Crexendo (CXDO) 10-Q 30 Apr 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 26, 2019
Document And Entity Information
Entity Registrant Name	Crexendo, Inc.
Entity Central Index Key	0001075736
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		14,399,109
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 2,094	$ 1,849
Restricted cash	100	100
Trade receivables, net of allowance for doubtful accounts of $12 as of March 31, 2019 and $14 as of December 31, 2018	586	419
Contract assets	16	12
Inventories	340	270
Equipment financing receivables	73	67
Contract costs	418	371
Prepaid expenses	183	244
Income tax receivable	0	1
Total current assets	3,810	3,333
Long-term trade receivables, net of allowance for doubtful accounts of $0 as of March 31, 2019 and December 31, 2018	8	10
Long term equipment financing receivables	272	184
Property and equipment, net	115	124
Operating lease right-of-use assets	1,031	0
Intangible assets, net	154	167
Goodwill	272	272
Contract costs, net of current portion	338	342
Other long-term assets	102	117
Total assets	6,102	4,549
Current liabilities:
Accounts payable	149	155
Accrued expenses	1,275	1,131
Finance leases	26	28
Notes payable	16	56
Operating lease liabilities	238	0
Income taxes payable	2	0
Contract liabilities	698	641
Total current liabilities	2,404	2,011
Contract liabilities, net of current portion	466	422
Finance leases, net of current portion	109	116
Operating lease liabilities, net of current portion	793	0
Total liabilities	3,772	2,549
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, 14,396,607 shares issued and outstanding as of March 31, 2019 and 14,394,113 shares issued and outstanding as of December 31, 2018	14	14
Additional paid-in capital	61,244	61,153
Accumulated deficit	(58,928)	(59,167)
Total stockholders' equity	2,330	2,000
Total liabilities and stockholders' equity	$ 6,102	$ 4,549

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Assets
Allowance for doubtful accounts - trade receivables	$ 12	$ 14
Allowance for doubtful accounts - long-term trade receivables	$ 0	$ 0
Stockholders equity
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, issued	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	25,000,000	25,000,000
Common stock, issued	14,396,607	14,394,113
Common stock, outstanding	14,396,607	14,394,113

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Service revenue	$ 3,008	$ 2,442
Product revenue	484	366
Total revenue	3,492	2,808
Operating expenses:
Cost of service revenue	877	729
Cost of product revenue	249	187
Selling and marketing	899	829
General and administrative	1,014	945
Research and development	212	181
Total operating expenses	3,251	2,871
Income/(loss) from operations	241	(63)
Other income/(expense):
Interest income	1	2
Interest expense	(5)	(1)
Other income, net	5	3
Total other income, net	1	4
Income/(loss) before income tax	242	(59)
Income tax provision	(3)	(4)
Net income/(loss)	$ 239	$ (63)
Earnings/(loss) per common share:
Basic	$ 0.02	$ 0
Diluted	$ 0.02	$ 0
Weighted-average common shares outstanding:
Basic	14,394,645	14,287,734
Diluted	15,139,858	14,287,734

Condensed Consolidated Statem_2

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance, amount at Dec. 31, 2017	$ 14	$ 60,560	$ (58,944)	$ 1,630
Beginning balance, shares at Dec. 31, 2017	14,287,556
Share-based compensation		62		62
Issuance of common stock for exercise of stock option, amount		2		2
Issuance of common stock for exercise of stock option, shares	1,100
Net loss			(63)	(63)
Ending balance, amount at Mar. 31, 2018	$ 14	60,624	(59,007)	1,631
Ending balance, shares at Mar. 31, 2018	14,288,656
Beginning balance, amount at Dec. 31, 2018	$ 14	61,153	(59,167)	2,000
Beginning balance, shares at Dec. 31, 2018	14,394,113
Share-based compensation		91	0	91
Vesting of restricted stock units	2,494
Net loss			239	239
Ending balance, amount at Mar. 31, 2019	$ 14	$ 61,244	$ (58,928)	$ 2,330
Ending balance, shares at Mar. 31, 2019	14,396,607

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ 239	$ (63)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	22	19
Share-based compensation	91	62
Changes in assets and liabilities:
Trade receivables	(165)	11
Contract assets	(4)	(1)
Equipment financing receivables	(94)	27
Inventories	(70)	(59)
Contract costs	(43)	(4)
Prepaid expenses	61	(165)
Income tax receivable	1	0
Other assets	15	2
Accounts payable and accrued expenses	138	95
Income tax payable	2	4
Contract liabilities	101	(55)
Net cash provided by operating activities	294	(127)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash provided by investing activities	0	0
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments made on finance leases	(9)	0
Repayments made on notes payable	(40)	(40)
Proceeds from exercise of options	0	2
Net cash provided by financing activities	(49)	(38)
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	245	(165)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT THE BEGINNING OF THE PERIOD	1,949	1,382
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT THE END OF THE PERIOD	2,194	1,217
Supplemental disclosure of non-cash investing and financing information:
Cash used during the year for: Interest expense	$ (5)	$ (1)

1. Significant Accounting Polic

1. Significant Accounting Policies	3 Months Ended
	Mar. 31, 2019
Significant Accounting Policies
Significant Accounting Policies	Description of Business - 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 The following table provides a reconciliation of cash and cash equivalents and restricted cash reported on the balance sheet to the cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows (in thousands): March 31, March 31, 2019 2018 Cash and cash equivalents $ 2,094,000 $ 1,117,000 Restricted cash 100,000 100,000 Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows $ 2,194,000 $ 1,217,000 Trade Receivables Allowance for Doubtful Accounts Contract Assets Contract Costs - Inventory 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 the statement of operations. Goodwill Intangible Assets Contract Liabilities Use of Estimates - Product and Service Revenue Recognition - Cost of Service Revenue Cost of Product Revenue Product Warranty – 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 Lease Obligations ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. A lease that transfers substantially all of the benefits and risks incidental to ownership of property are accounted for as finance leases. At the inception of a finance lease, an asset and finance lease obligation is recorded at an amount equal to the lesser of the present value of the minimum lease payments and the property’s fair market value. Finance lease obligations are classified as either current or long-term based on the due dates of future minimum lease payments, net of interest. Notes Payable Income Taxes - Interest and penalties associated with income taxes are classified as income tax expense in the condensed consolidated statements of operations. Stock-Based Compensation - Comprehensive Income/(Loss) Operating Segments Significant Customers Recently Adopted Accounting Pronouncements - Leases Narrow-Scope Improvements for Lessors Codification Improvements to Topic 842, Leases Leases (Topic 842) - Targeted Improvements We adopted Topic 842 as of January 1, 2019, using the alternative transition method that allowed us to recognize a cumulative-effect adjustment to the opening balance of retained earnings at the beginning of the period of adoption. We used the package of practical expedients permitted under the transition guidance that allowed us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. We elected the practical expedient that allows lessees to treat the lease and non-lease components of leases as a single lease component. Additionally, we elected the hindsight practical expedient to determine the reasonably certain lease terms for existing leases. The adoption of Topic 842 did not have a material adjustment to the opening balance of retained earnings. The adoption of Topic 842 had a material impact on our condensed consolidated balance sheet due to the recognition of right-of-use (“ROU”) assets and lease liabilities. As a result of the adoption of the standard, the Company recognized ROU assets and lease liabilities of $1,088,000 as of January 1, 2019. The adoption of Topic 842 did not have a material impact on our condensed consolidated statement of operations or our condensed consolidated statement cash flows. In August 2018, the FASB issued ASU 2018-07, to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The new guidance expands the scope of Accounting Standards Codification (ASC) 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in an entity’s own operations and supersedes the guidance in ASC 505-50. The guidance also applies to awards granted by an investor to employees and nonemployees of an equity method investee for goods or services used or consumed in the investee’s operations. The guidance in ASC 718 does not apply to instruments issued to a lender or an investor in a financing (e.g., in a capital raising) transaction. It also does not apply to equity instruments granted when selling goods or services to customers in the scope of ASC 606. However, the guidance states that share-based payments granted to a customer in exchange for a distinct good or service to be used or consumed in the grantor’s own operations are accounted for under ASC 718. The Company adopted ASU 2018-07 effective January 1, 2019. The adoption of this ASU did not have an impact on our condensed consolidated financial statements. Business Combinations (Topic 805) Clarifying the Definition of a Business In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): , In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718 Recently Issued Accounting Pronouncements - In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350):

2. Changes in Accounting Princi

2. Changes in Accounting Principles	3 Months Ended
	Mar. 31, 2019
Changes In Accounting Principles
Changes in Accounting Principles	Except for the changes below, the Company has consistently applied the accounting principles to all periods presented in these condensed consolidated financial statements. The Company adopted Topic 842, Leases We adopted Topic 842 as of January 1, 2019, using the alternative transition method that allowed us to recognize a cumulative-effect adjustment to the opening balance of retained earnings at the beginning of the period of adoption. We used the package of practical expedients permitted under the transition guidance that allowed us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. We elected the practical expedient that allows lessees to treat the lease and non-lease components of leases as a single lease component. Additionally, we elected the hindsight practical expedient to determine the reasonably certain lease terms for existing leases. The adoption of Topic 842 did not have a material adjustment to the opening balance of retained earnings. The adoption of Topic 842 had a material impact on our condensed consolidated balance sheet due to the recognition of right-of-use (“ROU”) assets and lease liabilities. As a result of the adoption of the standard, the Company recognized ROU assets and lease liabilities of $1,088,000 as of January 1, 2019. The adoption of Topic 842 did not have a material impact on our condensed consolidated statement of operations or our condensed consolidated statement cash flows.

3. Revenue

3. Revenue	3 Months Ended
	Mar. 31, 2019
Revenue
Revenue	Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. The following is a description of principal activities – separated by reportable segments – from which the Company generates its revenue. For more detailed information about reportable segments, see Note 13. Telecommunications Segment Products and services may be sold separately or in bundled packages. The typical length of a contract for service is thirty-six to sixty months. Customers are billed for these services on a monthly basis. For bundled packages, the Company accounts for individual products and services separately if they are distinct – i.e. if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The consideration (including any discounts) is allocated between separate products and services in a bundle based on their relative stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which the Company separately sells the desktop devices and telecommunication services. For items that are not sold separately (e.g. additional features) the Company estimates stand-alone selling prices using the adjusted market assessment approach. When we provide a free trial period, we do not begin to recognize recurring revenue until the trial period has ended and the customer has been billed for the services. Desktop Devices - Equipment Financing Revenue - Cloud Telecommunications Services - Broadband Internet Access Professional Services Revenue Commission Revenue - Web Services Segment Website Hosting Service – Professional Website Management Service and Other Disaggregation of Revenue In the following table, revenue is disaggregated by primary major product line, and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the reportable segments. Three Months Ended March 31, 2019 Cloud Total (In thousands) Telecommunications Web Services Reportable Segment Segment Segments Major products/services lines Desktop devices $ 484 $ - $ 484 Equipment financing revenue 22 - 22 Telecommunications services 2,507 - 2,507 Fees, commissions, and other, recognized over time 191 - 191 One time fees, commissions and other 110 - 110 Website hosting services - 146 146 Website management services and other - 32 32 $ 3,314 $ 178 $ 3,492 Timing of revenue recognition Products and fees recognized at a point in time $ 594 $ - $ 594 Services and fees transferred over time 2,720 178 2,898 $ 3,314 $ 178 $ 3,492 Three Months Ended March 31, 2018 Cloud Total (In thousands) Telecommunications Web Services Reportable Segment Segment Segments Major products/services lines Desktop devices $ 366 $ - $ 366 Equipment financing revenue 31 - 31 Telecommunications services 2,042 - 2,042 Fees, commissions, and other, recognized over time 137 - 137 One time fees, commissions and other 7 - 7 Website hosting services - 204 204 Website management services and other - 21 21 $ 2,583 $ 225 $ 2,808 Timing of revenue recognition Products and fees recognized at a point in time $ 373 $ - $ 373 Services and fees transferred over time 2,210 225 2,435 $ 2,583 $ 225 $ 2,808 Contract balances The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers. March 31, December 31, (In thousands) 2019 2018 Receivables, which are included in Trade receivables, net of allowance for doubtful accounts $ 594 $ 429 Contract assets 16 12 Contract liabilities 1,164 1,063 Significant changes in the contract assets and the contract liabilities balances during the period are as follows: Three Months Ended For the Year Ended (In thousands) March 31, 2019 December 31, 2018 Contract assets Contract Liabilities Contract assets Contract Liabilities Revenue recognized that was included in the contract liability balance at the beginning of the period $ - $ (806 ) $ - $ (837 ) Increase due to cash received, excluding amounts recognized as revenue during the period - 907 - 912 Transferred to receivables from contract assets recognized at the beginning of the period (2 ) - (2 ) - Increase due to additional unamortized discounts 6 - 11 - Transaction price allocated to the remaining performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands): 2019 2020 2021 2022 2023 2024 Total Desktop devices $ 246 - - - - - $ 246 Telecommunications service $ 6,598 7,162 5,293 3,341 1,548 38 $ 23,980 All consideration from contracts with customers is included in the amounts presented above

4. Earnings_(Loss) Per Common S

4. Earnings/(Loss) Per Common Share	3 Months Ended
	Mar. 31, 2019
Earningsloss Per Common Share
Earnings/(Loss) Per Common Share	Basic earnings/(loss) per common share is computed by dividing the net income/(loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings/(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 three months ended March 31, 2018 is the same as basic net loss per common share because the common share equivalents were anti-dilutive due to the net loss. The following table sets forth the computation of basic and diluted earnings/(loss) per common share: Three Months Ended March 31, 2019 2018 Net income/(loss) (in thousands) (A) $ 239 $ (63 ) Weighted-average share reconciliation: Weighted-average basic shares outstanding (B) 14,394,645 14,287,734 Dilutive effect of stock-based awards 745,213 - Diluted shares outstanding (C) 15,139,858 14,287,734 Net income/(loss) per common share: Basic (A/B) $ 0.02 $ (0.00 ) Diluted (A/C) $ 0.02 $ (0.00 ) For the three months ended March 31, 2018, 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 March 31, 2019 and 2018, the common stock equivalent shares were, as follows: March 31, March 31, 2019 2018 Shares of common stock issuable under equity incentive plans outstanding 3,848,393 3,842,428 Common stock equivalent shares excluded from diluted earnings/(loss) per share 3,848,393 3,842,428

5. Trade Receivables net

5. Trade Receivables net	3 Months Ended
	Mar. 31, 2019
Trade Receivables Net
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 our trade receivables as shown on our balance sheet (in thousands): March 31, December 31, 2019 2018 Gross trade receivables $ 606 $ 443 Less: allowance for doubtful accounts (12 ) (14 ) Trade receivables, net $ 594 $ 429 Current trade receivables, net $ 586 $ 419 Long-term trade receivables, net 8 10 Trade receivables, net $ 594 $ 429

6. Prepaid Expenses

6. Prepaid Expenses	3 Months Ended
	Mar. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid Expenses	Prepaid expenses consisted of the following (in thousands): March 31, December 31, 2019 2018 Prepaid corporate insurance $ 17 $ 43 Prepaid software services 36 28 Prepaid tax liability deposit 23 48 Prepaid inventory deposits 26 61 Other prepaid expenses 81 64 Total prepaid expenses $ 183 $ 244

7. Intangible Assets

7. Intangible Assets	3 Months Ended
	Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	The net carrying amount of intangible assets are as follows (in thousands): March 31, December 31, 2019 2018 Customer relationships $ 941 $ 941 Less: accumulated amortization (787 ) (774 ) Total $ 154 $ 167 Amortization expense is included in general and administrative expenses and totaled $13,000 and $18,000 for the three months ended March 31, 2019 and 2018, respectively.

8. Accrued Expenses

8. Accrued Expenses	3 Months Ended
	Mar. 31, 2019
Payables and Accruals [Abstract]
Accrued Expenses	Accrued expenses consisted of the following (in thousands): March 31, December 31, 2019 2018 Accrued wages and benefits $ 401 $ 301 Accrued accounts payable 323 243 Accrued sales and telecommunication taxes 477 480 Product warranty liability 16 16 Other 58 91 Total accrued expenses $ 1,275 $ 1,131 The changes in aggregate product warranty liabilities for the year ended December 31, 2018 and three months ended March 31, 2019 were as follows (in thousands): Warranty Liabilities Balance at January 1, 2018 $ - Accrual for warranties 31 Warranty settlements (15 ) Balance at December 31, 2018 16 Accrual for warranties 5 Warranty settlements (5 ) Balance at March 31, 2019 $ 16 Product warranty expense is included in cost of product revenue expense and totaled $5,000 and $5,000 for the three months ended March 31, 2019 and 2018, respectively.

9. Notes Payable

9. Notes Payable	3 Months Ended
	Mar. 31, 2019
Debt Disclosure [Abstract]
Notes Payable	Notes payable consists of short and long-term financing arrangements for software licenses, subscriptions, support, corporate insurance policies, and other. The Company’s outstanding balances under its note payable agreements were $16,000 and $56,000 as of March 31, 2019 and 2018, respectively. As of March 31, 2019, future principal payments are scheduled as follows (in thousands): Year ending December 31, 2019 remaining $ 16 Total $ 16

10. Fair Value Measurements

10. Fair Value Measurements	3 Months Ended
	Mar. 31, 2019
Fair Value Measurements
Fair Value Measurements	We have financial instruments as of March 31, 2019 and December 31, 2018 for which the fair value is summarized below (in thousands): March 31, 2019 December 31, 2018 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Trade receivables, net $ 594 $ 594 $ 429 $ 429 Equipment financing receivables 345 345 251 251 Liabilities: Finance lease obligations $ 135 $ 135 $ 144 $ 144 Notes payable 16 16 56 56

11. Income Taxes

11. Income Taxes	3 Months Ended
	Mar. 31, 2019
Income Taxes
Income Taxes	Our effective tax rate for the three months ended March 31, 2019 and 2018 was (1.4)% and (6.8)%, respectively, which resulted in an income tax provision of $(3,000) and $(4,000), respectively. The tax provision is due to state tax payments made with extensions filed. Significant management judgment is required in determining our provision for income taxes and in determining whether deferred tax assets will be realized in full or in part. 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 assets, projected future taxable income, the suspension of the sale of product and services through the seminar sales channel, 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; accordingly, we recorded a full valuation allowance. Subsequent to placing a full valuation allowance on our net deferred tax assets, adjustments impacting our tax rate have been and are expected to continue to be insignificant.

12. Leases

12. Leases	3 Months Ended
	Mar. 31, 2019
Less: Current portion of finance receivables not billed, net
Leases	Lessee Accounting We determine if an agreement is a lease at inception. We lease our corporate office space and equipment under operating leases. We lease data center equipment, including maintenance contracts under finance leases. Operating leases are recorded as right-of-use (“ROU”) assets and lease liabilities on the balance sheet. ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate at the commencement date to determine the present value of lease payments. The operating lease ROU assets also include any lease payments made and exclude lease incentives. The Company’s lease agreements do not contain any variable lease payments, material residual value guarantees or any restrictive covenants. Our lease terms may include options, at our sole discretion, to extend or terminate the lease. At the adoption date of ASC Topic 842, the Company is reasonably certain that we would exercise our option to renew our corporate office space operating lease. Lease expense is recognized on a straight-line basis over the lease term. We lease the corporate office space in Tempe, Arizona from a Company that is owned by the major shareholder and CEO of the Company. Effective March 1, 2017, the lease agreement was renewed for a three year term with monthly rent payments of $25,000. There is a renewal option for another three year term at the end of the lease that was considered in valuing the ROU asset as we are reasonably certain we would exercise the renewal option. Amortization of the ROU assets and operating lease liabilities for the three months ended March 31, 2019 and 2018 was $57,000 and $0, respectively. Rental expense incurred on operating leases for the three months ended March 31, 2019 and 2018 was approximately $75,000 and $80,000, respectively. We have lease agreements with lease and non-lease components, and we account for the lease and non-lease components as a single lease component. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company leases equipment and support under a finance lease agreement which extends through 2023. The outstanding balance for finance leases was $135,000 and $0 as of March 31, 2019 and 2018, respectively. The Company recorded assets classified as property and equipment under finance lease obligations of $129,000 and $0 as of March 31, 2019 and 2018, respectively. Related accumulated depreciation totaled $22,000 and $0 as of March 31, 2019 and 2018, respectively. The $25,000 support contract was classified as a prepaid expense and is being amortized over the service period of 3 years. Amortization expense is included in general and administrative expenses and totaled $2,000 and $0 for the three months ended March 31, 2019 and 2018, respectively. The interest rate on the finance lease obligation is 6.7% and interest expense was $3,000 and $0 for the three months ended March 31, 2019 and 2018, respectively. The maturity of operating leases and finance lease liabilities as of March 31, 2019 are as follows: Year ending December 31, Operating leases Finance leases 2019 remaining $ 225 $ 24 2020 300 37 2021 300 36 2022 300 37 2023 50 21 Total minimum lease payments 1,175 155 Less: amount representing interest (144 ) (20 ) Present value of minimum lease payments $ 1,031 $ 135 Lease term and discount rate March 31, 2019 Weighted-average remaining lease term (years) Operating leases 3.9 Finance leases 4.3 Weighted-average discount rate Operating leases 6.7 % Finance leases 6.7 % Three Months Ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 75 Operating cash flows from finance leases 3 Financing cash flows from finance leases 9 We adopted ASC Topic 842 utilizing a practical expedient that does not require application to periods prior to adoption. As previously disclosed in our 2018 Annual Report on Form 10-K and under ASC Topic 840, the predecessor to Topic 842, future aggregate minimum lease obligations under the operating lease and sale-leaseback as of December 31, 2018, exclusive of taxes and insurance, are as follows (in thousands): Year ending December 31, 2019 $ 300 2020 50 Total $ 350 Lessor Accounting Lessor accounting remained substantially unchanged with the adoption of ASC Topic 842. Crexendo offers its customers lease financing for the lease of our cloud telecommunication equipment (IP or cloud telephone desktop devices). We account for these transactions as sales-type leases. 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 is recognized ratably over the applicable service period. Future minimum lease payments as of March 31, 2019, consisted of the following: Year ending December 31, Lease Receivables 2019 remaining $ 102 2020 141 2021 131 2022 93 2023 65 2024 5 Gross equipment financing receivables 537 Less: unearned income (192 ) Equipment financing receivables, net $ 345

13. Segments

13. Segments	3 Months Ended
	Mar. 31, 2019
Segments
Segments	Management has chosen to organize the Company around differences based on its products and services. Cloud Telecommunications segment generates revenue from selling cloud telecommunication products and services and broadband Internet services. Web Services segment generates revenue from website hosting and other professional services. The Company has two operating segments, which consist of Cloud Telecommunications and Web Services. Segment revenue and income/(loss) before income tax provision are as follows (in thousands): Three Months Ended March 31, 2019 2018 Revenue: Cloud telecommunications $ 3,314 $ 2,583 Web services 178 225 Consolidated revenue 3,492 2,808 Income/(loss) from operations: Cloud telecommunications 163 (188 ) Web services 78 125 Total operating income/(loss) 241 (63 ) Other income/(expense), net: Cloud telecommunications (3 ) 4 Web services 4 - Total other income, net 1 4 Income/(loss) before income tax provision: Cloud telecommunications 160 (184 ) Web services 82 125 Income/(loss) before income tax provision $ 242 $ (59 ) Depreciation and amortization was $21,000 and $18,000 for the Cloud Telecommunications segment for the three months ended March 31, 2019 and 2018, respectively. Depreciation and amortization was $1,000 and $1,000 for the Web Services segment for the three months ended March 31, 2019 and 2018, respectively. Interest income was $1,000 and $2,000 for the Web Services segment for the three months ended March 31, 2019 and 2018, respectively. Interest expense was $5,000 and $1,000 for the Cloud Telecommunications segment for the three months ended March 31, 2019 and 2018, respectively.

1. Significant Accounting Pol_2

1. Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2019
Significant Accounting Policies Policies Abstract
Description of Business	Description of Business -
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
Restricted Cash	Restricted Cash The following table provides a reconciliation of cash and cash equivalents and restricted cash reported on the balance sheet to the cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows (in thousands): March 31, March 31, 2019 2018 Cash and cash equivalents $ 2,094,000 $ 1,117,000 Restricted cash 100,000 100,000 Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows $ 2,194,000 $ 1,217,000
Trade Receivables	Trade Receivables
Allowance for Doubtful Accounts	Allowance for Doubtful Accounts
Contract Assets	Contract Assets
Contract Costs	Contract Costs -
Inventory	Inventory
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 the statement of operations.
Goodwill	Goodwill
Intangible Assets	Intangible Assets
Contract Liabilities	Contract Liabilities
Use of Estimates	Use of Estimates -
Product and Service Revenue Recognition	Product and Service Revenue Recognition -
Cost of Service Revenue	Cost of Service Revenue
Cost of Product Revenue	Cost of Product Revenue
Product Warranty	Product Warranty –
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
Lease Obligations	Lease Obligations ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. A lease that transfers substantially all of the benefits and risks incidental to ownership of property are accounted for as finance leases. At the inception of a finance lease, an asset and finance lease obligation is recorded at an amount equal to the lesser of the present value of the minimum lease payments and the property’s fair market value. Finance lease obligations are classified as either current or long-term based on the due dates of future minimum lease payments, net of interest.
Notes Payable	Notes Payable
Income Taxes	Income Taxes - Interest and penalties associated with income taxes are classified as income tax expense in the condensed consolidated statements of operations.
Stock-Based Compensation	Stock-Based Compensation -
Comprehensive Income/(Loss)	Comprehensive Income/(Loss)
Operating Segments	Operating Segments
Significant Customers	Significant Customers
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements - Leases Narrow-Scope Improvements for Lessors Codification Improvements to Topic 842, Leases Leases (Topic 842) - Targeted Improvements We adopted Topic 842 as of January 1, 2019, using the alternative transition method that allowed us to recognize a cumulative-effect adjustment to the opening balance of retained earnings at the beginning of the period of adoption. We used the package of practical expedients permitted under the transition guidance that allowed us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. We elected the practical expedient that allows lessees to treat the lease and non-lease components of leases as a single lease component. Additionally, we elected the hindsight practical expedient to determine the reasonably certain lease terms for existing leases. The adoption of Topic 842 did not have a material adjustment to the opening balance of retained earnings. The adoption of Topic 842 had a material impact on our condensed consolidated balance sheet due to the recognition of right-of-use (“ROU”) assets and lease liabilities. As a result of the adoption of the standard, the Company recognized ROU assets and lease liabilities of $1,088,000 as of January 1, 2019. The adoption of Topic 842 did not have a material impact on our condensed consolidated statement of operations or our condensed consolidated statement cash flows. In August 2018, the FASB issued ASU 2018-07, to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The new guidance expands the scope of Accounting Standards Codification (ASC) 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in an entity’s own operations and supersedes the guidance in ASC 505-50. The guidance also applies to awards granted by an investor to employees and nonemployees of an equity method investee for goods or services used or consumed in the investee’s operations. The guidance in ASC 718 does not apply to instruments issued to a lender or an investor in a financing (e.g., in a capital raising) transaction. It also does not apply to equity instruments granted when selling goods or services to customers in the scope of ASC 606. However, the guidance states that share-based payments granted to a customer in exchange for a distinct good or service to be used or consumed in the grantor’s own operations are accounted for under ASC 718. The Company adopted ASU 2018-07 effective January 1, 2019. The adoption of this ASU did not have an impact on our condensed consolidated financial statements. Business Combinations (Topic 805) Clarifying the Definition of a Business In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): , In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements - In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350):

1. Significant Accounting Pol_3

1. Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2019
Significant Accounting Policies Tables Abstract
Restricted cash	March 31, March 31, 2019 2018 Cash and cash equivalents $ 2,094,000 $ 1,117,000 Restricted cash 100,000 100,000 Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows $ 2,194,000 $ 1,217,000
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

3. Revenue (Tables)

3. Revenue (Tables)	3 Months Ended
	Mar. 31, 2019
Revenue Tables Abstract
Disaggregation of revenue	Three Months Ended March 31, 2019 Cloud Total (In thousands) Telecommunications Web Services Reportable Segment Segment Segments Major products/services lines Desktop devices $ 484 $ - $ 484 Equipment financing revenue 22 - 22 Telecommunications services 2,507 - 2,507 Fees, commissions, and other, recognized over time 191 - 191 One time fees, commissions and other 110 - 110 Website hosting services - 146 146 Website management services and other - 32 32 $ 3,314 $ 178 $ 3,492 Timing of revenue recognition Products and fees recognized at a point in time $ 594 $ - $ 594 Services and fees transferred over time 2,720 178 2,898 $ 3,314 $ 178 $ 3,492 Three Months Ended March 31, 2018 Cloud Total (In thousands) Telecommunications Web Services Reportable Segment Segment Segments Major products/services lines Desktop devices $ 366 $ - $ 366 Equipment financing revenue 31 - 31 Telecommunications services 2,042 - 2,042 Fees, commissions, and other, recognized over time 137 - 137 One time fees, commissions and other 7 - 7 Website hosting services - 204 204 Website management services and other - 21 21 $ 2,583 $ 225 $ 2,808 Timing of revenue recognition Products and fees recognized at a point in time $ 373 $ - $ 373 Services and fees transferred over time 2,210 225 2,435 $ 2,583 $ 225 $ 2,808
Contract balances	March 31, December 31, (In thousands) 2019 2018 Receivables, which are included in Trade receivables, net of allowance for doubtful accounts $ 594 $ 429 Contract assets 16 12 Contract liabilities 1,164 1,063
Significant changes in the contract assets and liabilities	Three Months Ended For the Year Ended (In thousands) March 31, 2019 December 31, 2018 Contract assets Contract Liabilities Contract assets Contract Liabilities Revenue recognized that was included in the contract liability balance at the beginning of the period $ - $ (806 ) $ - $ (837 ) Increase due to cash received, excluding amounts recognized as revenue during the period - 907 - 912 Transferred to receivables from contract assets recognized at the beginning of the period (2 ) - (2 ) - Increase due to additional unamortized discounts 6 - 11 -
Performance obligations	2019 2020 2021 2022 2023 2024 Total Desktop devices $ 246 - - - - - $ 246 Telecommunications service $ 6,598 7,162 5,293 3,341 1,548 38 $ 23,980 All consideration from contracts with customers is included in the amounts presented above

4. Earnings_(Loss) Per Common_2

4. Earnings/(Loss) Per Common Share (Tables)	3 Months Ended
	Mar. 31, 2019
Earningsloss Per Common Share
Basic and diluted net income (loss) per common share	Three Months Ended March 31, 2019 2018 Net income/(loss) (in thousands) (A) $ 239 $ (63 ) Weighted-average share reconciliation: Weighted-average basic shares outstanding (B) 14,394,645 14,287,734 Dilutive effect of stock-based awards 745,213 - Diluted shares outstanding (C) 15,139,858 14,287,734 Net income/(loss) per common share: Basic (A/B) $ 0.02 $ (0.00 ) Diluted (A/C) $ 0.02 $ (0.00 )
Antidilutive securities excluded from earnings	March 31, March 31, 2019 2018 Shares of common stock issuable under equity incentive plans outstanding 3,848,393 3,842,428 Common stock equivalent shares excluded from diluted earnings/(loss) per share 3,848,393 3,842,428

5. Trade Receivables, net (Tabl

5. Trade Receivables, net (Tables)	3 Months Ended
	Mar. 31, 2019
Trade Receivables Net Tables Abstract
Trade receivables, net	March 31, December 31, 2019 2018 Gross trade receivables $ 606 $ 443 Less: allowance for doubtful accounts (12 ) (14 ) Trade receivables, net $ 594 $ 429 Current trade receivables, net $ 586 $ 419 Long-term trade receivables, net 8 10 Trade receivables, net $ 594 $ 429

6. Prepaid Expenses (Tables)

6. Prepaid Expenses (Tables)	3 Months Ended
	Mar. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid expenses	March 31, December 31, 2019 2018 Prepaid corporate insurance $ 17 $ 43 Prepaid software services 36 28 Prepaid tax liability deposit 23 48 Prepaid inventory deposits 26 61 Other prepaid expenses 81 64 Total prepaid expenses $ 183 $ 244

7. Intangible Assets (Tables)

7. Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible assets	March 31, December 31, 2019 2018 Customer relationships $ 941 $ 941 Less: accumulated amortization (787 ) (774 ) Total $ 154 $ 167

8. Accrued Expenses (Tables)

8. Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2019
Payables and Accruals [Abstract]
Accrued expenses	March 31, December 31, 2019 2018 Accrued wages and benefits $ 401 $ 301 Accrued accounts payable 323 243 Accrued sales and telecommunication taxes 477 480 Product warranty liability 16 16 Other 58 91 Total accrued expenses $ 1,275 $ 1,131
Product warranty liabilities	Warranty Liabilities Balance at January 1, 2018 $ - Accrual for warranties 31 Warranty settlements (15 ) Balance at December 31, 2018 16 Accrual for warranties 5 Warranty settlements (5 ) Balance at March 31, 2019 $ 16

9. Notes Payable (Tables)

9. Notes Payable (Tables)	3 Months Ended
	Mar. 31, 2019
Debt Disclosure [Abstract]
Summary of note payable	Year ending December 31, 2019 remaining $ 16 Total $ 16

10. Fair Value Measurements (Ta

10. Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2019
Fair Value Measurements Tables Abstract
Financial instruments	March 31, 2019 December 31, 2018 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Trade receivables, net $ 594 $ 594 $ 429 $ 429 Equipment financing receivables 345 345 251 251 Liabilities: Finance lease obligations $ 135 $ 135 $ 144 $ 144 Notes payable 16 16 56 56

12. Leases (Tables)

12. Leases (Tables)	3 Months Ended
	Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Future aggregate minimum lease obligations under capital leases	Year ending December 31, Operating leases Finance leases 2019 remaining $ 225 $ 24 2020 300 37 2021 300 36 2022 300 37 2023 50 21 Total minimum lease payments 1,175 155 Less: amount representing interest (144 ) (20 ) Present value of minimum lease payments $ 1,031 $ 135
Lease term and discount	Lease term and discount rate March 31, 2019 Weighted-average remaining lease term (years) Operating leases 3.9 Finance leases 4.3 Weighted-average discount rate Operating leases 6.7 % Finance leases 6.7 %
Cash paid for amounts included in the measurement of lease liabilities	Three Months Ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 75 Operating cash flows from finance leases 3 Financing cash flows from finance leases 9
Operating lease and sale-leaseback	Year ending December 31, 2019 $ 300 2020 50 Total $ 350
Future aggregate minimum lease obligations under operating leases	Year ending December 31, 2019 $ 300 2020 50 Total $ 350

13. Segments (Tables)

13. Segments (Tables)	3 Months Ended
	Mar. 31, 2019
Notes to Financial Statements
Information on reportable segments and reconciliation to condensed consolidated net (loss) income	Three Months Ended March 31, 2019 2018 Revenue: Cloud telecommunications $ 3,314 $ 2,583 Web services 178 225 Consolidated revenue 3,492 2,808 Income/(loss) from operations: Cloud telecommunications 163 (188 ) Web services 78 125 Total operating income/(loss) 241 (63 ) Other income/(expense), net: Cloud telecommunications (3 ) 4 Web services 4 - Total other income, net 1 4 Income/(loss) before income tax provision: Cloud telecommunications 160 (184 ) Web services 82 125 Income/(loss) before income tax provision $ 242 $ (59 )

1. Significant Accounting Pol_4

1. Significant Accounting Policies (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Significant Accounting Policies Details Abstract
Cash and cash equivalents	$ 2,094	$ 1,849
Restricted cash	100	100
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows	$ 2,194	$ 1,949	$ 1,217	$ 1,382

1. Significant Accounting Pol_5

1. Significant Accounting Policies (Details 1)	3 Months Ended
	Mar. 31, 2019
Computer and office equipment | Minimum
Depreciable lives	2 years
Computer and office equipment | Maximum
Depreciable lives	5 years
Computer software
Depreciable lives	3 years
Furniture and fixtures
Depreciable lives	4 years
Leasehold improvements | Minimum
Depreciable lives	2 years
Leasehold improvements | Maximum
Depreciable lives	5 years

1. Significant Accounting Pol_6

1. Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Significant Accounting Policies Details Narrative Abstract
Cash equivalents in financial institutions in excess of federally insured limits	$ 1,991		$ 1,645
Restricted cash	100		100
Capitalized contract costs	756		$ 713
Capitalized contract costs amortization	115	$ 112
Depreciation expense included in general and administrative expense	$ 8	$ 1

3. Revenue (Details)

3. Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue	$ 3,492	$ 2,808
Desktop devices
Revenue	484	366
Equipment financing revenue
Revenue	22	31
Telecommunications services
Revenue	2,507	2,042
Fees, commissions, and other, recognized over time
Revenue	191	137
One time fees, commissions and other
Revenue	110	7
Website hosting services
Revenue	146	204
Website management services and other
Revenue	32	21
Products and fees recognized at a point in time
Revenue	594	373
Services and fees transferred over time
Revenue	2,898	2,435
Cloud Telecommunications Segment
Revenue	3,314	2,583
Cloud Telecommunications Segment | Desktop devices
Revenue	484	366
Cloud Telecommunications Segment | Equipment financing revenue
Revenue	22	31
Cloud Telecommunications Segment | Telecommunications services
Revenue	2,507	2,042
Cloud Telecommunications Segment | Fees, commissions, and other, recognized over time
Revenue	191	137
Cloud Telecommunications Segment | One time fees, commissions and other
Revenue	110	7
Cloud Telecommunications Segment | Website hosting services
Revenue	0	0
Cloud Telecommunications Segment | Website management services and other
Revenue	0	0
Cloud Telecommunications Segment | Products and fees recognized at a point in time
Revenue	594	373
Cloud Telecommunications Segment | Services and fees transferred over time
Revenue	2,720	2,210
Web Services Segment
Revenue	178	225
Web Services Segment | Desktop devices
Revenue	0	0
Web Services Segment | Equipment financing revenue
Revenue	0	0
Web Services Segment | Telecommunications services
Revenue	0	0
Web Services Segment | Fees, commissions, and other, recognized over time
Revenue	0	0
Web Services Segment | One time fees, commissions and other
Revenue	0	0
Web Services Segment | Website hosting services
Revenue	146	204
Web Services Segment | Website management services and other
Revenue	32	21
Web Services Segment | Products and fees recognized at a point in time
Revenue	0	0
Web Services Segment | Services and fees transferred over time
Revenue	$ 178	$ 225

3. Revenue (Details 1)

3. Revenue (Details 1) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Revenue Details 1Abstract
Receivables, which are included in Trade receivables, net of allowance for doubtful accounts	$ 594	$ 429
Contract assets	16	12
Contract liabilities	$ 1,164	$ 1,063

3. Revenue (Details 2)

3. Revenue (Details 2) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Contract Assets
Revenue recognized that was included in the contract liability balance at the beginning of the period	$ 0	$ 0
Increase due to cash received, excluding amounts recognized as revenue during the period	0	0
Transferred to receivables from contract assets recognized at the beginning of the period	(2)	(2)
Increase due to additional unamortized discounts	6	11
Contract Liabilities
Revenue recognized that was included in the contract liability balance at the beginning of the period	(806)	(837)
Increase due to cash received, excluding amounts recognized as revenue during the period	907	912
Transferred to receivables from contract assets recognized at the beginning of the period	0	0
Increase due to additional unamortized discounts	$ 0	$ 0

3. Revenue (Details 3)

3. Revenue (Details 3) $ in Thousands	Mar. 31, 2019USD ($)
Desktop devices
2019	$ 246
2020	0
2021	0
2022	0
2023	0
2024	0
Total	246
Telecommunications services
2019	6,598
2020	7,162
2021	5,293
2022	3,341
2023	1,548
2024	38
Total	$ 23,980

4. Earnings_(Loss) Per Common_3

4. Earnings/(Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net Income Loss Per Common Share Details Abstract
Net income/(loss)	$ 239	$ (63)
Weighted-average share reconciliation:
Weighted-average basic shares outstanding	14,394,645	14,287,734
Dilutive effect of stock-based awards	745,213	0
Diluted shares outstanding	15,139,858	14,287,734
Net income/(loss) per common share:
Basic	$ 0.02	$ 0
Diluted	$ 0.02	$ 0

4. Earnings_(Loss) Per Common_4

4. Earnings/(Loss) Per Common Share (Details 1) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Shares excluded from earnings	3,848,393	3,842,428
Equity incentive plans
Shares excluded from earnings	3,848,393	3,842,428

5. Trade Receivables, net (Deta

5. Trade Receivables, net (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Trade Receivables Net Details Abstract
Gross trade receivables	$ 606	$ 443
Less allowance for doubtful accounts	(12)	(14)
Trade receivables, net	594	429
Current trade receivables, net	586	419
Long-term trade receivables, net	8	10
Trade receivables, net	$ 594	$ 429

6. Prepaid Expenses (Details)

6. Prepaid Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid corporate insurance	$ 17	$ 43
Prepaid software services	36	28
Prepaid tax liability deposit	23	48
Prepaid inventory deposits	26	61
Other prepaid expenses	81	64
Total prepaid assets	$ 183	$ 244

7. Intangible Assets (Details)

7. Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Less accumulated amortization	$ (787)	$ (774)
Carrying amount of intangible, Net	154	167
Customer Relationships [Member]
Carrying amount of intangible, Gross	$ 941	$ 941

7. Intangible Assets (Details N

7. Intangible Assets (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Intangible Assets Details Narrative Abstract
Amortization expense	$ 13	$ 18

8. Accrued Expenses (Details)

8. Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Payables and Accruals [Abstract]
Accrued wages and benefits	$ 401	$ 301
Accrued accounts payable	323	243
Accrued sales and telecommunications taxes	477	480
Product warranty liability	16	16	$ 16	$ 0
Other	58	91
Total accrued expenses	$ 1,275	$ 1,131

8. Accrued Expenses (Details 1)

8. Accrued Expenses (Details 1) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Accrued Expenses Details 1Abstract
Beginning balance	$ 16	$ 0
Accrual for warranties	5	31
Warranty settlements	(5)	(15)
Ending balance	$ 16	$ 16

9. Notes Payable (Details)

9. Notes Payable (Details) $ in Thousands	Mar. 31, 2019USD ($)
Notes Payable Details 1Abstract
2019	$ 16
Total	$ 16

10. Fair Value Measurements (De

10. Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Carrying Value [Member]
Assets:
Trade receivables, net	$ 594	$ 429
Equipment financing receivables	345	251
Liabilities:
Finance lease obligations	135	144
Notes payable	16	56
Estimated Fair Value [Member]
Assets:
Trade receivables, net	594	429
Equipment financing receivables	345	251
Liabilities:
Finance lease obligations	135	144
Notes payable	$ 16	$ 56

11. Income Taxes (Details Narra

11. Income Taxes (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Taxes Details Textuals Abstract
Effective tax rate	(1.40%)	(6.80%)
Income tax provision	$ (3)	$ (4)

12. Leases (Details)

12. Leases (Details) $ in Thousands	Mar. 31, 2019USD ($)
2020	$ 50
Total	350
Operating leases
2019	225
2020	300
2021	300
2022	300
2023	50
Total	1,175
Less: amount representing interest	(144)
Present value of minimum lease payments	1,031
Finance leases
2019	24
2020	37
2021	36
2022	37
2023	21
Total	155
Less: amount representing interest	(20)
Present value of minimum lease payments	$ 135

12. Leases (Details 1)

12. Leases (Details 1)	Mar. 31, 2019
Leases Details 1Abstract
Weighted-average remaining lease term - operating leases	3 years 10 months 24 days
Weighted-average remaining lease term - finance leases	4 years 3 months 18 days
Weighted-average discount rate - operating leases	6.70%
Weighted-average discount rate- finance leases	6.70%

12. Leases (Details 2)

12. Leases (Details 2) $ in Thousands	3 Months Ended
	Mar. 31, 2019USD ($)
Leases Details 2Abstract
Operating cash flows from operating leases	$ 75
Operating cash flows from finance leases	3
Financing cash flows from finance leases	$ 9

12. Leases (Details 3)

12. Leases (Details 3) $ in Thousands	Mar. 31, 2019USD ($)
Leases Details 3Abstract
2019	$ 300
2020	50
Total	$ 350

12. Leases (Details 4)

12. Leases (Details 4) $ in Thousands	Mar. 31, 2019USD ($)
Leases Details 4Abstract
2019 remaining	$ 102
2020	141
2021	131
2022	93
2023	65
2024	5
Gross equipment financing receivables	537
Less: unearned income	(192)
Equipment financing receivables, net	$ 345

13. Segments (Details)

13. Segments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Information
Revenue	$ 3,492	$ 2,808
Income/(loss) from operations	241	(63)
Other income/(loss), net	1	4
Income/(loss) before income tax provision	242	(59)
Cloud telecommunications
Segment Information
Revenue	3,314	2,583
Income/(loss) from operations	163	(188)
Other income/(loss), net	(3)	4
Income/(loss) before income tax provision	160	(184)
Web Services
Segment Information
Revenue	178	225
Income/(loss) from operations	78	125
Other income/(loss), net	4	0
Income/(loss) before income tax provision	$ 82	$ 125

13. Segments (Details Narrative

13. Segments (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest expense	$ 5	$ 1
Cloud telecommunications
Depreciation and amortization	21	18
Interest expense	5	1
Web Services
Depreciation and amortization	1	1
Interest income	$ 1	$ 2