| 1. Significant Accounting Policies (Policies) | 3 Months Ended |
| Mar. 31, 2021 |
| Accounting Policies [Abstract] | |
| Description of Business | Crexendo, Inc. is incorporated
in the state of Nevada. As used hereafter in the notes to consolidated financial statements, we refer to Crexendo, Inc. and its
wholly owned subsidiaries, as “we,” “us,” or “our Company.” Crexendo is an award-winning premier
provider of cloud communications, UCaaS, call center, collaboration services, and other cloud business services that are designed
to provide enterprise-class cloud services to any size business at affordable monthly rates. The Company has two operating segments,
which consist of Cloud Telecommunications and Web Services. |
| Basis of Presentation | The consolidated financial
statements include the accounts and operations of Crexendo, Inc. and its wholly owned subsidiaries, which include Crexendo Business
Solutions, Inc., Crexendo International, Inc., and Centric Telecom, Inc. All intercompany account balances and transactions have
been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with U.S. generally accepted
accounting principles (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission
(“SEC”). These consolidated financial statements reflect the results of operations, financial position, changes in
stockholders’ equity, and cash flows of our Company. |
| Cash and Cash Equivalents | |
| Restricted Cash | We classified $0 and $100,000
as restricted cash as of March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021, our
restricted cash requirement was waived and we released $100,000 into cash and cash equivalents. Cash was restricted for compensating
balance requirements on purchasing card agreements. As of March 31, 2021 and December 31, 2020, we had restricted cash in financial
institutions in excess of federally insured limits in the amount of $0 and $100,000, respectively. 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,
2021 2020
Cash and cash equivalents $ 16,204 $ 3,435
Restricted cash - 100
Total cash, cash equivalents, and restricted cash shown in the condensed
consolidated statement of cash flows $ 16,204 $ 3,535 |
| Trade Receivables | Trade receivables from our
cloud telecommunications and web services segments are recorded at invoiced amounts. |
| Allowance for Doubtful Accounts | The allowance represents
estimated losses resulting from customers’ failure to make required payments. The allowance estimate is based on historical
collection experience, specific identification of probable bad debts based on collection efforts, aging of trade receivables, customer
payment history, and other known factors, including current economic conditions. We believe that the allowance for doubtful accounts
is adequate based on our assessment to date, however, actual collection results may differ materially from our expectations. |
| Contract Assets | Contract assets primarily
relate to the Company’s rights to consideration for work completed but not billed as of the reporting date. The contract
assets are transferred to receivables when the rights become unconditional. |
| Contract Costs | Contract costs primarily
relate to incremental commission costs paid to sales representatives and sales leadership as a result of obtaining telecommunications
contracts which are recoverable. The Company capitalized contract costs in the amount of $985,000 and $970,000 at March 31, 2021
and December 31, 2020, respectively. Capitalized commission costs are amortized based on the transfer of goods or services to which
the assets relate which typically range from thirty-six to sixty months, and are included in selling and marketing expenses. During
the three months ended March 31, 2021 and 2020, the Company amortized $122,000 and $111,000 respectively, and there was no impairment
loss in relation to the costs capitalized. |
| Inventory | Finished goods telecommunications
equipment inventory is stated at the lower of cost or net realizable value (first-in, first-out method). In accordance with applicable
accounting guidance, we regularly evaluate whether inventory is stated at the lower of cost or net realizable value. If net realizable
value is less than cost, the write-down is recognized as a loss in earnings in the period in which the excess occurs. |
| Property and Equipment | Building 39 years
Land Not depreciated
Computer and office equipment 2 to 5 years
Computer software 3 years
Internal-use software 3 years
Furniture and fixtures 4 years
Vehicles 5 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 | Periodically we acquire
customer relationships that we account for as an asset acquisition and record a corresponding intangible asset that is amortized
over its estimated useful life. Any excess of the fair value of the purchase price over the fair value of the identifiable assets
and liabilities is allocated on a relative fair value basis. No goodwill is recorded in an asset acquisition. If the fair value
of the assets acquired exceeds the initial consideration paid as of the date of acquisition but includes a contingent consideration
arrangement and ASC 450 and ASC 815 do not apply to contingent consideration, we analogize to the guidance in ASC 323 on recognizing
contingent consideration in the acquisition of an equity method investment. The Company recognizes a liability equal to the lesser
of, the maximum amount of contingent consideration or the excess of the fair value of the net assets acquired over the initial
cost measurement. In accordance with the requirements of ASC 323 for equity method investments, the Company recognizes any excess
of the contingent consideration issued or issuable, over the amount that was initially recognized as a liability, as an additional
cost of the asset acquisition. If the amount initially recognized as a liability exceeds the contingent consideration issued or
issuable, the entity recognizes that amount as a reduction of the cost of the asset acquisition. In 2019, the Company acquired
customer relationships for an estimated aggregate purchase price of $351,000. During the year ended December 31, 2020, 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. |
| Business Acquisitions | We
account for business combinations using the acquisition method of accounting. The acquisition method of accounting requires that
the purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired
and liabilities assumed using the fair values determined by management as of the acquisition date. Goodwill as of the acquisition
date is measured as the excess of consideration transferred over the net of the acquisition date fair values of assets acquired
and the liabilities assumed. While the Company uses its best estimates and assumptions as part of the purchase price allocation
process to accurately value assets acquired and liabilities assumed at the acquisition date, the Company’s estimates are
inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the
acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset
to goodwill to the extent the Company identifies adjustments to the preliminary purchase price allocation. Upon the conclusion
of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first,
any subsequent adjustments are recorded to the consolidated statements of operations. We include the results of all acquisitions
in our consolidated financial statements from the date of acquisition. Acquisition related transaction costs, such as banking,
legal, accounting and other costs incurred in connection with an acquisition, are expensed as incurred in general and administrative
expenses. |
| Goodwill | Goodwill is tested for impairment
using a fair-value-based approach on an annual basis (December 31) and between annual tests if indicators of potential impairment
exist. |
| Intangible Assets | Our intangible assets consist
of customer relationships. The intangible assets are amortized following the patterns in which the economic benefits are consumed.
We periodically review the estimated useful lives of our intangible assets and review these assets for impairment whenever events
or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The determination of impairment
is based on estimates of future undiscounted cash flows. If an intangible asset is considered to be impaired, the amount of the
impairment will be equal to the excess of the carrying value over the fair value of the asset. |
| Contract Liabilities | Our contract liabilities
consist primarily of advance consideration received from customers for telecommunications contracts. The product and monthly service
revenue is recognized on completion of the implementation and the remaining activation fees are reclassified as deferred revenue. |
| Use of Estimates | In preparing the consolidated
financial statements, management makes assumptions, estimates and judgments that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts
of net sales and expenses during the reported periods. Specific estimates and judgments include valuation of goodwill
and intangible assets in connection with business acquisitions and asset acquisitions, allowances for doubtful accounts, uncertainties
related to certain income tax benefits, valuation of deferred income tax assets, valuations of share-based payments, annual incentive
bonuses accrual, recoverability of long-lived assets and product warranty liabilities. Management’s estimates are based on
historical experience and on our expectations that are believed to be reasonable. The combination of these factors forms
the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual
results may differ from our current estimates and those differences may be material. |
| Contingencies | The Company accrues for
claims and contingencies when losses become probable and reasonably estimable. As of the end of each applicable reporting period,
the Company reviews each of its matters and, where it is probable that a liability has been or will be incurred, it accrues for
all probable and reasonably estimable losses. Where the Company can reasonably estimate a range of losses it may incur regarding
such a matter, it records an accrual for the amount within the range that constitutes its best estimate. If the Company can reasonably
estimate a range but no amount within the range appears to be a better estimate than any other, it uses the amount that is the
low end of such range. |
| Product and Service Revenue Recognition | Revenue is recognized upon
transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive
in exchange for those products or services and excludes any amounts collected on behalf of third parties. We enter into contracts
that can include various combinations of products and services, which are generally capable of being distinct and accounted for
as separate performance obligations. We recognize revenue for delivered elements only when we determine there are no uncertainties
regarding customer acceptance. Changes in the allocation of the sales price between delivered and undelivered elements can impact
the timing of revenue recognized but does not change the total revenue recognized on any agreement. Revenue is recognized net of
any taxes collected from customers, which are subsequently remitted to governmental authorities. For more detailed information
about revenue, see Note 2. |
| Cost of Service Revenue | Cost of service includes
Cloud Telecommunications and Web Services cost of service revenue. Cloud Telecommunications cost of service revenue primarily consists
of fees we pay to third-party telecommunications and broadband Internet providers, costs of other third-party services we resell,
personnel and travel expenses related to system implementation, and customer service. Web Services cost of service revenue consists
primarily of customer service costs and outsourcing fees related to fulfillment of our professional web management services. |
| Cost of Product Revenue | Cost of product revenue
primarily consists of the costs associated with the purchase of desktop devices and other third-party equipment we purchase for
resale. |
| Product Warranty | We provide for the estimated
cost of product warranties at the time we recognize revenue. We evaluate our warranty obligations on a product group basis. Our
standard product warranty terms generally include post-sales support and repairs or replacement of a product at no additional charge
for a specified period of time. We base our estimated warranty obligation upon warranty terms, ongoing product failure rates, and
current period product shipments. If actual product failure rates, repair rates or any other post-sales support costs were to differ
from our estimates, we would be required to make revisions to the estimated warranty liability. Warranty terms generally last for
the duration that the customer has service. |
| Contingent Consideration | Contingent consideration
represents deferred business acquisition and asset acquisition consideration to be paid out at some point in the future, typically
over a one-year period or less from the acquisition date. Contingent consideration is recorded at the asset acquisition date fair
value. Contingent consideration recorded in connection with a business acquisition is reported
at fair value each reporting period until the contingency is resolved. Any changes in fair value are recognized in earnings. |
| Public Offering | On September 28, 2020, the
Company completed a public offering in which it issued and sold 1,750,000 shares of common stock at a price to the public of $5.50
per share. The shares sold and issued in the public offering resulted in an aggregate gross offering price of $9,625,000. The Company
received net proceeds of $8,623,000 after deducting underwriting discounts and commissions of $674,000 and offering expenses of
$328,000. 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. |
| Research and Development | Research and development
costs are expensed as incurred. Costs related to internally developed software are expensed as research and development expense
until technological feasibility has been achieved, after which the costs are capitalized. |
| Fair Value Measurements | The fair value of our financial
assets and liabilities was determined based on three levels of inputs, of which the first two are considered observable and the
last unobservable, that may be used to measure fair value which are the following: 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 | We determine if an agreement
is a lease at inception. We evaluate the lease terms to determine whether the lease will be accounted for as an operating or finance
lease. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, current
portion, and operating lease liabilities, net of current portion in our consolidated balance sheets. 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 | We record notes payable
net of any discounts or premiums. Discounts and premiums are amortized as interest expense or income over the life of the note
in such a way as to result in a constant rate of interest when applied to the amount outstanding at the beginning of any given
period. |
| Income Taxes | We recognize a liability
or asset for the deferred tax consequences of all temporary differences between the tax basis of assets and liabilities and their
reported amounts in the consolidated financial statements that will result in taxable or deductible amounts in future years when
the reported amounts of the assets and liabilities are recovered or settled. Accruals for uncertain tax positions are provided
for in accordance with accounting guidance. Accordingly, we may recognize the tax benefits from an uncertain tax position only
if it is more-likely-than-not that the tax position will be sustained on examination by the taxing authorities, based on the technical
merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on
the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Accounting guidance is also
provided on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities,
accounting for interest and penalties associated with tax positions, and income tax disclosures. Judgment is required in assessing
the future tax consequences of events that have been recognized in the financial statements or tax returns. Variations in the actual
outcome of these future tax consequences could materially impact our financial position, results of operations, and cash flows.
In assessing the need for a valuation allowance, we evaluate all significant available positive and negative evidence, including
historical operating results, estimates of future taxable income and the existence of prudent and feasible tax planning strategies.
At December 31, 2020 we determined that we would be able to realize our deferred income tax assets in the future and released $7,487,000
of the valuation allowance. Interest and penalties associated
with income taxes are classified as income tax expense in the consolidated statements of operations. |
| Stock-Based Compensation | For equity-classified awards,
compensation expense is recognized over the requisite service period based on the computed fair value on the grant date of the
award. Equity classified awards include the issuance of stock options and restricted stock units (“RSUs”). |
| Comprehensive Income/(Loss) | There were no other components
of comprehensive income/(loss) other than net income/(loss) for the three months ended March 31, 2021 and 2020. |
| Operating Segments | Accounting guidance establishes standards for
the way public business enterprises are to report information about operating segments in annual financial statements and requires
enterprises to report selected information about operating segments in financial reports issued to stockholders. The Company has
two operating segments, which consist of Cloud Telecommunications and Web Services. Research and development expenses are allocated
to Cloud Telecommunications and Web Services segments based on the level of effort, measured primarily by wages and benefits attributed
to our engineering department. Indirect sales and marketing expenses are allocated to the Cloud Telecommunications and Web
Services segments based on level of effort, measured by month-to-date contract bookings. General and administrative |
| Significant Customers | No customer accounted for
10% or more of our total revenue for the three months ended March 31, 2021 and 2020. No customer accounted for 10% or more of our
total trade accounts receivable as of March 31, 2021 and one telecommunications services customer accounted for 11% of total trade
accounts receivable as of December 31, 2020. |
| Recently Adopted Accounting Pronouncements | In December 2019, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12 to simplify the
accounting in ASC 740, Income Taxes The adoption
of this guidance did not have a material impact on our consolidated financial statements and related disclosures. In August 2018, the FASB
issued ASU 2018-13, which removes, modifies and adds to the disclosure requirements on fair value measurements in Topic 820. The
amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to
develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively
for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should
be applied retrospectively to all periods presented upon their effective date. An entity is permitted to early adopt any removed
or modified disclosures upon issuance of this updated guidance and delay adoption of the additional disclosures until their effective
date. We adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated
financial statements and related disclosures. In January 2017, the FASB
issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): |
| Recently Issued Accounting Pronouncements | In August 2020, the FASB
issued ASU 2020-06, which simplifies the accounting for convertible instruments. ASU 2020-06 eliminates certain models that require
separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates
certain of the conditions for equity classification for contracts in an entity’s own equity. ASU 2020-06 also requires entities
to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect
of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based
payment awards. ASU 2020-06 is effective for our fiscal year beginning after December 15, 2021, including interim periods within
this fiscal year. This guidance can be applied using either a modified or full retrospective approach. The Company is currently
evaluating the impact this ASU will have on the financial statements and related disclosures, as well as the timing of adoption. |
