10-K/A 1 cxdo_10ka.htm AMENDED ANNUAL REPORT Blueprint
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————
 
FORM 10-K/A
(Amendment No. 1)
 
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018:
Or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
———————
 
Crexendo, Inc.
(Exact name of registrant as specified in its charter)
———————
 
Nevada
 
001-32277
 
87-0591719
(State or Other Jurisdiction
 
(Commission
 
(I.R.S. Employer
of Incorporation or Organization)
 
File Number)
 
Identification No.)
 
1615 South 52nd Street, Tempe, AZ 85281
 (Address of Principal Executive Office) (Zip Code)
 
(602) 714-8500
 (Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
———————
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Name of each exchange on which registered
Common Stock, par value $0.001 per share
 
 OTCQX Marketplace
 
Securities registered pursuant to Section 12(g) of the Act: None
———————
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
 
Large accelerated filer
☐
 
 
Accelerated filer
☐
 
Non-accelerated filer
☐
 
(Do not check if a smaller reporting company)
Smaller reporting company
☒
 
 
 
 
 
Emerging growth company
☐
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐  
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
 
The aggregate market value of the common stock held by non-affiliates of the registrant as of December 31, 2018 was approximately $7,451,917.
 
The number of shares of the registrant’s common stock outstanding as of February 28, 2019 was 14,394,113.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
None
 

 
 
 
EXPLANATORY NOTE
 
Crexendo, Inc. (the “Company”) is filing this Amendment No. 1 (“Amendment No. 1”) to amend its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (“Form 10-K”), filed with the Securities and Exchange Commission on March 5, 2019 (“Original Filing”). The principal purpose of this Amendment No. 1 is to include the Part III information that was previously omitted from the Original Filing in reliance on General Instruction G(3) to Form 10-K. Accordingly, this Amendment No. 1 hereby amends and restates Items 10 through 14 of Part III and updates the Exhibits in Item 15 of Form 10-K.
 
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Amendment No. 1 also contains new certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, which are attached hereto. Because no financial statements have been included in this Amendment No. 1 and this Amendment No. 1 does not contain or amend any disclosure with respect to Items 307 and 308 of Regulation S-K, paragraphs 3, 4, and 5 of the certifications have been omitted.
 
Except as described above, no changes have been made to the Original Filing and this Amendment No. 1 does not modify, amend, or update in any way any of the financial or other information contained in the Original Filing. This Amendment No. 1 does not reflect events that may have occurred subsequent to the Original Filing and does not modify or update in any way disclosures made in the original Form 10-K. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing and with our filings with the SEC subsequent to the Original Filing.
 
 
 
ii
 
 
TABLE OF CONTENTS
 
PART III
 
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
1
ITEM 11.
EXECUTIVE COMPENSATION
6
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
11
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
11
ITEM 14
PRINCIPAL ACCOUNTANT FEES AND SERVICES
13
 
PART IV
 
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
14
SIGNATURES
15
 
  
 
 
iii
 
 
PART III
  
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
BOARD OF DIRECTORS
 
Set forth in the table below are the names, ages and positions of each Director on our Board. None of our directors or executive officers has any family relationship to any other director or executive officer.
 
Name
 
Age
 
Position
Steven G. Mihaylo
 
75
 
Chairman of the Board, Chief Executive Officer
Jeffrey P. Bash
 
77
 
Director
Anil Puri
 
69
 
Director
David Williams
 
63
 
Director
Todd Goergen
 
46
 
Director
 
Set forth below is a brief description of the business experience for at least the previous five years of our director:
 
Steven G. Mihaylo
 
Mr. Mihaylo was appointed our Chief Executive Officer in 2008 and Chairman of the Board in November 2010. Mr. Mihaylo is the former Chairman and Chief Executive Officer of Inter-Tel, Incorporated (“Inter-Tel”), which he founded in 1969. Mr. Mihaylo led the Inter-Tel revolution from providing business telephone systems to offering complete managed services and software that help businesses facilitate communication and increase customer service and productivity. Before selling Inter-Tel for nearly $750 million in 2007, he grew the business to nearly $500 million in annual revenue. Mr. Mihaylo led the development of Inter-Tel from providing business telephone systems to offering complete managed services and software that helped businesses facilitate communication and increase customer service and productivity. The Board nominated Mr. Mihaylo to the Board in part because he is the Chief Executive Officer of the Company and has more than 40 years of experience in the industry.
 
Mr. Mihaylo was awarded an honorary PhD from California State University - Fullerton and received a Bachelor of Arts in Business Administration in Accounting & Finance from California State University, Fullerton in 1969. Mr. Mihaylo has served on boards of numerous community organizations including the Arizona Heart Foundation, Junior Achievement of Arizona, Arizona Museum of Science and Technology and the Arizona State University College of Business Dean’s Council of 100. Committed to education, Mr. Mihaylo is involved with the Karl Eller College of Management at the University of Arizona and has served on the advisory board of Junior Achievement of Central Arizona for over 25 years, as a member of the board of directors, as well as being a member of the Big Bear High School Education Foundation, and is on the Dean’s Advisory Board of California State University - Fullerton.
 
David Williams
 
Mr. Williams has been a director of the company since May 2008.  Since 2008, Mr. Williams has served as the Chairman and Chief Executive Officer at Equity Capital Management Corp, which provides asset management, and tax oriented consulting and financing for real estate investors.  In addition, Mr. Williams serves as Counsel and Chief Financial Officer of Pacific Equities Capital Management Corporation, a real estate holding company.  From 1996 to 2008, Mr. Williams acted as an independent consultant in taxation, real estate transactions and venture capital. Mr. Williams served as Chief Financial Officer and tax counsel at Wilshire Equities Corp., from 1987 to 1990 and as President from 1990 to 1996. From 1980 to 1987, Mr. Williams rose from a junior staff member to director position at Arthur Young & Co., a public accounting firm.  The Board recognizes Mr. Williams' business, finance and tax experience and values his contributions to Board discussions and to the Company.  Mr. Williams is a certified public accountant in California, Nevada and Washington, and holds a juris doctorate degree in law from the McGeorge Law School of University of the Pacific. Mr. Williams graduated from Stanford University with a Master of Science degree in engineering finance and a Bachelor of Science degree in biological science with honors.
 
 
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Todd A. Goergen
 
Mr. Goergen is Founder and Managing Partner of The Ropart Asset Management Funds and serves on the Investment Committee of Ropart Investments, LLC.  Mr. Goergen's primary responsibilities include the management of the private equity portfolio, assisting in asset allocation and oversight of the firm’s outside investment managers.  Additionally, Mr. Goergen has been responsible for many of the firm's strategy decisions including; active versus passive management, impact of investment manager returns and broader investor trends in the alternative investment industry.  Prior to founding the RAM Funds in 2001, Mr. Goergen began his career in Mergers and Acquisitions and corporate finance at Donaldson, Lufkin, and Jenrette ("DLJ"). While at DLJ, Mr. Goergen was involved with over several billion dollars of buy side and sell side transactions.  After DLJ, Mr. Goergen was Director of Mergers and Acquisitions at Blyth, Inc., a leading global designer and marketer of personal and decorative products. Mr. Goergen graduated from Wake Forest University with concentrations in Economics and Political Science.  Mr. Goergen sits on the board of directors for the following firms: Cura, Crexendo and Fragmob; and is an observer on the board of Heal.  Additionally, Mr. Goergen is an active member of U.S. and International Advisory Councils to the Global Leadership Foundation and is an activist in the preservation of African wildlife.  Mr. Goergen is an avid wine enthusiast and has written columns for several magazines.
 
Jeffrey P. Bash
 
Mr. Bash has been a long time investor in Crexendo and has extensive investing and corporate finance experience.  From 2008 to the present Bash has also worked as a consultant to the private equity firm, FinTekk AP, LLC of Newport Beach, CA, providing strategic planning, corporate finance, structure, analysis, research and report writing services; including advisory services, as needed, to small private companies.  Since 1996, Bash has been a private investor and advocate for stockholder interests with both managements and Boards.  Prior to 1996, Bash was a Corporate Vice President & Actuary for New York Life Insurance Company, becoming a Fellow of the Society of Actuaries (FSA) from 1970 until his retirement in 1995.  He has also been a Vice President of private, family-owned Richmont Corporation of Dallas, TX, providing corporate finance services.  Mr. Bash received his Bachelor of Arts degree in mathematics from Oberlin College. 
 
Anil Puri
 
Dr. Anil Puri is director of the Woods Center for Economic Analysis and Forecasting at Cal State Fullerton. He served as provost for the university and dean for the Mihaylo College of Business and Economics. Prior to becoming Dean in 1998, Dr. Puri was department chair and professor of economics at California State University, Fullerton. Dr. Puri is a noted economist and scholar who has served as the Executive Vice President of the Western Economic Association International, the second largest professional association of economists in the United States and is a member of the American Economic Association, and the National Association of Business Economists. Dr. Puri brings to the Board extensive business and financial experience. Dr. Puri has previously served and counseled public boards and he is a panel member of the National Association of Business Economists' Survey of Economic Conditions.
 
EXECUTIVE OFFICERS
 
The name, age, position and a brief account of the business experience of each of our executive officers as of December 31, 2018 are set forth below:
 
Name
 
Age
 
Position
Steven G. Mihaylo
 
75
 
Chief Executive Officer and Chairman of the Board
Doug Gaylor
 
53
 
Chief Operating Officer and President
Ron Vincent
 
43
 
Chief Financial Officer
 
Steven G. Mihaylo
 
Biographical information for Mr. Mihaylo is set forth above under “Board of Directors”
 
 
2
 
 
Doug Gaylor
 
Mr. Gaylor has served as our President and Chief Operating Officer (COO) since May 2012.  Prior to ascending to the role of President, Mr. Gaylor was Vice President of Sales for the company, a position he held since joining the company in 2009. Mr. Gaylor’s 30+ years in the telecom industry have all been focused on sales, business development, and executive management with publicly held telecommunications companies making him a subject matter expert in UCaaS, call center, and collaboration.
 
Prior to joining Crexendo, Mr. Gaylor held positions of increasing responsibility, culminating with the position of Sr. Vice President, at Inter-Tel/ Mitel where he was originally hired in 1987. Doug was responsible for overseeing the sales efforts in the Western United States where he was ultimately responsible for the activities of approximately 200 sales representatives. Under his leadership yearly sales for his region reached over $175 million annually. Doug holds a Bachelors of Arts in Communications from the University of Houston. He is an active Board Member for multiple non-profit organizations specializing in education and community support.
 
Ron Vincent
 
Mr. Vincent has served as our Chief Financial Officer since April 2012. Prior to joining the Company, Mr. Vincent was employed by Ernst & Young, LLP (EY), as an audit senior manager, which concluded his fourteen year professional career as an auditor. Mr. Vincent received a Bachelor of Science in Business from Indiana University (Bloomington), Kelly School of Business in 1998 and a Master of Business Administration degree from the University of Phoenix. Mr. Vincent is a licensed Certified Public Accountant in the state of Arizona
 
CORPORATE GOVERNANCE
 
Board Meetings
 
During the year ended December 31, 2018, our Board met four times. Each director attended at least 75% of the aggregate of the total number of meetings of our Board and the total number of all meetings held by committees on which he served during the year ended December 31, 2018. All of our directors are invited, but not required, to attend the annual meeting. Our Chairman of the Board and major shareholder, Mr. Mihaylo attended the 2018 annual meeting.
 
Information about Committees of our Board of Directors
 
Our Board of Directors has established three committees, the Audit Committee, comprised of Messrs. Williams (chairman), Goergen and Dr. Puri, the Compensation Committee comprised of Messrs. Goergen (chairman) and Bash, and the Nominating Committee, comprised of Messrs. Bash (chairman), Goergen, and Williams. Our Board of Directors has determined that each of these persons is “independent” under the rules of the OTCQX Marketplace and applicable regulatory requirements.
 
Audit Committee
 
Mr. Williams serves as Chairman of our Audit Committee. Our Audit Committee held four meetings during the year ended December 31, 2018 and operates under a charter adopted by our Board on March 23, 2004 and amended and restated on August 9, 2006. The charter is available on our website at www.crexendo.com. Our Audit Committee is responsible for reviewing and discussing our audited financial statements with management, discussing information with our auditors relating to the auditors' judgments about the quality of our accounting policies and procedures, recommending to our Board that the audited financials be included in our Annual Report on Form 10-K and overseeing compliance with the Securities and Exchange Commission requirements for disclosure of auditors' services and activities.
 
Our Board of Directors has determined that David Williams, Chairman of our Audit Committee, is an audit committee financial expert as defined in Item 407(d) of Regulation S-K under the Securities Exchange Act of 1934, as amended. No Audit Committee member serves on more than three publicly-traded companies.
 
Compensation Committee
 
Mr. Goergen serves as Chairman of our Compensation Committee. The Compensation Committee held two meetings during the year ended December 31, 2018 and evaluates the performance of executives, pursuant to the Compensation Committee Charter, a copy of which is posted on our website at www.crexendo.com. The Compensation Committee has decision-making authority with respect to the compensation of our named executive officers, including our Chief Executive Officer. The Committee also administers our long-term incentive plans and has decision-making authority with respect to stock option grants to employees.
 
 
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In carrying out its responsibilities, the Compensation Committee may engage outside consultants as it determines to be appropriate. The Compensation Committee did not retain a compensation consultant during the year ended December 31, 2018.
 
Nominating Committee
 
Mr. Bash serves as the Chairman of our Nominating Committee. Our Nominating Committee, which held zero meetings since our last annual meeting, reviews and suggests candidates for election or appointment to our Board, and operates pursuant to our Nominating Committee Charter, a current copy of which is posted on our website at www.crexendo.com. Our Nominating Committee may attempt to recruit persons who possess the appropriate skills and characteristics required of members of our Board. Our Nominating Committee may use any reasonable means for recruitment of potential members including their own expertise or the use of one or more third-party search firms to assist with this purpose.
 
In the course of reviewing potential director candidates, the Nominating Committee considers nominees recommended by our shareholders. When considering a potential candidate for service as a director, the Nominating Committee may consider, in addition to the minimum qualifications and other criteria approved by our Board, all facts and circumstances that the Nominating Committee deems appropriate or advisable, including, among other things, the skills of the proposed director candidate, his or her availability, depth and breadth of business experience or other background characteristics, his or her independence and the needs of our Board. At a minimum, each nominee, whether proposed by a stockholder or any other party, is expected to have the highest personal and professional integrity, demonstrate sound judgment and possesses the ability to effectively interact with other members of our Board to serve the long-term interests of our company and shareholders. In addition, the Nominating Committee may consider whether the nominee has direct experience in our industry or in the markets in which we operate and whether the nominee, if elected, assists in achieving a mix of Board members that represent a diversity of background and experience. The procedures to be followed by shareholders in submitting such recommendations are described below in the section entitled “Submission of Securities Holder Recommendations for Director Candidates.”
 
Leadership Structure
  
Our Chief Executive Officer serves as the Chairman of the Board. We believe that this leadership structure is appropriate due to the nature of our business. Mr. Mihaylo’s experience in leadership positions throughout our company during his tenure, as well as his role in developing and executing the strategic plan, is critical to our future results. Mr. Mihaylo was able to utilize his in-depth knowledge and perspective gained in running our company to effectively and efficiently guide the full Board by recommending Board and committee meeting agendas, leading Board discussions on critical issues and creating a vital link among the Board, management and shareholders. Our Board believes this structure serves our shareholders by ensuring the development and implementation of our company’s strategies.
 
Risk Oversight
 
In general, our Board, as a whole and also at the committee level, oversees our risk management activities. Our Board annually reviews management’s long-term strategic plan and the annual budget that results from that strategic planning process. Using that information, our Compensation Committee establishes both the short-term and long-term compensation programs that include all our executives (including the named executive officers). These compensation programs are ratified by our Board, as a whole. The compensation programs are designed to focus management on the performance metrics underlying the operations of the Company, while limiting risk exposure to our company. Our Board receives periodic updates from management on the status of our operations and performance (including updates outside of the normal Board meetings). Finally, as noted below, our Board is assisted by our Audit Committee in fulfilling its responsibility for oversight of the quality and integrity of our accounting, auditing and financial reporting practices. Thus, in performing its risk oversight our Board establishes the performance metrics, monitors on a timely basis the achievement of those performance metrics, and oversees the mechanisms that report those performance metrics.
 
Code of Business Conduct
 
We have adopted a Code of Business Conduct and Ethics applicable to our directors, officers and employees. A copy of this code is posted on our website at www.crexendo.com. In the event that we amend or waive any of the provisions of the Code of Business Conduct and Ethics applicable to our Chief Executive Officer, Chief Financial Officer, we intend to satisfy our disclosure obligations under Item 5.05 of Form 8-K by posting such information on our website.
 
 
4
 
 
Stockholder Communications
 
Shareholders and other interested parties who wish to communicate with non-management directors of the Company should send their correspondences to: Crexendo Non-Management Directors, Crexendo, Inc., 1615 South 52nd Street, Tempe, Arizona 85281, or by email to nonmanagementdirectors@crexendo.com. All communications are forwarded directly to the appropriate non-management director.
 
Submission of Security Holder Recommendations for Director Candidates
 
All security holder recommendations for director candidates must be submitted in writing to the Secretary of our Company, Jeffrey G. Korn, at 1615 South 52nd Street, Tempe, Arizona 85281, who will forward all recommendations to the Nominating Committee. All security holder recommendations for director candidates must be submitted to our company not less than 120 calendar days prior to the date on which the company’s Proxy Statement was released to shareholders in connection with the previous year’s annual meeting of shareholders. All security holder recommendations for director candidates must include (1) the name and address of record of the security holder, (2) a representation that the security holder is a record holder of our security, or if the security holder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b), (2) of the Securities Exchange Act of 1934, (3) the name, age, business and residential address, educational background, public company directorships, current principal occupation or employment, and principal occupation or employment for the preceding five full fiscal years of the proposed director candidate, (4) a description of the qualifications and background of the proposed director candidate which addresses the minimum qualifications and other criteria for directors approved by our Board from time to time, (5) a description of all arrangements or understandings between the security holder and the proposed director candidate, (6) the consent of the proposed director candidate to be named in the proxy statement, to have all required information regarding such director candidate included in the applicable proxy statement, and to serve as a director if elected, and (7) any other information regarding the proposed director candidate that is required to be included in a proxy statement filed pursuant to the rules of the Securities and Exchange Commission.
 
DIRECTOR COMPENSATION
 
The annual pay package for non-employee directors is designed to attract and retain highly qualified professionals to represent our shareholders. We also reimburse our directors for travel, lodging and related expenses they incur on company-related business, including Board and committee meetings. In setting director compensation, we consider the amount of time that directors spend in fulfilling their duties to the Company as well as the skill level required by our directors. Directors who are also employees receive no additional compensation for serving on our Board. For the years ended December 31, 2018 and 2017, non-employee director compensation consisted of the following.
 
Cash Compensation.  For the year ended December 31, 2018, our non-employee directors received quarterly cash compensation of $2,500 per quarter following completion of the quarterly meetings.
 
Stock Options and Restricted Stock Units. On March 9, 2018, we granted to each non-employee director an option to purchase 10,000 shares of common stock at an exercise price of $2.93, which price was not less than 100% of the fair market value of an underlying share of common stock on the date of grant. Each such option vests in equal monthly installments over 12 months, with the first vesting date being April 9, 2018. In conformity with accounting guidance, the option awards to our non-employee directors were valued using the Black-Scholes option-pricing model on the date of grant, which were valued at $1.93 per share.
 
The following table summarizes the compensation earned by and paid to our non-employee directors for the year ended December 31, 2018:
 
Director
 
Fees Earned or Paid in Cash
 
 
Option Awards (1)
 
 
All Other Compensation
 
 
Total
 
Todd Goergen
 $10,000 
 $19,281(2)
 $- 
 $29,281 
Jeffrey P. Bash
 $10,000 
 $19,281(4)
 $- 
 $29,281 
David Williams
 $10,000 
 $19,281(2)
 $- 
 $29,281 
Anil Puri
 $10,000 
 $19,281(3)
 $- 
 $29,281 
 
(1)
The amounts shown in the “Stock Awards” and “Option Awards” column represent the aggregate grant date fair value of the options and restricted stock units granted to the NEOs, computed in accordance with accounting guidance. Estimates of forfeitures related to service-based vesting conditions have been disregarded. The assumptions used in the calculation of these amounts are included in the notes to our consolidated financial statements for the year ended December 31, 2018, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 6, 2019.
(2)
As of December 31, 2018, each of Messrs. Goergen and Williams held unexercised options to purchase an aggregate of 125,000 shares of our common stock.
(3)
As of December 31, 2018, Dr. Puri held unexercised options to purchase an aggregate of 145,000 shares of our common stock.
(4)
As of December 31, 2018, Mr. Bash held unexercised options to purchase an aggregate of 85,000 shares of our common stock.
 
 
5
 
 
ITEM 11.  EXECUTIVE COMPENSATION
 
Compensation Discussion and Analysis
 
The overall objective of our executive compensation program is to help create long-term value for our shareholders by attracting and retaining talented executives, rewarding superior operating and financial performance, d aligning the long-term interests of our executives with those of our shareholders. Accordingly, our executive compensation program incorporates the following principles:
 
●
We believe that retaining experienced, competent, goal-oriented executives and minimizing executive turnover is in our shareholders’ best interests;
●
We believe that a portion of our executives’ compensation should be tied to measures of performance of our business as a whole and that such measures of performance should be non-discretionary;
●
We believe that a portion of our executives’ compensation should be tied to measures of performance within each executive’s specific job responsibilities and that those measures should be as non-discretionary as possible;
●
We believe that the interests of our executives should be linked with those of our shareholders through the risks and rewards of owning our common stock;
●
We believe that a meaningful portion of each executive’s long-term incentives, and merit increases will vary based upon individual performance;
●
We believe that each executive’s performance against corporate and individual objectives for the previous year should be periodically reviewed, and that the difficulty of achieving desired results in any particular year must be considered; and
●
We believe that we should consider the ability of each executive to support our long-term performance goals; as well as each executive’s ability to fulfill his or her management responsibilities and his or her ability to work with and contribute to our executive management team.
 
Executive Compensation Procedures
 
In conjunction with our efforts to achieve the executive compensation objectives and implement the underlying compensation principles described above, we follow the procedures described below:
 
Role of the Compensation Committee
 
The Compensation Committee periodically requests and receives survey data from our human resource department on the compensation levels and practices of companies that need executive officers with skills and experience similar to what we require, companies that are in the same or similar industries as us, and companies with market capitalizations and revenues similar to us. The Compensation Committee uses this broad based survey information as a check on whether our compensation packages are consistent with current industry practices and are at a level that will enable us to attract and retain capable executive officers. We did not retain the services of a compensation consulting firm in 2018.
 
With respect to executives other than the Chief Executive Officer, the Compensation Committee seeks and receives recommendations from the Chief Executive Officer with respect to performance and appropriate levels of compensation. The Committee does not request or accept recommendations from the Chief Executive Officer concerning his own compensation.
 
The Compensation Committee’s conclusions and recommendations on the compensation packages for our executive officers are based on the total mix of information from the sources described above, as well as the Committee Members’ general knowledge of executive compensation practices and their personal evaluations of the likely effects of compensation levels and structure on the attainment of our business and financial objectives.
 
Each year, our senior management prepares a business plan and establishes goals for our company. The Compensation Committee reviews, modifies (if necessary), occasionally sets, and ultimately approves these goals, which are then incorporated into the company’s business plan. Periodically throughout the year, the Compensation Committee compares Company goals against actual circumstances and accomplishments. The Compensation Committee may revise the Company’s goals and business plan if they determine that circumstances warrant.
 
The Compensation Committee relies on its judgment in making compensation recommendations and decisions after reviewing our company’s overall performance and evaluating each executive’s performance against established goals, leadership ability, responsibilities within the company, and current compensation arrangements. The compensation program for NEOs and the Compensation Committee assessment process are designed to be flexible so as to better respond to the evolving business environment and individual circumstances.
 
 
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The Compensation Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Compensation Committee consisting of one or more members of the committee. In particular, the Compensation Committee may delegate the approval of certain transactions to a subcommittee consisting solely of members of the committee who are (a) “Non-Employee Directors” for the purpose of Rule 16b-3 under the Securities Exchange Act of 1934, as in effect from time to time, and (b) “outside directors” for the purposes of Section 162(m) of the Internal Revenue Code, as in effect from time to time.
 
Elements of our Compensation Programs: What our Compensation Programs are Designed to Award and Why We Choose Each Element
 
Elements of Compensation.   We implement the executive compensation objectives and principles described above through the use of the following elements of compensation, each of which is described in greater detail below:
 
●
Base Salary
 
●
Stock Option and Stock Awards
 
●
Retirement Benefits
 
●
Other Personal Benefits
 
The Compensation Committee evaluates overall compensation levels for each NEO in relation to other executives within our company and in relation to the NEO’s prior year compensation. The Compensation Committee also considers competing offers made to NEOs, if any. The Compensation Committee considers each element of compensation collectively with the other elements when establishing the various forms and levels of compensation for each NEO. The Compensation Committee approves compensation programs which it believes are competitive with our peers, such that the combination of base pay and performance-based bonuses results in an aggregate rate of cash salary, bonus compensation, equity awards and other benefits for our NEOs within competitive market standards.
 
In determining long-term equity awards to executives, the Compensation Committee considers total equity awards available under the Plan, the number of equity awards to be granted to each executive in relation to other executives, the overall compensation objective for each executive, and the number and type of awards to executives in prior years.
 
Base Pay.  Base salaries of the NEOs are set at levels that the Compensation Committee believes are generally competitive with our market peers so as to attract, reward, and retain executive talent. The Compensation Committee may opt to pay higher or lower amounts depending on individual circumstances. The Compensation Committee sets the base pay of the Chief Executive Officer and the other NEOs. Annual adjustments are influenced by growth of our operations, revenues and profitability, individual performance, changes in responsibility, and other factors. The table below summarizes base pay for our NEOs as of December 31, 2018:
 
Name
 
Base Pay
 
Position
Steven G. Mihaylo
 $- 
Chief Executive Officer and Chairman of the Board
Doug Gaylor
 $235,000 
Chief Operating Officer and President
Ron Vincent
 $172,500 
Chief Financial Officer
 
Stock Option Awards.   The Compensation Committee grants discretionary, long-term equity awards to our NEOs under the Plan. These awards have historically been in the form of stock options. The Compensation Committee believes that stock option awards align the interests of NEOs with the interests of our shareholders and will incentivize the NEOs to provide stockholder value. The Compensation Committee believes that such grants provide long-term performance-based compensation, help retain executives through the vesting periods, and serve to align management and stockholder interests. In making awards under the Plan, the Compensation Committee considers grant size. Options vest only to the extent that the NEO remains a company employee through the applicable vesting dates, typically monthly over three years. We believe the three year vesting schedule assists in retaining executives and encourages the NEOs to focus on long-term performance.
 
We have granted stock options to our NEOs with an exercise price equal to the closing price per share on the date of the grant. We do not grant options with an exercise price below 100% of the trading price of the underlying shares of our common stock on the date of grant. Stock options only have a value to the extent the value of the underlying shares on the exercise date exceeds the exercise price. Accordingly, stock options provide compensation only if the underlying share price increases over the option term and the NEO’s employment continues with us until the vesting date.
 
 
7
 
 
In granting stock options to the NEOs, we also consider the impact of the grant on our financial performance, as determined in accordance with accounting guidance. For share-based equity awards, we record expense in accordance with applicable accounting guidance. The amount of expense we record pursuant to accounting guidance may vary from the corresponding compensation value we use in determining the amount of the awards.
 
Retirement and Other Personal Benefits.   All of our NEOs receive similar retirement and other personal benefits. We sponsor the Crexendo, Inc. Retirement Savings Plan (the “401(k) Plan”) for eligible employees. Our NEOs participate in the 401(k) Plan. The 401(k) Plan is a broad-based, tax-qualified retirement plan under which eligible employees, including the NEOs, may make annual pre-tax salary reduction contributions, subject to the various limits imposed under the Internal Revenue Code of 1986, as amended (the “Code”).  We make matching contributions under the 401(k) Plan on behalf of eligible participants, including the NEOs, at the rate of 100% of the first one percent and 50% of each additional percentage of each participating NEO’s salary up to a six percent deferral, with a two-year vesting schedule for the matched portion. Matching contributions are not subject to non-discrimination requirements imposed by the Code. The 401(k) Plan is intended to help us attract and retain qualified executives through the offering of competitive employee benefits. We do not maintain any other pension or retirement plans for the NEOs.
 
We provide other traditional benefits and limited perquisites to our NEOs in order to achieve a competitive pay package as detailed in the Summary Compensation Table.  The Compensation Committee believes that these benefits, which are detailed in the Summary Compensation Table under the heading “All Other Compensation”, are reasonable, competitive, appropriate, and consistent with our overall executive compensation program. Other than our company’s contributions to the 401(k) Plan, these benefits consist principally of employer-paid premiums on health insurance, personal automobile reimbursements, and mobile phone communications charges.
 
Compensation of Steven G. Mihaylo, Chief Executive Officer. Mr. Mihaylo is primarily responsible for investor relations activities and the general management of our NEOs. Mr. Mihaylo receives a small base salary to cover health insurance premiums. Mr. Mihaylo does not participate in any non-equity incentive plans, but is eligible to receive stock option awards or other equity compensation. The Compensation Committee believes Mr. Mihaylo’s interests are directly aligned with the interests of our shareholders because of Mr. Mihaylo’s significant equity holdings in our company and his eligibility to participate in stock option awards or other equity compensation similar to Messrs. Gaylor and Vincent.
 
Compensation of Doug Gaylor, President and Chief Operating Officer. Mr. Gaylor has general responsibility for our operations. Mr. Gaylor receives a base salary similar to the other NEOs. Mr. Gaylor also receives retirement and other personal benefits similar to the other NEOs. Mr. Gaylor receives stock options or other equity compensation similar to Messrs. Mihaylo and Vincent.
 
Compensation of Ronald Vincent, Chief Financial Officer. Mr. Vincent has general responsibility for our accounting, finance, and human resource functions. Mr. Vincent receives a base salary similar to the other NEOs. Mr. Vincent also receives retirement and other personal benefits similar to the other NEOs. Mr. Vincent receives stock options or other equity compensation similar to Messrs. Gaylor and Mihaylo.
 
Deductibility of Executive Compensation.   Section 162(m) of the Code imposes a $1 million annual limit on the amount that a public company may deduct for compensation paid to its chief executive officer during a tax year or to any of its three other most highly compensated executive officers who are still employed at the end of the tax year. The limit does not apply to compensation that meets the requirements of Code Section 162(m) for “qualified performance-based” compensation (i.e., compensation paid only if the executive meets pre-established, objective goals based upon performance criteria approved by the shareholders).
 
The Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code. In certain situations, the Compensation Committee may approve compensation that will not meet the requirements of Code Section 162(m) in order to ensure competitive levels of total compensation for our executive officers. We do not have a stockholder approved non-equity incentive compensation plan. As a result, all bonus amounts paid to the NEOs do not constitute qualified performance-based compensation for purposes of Code Section 162(m). For the years ended December 31, 2018 and 2017, the compensation paid to the NEOs did not exceed the limitations imposed by Code Section 162(m).
 
 
8
 
 
Summary Compensation Table 
 
The table below summarizes the total compensation paid or earned by each of our NEOs for the year ended December 31, 2018 (marked as “2018” in the year column), and for the year ended December 31, 2017 (marked as “2017” in the year column).
 
Name and Principal Position
Year
 
 Salary
 
 
 Bonus
 
 
 Stock Awards
 
 
 Option Awards (1)
 
 
 Non-Equity Incentive Plan
 
 
 All Other Compensation
 
 
 Total Compensation
 
Steven Mihaylo (3)
2018
 $4,089 
 $- 
 $- 
 $- 
 $- 
 $1,260 
 $5,349 
Chief Executive Officer
2017
 $8,647 
 $- 
 $- 
 $38,155 
 $- 
 $59,020 
 $105,822 
 
 
    
    
    
    
    
    
    
Ronald Vincent (2)
2018
 $166,731 
 $- 
 $- 
 $67,484 
 $- 
 $13,437 
 $247,652 
Chief Financial Officer
2017
 $154,904 
 $- 
 $- 
 $19,078 
 $- 
 $12,874 
 $186,856 
 
 
    
    
    
    
    
    
    
Doug Gaylor (2)
2018
 $225,385 
 $- 
 $- 
 $86,765 
 $- 
 $14,753 
 $326,903 
Chief Operating Officer & President
2017
 $206,539 
 $- 
 $- 
 $19,078 
 $- 
 $14,579 
 $240,196 
 
(1)
The amounts shown in the “Stock Awards” and “Option Awards” column represent the aggregate grant date fair value of the options and restricted stock units granted to the NEOs, computed in accordance with accounting guidance.  Estimates of forfeitures related to service-based vesting conditions have been disregarded. The assumptions used in the calculation of these amounts are included in notes to our consolidated financial statements for the year ended December 31, 2018, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 6, 2019.
(2)
All other compensation for Messrs. Vincent and Gaylor consists primarily of matching contributions to the 401(k) Plan, automobile allowance, and other miscellaneous benefits, none of which exceeded $10,000.
(3)
All other compensation for Messr. Mihaylo consists of stock option compensation from the exercise of in the money stock options.
 
 
9
 
 
Outstanding Equity Awards as of December 31, 2018
 
The table below provides information on the holdings of stock options by the NEOs as of December 31, 2018.
 
 
 
 
 
 
Option Awards      
 
 
Stock Awards  
 
Name
 
Number of Securities of Underlying Unexercised Options (#) Exercisable
 
 
Number of Securities Underlying Unexercised Options (#) Unexercisable
 
 
Option Exercise Price
 
Option Expiration Date
 
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
 
 
Equity Incentive Plan Awards: Market of Payout Value of Unearned Shares, Unites or Other Rights That Have Not Vested ($)
 
Steven Mihaylo
  100,000 
  - 
 $7.69 
9/8/2019
  - 
  - 
 
  70,322 
  - 
 $3.30 
7/16/2020
  - 
  - 
 
  170,000 
  - 
 $5.90 
5/17/2021
  - 
  - 
 
  191,678 
  - 
 $4.08 
3/1/2022
  - 
  - 
 
  140,000 
  - 
 $3.19 
3/4/2021
  - 
  - 
 
    
    
    
 
    
    
Ronald Vincent
  25,000 
  - 
 $3.55 
5/15/2022
  - 
  - 
 
  50,000 
  - 
 $2.45 
3/18/2023
  - 
  - 
 
  25,000 
  - 
 $3.19 
3/4/2021
  - 
  - 
 
  75,000 
  - 
 $1.85 
1/5/2022
  - 
  - 
 
  100,000 
  - 
 $1.11 
12/31/2022
  - 
  - 
 
  25,000 
  - 
 $1.56 
3/7/2024
  - 
  - 
 
  8,725 
  26,275(1)
 $2.93 
3/9/2025
    
    
 
    
    
    
 
    
    
Doug Gaylor
  10,000 
  - 
 $7.12 
10/26/2019
  - 
  - 
 
  10,000 
  - 
 $3.30 
7/16/2020
  - 
  - 
 
  25,000 
  - 
 $5.90 
5/17/2021
  - 
  - 
 
  25,000 
  - 
 $4.08 
3/1/2022
  - 
  - 
 
  50,000 
  - 
 $3.55 
5/15/2022
  - 
  - 
 
  50,000 
  - 
 $2.45 
3/18/2023
  - 
  - 
 
  40,000 
  - 
 $3.19 
3/4/2021
  - 
  - 
 
  75,000 
  - 
 $1.85 
1/5/2022
  - 
  - 
 
  150,000 
  - 
 $1.11 
12/31/2022
  - 
  - 
 
  25,000 
  - 
 $1.56 
3/7/2024
  - 
  - 
 
  11,218 
  33,782(1)
 $2.93 
3/9/2025
    
    
 
(1)
Remaining unexercisable options vest ratably on a monthly basis through March 9, 2021.
 
Option Exercises and Stock Vested
 
The following table presents information about the exercise of stock options by NEOs during the years ended December 31, 2018 and 2017.
 
 
 
 
Option Awards
 
 
Stock Awards  
 
Name
 
Year
 
 
Number of shares acquired on exercise (#)
 
 
Value realized on exercise ($)
 
 
Number of shares acquired on exercise (#)
 
 
Value realized on exercise ($)
 
Steven Mihaylo
2018
  3,000 
 $1,260 
  - 
  - 
Steven Mihaylo
2017
  607,000 
 $59,020 
  - 
  - 
 
 
10
 
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
 
The following table sets forth, as of December 31, 2018, the number of shares of our common stock beneficially owned by each of the following persons and groups and the percentage of the outstanding shares owned by each person and group including: (i) each person who is known by us to be the owner of record or beneficial owner of more than 5% of the outstanding shares of our common stock; (ii) each director; (iii) each of our NEO’s; and (iv) all of our current directors and executive officers as a group. 
 
With respect to certain of the individuals listed below, we have relied upon information set forth in statements filed with the Securities and Exchange Commission pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934. Except as otherwise noted below, the address of each person identified in the following table is c/o Crexendo, Inc., 1615 South 52nd Street, Tempe, Arizona, 85281.
 
Name of Beneficial Owner
 
Shares Owned
 
 
Number of Outstanding Warrants and Options (1)
 
 
Total Beneficial Ownership (2)
 
 
Percent of Class Beneficially Owned
 
Steven G. Mihaylo
  10,121,162 
  672,000 
  10,793,162 
  71.6%
Todd Goergen
  360,000 
  122,497 
  482,497 
  3.3%
Jeffrey Bash
  159,992 
  82,497 
  242,489 
  1.7%
David Williams
  20,000 
  122,497 
  142,497 
  1.0%
Anil Puri
  3,501 
  142,497 
  145,998 
  1.0%
Doug Gaylor
  3,500 
  471,218 
  474,718 
  3.2%
Ron Vincent
  - 
  308,725 
  308,725 
  2.1%
All current directors and executive officers as a group (7 persons)
  10,668,155 
  1,921,931 
  12,590,086 
  77.2%
 
(1)
Reflects warrants or options that will be exercisable or vested, as the case may be, as of December 31, 2018.
 
(2)
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, based upon 14,394,113 shares of common stock outstanding on December 31, 2018. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options held by that person that are currently exercisable are deemed outstanding. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. The persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite such stockholder’s name.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based on a review of reports and representations submitted to us, all reports regarding beneficial ownership of our securities required to be filed under Section 16(a) for the year ended December 31, 2018 were timely filed.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
Certain Relationships and Related Transactions
 
Our Audit Committee is responsible for review and, as it determines appropriate, approval or ratification of “related-party transactions” between our company and related persons or entities, other than executive compensation decisions which are addressed by our Compensation Committee. We have adopted policies and procedures that apply to any transaction or series of transactions in which our company or a subsidiary is a participant, the amount involved exceeds $10,000, and a related person or entity has a direct or indirect material interest. Our Audit Committee has determined that, barring additional facts or circumstances, a related person or entity does not have a direct or indirect material interest in any of the following categories of transactions:
 
●
any transaction with another company for which a related person’s only relationship is as an employee (other than an executive officer), director, or beneficial owner of less than 10% of that company’s shares, if the amount involved does not exceed $10,000;
●
any charitable contribution, grant, or endowment by the company to a charitable organization, foundation, or university for which a related person’s only relationship is as an employee (other than an executive officer) or a director, if the amount involved does not exceed $10,000;
●
compensation to directors, for service as directors, determined by our Board;
●
transactions in which all securities holders receive proportional benefits; or
●
banking-related services involving a bank depository of funds, transfer agent, registrar, trustee under a trust indenture, or similar service.
 
 
11
 
 
Transactions involving related persons or entities that are not included in one of the above categories are reviewed by our Audit Committee. Our Audit Committee determines whether the related person or entity has a material interest in a transaction and may approve, not approve or take other action with respect to the transaction in its discretion.
 
Related Party Note Payable
 
On December 30, 2015, Crexendo, Inc. (the "Company") entered into a Term Loan Agreement (the "Loan Agreement"), with Steven G. Mihaylo, as Trustee of The Steven G. Mihaylo Trust dated August 19, 1999 (the "Lender"). Mr. Mihaylo is the principal shareholder and Chief Executive Officer of the Company. The term of the Loan is five years, with simple interest paid at 9% per annum until a balloon payment is due December 30, 2020. The Loan Agreement provides for interest to be paid in shares of common stock of the Company (the “Common Stock”) at a stock price of $1.20. For the first two years of the Loan term, interest will be paid in advance at the beginning of each year; for the last three years of the Loan term, interest will be paid at the end of each year. After the second year of the Loan term, there is no pre-payment penalty for early repayment of the outstanding principal amount of the Loan. If the Loan is repaid within the first two years of the Loan term, the Company will forfeit prepaid interest as a pre-payment penalty.
 
In February 2017, the Company entered into a second amendment to our Loan Agreement with Steven G. Mihaylo. The amendment extends the ability of the Board of Directors to request the remaining $1.0 million available under the Loan Agreement if necessary to fund operations through May 30, 2018. All other terms remain the same as initial loan agreement.
 
In September 2017, Steven G. Mihaylo exercised 444,999 options for a total strike price of $974,000. In December 2017, Steven G. Mihaylo exercised 12,001 options for a total strike price of $22,000. The Company used the proceeds from the stock options exercise to repay $996,000 of the $1.0 million outstanding related party note payable. During the year ended December 31, 2017, the Company accelerated the amortization of the debt discount in the amount of $77,000 as a result of the repayment.
 
In September 2018, the Company repaid the remaining $4,000 of the $1.0 million related party note payable.
 
Related Party Sale-Leaseback
 
On February 28, 2014, the Company sold and leased back the land, building and furniture associated with the corporate headquarters in Tempe, Arizona to a Company that is owned by the major shareholder and CEO of the Company for $2.0 million in cash. The Company recognized a deferred gain of $281,000 on sale-leaseback, which was amortized over the initial lease term of 36 months to offset rent expense. Deferred gain amortization for the years ended December 31, 2018 and 2017 was $0 and $16,000, respectively.
 
Effective March 1, 2017 the rent agreement was renewed for a three year term with rent payable in cash. Rent expense incurred on the sale-leaseback during the years ended December 31, 2018 and 2017 was $300,000 and $288,000, respectively.
 
Independence of our Board of Directors
 
Under the OTCQX Marketplace listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by its board of directors. Our Board consults with our legal counsel to ensure that our Board’s determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of the OTCQX Marketplace, as in effect from time to time.
 
Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his or her family members, and our company, our senior management and our independent auditors, our Board has affirmatively determined that the following four directors are independent directors within the meaning of the applicable rules of the OTCQX Marketplace: Mr. Goergen, Mr. Bash, Dr. Puri, and Mr. Williams. In making this determination, our Board found that none of the directors had a material or other disqualifying relationship with the Company.
 
 
12
 
 
ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
Fees of Independent Registered Public Accounting Firm
 
We have set forth below the aggregate fees paid or accrued for professional services rendered by Urish Popeck during the years ended December 31, 2018 and 2017. All of the services described in the following fee table were approved in conformity with the Audit Committee’s pre-approval process.
 
 
 
Year Ended
December 31,
2018
 
 
Year Ended
December 31,
2017
 
Audit Fees (1) (audit of our annual financial statements, review of our quarterly financial statements, review of our SEC filings and correspondence with the SEC)
 $131,393 
 $127,356 
Tax Fees (2)
  50,271 
  52,501 
 
 $181,664 
 $179,857 
 
(1)
Audit Fees: Fees paid or accrued for professional services rendered for the audit and reviews of our financial statements filed with the SEC on Forms 10-K and 10-Q, and reviews of our correspondence with the Securities and Exchange Commission.
(2)
Tax Fees: Fees billed for the preparation of federal and state income tax returns and other tax consultation services.
 
Pre-Approval Policies and Procedures
 
The Audit Committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm. The policy generally provides for the pre-approval of the scope of and fees for services in the defined categories of audit services, audit-related services, and tax services. Pre-approval is usually provided by the Audit Committee on a project-by-project basis before the independent registered public accounting firm is engaged to provide that service, and for de minimus projects only, pre-approval is provided with a not-to-exceed fee level determined for a group of such de minimus projects. The pre-approval of services may be delegated to the Chairman of the Audit Committee, but the decision must be reported to and ratified by the full Audit Committee at its next meeting.
 
 
13
 
 
PART IV
 
ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
Documents filed as part of this Report:
 
1.
Financial Statements. See Item 8 – Financial Statements and Supplementary Data included in Original Filing previously filed with the Annual Report on Form 10-K filed with the SEC on March 5, 2019, which is being amended hereby.
2.
The Financial Statement Schedule was filed as part of the Original Filing:
 
Schedule II – Valuation and Qualifying Accounts
 
Previously filed with the Annual Report on Form 10-K filed with the SEC on March 5, 2019, which is being amended hereby.
 
3.
Exhibit Index as seen below.
 
EXHIBIT INDEX
 
 
 
 
 
Incorporated By Reference
 
 
Exhibit No.
 
Exhibit Description
 
Form
 
Date
 
Number
 
Filed Herewith
 
8-K
 
3/21/00
 
10.1
 
 
 
S-1
 
6/1/99
 
3.1
 
 
 
S-1
 
9/7/00
 
3.1
 
 
 
10-K
 
10/15/02
 
3.3
 
 
 
10-Q
 
11/20/01
 
3.2
 
 
 
S-1/A
 
11/12/99
 
3.3
 
 
 
S-1/A
 
11/12/99
 
3.4
 
 
 
10-K
 
10/15/02
 
4.1
 
 
 
S-1
 
6/1/99
 
4.1
 
 
 
S-1
 
6/1/99
 
10.6
 
 
 
10-K
 
9/29/03
 
10.2
 
 
 
10-K
 
9/29/03
 
10.3
 
 
 
10-K
 
9/10/04
 
10.11
 
 
 
14-A
 
4/30/13
 
 
 
 
 
8-K
 
3/4/14
 
10.1
 
 
 
8-K
 
3/4/14
 
10.2
 
 
 
8-K
 
12/24/14
 
10.1
 
 
 
8-K
 
12/31/15
 
10.1
 
 
 
8-K
 
6/30/16
 
10.1
 
 
 
8-K
 
12/14/16
 
3.1
 
 
 
8-K
 
12/14/16
 
3.2
 
 
 
8-K
 
2/28/17
 
10.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
X

 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.INS
 
XBRL INSTANCE DOCUMENT
 
 
 
 
 
 
 
 
101.SCH
 
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
 
 
 
 
 
 
 
 
101.CAL
 
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT
 
 
 
 
 
 
 
 
101.DEF
 
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT
 
 
 
 
 
 
 
 
101.LAB
 
XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT
 
 
 
 
 
 
 
 
101.PRE
 
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT
 
 
 
 
 
 
 
 
———————
* Indicates a management contract or compensatory plan or arrangement.
** Previously filed with the Annual Report on Form 10-K filed with the SEC on March 5, 2019, which is being amended hereby.
***Previously furnished with the Annual Report on Form 10-K filed with the SEC on March 5, 2019, which is being amended hereby.
  
 
14
 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
     
 CREXENDO, INC.
 
 
 
 
 
 
Date: June 25, 2019
By:
/s/ Ronald Vincent
 
 
Ronald Vincent
 
 
Chief Financial Officer
 
 
 
 
 
15