Steve Mihaylo - Chairman and Chief Executive Officer Doug Gaylor - President and Chief Operating Officer Ron Vincent - Chief Financial Officer Satish Bhagavatula - Chief Technology Officer and Chief Investment Officer Jeff Korn - Chief Legal Officer

Good day and welcome to the Crexendo Third Quarter 2014 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Chief Executive Officer, Steve Mihaylo. Please go ahead, sir. Steve Mihaylo - Chairman and Chief Executive Officer: Thank you, Stephanie. I am Steve Mihaylo, Chairman and CEO of Crexendo. I want to welcome you to the Crexendo 2014 third quarter conference call. With me today are Doug Gaylor, our President and COO; Ron Vincent, our CFO; Satish Bhagavatula, our CTO and CIO; and Jeff Korn, our Chief Legal Officer. I am going to ask Jeff to read the Safe Harbor statement after that I will give some general comments relative to the quarter. Ron will provide some granularity on the numbers, Doug will provide a business and sales update, Satish will give an update on technology, and then we will open the call up to questions. Jeff, will you please provide the Safe Harbor statement? Jeff Korn - Chief Legal Officer: Yes, Steve. Thank you. I want to take this opportunity to remind listeners that this call will contain forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for such forward-looking statements. All statements made in this conference call other than statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to words like, belief, expect, anticipate, estimate, will and other similar statements of expectation identifying 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. These risk factors are explained in detail in the company’s filings with the Securities and Exchange Commission, including the Form 10-K for the fiscal year ended December 31, 2013 and the forms 10-Q for the periods ending March 30, 2014 and June 30, 2014. Crexendo does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Steve? Steve Mihaylo - Chairman and Chief Executive Officer: Thank you, Jeff. Our sales trend is steadily increasing and I believe our sales are about to increase at an even faster rate. We continue to have quarter-on-quarter organic sales growth, interest in our award winning products and services remain high. There are good – these are good trends watching the enthusiasm I see from customers who have installed our products and services and the enthusiasm of our dealers and direct sales force. I believe there will be continued growth in sales. We continue to grow our backlog quarter-over-quarter. I am pleased by the fact that we have continuing improvement in backlog, which also bodes well for the company’s future. We continue to add more dealers every quarter and I am particularly excited about this channel. We hit a high watermark in dealer sales again in Q3. And I fully expect that trend to continue to improve. We have scheduled our second annual Business Partners’ Conference for January and the team and I will show our dealers the exciting developments we have and how Crexendo’s cloud products and services will increase their customers’ productivity in most cases save their money and more importantly they increase the dealers’ bottom line. Our network sales also hit a high watermark last quarter. We believe this will continue. This is a very important part of our business and it allows us to craft enterprise solutions for clients. Being a one-stop shop IP integrator enables us to expand our sales and believe that helps increase our customer retention rates as well. We believe – we continue to work to drive down costs. We are working on reducing our costs for IP phones as well as other products and services. While we work to keep costs low, we never sacrifice quality. We also changed the way we sell our products. We are now selling for cash the telephone instruments, which should also improve our cash flow. We believe our continued drive to improve our products and service while keeping prices lower will be a long-term benefit to our customers and shareholders. I want to discuss what is of concern to me, our Board and our investors, which is our cash position. As you know, our cash position is declining and a cash institution is going to be required. Our public filings include a letter for me indicating my agreement to fund the company. Our Board has established a special committee to review our funding options and to negotiate the mechanism, where a loan or direct investment can be made in the company. I fully expect funding to be completed before the end of this year. I believe it is likely that I will be making the funding contribution. I have not previously discussed the specifics of my 10b5-1 plan parameters. However, in light of my preparing to make an direct investment in the company, I need to keep my powder dry. Therefore, once our quiet period expires on Thursday, I am going to cancel the plan I have in place. I may still make strategic open market purchases also at the right time I may again initiate a 10b5-1 plan. I continue to believe in our company and we will continue to grow the business through our direct sales force and our dealer network. With that, I will turn the call over to Ron. Ron? Ron Vincent - Chief Financial Officer: Thank you, Steve. Consolidated revenue for the third quarter of $1.7 million compared to $2.4 million for the third quarter of the prior year. The 29% decrease of approximately $700,000 is primarily related to $1 million decrease in our web services revenue offset by a $300,000 increase in our telecommunication services revenue. Consolidated operating expenses for the third quarter decreased 21% to $3.3 million compared to $4.2 million for the third quarter of the prior year. Our pre-tax loss and net loss for the third quarter was $1.5 million for a loss per diluted common share of $0.13 compared to a pre-tax loss of $1.6 million and a net loss of $1.7 million or $0.15 loss per diluted common share for the third quarter of the prior year. For the nine months ended, consolidated revenue was $5.6 million compared to $8.2 million for the same period for the prior year. The 32% decrease of $2.6 million is primarily related to $4 million decrease in web services revenue offset by $1.4 million increase in our telecommunication services revenue. And consolidated operating expenses for the nine month period ended September 30, 2014 decreased 13% to $10.4 million compared to $12 million for the same period of the prior year. Pre-tax and net loss for the nine month period of $4.6 million or a loss per diluted common share of $0.42 compared to a pre-tax loss of $3.4 million and a net loss of $3.1 million or $0.29 loss per diluted common share for the same period of the prior year. Turning to the balance sheet and cash flow at September 30, we had cash and cash equivalents, including our restricted cash of $2.3 million compared to $3.6 million at December 31, 2013. Cash used for operations during the third quarter of $804,000 compared to $1.5 million for the third quarter of the prior year. Cash used for operations for the nine-month period ended September 30 of $3 million compared to $3.9 million for the same period of the prior year. Cash used for investing activities for the third quarter of $1,000 compared to $5,000 provided by investing activities for the third quarter of the prior year, cash provided by investing activities for the full nine-month period ended September 30 was $1.8 million compared to cash used for investing activities of $100,000 for the same period of the prior year. Cash used for financing activities for the third quarter was $11,000 compared to $85,000 provided by financing activities for the third quarter of the prior year. Cash used for financing activities for the nine-month period ended September 30 was $6,000 compared to cash provided by financing activities of $88,000 for the same period of the prior year. Company has two operating segments, which consist of hosted telecommunications services and web services. Effective April 1, 2014, the company changed its reporting segments to report the stores online and Crexendo web services business unit as one reportable segment. The company revised its segment reporting to reflect changes in how that chief operating decision-maker internally measure performance and allocate resources. Segment operating results for the prior year had been revised to confirm the current year segment operating results presentation and disclosures. Hosted telecommunications services segment revenue increased 49% for the third quarter to $1,035,000 compared to $696,000 for the third quarter of the prior year. At September 30, our backlog has increased to $8.8 million compared to $8.4 million at June 30, 2014. Majority of our network service contracts are 36 to 60 month contracts and therefore the backlog will be recognized as revenue over this period. Web services segment revenue for the third quarter decreased 60% to $690,000 compared to $1.7 million for the third quarter of the prior year. Our backlog has decreased to $66,000 at September 30. Revenue generated from cash collected on our EPTA agreement decreased 81% to $99,000 for the third quarter compared to $534,000 for the third quarter of the prior year. With that, I will turn it over to Doug Gaylor, our President and COO for additional sales comments. Doug Gaylor - President and Chief Operating Officer: Thanks, Ron. During Q3, we continued to see increases in both our direct and partner sales initiatives. We continue to cut expenses and decrease our cash burn and we continue to make great strides in our fulfillment, in our operations divisions as we increased our telecom backlog. We also began the process of converting over all of the customers that we acquired from the One Stop Voice acquisition that happened during Q2. On the direct sales front, we had our strongest quarter of the year with a 9% increase in sales bookings over Q2. For competitive reasons, I won’t go into specific details on the following, but our focus on larger sales opportunities and specific vertical markets returned some significant sales during the quarter, including an 18 location sale as well as sales into new verticals that we have been pursuing that will provide significant sales opportunities for us in the future. By establishing Crexendo as the preferred vendor for telecommunications for many of these vertical markets and associations, we are quickly becoming the go-to solutions provider for many of their members. Crexendo’s ability to understand the company’s communications challenges combined with the team work of our sales and engineering teams working closely together provides us unique and in some cases custom solutions for the end users, which gives us a unique advantage in the industry. The capability for our team to evaluate the customer’s needs and desires and be able to have our engineering team create custom solutions to address their challenges enhances our ability to win opportunities and expand within this particular vertical market. Our dealer partner channel continues to grow and expand posting its best quarter ever and build sales bookings as well as new dealer partners added. Our focus on adding quality partners and providing them the training tools and support to help make them successful and telling Crexendo’s hosted cloud communication solutions is providing good success and that is the trend that I expect to continue with even greater increases in the future. In addition, we released some additional incentives and sales programs to our dealer partner channel during Q3 that has been very well received and that we are confident we will have a very positive impact on future sales. We are also thrilled to be hosting our second annual Business Partner Conference called CrexWorx that will take place January 21 through January 23, 2015 here in Phoenix. Our dealer partners are extremely excited about what Crexendo is providing for them and we anticipate a tremendous turnout for our conference. As Steve and Ron had previously mentioned, we continue to cut our expenses and decrease our cash burn and we will still – and we see additional decreases in the future as we complete the transition of all of our One Stop Voice customers over to the Crexendo platform. To this point, we have successfully converted over 90% of the One Stop Voice customers through October and anticipate completing the conversion of all remaining clients in November, which will allow us to eliminate support costs and redundant expenses going forward. Our operations group, which has made great strides in perfecting our installation and implementation processes to assure customer satisfaction before, during and after cutover. With our focus on larger opportunities, it is critical for us to have a very detailed and focused process to ensure a smooth installation and our operations department has done a tremendous job in this area as we increased the number and size of installations that we perform monthly. Our operations efforts combined with our engineering talents are the key reasons we have best choice for our customers. All of these efforts have resulted in increasing our telecom backlog 5% to $8.8 million as we begin Q4. As we begin Q4, I continue to be excited about the direction the organization is headed. Although we have not seen the growth accelerating as quickly as we would like, we are seeing steady and consistent growth while we fine tune all areas of the organization. We recently added a new addition to our team and Mike Wetherell who will be in-charge of our direct sales and sales enablement responsibilities. As an industry veteran with over 25 years of experience we are excited to have Mike on board to further assist our efforts. The excitement in growth of our dealer channel combined with our success in closing and implementing larger opportunities allow us to see increased growth in our telecom revenues and in our telecom backlogs. All indicators are positive for continued growth within the organization and I am committed to delivering and executing on our plans to get us to profitability. I will now turn it over to Satish Bhagavatula for an engineering and technology review. Satish Bhagavatula - Chief Technology Officer and Chief Investment Officer: Thank you, Doug. Greetings, everyone. I am glad to report that we made significant improvements to our services, products and technology during Q3. The enhancements have been in the areas of increased operational efficiencies of our cloud services, improved and new functionality in our telecom platform, maintenance of our current web hosting platform and continued improvements to our new web platform. As our telecom customers continue to increase, we have seen a remarkable growth in the traffic and stress on our infrastructure. Successful integration of KBX platform from PBX Central acquisition and continued migration of new customers from One Stop Voice acquisition into Crexendo’s native infrastructure demonstrates that our infrastructure is scalable and then it can withstand the continued growth of the Crexendo base. The cutover of new circuits from Level 3, a Tier 1 carrier, has drastically improved our network reach to our customers, premise and positions Crexendo to be able to deliver higher quality voice services to our customers through the public Internet. I am glad to report that the changes we made to our e-mail infrastructure to mitigate the demark changes enforced by large e-mail ISPs, such as Yahoo!, Google and AOL have yielded good results and prevented heavy down trades. As many of you might be aware, new security vulnerabilities such as hard fleet and Kudo were discovered, which affected much of the cloud service industry. Although we were not impacted by these vulnerabilities directly, we assessed its impact and mitigated these vulnerabilities. We continued to invest heavily in adding enhanced external monitoring capabilities, processes and regular vulnerability assessments of our infrastructure. This continuous analysis, monitoring and evaluation process better prepares us from vulnerabilities in the public internet upstream from our telecom carriers and data carriers and faulty equipment within our infrastructure. Our Stores 7.0 platform continues to service most of our web hosting and e-commerce customers today. Although we have seized to add major new features to our 7.0 platform, we continued to make small improvements and regular fixes to adapt to the changing technologies in the e-commerce industry. While supporting our existing e-commerce platform, our development team is focusing on developing our next generation web builder. We put in considerable effort in Q3 to stabilize our new web platform and continue to do so to every release. We added features like sections that allow for greater usability of the platform and drag and drop functionality within the builder. We have picked BrowseKit as the brand name for Crexendo’s new web platform under the Crexendo umbrella. Prospects and customers may visit browsekit.com and test drives the service offering. As with any product, the first version is the hardest to achieve. Thereafter, incremental changes are made as the customers start using the product and feedback starts to come in. This new web platform is meant to help build simple, do-it-yourself websites and is ready for smaller partners to start building websites on it. As this platform matures over subsequent releases and we lay out the foundation for content management and e-commerce folks to our powerful Stores 7.0 back-end, it has great potential to be a powerful web platform in a rapidly growing web market. On our telecom platform, we continued to rollout new updates every four weeks. During Q3 of 2014, much of the emphasis on the telecom development was spent on enhancing Crexendo platform to address the small feature gaps and smooth migration of our One Stop Voice customers. We took great measures in making sure customers are well cared for and felt no impact of the transition from OSV platform to Crexendo’s native platform. I am glad to report that we rolled out a Crexendo console for Windows that helps Crexendo and its partners to implement larger size deals. We continued to improve our call center offering handling up even 64 numbering plans and reporting capabilities. Product teams continued to spend considerable amount of time evaluating and identifying third-party technology partnerships. Crexendo recently launched an early version of Crexendo cloud console. This allows our customers to receive telephony events directly to their browser window and manage their calls right from a browser window. This feature also allows our customers to do screen pops with any standard web-based CRM solution in the industry. We believe this functionality will be the foundation for Crexendo’s desktop presence, while we leverage technologies such WebSocket and web RTC. Also during Q3, heavy emphasis was made on integrating One Stop Voice customer base. I am also glad to report PBX Central has been fully integrated into Crexendo and has been performing very well for over a quarter now. We are confident our value-add continues to increase as we continue to enhance and build our telecom and web platforms. We continue to look for synergistic technology partnership opportunities to augment our internal product development and thus grow our product portfolio. We continued to adopt more cloud technologies to allow for greater automation of our business, which in turn improves our margins and enables us to better serve our customers. With that, I will now turn it over to Mr. Steve Mihaylo. Steve Mihaylo - Chairman and Chief Executive Officer: Thank you, Satish. Stephanie, we are now available to take questions if you would like to open it up for questions.

Thank you. (Operator Instructions) Steve Mihaylo - Chairman and Chief Executive Officer: Stephanie, I guess we did such a – or do you have someone?

No, I am sorry, there are no questions. Steve Mihaylo - Chairman and Chief Executive Officer: Okay. I guess, we did such a good job of presenting that there are no questions, but let me just wrap this up by saying we have three significant things that are going on in the company that should improve cash flow significantly. By the end of this quarter, we will have our new endpoints in place that should reduce our costs significantly. We also have increased sales, the sales in October were robust and we expect that trend to continue. And the third one is – and this is very important near the end of last quarter about halfway through September, we introduced selling of the endpoints as opposed to running them and that should significantly improve our cash flow. So, those three things, selling the endpoints, increased sales and reduced costs is going to benefit us tremendously. We should see almost every thing transitioned into those new plans by the end of the first quarter. And I expect the second quarter to start bearing fruit for us. So, with that, I am going to wish all of you a pleasant afternoon and thank you for joining the conference call and look forward to talking to you after we report year end. As you know, that’s usually takes a little longer, because we have our 10-K and proxy and other things to file, but hopefully we will be back at you pretty soon. Thank you very much and good day.