Company: CXDO
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001654954-25-012585
Chunk: 38

Company: Crexendo, Inc.
Filing Date: 2025-11-04
Form: 10-Q
Item: Part I, Item 1
Chunk 38
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 On August 9, 2023, in connection with the sale of our corporate office building and land, we entered into a lease agreement to leaseback the property. The operating lease agreement had an initial term of eighteen full calendar months, with an option to terminate the lease on the last day of the twelfth full calendar month with a ninety-day notice. The operating lease agreement includes fixed fees for property tax, insurance, and common area maintenance (CAM). We account for the lease components and non-lease components such as fixed fee property tax and insurance charges as a single lease component. The CAM charges are considered a separate non-lease component of the lease agreement and are excluded from the measurement of the lease liability. We utilized our incremental borrowing rate of 6.58% to determine the present value of lease payments to determine our lease liability. Rental expense for the three months ended September 30, 2025 and 2024 was approximately $0 and $78, respectively, and for the nine months ended September 30, 2025 and 2024 was $14 and $229, respectively. We currently are in a non-cancelable commercial sublease operating agreement to sublease office space in Tempe Arizona, which is the headquarters for the Company. This sublease commenced on October 1, 2024, and will continue for thirty-seven (37) months through October 31, 2027. The base monthly rent is as follows: October 1, 2024 – September 30, 2025, $28; October 1, 2025 – September 30, 2026, $29, and October 1, 2026 – October 31, 2027, $30. The Company is entitled to three months of rent abatement, which will be January 2025, January 2026, and January 2027. If Operating Costs exceed $20 in a calendar year, then the Company shall be responsible for fifty (50%) percent of the amount exceeding $20. Rental expense for the three months ended September 30, 2025 and 2024 was approximately $81 and $0, respectively, and for the nine months ended September 30, 2025 and 2024 was $242 and $0, respectively. We leased office space in Reston, Virginia under a non-cancelable operating lease agreement that expired in October 2024. The operating lease contained customary escalation clauses. Rental expense for the three months ended September