Steven Mihaylo – Chief Executive Officer Jeff Korn – Chief Council Jonathan Erickson – Chief Financial Officer Clint Sanderson – Senior Vice President and President of StoresOnline Division

Jeff Bash – Private Investor [Alan Cohen – Special K Capital] Robyn Lockner – Private Investor [Bruce Seymour] – Private Investor

Welcome to the iMergent fiscal third quarter 2009 earnings conference call. (Operator Instructions) I would now like to turn the call over to Mr. Steve Mihaylo, CEO.

With me here today I have Clint Sanderson our Senior Vice President, John Erickson our CFO, Jeff Korn our Chief Legal Officer, and we have the privilege of having Dr. Anil Puri with us as well, one of our board members. We are coming to you today from the business school, which is the largest in the western United States with nearly 9,000 students at Cal State Fullerton, the second largest university in the State of California with nearly 38,000 students. I'm going to give a brief overview of the numbers here, but before I do I'm going to get Jeff Korn to read the forward-looking statement.

Let me remind you that this call will contain forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for such forward-looking statements. Investors should be aware that any forward-looking statements are based on assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed here today. The risk factors are explained in detail in the company's filings with the Securities and Exchange Commission. iMergent does not undertake any obligation to publicly update revise any forward-looking statements whether as a result of new information, future events or otherwise.

Before I get started with an overview of the numbers, I'd like to remind you that we were very busy this quarter. We launched our Crexendo Business Solutions division in Phoenix, Arizona. We actually hired initial employees. We opened offices in Phoenix, Arizona. We announced that we are moving our corporate headquarters to Phoenix, Arizona. We've had a very intensified program of reducing costs within the company and our numbers show it. And we've settled the litigation in California so we've been very busy. That's just the highlight of some of the things that we've been able to do. For the third fiscal quarter ended March 31, we had operating income of $1.2 million compared with $737,000 in the third quarter of 2008. That's an increase of 65%. We also had net income before taxes of $2.8 million compared to $3 million in the same period last year. That's a decrease of 7%. Our tax provision for the third quarter was $1.2 million versus $1.3 million and the net income was $1.6 million or $0.14 a share versus $1.7 million or $0.15 per share in the previous year. But if you look at Q2 of 2009, we had a significant improvement in the numbers, a large loss versus a nice profit. Sales wise we had $15.1 million in the third quarter of this year in products and other revenue compared to $19.1 million for the third quarter of last year. We also had $5.9 million in other revenue compared to $8.4. Now, this is a decrease of 25%, actually 30% on the other revenue and a decrease of 25% on products and our normal services. This comes to a total of $21 million for the third quarter of '09 versus $27.5 million for the third quarter of last year, but as you can see, we've had a significant increase in profitability due to a more focused approach to our prospecting and a more focused approach to cutting other costs. We ended the quarter with $24 million in cash, which includes free cash and also our restricted cash. That's over $2 per share in cash. At this time, I'm going to turn this over to Clint Sanderson who's going to talk a little bit about his role in getting these results, then we're going to turn it over to John Erickson who will give you some granularity in the numbers and then we'll turn it over to you, [Abigail], for questions.

We're obviously very encouraged with the results of this quarter. As a result of the cutbacks we made at the beginning of the year in our sales teams, we saw an improvement in our overall sales rates for the quarter. In addition, we saw definite results from our cost cutting initiatives and also saw results in our efforts, as Steve mentioned, to reduce customer complaints and we've been able to get traction in several different programs that we're testing to accomplish that goal of reducing complaints. We also made significant progress with our Crexendo brand. That's where we're using value added resellers to sell our e-commerce and SEO products, so we're really excited about our ability to grow our business through both our workshop go-to-market strategy with stores StoresOnline and through the relationships with Crexendo that we're establishing selling those products through value added resellers. So we're encouraged and look forward to continue with these initiatives into the coming quarter.

As has been mentioned, we did see significant results in our cost savings initiatives that we implemented. These cost saving initiatives were focused on reducing advertising costs per buyer, event cost per attendee, and travel cost per employee. Cost of products and other revenue decreased 23% to $5.8 million for the quarter compared to $7.5 million for the same quarter last year. Outpacing the reduction in product and other revenues which decreased 21% to $15.1 million compared to $19.1 million for the same quarter last year. Selling and marketing expenses decreased 36% to $9.3 million for the quarter compared to $14.5 million for the same quarter last year. This reduction is due primarily to improvements made in our data modeling that allows us to better identify and prospect potential buyers. Total operating expenses decreased 27% to $19.7 million for the quarter compared to $26.8 million for the same quarter last year. During the three months ended March 31, 2009, the company held 154 workshops with no workshops held internationally compared to 204 workshops including ten internationally in the same quarter of last year. Revenues for the third quarter of fiscal 2009 were $20.9 million compared to $27.6 million for the third quarter of fiscal 2008. Revenues were negatively impacted by the lower number of workshops and an increase in the percentage of sales that were financed at our workshops, which increased to 62% during the current quarter compared to 50% in the prior year quarter. During the third quarter of fiscal 2009, the average number of buying units attending our workshops was 86 up from 84 in the prior year quarter, 28% of buying units made a purchase at the workshops during the current quarter, which was comparable to the prior year quarter. The average workshop purchase price increased to $5,250 during the current quarter from $4,990 in the prior year quarter. For the first nine months of fiscal 2009, we conducted 606 workshops including 81 internationally compared to 806 workshops including 119 internationally during the nine months ended March 31, 2008. Revenues for the nine months ended March 31, 2009 were $75 million compared to $99 million for the same period last year. Total operating expenses were $84 million compared to $101.8 million for the same period last year. For the nine months ended March 31, 2009, net loss was $16.1 million or $1.42 per common share, which included an $11.6 million income tax provision related to the reserves and valuation allowance associated with the ongoing IRS audit. Net income for the nine months ended March 31, 2008 was $2.6 million or $0.22 per diluted common share. Now for review of our cash flows and balance sheet, cash used for operating activities during the third quarter was $76,000 compared to cash provided by operating activities of $4.6 million during the same quarter last year. As of March 31, 2009, cash and cash equivalents were $21.5 million, working capital was $16.7 million, and working capital excluding deferred revenue was $42 million. Total current and long-term net trade receivables were $33.4 million at March 31, 2009. I'll now turn the time back over to Steve before the Q&A session.

One of the things I'd like to mention as well we, as you know, reduced the number of workshops significantly as a result of better qualifying customers, and this is part of our program to reduce complaints, but also sales were affected by the general economy. At this time, [Abigail], I'd like to open this up to questions and answers if you would please.

(Operator Instructions) Your first question comes from Jeff Bash – Private Investor. Jeff Bash – Private Investor: Congratulations on a solid start to your management of the company.

Thank you very much. Jeff Bash – Private Investor: It is correct isn't it that a number of the cost cutting initiatives that you implemented have not had time to be in effect for a full quarter, isn't it?

That's correct. This is an ongoing process. We expect incremental improvement as we go along here. At some point in time we're going to get to the point of diminishing returns, but I think there's still room to make good improvements. Jeff Bash – Private Investor: Now on receivables reserves for doubtful accounts, which don't affect the income statement directly, last quarter the reserve was raised from the low 30% range to the 37.3%. This quarter it's 29.4%. Am I correct that this lower number reflects a relatively lower proportion of new financed contracts [inaudible]?

Well that's certainly part of it. Obviously, there's less finance contracts because we had lower sales, but we've also improved the quality of the customers that we're selling to. It's a combination of a lot of those things.

Jeff, this is John Erickson. We did start to see improvement in our receivables towards the second half of this quarter, which was an encouraging sign for us.

And I think personally, and this is just my gut reaction to this, I think we're seeing incremental improvement in the economy as well.

Your next question comes from [Alan Cohen – Special K Capital]. [Alan Cohen – Special K Capital]: The fact that you did no international workshops as compared to, I think you said the number was 80 for the prior six months, 81 or something like that? Is that a trend as part of your new initiative or was that something that was just because of the way it worked out this quarter?

Well, there's a lot of issues involved. It's partly a trend it's partly a proactive initiative on our part. It's not to say that we won't be in international markets but, as you know, we're still trying to resolve the situation down in Australia. So it's a combination of a lot of things. Perhaps Clint Sanderson could add a little bit of color to that.

Yes, we will eventually go back to those markets. Right now with the cost cutting initiatives we've had and with the other initiatives it makes most sense for us to stay here domestically. And some of the programs that we're working on right now will allow us to go to those markets, to overseas markets, and actually be more profitable and until we get those dialed in, we're going to wait to go to those markets again. [Alan Cohen – Special K Capital]: I understand as you retrench and then build a solid base. The other question, the amount of contracts financed jumps to 60% from 50%, but at the same time you believe that you're getting a higher quality customer. Does some of that have to do with the fact you did no international workshops which tended to be a higher percentage of cash buyers?

Well, there's a lot of factors involved there. Certainly, the higher number of domestic over international had something to do with it. The economy had a little bit to do with it, but also the fact that we're doing a better job of qualifying our customers. Our ultimate goal is to have 100% customer satisfaction. In order to do that, we need to be working more to help our customers become successful through additional training and other ways to do that, helping them select the right products to sell and so on. [Alan Cohen – Special K Capital]: But do you consider that something, like that jump I don't know how you want to look at it seems pretty significant from 50% to 60%. Is that a trend or are you going to monitor that and watch…?

No, we monitor everything in our business. We measure all the processes and that's certainly one we have our eye on.

[Alan], this is Clint, the international markets definitely do have an impact historically. [Alan Cohen – Special K Capital]: I kind of remembered somewhere in the past of talking about a higher percentage of cash buyers.

Yes, historically we have a higher percentage of cash in those international markets than we do in our domestic markets. That is definitely the case.

This is John Erickson. We've also seen, I mean Q2 we had a higher percentage of contracts versus cash sales, so it's been a trend over the past six months that we're working on increasing our cash percentage. But it has been a trend over the past six months to see the contract sales increase and the cash sales decrease. [Alan Cohen – Special K Capital]: The last question I have or is a comment, which is actually pretty positive, the average sale jumped quite a bit. What do you attribute that to?

The average sale with the comparison between last year and this year, we did between, then and now, we did increase the price. But also it just comes down to the efficiency in our sales process and selling more individuals what we call our platinum package of our workshops versus the single package. [Alan Cohen – Special K Capital]: I know you did increase the price, but at the same time you introduced a lower priced item at the same time.

Yes, that's correct.

We're trying to address the needs of the market, and as time goes on here you're going to see more training revenues as well, because we're finding that a well-trained customer is also a happy customer. [Alan Cohen – Special K Capital]: Now your margins on that are pretty high, on the training, correct?

Well, the margins on training are, the gross margins are similar to software. Obviously, you have additional costs over and above the software, so the net margins are about the same or maybe a little bit higher because you don't some of the marketing costs associated with it. [Alan Cohen – Special K Capital]: It's an add-on sale?

Exactly.

(Operator Instructions) Your next question comes from Robyn Lockner – Private Investor. Robyn Lockner – Private Investor: If time permits, I'd like to ask three questions. In recent months iMergent has temporarily stopped buying back stock on the open market and has also cut the dividend, and due to the financial environment, I think everyone would agree that those were appropriate decisions. Going forward as the business potentially gains more momentum and generates more cash flow, how would that hypothetical cash flow be divided between reinvesting in the business for additional growth versus share buybacks versus larger dividends?

Well, I can't tell you that we've got a set formula here. The most important thing going forward is reinvesting in the business. And as I mentioned at the beginning of this call, we launched our Crexendo Business Solutions division. We have plans to launch a telecom division, hosted telecom, and we have plans to launch a network services division and eventually an educational division, within the next year or two. So a significant portion of our free cash or our profits will be reinvested into the business for growth. Having said that, we're always looking at the ability to purchase stock and increase our dividend and that's something we review on a regular basis. I can tell you right now, unless we can buy stock in a fairly significant block that would be the way we're going to purchase it, not in the open market. And as far as the dividend, that's something we'll look at. We reviewed it this quarter. There was no decision made to increase it, but we'll be reviewing it every quarter going forward. Robyn Lockner – Private Investor: With regard to the relocation of the corporate headquarters, what are some of the advantages of making that move?

Well we expect to have a significant portion of our business in Arizona over the next several years. Crexendo Business Solutions is the division that will be selling our products to established businesses through value added resellers. We launched that division just literally a couple of weeks ago. We've already signed a couple of value added resellers. There's training issues, there's a lot of support issues that we have to get in place. The encouraging thing is the potential business partners that we've spoken to so far there hasn't been much in the way of negatives. They're all very excited about the prospects for our web building software, our e-commerce software and our search engine optimization capabilities. But as you can appreciate, you have to go from point A, which is where we're at right now, and get to point B before you start seeing sales. We're hopeful that we'll see a minimum number of sales this quarter, the quarter that we're in, but I don't want to raise anyone's expectations. We'd be happy with $50,000 or $100,000 in sales this quarter, but you're going to see expediential growth as we go forward. So that's taken a lot of our endeavors here and a lot of what we do from a planning standpoint. We've also hired the first couple of engineers that are doing the preliminary work on our hosted telecom services. They happen to be in Phoenix. Our network services division will be there. So, even though it's a very tiny piece of our business right now, we expect it at some point in the future to eclipse our StoresOnline revenue. And I would say that's potentially possible in the next couple of years, certainly no more than three or four years. As far as our employees that are in Orem, Utah, we have a tremendous core competency in Utah. So all of our support services remain there and, as we add more support services, they will be in Oren, Utah. But the bulk of our sales over time we expect to transition into our operations in Phoenix and that's the reason we moved our headquarters. Robyn Lockner – Private Investor: And then final question, prior to your substantial investment in the company, you obviously did a large amount of due diligence. What is it that you saw in iMergent that convinced you to invest in this company as opposed to the other alternatives that were out there?

Well, there were two things. Number one, I was really impressed by the product itself, our software. We have software that's pretty much a set program that through data base manipulation can be made to look like just about any website that's out there, and it's scalable. The industry itself is scalable. I've never seen an industry where you can have minimal amount of channel conflict when you're dealing with VARS because they're selling into their existing customer base as opposed to competing with every other VAR that's out there in the field. Obviously, it's taken me a while to get this cranked up. I had spoken to the management prior to becoming part of the management and was frustrated by the fact that we didn't see any traction in that area. However, since I've come on board as you know, the CEO is no longer with the company, and the president of the company is no longer here. We've made significant cuts at the beginning of my tenure and all of those things are behind us now. We have a team that's committed. We're all reading off the same sheet of music here, we're all singing the same tune, we're all heading in the same direction, we're all pulling on the oars in the same direction, we're all pulling on the rope in the same direction. In other words, we all know where we're going and we're doing our level best to get us there. So I'm encouraged and even more so than I was when I made my initial investment.

Your next question comes from [Bruce Seymour] – Private Investor. [Bruce Seymour] – Private Investor: I was just wondering with all the expenses involved in training and the cutback in previous teams, sales teams, what kind of expenses do you anticipate in training new sales teams and how many of them and when do you expect them to be online?

Well, we had an initiative, which we've tested and we're encouraged by it, to bring our potential customers directly into a workshop where we, not only train them, but we sell them in the workshop. And that means that we're going to have plenty of trained employees that will be able to transition into other functions in the business from our preview teams. That's not to say that we're immediately going to stop the preview teams, we're not. But we do think that we'll have a significant number of people, probably in the range of 10 or 15 people that we can transition into support functions and selling functions in our Crexendo Business Systems area. So we feel good that we've got enough people to get the job done here without having to go outside. It's just a case of cross-training and reassigning a few people. Do you want to add to that, Clint?

Yes, we also as we're moving into with our Crexendo Brand and leveraging value added resellers, the expense for us and for them is not as great because they already have the channel, they have the customers and they already have trained sales people. So we really pick up a lot because we can leverage the talent they already have. So it's just a matter of us providing support to them and working with them as we work with their customers and offer their customers our products. So, it's not like we're starting from scratch training all new salespeople. [Bruce Seymour] – Private Investor: It sounds like there will be a reduction in our own sales force with StoresOnline.

No, that's not true. There may be a reassignment of some of our preview people, but the sales occur in our workshops and we see no reduction occurring there.

Bruce, just to maybe add some clarity, its two different go-to-market strategies. The StoresOnline go-to-market strategy we do workshops, training workshops, and then give customers at our workshops the opportunity to buy there. We're going to continue doing that as we always have and just continue improving on that model. The Crexendo go-to-market strategy is through value added resellers and that's going to be running parallel to the StoresOnline go-to-market strategy.

And, frankly, as the economy improves and as we re-enter foreign markets, we'll probably be adding to the workshop teams going forward.

That concludes the question and answer portion of today's call. I will now turn the call back to management for any additional or closing remarks.

Well, I want to thank all of you for your continued interest in our progress and support of shareholders and tell you that we look forward to seeing you in the fourth quarter, which will end June 30, and we'll probably be announcing it when, John, towards the end of July because it is our year end.

It'll be around the first part of September.

Okay, the first part of September. Thank you all and have a good summer.

This concludes your iMergent conference call for today. You may now disconnect.