,147,561
Shares vested and expected to vest	4,052,341
Exercisable	2,716,262	1,351,894
Weighted-Average Exercise Price
Outstanding	$ 3.78	$ 3.96
Granted	1.50	3.18
Exercised	1.85	2.44
Cancelled/forfeited	2.16	4.05
Outstanding	2.56	3.78
Shares vested and expected to vest	2.56
Exercisable	$ 3.04	$ 4.18
Weighted-Average Remaining Contract Life
Outstanding	6 years 10 months 24 days	8 years
Outstanding	6 years 2 months 12 days	6 years 10 months 24 days
Shares vested and expected to vest	6 years 2 months 12 days
Exercisable	6 years 1 month 6 days	6 years 7 months 6 days
Aggregate Intrinsic Value
Outstanding	$ 0	$ 482
Outstanding	0	0
Shares vested and expected to vest	0
Exercisable	$ 0	$ 0

14. Stock-Based Compensation 71

14. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Stock-based Compensation Details Narrative
Shares remaining in the plans available to grant	1,268,031
Intrinsic value of options exercised	$ 8	$ 21
Total future compensation expense related to non-vested options not yet recognized	$ 1,325
Total future compensation expense related to non-vested options not yet recognized, period	2 years

15. Income Taxes (Details)

15. Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Current income tax expense/(benefit):
Federal									$ 0	$ 0
State and local									(12)	77
Foreign									0	0
Current income tax expense/(benefit)	$ 40	$ (10)	$ (8)	$ (10)	$ (21)	$ (9)	$ (13)	$ (34)	$ (12)	$ 77

15. Income Taxes (Details 1)

15. Income Taxes (Details 1) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Taxes
U.S. federal statutory income tax benefit	$ (1,548)	$ (2,142)
Increase in income tax benefit resulting from:
State and local income tax benefit, net of federal effect	213	104
Change in the valuation allowance for net deferred income tax assets	1,212	2,036
Other, net	111	79
Income tax expense/(benefit)	$ (12)	$ 77

15. Income Taxes (Details 2)

15. Income Taxes (Details 2) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Deferred income tax assets:
Total deferred income tax assets	$ 482	$ 381
Current [Member]
Deferred income tax assets:
Accrued expenses	168	302
Deferred revenue	326	230
Net operating loss carry-forwards	0	0
Foreign tax credits	0	0
Stock-based compensation	0	0
Property and equipment	0	0
Other	0	0
Subtotal	494	532
Valuation allowance	(485)	(511)
Total deferred income tax assets	9	21
Deferred income tax liabilities:
Property and equipment	0	0
Prepaid expenses and other	(491)	(402)
Total deferred income tax liabilities	(491)	(402)
Net deferred income tax assets (liabilities)	(482)	(381)
NonCurrent [Member]
Deferred income tax assets:
Accrued expenses	0	0
Deferred revenue	0	0
Net operating loss carry-forwards	8,024	7,132
Foreign tax credits	892	892
Stock-based compensation	3,277	2,895
Property and equipment	58	118
Other	833	708
Subtotal	13,084	11,745
Valuation allowance	(12,602)	(11,364)
Total deferred income tax assets	482	381
Deferred income tax liabilities:
Property and equipment	0	0
Prepaid expenses and other	0	0
Total deferred income tax liabilities	0	0
Net deferred income tax assets (liabilities)	$ 482	$ 381

15. Income Taxes (Details 3)

15. Income Taxes (Details 3) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Taxes
Beginning Balance	$ 891	$ 891
Reductions due to lapsed statute of limitations	0	0
Ending Balance	$ 891	$ 891

15. Income Taxes (Details Narra

15. Income Taxes (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Valuation allowance for deferred tax assets	$ 13,087	$ 11,875
Net change in our valuation allowance	1,212	$ 2,036
Research and development
Operating loss carryforwards	$ 21,936
Operating loss carryforwards, exiration date	2019 through 2020
Foreign tax credit carry-forwards
Operating loss carryforwards	$ 129
Operating loss carryforwards, exiration date	expire in 2017
U.S. federal income tax reporting
Operating loss carryforwards	$ 892
Operating loss carryforwards, exiration date	2020 through 2035

16. Commitments and Contingen77

16. Commitments and Contingencies (Details) $ in Thousands	Dec. 31, 2015USD ($)
Commitments And Contingencies Details
2,016	$ 112
2,017	20
2,018	15
Total	$ 147

16. Commitments and Contingen78

16. Commitments and Contingencies (Details 1) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Commitments And Contingencies Details 1
Minimum rentals	$ 15	$ 20	$ 112
Less: Sublease rentals	0	0	(92)
Total	$ 15	$ 20	$ 20

16. Commitments and Contingen79

16. Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Liabilities relating to legal proceedings	$ 0	$ 231
Amortization of prepaid rent	$ 322	$ 268

17. Employee Benefit Plan (Deta

17. Employee Benefit Plan (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Employee Benefit Plan Details Narrative
Employer contributions to employee benefit plan	$ 133	$ 146

18. Segment (Details)

18. Segment (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Segment Information
Revenue	$ 2,109	$ 1,972	$ 1,890	$ 1,852	$ 1,989	$ 1,725	$ 1,808	$ 2,072	$ 7,823	$ 7,594
Gain/(Loss) from Operations	$ (1,327)	$ (1,052)	$ (1,085)	$ (1,375)	$ (1,807)	$ (1,554)	$ (1,563)	$ (1,675)	(4,839)	(6,599)
Other Income, net									286	300
Gain/(Loss) before income tax provision									(4,553)	(6,299)
Hosted Telecommunications Services [Member]
Segment Information
Revenue									5,989	4,297
Gain/(Loss) from Operations									(4,904)	(5,776)
Other Income, net									71	87
Gain/(Loss) before income tax provision									(4,833)	(5,689)
Web Services [Member]
Segment Information
Revenue									1,834	3,297
Gain/(Loss) from Operations									65	(823)
Other Income, net									215	213
Gain/(Loss) before income tax provision									$ 280	$ (610)

19. Quarterly Financial Infor82

19. Quarterly Financial Information (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended																12 Months Ended
	Dec. 31, 2015		Sep. 30, 2015		Jun. 30, 2015		Mar. 31, 2015		Dec. 31, 2014		Sep. 30, 2014		Jun. 30, 2014		Mar. 31, 2014		Dec. 31, 2015	Dec. 31, 2014
Quarterly Financial Information Details
Revenue	$ 2,109		$ 1,972		$ 1,890		$ 1,852		$ 1,989		$ 1,725		$ 1,808		$ 2,072		$ 7,823	$ 7,594
Cost of revenue	979		882		855		861		978		790		884		930		3,577	3,582
Selling and marketing	637		624		580		603		577		546		504		653		2,444	2,280
General and administrative	1,618		1,309		1,375		1,560		1,880		1,549		1,548		1,750		5,862	6,727
Research and development	202		209		165		203		361		394		435		414		779	1,604
Total operating expenses	3,436		3,024		2,975		3,227		3,796		3,279		3,371		3,747		12,662	14,193
Loss from operations	(1,327)		(1,052)		(1,085)		(1,375)		(1,807)		(1,554)		(1,563)		(1,675)		(4,839)	(6,599)
Total other income, net	19		19		33		215		80		61		82		77		286	300
Loss before income taxes	(1,308)		(1,033)		(1,052)		(1,160)		(1,727)		(1,493)		(1,481)		(1,598)		(4,553)	(6,299)
Income tax benefit (provision)	40		(10)		(8)		(10)		(21)		(9)		(13)		(34)		(12)	77
Net loss	$ (1,268)		$ (1,043)		$ (1,060)		$ (1,170)		$ (1,748)		$ (1,502)		$ (1,494)		$ (1,632)		$ (4,541)	$ (6,376)
Basic net loss per common share	$ (0.10)	[1]	$ (0.08)	[1]	$ (0.08)	[1]	$ (0.09)	[1]	$ (0.15)	[1]	$ (0.13)	[1]	$ (0.13)	[1]	$ (0.15)	[1]	$ (0.35)	$ (0.57)
Diluted net loss per common share	$ (0.10)	[1]	$ (0.08)	[1]	$ (0.08)	[1]	$ (0.09)	[1]	$ (0.15)	[1]	$ (0.13)	[1]	$ (0.13)	[1]	$ (0.15)	[1]	$ (0.35)	$ (0.57)
[1]	Net income (loss) per common share is computed independently for each of the quarters presented. Therefore, the sums of quarterly net income (loss) per common share amounts do not necessarily equal the total for the twelve month periods presented.

19. Quarterly Financial Infor83

19. Quarterly Financial Information (unaudited) (Details 1) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Allowance for doubtful accounts receivable
Balance at Beginning of Year	$ 68	$ 200
Additions	0	0
Deductions	(9)	(132)
Balance at End of Year	59	68
Deferred income tax asset valuation allowance
Balance at Beginning of Year	11,875	9,839
Additions	1,212	2,036
Deductions	0	0
Balance at End of Year	$ 13,087	$ 11,875