HispanicBusiness

Segment other income, primarily related to interest on the collection of accounts receivable for the fourth quarter of 2012 decreased 74% to $259,000 compared to $1.0 million in the prior year quarter. Segment other income, primarily related to interest on the collection of accounts receivable for the year-ended December 31, 2012 decreased 59% to $1.9 million compared to $4.7 million for the year ended December 31, 2011.

Total segment income before income taxes for the fourth quarter of 2012 decreased 87% to $332,000 compared to $2.5 million in the prior year quarter. Total segment income before income taxes for the year-ended December 31, 2012 increased 8% to $6.5 million compared to $6.0 million for the year ended December 31, 2011.

Crexendo Web Services

Revenue for the fourth quarter of 2012 decreased 27% to $468,000, from $638,000 in the prior year quarter. Revenue for the year-ended December 31, 2012 increased 8% to $2.5 million, compared to $2.3 million for the year-ended December 31, 2011. Web Services backlog, which is anticipated to be recognized within the next twelve months, was $1.1 million at December 31, 2012 and 2011, respectively.

Total segment operating expenses for the fourth quarter of 2012 increased 5% to $2.2 million compared to $2.1 million in the prior year quarter. Total segment operating expenses for the year ended December 31, 2012 increased 5% to $7.8 million compared to $7.4 million for the year ended December 31, 2011.

Crexendo Network Services

Revenue for the fourth quarter of 2012 increased 718% to $327,000 compared to $40,000 in the prior year quarter. Revenue for the year ended December 31, 2012 increased 632% to $805,000 compared to $110,000 for the year-ended December 31, 2011. Network Services backlog, which is anticipated to be recognized within the next thirty-six months, was $2.4 million at December 31, 2012 compared to a backlog of $155,000 at December 31, 2011.

Total Network Services operating expenses for the fourth quarter of 2012 increased 237% to $2.3 million compared to $683,000 in the prior year quarter. Total Network Services operating expenses for the year ended December 31, 2012 increased 182% to $6.2 million compared to $2.2 million for the year-ended December 31, 2011.

Steven G. Mihaylo, Chief Executive Officer, commented, "I understand these are not results that are going to excite our shareholders however, the entire management team and I are working daily to improve results. We have had some positive trends but I also want to point out a number of things that are not apparent from the results. First, this last quarter we completed the transition of the business from a B2C model to a B2B model. With that, we have continued to 'right size' the business. We have reduced associates whose jobs were primarily supporting and making sales to the B2C customers. We were able to make these changes while employing high quality support staff who can work with the Crexendo customers as well as the legacy customers. We took great pains to make sure all customers have the tools they need while continuing to bring our costs in line. We continue to see improvement in the University Program, it is currently in 6 schools and we expect to have 120 web sites built from those students and we will be adding additional schools in the fall Semester. Excitement for the program is increasing drastically as the program grows. As I have explained, this will not bring immediate substantial benefit to our revenue but should be a real benefit in the future, bringing us excited and sticky customers. It is also bringing the immediate benefit of having the best and brightest students using our software and providing feedback to our engineers which is helping us improve our already world class software."