AT&T INC.  Management's Report of Financial Condition and Results of Operations in millions of dollars, except per share amounts (Form 10-Q)

CREXENDO, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

This part and different elements of this Kind 10-Q include forward-looking
statements that contain dangers and uncertainties. Ahead-looking statements can
be recognized by phrases corresponding to "anticipates," "expects," "believes," "plans,"
"predicts," and comparable phrases. Ahead-looking statements are usually not ensures of
future efficiency and our Firm's precise outcomes could differ considerably
from the outcomes mentioned within the forward-looking statements. Elements that may
trigger such variations embody, however are usually not restricted to, these mentioned in Half
II, Merchandise 1A, "Threat Elements," that are integrated herein by reference. The
following dialogue must be learn together with our Annual Report on
Kind 10-Ok for the 12 months ended December 31, 2021 (the "2020 Kind 10-Ok") filed with
the SEC and the Condensed Consolidated Monetary Statements and notes thereto
included within the 2022 Kind 10-Qs and elsewhere on this Kind 10-Q. We assume no
obligation to revise or replace any forward-looking statements for any purpose,
besides as required by regulation.



OVERVIEW



Crexendo, Inc. is an award-winning premier supplier of Unified Communications as
a Service (UCaaS), Name Heart as a Service (CCaaS), communication platform
software program options, and collaboration companies designed to offer
enterprise-class cloud communication options to any dimension enterprise by way of our
enterprise companions, brokers, and direct channels. Our options at present assist
over 2.5 million finish customers globally and was lately acknowledged because the quickest
rising UCaaS platform in the USA. By offering quite a lot of
complete and scalable options, we're in a position to cater to companies of all
sizes on a month-to-month subscription foundation with out the necessity for costly capital
investments, no matter the place their enterprise is in its lifecycle. Our
services and products will be categorized within the following choices:



Cloud Telecommunications Providers - Our cloud telecommunications companies
transmit calls utilizing IP or cloud know-how, which converts voice alerts into
digital knowledge packets for transmission over the Web or cloud. Every of our
calling plans gives quite a few primary options sometimes supplied by
conventional phone service suppliers, plus a variety of enhanced options
that we consider provide a lovely worth proposition to our prospects. This
platform permits a consumer, through a single "id" or phone quantity, to entry
and make the most of companies and options no matter how the consumer is related to the
Web or cloud, whether or not it is from a desktop system or an utility on
a
cell system.



We generate recurring income from our cloud telecommunications and broadband
Web companies. Our cloud telecommunications contracts sometimes have a
thirty-six to sixty month time period. We may cost activation and flash charges and
the Firm usually allocates a portion of the activation charges to the desktop
units, which is acknowledged on the time of the set up or buyer
acceptance, and a portion to the service, which is acknowledged over the contract
time period utilizing the straight-line technique. We additionally cost different varied contracted and
non-contracted charges.



We generate product income and gear financing income from the sale and
lease of our cloud telecommunications gear. Revenues from the sale of
gear, together with these from sales-type leases, are acknowledged on the time of
sale or on the inception of the lease, as acceptable.



Software program Options - Our software program options phase derives revenues from three
major sources: software program licenses, software program upkeep assist and
skilled companies. Software program and companies could also be bought individually or in
bundled packages. Typically, contracts with prospects include a number of
efficiency obligations, consisting of software program and companies. For bundled
packages, the Firm accounts for particular person services and products individually
if they're distinct - i.e. if a services or products is individually identifiable
from different gadgets within the bundled package deal and if a buyer can profit from it on
its personal or with different sources which might be available to the shopper. The
consideration is allotted between separate services and products in a bundle
based mostly on their relative stand-alone promoting costs. The stand-alone promoting
costs are decided based mostly on the costs at which the Firm individually sells
the software program licenses {and professional} companies. For gadgets that aren't bought
individually (e.g. further options) the Firm estimates stand-alone promoting
costs utilizing the adjusted market evaluation method. After we present a free
trial interval, we don't start to acknowledge recurring income till the trial
interval has ended and the shopper has been billed for the companies.



We generate software program license income from the sale of perpetual software program
licenses, term-based software program licenses that expire, and Software program-as-a-Service
("SaaS") based mostly software program that are known as subscription preparations. The
Firm doesn't acknowledge software program income associated to the renewal of
subscription software program licenses sooner than the start of the subscription
interval.



We generate subscription and upkeep assist income from buyer assist
and different supportive companies. The Firm presents warranties on its merchandise.
The guarantee interval for our licensed software program is usually 90 days. Sure of
the Firm's warranties are thought of to be assurance-type in nature and do
not cowl something past guaranteeing that the product is functioning as meant.
Based mostly on the steerage in ASC 606, assurance-type warranties don't symbolize
separate efficiency obligations. The Firm additionally sells separately-priced
upkeep service contracts, which qualify as service-type warranties and
symbolize separate efficiency obligations. The Firm doesn't sometimes enable
and has no historical past of accepting materials product returns. Buyer assist
consists of software program updates on a when-and-if-available foundation, phone assist,
built-in web-based assist and bug fixes or patches. Subscription and
upkeep assist income is acknowledged ratably over the time period of the shopper
assist settlement, which is usually one 12 months.




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We generate skilled companies and different income from consulting, technical
assist, resident engineer companies, design companies and set up companies.
Income for skilled companies and different is acknowledged when the efficiency
obligation is full and the shopper has accepted the efficiency obligation.



OUR SERVICES AND PRODUCTS


Our options at present assist over 2.5 million finish customers globally and was
lately acknowledged because the quickest rising UCaaS platform in the USA.
By offering quite a lot of complete and scalable options, we're in a position to
cater to companies of all sizes on a month-to-month subscription foundation with out the
want for costly capital investments, no matter the place their enterprise is in
its lifecycle. Our services and products will be categorized within the following
choices:



Cloud Telecommunications Providers - Our cloud telecommunications service
providing consists of {hardware}, software program, and unified ng IP or cloud know-how over
any high-speed Web connection. These companies are rendered by way of a
number of units and communication options for companies utilizing consumer
interfaces corresponding to a Crexendo branded desktop telephones and/or cell and desktop
purposes. Some examples of cell units are Android cell telephones, iPhones,
iPads or Android tablets. These companies allow our prospects to seamlessly
talk with others by way of cellphone calls that originate/terminate on our
community or PSTN networks. Our cloud telecommunications companies are powered by
our proprietary implementation of requirements based mostly Internet and VoIP cloud
applied sciences. Our companies use our extremely scalable complicated infrastructure that
we construct and handle based mostly on business commonplace finest practices to realize better
efficiencies, higher high quality of service (QoS) and buyer satisfaction. Our
infrastructure contains of compute, storage, community applied sciences, third celebration
merchandise and vendor relationships. We additionally develop finish consumer portals for account
administration, license administration, billing and buyer assist and undertake different
cloud applied sciences by way of our partnerships.



by Crexendo The cloud telecommunications service presents all kinds of important and superior options for companies of all sizes. Many of those options included within the service providing are:


    ·   Enterprise Productiveness Options corresponding to dial-by extension and title,
        switch, convention, name recording, Limitless calling to wherever within the

United States and CanadaWorldwide calls, Toll-free (incoming and outgoing)

Particular person productiveness options corresponding to caller ID, name ready, final

Name Return, Name Recording, Music/Message Ready, Voicemail, Unified

Messaging, Scorching-desking

· Group productiveness options corresponding to Name parkName Pickup, Interactive

        Voice Response (IVR), Particular person and Common Paging, Company
        Listing, Multi-Occasion Conferencing, Group Mailboxes, Internet and cell
        units based mostly collaboration purposes
    ·   Name Heart Options corresponding to Automated Name Distribution (ACD), Name
        Monitor, Whisper and Barge, Automated Name Recording, A method name
        recording, Analytics
    ·   Superior Unified Communication Options corresponding to Discover-Me-Observe-Me,
        Sequential Ring and Simultaneous Ring, Voicemail transcription
    ·   Cell Options corresponding to extension dialing, switch and convention and

seamless switch of Wi-Fi to/from 3G and 4G, LTE, and different knowledge

companies. These options are additionally obtainable on CrexMo, a

cell utility for iPhone and Android smartphones, in addition to for iPad

and Android tablets

· Conventional PBX options corresponding to busy lamp fields, system maintain. 16-48 Harbor

Analog Gadgets Density

In depth choice of workplace units corresponding to entry degree cellphone, govt

Desktop pc, DECT cellphone for cell customers

· Superior fax resolution corresponding to Cloud Fax (cFax) permitting prospects to

ship and obtain faxes from their e-mail shoppers, cellphones and

Desktop computer systems with out having to make use of a fax machine just by attaching a file

· Internet-based on-line portal to manage, handle and provision the system.

Asynchronous communication instruments corresponding to SMS/MMS, chat and doc sharing

        to maintain in tempo with rising communication tendencies.



Many of those companies are included in our primary providing to our prospects for a
month-to-month recurring price and don't require a capital expense. A number of the superior
options corresponding to Automated Name Recording and Name Heart Options require
further month-to-month charges. Crexendo continues to take a position and develop its know-how
and CPaaS choices to make them extra aggressive and worthwhile.



Software program Options – Our software program options providing gives a complete suite of unified communications (UC), video conferencing, collaboration, and make contact with heart options to greater than 200 service suppliers, serving greater than 2.5 million customers worldwide. the world. Our platform permits its service supplier companions to customise packages with unprecedented ranges of flexibility, price effectiveness and ease of use.



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Our software program resolution providing is as follows:

SNAPsolution® – an entire IP-based platform that provides a large

suite of UC companies, together with Non-public Hosted Department Alternate (PBX),

auto attendant, name heart, conferencing and mobility. The platform

consists of a variety of characteristic units, tailored to offer

unprecedented ranges of flexibility, making the answer aggressive with

the principle market gamers. SNAPsolution features a full suite of voices

over Web Protocol (VoIP)/UC options with a low-cost common

license, as a substitute of pricing every characteristic individually. The corporate

licenses its platform on a concurrent session foundation, not per seat/per

attribute. This enables service suppliers to oversubscribe their networks,

scale back price per seat as quantity will increase. like service

provider will increase his buyer base, he simply wants to verify he has

sufficient concurrent name licenses to assist customers throughout your entire community.

SNAPaccel – a software program license based mostly on software program as a service (“SaaS”)

known as subscription phrases.

Upkeep and assist of subscriptions – The corporate additionally sells

Individually priced upkeep service contracts, that are thought of

service-type warranties and symbolize separate efficiency obligations and

customer support. Buyer assist consists of software program updates on a

topic to availability, phone assist, built-in net interface

assist and bug fixes or fixes.

· Skilled and different companies – The Firm’s skilled companies

embody consulting, technical assist, resident engineer companies, design

        companies and set up companies.




RESULTS OF OPERATIONS



The next dialogue of monetary situation and outcomes of operations ought to
be learn together with our condensed consolidated monetary statements and
notes thereto and different monetary info included elsewhere on this Kind
10-Q.



Outcomes of Consolidated Operations (in 1000's, apart from per share quantities):



                          Three Months Ended September 30,             9

Months ended September 30,

                            2022                     2021                2022                  2021
Service income       $          4,473         $          4,325     $        13,427       $        12,791
Software program options
income                          3,875                    3,784              10,741                 4,796
Product income                    760                      701               1,944                 1,509
Whole income         $          9,108         $          8,810     $        26,112       $        19,096
Revenue/(loss)
earlier than earnings taxes               (728 )                     12              (3,127 )              (2,090 )
Revenue tax
profit/(provision)                 32                     (137 )               315                   247
Internet loss                          (696 )                   (125 )            (2,812 )              (1,843 )
Primary earnings per
share                 $          (0.03 )       $          (0.01 )   $         (0.13 )     $         (0.09 )
Diluted earnings
per share             $          (0.03 )       $          (0.01 )   $         (0.13 )     $         (0.09 )



Three months accomplished September 30, 2022 in comparison with the three months ended September 30, 2021



Whole Income



Whole income consists of service income, software program options income and
product income. The next desk displays our whole income for the three
months ended September 30, 2022, in comparison with the three months ended September
30, 2021:



                                 Three Months Ended September 30,
                   2022             2021         Greenback Change      % Change
Whole income   $    9,108       $    8,810     $           298                   3 %





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The rise in whole income is because of a rise in income from companies
$147,000a rise in income from software program options for $91,000and a rise in product gross sales of $59,000.

Revenue/(loss) earlier than earnings taxes

The next desk displays our earnings/(loss) earlier than earnings taxes for the three
months ended September 30, 2022, in comparison with the three months ended September
30, 2021:



                                            Three Months Ended September 30,
                             2022             2021         Greenback Change       % Change
Revenue/(loss) earlier than
earnings taxes              $     (728 )     $       12     $          (740 )              -6167 %




The elevated loss earlier than earnings tax is primarily as a result of a rise in
working bills of $895,000 and a rise in different expense of $143,000. The
improve in working bills is primarily associated to will increase in salaries and
advantages and inventory compensation expense, offset by a rise in income of
$298,000.


Revenue Tax Profit/(Provision)

The next desk displays our tax profit for the three months ended
September 30, 2022in comparison with the three months ended September 30, 2021:


                                           Three Months Ended September 30,
                           2022             2021           Greenback Change       % Change
Revenue tax
profit/(provision)     $       32       $     (137 )     $           169                 -123 %




We had an earnings tax advantage of $32,000 for the three months ended September 30,
2022 in comparison with an earnings tax provision of $(137,000) for the three months
ended September 30, 2021. We had earnings/(loss) earlier than earnings tax for the three
months ended September 30, 2022 and 2021 of $(728,000) and $12,000,
respectively.



Finish of 9 months September 30, 2022 in comparison with 9 months ended September 30, 2021



Whole Income



Whole income consists of service income, software program options income and
product income. The next desk displays our service income for the 9
months ended September 30, 2022, in comparison with the 9 months ended September 30,
2021:



                                9 Months Ended September 30,
                   2022          2021        Greenback Change       % Change
Whole income   $   26,112     $ 19,096     $         7,016                   37 %




The rise in whole income is because of a rise in service income of
$636,000, a rise in software program options income of $5,945,000, and an
improve in product income of $435,000. The numerous improve in software program
options income is primarily associated to 9 months of income for 2022
in comparison with solely 4 months of income for the 9 months finish September 31,
2021.



Loss Earlier than Revenue Taxes



The next desk displays our loss earlier than earnings taxes for the 9 months
ended September 30, 2022, in comparison with the 9 months ended September 30, 2021:



                                           9 Months Ended September 30,
                             2022          2021        Greenback Change       % Change
Loss earlier than earnings taxes   $  (3,127 )   $ (2,090 )   $        (1,037 )    
            50 %







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The rise within the loss earlier than earnings tax is primarily as a result of a rise in
income of $7,016,000, offset by a rise in working bills of $7,792,000
and a rise in different expense of $261,000. The rise in working bills
is primarily associated to will increase in salaries and advantages, inventory compensation
expense, and 9 months of software program options working bills in comparison with
solely 4 month within the prior interval.



Revenue Tax Profit


The next desk displays our tax profit for the 9 months ended
September 30, 2022in comparison with the 9 months ended September 30, 2021:


                                      9 Months Ended September 30,
                       2022           2021          Greenback Change       % Change
Revenue tax profit   $    315       $    247       $            68                   28 %




We had an earnings tax advantage of $315,000 for the 9 months ended September 30,
2022 in comparison with an earnings tax advantage of $247,000 for the 9 months ended
September 30, 2021. We had a loss earlier than earnings tax for the 9 months ended
September 30, 2022 and 2021 of $(3,127,000) and $(2,090,000), respectively.

USE OF NON-GAAP FINANCIAL MEASURES



To guage our enterprise, we think about and use non-generally accepted accounting
ideas ("Non-GAAP") web earnings/(loss) and Adjusted EBITDA as a supplemental
measure of working efficiency. These measures embody the identical changes
that administration takes under consideration when it evaluations and assesses working
efficiency on a period-to-period foundation. We think about Non-GAAP web earnings/(loss)
to be an vital indicator of general enterprise efficiency as a result of it permits
us to judge outcomes with out the results of share-based compensation,
acquisition associated bills, adjustments in truthful worth of contingent consideration
and amortization of intangibles. We outline EBITDA as U.S. GAAP web earnings/(loss)
earlier than curiosity earnings, curiosity expense, different earnings and expense, provision
for earnings taxes, and depreciation and amortization. We consider EBITDA gives
a helpful metric to traders to check us with different firms inside our
business and throughout industries. We outline Adjusted EBITDA as EBITDA adjusted for
acquisition associated bills, adjustments in truthful worth of contingent consideration
and share-based compensation. We use Adjusted EBITDA as a supplemental measure
to assessment and assess working efficiency. We additionally consider use of Adjusted
EBITDA facilitates traders' use of working efficiency comparisons from
interval to interval, in addition to throughout firms.



In our November 10, 2022 earnings press launch, as furnished on Kind 8-Ok, we
included Non-GAAP web earnings/(loss), EBITDA and Adjusted EBITDA. The phrases
Non-GAAP web earnings/(loss), EBITDA, and Adjusted EBITDA are usually not outlined underneath
U.S. GAAP, and are usually not measures of working earnings, working efficiency or
liquidity introduced in analytical instruments, and when assessing our working
efficiency, Non-GAAP web earnings/(loss), EBITDA, and Adjusted EBITDA mustn't
be thought of in isolation, or as an alternative choice to web earnings/(loss) or different
consolidated earnings assertion knowledge ready in accordance with U.S. GAAP. Some
of those limitations embody, however are usually not restricted to:



EBITDA and Adjusted EBITDA don’t mirror our money outflows or future bills

necessities for capital expenditures or contractual commitments;

they don’t mirror adjustments in or money necessities of our enterprise

capital necessities;

they don’t mirror curiosity prices or money necessities

essential to service curiosity or principal funds, on our debt that we

could incur;

they don’t mirror earnings taxes or money necessities for any taxes

Funds;

Though depreciation and amortization are non-cash prices, property

depreciated and amortized will likely be changed sooner or later,

and EBITDA and Adjusted EBITDA don’t mirror any money requirement for

these substitutes;

· whereas stock-based compensation is a element of working bills, the

the impression on our monetary statements in comparison with different firms could range

considerably as a result of elements such because the assumed lifetime of the choices and

the perceived volatility of our frequent inventory; and

different firms could calculate EBITDA and Adjusted EBITDA in a different way than

        we do, limiting their usefulness as comparative measures.




We compensate for these limitations by relying totally on our U.S. GAAP
outcomes and utilizing Non-GAAP web earnings/(loss), EBITDA, and Adjusted EBITDA solely
as supplemental assist for administration's evaluation of enterprise efficiency.
Non-GAAP web earnings/(loss), EBITDA and Adjusted EBITDA are calculated as follows
for the durations introduced.




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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES



In accordance with the necessities of Regulation G issued by the SEC, we're
presenting essentially the most straight comparable U.S. GAAP monetary measures and
reconciling the unaudited Non-GAAP monetary metrics to the comparable U.S.
GAAP
measures.



                    Reconciliation of U.S. GAAP Internet Loss to Non-GAAP Internet Revenue
                  (Unaudited, in 1000's, apart from per share and share knowledge)

                     Three Months Ended September 30,          9 Months
Ended September 30,
                         2022                  2021                2022                 2021
U.S. GAAP web
loss               $            (696 )     $        (125 )   $         (2,812 )     $      (1,843 )
Share-based
compensation                     851                 415                2,762               1,150
Acquisition
associated bills                   8                   4                   31               1,065
Amortization of
intangible
property                           550                 506                1,649                 773
Non-GAAP web
earnings             $             713       $         800     $          1,630       $       1,145

Non-GAAP
earnings per
frequent share:
Primary              $            0.03       $        0.04     $           0.07       $        0.06
Diluted            $            0.03       $        0.03     $           0.06       $        0.05

Weighted-average
frequent shares
excellent:
Primary                     22,620,703          21,596,415           22,439,575          19,757,658
Diluted                   25,285,848          26,196,240           25,491,062          22,481,104




                  Reconciliation of U.S. GAAP Internet Loss to EBITDA to

Adjusted EBITDA

                                      (Unaudited, in 1000's)

                        Three Months Ended September 30,         9 

Months ended September 30,

                            2022                 2021              2022                  2021
U.S. GAAP web loss     $         (696 )       $      (125 )   $        (2,812 )     $        (1,843 )
Depreciation and
amortization                      623                 569               1,862                   931
Curiosity expense                   19                  24                  57                    64
Curiosity and different
expense                           165                  17                 281                    13
Revenue tax
provision/(profit)               (32 )               137                (315 )                (247 )
EBITDA                             79                 622                (927 )              (1,082 )
Acquisition associated
bills                            8                   4                  31                 1,065
Share-based
compensation                      851                 415               2,762                 1,150
Adjusted EBITDA        $          938         $     1,041     $         1,866       $         1,133



CRITICAL ACCOUNTING POLICIES AND ESTIMATES



In getting ready our monetary statements, we make estimates, assumptions and
judgments that may have a major impression on our income, working earnings or
loss and web earnings or loss, in addition to on the worth of sure property and
liabilities on our steadiness sheet. Please see Notice 1 of Half I, Merchandise 1 of this
quarterly report on Kind 10-Q for a abstract of great accounting insurance policies.
As well as, the estimates, assumptions and judgments concerned in our accounting
insurance policies described in important accounting insurance policies and estimates are disclosed
in our Annual Report on Kind 10-Ok for the 12 months ended December 31, 2021.



Phase Working Outcomes



The Firm has two working segments, which include cloud
telecommunications companies and software program options. The data beneath is
organized in accordance with our two reportable segments. Phase working
earnings is the same as phase web income much less phase price of service income,
price of product income, gross sales and advertising and marketing, analysis and growth, and
basic and administrative bills.




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Working Outcomes of our Cloud Telecommunications Providers Phase (in
1000's):



                          Three Months Ended September 30,             9 Months Ended September 30,
Cloud
Telecommunications
Providers                    2022                     2021                2022                  2021
Service income       $          4,473         $          4,325     $        13,427       $        12,791
Product income                    760                      701               1,944                 1,509
Whole income         $          5,233         $          5,026     $        15,371       $        14,300
Working bills:
Value of service
income               $          1,375         $          1,210     $         4,249       $         3,816
Value of product
income                            453                      461               1,142                   972
Promoting and
advertising and marketing                        1,704                    1,487               4,963                 4,274
Basic and
administrative                   2,056                    1,763               6,355                 6,146
Analysis and
growth                        284                      358                 898                 1,096
Whole working
bills                         5,872                    5,279              17,607                16,304
Working loss                    (639 )                   (253 )            (2,236 )              (2,004 )
Different expense                      (17 )                    (22 )               (52 )                 (58 )
Loss earlier than tax
profit/(provision)   $           (656 )       $           (275 )   $        (2,288 )     $        (2,062 )



Three months accomplished September 30, 2022 in comparison with the three months ended September 30, 2021



Service Income



Cloud telecommunications service income consists primarily of charges collected
for cloud telecommunications companies, skilled companies, curiosity from
sales-type leases, reselling broadband Web companies, administrative charges,
web site internet hosting, and net administration companies. The next desk displays our
service income for the three months ended September 30, 2022, in comparison with the
three months ended September 30, 2021:



                                   Three Months Ended September 30,
                     2022             2021         Greenback Change      % Change
Service income   $    4,473       $    4,325     $           148                   3 %



The rise in service income is because of a rise in telecommunications
companies of $113,000, a rise in sales-type lease curiosity of $24,000, an
improve in one-time charges, commissions and different of $7,000, and a rise in
charges, commissions, and different, acknowledged over time of $4,000, A considerable
portion of Cloud Telecommunications service income is generated by way of
thirty-six to sixty month service contracts.



Product Income



Product income consists primarily of charges collected from the sale of desktop
cellphone units and third-party gear. The next desk displays our
product income for the three months ended September 30, 2022, in comparison with the
three months ended September 30, 2021:



                                   Three Months Ended September 30,
                    2022            2021           Greenback Change      % Change
Product income   $     760       $     701       $            59                   8 %




Product income fluctuates from one interval to the subsequent based mostly on timing of
installations. Our typical buyer set up is full inside 30-60 days.
Nonetheless, bigger enterprise prospects can take a number of months, relying on dimension
and the variety of places. Product income is acknowledged when merchandise have
been put in and companies begin. Moreover, product income can
fluctuate because of the allocation of reductions or gross sales promotions throughout the
efficiency obligations.




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Backlog



Backlog represents the full contract worth of all contracts signed, much less
income acknowledged from these contracts as of September 30, 2022 and 2021.
Backlog decreased 2%, or $660,000 to $30,063,000 as of September 30, 2022 as
in comparison with $30,723,000 as of September 30, 2021. Under is a desk which
shows the Cloud Telecommunications phase income backlog as of July 1, 2022
and 2021, and September 30, 2022 and 2021, which we anticipate to acknowledge as
income throughout the subsequent thirty-six to sixty months (in 1000's):



Cloud telecommunications backlog at July 1, 2022 $29,452
Cloud telecommunications backlog at September 30, 2022 $30,063

Cloud telecommunications backlog at July 1, 2021 $27,227
Cloud telecommunications backlog at September 30, 2021 $30,723



Value of Service Income



Value of service income consists primarily of charges we pay to third-party
telecommunications carriers, broadband Web suppliers, software program suppliers,
prices associated to installations, buyer assist salaries, wages and advantages,
and share-based compensation. The next desk displays our price of service
income for the three months ended September 30, 2022, in comparison with the three
months ended September 30, 2021:



                                            Three Months Ended September 30,
                             2022             2021         Greenback Change       % Change
Value of service income   $    1,375       $    1,210     $           165                   14 %




The rise in price of service income was primarily as a result of added headcount
associated to our improve in income and company-wide wage will increase ensuing
in $165,000 in further prices, a rise of $60,000 for third celebration
set up companies, outsourced buyer assist, and help within the
migration of our prospects to our VIP platform, and a rise in different price of
service income of $26,000, offset by an $85,000 lower in third-party
telecommunications provider prices.



Value of Product Income


The price of product income consists of prices related to desktop telephones and third-party gear. The next desk displays our price of income for the three months ended September 30, 2022in comparison with the three months ended September 30, 2021:


                                           Three Months Ended September 30,
                            2022           2021          Greenback Change       % Change
Value of product income   $    453       $    461       $            (8 )                 -2 %



The decrease price of income is primarily because of the negotiation of decrease prices on our desk telephones.


Promoting and Advertising and marketing



Promoting and advertising and marketing bills consist primarily of direct and channel gross sales
consultant salaries and advantages, share-based compensation, associate channel
commissions, amortization of prices to amass contracts, journey bills, lead
era companies, commerce reveals, inside and third-party advertising and marketing prices, the
manufacturing of selling supplies, and gross sales assist software program. The next
desk displays our promoting and advertising and marketing bills for the three months ended
September 30, 2022, in comparison with the three months ended September 30, 2021:

                                          Three Months Ended September 30,
                           2022             2021         Greenback Change       % Change
Promoting and advertising and marketing   $    1,704       $    1,487     $           217                   15 %




The rise in promoting and advertising and marketing expense is because of a rise in
fee expense of $121,000 straight associated to the rise in income, an
improve in salaries, wages and advantages of $88,000 associated to enlargement of our
gross sales staff, a rise in journey associated prices and tradeshows of $30,000,
offset by a lower in gross sales leads and advertising and marketing materials prices of $20,000 and
a lower in different gross sales and advertising and marketing expense of $2,000.



Basic and Administrative



Basic and administrative bills include salaries, wages and advantages,
share-based compensation for executives, administrative personnel, authorized, lease,
gear, accounting and different skilled companies, investor relations,
depreciation, amortization of intangibles, and different administrative company
bills. The next desk displays our basic and administrative bills
for the three months ended September 30, 2022, in comparison with the three months
ended September 30, 2021:



                                            Three Months Ended September 30,
                             2022             2021         Greenback Change       % Change
Basic and
administrative            $    2,056       $    1,763     $           293                   17 %





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         The rise generally and administrative bills is primarily as a result of
a rise in administrative salaries, wages, and advantages of $375,000 associated
to a rise in headcount and company-wide wage will increase, offset by a
lower in company insurance coverage of $37,000 as a result of an allocation of price to the
software program options phase, a lower in financial institution processing charges of $13,000, and a
lower in different basic and administrative expense of $32,000.



Analysis and Improvement


Analysis and growth bills primarily include salaries, wages and
advantages, share-based compensation, and outsourced engineering companies associated
to the event of latest cloud telecommunications options and merchandise. The
following desk displays our analysis and growth bills for the three
months ended September 30, 2022, in comparison with the three months ended September
30, 2021:



                                            Three Months Ended September 30,
                             2022           2021          Greenback Change       % Change
Analysis and growth   $    284       $    358       $           (74 )                -21 %



The lower in analysis and growth bills is principally associated to a lower within the upkeep prices of our cell purposes and different growth prices of $47,000 and a lower in salaries, wages and advantages of
$27,000.



Different Expense



Different expense primarily pertains to curiosity expense and web international change
good points or losses, offset by bank card money again rewards. The next desk
displays our different expense for the three months ended September 30, 2022,
in comparison with the three months ended September 30, 2021:



                                 Three Months Ended September 30,
                  2022           2021          Greenback Change       % Change
Different expense   $    (17 )     $    (22 )     $             5                  -23 %



Finish of 9 months September 30, 2022 in comparison with 9 months ended September 30, 2021



Service Income



Cloud telecommunications service income consists primarily of charges collected
for cloud telecommunications companies, skilled companies, curiosity from
sales-type leases, reselling broadband Web companies, administrative charges,
web site internet hosting, and net administration companies. The next desk displays our
service income for the 9 months ended September 30, 2022, in comparison with the
9 months ended September 30, 2021:



                                   9 Months Ended September 30,
                     2022             2021        Greenback Change      % Change
Service income   $    13,427       $ 12,791     $           636                   5 %



The rise in service income is because of a rise in telecommunications
service income of $397,000, a rise in a single time charges, commissions and different
of $182,000, a rise in sales-type lease curiosity of $40,000, and an
improve in charges, commissions, and different, acknowledged over time of $17,000. A
substantial portion of Cloud Telecommunications service income is generated
by way of thirty-six to sixty month service contracts.




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Product Income



Product income consists primarily of charges collected from the sale of desktop
cellphone units and third-party gear. The next desk displays our
product income for the 9 months ended September 30, 2022, in comparison with the
9 months ended September 30, 2021:



                                   9 Months Ended September 30,
                     2022            2021        Greenback Change       % Change
Product income   $    1,944       $  1,509     $           435                   29 %




Product income fluctuates from one interval to the subsequent based mostly on timing of
installations. Our typical buyer set up is full inside 30-60 days.
Nonetheless, bigger enterprise prospects can take a number of months, relying on dimension
and the variety of places. Product income is acknowledged when merchandise have
been put in and companies begin. Moreover, product income can
fluctuate because of the allocation of reductions or gross sales promotions throughout the
efficiency obligations.



Backlog



Backlog represents the full contract worth of all contracts signed, much less
income acknowledged from these contracts as of September 30, 2022 and 2021.
Backlog decreased 2%, or $660,000 to $30,063,000 as of September 30, 2022 as
in comparison with $30,723,000 as of September 30, 2021. Under is a desk which
shows the Cloud Telecommunications phase income backlog as of January 1,
2022 and 2021, and September 30, 2022 and 2021, which we anticipate to acknowledge as
income throughout the subsequent thirty-six to sixty months (in 1000's):



Cloud telecommunications backlog at January 1, 2022 $30,190
Cloud telecommunications backlog at September 30, 2022 $30,063

Cloud telecommunications backlog at January 1, 2021 $28,551
Cloud telecommunications backlog at September 30, 2021 $30,723



Value of Service Income



Value of service income consists primarily of charges we pay to third-party
telecommunications carriers, broadband Web suppliers, software program suppliers,
prices associated to installations, buyer assist salaries, wages and advantages,
and share-based compensation. The next desk displays our price of service
income for the 9 months ended September 30, 2022, in comparison with the 9
months ended September 30, 2021:



                                           9 Months Ended September 30,
                             2022            2021        Greenback Change       % Change
Value of service income   $    4,249       $  3,816     $           433                   11 %




The rise in price of service income was primarily as a result of added headcount
associated to our improve in income and company-wide wage will increase ensuing
in $513,000 in further prices, a rise of $178,000 for third celebration
set up companies, outsourced buyer assist, and help within the
migration of our prospects to our VIP platform, and a rise in different price of
service income of $44,000, offset by a $302,000 lower in telecommunication
provider prices as we have eradicated prices by migrating prospects to our VIP
platform and as we have switched to decrease price telecommunication carriers.



Value of Product Income


The price of product income consists of prices related to desktop telephones and third-party gear. The next desk displays our price of product income for the 9 months ended September 30, 2022in comparison with the 9 months ended September 30, 2021:


                                           9 Months Ended September 30,
                             2022            2021        Greenback Change       % Change
Value of product income   $    1,142       $    972     $           170                   17 %



The rise in the price of product income is principally as a result of a rise in product income.



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Promoting and Advertising and marketing



Promoting and advertising and marketing bills consist primarily of direct and channel gross sales
consultant salaries and advantages, share-based compensation, associate channel
commissions, amortization of prices to amass contracts, journey bills, lead
era companies, commerce reveals, inside and third-party advertising and marketing prices, the
manufacturing of selling supplies, and gross sales assist software program. The next
desk displays our promoting and advertising and marketing bills for the 9 months ended
September 30, 2022, in comparison with the 9 months ended September 30, 2021:



                                         9 Months Ended September 30,
                           2022            2021        Greenback Change       % Change
Promoting and advertising and marketing   $    4,963       $  4,274     $           689                   16 %




The rise in promoting and advertising and marketing expense is because of a rise in salaries,
wages and advantages of $366,000 associated to enlargement of our gross sales staff, an
improve in fee expense of $193,000 straight associated to the rise in
income, and a rise in journey associated prices and tradeshows of $161,000,
offset by a lower in different promoting and advertising and marketing bills of $31,000.



Basic and Administrative



Basic and administrative bills include salaries, wages and advantages,
share-based compensation for executives, administrative personnel, authorized, lease,
gear, accounting and different skilled companies, investor relations,
depreciation, amortization of intangibles, and different administrative company
bills. The next desk displays our basic and administrative bills
for the 9 months ended September 30, 2022, in comparison with the 9 months ended
September 30, 2021:



                                             9 Months Ended September 30,
                              2022             2021         Greenback Change      % Change
Basic and
administrative             $    6,355       $    6,146     $           209                   3 %




The rise generally and administrative bills is primarily due a rise
in administrative salaries, wages and advantages of $1,207,000 associated to an
improve in share-based compensation on account of a company-wide worker
retention grant, a rise in headcount, and company-wide wage will increase,
and a rise in telecommunication charges of $53,000, offset by a lower in
acquisition associated bills of $1,050,000, associated to the 2021 acquisitions of
Centric Telecom and NetSapiens, and a lower in different basic and
administrative bills of $1,000.



Analysis and Improvement


Analysis and growth bills primarily include salaries, wages and
advantages, share-based compensation, and outsourced engineering companies associated
to the event of latest cloud telecommunications options and merchandise. The
following desk displays our analysis and growth bills for the 9
months ended September 30, 2022, in comparison with the 9 months ended September 30,
2021:



                                            9 Months Ended September 30,
                            2022            2021         Greenback Change       % Change
Analysis and growth   $   898       $    1,096     $          (198 )                -18 %



The lower in analysis and growth bills is principally associated to a lower within the upkeep prices of our cell purposes and different growth prices of $105,000and a lower in salaries, wages and advantages of
$96,000offset by a $3,000 elevated bills associated to product testing.


Different Expense



Different expense primarily pertains to curiosity expense and web international change
good points or losses, offset by bank card money again rewards. The next desk
displays our different expense for the 9 months ended September 30, 2022,
in comparison with the 9 months ended September 30, 2021:



                                 9 Months Ended September 30,
                  2022           2021          Greenback Change       % Change
Different expense   $    (52 )     $    (58 )     $             6                  -10 %





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Software program Options phase working outcomes (in 1000’s):

As a part of the merger with NetSapiens, Inc.on June 1, 2021, the next Software program Options working phase was created. The outcomes of operations of the Software program Options phase are included in our consolidated outcomes of operations from the date of acquisition of June 1, 2021.



                          Three Months Ended September 30,            9 Months Ended September 30,
Software program Options          2022                     2021              2022                  2021
Software program options
income               $          3,875         $          3,784     $    10,741         $         4,796
Working bills:
Value of software program
options income                1,170                    1,675           3,987                   2,201
Promoting and
advertising and marketing                        1,028                      798           3,124                   1,187
Basic and
administrative                     744                    1,005           2,451                   1,417
Analysis and
growth                        838                        -           1,732                       -
Whole working
bills                         3,780                    3,478          11,294                   4,805
Working
earnings/(loss)                       95                      306            (553 )                    (9 )
Different expense                     (167 )                    (19 )          (286 )                   (19 )
Revenue/(loss)
earlier than tax
profit/(provision)   $            (72 )       $            287     $      (839 )       $           (28 )



Three months accomplished September 30, 2022 in comparison with the three months ended September 30, 2021



Software program Options Income



Software program options income consists primarily of software program license charges,
subscription upkeep and assist, {and professional} companies. Software program
licenses are billed by the variety of concurrent classes a Associate has bought
or subscribes to. Subscription upkeep and assist is ongoing and gives
for software program updates and enhancements, assist for add-on modules, bug fixes,
and different basic upkeep gadgets. Skilled companies and different revenues
consist {of professional} companies such because the set up of software program and
integration of different modules, coaching and implementation in addition to customized
cell branding. The next desk displays our service income for the three
months ended September 30, 2022, in comparison with the three months ended September
30, 2021:



                                            Three Months Ended September 30,
                             2022             2021          Greenback Change      % Change
Software program options
income                   $    3,875       $    3,784      $            91                   2 %




The rise is primarily associated to a $546,000 improve in recurring software program
license and upkeep and assist subscriptions, a rise in skilled
companies of $33,000, offset by a lower in perpetual software program licenses of
$488,000.



Backlog



Backlog represents the full contract worth of all contracts signed, much less
income acknowledged from these contracts as of September 30, 2022 and 2021.
Backlog elevated 6%, or $786,000 to $13,334,000 as of September 30, 2022 as
in comparison with $12,558,000 as of September 30, 2021 on account of our June 1, 2021
acquisition. Under is a desk which shows the software program options phase
income backlog as of July 1, 2022 and 2021, and September 30, 2022 and 2021,
which we anticipate to acknowledge as income throughout the subsequent thirty-six to sixty
months (in 1000's):



Backlog of software program options at July 1, 2022 $12,669
Backlog of software program options at September 30, 2022 $13,344

Backlog of software program options at July 1, 2021 $12,828
Backlog of software program options at September 30, 2021 $12,558

Software program Resolution Income Value



Value of software program options income consists primarily of salaries, wages and
advantages, share-based compensation, amortization expense associated to the
know-how, price of Knowledge Heart internet hosting, third-party software program modules and
outsourced companies required to put in and assist software program options. The
following desk displays our price of service income for the three months ended
September 30, 2022, in comparison with the three months ended September 30, 2021:

                                            Three Months Ended September 30,
                             2022             2021         Greenback Change       % Change
Value of software program
options income         $    1,170       $    1,675     $          (505 )                -30 %





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The lower in price of service income is primarily associated to the
reclassification of $738,000  of analysis and growth bills out of price
of service income after rigorously reviewing working bills that qualify as
analysis and growth working bills, a $50,000 lower in amortization
expense associated to the know-how, offset by a rise in price of service
income of $284,000 associated to the company-wide wage will increase that resulted
in $158,000 of further prices, a rise of $67,000 in knowledge heart internet hosting
associated to knowledge heart enlargement and elevated exercise, a rise of $41,000
in third-party software program modules and outsourced companies required to put in and
assist software program options additionally as a result of elevated exercise, and a $18,000
improve in share-based compensation.



Promoting and Advertising and marketing



Promoting and advertising and marketing bills consist primarily of gross sales and advertising and marketing
salaries, wages and advantages, commissions, share-based compensation, journey
bills, lead era companies, commerce reveals, third-party advertising and marketing companies,
the manufacturing of selling supplies, amortization expense associated to buyer
relationships intangible asset, and gross sales assist software program. The next desk
displays our promoting and advertising and marketing bills for the three months ended September
30, 2022, in comparison with the three months ended September 30, 2021:



                                         Three Months Ended September 30,
                           2022            2021         Greenback Change       % Change
Promoting and advertising and marketing   $    1,028       $    798      $           230     
             29 %




The rise in promoting and advertising and marketing bills is primarily associated to an
improve in commissions of $99,000, a rise in salaries, wages and advantages
of $76,000, a rise in share-based compensation of $29,000, a rise in
buyer relationships intangible asset amortization expense of $74,000, an
improve in gross sales assist software program of $17,000, and a $20,000 improve in different
promoting and advertising and marketing bills, offset by a lower of $85,000 in third-party
advertising and marketing companies.



Basic and Administrative


Basic and administrative bills include salaries, wages and advantages for
executives, share-based compensation, administrative personnel, amortization of
intangible asset associated to emblems and commerce names, authorized, lease, gear,
accounting and different skilled companies, and different administrative company
bills. The next desk displays our basic and administrative bills
for the three months ended September 30, 2022, in comparison with the three months
ended September 30, 2021:



                                            Three Months Ended September 30,
                             2022             2021         Greenback Change       % Change
Basic and
administrative            $      744       $    1,005     $          (261 )                -26 %



The lower generally and administrative bills is primarily associated to the
reclassification of $100,000 of analysis and growth bills out of basic
& administrative bills after rigorously reviewing bills that qualify as
analysis and growth working bills, and a discount in skilled
service charges of $117,000, a lower in gear of $38,000, and a $6,000
lower in different administrative company bills.



Analysis and Improvement


Analysis and growth bills primarily include salaries, wages and
advantages, share-based compensation, and outsourced engineering companies associated
to the event of our software program options. The next desk displays our
analysis and growth bills for the three months ended September 30, 2022,
in comparison with the three months ended September 30, 2021:



                           2022      2021       Greenback Change      % Change
Analysis and growth   $ 838     $   -     $           838                   -





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The rise in analysis and growth bills is primarily associated to the
reclassification of analysis and growth bills out of price of service
income of $738,000 and basic and administrative bills of $100,000 after
rigorously reviewing working bills that qualify as analysis and growth
working bills.



Different Expense



Different expense primarily pertains to curiosity expense and web international change
good points or losses. The next desk displays our different expense for the three
months ended September 30, 2022, in comparison with the three months ended September
30, 2021:



                                Three Months Ended September 30,
                  2022           2022         Greenback Change       % Change
Different expense   $    (167 )     $   (19 )    $          (148 )                779 %



The rise in different bills is principally associated to web international change losses throughout the interval.

Finish of 9 months September 30, 2022 in comparison with 9 months ended September 30, 2021



Software program Options Income



Software program options income consists primarily of software program license charges,
subscription upkeep and assist, {and professional} companies. Software program
licenses are billed by the variety of concurrent classes a Associate has bought
or subscribes to. Subscription upkeep and assist is ongoing and gives
for software program updates and enhancements, assist for add-on modules, bug fixes,
and different basic upkeep gadgets. Skilled companies and different revenues
consist {of professional} companies such because the set up of software program and
integration of different modules, coaching and implementation in addition to customized
cell branding. The next desk displays our service income for the 9
months ended September 30, 2022, in comparison with the 9 months ended September 30,
2021:



                                             9 Months Ended September 30,
                                2022         2021        Greenback Change       % Change
Software program options income   $   10,741     $ 4,796     $         5,945                  124 %




The rise is primarily associated to 9 months of income for the 9 months
ended September 30, 2022, in comparison with solely 4 months of income for the 9
months finish September 30, 2021, because of the June 1, 2021 acquisition date.



Backlog



Backlog represents the full contract worth of all contracts signed, much less
income acknowledged from these contracts as of September 30, 2022 and 2021.
Backlog elevated 6%, or $786,000 to $13,334,000 as of September 30, 2022 as
in comparison with $12,558,000 as of September 30, 2021. Under is a desk which
shows the software program options phase income backlog as of January 1, 2022
and 2021, and September 30, 2022 and 2021, which we anticipate to acknowledge as
income throughout the subsequent thirty-six to sixty months (in 1000's):



Backlog of software program options at January 1, 2022 $13,034
Backlog of software program options at September 30, 2022 $13,344

Backlog of software program options at January 1, 2021 $ – Software program options backlog at September 30, 2021 $12,558




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Software program Resolution Income Value



Value of software program options income consists primarily of salaries, wages and
advantages, share-based compensation, amortization expense associated to the
know-how, price of Knowledge Heart internet hosting, third-party software program modules and
outsourced companies required to put in and assist software program options. The
following desk displays our price of service income for the 9 months ended
September 30, 2022, in comparison with the 9 months ended September 30, 2021:



                                             9 Months Ended September 30,
                              2022            2021         Greenback Change       % Change
Value of software program
options income          $    3,987       $   2,201     $         1,786                   81 %



The rise in price of service income is primarily associated to 9 months of
prices for the 9 months ended September 30, 2022, in comparison with solely 4 months
of prices for the 9 months finish September 30, 2021, because of the June 1, 2021
acquisition date, and the reclassification of $1,530,000 in analysis and
growth bills out of price of service income for the 9 months ended
September 30, 2022, after rigorously reviewing working bills that qualify as
analysis and growth working bills.



Promoting and Advertising and marketing



Promoting and advertising and marketing bills consist primarily of gross sales and advertising and marketing
salaries, wages and advantages, commissions, share-based compensation, journey
bills, lead era companies, commerce reveals, third-party advertising and marketing companies,
the manufacturing of selling supplies, and gross sales assist software program. The next
desk displays our promoting and advertising and marketing bills for the 9 months ended
September 30, 2022, in comparison with the 9 months ended September 30, 2021:



                                        9 Months Ended September 30,
                          2022          2021        Greenback Change       % Change
Promoting and advertising and marketing   $   3,124      $ 1,187     $         1,937                  163 %



The rise in promoting and advertising and marketing bills is primarily associated to 9
months of bills for the 9 months ended September 30, 2022, in comparison with
solely 4 months of bills for the 9 months finish September 30, 2021, as a result of
the June 1, 2021 acquisition date.



Basic and Administrative


Basic and administrative bills include salaries, wages and advantages for
executives, share-based compensation, administrative personnel, amortization of
intangible asset associated to buyer lists, authorized, lease, gear, accounting
and different skilled companies, and different administrative company bills.
The next desk displays our basic and administrative bills for the
9 months ended September 30, 2022, in comparison with the 9 months ended
September 30, 2021:



                                             9 Months Ended September 30,
                               2022           2021        Greenback Change       % Change
Basic and administrative   $   2,451       $ 1,417     $         1,034   
               73 %



The rise generally and administrative bills is primarily associated to 9
months of bills for the 9 months ended September 30, 2022, in comparison with
solely 4 months of bills for the 9 months finish September 30, 2021, as a result of
the June 1, 2021 acquisition date, and the reclassification of $202,000 of
analysis and growth bills out of basic & administrative bills after
rigorously reviewing bills that qualify as analysis and growth working
bills.



Analysis and Improvement


Analysis and growth bills primarily include salaries, wages and
advantages, share-based compensation, and outsourced engineering companies associated
to the event of our software program options. The next desk displays our
analysis and growth bills for the 9 months ended September 30, 2022,
in comparison with the 9 months ended September 30, 2021:



                                           9 Months Ended September 30,
                              2022           2021        Greenback Change      % Change
Analysis and growth   $     1,732       $   -      $         1,732                   -




The rise in analysis and growth bills is primarily associated to the
reclassification of analysis and growth bills out of price of service
income of $1,530,000 and basic and administrative bills of $202,000 after
rigorously reviewing working bills that qualify as analysis and growth
working bills.




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Different Expense



Different expense primarily pertains to curiosity expense and web international change
good points or losses. The next desk displays our different expense for the 9
months ended September 30, 2022, in comparison with the 9 months ended September 30,
2021:



                            9 Months Ended September 30,
                 2022      2021       Greenback Change      % Change
Different expense   $ (286 )   $ (19 )   $          (267 )            1405%



The rise in different bills is principally associated to web international change losses throughout the 9 months ended September 30, 2022.

Money and capital sources



Liquidity is a measure of our potential to entry adequate money flows to fulfill
the short-term and long-term money necessities of our enterprise operations. We
finance our operations primarily by way of companies, software program options, and
product gross sales to our prospects. As of September 30, 2022 and December 31, 2021,
we had money and money equivalents of $4,821,000 and $7,468,000, respectively.
Adjustments in money and money equivalents are dependent upon adjustments in, amongst different
issues, working capital gadgets corresponding to contract liabilities, contract prices,
accounts payable, accounts receivable, pay as you go bills, and varied accrued
bills, in addition to purchases of property and gear, asset acquisitions,
enterprise mixtures, and adjustments in our capital and monetary construction as a result of
debt repayments and issuances, inventory possibility workouts, gross sales of fairness
investments and comparable occasions. We consider that our operations together with
present liquidity sources will fulfill our money necessities for not less than
the
subsequent twelve months.



Working Actions


Money supplied by or utilized in working actions is pushed by our web loss, the
timing of buyer collections, in addition to the quantity and timing of
disbursements to our distributors, the amount of money we put money into personnel,
advertising and marketing, and infrastructure prices to assist the anticipated development of our
enterprise. The next desk displays our web money utilized in working actions
for the 9 months ended September 30, 2022, in comparison with the 9 months ended
September 30, 2021:



                                              9 Months Ended September 30,
                                2022          2021         Greenback Change       % Change
Internet money utilized in working
actions                   $   (2,665 )   $    (473 )   $        (2,192 )                463 %




The web money used for operations was primarily pushed by our web loss for the
9 months ended September 30, 2022 of $696,000, a rise in accounts
receivable, a rise in gear financing receivables, a rise in
contract prices, a rise in pay as you go bills, a rise in earnings tax
receivable, a lower in accounts payable and accrued bills, and a lower
in contract liabilities, offset by non-cash bills for depreciation and
amortization and share-based compensation.



Investing Actions


Money supplied by or utilized in investing actions is pushed by the acquisition of
property and gear, enterprise mixtures, and asset acquisitions. The
following desk displays our web money utilized in investing actions for the 9
months ended September 30, 2022, in comparison with the 9 months ended September 30,
2021:



                                              9 Months Ended September 30,
                                2022          2021         Greenback Change       % Change
Internet money utilized in investing
actions                   $     (192 )   $ (10,596 )   $        10,404                  -98 %



Internet money utilized in investing actions throughout the 9 months ended September 30, 2022primarily issues the acquisition of property, plant and gear.

Internet money used for investing actions for the 9 months ended September 30,
2021, primarily pertains to money paid for a enterprise mixture. Through the 9
months ended September 30, 2021, the Firm acquired 100% of the issued and
excellent shares of Centric Telecom, Inc., a supplier of telecommunications
merchandise, companies, and options in Northern Virginia. The combination buy
worth of $3,255,000 consisted of $2,163,000 of money paid at closing, 46,662
shares of our frequent inventory with an estimated truthful worth of $346,000 issued at
closing, and $746,000 of estimated contingent consideration to be paid out based mostly
on annualized income acknowledged throughout the 9 month earn-out interval. On
September 1, 2021, the Firm acquired 100% of the issued and excellent
shares of NetSapiens, Inc. ("NetSapiens"), a supplier of a complete suite
of unified communications (UC), video conferencing, collaboration & contact
heart options to service suppliers, servicing over 1.7M customers across the
globe. The combination buy worth was roughly $49.1 million, consisting
of $10 million in money, and roughly $39 million in frequent inventory and inventory
choices. In reference to the closing of the Merger, the Firm issued
3,097,309 shares of the Firm's frequent inventory valued at $5.47 per share for
frequent inventory consideration of roughly $16.9 million, and 4,482,328 choices
underneath the Crexendo, Inc. 2021 Fairness Incentive Plan with an combination worth of
$22.1 million, web of the combination train worth of $5.6 million.




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Financing Actions


Money supplied by or utilized in financing actions is pushed by the proceeds from
the train of choices, taxes paid on the web settlement of inventory choices and
RSUs, fee of contingent consideration, proceeds from finance leases and
notes payable, repayments made on finance leases and notes payable, dividend
funds, and proceeds from the issuance of frequent inventory in reference to an
providing. The next desk displays our web money supplied by/(utilized in)
financing actions for the 9 months ended September 30, 2022, in comparison with
the 9 months ended September 30, 2021:



                                             9 Months Ended September 30,
                               2022           2021         Greenback Change       % Change
Internet money supplied
by/(utilized in) financing
actions                  $      (36 )    $   1,081     $        (1,117 )               -103 %




Internet money utilized in financing actions within the 9 months ended September 30,
2022, primarily pertains to money proceeds from the train of inventory choices of
$576,000, offset by the funds of worker tax withholdings associated to the online
settlement of inventory choices and RSUs of $135,000, dividend funds of $336,000,
and repayments of notes payable and finance leases of $141,000.



Internet money supplied by financing actions within the 9 months ended September 30,
2021, primarily pertains to money proceeds from the train of inventory choices of
$1,177,000 offset by the funds of worker tax withholdings associated to the
web settlement of inventory choices of $155,000.



Contractual obligations and commitments

Besides as set forth in Notes 4, 10, and 13 within the accompanying notes to the
Condensed Consolidated Monetary Statements included in Half I, Merchandise 1 of this
Quarterly Report on Kind 10-Q, there have been no important adjustments in our
commitments underneath contractual obligations, as disclosed in our Annual Report on
Kind 10-Ok for the 12 months ended December 31, 2021.



Off-balance sheet preparations

Of the, September 30, 2022we aren’t concerned in any off-balance sheet preparations, as outlined in SEC SK Part 303(a)(4)(ii).


Associated Occasion Transactions



None


Influence of current accounting pronouncements



The data set forth underneath Notice 1 to the condensed consolidated monetary
statements underneath the caption "Latest Accounting Pronouncements" is integrated
herein by reference.

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