0001354488-13-004664.txt : 20130815 0001354488-13-004664.hdr.sgml : 20130815 20130815133415 ACCESSION NUMBER: 0001354488-13-004664 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20130630 FILED AS OF DATE: 20130815 DATE AS OF CHANGE: 20130815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Crexendo, Inc. CENTRAL INDEX KEY: 0001075736 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 870591719 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-32277 FILM NUMBER: 131041613 BUSINESS ADDRESS: STREET 1: 1615 S. 52ND STREET CITY: TEMPE STATE: AZ ZIP: 85281 BUSINESS PHONE: 8012270004 MAIL ADDRESS: STREET 1: 1615 S. 52ND STREET CITY: TEMPE STATE: AZ ZIP: 85281 FORMER COMPANY: FORMER CONFORMED NAME: IMERGENT INC DATE OF NAME CHANGE: 20020710 FORMER COMPANY: FORMER CONFORMED NAME: NETGATEWAY INC DATE OF NAME CHANGE: 19990527 10-Q/A 1 exe_10q.htm QUARTERLY REPORT exe_10q.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
———————
FORM 10-Q/A
———————
 
(Mark One)
 
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2013
 
OR
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 
For the transition period from ________ to ________.
 
Commission file number 001-32277
 
———————
 
Crexendo, Inc.
(Exact name of registrant as specified in its charter)
 
———————
 
Delaware
 
87-0591719
(State or other jurisdiction of
 
(I.R.S. Employer Identification No.)
incorporation or organization)
   
     
1615 South 52nd Street, Tempe, AZ
 
85281
(Address of Principal Executive Offices)
 
(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)
 
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 þ  No ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, 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 þ  No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one).
 
Large accelerated filer
¨
 
Accelerated filer
¨
 
Non-accelerated filer
¨
 
Smaller reporting company
þ
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No þ.
 
The number of shares outstanding of the registrant’s common stock as of August 1, 2013 was 10,709,904.
 


 
 

 
 
EXPLANATORY NOTE
 
The purpose of this Amendment No. 1 (the “Amendment”) to Crexendo, Inc. Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, filed with the Securities and Exchange Commission on August 14, 2013 (the “Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

No other changes have been made to the Form 10-Q. This Amendment speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
 
 
 
 

 
 
EXHIBITS
 
Exhibits
 
Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities and Exchange Act of 1934, as amended
Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities and Exchange Act of 1934, as amended
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
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
 
*
In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.
 
 
37

 
 
 
Pursuant to the requirements 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.

August 15, 2013
Crexendo, Inc.
     
     
 
By:
/s/ Steven G. Mihaylo  
   
Steven G. Mihaylo
Chief Executive Officer
 
 
August 15, 2013
By:
/s/ Ronald Vincent  
   
Ronald Vincent
Chief Financial Officer

 
 
38

EX-31.1 2 exe_ex311.htm CERTIFICATION exe_ex311.htm
EXHIBIT 31.1
 
Certification Pursuant to
Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended
 
I, Steven G. Mihaylo, certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q of Crexendo, Inc.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Date: August 15, 2013
By:  
/s/ Steven G. Mihaylo  
   
Steven G. Mihaylo
Chief Executive Officer
EX-31.2 3 exe_ex312.htm CERTIFICATION exe_ex312.htm
EXHIBIT 31.2
 
Certification Pursuant to
Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Amended
 
I, Ronald Vincent, certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q of Crexendo, Inc.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date: August 15, 2013
By:  
/s/ Ronald Vincent  
   
Ronald Vincent
Chief Financial Officer
EX-32.1 4 exe_ex321.htm CERTIFICATION exe_ex321.htm
EXHIBIT 32.1
 
CERTIFICATIONS PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
 
In connection with the Quarterly Report of Crexendo, Inc., a Delaware corporation (the “Company”), on Form 10-Q/A for the quarter ended June, 30 2013, as filed with the Securities and Exchange Commission (the “Report”), Steven G. Mihaylo, Chief Executive Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:
 
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
 
 
Date: August 15, 2013
By:  
/s/ Steven G. Mihaylo  
   
Steven G. Mihaylo
Chief Executive Officer

[A signed original of this written statement required by Section 906 has been provided to Crexendo, Inc. and will be retained by Crexendo, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.]
 



EX-32.2 5 exe_ex322.htm CERTIFICATION exe_ex322.htm
EXHIBIT 32.2
 
CERTIFICATIONS PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
 
    In connection with the Quarterly Report of Crexendo, Inc., a Delaware corporation (the “Company”), on Form 10-Q/A for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission (the “Report”), Ronald Vincent, Chief Financial Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:
 
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
 
 
Date: August 15, 2013
By:  
/s/ Ronald Vincent  
   
Ronald Vincent
Chief Financial Officer

GRAPHIC 6 img001.jpg begin 644 img001.jpg M_]C_X``02D9)1@`!`0$`8`!@``#_VP!#``(!`0(!`0("`@("`@("`P4#`P,# M`P8$!`,%!P8'!P<&!P<("0L)"`@*"`<'"@T*"@L,#`P,!PD.#PT,#@L,#`S_ MVP!#`0("`@,#`P8#`P8,"`<(#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P, M#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`S_P``1"``S`3H#`2(``A$!`Q$!_\0` M'P```04!`0$!`0$```````````$"`P0%!@<("0H+_\0`M1```@$#`P($`P4% M!`0```%]`0(#``01!1(A,4$&$U%A!R)Q%#*!D:$((T*QP152T?`D,V)R@@D* M%A<8&1HE)B7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#]_****`"B MBD:54=5+`,_W03R?I0V,YKXJ_%[0?@QX;&J>(+S[+;O((HE52\DSGG:JCKQR M3T`ZFH_A-\:/#_QLT*34-`O#>#7SQ_P5*=O[ M'\(+DX,ET<9XZ15F_P#!+)C_`&KXR&3@PVAQV^]-7Y)4X^QL>.%PWR1]BU:^ MO-?V?/>][>5K;:W/TB'!V%?";SWGE[5/;3EMS\EK6OYWN?8=%%>=?M-?M;?# MG]CCX>MXI^)?BW2O">C[C'%)=R$RW;@9\N&)07E?'\**3^%?K9^;'HM%?EE\ M0O\`@[6_9\\,ZP]MH?A+XF^)[=#C[7%96MI$_NHEG#X^J@UZ9^RU_P`'*W[, M_P"TIXFL]#O=7U[X=:M?.(H5\46B06DCDX"_:(GDC3)/60H*"K,_0&BLKQ5X MUT[P?X&U+Q'>3[M)TJQEU*>:$>;F".,R,RX^]\H)&.M>'?LA?\%2?@U^VY\- MO%_B_P`%>(YT\.>!64:U?:O:/IL-D&C:3>S2X&T*K$GH,4"/H:BOS(^./_!U MG^SG\+_%L^E>'M+\>>/H[60QOJ&F6,-O9O@XS&;B1'<>AV`'L<5]Y_"K]IWP MO\3?V8/#_P`6Y[I?#7A+7M#@\0&?6)H[<6%M+$L@,S;BBD!@#\Q&>]`-,]$H MK\V?CY_P=,_LU?"'7[C3-`3QI\1)K:0QMZQ%9^(=(^(?@E96"_:[[38;JV3)ZL;>5Y`/HAH'9GZ=T5RGP@^ M.7A']H'X<6?B[P/X@TSQ9X=OT+6][IDZSQR$=4X^ZXZ%6P0>"!7SU\$O^"U' MP$^.O[3)^#]AKVMZ+\0?M,UB-+UW1Y]-9KJ(D/;[I`%\WAL+G+8P,G`((^L* M**R/'_C[1OA9X)U;Q)XCU.TT?0M#M9+V_OKJ01PVL**69V)[`"@1KT5\Q?L4 M?\%=?@Y_P4&^(&I>'/A?=>*-:NM&MC=WUU-H5Q:V=HF[:H>5P%#.<[5ZMM;C M"G&O^V[_`,%3O@C_`,$^+6%/B3XQ@L]9NH_-M]$L(S>:G.G9O)3[BGLTA53Z MT#U/H:BOR@O?^#NWX%PZT88?AY\59[(-C[3Y%BC$>NPW']:^JOV*?^"W7[// M[=WB&WT'PGXODTGQ7=D"#0M?M_L%YU`-,^M:*;+*(8F= MLX0$FOG+]C;_`(*M_!C]N[6O&%C\/]=U">3P)`EUK,FHZ?)80VL3,Z[]\@"D M#RW).>`,F@1]'T5^=G[3/_!SM^S5^S_XFNM&T>Z\3?$J_LW\N67PY9QM8AAU M`GFDC5P/6,,I]:Y_X(_\'5O[-_Q.\10:;XAT_P`>>`?M$BQK>ZII\5Q9IDXR M[6\DCJ/?9@4#LS],Z*R_!7C;1_B1X2T[7_#^IV.M:+J\"W5E?6ZA?W"P6]L@_B9V(`]!W)( M`Y-`C:HK\S_C?_P=5?LV_##79]/\/6?COQ^UO(8S=Z5IT=O:/@XRKW$D;L/? M9@UTG[+'_!S-^S9^TAXJM-"U2\\1?#;5+Z010-XEM8X[*1SP`;B*1T3)[R;! M[T%69YI_P<'_`/!27XU?L/?M&_!/0?A=XT_X1C2O%T,[ZM!_9%A>_:RMU"BG M=<0R,F%=A\A7KZXK]5+9S);1LQRS*"?RK\-?^#K2ZCOOVLOV:YX9$FAFM+AX MY$8,KJ;RV(8$<$$S2%0>QKXKO\`_@[M^!<&M&&#X>?%6XL@ MV/M)@L48CUV&X_K0*S/U?HKY(_8G_P""W?[//[=_B"WT'PGXNET?Q7=X$&A> M(+?[!>7+8^[$26BE;_91V;VKZ:^*'Q+T7X,_#G7/%GB2^33=!\.64NH7]RX+ M"&&-2S'`R6.!PH!).``2:`9NT5\S?LT_\%0O"/[1?QB3P2V@^(/"NKW[7":8 M-3>VD^U2P+(TMK*(9'-O=*D,[^3)C*V\P#%HI%7Z9H$%%%>8_MA?$34_A?\` M`/6-5TB8V]_NBMXYA]Z(22!2R_[6"<'L>:\_-LRIY?@JN.K)N-.+D[;VBKZ> M9VY=@JF,Q5/"4FE*I)15]KMVU/3J_-3]I3XAZSJO[0FOW4VH77G:?J,L-JRR M%3;HCE5"$?=P`.F.>>O->G_L"?'#Q/JWQJ71-0U>_P!2T_4X97DCNIWFV.J% M@REB2#QCC@@_2O%OV@_^2Y^*_P#L+7/_`*-:OYF\2^,X<0<.X7'86,J:]K*+ MBWUC%-:K?1IKLS][X#X6EDV=XC"8AQF_9Q::724K/?;;4]L_;A\077BOX&?" MG4[Z3S;R_P!/:>=^F]VB@)/XGFM7_@EE_P`A;QE_UPM/_0IJYW]K[_DVWX._ M]@K_`-I05T7_``2R_P"0MXR_ZX6G_H4U5EE24_$C#3F[MP@V^[>&1./A&'`M M>$59*4DO_!Y]7^._&FG_``W\$:SXBU><6VE:#93:A>3'I%#%&TCM^"J37X"_ ML??L_P#BC_@Y*_X*#^,OB=\4M2U:Q^$7@J98H--MYBGE0NQ-MIL!Z(2BF2:0 M?,3Z%U*_KM_P68U.[TC_`()8?'::S9UG/A.ZB)7J$,,;BR0VRH#]$P?QK^IS^?$[*Y]M_"+]@OX+?`?P MQ#H_A/X6^!='LH%V_)HT$DLGN\KJ9)#[LQ)KPK_@HE_P0^^"O[<7PIU>"Q\( M>'_!/CY;=GTCQ#HUC'921W`!*+<+$%6:)FX8,"P!RI!%?9]%!-S\9O\`@B'^ MTS\2K?\`9"^/W[/GQ0T[7X[SX:^&-5FT&[U"WE`CMEBEAGLQ(PPRQ2%&09^[ M(P'RJ`/B+_@B?^S[XS_X*$Z?XB_9WT_4[WPS\,M0U6W\7>/M6LV`N+FUMT\J MVL4SQF25V;G(S&&(/EX/]'7[5'_)L/Q'_P"Q7U/_`-)):_*'_@SOT*UC^$GQ MOU,1+]MFU?3+5I,?,8TAG8+],NQH+OHV?>_PT_X(J_LM?"WP?!HMG\%?!.HQ M0Q"-[G5[$:C=SX'WGFFW,2>O!`]`*_,7_@JKXJ\2_P#!0_\`X*&>#?V&?@S) M%X6^&O@$P6.H06:E+&*2&$232R*N-T-I#A$C)QY@;N5(_=VOYI/V0/%?[2D? M_!7#X_ZY^SYX>\/^)/B)_:>MIJ2ZR("+>S;5`'9/.DC`;>L2Y!)P>F":!1[G M[<_L;_\`!'/X`?L5^"++3M!\`:%KNLPQ*MUK^NV45_J-[)_$^^12(P3_``1A M5'IWKKOVBO\`@F?\"/VJ/"%SHWC+X7^$+Q)XV1+RUTZ*SO[4D8W17$061&'7 M@X]01Q7P!_PN7_@K3_T3?X;_`/E._P#DNC_A#XTNM1M=/S'/K]O#AE MEC*\_;(0H*D73;C2K[ M3;29/.\O>&;[2Q9@1ZQ'Y6K1Z=;K>IN#[)Q$OF# M(X.&SR.M`-VU/@[_`((0_P#!9"S_`."@_P`(F\&^.+VWLOC#X,M0-024B+^W M[5,+]MC''SC@2J/NL0PPK87XN_X*R?MX>-/^"R7[6NF?LI?L]/)?>#;>_P!N MM:K`Y%MK$T39DN)'7@6-OC(/_+1P",_NP?FK_@O_`&?PS^$/_!2W6Y_@-JVI MZ;XDN+6=O&,.C2&*TL=0D5UN$@>,@@O$SF=!\JLS#NRK^D/_``:L>$O@M9?L M?ZKJ_@NX%[\5KJY\GQJUZJK>V8#$V\40&2+0J-RL/O/OW_P!9T>U0?;;F,+-XDURX(BCEFQSL#'(0'"11D#N3 M\5?\$4/^".-M^W];7W[3O[2LVH^-I?&.H376CZ3?3.$U/;(5>\N2,%H]ZLD< M0PFU,D%=JCVO_@[IU>]L_P!@?P):0EQ9WOCB'[3CH2ME=E`?Q)/X5Y%^R/\` M$;_@IMX7_9;^'EA\._AU\.I?`EMX>L1H$CC3Q)-9&!#"[9NE.YD(8D@$DG(S M0);'ZZZ+^R/\*O#GAU-'L/AIX!M-+C01BTB\/VBP[<8P5$>#^-?G%_P6>_X( M!>`_&7P)DD^&OPUD1P596&G%6! MZ@C[7THN&JZGOW_!`'_@HMJO[?O[#=Q%XMO&O_'GP[F&BZO=.?WFHQ&/=;73 M^KN@96/\3Q,W>OQI_P""0/[/7C;]MG]IGQW\$-$UV]\,^`O&DBZCX^O[+*W, MFEV4\C+:HW0>;-,BX.1T)!"E3^D__!O'_P`$[?CQ^PQ\6/C#J'Q5\(V_A?1O M&FF6\EN(-1M;B)[J.:5MJI#(Y4!)GQGC&!FO%?\`@TFLHG_:9_:&N60&>*RL MHU?NJM=7!8?B57\A0.]KV/U>_9]_X)I_`?\`9@\)VVD>#_A;X.LTMT5&N[G3 M8KR^N2!C=)<2AI'8]>6QZ`=*XS]NK_@D+\%?VW_@_K&B:CX(\-Z#XDFM9!I7 MB'2].BL[[3KC;^[IZ;&\A<61>62"ZA3/1/-2-P!QN=S_$:\H_X*B_%/QY_P6F_ MX*TV'[+?@76)=-^'O@B_>VU&6,EK:+EMZMGZ=_LA_\`!)#X!_L8>!K/2?#'P]\/ZCJ,,2I=:YK-E%?ZG?N. MKO+(IVY/\$>U!V%3_M6?\$G?@%^V)X+N])\5_#CPW;7 MCI-$H)P>=K[E/=37T9101<_E=_X*4_#'XE_LI_M3_#[X"^/]8E\2Z/\`"J]! M\&ZQ,I$MYH]Y<121*22?E1HW7;D[&#J#M5:_?_\`X*Y?M[?\.Z?V$=?\>V2P M3>)[KRM&\.PS`,CW\ZML=E_B6-%DE([B/'>OS>_X.O\`1+"#]JW]F[4D"#5+ MJ*ZMIB,;FACO+9H\^P:67'U-=A_P>`:I>1?L_?!"R0O]@N-;OIYA_"94MHEC MS[[9)/S-!>]C$_X(D_\`!$_2?VMO"8_:3_:36]\>ZMX[N9-2TC2=4F9XKN,L M1]MN^,?A2_LI:)8^&OV7OAOI^EK&FFV7A?38;4(`%\M;2(+C'MBN^H(;N?E-_ MP60_X-^/`7C_`.$.M_$[X&:!!X$^)'A.%]6.FZ,OV>RUM(LR.J1+A8;@`%D: M/:&90I&2&7I?^",7[7C?\%B_^":_C/X7?$S4KN?Q?X'XK:^5%3_`%8$.KA(/;A'?'L305>Z/T!_90_X)>ZW\'OVA[+QWXM\3Z%J M!T2_O-:AM]$L9[8:[K%RE_%)JUX)9'$4H@U*\B$$/[O$BG<=B@?9M%%!!\H_ MM<_MM^(_A9\5[OPSX?CM+==+2$SS2Q"1YG>-9,#/`7:ZCIG(/-2_&[XO3_'# M]@677[JWCMKR6\A@N$CSL+I.H++GH",''.,XYK4_:D_82OOC3\1Y_$NBZM8V MMSJ"Q+=0WF]5RB"/'J4ZL:2]Q_Z) M>N#_`&@_^2Y^*_\`L+7/_HUJ^N/V4_V'[WX&^/I/$.LZK9WEQ!&\5K#:;ROS M#!=F95YVY&`#UZ\5@_&+_@G9?>//BS>:UIFN6-KIFJW+7-PEPKF:!F.Y@H`( M<9)(RR\''O7P6(\.^(9<*4,)'#OVJKRDXWC=1E&,4WK;>/?1-/8^RH\<9+'B M*KB777LW2C%2L[-J3;6U]GV\CA/VOO\`DVWX._\`8*_]I05T7_!++_D+>,O^ MN%I_Z%-7K'[0W[(4?Q7^$WA[0=)ODL[OPM"L%D]SDQS($52'*@D$[%.0#WXY MXG_8_P#V6Y_V<=%U.34;^WOM6U,-&N]'F;&?+6>%H]WU4MG\*_%+_@@# M^V;'_P`$R/VGOB-^R[\;KB/PBVH:WNTZ]OG\JTM]20"(QL[?*L5Q$(FCD/RG M:O/S@U^[U?(G_!3+_@C!\)O^"F]E#J'B.*Z\,^.;"$06?B;2D3[3Y8.1%.C? M+/&,G`;#+D[67)S^_GXVGT9]XKS']L']K[P1^ MQ!\"M:\?>.]7MM-TS2X':"!I`+C4Y]OR6T"'EY';``'3.3@`D?E?H_\`P0B_ M;@_9UM?[%^$G[5]I%X;B^6&WOM:U73$B3H`L"17*)Q_=85M?#?\`X-E/'GQV M^)%EXF_:E^/FL_$/[(X9]-TZ[NKHS#.3&+NZ(:-#C!"1`^A!YH"R[F7_`,$= M?B7\=?VR/A'^TS\'/V:[WX7^$;"Q\ M*>'6T*XT+3[>T@_2_LX_M-SZ#I=R MY9;34;R^T,+;;&T&)'\-VDF5^TL!_P`MWY$2GIRYX"AOHO\`8=_X)?\` M@#_@G!\$=7\/?">WCMO%.L6Q6Z\3:S$+R[OK@*1&\P4IF)&.1"A1>O/O\`@WX_;ULO,;=+I=SCGR)`"89#RI4#[R*6_?FN9^,GP>\-_M`?"[7/!?B_2K;6_#?B M.U>SO[.=)-5MM*^)?PY@.G6EE=R")]9T]"?)>')3Y;H/F`16QACCL/\`@FE_ MP1#\6?\`!,']HG5_$'@WXVRZK\/O$$CIJ7A._P!`.+F$%C`WG"XPMQ%D#S1& M-P+`KAL#'_X**?\`!MU\/?VM_B5=?$/X<^([OX1^/[R(^IB1L,[=`JD9R0#^?%C_P1S_X*+^&X$T;3/VM]._L& M(>7')+XLUD7*ITX!M6(X[>9^->C?LO?\&RND6WQ3M?'G[1OQ-UOXWZ_;N)1I MUPTWV&1@00)Y9G>:=`<_)^[4]"".*!67<^@?^")_QP^._P"U!^QMU MA_Z575?N%!I4%AI"6-K##:VT,(@ABB0)'"@7:JJHX"@8``X`%?#_`/P2,_X( MR2?\$N/B/\1?$$GQ!7QI_P`)[%!&(%T?[!]B\J663.[SI-^?,QT'2@+Z,^Z: M***"3\-/^#9G_E*/^TQ_UZWG_IV%<=K7C&X_X(._\%_-?\0>(K6[@^$_Q4EN M;AKJ)&=/[.OI1*TB@#YFM;H891\VQ#@?.N?T3_X)C_\`!&27_@G9^U-\3?B2 M_P`0D\6#XB131"P71S9FQ\R\^TY,GG/OQ]W[JYZ^U>^_MV?\$_?AK_P42^#[ M^#_B-I#74<#&;3=2M6$5_I$Q&/-@DP<9``96!5AU!P,!?,KGJW@7QYHOQ.\( M:=X@\.ZK8:YHFK0K<6=]93K/;W,;#(974D$4GCWQ_H?PM\(:AX@\2:OI^A:) MI4+7%Y?7TZP6]M&HR69V(`%?CI9?\&Z7[3_[*.J7<7[//[4']C:)<2%UL[^] MU#1@`3GYTMEGC=O5MBY]!6YX5_X-T/CK^TSXIL+K]J3]I75O%^AV4JR/HVCZ MC>WZSX(.U9;I8TAR.-PA8\\8ZT"LNY\"?\%B?VZYO^"A7_!0'PQXVT6SOXOA MCI%[%X<\)7=Q"T2ZHMO<(]SGPW92:AXL^'MU'XET^VB4M+>11Q.ES"@')8Q.SA1RS1*!R:Y[]O'_@WS M\,_M2S?!RQ\"^*++X7^&/@_:26=GI4.C&^6Z#SQS,Y4DDOBS6DN5CZ8`^RL1QV$OXT"=F?='_!6_\`X*B>$/\` M@F]^SAK-_<:K97'Q$UBSEM_#&AI*&N9[EE*K.Z#E((R=S.<`[=HRQ`KY1_X- M6/V+M;^%7P!\8_&CQ7;W$.J_%FXB72OM`(EDT^%G8W!![332,0>ZQ*W1A3_V M3O\`@UW\.:!\3H?'/[07Q$U7XRZZD@G?3G$J6-Q(""/M$TKM-<*,?=.P'H01 MD5^J^FZ;;Z-IUO9V=O#:VEI&L,$$*"..%%`"HJCA5````X`%`-Z61-11102% M%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`44 E44`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110!__V3\_ ` end EX-101.INS 7 exe-20130630.xml 0001075736 2013-01-01 2013-06-30 0001075736 2013-06-30 0001075736 2012-12-31 0001075736 EXE:NonConformingEptasMember 2013-06-30 0001075736 EXE:NonConformingEptasMember 2012-12-31 0001075736 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2013-06-30 0001075736 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2012-12-31 0001075736 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2013-06-30 0001075736 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2012-12-31 0001075736 us-gaap:FairValueInputsLevel1Member 2013-06-30 0001075736 us-gaap:FairValueInputsLevel2Member 2013-06-30 0001075736 us-gaap:FairValueInputsLevel3Member 2013-06-30 0001075736 us-gaap:FairValueInputsLevel1Member 2012-12-31 0001075736 us-gaap:FairValueInputsLevel2Member 2012-12-31 0001075736 us-gaap:FairValueInputsLevel3Member 2012-12-31 0001075736 EXE:StoresOnlineMember 2013-01-01 2013-06-30 0001075736 EXE:StoresOnlineMember 2012-01-01 2012-06-30 0001075736 EXE:CrexendoWebServicesMember 2013-01-01 2013-06-30 0001075736 EXE:CrexendoWebServicesMember 2012-01-01 2012-06-30 0001075736 EXE:CrexendoNetworkServicesMember 2013-01-01 2013-06-30 0001075736 EXE:CrexendoNetworkServicesMember 2012-01-01 2012-06-30 0001075736 us-gaap:CommonStockMember 2013-01-01 2013-06-30 0001075736 us-gaap:CommonStockMember 2012-12-31 0001075736 us-gaap:CommonStockMember 2013-06-30 0001075736 us-gaap:AdditionalPaidInCapitalMember 2013-01-01 2013-06-30 0001075736 us-gaap:AdditionalPaidInCapitalMember 2012-12-31 0001075736 us-gaap:AdditionalPaidInCapitalMember 2013-06-30 0001075736 us-gaap:RetainedEarningsMember 2013-01-01 2013-06-30 0001075736 us-gaap:RetainedEarningsMember 2012-12-31 0001075736 us-gaap:RetainedEarningsMember 2013-06-30 0001075736 2013-08-01 0001075736 2012-01-01 2012-06-30 0001075736 2012-06-30 0001075736 2011-12-31 0001075736 us-gaap:OfficeEquipmentMember us-gaap:MaximumMember 2013-01-01 2013-06-30 0001075736 us-gaap:ComputerSoftwareIntangibleAssetMember 2013-01-01 2013-06-30 0001075736 us-gaap:FurnitureAndFixturesMember 2013-01-01 2013-06-30 0001075736 us-gaap:LeaseholdImprovementsMember us-gaap:MaximumMember 2013-01-01 2013-06-30 0001075736 us-gaap:BuildingMember 2013-01-01 2013-06-30 0001075736 us-gaap:OfficeEquipmentMember us-gaap:MinimumMember 2013-01-01 2013-06-30 0001075736 us-gaap:LeaseholdImprovementsMember us-gaap:MinimumMember 2013-01-01 2013-06-30 0001075736 2012-01-01 2012-12-31 0001075736 2013-04-01 2013-06-30 0001075736 2012-04-01 2012-06-30 0001075736 EXE:StoresOnlineMember 2013-04-01 2013-06-30 0001075736 EXE:StoresOnlineMember 2012-04-01 2012-06-30 0001075736 EXE:CrexendoWebServicesMember 2013-04-01 2013-06-30 0001075736 EXE:CrexendoWebServicesMember 2012-04-01 2012-06-30 0001075736 EXE:CrexendoNetworkServicesMember 2013-04-01 2013-06-30 0001075736 EXE:CrexendoNetworkServicesMember 2012-04-01 2012-06-30 0001075736 us-gaap:ContingentConsiderationClassifiedAsEquityMember 2013-01-01 2013-06-30 0001075736 us-gaap:ContingentConsiderationClassifiedAsEquityMember 2013-06-30 0001075736 EXE:PbxCentralMember 2013-06-30 0001075736 EXE:TechnologyMember 2013-01-01 2013-06-30 0001075736 us-gaap:CustomerRelationshipsMember 2013-01-01 2013-06-30 0001075736 EXE:PbxCentralMember 2013-01-01 2013-06-30 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure Crexendo, Inc. 0001075736 10-Q 2013-06-30 false --12-31 No No Yes Smaller Reporting Company Q2 2013 250000 500000 250000 500000 250000 500000 0 0 250000 0 0 500000 641000 1326000 106000 196000 0.001 0.001 5000000 5000000 0 0 0.001 0.001 100000000 100000000 10709904 10669201 -1468000 -1468000 80000 -1070000 -117000 10127000 10292000 11000 11000 49824000 50364000 -39543000 -41011000 276000 430000 430000 2187 3000 P5Y P3Y P4Y P5Y P20Y P2Y P2Y 1392000 3945000 520000 432000 86000 79000 100000 163000 142000 341000 1493000 3438000 -747000 -1522000 2240000 4960000 1493000 3438000 247000 124000 -369000 -159000 616000 283000 196000 96000 51000 28000 1468000 3383000 1493000 3438000 1468000 3383000 0 0 1468000 0 0 3383000 10709904 12937000 17527000 9640000 10292000 -41011000 -39543000 50364000 49824000 11000 11000 3297000 7235000 253000 143000 399000 3154000 6583000 1348000 3052000 105000 103000 1307000 3010000 307000 418000 12937000 17527000 95000 97000 340000 265000 671000 6000 105000 103000 2658000 3172000 196000 96000 152000 395000 8470000 12893000 510000 333000 63000 434000 51000 28000 131000 171000 1341000 3043000 1444000 1444000 4930000 7440000 8443000 8658000 276000 10675990 10614888 10682393 10634104 10675990 10582372 10682393 10634104 -0.14 0.01 -0.10 -0.01 -0.14 0.01 -0.10 -0.01 -263000 -140000 -26000 13000 -1731000 -60000 -1096000 -104000 332000 1280000 120000 510000 -33000 14000 -26000 -14000 365000 1266000 146000 524000 -2063000 1645000 3344000 -1223000 -2539000 -2485000 -2145000 -1340000 -1216000 -614000 629000 1682000 -594000 -1099000 -1251000 -1197000 7822000 11509000 3953000 5528000 895000 1099000 414000 505000 3290000 5774000 1852000 2741000 1625000 1917000 717000 984000 2012000 2719000 970000 1298000 5759000 3781000 8464000 1102000 1462000 876000 243000 10169000 2737000 4914000 1677000 4054000 569000 692000 491000 168000 16000 -2510000 -215000 3000 70000 422000 6000 3000 498000 -110000 -1024000 -300000 60000 1024000 -2403000 739000 -1960000 -6000000 -1202000 -573000 -2000 -20000 177000 37000 -371000 -38000 -40000 -28000 -123000 -25000 -1945000 -6157000 -253000 -167000 430000 455000 598000 759000 -606000 4000 -250000 10669201 10709904 107000 107000 38516 <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Description of Business - </b>Crexendo, Inc. is incorporated in the state of Delaware. As used hereafter in the notes to consolidated financial statements, we refer to Crexendo, Inc. and its wholly owned subsidiaries, as &#147;we,&#148; &#147;us,&#148; or &#147;our Company&#148;. In May 2011, our stockholders approved an amendment to our Certificate of Incorporation to change our name from &#34;iMergent, Inc.&#34; to &#34;Crexendo, Inc.&#34; The name change was effective May 18, 2011. Our ticker symbol &#34;IIG&#34; on the New York Stock Exchange was changed to &#147;EXE&#148; on May 18, 2011.&#160;&#160;We are a hosted services company that provides web hosting, hosted telecommunications services, search engine optimization management, link building, e-commerce software, website development, and broadband internet services for businesses and entrepreneurs.&#160;&#160;Our services are designed to make enterprise-class hosting services available to small and medium-sized businesses at affordable monthly rates.&#160;The Company has three operating segments, which consist of Crexendo Network Services, Crexendo Web Services and StoresOnline.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: left; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In July 2011, we announced the suspension of our direct mail seminar sales channel in our StoresOnline segment. Accordingly, we have shifted our focus toward growing our Crexendo Network Services and Crexendo Web Services segments.&#160; As a result, the Company has transformed into a start-up company with the inherent risks and uncertainties of funding operations until profitability is achieved. Due to changes in our business model and the rapidly evolving nature of our business and the markets we serve, we believe period-to-period comparisons of our operating results, including operating expenses as a percentage of revenue and cash flows, are not necessarily meaningful and should not be relied upon as an indication of future performance. We currently plan to fund our growth during the next twelve months using our cash and cash equivalents of $4,930,000, the collection of remaining accounts receivable from our former StoresOnline business, and restricted cash expected to be released from restriction. In addition, in March 2013, the Company received a letter from the CEO, and majority shareholder, that if there is a shortfall in cash, that the CEO would provide additional financial support if necessary up to $2.0 million. The Company believes that it has sufficient funds to sustain its operations during the next 12 months.&#160; Beyond the next twelve months, the Company&#146;s forecast indicates that given current trends and growth projections, the Company may need to raise additional capital. There can be no assurances that such additional capital, if needed, would be available on acceptable terms or at all, which would adversely affect our Company&#146;s ability to achieve our business objectives.&#160; In addition, if our future operating performance during the next twelve months is below our expectations, our liquidity and ability to operate our business could be adversely affected unless the Company is able to raise additional capital during that period to offset the shortfall in performance. </font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Basis of Presentation &#150;&#160;</b>These unaudited condensed consolidated financial statements include the accounts and operations of Crexendo, Inc. and its wholly owned subsidiaries, which include Avail 24/7 Inc., Crexendo Business Solutions, Inc., Galaxy Mall, Inc., StoresOnline Inc., StoresOnline International Canada ULC, StoresOnline International, Inc., StoresOnline International Ltd., StoresOnline International Canada, Ltd., Internet Training Group, Inc., Crexendo International, Inc., Crexendo Telecom, Inc., Crexendo India Limited, and Crexendo Property Management, LLC.&#160;&#160;&#160;All intercompany account balances and transactions have been eliminated in consolidation.&#160;&#160;The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, consistent in all material respects with those applied in our financial statements included in our Annual Report on Form 10-K for the fiscal year ended December&#160;31, 2012. Because these financial statements address interim periods, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that in the opinion of management are necessary for the fair presentation of the interim periods presented. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December&#160;31, 2013 or for any future periods. This Quarterly Report on Form 10-Q should be read in conjunction with the Company&#146;s audited financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended December&#160;31, 2012.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Cash and Cash Equivalents</b> - We consider all highly liquid, short-term investments with maturities of three months or less at the time of purchase to be cash equivalents.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Restricted Cash</b> &#150; We classified $1,444,000 as restricted cash as of June 30, 2013 and December 31, 2012, respectively.&#160;&#160;Cash is restricted for state licensing letters of credit, compensating balance requirement of our merchant accounts, and purchasing card agreements.&#160;&#160;The Company expects the restrictions to be removed during the next year and therefore classified restricted cash as current.&#160;&#160;As of June 30, 2013, we had restricted cash in financial institutions in excess of federally insured limits in the amount of $1,444,000.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Trade Receivables</b> &#150; We have historically offered to our StoresOnline customers the option to finance, typically through 24 and 36-month extended payment term arrangements (&#147;EPTAs&#148;), purchases made at our Internet Training Workshops through our StoresOnline segment. EPTAs are reflected as short-term and long-term trade receivables, as applicable, as we have the intent and ability to hold the receivables for the foreseeable future, until maturity or payoff.&#160;&#160;EPTAs are recorded on a nonaccrual status beginning on the contract date.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Allowance for Doubtful Accounts</b> &#150; For sales made through EPTA contracts, we record an allowance for doubtful accounts each reporting period based on the Company&#146;s ongoing assessment of collectability. The allowance represents estimated losses resulting from customers&#146; failure to make required payments. The allowance for doubtful accounts for EPTAs is netted against the current and long-term trade receivables balances. The allowance estimate is based on historical collection experience, specific identification of probable bad debts based on collection efforts, aging of trade receivables, customer payment history, and other known factors, including current economic conditions. We believe that the allowance for doubtful accounts is adequate based on our assessment to date, however, actual collection results may differ materially from our expectations. Because revenue generated from customers financing through EPTAs is deferred and not recognized prior to the collection of cash, adjustments to the allowance for doubtful accounts related to our EPTA contracts increase or decrease deferred revenue. Trade receivables are written off against the allowance when the related customers are no longer making required payments and the trade receivables are determined to be uncollectible, typically 90 days past their original due date.&#160;&#160;For sales made in our Crexendo Web Services and Crexendo Network Services segments, the allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Interest Income</b> - Interest income is primarily earned from EPTA contracts. EPTA contract terms generally contain an 18% simple interest rate. Interest income is recognized on these accounts only to the extent cash is received as the receivables are generally 24 and 36-months in length and collection of the full amount of the receivable is not probable. We recognized $146,000 and $524,000 for the three months ended June 30, 2013 and 2012, respectively. We recognized $365,000 and $1,266,000 for the six months ended June 30, 2013 and 2012, respectively.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Inventory </b>- Inventories consist of telecommunication equipment and is stated at the lower of cost (first-in, first-out method) or market. In accordance with applicable accounting guidance we regularly evaluate whether inventory is stated at the lower of cost or market.&#160;&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Certificate of Deposit</b> - We hold a $250,000 certificate of deposit as collateral for merchant accounts, which automatically renews every 12 months. The certificate of deposit is classified as long-term in the condensed consolidated balance sheets.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Property and Equipment</b> - Depreciation and amortization expense is computed using the straight-line method in amounts sufficient to allocate the cost of depreciable assets over their estimated useful lives ranging from two to five years. The cost of leasehold improvements is amortized using the straight-line method over the shorter of the estimated useful life of the asset or the term of the related lease. Depreciation and amortization expense is included in general and administrative expenses and totaled $317,000 and $391,000 for the three months ended June 30, 2013 and 2012, respectively and $574,000 and $502,000 for the six months ended June 30, 2013 and 2012, respectively. Depreciable lives by asset group are as follows:</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="width: 79%; text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Computer and office equipment</font></td> <td style="width: 21%; text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2 to 5 years</font></td></tr> <tr style="vertical-align: top; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Computer software</font></td> <td style="text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">3 years</font></td></tr> <tr style="vertical-align: top; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Furniture and fixtures</font></td> <td style="text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4 years</font></td></tr> <tr style="vertical-align: top; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Leasehold improvements</font></td> <td style="text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2 to 5 years</font></td></tr> <tr style="vertical-align: top; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Building</font></td> <td style="text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">20 years</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Maintenance and repairs are expensed as incurred. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and any related gain or loss on disposition is reflected in net income or loss for the year.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Goodwill </b>&#150; Goodwill of $265,000 was recorded in connection with the acquisition of CastleWave in 2010. Goodwill of $75,000 was recorded in connection with the acquisition of PBX Central on June 4, 2013. Goodwill is tested for impairment using a fair-value-based approach on an annual basis (December 31) and between annual tests if indicators of potential impairment exist.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Intangible Assets</b> - Our intangible assets consist primarily of assets acquired in the acquisition of CastleWave and PBX Central, which include customer relationships, developed technology, technical know-how, and a non-compete agreement. The fair value of identifiable intangible assets is based upon the lower of discounted future cash flow projections or the amount paid in an arm&#146;s length transaction. The intangible assets are amortized following the patterns in which the economic benefits are consumed. Amortization expense from these acquired assets is included in general and administrative expenses and totaled $17,000 and $18,000 for the three months ended June 30, 2013 and 2012, respectively and $24,000 and $36,000 for the six months ended June 30, 2013 and 2012, respectively.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Use of Estimates - </b>In preparing the consolidated financial statements, management makes assumptions, estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods.&#160;&#160;Specific estimates and judgments include inventory valuation and obsolescence, intangible assets, allowances for doubtful accounts, sales returns and allowances, uncertainties related to certain income tax benefits, valuation of deferred income tax assets, valuations of share-based payments and recoverability of long-lived assets.&#160;&#160;Management&#146;s estimates are based on historical experience and on our expectations that are believed to be reasonable.&#160;&#160;The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.&#160;&#160;Actual results may differ from our current estimates and those differences may be material.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Revenue Recognition - </b>In general, we recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.&#160;&#160;We recognize revenue from our Web Services and Network Services segments on an accrual basis and revenue from our StoresOnline segment on a cash basis. Specifics to revenue category are as follows:</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Software licenses and DVD training courses sold under EPTAs are recognized as revenue upon receipt of cash from customers and not at the time of sale. Accounting standards require revenue to be deferred until customer payments are received if collection of the original principal balance is not probable.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">We enter into agreements where revenue is derived from multiple deliverables including any mix of products and/or services.&#160;&#160;For these arrangements, we determine whether the delivered item(s) has value to the customer on a stand-alone basis, and in the event the arrangement includes a general right of return relative to the delivered item(s), whether the delivery or performance of the undelivered item(s) is considered probable and substantially in our control.&#160;&#160;If these criteria are met, the arrangement consideration is allocated to the separate units of accounting based on each unit&#146;s relative selling price.&#160;&#160;If these criteria are not met, the arrangement is accounted for as a single unit of accounting which would result in revenue being recognized ratably over the contract term or deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. The amount of product and services revenue recognized for arrangements with multiple deliverables is impacted by the allocation of arrangement consideration to the deliverables in the arrangement based on the relative selling prices. In determining our selling prices, we apply the selling price hierarchy using vendor specific objective evidence (VSOE) when available, third-party evidence of selling price (&#147;TPE&#148;) if VSOE does not exist, and best estimated selling price (&#147;BESP&#148;) if neither VSOE nor TPE is available.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">VSOE of fair value for elements of an arrangement is based upon the normal pricing and discounting practices for a deliverable when sold separately.&#160;&#160;In determining VSOE, we require that a substantial majority of the selling prices fall within a reasonably narrow pricing range, generally evidenced by a substantial majority of such historical stand-alone transactions falling within a reasonably narrow range of the median rate. In addition, we consider major service groups, geographies, customer classifications, and other variables in determining VSOE.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">We are typically not able to determine TPE for our products or services. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, our offerings contain a significant level of differentiation such that the comparable pricing of products with similar functionality is difficult to obtain. Furthermore, we are unable to reliably determine what similar competitor products&#146; selling prices are on a stand-alone basis.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">When we are unable to establish the selling price using VSOE or TPE, we use BESP in our allocation of arrangement consideration. The objective of BESP is to determine the price at which we would transact a sale if the product or service were sold on a stand-alone basis. We determine BESP for a product or service by considering multiple factors including, but not limited to, cost of products, gross margin objectives, pricing practices, geographies, customer classes and distribution channels.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">We recognize revenue for delivered elements only when we determine there are no uncertainties regarding customer acceptance. Changes in the allocation of the sales price between delivered and undelivered elements can impact the timing of revenue recognized but does not change the total revenue recognized on any agreement.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Professional Services Revenue</i></b> - Fees collected for professional services, including website design and development, search engine optimization services, link-building, paid search management services, and telecom installation services are recognized as revenue, net of expected customer refunds, over the period during which the services are performed, based upon the value for such services.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Web and Telecommunications Services Hosting Revenue </i></b><i>- </i>Fees collected for hosting revenue are recognized ratably as services are provided.&#160;&#160;Customers are billed for these services on a monthly or annual basis at the customer&#146;s option.&#160;&#160;We recognize revenue ratably over the applicable service period.&#160;&#160;When we provide a free trial period, we do not begin to recognize subscription revenue until the trial period has ended and the customer has been billed for the services.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Equipment Sales and Financing Revenue</i></b><i> - </i>Fees generated from the sale of telecommunications equipment are recognized when the devices are installed and hosted telecommunications services begin.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Fees generated from renting our hosted telecommunication equipment (IP or cloud telephone devices) through leasing contracts are recognized as revenue based on whether the lease qualifies as an operating lease or sales-type lease.&#160;&#160;The two primary accounting provisions which we use to classify transactions as sales-type or operating leases are: 1) lease term to determine if it is equal to or greater than 75% of the economic life of the equipment and 2) the present value of the minimum lease payments to determine if they are equal to or greater than 90% of the fair market value of the equipment at the inception of the lease. The economic life of most of our products is estimated to be three years, since this represents the most frequent contractual lease term for our products, and there is no residual value for used equipment. Residual values, if any, are established at the lease inception using estimates of fair value at the end of the lease term. The vast majority of our leases that qualify as sales-type leases are non-cancelable and include cancellation penalties approximately equal to the full value of the lease receivables. Leases that do not meet the criteria for sales-type lease accounting are accounted for as operating leases. Revenue from sales-type leases is recognized upon installation and the interest portion is deferred and recognized as earned.&#160;&#160;Revenue from operating leases in recognized ratably over the applicable service period.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Commission Revenue</i></b><i> - </i>We have contracts with third-party entities with respect to telemarketing product sales to our customers following the sale of the initial software licenses. These products and services are intended to assist the customers with their Internet businesses. These products are sold and delivered completely by third parties. We receive commissions from these third parties, and recognize the revenue as the commissions are received, net of expected customer refunds.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Cost of Revenue</b> &#150; Cost of revenue consists primarily of salaries for fulfillment services, and the cost of telecommunications equipment, services, and other products sold.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Prepaid Sales Commissions</b> -&#160;For arrangements where we recognize revenue over the relevant contract period, we defer related commission payments to our direct sales force and amortize these amounts over the same period that the related revenues are recognized.&#160;&#160;This is done to match commissions with the related revenues.&#160;&#160;Commission payments are nonrefundable unless amounts due from a customer are determined to be uncollectible or if the customer subsequently changes or terminates the level of service, in which case commissions which were paid are recoverable by us.&#160;&#160;We deferred $53,000 and $0 of commissions and amortized to sales and marketing expense $5,000 and $0 as of June 30, 2013 and December 31, 2012, respectively.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Research and Development</b> - Research and development costs are expensed as incurred. Costs related to internally developed software are expensed as research and development expense until technological feasibility has been achieved, after which the costs are capitalized.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Fair Value Measurements&#160;</b>- The fair value of our financial assets and liabilities was determined based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><i>Level 1</i> &#151; Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><i>Level 2</i> &#151; Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Quoted prices for similar assets or liabilities in active markets;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Quoted prices for identical or similar assets in non-active markets;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Inputs other than quoted prices that are observable for the asset or liability; and</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Inputs that are derived principally from or corroborated by other observable market data.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><i>Level 3</i> &#151; Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment.&#160; These values are generally determined using pricing models for which the assumptions utilize management&#146;s estimates of market participant assumptions.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Financial Instruments</b> - The carrying values of cash and cash equivalents, restricted cash, certificates of deposit, and merchant account deposits approximate their fair values due to either the short maturity of the instruments or the recent date of the initial transaction.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Income Taxes</b> - We recognize a liability or asset for the deferred tax consequences of all temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the assets and liabilities are recovered or settled. Accruals for uncertain tax positions are provided for in accordance with accounting guidance. Accordingly, we may recognize the tax benefits from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Accounting guidance is also provided on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. Judgment is required in assessing the future tax consequences of events that have been recognized in the financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact our financial position, results of operations, and cash flows.&#160;&#160;In assessing the need for a valuation allowance, we evaluate all significant available positive and negative evidence, including historical operating results, estimates of future taxable income and the existence of prudent and feasible tax planning strategies.&#160;&#160;We have placed a full valuation allowance on deferred tax assets, see Note 5.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Interest and penalties associated with income taxes are classified as income tax expense in the consolidated statements of operations.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">We do not intend to permanently reinvest the undistributed earnings of our United Kingdom subsidiary, therefore, we have provided for U.S.&#160;deferred income taxes on such undistributed foreign earnings.&#160;&#160;All other foreign subsidiaries are considered disregarded foreign entities for US tax purposes.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Stock-Based Compensation - </b>For equity-classified awards, compensation expense is recognized over the requisite service period based on the computed fair value on the grant date of the award.&#160;&#160;Equity classified awards include the issuance of stock options and restricted stock.&#160;&#160;The restricted stock includes all dividend rights and is a participating security; however, the restricted stock does not change earnings per share under the two-class method.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Comprehensive Income (Loss)</b> &#150; There were no other components of comprehensive income (loss) other than net income (loss) for the three and six months ended June 30, 2013 and 2012.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Operating Segments </b>- Accounting guidance establishes standards for the way public business enterprises are to report information about operating segments in annual financial statements and requires enterprises to report selected information about operating segments in financial reports issued to stockholders. The Company has three operating segments, which consist of StoresOnline, Crexendo Web Services and Crexendo Network Services.&#160;&#160;Effective October 1, 2012, the Company changed its reporting segments to reflect the allocation of previously unallocated corporate expenses to each of the three operating segments.&#160;&#160;The Company revised its segment reporting to reflect changes in how the Chief Operating Decision Maker (CODM) internally measures performance and allocates resources.&#160;&#160;Segment operating results for the three and six months ended June 30, 2012 have been recast to conform to current quarter segment operating results presentation.&#160;&#160;Accounting guidance also establishes standards for related disclosure about products and services, geographic areas and major customers. We generate over 90% of our total revenue from customers within North America (United States and Canada) and less than 10% of our total revenues from customers in other parts of the world.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Significant Customers </b>&#150; No customer accounted for 10% or more of our total revenue or total accounts receivable for the three and six months ended June 30, 2013 and 2012.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 8pt 0; text-align: left; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Basic net income (loss) per common share is computed by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted net income per common share is computed giving effect to all dilutive common stock equivalents, consisting of common stock options and <font style="background-color: white">restricted shares held in escrow</font>. Diluted net loss per common share for the three months ended June 30, 2013 and 2012 was the same as basic net loss per common share, as the common share equivalents were anti-dilutive. Diluted net loss per common share for the six months ended June 30, 2013 was the same as basic net loss per common share, as the common share equivalents were anti-dilutive. Diluted net income per common share for the six months ended June 30, 2012 included 7,000 <font style="background-color: white">restricted shares held in escrow</font>. The following table sets forth the computation of basic and diluted net income (loss) per common share:</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Three Months Ended June 30,</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Six Months Ended June 30,</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="width: 52%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Net (loss) income (in thousands)</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(1,070</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(117</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(1,468</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">80</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Weighted-average share reconciliation:</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Weighted-average shares outstanding</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">10,682,393</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">10,641,104</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">10,675,990</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">10,589,372</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Weighted-average restricted shares held in escrow</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(7,000</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(7,000</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Weighted-average basic shares outstanding</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,682,393</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,634,104</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,675,990</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,582,372</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Dilutive employee stock options</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">25,516</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Dilutive restricted shares held in escrow</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,000</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Diluted shares outstanding</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,682,393</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,634,104</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,675,990</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,614,888</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Net (loss) income per common share:</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Basic</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(0.10</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(0.01</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(0.14</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">0.01</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Diluted</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(0.10</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(0.01</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(0.14</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">0.01</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The following table includes the number of common stock equivalent shares that are not included in the computation of diluted income (loss) per share because including them would have been anti-dilutive.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Three Months ended June 30,</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Six Months ended June 30,</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="width: 52%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding stock options</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2,292,784</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,284,442</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2,056,455</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,436,479</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Restricted shares held in escrow</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,000</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,292,784</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,291,442</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,056,455</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,436,479</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Our trade receivables balance primarily consists of the residual Extended Payment Term Agreements (EPTAs) sold through our workshop seminars that we discontinued in July 2011.&#160;&#160;Below is an analysis of the days outstanding of our trade receivables as shown on our balance sheet (in thousands):</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 78%"><font style="font: 8pt Times New Roman, Times, Serif">Non-EPTA trade receivables</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 8%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">520</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 8%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">432</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Conforming EPTAs</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,392</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,945</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Non-Conforming EPTAs:</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;1 - 30 days</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">142</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">341</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;31 - 60 days</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">163</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;61 - 90 days</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">86</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">79</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Gross trade receivables</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,240</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,960</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Less allowance for doubtful accounts</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(747</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,522</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Trade receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,493</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,438</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Current trade receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,341</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,043</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Long-term trade receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">152</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">395</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Trade receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,493</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,438</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">All current and long-term EPTAs in the table above had original contract terms of greater than one year.&#160;&#160;The Company wrote off $729,000 of EPTAs during the six months ended June 30, 2013 and $3,939,000 during the year ended December 31, 2012, of which, all had original contract terms of greater than one year.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Our effective tax rate for the three and six months ended June 30, 2013 was 2.4% and 15.5%, respectively, which resulted in a benefit for income taxes of $26,000 and $263,000 respectively, The benefit for the six months ended June 30, 2013 was primarily due to the statute of limitations expiring on some uncertain tax positions..</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Our effective tax rate for the three months ended June 30, 2012 was 13% which resulted in an income tax provision of $13,000.&#160;&#160;Our effective tax rate for the six months ended June 30, 2012 was 233%, which resulted in a benefit for income taxes of $140,000.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Significant management judgment is required in determining our provision for income taxes and in determining whether deferred tax assets will be realized in full or in part.&#160;&#160;In assessing the recovery of the deferred tax assets, we considered whether it is more likely than not that some portion or all of our deferred tax assets will not be realized.&#160;&#160;The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible.&#160;&#160;We considered the scheduled reversals of future deferred tax assets, projected future taxable income, the suspension of the sale of product and services through the seminar sales channel for our StoresOnline segment, the restructuring of the StoresOnline segment, and tax planning strategies in making this assessment.&#160;&#160;As a result, we determined it was more likely than not that the deferred tax assets would not be realized; accordingly, we recorded a full valuation allowance. Subsequent to placing a full valuation allowance on our net deferred tax assets, adjustments impacting our tax rate have been and are expected to continue to be insignificant.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We have financial instruments as of June 30, 2013 and December 31, 2012 for which the fair value is summarized below (in thousands):</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <table border="0" cellpadding="0" cellspacing="0" style="width: 100%; border-collapse: collapse; font: 8pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">June 30, 2013</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 1pt solid; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">December 31, 2012</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Carrying Value</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Estimated Fair Value</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Carrying Value</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Estimated Fair Value</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Assets:</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: White; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Trade receivables, net</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;1,493</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;1,468</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;3,438</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;3,383</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Certificate of deposit</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;250</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;250</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;500</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;500</font></td></tr> <tr style="vertical-align: bottom; background-color: White; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Liabilities:</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Acquisition related contingent consideration</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160;&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160;&#160;</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Assets for which fair value is disclosed but not required to be recognized in the balance sheet on a recurring basis are summarized below as of June 30, 2013 and December 31, 2012 (in thousands):</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="10" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Fair value measurement at reporting date</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"><b>Description</b></font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="3" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></p></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; background-color: white; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 1</b></font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; background-color: white; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 2</b></font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; background-color: white; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 3</b></font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Assets:</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="width: 52%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Trade receivables, net</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,468</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,468</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Certificate of deposit</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">250</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">250</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"><b>Description</b></font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="3" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>As of December 31, </b></font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></p></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 1</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 2</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 3</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Assets:</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Trade receivables, net</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">3,383</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">3,383</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Certificate of deposit</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">500</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">500</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0pt; text-indent: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">The carrying amount of certificates of deposit approximates fair value, as determined by certificates of deposit with similar terms and conditions. The trade receivables consist primarily of extended payment term agreements and the fair value is computed using a discounted cash flow model with an estimated market rate.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Liabilities measured at fair value on a recurring basis are summarized below as of June 30, 2013 (in thousands). There were no liabilities measured at fair value on a recurring basis at December 31, 2012.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table border="0" cellpadding="0" cellspacing="0" style="width: 100%; border-collapse: collapse; font: 8pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="5" style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair value measurement at reporting date</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">Description</font></td> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">As of June 30,<br /> 2013</font></td> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center; background-color: white; width: 62pt"><font style="font: 8pt Times New Roman, Times, Serif">Level 1</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white; width: 9pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center; background-color: white; width: 62pt"><font style="font: 8pt Times New Roman, Times, Serif">Level 2</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white; width: 11pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center; background-color: white; width: 62pt"><font style="font: 8pt Times New Roman, Times, Serif">Level 3</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: bold 8pt Times New Roman, Times, Serif; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Liabilities:</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Acquisition related contingent consideration</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 40pt"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><font style="font: 8pt Times New Roman, Times, Serif">Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company&#146;s own assumptions in measuring fair value. Future changes in fair value of the contingent financial milestone consideration, as a result of changes in significant inputs such as the discount rate and estimated probabilities of financial milestone achievements, could have a material effect on the statement of operations and balance sheet in the period of the change.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><font style="font: 8pt Times New Roman, Times, Serif">The progression of the Company&#146;s Level 3 instruments fair valued on a recurring basis for the six months ended June 30, 2013 are shown in the table below (in thousands):</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"></p> <table border="0" cellpadding="0" cellspacing="0" style="width: 100%; border-collapse: collapse; font: 8pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Acquistion Related Contingent Consideration</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Balance at December 31, 2012</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</font></td></tr> <tr style="vertical-align: bottom; background-color: White; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Additions</font></td> <td style="border-bottom: windowtext 0.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Balance at June 30, 2013</font></td> <td style="border-bottom: windowtext 2pt double; font: 8pt Times New Roman, Times, Serif; text-align: right; border-top-color: windowtext; border-top-width: 0.5pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Legal Proceedings</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">From time to time we receive inquiries from federal, state, city and local government officials in the various jurisdictions in which we operate. These inquiries and investigations generally concern compliance with various city, county, state and/or federal regulations involving sales, representations made, customer service, refund policies, and marketing practices. We respond to these inquiries and have generally been successful in addressing the concerns of these persons and entities, without a formal complaint or charge being made, although there is often no formal closing of the inquiry or investigation. There can be no assurance that the ultimate resolution of these or other inquiries and investigations will not have a material adverse effect on our business or operations, or that a formal complaint will not be initiated. We also receive complaints and inquiries in the ordinary course of business from both customers and governmental and non-governmental bodies on behalf of customers, and in some cases these customer complaints have risen to the level of litigation. There can be no assurance that the ultimate resolution of these matters will not have a material adverse effect on our business or results of operations.&#160;&#160;&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We have recorded&#160;liabilities of approximately $202,000 as of June 30, 2013 and December 31, 2012, respectively, for estimated losses resulting from various legal proceedings in which we are engaged. Attorney&#146;s fees associated with the various legal proceedings are expensed as incurred. We are also subject to various claims and legal proceedings covering matters that arise in the ordinary course of business. We believe that the resolution of these other cases will not have a material adverse effect on our business, financial position, or results of operations.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Management has chosen to organize the Company around differences based on its products and services.&#160;&#160;Crexendo Web Services segment generates revenue from managing e-commerce or lead generation offerings, websites, search engine optimization/management and online promotional needs for small, medium, and large businesses.&#160;&#160;Crexendo Network Services segment generates revenue from selling hosted telecommunication and broadband data services. We believe that the StoresOnline segment will continue to generate revenue by offering businesses a continuum of services and technology providing tools and training to establish a successful website on the Internet for entrepreneurs and small office/home office (SOHO) customers.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The Company has three operating segments, which consist of StoresOnline, Crexendo Web Services, and Crexendo Network Services. Effective October 1, 2012, the Company changed its reporting segments to reflect the allocation of previously unallocated corporate expenses to each of the three operating segments. The Company revised its segment reporting to reflect changes in how the Chief Operating Decision Maker (CODM) internally measures performance and allocates resources. Segment operating results for the prior year have been revised to conform to current year segment operating results presentation.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Segment revenue and income (loss) before income tax provision was as follows (in thousands):</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Three Months Ended June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Six Months Ended June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Revenue:</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 52%; text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">StoresOnline</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,677</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,054</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,781</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8,464</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Web Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">569</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">692</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,102</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,462</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Network Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">491</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">168</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">876</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">243</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Consolidated revenue</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,737</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,914</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,759</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,169</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Loss from Operations:</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">StoresOnline</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">629</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,682</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,645</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,344</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Web Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(594</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,099</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,223</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,539</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Network Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,251</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,197</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,485</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,145</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Total operating loss</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,216</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(614</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,063</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,340</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Other Income, net:</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">StoresOnline</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">120</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">504</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">326</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,266</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Web Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Network Services</font></td> <td style="text-align: right; text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Total other income</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">120</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">510</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">332</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,280</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif"> Loss before income tax provision</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">StoresOnline</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">749</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,186</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,971</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,610</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Web Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(594</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,096</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,220</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,532</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Network Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,251</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,194</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,482</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,138</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif"> Loss before income tax provision</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,096</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(104</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,731</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(60</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>PBX Holdings, LLC. Acquisition</i></b></font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: justify; text-indent: 24.5pt"><font style="font: 8pt Times New Roman, Times, Serif">On June 4, 2013 we acquired certain assets from PBX Holdings, LLC., dba PBX Central, a privately-held provider of IP Telecom and Cloud communications located in Austin, Texas. The aggregate purchase price of approximately $769,000 consisted of $300,000 of cash paid at closing and 38,516 shares of our common stock with an estimated fair value of approximately $107,000. The fair value of the issuance of common stock issued as consideration for PBX Central was determined on the basis of the closing market price of the Company&#146;s common stock on the acquisition date. In addition, the Company recorded as part of the purchase price approximately $363,000 of contingent consideration it estimates will be earned relating to an additional payment provision. The estimated additional payment obligation is comprised of approximately $87,000 of cash consideration and 115,385 shares of the Company&#146;s common stock with an estimated value of approximately $276,000 at the time of the acquisition. The Company&#146;s consolidated financial statements include the results of operations of PBX Central from the date of acquisition. The historical results of operations of PBX Central were not significant to the Company&#146;s consolidated results of operations for the periods presented. The total purchase consideration was allocated to the assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition, as determined by management. The excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed has been recorded as goodwill. In accordance with current accounting standards, goodwill associated with the PBX Central acquisition will not be amortized and will be tested for impairment at least annually.&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: justify; text-indent: 24.5pt"><font style="font: 8pt Times New Roman, Times, Serif">The preliminary purchase price allocation is subject to completion of final fair value allocations. The actual amounts that will be recorded based upon final assessment of the fair values may differ substantially from the information in the unaudited condensed consolidated financial statements. The primary area of the purchase price allocation that is not yet finalized relate to the valuation of the intangible assets acquired.&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: justify; text-indent: 24.5pt"><font style="font: 8pt Times New Roman, Times, Serif">We anticipate finalizing our purchase price allocation during the third quarter of 2013. The following table presents the preliminary allocation of the purchase price for PBX Central (in thousands):</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: justify; text-indent: 24.5pt"></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: left">Consideration (including estimated unpaid contingent consideration):</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="width: 70%">&#160;&#160;&#160;&#160;&#160;&#160;Cash</td><td style="width: 10%">&#160;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">387</td><td style="width: 1%; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt">&#160;&#160;&#160;&#160;&#160;&#160;Common Stock</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">383</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 2.5pt">Total Consideration</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">770</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-align: left">Recognized amounts of identifiable assets acquired and liabilities assumed:</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">&#160;&#160;&#160;&#160;&#160;Property and Equipment</td><td>&#160;</td> <td style="text-align: left">$</td><td style="text-align: right">7</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">&#160;&#160;&#160;&#160;&#160;Identifiable intangible assets</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">688</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Total identifiable net assets</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">695</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">&#160;&#160;&#160;&#160;&#160;Goodwill</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">75</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 2.5pt">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">770</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 4.5pt 0 0; text-align: justify; text-indent: 24.5pt"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The following were the identified intangible assets acquired and the respective estimated periods over which such assets will be amortized (in thousands):</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Amount</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Weighted Average useful life (In years)</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="width: 78%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Technology</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 8%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">180</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 8%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Customer relationships</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">508</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">10</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">688</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In determining the preliminary purchase price allocation, the Company considered, among other factors, its intention to use the acquired assets and the historical and estimated future demand for PBX Central services. The estimated fair value of customer relationships was based upon the income approach. The income approach relies on an estimation of the present value of the future monetary benefits expected to flow to the owner of an asset during its remaining economic life. This approach requires a projection of the cash flow that the asset is expected to generate in the future. The projected cash flow is discounted to its present value using a rate of return, or discount rate that accounts for the time value of money and the degree of risk inherent in the asset. The income approach may take the form of a &#147;relief from royalty&#148; methodology, a cost savings methodology, a &#147;with and without&#148; methodology, or excess earnings methodology, depending on the specific asset under consideration.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The cost approach was used to determine the fair value of the technology acquired from PBX Central.&#160;&#160;The cost approach estimates the value of the intangible asset by quantifying the aggregate expenditures that would be required to replace the intangible asset.&#160;&#160;Such expenditures include the developers&#146; time and materials.&#160;&#160;The underlying assumption is that the cost to purchase or develop an asset are commensurate with the economic benefits the asset is expected to generate over its remaining economic life.&#160;&#160;Management has estimated the cost to develop a similar product with current technology.&#160;&#160;The key assumptions used in valuing the technology acquired are developers&#146; time.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The customer relationships were valued using a form of the income approach known as the multi-period excess earnings method. Inherent in the multi-period excess earnings method is the recognition that, in most cases, all of the assets of the business, both tangible and intangible, contribute to the generation of the cash flow of the business and the net cash flows attributable to the subject asset must recognize the support of the other assets which contribute to the realization of the cash flows. This future cash flow was then discounted using an estimated required rate of return for the asset to determine the present value of the future cash flows attributable to the asset. The key assumptions used in valuing the customer relationships acquired are as follows: discount rate of 18%, tax rate of 38.1%, contributory asset charges for technology license and tangible assets used to deliver services, and estimated economic life of 10 years.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The total weighted average amortization period for the identified intangible assets acquired from PBX Central is 6 years. The goodwill resulting from the PBX Central acquisition is not currently deductible for income tax purposes.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Description of Business - </b>Crexendo, Inc. is incorporated in the state of Delaware. As used hereafter in the notes to consolidated financial statements, we refer to Crexendo, Inc. and its wholly owned subsidiaries, as &#147;we,&#148; &#147;us,&#148; or &#147;our Company&#148;. In May 2011, our stockholders approved an amendment to our Certificate of Incorporation to change our name from &#34;iMergent, Inc.&#34; to &#34;Crexendo, Inc.&#34; The name change was effective May 18, 2011. Our ticker symbol &#34;IIG&#34; on the New York Stock Exchange was changed to &#147;EXE&#148; on May 18, 2011. We are a hosted services company that provides web hosting, hosted telecommunications services, search engine optimization management, link building, e-commerce software, website development, and broadband internet services for businesses and entrepreneurs. Our services are designed to make enterprise-class hosting services available to small and medium-sized businesses at affordable monthly rates. The Company has three operating segments, which consist of Crexendo Network Services, Crexendo Web Services and StoresOnline.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: left; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In July 2011, we announced the suspension of our direct mail seminar sales channel in our StoresOnline segment. Accordingly, we have shifted our focus toward growing our Crexendo Network Services and Crexendo Web Services segments.&#160; As a result, the Company has transformed into a start-up company with the inherent risks and uncertainties of funding operations until profitability is achieved. Due to changes in our business model and the rapidly evolving nature of our business and the markets we serve, we believe period-to-period comparisons of our operating results, including operating expenses as a percentage of revenue and cash flows, are not necessarily meaningful and should not be relied upon as an indication of future performance. We currently plan to fund our growth during the next twelve months using our cash and cash equivalents of $4,930,000, the collection of remaining accounts receivable from our former StoresOnline business, and restricted cash expected to be released from restriction. In addition, in March 2013, the Company received a letter from the CEO, and majority shareholder, that if there is a shortfall in cash, that the CEO would provide additional financial support if necessary up to $2.0 million. The Company believes that it has sufficient funds to sustain its operations during the next 12 months.&#160; Beyond the next twelve months, the Company&#146;s forecast indicates that given current trends and growth projections, the Company may need to raise additional capital. There can be no assurances that such additional capital, if needed, would be available on acceptable terms or at all, which would adversely affect our Company&#146;s ability to achieve our business objectives.&#160; In addition, if our future operating performance during the next twelve months is below our expectations, our liquidity and ability to operate our business could be adversely affected unless the Company is able to raise additional capital during that period to offset the shortfall in performance. </font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Basis of Presentation &#150;&#160;</b>These unaudited condensed consolidated financial statements include the accounts and operations of Crexendo, Inc. and its wholly owned subsidiaries, which include Avail 24/7 Inc., Crexendo Business Solutions, Inc., Galaxy Mall, Inc., StoresOnline Inc., StoresOnline International Canada ULC, StoresOnline International, Inc., StoresOnline International Ltd., StoresOnline International Canada, Ltd., Internet Training Group, Inc., Crexendo International, Inc., Crexendo Telecom, Inc., Crexendo India Limited, and Crexendo Property Management, LLC.&#160;&#160;&#160;All intercompany account balances and transactions have been eliminated in consolidation.&#160;&#160;The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, consistent in all material respects with those applied in our financial statements included in our Annual Report on Form 10-K for the fiscal year ended December&#160;31, 2012. Because these financial statements address interim periods, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that in the opinion of management are necessary for the fair presentation of the interim periods presented. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December&#160;31, 2013 or for any future periods. This Quarterly Report on Form 10-Q should be read in conjunction with the Company&#146;s audited financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended December&#160;31, 2012.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Cash and Cash Equivalents</b> - We consider all highly liquid, short-term investments with maturities of three months or less at the time of purchase to be cash equivalents.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Restricted Cash</b> &#150; We classified $1,444,000 as restricted cash as of June 30, 2013 and December 31, 2012, respectively.&#160;&#160;Cash is restricted for state licensing letters of credit, compensating balance requirement of our merchant accounts, and purchasing card agreements.&#160;&#160;The Company expects the restrictions to be removed during the next year and therefore classified restricted cash as current.&#160;&#160;As of June 30, 2013, we had restricted cash in financial institutions in excess of federally insured limits in the amount of $1,444,000.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Trade Receivables</b> &#150; We have historically offered to our StoresOnline customers the option to finance, typically through 24 and 36-month extended payment term arrangements (&#147;EPTAs&#148;), purchases made at our Internet Training Workshops through our StoresOnline segment. EPTAs are reflected as short-term and long-term trade receivables, as applicable, as we have the intent and ability to hold the receivables for the foreseeable future, until maturity or payoff.&#160;&#160;EPTAs are recorded on a nonaccrual status beginning on the contract date.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Allowance for Doubtful Accounts</b> &#150; For sales made through EPTA contracts, we record an allowance for doubtful accounts each reporting period based on the Company&#146;s ongoing assessment of collectability. The allowance represents estimated losses resulting from customers&#146; failure to make required payments. The allowance for doubtful accounts for EPTAs is netted against the current and long-term trade receivables balances. The allowance estimate is based on historical collection experience, specific identification of probable bad debts based on collection efforts, aging of trade receivables, customer payment history, and other known factors, including current economic conditions. We believe that the allowance for doubtful accounts is adequate based on our assessment to date, however, actual collection results may differ materially from our expectations. Because revenue generated from customers financing through EPTAs is deferred and not recognized prior to the collection of cash, adjustments to the allowance for doubtful accounts related to our EPTA contracts increase or decrease deferred revenue. Trade receivables are written off against the allowance when the related customers are no longer making required payments and the trade receivables are determined to be uncollectible, typically 90 days past their original due date.&#160;&#160;For sales made in our Crexendo Web Services and Crexendo Network Services segments, the allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Interest Income</b> - Interest income is primarily earned from EPTA contracts. EPTA contract terms generally contain an 18% simple interest rate. Interest income is recognized on these accounts only to the extent cash is received as the receivables are generally 24 and 36-months in length and collection of the full amount of the receivable is not probable. We recognized $146,000 and $524,000 for the three months ended June 30, 2013 and 2012, respectively. We recognized $365,000 and $1,266,000 for the six months ended June 30, 2013 and 2012, respectively.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Inventory </b>- Inventories consist of telecommunication equipment and is stated at the lower of cost (first-in, first-out method) or market. In accordance with applicable accounting guidance we regularly evaluate whether inventory is stated at the lower of cost or market.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Certificate of Deposit</b> - We hold a $250,000 certificate of deposit as collateral for merchant accounts, which automatically renews every 12 months. The certificate of deposit is classified as long-term in the condensed consolidated balance sheets.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Property and Equipment</b> - Depreciation and amortization expense is computed using the straight-line method in amounts sufficient to allocate the cost of depreciable assets over their estimated useful lives ranging from two to five years. The cost of leasehold improvements is amortized using the straight-line method over the shorter of the estimated useful life of the asset or the term of the related lease. Depreciation and amortization expense is included in general and administrative expenses and totaled $317,000 and $391,000 for the three months ended June 30, 2013 and 2012, respectively and $574,000 and $502,000 for the six months ended June 30, 2013 and 2012, respectively. Depreciable lives by asset group are as follows:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"></font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="width: 79%; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Computer and office equipment</font></td> <td style="width: 21%; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">2 to 5 years</font></td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Computer software</font></td> <td style="text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">3 years</font></td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Furniture and fixtures</font></td> <td style="text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">4 years</font></td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Leasehold improvements</font></td> <td style="text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">2 to 5 years</font></td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Building</font></td> <td style="text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">20 years</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Maintenance and repairs are expensed as incurred. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and any related gain or loss on disposition is reflected in net income or loss for the year.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Goodwill </b>&#150; Goodwill of $265,000 was recorded in connection with the acquisition of CastleWave in 2010. Goodwill of $75,000 was recorded in connection with the acquisition of PBX Central on June 4, 2013. Goodwill is tested for impairment using a fair-value-based approach on an annual basis (December 31) and between annual tests if indicators of potential impairment exist.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Intangible Assets</b> - Our intangible assets consist primarily of assets acquired in the acquisition of CastleWave and PBX Central, which include customer relationships, developed technology, technical know-how, and a non-compete agreement. The fair value of identifiable intangible assets is based upon the lower of discounted future cash flow projections or the amount paid in an arm&#146;s length transaction. The intangible assets are amortized following the patterns in which the economic benefits are consumed. Amortization expense from these acquired assets is included in general and administrative expenses and totaled $17,000 and $18,000 for the three months ended June 30, 2013 and 2012, respectively and $24,000 and $36,000 for the six months ended June 30, 2013 and 2012, respectively.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Use of Estimates - </b>In preparing the consolidated financial statements, management makes assumptions, estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods.&#160;&#160;Specific estimates and judgments include inventory valuation and obsolescence, intangible assets, allowances for doubtful accounts, sales returns and allowances, uncertainties related to certain income tax benefits, valuation of deferred income tax assets, valuations of share-based payments and recoverability of long-lived assets.&#160;&#160;Management&#146;s estimates are based on historical experience and on our expectations that are believed to be reasonable.&#160;&#160;The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.&#160;&#160;Actual results may differ from our current estimates and those differences may be material.</font></p> <p style="margin: 0pt; text-align: justify; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Revenue Recognition - </b>In general, we recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.&#160;&#160;We recognize revenue from our Web Services and Network Services segments on an accrual basis and revenue from our StoresOnline segment on a cash basis. Specifics to revenue category are as follows:</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Software licenses and DVD training courses sold under EPTAs are recognized as revenue upon receipt of cash from customers and not at the time of sale. Accounting standards require revenue to be deferred until customer payments are received if collection of the original principal balance is not probable.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">We enter into agreements where revenue is derived from multiple deliverables including any mix of products and/or services.&#160;&#160;For these arrangements, we determine whether the delivered item(s) has value to the customer on a stand-alone basis, and in the event the arrangement includes a general right of return relative to the delivered item(s), whether the delivery or performance of the undelivered item(s) is considered probable and substantially in our control.&#160;&#160;If these criteria are met, the arrangement consideration is allocated to the separate units of accounting based on each unit&#146;s relative selling price.&#160;&#160;If these criteria are not met, the arrangement is accounted for as a single unit of accounting which would result in revenue being recognized ratably over the contract term or deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. The amount of product and services revenue recognized for arrangements with multiple deliverables is impacted by the allocation of arrangement consideration to the deliverables in the arrangement based on the relative selling prices. In determining our selling prices, we apply the selling price hierarchy using vendor specific objective evidence (VSOE) when available, third-party evidence of selling price (&#147;TPE&#148;) if VSOE does not exist, and best estimated selling price (&#147;BESP&#148;) if neither VSOE nor TPE is available.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">VSOE of fair value for elements of an arrangement is based upon the normal pricing and discounting practices for a deliverable when sold separately.&#160;&#160;In determining VSOE, we require that a substantial majority of the selling prices fall within a reasonably narrow pricing range, generally evidenced by a substantial majority of such historical stand-alone transactions falling within a reasonably narrow range of the median rate. In addition, we consider major service groups, geographies, customer classifications, and other variables in determining VSOE.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">We are typically not able to determine TPE for our products or services. TPE is determined based on competitor prices for similar deliverables when sold separately. Generally, our offerings contain a significant level of differentiation such that the comparable pricing of products with similar functionality is difficult to obtain. Furthermore, we are unable to reliably determine what similar competitor products&#146; selling prices are on a stand-alone basis.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">When we are unable to establish the selling price using VSOE or TPE, we use BESP in our allocation of arrangement consideration. The objective of BESP is to determine the price at which we would transact a sale if the product or service were sold on a stand-alone basis. We determine BESP for a product or service by considering multiple factors including, but not limited to, cost of products, gross margin objectives, pricing practices, geographies, customer classes and distribution channels.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">We recognize revenue for delivered elements only when we determine there are no uncertainties regarding customer acceptance. Changes in the allocation of the sales price between delivered and undelivered elements can impact the timing of revenue recognized but does not change the total revenue recognized on any agreement.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Professional Services Revenue</i></b> - Fees collected for professional services, including website design and development, search engine optimization services, link-building, paid search management services, and telecom installation services are recognized as revenue, net of expected customer refunds, over the period during which the services are performed, based upon the value for such services.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Web and Telecommunications Services Hosting Revenue </i></b><i>- </i>Fees collected for hosting revenue are recognized ratably as services are provided.&#160;&#160;Customers are billed for these services on a monthly or annual basis at the customer&#146;s option.&#160;&#160;We recognize revenue ratably over the applicable service period.&#160;&#160;When we provide a free trial period, we do not begin to recognize subscription revenue until the trial period has ended and the customer has been billed for the services.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Equipment Sales and Financing Revenue</i></b><i> - </i>Fees generated from the sale of telecommunications equipment are recognized when the devices are installed and hosted telecommunications services begin.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Fees generated from renting our hosted telecommunication equipment (IP or cloud telephone devices) through leasing contracts are recognized as revenue based on whether the lease qualifies as an operating lease or sales-type lease.&#160;&#160;The two primary accounting provisions which we use to classify transactions as sales-type or operating leases are: 1) lease term to determine if it is equal to or greater than 75% of the economic life of the equipment and 2) the present value of the minimum lease payments to determine if they are equal to or greater than 90% of the fair market value of the equipment at the inception of the lease. The economic life of most of our products is estimated to be three years, since this represents the most frequent contractual lease term for our products, and there is no residual value for used equipment. Residual values, if any, are established at the lease inception using estimates of fair value at the end of the lease term. The vast majority of our leases that qualify as sales-type leases are non-cancelable and include cancellation penalties approximately equal to the full value of the lease receivables. Leases that do not meet the criteria for sales-type lease accounting are accounted for as operating leases. Revenue from sales-type leases is recognized upon installation and the interest portion is deferred and recognized as earned.&#160;&#160;Revenue from operating leases in recognized ratably over the applicable service period.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b><i>Commission Revenue</i></b><i> - </i>We have contracts with third-party entities with respect to telemarketing product sales to our customers following the sale of the initial software licenses. These products and services are intended to assist the customers with their Internet businesses. These products are sold and delivered completely by third parties. We receive commissions from these third parties, and recognize the revenue as the commissions are received, net of expected customer refunds.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="margin: 0pt; text-align: justify; font: 8pt Times New Roman, Times, Serif"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Cost of Revenue</b> &#150; Cost of revenue consists primarily of salaries for fulfillment services, and the cost of telecommunications equipment, services, and other products sold.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Research and Development</b> - Research and development costs are expensed as incurred. Costs related to internally developed software are expensed as research and development expense until technological feasibility has been achieved, after which the costs are capitalized.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"><b>Fair Value Measurements&#160;</b>- The fair value of our financial assets and liabilities was determined based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><i>Level 1</i> &#151; Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><i>Level 2</i> &#151; Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Quoted prices for similar assets or liabilities in active markets;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Quoted prices for identical or similar assets in non-active markets;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Inputs other than quoted prices that are observable for the asset or liability; and</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#183;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Inputs that are derived principally from or corroborated by other observable market data.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><i>Level 3</i> &#151; Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment.&#160; These values are generally determined using pricing models for which the assumptions utilize management&#146;s estimates of market participant assumptions.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Financial Instruments</b> - The carrying values of cash and cash equivalents, restricted cash, certificates of deposit, and merchant account deposits approximate their fair values due to either the short maturity of the instruments or the recent date of the initial transaction.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Income Taxes</b> - We recognize a liability or asset for the deferred tax consequences of all temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the assets and liabilities are recovered or settled. Accruals for uncertain tax positions are provided for in accordance with accounting guidance. Accordingly, we may recognize the tax benefits from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Accounting guidance is also provided on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. Judgment is required in assessing the future tax consequences of events that have been recognized in the financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact our financial position, results of operations, and cash flows.&#160;&#160;In assessing the need for a valuation allowance, we evaluate all significant available positive and negative evidence, including historical operating results, estimates of future taxable income and the existence of prudent and feasible tax planning strategies.&#160;&#160;We have placed a full valuation allowance on deferred tax assets, see Note 5.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Interest and penalties associated with income taxes are classified as income tax expense in the consolidated statements of operations.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">We do not intend to permanently reinvest the undistributed earnings of our United Kingdom subsidiary, therefore, we have provided for U.S.&#160;deferred income taxes on such undistributed foreign earnings.&#160;&#160;All other foreign subsidiaries are considered disregarded foreign entities for US tax purposes.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Stock-Based Compensation - </b>For equity-classified awards, compensation expense is recognized over the requisite service period based on the computed fair value on the grant date of the award.&#160;&#160;Equity classified awards include the issuance of stock options and restricted stock.&#160;&#160;The restricted stock includes all dividend rights and is a participating security; however, the restricted stock does not change earnings per share under the two-class method.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Comprehensive Income (Loss)</b> &#150; There were no other components of comprehensive income (loss) other than net income (loss) for the three and six months ended June 30, 2013 and 2012.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Operating Segments </b>- Accounting guidance establishes standards for the way public business enterprises are to report information about operating segments in annual financial statements and requires enterprises to report selected information about operating segments in financial reports issued to stockholders. The Company has three operating segments, which consist of StoresOnline, Crexendo Web Services and Crexendo Network Services.&#160;&#160;Effective October 1, 2012, the Company changed its reporting segments to reflect the allocation of previously unallocated corporate expenses to each of the three operating segments.&#160;&#160;The Company revised its segment reporting to reflect changes in how the Chief Operating Decision Maker (CODM) internally measures performance and allocates resources.&#160;&#160;Segment operating results for the three and six months ended June 30, 2012 have been recast to conform to current quarter segment operating results presentation.&#160;&#160;Accounting guidance also establishes standards for related disclosure about products and services, geographic areas and major customers. We generate over 90% of our total revenue from customers within North America (United States and Canada) and less than 10% of our total revenues from customers in other parts of the world.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Significant Customers </b>&#150; No customer accounted for 10% or more of our total revenue or total accounts receivable for the three and six months ended June 30, 2013 and 2012.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b>Prepaid Sales Commissions</b> -&#160;For arrangements where we recognize revenue over the relevant contract period, we defer related commission payments to our direct sales force and amortize these amounts over the same period that the related revenues are recognized.&#160;&#160;This is done to match commissions with the related revenues.&#160;&#160;Commission payments are nonrefundable unless amounts due from a customer are determined to be uncollectible or if the customer subsequently changes or terminates the level of service, in which case commissions which were paid are recoverable by us.&#160;&#160;We deferred $53,000 and $0 of commissions and amortized to sales and marketing expense $5,000 and $0 as of June 30, 2013 and December 31, 2012, respectively.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Depreciable lives by asset group are as follows:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="width: 79%"><font style="font: 8pt Times New Roman, Times, Serif">Computer and office equipment</font></td> <td style="width: 21%"><font style="font: 8pt Times New Roman, Times, Serif">2 to 5 years</font></td></tr> <tr style="vertical-align: top; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Computer software</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">3 years</font></td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Furniture and fixtures</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">4 years</font></td></tr> <tr style="vertical-align: top; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Leasehold improvements</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">2 to 5 years</font></td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Building</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">20 years</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The following table sets forth the computation of basic and diluted net income (loss) per common share:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Three Months Ended June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Six Months Ended June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 52%"><font style="font: 8pt Times New Roman, Times, Serif">Net (loss) income (in thousands)</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,070</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(117</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,468</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">80</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Weighted-average share reconciliation:</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Weighted-average shares outstanding</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,682,393</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,641,104</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,675,990</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,589,372</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Weighted-average restricted shares held in escrow</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(7,000</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(7,000</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Weighted-average basic shares outstanding</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,682,393</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,634,104</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,675,990</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,582,372</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Dilutive employee stock options</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">25,516</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Dilutive restricted shares held in escrow</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,000</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Diluted shares outstanding</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,682,393</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,634,104</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,675,990</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,614,888</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Net (loss) income per common share:</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Basic</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(0.10</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(0.01</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(0.14</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.01</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Diluted</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(0.10</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(0.01</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(0.14</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.01</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The following table includes the number of common stock equivalent shares that are not included in the computation of diluted income (loss) per share because including them would have been anti-dilutive.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Three Months ended June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Six Months ended June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 52%"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding stock options</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,292,784</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,284,442</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,056,455</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,436,479</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Restricted shares held in escrow</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,000</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,292,784</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,291,442</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,056,455</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,436,479</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Below is an analysis of the days outstanding of our trade receivables as shown on our balance sheet (in thousands):</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 78%"><font style="font: 8pt Times New Roman, Times, Serif">Non-EPTA trade receivables</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 8%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">520</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 8%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">432</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Conforming EPTAs</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,392</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,945</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Non-Conforming EPTAs:</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;1 - 30 days</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">142</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">341</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;31 - 60 days</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">163</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;61 - 90 days</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">86</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">79</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Gross trade receivables</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,240</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,960</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Less allowance for doubtful accounts</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(747</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,522</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Trade receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,493</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,438</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Current trade receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,341</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,043</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Long-term trade receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">152</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">395</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Trade receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,493</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,438</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Equipment finance receivables arising from the rental of our hosted telecommunication equipment through sales-type leases, were as follows (in thousands):</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 78%"><font style="font: 8pt Times New Roman, Times, Serif">Gross financing receivables</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 8%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">616</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 8%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">283</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Less unearned income</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(369</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(159</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Financing receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">247</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">124</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Less: Current portion of finance receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">51</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">28</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Finance receivables due after one year</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">196</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">96</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We have financial instruments as of June 30, 2013 and December 31, 2012 for which the fair value is summarized below (in thousands):</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</p> <table border="0" cellpadding="0" cellspacing="0" style="width: 100%; border-collapse: collapse; font: 8pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">June 30, 2013</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 1pt solid; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">December 31, 2012</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Carrying Value</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Estimated Fair Value</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Carrying Value</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Estimated Fair Value</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Assets:</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: White; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Trade receivables, net</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;1,493</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;1,468</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;3,438</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;3,383</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Certificate of deposit</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;250</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;250</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;500</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;500</font></td></tr> <tr style="vertical-align: bottom; background-color: White; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Liabilities:</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Acquisition related contingent consideration</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160;&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-&#160;&#160;&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Assets for which fair value is disclosed but not required to be recognized in the balance sheet on a recurring basis are summarized below as of June 30, 2013 and December 31, 2012 (in thousands):</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="10" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Fair value measurement at reporting date</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"><b>Description</b></font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="3" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>As of June 30,</b></font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></p></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; background-color: white; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 1</b></font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; background-color: white; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 2</b></font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; background-color: white; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 3</b></font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Assets:</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="width: 52%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Trade receivables, net</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,468</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,468</font></td> <td nowrap="nowrap" style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Certificate of deposit</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">250</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">250</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"><b>Description</b></font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="3" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>As of December 31, </b></font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></p></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 1</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 2</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Level 3</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Assets:</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Trade receivables, net</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">3,383</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">3,383</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Certificate of deposit</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">500</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">500</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Liabilities measured at fair value on a recurring basis are summarized below as of June 30, 2013 (in thousands). There were no liabilities measured at fair value on a recurring basis at December 31, 2012.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table border="0" cellpadding="0" cellspacing="0" style="width: 100%; border-collapse: collapse; font: 8pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="5" style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair value measurement at reporting date</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">Description</font></td> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">As of June 30,<br /> 2013</font></td> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center; background-color: white; width: 62pt"><font style="font: 8pt Times New Roman, Times, Serif">Level 1</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white; width: 9pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center; background-color: white; width: 62pt"><font style="font: 8pt Times New Roman, Times, Serif">Level 2</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white; width: 11pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center; background-color: white; width: 62pt"><font style="font: 8pt Times New Roman, Times, Serif">Level 3</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: bold 8pt Times New Roman, Times, Serif; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="background-color: white; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; text-align: center; background-color: white"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Liabilities:</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Acquisition related contingent consideration</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Segment revenue and income (loss) before income tax provision was as follows (in thousands):</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Three Months Ended June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="6" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Six Months Ended June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Revenue:</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 52%; text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">StoresOnline</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,677</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,054</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,781</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8,464</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Web Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">569</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">692</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,102</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,462</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Network Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">491</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">168</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">876</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">243</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Consolidated revenue</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,737</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,914</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,759</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,169</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Loss from Operations:</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">StoresOnline</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">629</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,682</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,645</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,344</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Web Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(594</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,099</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,223</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,539</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Network Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,251</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,197</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,485</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,145</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Total operating loss</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,216</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(614</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,063</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,340</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Other Income, net:</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">StoresOnline</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">120</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">504</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">326</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,266</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Web Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Network Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Total other income</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">120</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">510</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">332</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,280</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif"> Loss before income tax provision</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">StoresOnline</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">749</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,186</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,971</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,610</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Web Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(594</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,096</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,220</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,532</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-indent: 10pt"><font style="font: 8pt Times New Roman, Times, Serif">Crexendo Network Services</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,251</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,194</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,482</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(2,138</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Loss before income tax provision</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,096</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(104</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,731</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(60</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;The following table presents the preliminary allocation of the purchase price for PBX Central:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">&#160;</p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: left; width: 70%">Consideration (including estimated unpaid contingent consideration):</td><td style="width: 10%">&#160;</td> <td style="text-align: left; width: 1%">&#160;</td><td style="text-align: right; width: 18%">&#160;</td><td style="text-align: left; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom"> <td>&#160;&#160;&#160;&#160;&#160;&#160;Cash</td><td>&#160;</td> <td style="text-align: left">$</td><td style="text-align: right">387</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt">&#160;&#160;&#160;&#160;&#160;&#160;Common Stock</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">383</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 2.5pt">Total Consideration</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">770</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>&#160;</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; text-align: left">Recognized amounts of identifiable assets acquired and liabilities assumed:</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">&#160;&#160;&#160;&#160;&#160;Property and Equipment</td><td>&#160;</td> <td style="text-align: left">$</td><td style="text-align: right">7</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt">&#160;&#160;&#160;&#160;&#160;Identifiable intangible assets</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">688</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Total identifiable net assets</td><td>&#160;</td> <td style="text-align: left">&#160;</td><td style="text-align: right">695</td><td style="text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt">&#160;&#160;&#160;&#160;&#160;Goodwill</td><td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">75</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 2.5pt">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">770</td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The following were the identified intangible assets acquired and the respective estimated periods over which such assets will be amortized:</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Amount</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>Weighted Average useful life (In years)</b></font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif; width: 78%"><font style="font: 8pt Times New Roman, Times, Serif">Technology</font></td> <td style="font: 8pt Times New Roman, Times, Serif; text-align: right; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="font: 8pt Times New Roman, Times, Serif; text-align: right; width: 8%"><font style="font: 8pt Times New Roman, Times, Serif">180</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif; text-align: right; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif; text-align: right; width: 8%"><font style="font: 8pt Times New Roman, Times, Serif">2</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Customer relationships</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">508</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">10</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">688</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td nowrap="nowrap" style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> 1444000 1444000 574000 502000 317000 391000 53000 0 5000 0 10675990 10589372 10682393 10641104 -7000 -7000 25516 7000 2056455 1436479 2292784 1284442 2056455 1436479 2292784 1291442 7000 729000 3939000 0.155 2.33 0.024 0.13 263000 140000 26000 13000 202000000 202000000 332000 326000 1266000 3000 7000 3000 7000 1280000 120000 510000 120000 504000 3000 3000 -1731000 1971000 4610000 -1220000 -2532000 -2482000 -2138000 -60000 -1096000 -104000 749000 2186000 -594000 -1096000 -1251000 -1194000 770000 383000 387000 75000 695000 688000 7000 770000 688000 180000 508000 P2Y P10Y 769000 300000 38516 107000 363000 87000 115385 276000 -382000 -11000 <table border="0" cellpadding="0" cellspacing="0" style="width: 100%; border-collapse: collapse; font: 8pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font: bold 8pt Times New Roman, Times, Serif; border-bottom: windowtext 0.5pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Acquistion Related Contingent Consideration</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Balance at December 31, 2012</font></td> <td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</font></td></tr> <tr style="vertical-align: bottom; background-color: White; font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Additions</font></td> <td style="border-bottom: windowtext 0.5pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 8pt Times New Roman, Times, Serif"> <td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Balance at June 30, 2013</font></td> <td style="border-bottom: windowtext 2pt double; font: 8pt Times New Roman, Times, Serif; text-align: right; border-top-color: windowtext; border-top-width: 0.5pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;87</font></td></tr> </table> 87000 87000 87000 87000 87000 24000 36000 17000 18000 87000 107000 363000 276000 276000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">On April 1, 2012, we began renting our hosted telecommunication equipment (IP or cloud telephone devices) through leasing contracts that we classify as either operating leases or sale-type leases. <font style="color: #009CDB">&#160;</font> The vast majority of our leases that qualify as sales-type leases are non-cancelable and include cancellation penalties approximately equal to the full value of the lease receivables.&#160;&#160;Leases that do not meet the criteria for sales-type lease accounting are accounted for as operating leases.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Equipment finance receivables arising from the rental of our hosted telecommunication equipment through sales-type leases, were as follows (in thousands):</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>June 30,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31,</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom"> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2013</b></font></td> <td nowrap="nowrap" style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="font-size: 12pt"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-size: 12pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2012</b></font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 78%"><font style="font: 8pt Times New Roman, Times, Serif">Gross financing receivables</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 8%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">616</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 8%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">283</font></td> <td nowrap="nowrap" style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Less unearned income</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(369</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(159</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Financing receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">247</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">124</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font: 8pt Times New Roman, Times, Serif">Less: Current portion of finance receivables, net</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">51</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">28</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font: 8pt Times New Roman, Times, Serif">Finance receivables due after one year</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">196</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">96</font></td> <td nowrap="nowrap"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Equipment finance receivables are expected to be collected within the next thirty-six to sixty months.</font></p> EX-101.SCH 8 exe-20130630.xsd 0001 - Document - Document and Entity Information link:presentationLink link:calculationLink link:definitionLink 0002 - Statement - Condensed Consolidated Balance Sheets (unaudited) link:presentationLink link:calculationLink link:definitionLink 0003 - Statement - Condensed Consolidated Balance Sheets (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 0004 - Statement - Condensed Consolidated Statements of Operations (Unaudited) link:presentationLink link:calculationLink link:definitionLink 0005 - Statement - Condensed Consolidated Statement of Stockholders' Equity (Unaudited) link:presentationLink link:calculationLink link:definitionLink 0006 - Statement - Condensed Consolidated Statements of Cash Flows (Unaudited) link:presentationLink link:calculationLink link:definitionLink 0007 - Disclosure - 1. Significant Accounting Policies link:presentationLink link:calculationLink link:definitionLink 0008 - Disclosure - 2. Net Income (Loss) Per Common Share link:presentationLink link:calculationLink link:definitionLink 0009 - Disclosure - 3. Trade Receivables net link:presentationLink link:calculationLink link:definitionLink 0010 - Disclosure - 4. Equipment Financing Receivables link:presentationLink link:calculationLink link:definitionLink 0011 - Disclosure - 5. Income Taxes link:presentationLink link:calculationLink link:definitionLink 0012 - Disclosure - 6. Fair Value Measurements link:presentationLink link:calculationLink link:definitionLink 0013 - Disclosure - 7. Commitments and Contingencies link:presentationLink link:calculationLink link:definitionLink 0014 - Disclosure - 8. Segment Information link:presentationLink link:calculationLink link:definitionLink 0015 - Disclosure - 9. Business Acquisition link:presentationLink link:calculationLink link:definitionLink 0016 - Disclosure - 1. Summary of Significant Accounting Policies (Policies) link:presentationLink link:calculationLink link:definitionLink 0017 - Disclosure - 1. Significant Accounting Policies (Tables) link:presentationLink link:calculationLink link:definitionLink 0018 - Disclosure - 2. Net Income (Loss) Per Common Share (Tables) link:presentationLink link:calculationLink link:definitionLink 0019 - Disclosure - 3. Trade Receivables, net (Tables) link:presentationLink link:calculationLink link:definitionLink 0020 - Disclosure - 4. Equipment Financing Receivables (Tables) link:presentationLink link:calculationLink link:definitionLink 0021 - Disclosure - 6. Fair Value Measurements (Tables) link:presentationLink link:calculationLink link:definitionLink 0022 - Disclosure - 8. Segment Information (Tables) link:presentationLink link:calculationLink link:definitionLink 0023 - Disclosure - 9. Business Acquisition (Tables) link:presentationLink link:calculationLink link:definitionLink 0024 - Disclosure - 1. Significant Accounting Policies (Details) link:presentationLink link:calculationLink link:definitionLink 0025 - Disclosure - 1. Significant Accounting Policies (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 0026 - Disclosure - 2. Net Income (Loss) Per Common Share (Details) link:presentationLink link:calculationLink link:definitionLink 0027 - Disclosure - 2. Net Income (Loss) Per Common Share (Details 1) link:presentationLink link:calculationLink link:definitionLink 0028 - Disclosure - 2. Net Income (Loss) Per Common Share (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 0029 - Disclosure - 3. Trade Receivables, net (Details) link:presentationLink link:calculationLink link:definitionLink 0030 - Disclosure - 3. Trade Receivables, net (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 0031 - Disclosure - 4. Equipment Financing Receivables (Details) link:presentationLink link:calculationLink link:definitionLink 0032 - Disclosure - 5. Income Taxes (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 0033 - Disclosure - 6. Fair Value Measurements (Details) link:presentationLink link:calculationLink link:definitionLink 0034 - Disclosure - 6. Fair Value Measurements (Details 1) link:presentationLink link:calculationLink link:definitionLink 0035 - Disclosure - 6. Fair Value Measurements (Details 2) link:presentationLink link:calculationLink link:definitionLink 0036 - Disclosure - 7. Commitments and Contingencies (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 0037 - Disclosure - 8. Segment Information (Details) link:presentationLink link:calculationLink link:definitionLink 0038 - Disclosure - 9. Business Acquisition (Details) link:presentationLink link:calculationLink link:definitionLink 0039 - Disclosure - 9. Business Acquisition (Details1) link:presentationLink link:calculationLink link:definitionLink 0040 - Disclosure - 9. Business Acquisition (Details Narrative) link:presentationLink link:calculationLink link:definitionLink EX-101.CAL 9 exe-20130630_cal.xml EX-101.DEF 10 exe-20130630_def.xml EX-101.LAB 11 exe-20130630_lab.xml Non-Conforming EPTAs [Member] Valuation Allowances And Reserves Type [Axis] Carrying Value [Member] Measurement Basis [Axis] Estimated Fair Value [Member] Level 1 Member FairValueByFairValueHierarchyLevel [Axis] Level 2 Member Level 3 Member Acquisition Contingent Consideration Member Stores Online Member StatementBusinessSegments [Axis] Crexendo Web Services Member Crexendo Network Services Member Unallocated Corporate Items Member Common Stock Equity Components [Axis] Additional Paid-In Capital Accumulated Deficit Outstanding stock options Antidilutive Securities [Axis] Restricted shares held in escrow Computer and office equipment Property, Plant and Equipment, Type [Axis] Maximum [Member] Range [Axis] Computer software Furniture and fixtures Leasehold improvements Building Minimum Contingent Consideration PBX Central [Member] Finite-Lived Intangible Assets by Major Class [Axis] Customer Relationships [Member] Finite-Lived Intangible Assets by Major Class [Axis] Technology [Member] Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Is Entity a Well-known Seasoned Issuer? Is Entity a Voluntary Filer? Is Entity's Reporting Status Current? Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] Assets Current Assets: Cash and cash equivalents Restricted cash Trade receivables, net of allowance of doubtful accounts of $641 as of June 30, 2013 and $1,326 as of December 31, 2012 Inventories Equipment financing receivables Income taxes receivable Prepaid expenses and other Total Current Assets Certificate of deposit Long-term trade receivables, net of allowance of doubtful accounts of $106 as of June 30, 2013 and $196 as of December 31, 2012 Long term equipment financing receivables Property and equipment, net Deferred income tax assets, net Intangible assets Goodwill Other long-term assets Total Assets Liabilities and Stockholders' Equity Current Liabilities: Accounts payable Accrued expenses and other Deferred income tax liability Deferred revenue, current portion Contingent Consideration Total Current Liabilities Deferred revenue, net of current portion Other long-term liabilities Total Liabilities Stockholders Equity Preferred stock, par value $0.001 per share - authorized 5,000,000 shares; none issued Common stock, par value $0.001 per share - authorized 100,000,000 shares; 10,709,904 shares outstanding as of June 30, 2013 and 10,669,201 shares outstanding as of December 31, 2012 Additional paid-in capital Contingent consideration Accumulated deficit Total Stockholders' Equity Total Liabilities and Stockholders' Equity Allowance for Doubtful Accounts - Trade Receivables Allowance for Doubtful accounts - Long Term Trade Receivables Preferred Stock par value Preferred Stock Shares Authorized Preferred Stock Issued Common Stock par value Common Stock Shares Authorized Common Stock Outstanding Income Statement [Abstract] Revenue Operating expenses: Cost of revenue Selling and marketing General and administrative Research and development Total operating expenses Loss from operations Other income (expense): Interest income Other income (expense), net Total other income, net Loss before income tax provision Income tax benefit (provision) Net income (loss) Net income (loss) per common share: Basic Diluted Dividends per common share Weighted-average common shares outstanding: Basic Diluted Statement [Table] Statement [Line Items] Beginning Balance, Amount Beginning Balance, Shares Expense for stock options granted to employees Proceeds from the exercise of stock options, Amount Proceeds from the exercise of stock options, Shares Contingent consideration Issuance of common stock for business acquisition, Amount Issuance of common stock for business acquisition, Shares Net loss Ending Balance, Amount Ending Balance, Shares Statement of Cash Flows [Abstract] CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Lease abandonment Depreciation and amortization Expense for stock options issued to employees Change in uncertain tax positions Changes in assets and liabilities: Trade receivables Equipment financing receivables Inventories Income taxes receivable Prepaid expenses and other Other long-term assets Accounts payable, accrued expenses and other Deferred revenue Other long-term liabilities Net cash (used for) provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Redemption of certificate of deposit Acquisition of property and equipment Acquisition of PBX Central Net cash used for investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of options Payments made on contingent consideration Dividend payments Net cash provided by financing activities NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD Supplemental disclosure of cash flow information: Cash received during the period: Income taxes Supplemental disclosure of non-cash investing and financing information: Purchases of property and equipment included in accounts payable Business acquisition with stock (Note 9) Contingent consideration related to acquisition (Note 9) Significant Accounting Policies 1. Summary of Significant Accounting Policies Net Income Loss Per Common Share 2. Net Income (Loss) Per Common Share Trade Receivables Net 3. Trade Receivables net Equipment Financing Receivables 4. Equipment Financing Receivables Income Taxes 5. Income Taxes Fair Value Measurements 6. Fair Value Measurements Less: Current portion of finance receivables not billed, net 7. Commitments and Contingencies Segment Information 8. Segment Information Dividends [Abstract] 9. Business Acquisition Summary Of Significant Accounting Policies Policies Description of Business Basis of Presentation Cash and Cash Equivalents Restricted Cash Trade Receivables Allowance for Doubtful Accounts Interest Income Inventory Certificate of Deposit Property and Equipment Goodwill Intangible Assets Use of Estimates Revenue Recognition Cost of Revenue Prepaid Sales Commissions Research and Development Fair Value Measurements Financial Instruments Foreign Currency Translation Income Taxes