Crexendo (CXDO) 10-Q 10 Nov 20 2020 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Oct. 31, 2020
Cover [Abstract]
Entity Registrant Name	Crexendo, Inc.
Entity Central Index Key	0001075736
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
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 Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	NV
Entity File Number	001-32277
Entity Common Stock, Shares Outstanding		17,963,234
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 15,353	$ 4,180
Restricted cash	100	100
Trade receivables, net of allowance for doubtful accounts of $50 as of September 30, 2020 and $14 as of December 31, 2019	632	380
Contract assets	94	22
Inventories	263	382
Equipment financing receivables	253	143
Contract costs	403	379
Prepaid expenses	332	141
Income tax receivable	0	4
Total current assets	17,430	5,731
Long-term trade receivables, net of allowance for doubtful accounts of $0 as of September 30, 2020 and December 31, 2019	2	6
Long term equipment financing receivables, net	846	561
Property and equipment, net	2,772	155
Operating lease right-of-use assets	1	51
Intangible assets, net	275	465
Goodwill	272	272
Contract costs, net of current portion	512	436
Other long-term assets	152	106
Total assets	22,262	7,783
Current liabilities:
Accounts payable	214	86
Accrued expenses	1,570	1,754
Finance leases	31	30
Notes payable	1,071	0
Operating lease liabilities	0	50
Income tax payable	5	0
Contingent consideration	0	175
Contract liabilities	783	791
Total current liabilities	3,674	2,886
Contract liabilities, net of current portion	63	423
Finance leases, net of current portion	450	86
Notes payable, net of current portion	1,891	0
Operating lease liabilities, net of current portion	1	1
Total liabilities	6,079	3,396
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, 17,536,891 shares issued and outstanding as of September 30, 2020 and 14,884,755 shares issued and outstanding as of December 31, 2019	18	15
Additional paid-in capital	73,414	62,400
Accumulated deficit	(57,249)	(58,028)
Total stockholders' equity	16,183	4,387
Total liabilities and stockholders' equity	$ 22,262	$ 7,783

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets
Allowance for doubtful accounts - trade receivables	$ 50	$ 14
Allowance for doubtful accounts - long-term trade receivables	$ 0	$ 0
Stockholders equity
Preferred stock, par value	$ .01	$ 0.01
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized	25,000,000	25,000,000
Common stock, issued	17,536,891	14,884,755
Common stock, outstanding	17,536,891	14,884,755

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total revenue	$ 4,143	$ 3,602	$ 12,064	$ 10,708
Operating expenses:
Selling and marketing	1,051	1,003	3,151	2,865
General and administrative	1,351	1,040	3,585	3,051
Research and development	326	215	840	624
Total operating expenses	3,988	3,266	11,197	9,791
Income from operations	155	336	867	917
Other income/(expense):
Interest income	1	1	3	4
Interest expense	(23)	(1)	(54)	(9)
Other income/(expense), net	1	(2)	(28)	6
Total other income/(expense), net	(21)	(2)	(79)	1
Income before income tax	134	334	788	918
Income tax provision	(3)	0	(9)	(7)
Net income	$ 131	$ 334	$ 779	$ 911
Earnings per common share:
Basic	$ 0.01	$ 0.02	$ 0.05	$ 0.06
Diluted	$ 0.01	$ 0.02	$ 0.05	$ 0.06
Weighted-average common shares outstanding:
Basic	15,244,804	14,663,151	15,058,192	14,507,696
Diluted	17,249,035	15,629,647	16,793,896	15,444,063
Service
Total revenue	$ 3,654	$ 3,259	$ 10,747	$ 9,414
Operating expenses:
Cost of revenue	946	836	2,824	2,587
Product
Total revenue	489	343	1,317	1,294
Operating expenses:
Cost of revenue	$ 314	$ 172	$ 797	$ 664

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, shares at Dec. 31, 2018	14,394,113
Beginning balance, amount at Dec. 31, 2018	$ 14	$ 61,153	$ (59,167)	$ 2,000
Share-based compensation		91		91
Vesting of restricted stock units	2,494
Net income			239	239
Ending balance, shares at Mar. 31, 2019	14,396,607
Ending balance, amount at Mar. 31, 2019	$ 14	61,244	(58,928)	2,330
Beginning balance, shares at Dec. 31, 2018	14,394,113
Beginning balance, amount at Dec. 31, 2018	$ 14	61,153	(59,167)	2,000
Net income				911
Ending balance, shares at Sep. 30, 2019	14,711,474
Ending balance, amount at Sep. 30, 2019	$ 15	61,892	(58,256)	3,651
Beginning balance, shares at Mar. 31, 2019	14,396,607
Beginning balance, amount at Mar. 31, 2019	$ 14	61,244	(58,928)	2,330
Share-based compensation		95		95
Vesting of restricted stock units	7,498
Issuance of common stock for exercise of stock options, shares	177,379
Issuance of common stock for exercise of stock options, amount	$ 1	271		272
Net income			338	338
Ending balance, shares at Jun. 30, 2019	14,581,484
Ending balance, amount at Jun. 30, 2019	$ 15	61,610	(58,590)	3,035
Share-based compensation		107		107
Vesting of restricted stock units	7,496
Issuance of common stock for exercise of stock options, shares	122,494
Issuance of common stock for exercise of stock options, amount		175		175
Net income			334	334
Ending balance, shares at Sep. 30, 2019	14,711,474
Ending balance, amount at Sep. 30, 2019	$ 15	61,892	(58,256)	3,651
Beginning balance, shares at Dec. 31, 2019	14,884,755
Beginning balance, amount at Dec. 31, 2019	$ 15	62,400	(58,028)	4,387
Share-based compensation		105		105
Vesting of restricted stock units	7,498
Issuance of common stock for exercise of stock options, shares	49,200
Issuance of common stock for exercise of stock options, amount		84		84
Net income			140	140
Ending balance, shares at Mar. 31, 2020	14,941,453
Ending balance, amount at Mar. 31, 2020	$ 15	62,589	(57,888)	4,716
Beginning balance, shares at Dec. 31, 2019	14,884,755
Beginning balance, amount at Dec. 31, 2019	$ 15	62,400	(58,028)	4,387
Net income				779
Ending balance, shares at Sep. 30, 2020	17,536,891
Ending balance, amount at Sep. 30, 2020	$ 18	73,415	(57,249)	16,184
Beginning balance, shares at Mar. 31, 2020	14,941,453
Beginning balance, amount at Mar. 31, 2020	$ 15	62,589	(57,888)	4,716
Share-based compensation		136		136
Vesting of restricted stock units	15,363
Issuance of common stock for exercise of stock options, shares	143,448
Issuance of common stock for exercise of stock options, amount		414		414
Net income			508	508
Ending balance, shares at Jun. 30, 2020	15,100,264
Ending balance, amount at Jun. 30, 2020	$ 15	63,139	(57,380)	5,774
Share-based compensation		136		136
Vesting of restricted stock units	14,372
Issuance of common stock for exercise of stock options, shares	672,255
Issuance of common stock for exercise of stock options, amount	$ 1	1,509		1,510
Issuance of common stock in connection with an offering, shares	1,750,000
Issuance of common stock in connection with an offering, amount	$ 2	8,631		8,633
Net income			131	131
Ending balance, shares at Sep. 30, 2020	17,536,891
Ending balance, amount at Sep. 30, 2020	$ 18	$ 73,415	$ (57,249)	$ 16,184

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 779	$ 911
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	197	69
Share-based compensation	377	293
Changes in assets and liabilities:
Trade receivables	(248)	(11)
Contract assets	(72)	(2)
Equipment financing receivables	(395)	(342)
Inventories	119	108
Contract costs	(100)	(68)
Prepaid expenses	(191)	(157)
Income tax receivable	4	(2)
Other assets	(46)	14
Accounts payable and accrued expenses	(25)	224
Income tax payable	5	0
Contract liabilities	19	120
Net cash provided by operating activities	423	1,157
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(745)	(72)
Acquisition of customer relationship assets	(176)	0
Net cash used for investing activities	(921)	(72)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of contingent consideration	(54)	0
Repayments made on finance leases	(22)	(21)
Proceeds from notes payable	1,001	0
Repayments made on notes payable	(39)	(52)
Proceeds from exercise of options	2,007	447
Proceeds from issuance of common stock in connection with an offering	8,778	0
Net cash provided by financing activities	11,671	374
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	11,173	1,459
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT THE BEGINNING OF THE PERIOD	4,280	1,949
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT THE END OF THE PERIOD	15,453	3,408
Supplemental disclosure of cash flow information:
Cash used during the year for: Income taxes, net	0	(9)
Cash used during the year for: interest expense	(54)	(9)
Supplemental disclosure of non-cash investing and financing information
Purchase of property and equipment with a note payable	2,000	0
Adjustment to intangible assets and contingent consideration of customer relationship asset acquisition	(121)	0
Deferred offering costs, in accounts payable and accrued expenses but not yet paid	$ (145)	$ 0

1. Significant Accounting Polic

1. Significant Accounting Policies	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Significant Accounting Policies	Description of Business – Basis of Presentation – 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): September 30, September 30, 2020 2019 Cash and cash equivalents $ 15,353 $ 3,308 Restricted cash 100 100 Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows $ 15,453 $ 3,408 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 Building 39 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. Asset Acquisitions – Goodwill – Intangible Assets – Contract Liabilities – Use of Estimates – C ontingencies – Product and Service Revenue Recognition – Cost of Service Revenue – Cost of Product Revenue – Product Warranty – Contingent Consideration – Public Offering Deferred Offering Costs – 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 consolidated statements of operations. Stock-Based Compensation – Comprehensive Income – Operating Segments – Significant Customers – Recently Adopted Accounting Pronouncements – In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): In February 2016, the FASB issued ASU 2016-02, 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. Recently Issued Accounting Pronouncements – In December 2019, the FASB issued ASU 2019-12 to simplify the accounting in ASC 740, Income Taxes

2. Revenue

2. Revenue	9 Months Ended
	Sep. 30, 2020
Revenues [Abstract]
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 15. Cloud 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 – Fees, Commissions, and Other, Recognized over Time – ● Contracted activation and flash fees – The Company generally allocates a portion of the activation fees to the desktop devices, which is recognized at the time of the installation or customer acceptance, and a portion to the service, which is recognized over the contract term using the straight-line method. ● Non-contracted carrier cost recovery fee – This fee recovers the various costs and expenses that the Company incurs in connection with complying with legal, regulatory, and other requirements, including without limitation federal, state, and local reporting and filing requirements. This fee is assessed as a set percentage of our monthly billing and is recognized monthly. ● Non-contracted administrative fees – Administrative fees are recognized as revenue on a monthly basis. One-Time Fees, Commissions, and Other – ● Contracted professional service revenue – Professional service revenue includes professional installation services, custom integration, and other professional services. The Company typically bills and collects professional service revenue upon entering into a contract with a customer. Professional service revenue is recognized as revenue when the performance obligations are completed. ● Non-contracted cancellation fees – These cancellation fees relate to remaining contractual term buyout payments in connection with early cancellation and are billed and recognized as revenue upon receipt. ● Other non-contracted fees – These fees include disconnect fees, shipping fees, restocking fees, and porting fees. Other non-contracted fees are recognized as revenue upon receipt of payment. 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 September 30, 2020 (In thousands) Cloud Telecommunications Segment Web Services Segment Total Reportable Segments Major products/services lines Desktop devices $ 489 $ - $ 489 Equipment financing revenue 59 - 59 Telecommunications services 3,182 - 3,182 Fees, commissions, and other, recognized over time 244 - 244 One time fees, commissions and other 40 - 40 Website hosting services - 117 117 Website management services and other - 12 12 $ 4,014 $ 129 $ 4,143 Timing of revenue recognition Products and fees recognized at a point in time $ 529 $ - $ 529 Services and fees transferred over time 3,485 129 3,614 $ 4,014 $ 129 $ 4,143 Three Months Ended September 30, 2019 (In thousands) Cloud Telecommunications Segment Web Services Segment Total Reportable Segments Major products/services lines Desktop devices $ 343 $ - $ 343 Equipment financing revenue 30 - 30 Telecommunications services 2,813 - 2,813 Fees, commissions, and other, recognized over time 176 - 176 One time fees, commissions and other 81 - 81 Website hosting services - 146 146 Website management services and other - 13 13 $ 3,443 $ 159 $ 3,602 Timing of revenue recognition Products and fees recognized at a point in time $ 424 $ - $ 424 Services and fees transferred over time 3,019 159 3,178 $ 3,443 $ 159 $ 3,602 Nine Months Ended September 30, 2020 (In thousands) Cloud Telecommunications Segment Web Services Segment Total Reportable Segments Major products/services lines Desktop devices $ 1,317 $ - $ 1,317 Equipment financing revenue 156 - 156 Telecommunications services 9,321 - 9,321 Fees, commissions, and other, recognized over time 726 - 726 One time fees, commissions and other 123 - 123 Website hosting services - 372 372 Website management services and other - 49 49 $ 11,643 $ 421 $ 12,064 Timing of revenue recognition Products and fees recognized at a point in time $ 1,440 $ - $ 1,440 Services and fees transferred over time 10,203 421 10,624 $ 11,643 $ 421 $ 12,064 Nine Months Ended September 30, 2019 (In thousands) Cloud Telecommunications Segment Web Services Segment Total Reportable Segments Major products/services lines Desktop devices $ 1,294 $ - $ 1,294 Equipment financing revenue 79 - 79 Telecommunications services 7,949 - 7,949 Fees, commissions, and other, recognized over time 575 - 575 One time fees, commissions and other 309 - 309 Website hosting services - 444 444 Website management services and other - 58 58 $ 10,206 $ 502 $ 10,708 Timing of revenue recognition Products and fees recognized at a point in time $ 1,603 $ - $ 1,603 Services and fees transferred over time 8,603 502 9,105 $ 10,206 $ 502 $ 10,708 Contract balances The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers. September 30, December 31, (In thousands) 2020 2019 Receivables, which are included in trade receivables, net of allowance for doubtful accounts $ 634 $ 386 Contract assets 94 22 Contract liabilities 1,233 1,214 Significant changes in the contract assets and the contract liabilities balances during the period are as follows: Nine Months Ended For the Year Ended (In thousands) September 30, 2020 December 31, 2019 Contract Assets Contract Liabilities Contract Assets Contract Liabilities Revenue recognized that was included in the contract liability balance at the beginning of the period $ - $ (942 ) $ - $ (882 ) Increase due to cash received, excluding amounts recognized as revenue during the period - 923 - 1,033 Transferred to receivables from contract assets recognized at the beginning of the period (12 ) - (13 ) - Increase due to additional unamortized discounts 84 - 23 - 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): 2020 2021 2022 2023 2024 2025 Total Desktop devices $ 304 - - - - - $ 304 Telecommunications service $ 3,166 9,937 7,057 4,752 2,598 499 $ 28,009 All consideration from contracts with customers is included in the amounts presented above

3. Earnings Per Common Share

3. Earnings Per Common Share	9 Months Ended
	Sep. 30, 2020
Earnings per common share:
Earnings Per Common Share	Basic net income per common share is computed by dividing the net income for the period by the weighted-average number of common shares outstanding during the period. Diluted net income per common share is computed giving effect to all dilutive common stock equivalents, consisting of common stock options. The following table sets forth the computation of basic and diluted net income per common share: Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net income (in thousands) (A) $ 131 $ 334 $ 779 $ 911 Weighted-average share reconciliation: Weighted-average basic shares outstanding (B) 15,244,804 14,663,151 15,058,192 14,507,696 Dilutive effect of stock-based awards 2,004,231 966,496 1,735,704 936,367 Diluted weighted-average outstanding shares of common stock (C) 17,249,035 15,629,647 16,793,896 15,444,063 Earnings per common share: Basic (A/B) $ 0.01 $ 0.02 $ 0.05 $ 0.06 Diluted (A/C) $ 0.01 $ 0.02 $ 0.05 $ 0.06 For the three and nine months ended September 30, 2020 and 2019, the following potentially dilutive common stock, including awards granted under our equity incentive compensation plans, were excluded from the computation of diluted net income per share because including them would be anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Stock options 18,685 1,271,559 91,845 1,662,311

4. Acquisitions

4. Acquisitions	9 Months Ended
	Sep. 30, 2020
Business Combinations [Abstract]
Acquisitions	DoubleHorn, LLC Asset Acquisition On December 31, 2019, the Company acquired certain assets from DoubleHorn, LLC. The aggregate purchase price of approximately $351,000 consisted of $176,000 of cash payable at closing and $175,000 of contingent consideration it estimates will be paid during the six month earn-out period. The Company concluded that the DoubleHorn acquisition met the definition of an asset acquisition under ASU 2017-01, "Clarifying the Definition of a Business", and the cost was allocated to the individual assets acquired and liabilities assumed based on their relative fair values. The customer relationships intangible asset will be amortized over a six year estimated useful life following the pattern of the economic benefits. During the nine month period ended September 30, 2020, $54,000 of contingent consideration was paid in cash and the Company determined that the contingent consideration payable was $121,000 less than initially recorded and recognized a reduction in the cost of the asset acquired. The following table presents the cost of the acquisition and the allocation to assets acquired based upon their relative fair value: Consideration: Cash $ 230 Total consideration $ 230 Recognized amounts of identifiable assets acquired and liabilities assumed: Customer relationships $ 230 Net assets acquired $ 230

5. Trade Receivables, net

5. Trade Receivables, net	9 Months Ended
	Sep. 30, 2020
Accounts Receivable, after Allowance for Credit Loss [Abstract]
Trade Receivables, net	Our trade receivables balance consists of traditional trade receivables. Below is an analysis of our trade receivables as shown on our balance sheet (in thousands): September 30, December 31, 2020 2019 Gross trade receivables $ 684 $ 400 Less: allowance for doubtful accounts (50 ) (14 ) Trade receivables, net $ 634 $ 386 Current trade receivables, net $ 632 $ 380 Long-term trade receivables, net 2 6 Trade receivables, net $ 634 $ 386

6. Prepaid Expenses

6. Prepaid Expenses	9 Months Ended
	Sep. 30, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid Expenses	Prepaid expenses consisted of the following (in thousands): September 30, December 31, 2020 2019 Prepaid corporate insurance $ 87 $ 48 Prepaid software services and support 80 27 Prepaid inventory deposits 90 - Other prepaid expenses 75 66 Total prepaid expenses $ 332 $ 141

7. Property and Equipment

7. Property and Equipment	9 Months Ended
	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
Property and Equipment	Property and equipment consisted of the following (in thousands): September 30, December 31, 2020 2019 Building $ 2,000 $ - Land 500 - Computer and office equipment 1,407 1,388 Computer software 526 346 Internal software 14 - Furniture and fixtures 29 - Leasehold improvements - 85 Less: accumulated depreciation (1,704 ) (1,664 ) Total property and equipment, net $ 2,772 $ 155 Depreciation and amortization expense is included in general and administrative expenses and totaled $34,000 and $12,000 for the three months ended September 30, 2020 and 2019, respectively and $128,000 and $29,000 for the nine months ended September 30, 2020 and 2019, respectively.

8. Intangible Assets

8. Intangible Assets	9 Months Ended
	Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	The net carrying amount of intangible assets are as follows (in thousands): September 30, December 31, 2020 2019 Customer relationships $ 1,171 $ 1,292 Less: accumulated amortization (896 ) (827 ) Total $ 275 $ 465 Amortization expense is included in general and administrative expenses and totaled $23,000 and $13,000 for the three months ended September 30, 2020 and 2019, respectively, and $69,000 and $40,000 for the nine months ended September 30, 2020 and 2019, respectively. During the nine months ended September 30, 2020, we reduced customer relationships by $121,000 due to an adjustment to the total consideration payable under the DoubleHorn customer relationships asset purchase agreement.

9. Accrued Expenses

9. Accrued Expenses	9 Months Ended
	Sep. 30, 2020
Payables and Accruals [Abstract]
Accrued Expenses	Accrued expenses consisted of the following (in thousands): September 30, December 31, 2020 2019 Accrued wages and benefits $ 384 $ 538 Accrued accounts payable 607 566 Accrued sales and telecommunication taxes 393 529 Product warranty liability 47 37 Other 139 84 Total accrued expenses $ 1,570 $ 1,754 The changes in aggregate product warranty liabilities for the year ended December 31, 2019 and nine months ended September 30, 2020 were as follows (in thousands): Warranty Liabilities Balance at January 1, 2019 $ 16 Accrual for warranties 37 Adjustments related to pre-existing warranties 7 Warranty settlements (23 ) Balance at December 31, 2019 37 Accrual for warranties 29 Warranty settlements (19 ) Balance at September 30, 2020 $ 47 Product warranty expense is included in cost of product revenue expense and totaled $11,000 and $4,000 for the three months ended September 30, 2020 and 2019, respectively, and $29,000 and $14,000 for the nine months ended September 30, 2020 and 2019, respectively.

10. Notes Payable

10. Notes Payable	9 Months Ended
	Sep. 30, 2020
Notes Payable [Abstract]
Notes Payable	Notes payable consists of a short and long-term financing arrangements: September 30, December 31, 2020 2019 Notes payable $ 2,962 $ - Less: current notes payable (1,071 ) - Notes payable, net of current portion $ 1,891 $ - On January 27, 2020, we entered into a Fixed Rate Term Loan Agreement with Bank of America, N.A. to finance Two Million Dollars ($2,000,000) to purchase our corporate office building. The Loan Agreement has a term of seven (7) years with monthly payments of Eleven Thousand Eight Hundred Forty-One and 15/100 Dollars ($11,841.15), including interest at 3.67%, beginning on March 1, 2020, secured by the office building. On April 21, 2020, we received a loan from Infinity Bank in the aggregate principal amount of One Million, Six Hundred and Twenty-Six Dollars ($1,000,626), pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted March 27, 2020. The loan bears interest at a rate of 1.00% per annum, payable monthly commencing on November 21, 2020, following an initial deferral period as specified under the PPP. The notes may be prepaid by the applicable Borrower at any time prior to maturity with no prepayment penalties. Proceeds from the loan will be available to fund designated expenses, including certain payroll costs, group health care benefits and other permitted expenses, in accordance with the PPP. Under the terms of the PPP, up to the entire amount of principal and accrued interest may be forgiven to the extent loan proceeds are used for qualifying expenses as described in the CARES Act and applicable implementing guidance issued by the U.S. Small Business Administration under the PPP. The Company will use the entire loan amount for designated qualifying expenses and believes forgiveness will be granted of the respective loan in accordance with the terms of the PPP. As of September 30, 2020, future principal payments are scheduled as follows (in thousands): Year ending December 31, 2020 remaining $ 1,018 2021 71 2022 74 2023 76 2024 79 Thereafter 1,644 Total $ 2,962

11. Fair Value Measurements

11. Fair Value Measurements	9 Months Ended
	Sep. 30, 2020
Fair Value Disclosures [Abstract]
Fair Value Measurements	We have financial instruments as of September 30, 2020 and December 31, 2019 for which the fair value is summarized below (in thousands): September 30, 2020 December 31, 2019 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Trade receivables, net $ 634 $ 634 $ 386 $ 386 Equipment financing receivables 1,099 1,099 704 704 Liabilities: Finance lease obligations $ 94 $ 94 $ 116 $ 116 Notes payable 2,962 2,962 - - Asset acquisition contingent consideration - - 175 175 Liabilities for which fair value is recognized in the balance sheet on a recurring basis are summarized below as of September 30, 2020 and December 31, 2019 (in thousands): Fair value measurement at reporting date Description As of September 30,2020 Level 1 Level 2 Level 3 Liabilities: Asset acquisition contingent consideration $ - $ - $ - $ - Description As of December 31,2019 Level 1 Level 2 Level 3 Liabilities: Asset acquisition contingent consideration $ 175 $ - $ - $ 175 The recurring Level 3 measurement of our asset acquisition contingent consideration liability includes the following significant unobservable inputs at December 31, 2019 (in thousands): Contingent consideration liability Fair Value at December 31, 2019 Valuation technique Unobservable inputs Range Revenue - based payments $ 175 Discounted cash flow Discount Rate 3.67 % Probability of milestone payment 100 % Projected year of payments 2020 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. During the nine month period ended September 30, 2020, the Company reduced the contingent consideration to be paid based on the completion of the earn-out period by $121,000 and recognized a reduction in the cost of the assets acquired. The progression of the Company’s Level 3 instruments fair valued on a recurring basis for the nine months ended September 30, 2020 and the year ended December 31, 2019 are shown in the table below (in thousands): Asset Acquisition Contingent Consideration Balance at January 1, 2019 $ - Additions 175 Balance at December 31, 2019 $ 175 Cash payments (54 ) Adjustment (121 ) Balance at September 30, 2020 $ -

12. Income Taxes

12. Income Taxes	9 Months Ended
	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Our effective tax rate for the three months ended September 30, 2020 and 2019 was 2.2% and 0.1%, respectively, which resulted in an income tax provision of $(3,000) and $0, respectively. Our effective tax rate for the nine months ended September 30, 2020 and 2019 was 1.1% and 0.7%, respectively, which resulted in an income tax provision of $(9,000) and $(7,000), 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. 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 reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on the evidence available, it is more-likely-than-not that such assets will not be realized. In making the assessment under the more-likely-than-not standard, appropriate consideration must be given to all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods by jurisdiction, unitary versus stand-alone state tax filings, our experience with loss carryforwards expiring unutilized, and all tax planning alternatives that may be available. Based on the significant negative evidence of cumulative losses and history of loss carryforwards expiring unutilized, the positive evidence of forecasts of future profitability was not sufficient to overcome the negative evidence. As a result, we determined it was more likely than not that the deferred tax assets would not be realized as of September 30, 2020 and December 31, 2019; accordingly, we recorded a full valuation allowance.

13. Leases

13. Leases	9 Months Ended
	Sep. 30, 2020
Leases [Abstract]
Leases	Lessee Accounting We determine if an agreement is a lease at inception. We previously leased our corporate office building 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 was reasonably certain that we would exercise our option to renew our corporate office building operating lease. Lease expense is recognized on a straight-line basis over the lease term. We previously leased the corporate office building 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 was a renewal option for another three year term at the end of the lease that was considered in valuing the ROU asset as we were reasonably certain we would exercise the renewal option. Amortization of the ROU assets and operating lease liabilities for the three months ended September 30, 2020 and 2019 was $0 and $59,000, respectively, and for the nine months ended September 30, 2020 and 2019 was $50,000 and $174,000, respectively. Rental expense incurred on operating leases for the three months ended September 30, 2020 and 2019 was approximately $0 and $75,000, respectively, and for the nine months ended September 30, 2020 and 2019 was approximately $25,000 and $225,000, respectively. As of December 31, 2019 we initiated the process to purchase the corporate office building back from our lessor and gave notice that we will not be exercising our option to renew for another three year term. The ROU asset and associated lease liabilities were revalued as of December 31, 2019 for the remaining two months of the lease term. This resulted in an adjustment of approximately $804,000 for the associated ROU, $250,000 for the operating lease liability, current portion, and $554,000 for the operating lease liability, net of current portion. 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 $94,000 and $116,000 as of September 30, 2020 and December 31, 2019, respectively. The Company recorded assets classified as property and equipment under finance lease obligations of $129,000 and $129,000 as of September 30, 2020 and December 31, 2019, respectively. Related accumulated depreciation totaled $60,000 and $34,000 as of September 30, 2020 and 2019, 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 $2,000 for the three months ended September 30, 2020 and 2019, respectively, and $6,000 and $6,000 for the nine months ended September 30, 2020 and 2019, respectively. The interest rate on the finance lease obligation is 6.7% and interest expense was $2,000 and $1,000 for the three months ended September 30, 2020 and 2019, respectively and $5,000 and $7,000 for the nine months ended September 30, 2020 and 2019, respectively. The maturity of operating leases and finance lease liabilities as of September 30, 2020 are as follows: Year ending December 31, Operating Leases Finance Leases 2020 remaining $ - $ 9 2021 1 36 2022 - 37 2023 - 21 Total minimum lease payments 1 103 Less: amount representing interest - (9 ) Present value of minimum lease payments $ 1 $ 94 Lease term and discount rate September 30, 2020 Weighted-average remaining lease term (years) Operating leases 3.5 Finance leases 2.8 Weighted-average discount rate Operating leases 6.7 % Finance leases 6.7 % Nine Months Ended September 30, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 25 Operating cash flows from finance leases 5 Financing cash flows from finance leases 22 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. Equipment finance receivables arising from the rental of our cloud telecommunications equipment through sales-type leases, were as follows (in thousands): September 30, December 31, 2020 2019 Gross financing receivables $ 1,650 $ 1,086 Less: unearned income (551 ) (382 ) Financing receivables, net 1,099 704 Less: current portion of finance receivables, net (253 ) (143 ) Finance receivables due after one year $ 846 $ 561 Future minimum lease payments as of September 30, 2020, consisted of the following: Year ending December 31, Lease Receivables 2020 remaining $ 126 2021 485 2022 431 2023 338 2024 214 2025 56 Gross equipment financing receivables 1,650 Less: unearned income (551 ) Equipment financing receivables, net $ 1,099

14. Commitments and Contingenci

14. Commitments and Contingencies	9 Months Ended
	Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Annual Incentive Bonuses Accrual We utilize incentive bonuses to reward performance achievements and have in place annual target incentive bonuses, payable either in whole or in part, depending on the extent to which the financial performance goals set by the Compensation Committee are achieved. Under our 2020 Profit Sharing Plan, incentive bonuses for all of the participants, including the participating officers excluding the CEO, are determinable based upon four measures of corporate financial performance. The four performance target are; (a) The revenue for the year ended December 31, 2020 must exceed the budgeted revenue approved by the Board; (b) adjusted EBITDA must exceed the budgeted adjusted EBITDA approved by the board; (c) sales bookings for the year ended December 31, 2020 must exceed budgeted Sales Bookings approved by the board; and (d) completion of an asset or business acquisition during the year ended December 31, 2020. If the requirements of (a-c) are met individually, there shall be an award pool of sixty thousand ($60,000) for each performance target achieved during the year ended December 31, 2020, to be allocated to participants based on the participant’s proportionate share. If the requirement of (d) is met, there shall be an award pool based on the acquired annual revenue for each asset or business combination completed during the year ended December 31, 2020. An amount of $20,000 per $1M of acquired annualized revenue up to $5 million of acquired annualized revenue; plus $10,000 per $1M of acquired annualized revenue above $5M will be placed in the award pool to be allocated to participating executives based on the participant’s proportionate share. Based on our financial performance as of September 30, 2020, it is reasonably possible that one or multiple of the performance targets may be achieved, however a reasonable estimate of liability cannot be made at this time.

15. Segments

15. Segments	9 Months Ended
	Sep. 30, 2020
Segment Reporting [Abstract]
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 before income tax provision are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenue: Cloud telecommunications $ 4,014 $ 3,443 $ 11,643 $ 10,206 Web services 129 159 421 502 Consolidated revenue 4,143 3,602 12,064 10,708 Income from operations: Cloud telecommunications 124 276 739 692 Web services 31 60 128 225 Total operating income 155 336 867 917 Other income/(expense), net: Cloud telecommunications (20 ) 2 (47 ) (2 ) Web services (1 ) (4 ) (32 ) 3 Total other income/(expense), net (21 ) (2 ) (79 ) 1 Income before income tax provision: Cloud telecommunications 104 278 692 690 Web services 30 56 96 228 Income before income tax provision $ 134 $ 334 $ 788 $ 918 Depreciation and amortization was $55,000 and $24,000 for the Cloud Telecommunications segment for the three months ended September 30, 2020 and 2019, respectively. Depreciation and amortization was $190,000 and $66,000 for the Cloud Telecommunications segment for the nine months ended September 30, 2020 and 2019, respectively. Depreciation and amortization was $2,000 and $1,000 for the Web Services segment for the three months ended September 30, 2020 and 2019, respectively. Depreciation and amortization was $7,000 and $3,000 for the Web Services segment for the nine months ended September 30, 2020 and 2019, respectively. Interest income was $1,000 and $1,000 for the Web Services segment for the three months ended September 30, 2020 and 2019, respectively. Interest income was $3,000 and $4,000 for the Web Services segment for the nine months ended September 30, 2020 and 2019, respectively. Interest expense was $22,000 and $1,000 for the Cloud Telecommunications segment for the three months ended September 30, 2020 and 2019, respectively. Interest expense was $52,000 and $9,000 for the Cloud Telecommunications segment for the nine months ended September 30, 2020 and 2019, respectively. Interest expense was $1,000 and $0 for the Web Services segment for the three months ended September 30, 2020 and 2019. Interest expense was $2,000 and $0 for the Web Services segment for the nine months ended September 30, 2020 and 2019, respectively.

16. Subsequent Events

16. Subsequent Events	9 Months Ended
	Sep. 30, 2020
Subsequent Events [Abstract]
Subsequent Events	On October 21, 2020, the underwriters of the Company’s public offering exercised their option to purchase additional shares of the Company’s common stock to cover sales by the underwriters of a greater number of shares than the total set forth in the filed prospectus for the public offering. The underwriters purchased an additional 420,000 shares of common stock from the Company. The gross proceeds to the Company of the issuance were $2,310,000, and the Company received net proceeds of $2,148,000 after deducting underwriting discounts and commissions.

1. Significant Accounting Pol_2

1. Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Description of Business	Description of Business –
Basis of Presentation	Basis of Presentation –
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): September 30, September 30, 2020 2019 Cash and cash equivalents $ 15,353 $ 3,308 Restricted cash 100 100 Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows $ 15,453 $ 3,408
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 Building 39 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.
Asset Acquisitions	Asset Acquisitions –
Goodwill	Goodwill –
Intangible Assets	Intangible Assets –
Contract Liabilities	Contract Liabilities –
Use of Estimates	Use of Estimates –
Contingencies	C ontingencies –
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 –
Contingent Consideration	Contingent Consideration –
Public Offering	Public Offering
Deferred Offering Costs	Deferred Offering Costs –
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 consolidated statements of operations.
Stock-Based Compensation	Stock-Based Compensation –
Comprehensive Income	Comprehensive Income –
Operating Segments	Operating Segments –
Significant Customers	Significant Customers –
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements – In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): In February 2016, the FASB issued ASU 2016-02, 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.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements – In December 2019, the FASB issued ASU 2019-12 to simplify the accounting in ASC 740, Income Taxes

1. Significant Accounting Pol_3

1. Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Cash, cash equivalents and restricted cash	September 30, September 30, 2020 2019 Cash and cash equivalents $ 15,353 $ 3,308 Restricted cash 100 100 Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows $ 15,453 $ 3,408
Property and equipment useful life	Computer and office equipment 2 to 5 years Computer software 3 years Furniture and fixtures 4 years Building 39 years Leasehold improvements 2 to 5 years

2. Revenue (Tables)

2. Revenue (Tables)	9 Months Ended
	Sep. 30, 2020
Revenues [Abstract]
Disaggregation of revenue	Three Months Ended September 30, 2020 (In thousands) Cloud Telecommunications Segment Web Services Segment Total Reportable Segments Major products/services lines Desktop devices $ 489 $ - $ 489 Equipment financing revenue 59 - 59 Telecommunications services 3,182 - 3,182 Fees, commissions, and other, recognized over time 244 - 244 One time fees, commissions and other 40 - 40 Website hosting services - 117 117 Website management services and other - 12 12 $ 4,014 $ 129 $ 4,143 Timing of revenue recognition Products and fees recognized at a point in time $ 529 $ - $ 529 Services and fees transferred over time 3,485 129 3,614 $ 4,014 $ 129 $ 4,143 Three Months Ended September 30, 2019 (In thousands) Cloud Telecommunications Segment Web Services Segment Total Reportable Segments Major products/services lines Desktop devices $ 343 $ - $ 343 Equipment financing revenue 30 - 30 Telecommunications services 2,813 - 2,813 Fees, commissions, and other, recognized over time 176 - 176 One time fees, commissions and other 81 - 81 Website hosting services - 146 146 Website management services and other - 13 13 $ 3,443 $ 159 $ 3,602 Timing of revenue recognition Products and fees recognized at a point in time $ 424 $ - $ 424 Services and fees transferred over time 3,019 159 3,178 $ 3,443 $ 159 $ 3,602 Nine Months Ended September 30, 2020 (In thousands) Cloud Telecommunications Segment Web Services Segment Total Reportable Segments Major products/services lines Desktop devices $ 1,317 $ - $ 1,317 Equipment financing revenue 156 - 156 Telecommunications services 9,321 - 9,321 Fees, commissions, and other, recognized over time 726 - 726 One time fees, commissions and other 123 - 123 Website hosting services - 372 372 Website management services and other - 49 49 $ 11,643 $ 421 $ 12,064 Timing of revenue recognition Products and fees recognized at a point in time $ 1,440 $ - $ 1,440 Services and fees transferred over time 10,203 421 10,624 $ 11,643 $ 421 $ 12,064 Nine Months Ended September 30, 2019 (In thousands) Cloud Telecommunications Segment Web Services Segment Total Reportable Segments Major products/services lines Desktop devices $ 1,294 $ - $ 1,294 Equipment financing revenue 79 - 79 Telecommunications services 7,949 - 7,949 Fees, commissions, and other, recognized over time 575 - 575 One time fees, commissions and other 309 - 309 Website hosting services - 444 444 Website management services and other - 58 58 $ 10,206 $ 502 $ 10,708 Timing of revenue recognition Products and fees recognized at a point in time $ 1,603 $ - $ 1,603 Services and fees transferred over time 8,603 502 9,105 $ 10,206 $ 502 $ 10,708
Contract balances	September 30, December 31, (In thousands) 2020 2019 Receivables, which are included in trade receivables, net of allowance for doubtful accounts $ 634 $ 386 Contract assets 94 22 Contract liabilities 1,233 1,214
Significant changes in the contract assets and liabilities	Nine Months Ended For the Year Ended (In thousands) September 30, 2020 December 31, 2019 Contract Assets Contract Liabilities Contract Assets Contract Liabilities Revenue recognized that was included in the contract liability balance at the beginning of the period $ - $ (942 ) $ - $ (882 ) Increase due to cash received, excluding amounts recognized as revenue during the period - 923 - 1,033 Transferred to receivables from contract assets recognized at the beginning of the period (12 ) - (13 ) - Increase due to additional unamortized discounts 84 - 23 -
Performance obligations	2020 2021 2022 2023 2024 2025 Total Desktop devices $ 304 - - - - - $ 304 Telecommunications service $ 3,166 9,937 7,057 4,752 2,598 499 $ 28,009 All consideration from contracts with customers is included in the amounts presented above

3. Earnings Per Common Share (T

3. Earnings Per Common Share (Tables)	9 Months Ended
	Sep. 30, 2020
Earnings per common share:
Basic and diluted net income per common share	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net income (in thousands) (A) $ 131 $ 334 $ 779 $ 911 Weighted-average share reconciliation: Weighted-average basic shares outstanding (B) 15,244,804 14,663,151 15,058,192 14,507,696 Dilutive effect of stock-based awards 2,004,231 966,496 1,735,704 936,367 Diluted weighted-average outstanding shares of common stock (C) 17,249,035 15,629,647 16,793,896 15,444,063 Earnings per common share: Basic (A/B) $ 0.01 $ 0.02 $ 0.05 $ 0.06 Diluted (A/C) $ 0.01 $ 0.02 $ 0.05 $ 0.06
Antidilutive securities excluded from earnings	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Stock options 18,685 1,271,559 91,845 1,662,311

4. Acquisitions (Tables)

4. Acquisitions (Tables)	9 Months Ended
	Sep. 30, 2020
Business Combinations [Abstract]
Cost of acquisition	Consideration: Cash $ 230 Total consideration $ 230 Recognized amounts of identifiable assets acquired and liabilities assumed: Customer relationships $ 230 Net assets acquired $ 230

5. Trade Receivables, net (Tabl

5. Trade Receivables, net (Tables)	9 Months Ended
	Sep. 30, 2020
Accounts Receivable, after Allowance for Credit Loss [Abstract]
Trade receivables, net	September 30, December 31, 2020 2019 Gross trade receivables $ 684 $ 400 Less: allowance for doubtful accounts (50 ) (14 ) Trade receivables, net $ 634 $ 386 Current trade receivables, net $ 632 $ 380 Long-term trade receivables, net 2 6 Trade receivables, net $ 634 $ 386

6. Prepaid Expenses (Tables)

6. Prepaid Expenses (Tables)	9 Months Ended
	Sep. 30, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid expenses	September 30, December 31, 2020 2019 Prepaid corporate insurance $ 87 $ 48 Prepaid software services and support 80 27 Prepaid inventory deposits 90 - Other prepaid expenses 75 66 Total prepaid expenses $ 332 $ 141

7. Property and Equipment (Tabl

7. Property and Equipment (Tables)	9 Months Ended
	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
Property and equipment	September 30, December 31, 2020 2019 Building $ 2,000 $ - Land 500 - Computer and office equipment 1,407 1,388 Computer software 526 346 Internal software 14 - Furniture and fixtures 29 - Leasehold improvements - 85 Less: accumulated depreciation (1,704 ) (1,664 ) Total property and equipment, net $ 2,772 $ 155

8. Intangible Assets (Tables)

8. Intangible Assets (Tables)	9 Months Ended
	Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible assets	September 30, December 31, 2020 2019 Customer relationships $ 1,171 $ 1,292 Less: accumulated amortization (896 ) (827 ) Total $ 275 $ 465

9. Accrued Expenses (Tables)

9. Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2020
Payables and Accruals [Abstract]
Accrued expenses	September 30, December 31, 2020 2019 Accrued wages and benefits $ 384 $ 538 Accrued accounts payable 607 566 Accrued sales and telecommunication taxes 393 529 Product warranty liability 47 37 Other 139 84 Total accrued expenses $ 1,570 $ 1,754
Product warranty liabilities	Warranty Liabilities Balance at January 1, 2019 $ 16 Accrual for warranties 37 Adjustments related to pre-existing warranties 7 Warranty settlements (23 ) Balance at December 31, 2019 37 Accrual for warranties 29 Warranty settlements (19 ) Balance at September 30, 2020 $ 47

10. Notes Payable (Tables)

10. Notes Payable (Tables)	9 Months Ended
	Sep. 30, 2020
Notes Payable [Abstract]
Notes payable	September 30, December 31, 2020 2019 Notes payable $ 2,962 $ - Less: current notes payable (1,071 ) - Notes payable, net of current portion $ 1,891 $ -
Principal payments of notes payable	Year ending December 31, 2020 remaining $ 1,018 2021 71 2022 74 2023 76 2024 79 Thereafter 1,644 Total $ 2,962

11. Fair Value Measurements (Ta

11. Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2020
Fair Value Disclosures [Abstract]
Financial instruments	September 30, 2020 December 31, 2019 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Trade receivables, net $ 634 $ 634 $ 386 $ 386 Equipment financing receivables 1,099 1,099 704 704 Liabilities: Finance lease obligations $ 94 $ 94 $ 116 $ 116 Notes payable 2,962 2,962 - - Asset acquisition contingent consideration - - 175 175
Liabilities for which fair value is recognized	Fair value measurement at reporting date Description As of September 30,2020 Level 1 Level 2 Level 3 Liabilities: Asset acquisition contingent consideration $ - $ - $ - $ - Description As of December 31,2019 Level 1 Level 2 Level 3 Liabilities: Asset acquisition contingent consideration $ 175 $ - $ - $ 175 The recurring Level 3 measurement of our asset acquisition contingent consideration liability includes the following significant unobservable inputs at December 31, 2019 (in thousands): Contingent consideration liability Fair Value at December 31, 2019 Valuation technique Unobservable inputs Range Revenue - based payments $ 175 Discounted cash flow Discount Rate 3.67 % Probability of milestone payment 100 % Projected year of payments 2020
Progression of level 3 instruments	Asset Acquisition Contingent Consideration Balance at January 1, 2019 $ - Additions 175 Balance at December 31, 2019 $ 175 Cash payments (54 ) Adjustment (121 ) Balance at September 30, 2020 $ -

13. Leases (Tables)

13. Leases (Tables)	9 Months Ended
	Sep. 30, 2020
Leases [Abstract]
Maturity of operating and finance lease liabilities	Year ending December 31, Operating Leases Finance Leases 2020 remaining $ - $ 9 2021 1 36 2022 - 37 2023 - 21 Total minimum lease payments 1 103 Less: amount representing interest - (9 ) Present value of minimum lease payments $ 1 $ 94
Lease term and discount	Lease term and discount rate September 30, 2020 Weighted-average remaining lease term (years) Operating leases 3.5 Finance leases 2.8 Weighted-average discount rate Operating leases 6.7 % Finance leases 6.7 %
Cash paid for amounts included in the measurement of lease liabilities	Nine Months Ended September 30, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 25 Operating cash flows from finance leases 5 Financing cash flows from finance leases 22
Equipment finance receivables	September 30, December 31, 2020 2019 Gross financing receivables $ 1,650 $ 1,086 Less: unearned income (551 ) (382 ) Financing receivables, net 1,099 704 Less: current portion of finance receivables, net (253 ) (143 ) Finance receivables due after one year $ 846 $ 561
Future aggregate minimum lease obligations under operating leases	Year ending December 31, Lease Receivables 2020 remaining $ 126 2021 485 2022 431 2023 338 2024 214 2025 56 Gross equipment financing receivables 1,650 Less: unearned income (551 ) Equipment financing receivables, net $ 1,099

15. Segments (Tables)

15. Segments (Tables)	9 Months Ended
	Sep. 30, 2020
Segment Reporting [Abstract]
Segment information	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenue: Cloud telecommunications $ 4,014 $ 3,443 $ 11,643 $ 10,206 Web services 129 159 421 502 Consolidated revenue 4,143 3,602 12,064 10,708 Income from operations: Cloud telecommunications 124 276 739 692 Web services 31 60 128 225 Total operating income 155 336 867 917 Other income/(expense), net: Cloud telecommunications (20 ) 2 (47 ) (2 ) Web services (1 ) (4 ) (32 ) 3 Total other income/(expense), net (21 ) (2 ) (79 ) 1 Income before income tax provision: Cloud telecommunications 104 278 692 690 Web services 30 56 96 228 Income before income tax provision $ 134 $ 334 $ 788 $ 918

1. Significant Accounting Pol_4

1. Significant Accounting Policies (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Cash and cash equivalents	$ 15,353		$ 3,308
Restricted cash	100	$ 100	100
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows	$ 15,453	$ 4,280	$ 3,408	$ 1,949

1. Significant Accounting Pol_5

1. Significant Accounting Policies (Details 1)	9 Months Ended
	Sep. 30, 2020
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
Buildings
Depreciable lives	39 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		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Accounting Policies [Abstract]
Cash equivalents in financial institutions in excess of federally insured limits	$ 15,414		$ 15,414		$ 4,004
Restricted cash	100	$ 100	100	$ 100	100
Capitalized contract costs	915		915		$ 815
Capitalized contract costs amortization	$ 123	$ 127	$ 368	$ 376

2. Revenue (Details)

2. Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenue	$ 4,143	$ 3,602	$ 12,064	$ 10,708
Desktop Devices
Revenue	489	343	1,317	1,294
Equipment Financing Revenue
Revenue	59	30	156	79
Telecommunications Services
Revenue	3,182	2,813	9,321	7,949
Fees, Commissions, and Other, Recognized Over Time
Revenue	244	176	726	575
One Time Fees, Commissions and Other
Revenue	40	81	123	309
Website Hosting Services
Revenue	117	146	372	444
Website Management Services and Other
Revenue	12	13	49	58
Products and Fees Recognized at a Point in Time
Revenue	529	424	1,440	1,603
Services and Fees Transferred Over Time
Revenue	3,614	3,178	10,624	9,105
Cloud Telecommunications Segment
Revenue	4,014	3,443	11,643	10,206
Cloud Telecommunications Segment | Desktop Devices
Revenue	489	343	1,317	1,294
Cloud Telecommunications Segment | Equipment Financing Revenue
Revenue	59	30	156	79
Cloud Telecommunications Segment | Telecommunications Services
Revenue	3,182	2,813	9,321	7,949
Cloud Telecommunications Segment | Fees, Commissions, and Other, Recognized Over Time
Revenue	244	176	726	575
Cloud Telecommunications Segment | One Time Fees, Commissions and Other
Revenue	40	81	123	309
Cloud Telecommunications Segment | Website Hosting Services
Revenue	0	0	0	0
Cloud Telecommunications Segment | Website Management Services and Other
Revenue	0	0	0	0
Cloud Telecommunications Segment | Products and Fees Recognized at a Point in Time
Revenue	529	424	1,440	1,603
Cloud Telecommunications Segment | Services and Fees Transferred Over Time
Revenue	3,485	3,019	10,203	8,603
Web Services Segment
Revenue	129	159	421	502
Web Services Segment | Desktop Devices
Revenue	0	0	0	0
Web Services Segment | Equipment Financing Revenue
Revenue	0	0	0	0
Web Services Segment | Telecommunications Services
Revenue	0	0	0	0
Web Services Segment | Fees, Commissions, and Other, Recognized Over Time
Revenue	0	0	0	0
Web Services Segment | One Time Fees, Commissions and Other
Revenue	0	0	0	0
Web Services Segment | Website Hosting Services
Revenue	117	146	372	44
Web Services Segment | Website Management Services and Other
Revenue	12	13	49	58
Web Services Segment | Products and Fees Recognized at a Point in Time
Revenue	0	0	0	0
Web Services Segment | Services and Fees Transferred Over Time
Revenue	$ 129	$ 159	$ 421	$ 502

2. Revenue (Details 1)

2. Revenue (Details 1) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Revenues [Abstract]
Receivables, which are included in trade receivables, net of allowance for doubtful accounts	$ 634	$ 386
Contract assets	94	22
Contract liabilities	$ 1,233	$ 1,214

2. Revenue (Details 2)

2. Revenue (Details 2) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
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	(12)	(13)
Increase due to additional unamortized discounts	84	23
Contract Liabilities
Revenue recognized that was included in the contract liability balance at the beginning of the period	(942)	(882)
Increase due to cash received, excluding amounts recognized as revenue during the period	923	1,033
Transferred to receivables from contract assets recognized at the beginning of the period	0	0
Increase due to additional unamortized discounts	$ 0	$ 0

2. Revenue (Details 3)

2. Revenue (Details 3) $ in Thousands	Sep. 30, 2020USD ($)
Desktop Devices
2020	$ 304
2021	0
2022	0
2023	0
2024	0
2025	0
Total	304
Telecommunications Services
2020	3,166
2021	9,937
2022	7,057
2023	4,752
2024	2,598
2025	499
Total	$ 28,009

3. Earnings Per Common Share (D

3. Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings per common share:
Net income	$ 131	$ 508	$ 140	$ 334	$ 338	$ 239	$ 779	$ 911
Weighted-average share reconciliation:
Weighted-average basic shares outstanding	15,244,804			14,663,151			15,058,192	14,507,696
Dilutive effect of stock-based awards	2,004,231			966,496			1,735,704	936,367
Diluted shares outstanding	17,249,035			15,629,647			16,793,896	15,444,063
Earnings per common share:
Basic	$ 0.01			$ 0.02			$ 0.05	$ 0.06
Diluted	$ 0.01			$ 0.02			$ 0.05	$ 0.06

3. Earnings Per Common Share _2

3. Earnings Per Common Share (Details 1) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings per common share:
Shares excluded from earnings	18,685	1,271,559	91,845	1,662,311

4. Acquisitions (Details)

4. Acquisitions (Details) $ in Thousands	Sep. 30, 2020USD ($)
Consideration
Cash	$ 230
Total consideration	230
Recognized amounts of identifiable assets acquired and liabilities assumed:
Customer relationships	230
Net assets acquired	$ 230

5. Trade Receivables, net (Deta

5. Trade Receivables, net (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Accounts Receivable, after Allowance for Credit Loss [Abstract]
Gross trade receivables	$ 685	$ 400
Less allowance for doubtful accounts	(50)	(14)
Trade receivables, net	634	386
Current trade receivables, net	632	380
Long-term trade receivables, net	$ 2	$ 6

6. Prepaid Expenses (Details)

6. Prepaid Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid corporate insurance	$ 87	$ 48
Prepaid software services and support	80	27
Prepaid inventory deposits	90	0
Other prepaid expenses	75	66
Total prepaid assets	$ 332	$ 141

7. Property and Equipment (Deta

7. Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Less: accumulated depreciation	$ (1,704)	$ (1,664)
Total property and equipment, net	2,772	155
Building
Property and equipment, gross	2,000	0
Land
Property and equipment, gross	500	0
Computer and Office Equipment
Property and equipment, gross	1,407	1,388
Computer Software
Property and equipment, gross	526	346
Internal Software
Property and equipment, gross	14	0
Furniture and Fixtures
Property and equipment, gross	29	0
Leasehold Improvements
Property and equipment, gross	$ 0	$ 85

7. Property and Equipment (De_2

7. Property and Equipment (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 34	$ 12	$ 128	$ 29

8. Intangible Assets (Details)

8. Intangible Assets (Details) - Customer Relationships - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Carrying amount of intangible, gross	$ 1,171	$ 1,292
Less: accumulated amortization	(896)	(827)
Carrying amount of intangible, net	$ 275	$ 465

8. Intangible Assets (Details N

8. Intangible Assets (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 23	$ 13	$ 69	$ 40

9. Accrued Expenses (Details)

9. Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Accrued wages and benefits	$ 384	$ 538
Accrued accounts payable	607	566
Accrued sales and telecommunications taxes	393	529
Product warranty liability	47	37	$ 16
Other	139	84
Total accrued expenses	$ 1,570	$ 1,754

9. Accrued Expenses (Details 1)

9. Accrued Expenses (Details 1) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Beginning balance	$ 37	$ 16
Accrual for warranties	29	37
Adjustments related to pre-existing warranties		7
Warranty settlements	(19)	(23)
Ending balance	$ 47	$ 37

9. Accrued Expenses (Details Na

9. Accrued Expenses (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Payables and Accruals [Abstract]
Product warranty expense	$ 11	$ 4	$ 29	$ 14

10. Notes Payable (Details)

10. Notes Payable (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Notes Payable [Abstract]
Notes payable	$ 2,962	$ 0
Less: current notes payable	(1,071)	0
Notes payable, net of current portion	$ 1,891	$ 0

10. Notes Payable (Details 1)

10. Notes Payable (Details 1) $ in Thousands	Sep. 30, 2020USD ($)
Notes Payable [Abstract]
2020 remaining	$ 1,018
2021	71
2022	74
2023	76
2024	79
Thereafter	1,644
Total	$ 2,962

11. Fair Value Measurements (De

11. Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Liabilities:
Notes payable	$ 2,962	$ 0
Assets acquisition contingent consideration	0	175
Carrying Value
Assets:
Trade receivables, net	634	386
Equipment financing receivables	1,099	704
Liabilities:
Finance lease obligations	94	116
Notes payable	2,962	0
Assets acquisition contingent consideration	0	175
Estimated Fair Value
Assets:
Trade receivables, net	634	386
Equipment financing receivables	1,099	704
Liabilities:
Finance lease obligations	94	116
Notes payable	2,962	0
Assets acquisition contingent consideration	$ 0	$ 175

11. Fair Value Measurements (_2

11. Fair Value Measurements (Details 1) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Asset acquisition contingent consideration	$ 0	$ 175
Level 1
Asset acquisition contingent consideration	0	0
Level 2
Asset acquisition contingent consideration	0	0
Level 3
Asset acquisition contingent consideration	$ 0	$ 175

11. Fair Value Measurements (_3

11. Fair Value Measurements (Details 2) - Level 3 $ in Thousands	12 Months Ended
	Dec. 31, 2019USD ($)
Revenue - based payments	$ 175
Valuation technique	Discounted cash flow
Unobservable inputs	Discount rate
Range	3.67%
Probability of milestone payment	100.00%
Projected year of payments	2020

11. Fair Value Measurements (_4

11. Fair Value Measurements (Details 3) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Fair Value Disclosures [Abstract]
Beginning balance	$ 175	$ 0
Additions		175
Cash payments	(54)
Adjustment	(121)
Ending balance	$ 0	$ 175

12. Income Taxes (Details Narra

12. Income Taxes (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Effective tax rate	2.20%	0.10%	1.10%	0.70%
Income tax provision	$ (3)	$ 0	$ (9)	$ (7)

13. Leases (Details)

13. Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Operating Leases
2020 remaining	$ 0
2021	1
2022	0
2023	0
Total	1
Less: amount representing interest	0
Present value of minimum lease payments	1
Finance Leases
2020 remaining	9
2021	36
2022	37
2023	21
Total	103
Less: amount representing interest	(9)
Present value of minimum lease payments	$ 94	$ 116

13. Leases (Details 1)

13. Leases (Details 1)	Sep. 30, 2020
Leases [Abstract]
Weighted-average remaining lease term - operating leases	3 years 6 months
Weighted-average remaining lease term - finance leases	2 years 9 months 18 days
Weighted-average discount rate - operating leases	6.70%
Weighted-average discount rate- finance leases	6.70%

13. Leases (Details 2)

13. Leases (Details 2) $ in Thousands	9 Months Ended
	Sep. 30, 2020USD ($)
Leases [Abstract]
Operating cash flows from operating leases	$ 25
Operating cash flows from finance leases	5
Financing cash flows from finance leases	$ 22

13. Leases (Details 3)

13. Leases (Details 3) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Leases [Abstract]
Gross financing receivables	$ 1,650	$ 1,086
Less unearned income	(551)	(382)
Financing receivables, net	1,099	704
Less: current portion of finance receivables, net	(253)	(143)
Finance receivables due after one year	$ 846	$ 561

13. Leases (Details 4)

13. Leases (Details 4) $ in Thousands	Sep. 30, 2020USD ($)
Leases [Abstract]
2020 remaining	$ 126
2021	485
2022	431
2023	338
2024	214
2025	56
Gross equipment financing receivables	1,650
Less: unearned income	(551)
Equipment financing receivables, net	$ 1,099

13. Leases (Details Narrative)

13. Leases (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Leases [Abstract]
Amortization of the ROU assets and operating lease liabilities	$ 0	$ 59	$ 50	$ 174
Rental expense incurred on operating leases	0	$ 75	25	$ 225
Finance lease liability	$ 94		$ 94		$ 116

15. Segments (Details)

15. Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Information
Revenue	$ 4,143	$ 3,602	$ 12,064	$ 10,708
Income from operations	155	336	867	917
Other income/(expense), net	(21)	(2)	(79)	1
Income before income tax provision	134	334	788	918
Cloud Telecommunications
Segment Information
Revenue	4,014	3,443	11,643	10,206
Income from operations	125	276	739	692
Other income/(expense), net	(20)	2	(47)	(2)
Income before income tax provision	104	278	692	690
Web Services
Segment Information
Revenue	129	159	421	502
Income from operations	31	60	128	225
Other income/(expense), net	(1)	(4)	(32)	3
Income before income tax provision	$ 30	$ 56	$ 96	$ 228

15. Segments (Details Narrative

15. Segments (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Depreciation and amortization	$ 34	$ 12	$ 128	$ 29
Interest expense	23	1	54	9
Cloud Telecommunications
Depreciation and amortization	55	24	190	66
Interest expense	22	1	52	9
Web Services
Depreciation and amortization	2	1	7	3
Interest income	1	1	3	4
Interest expense	$ 1	$ 0	$ 2	$ 0