IIG Imergent Common Stock

iMergent, Inc. (AMEX:IIG), a leading provider of eCommerce software, site development, web hosting and search engine optimization for businesses and entrepreneurs, today reported financial results for its second quarter ended June 30, 2010.

Second Quarter 2010 Compared to 2009

Net income for the second quarter of 2010 was $51,000, or $0.00 per diluted common share, compared to $8,535,000, or $0.74 per diluted common share in the comparable quarter last year. Income before income tax provision for the second quarter of 2010 was $127,000 compared to income of $2,659,000 in the comparable quarter last year. The income tax provision for the second quarter of 2010 was $76,000, compared to an income tax benefit of $5,876,000 in the prior year quarter. The higher than normal income tax provision in the current quarter is primarily due to the Company's permanent differences. The income tax benefit in the prior year quarter is primarily due to an IRS settlement in the prior year.

Revenue for the second quarter of 2010 decreased 10% to $17,448,000, compared to $19,370,000 for the comparable quarter last year. The lower revenue was a result of a 12% reduction in the number of workshops conducted during the second quarter of 2010 as compared to the comparable quarter in 2009, a 28% decrease in principal cash collected on our receivables portfolio, and a 17% decrease in the number of preview buyers attending our workshops compared to the prior year quarter. These decreases were offset by an increase in the percentage of attendees purchasing products to 26% in the second quarter of 2010, compared to 24% in the comparable quarter of 2009. Revenue from our Crexendo Business Solutions division was $365,000 compared to zero revenue in the comparable period last year. Total operating expenses increased 1% to $18,490,000 for the second quarter of 2010, compared to $18,278,000 for the comparable quarter in 2009, primarily as a result of an increase in the number of international events which have higher marketing and event costs and an increase in expenses associated with the Company's Crexendo enterprise division.

Cash from operating activities was $467,000 for the second quarter of 2010, compared to cash used of $826,000 for the comparable period in 2009. As of June 30, 2010, cash and cash equivalents were $18,453,000, working capital was $14,775,000, and working capital excluding deferred revenue was $28,326,000.

During the quarter ended June 30, 2010, the Company repurchased 54,806 shares of its common stock in the open market at an average price of $4.69 per share.

Six months ended June 30, 2010 compared to 2009

Net income for the six months ended June 30, 2010 was $174,000 or $0.02 per diluted common share, compared to $10,086,000, or $0.88 per diluted common share in the comparable period last year. Revenue for the six months ended June 30, 2010 decreased 14% to $34,542,000, compared to $40,291,000 for the comparable period last year. Revenue from our Crexendo Business Solutions division was $607,000 compared to zero revenue in the comparable period last year.  Total operating expenses decreased 4% to $36,465,000 for the six months ended June 30, 2010, compared to $37,981,000 for the comparable period in 2009. Cash used in operating activities was $25,000 for the six months ended June 30, 2010, compared to cash used of $902,000 for the comparable period in 2009.

Steven G. Mihaylo, Chief Executive Officer of iMergent, stated, "I am pleased with the progress we have made in our strategy to provide a broad range of business managed services and training to our future and current customers. We have been testing selling our StoresOnline products and services as a SaaS model (Software-as-a-Service) as opposed to a traditional software license sale. We believe this is both a business benefit and a benefit to our customers as the Workshop sale is coupled with training that we believe is essential for our clients to be able to build and market web sites. In January, we converted one workshop team to this model. And based on recent results, we anticipate transitioning an additional workshop team to the SaaS model during the third quarter of 2010 with the goal of converting all of our workshop teams to the SaaS model by the first quarter of 2011. In addition, the transition from a software license sale to a SaaS model should enable us to open new sales channels, such as through affiliate marketing, private label partnerships, and direct online channels to compliment our current workshop model. 

I am also very pleased with the progress of the Crexendo Web Services and Crexendo Telecom divisions. While at present we have been fortunate to be able to cover the costs of development through profits from our StoresOnline division we believe the time has come to increase our investment in these divisions. We have started to see an increase in demand for web services resulting in an approximate 50% growth in sales quarter over quarter. We believe the timing is right to increase our direct sales efforts by hiring additional direct sales representatives. Finally, in anticipation of the nationwide launch of our hosted telecom offering during the first quarter of 2011, we have increased our development team to allow us to go to market with a robust offering which will include premium services such as operator services, to service the expected needs of our Customers. While these additional investments in sales and research and development may impact our short term profitability, we believe these are necessary investments in our business to achieve future long term success.

We are confident in the long term direction of the company and we believe that our continued focus on product and channel development will lead to future growth for the Company as well as higher shareholder value. We strongly believe in the actions we are taking.  We also believe that our stock continues to be undervalued.  I have asked our Chief Financial Officer and our Chief Legal Officer to draft a tender offer which I will present to iMergent's Board seeking to allow the Company to purchase between 250,000 and 1,000,000 shares of iMergent's common stock at a range of $4.25 to $4.75 per share. We believe this action is in the best interest of our shareholders and our Company, we are hopeful that this will be more effective in allowing us to acquire stock than our repurchase program has been to date. We believe iMergent's Board will support this action, and we hope to have a tender offer in place by the end of this year."

Conference Call

The Company is hosting a conference call today, July 27, 2010, at 4:30 PM Eastern Daylight Time. The conference call will be broadcast live over the Internet at www.imergentinc.com. If you do not have Internet access, the telephone dial-in number is 888-510-1783 for domestic participants and 719-457-2625 for international participants. The conference ID to join the call is 4440224. Please dial in five to ten minutes prior to the beginning of the call at 4:30 PM EDT. A telephone replay will be available two hours after the call for 90 days by dialing 888-203-1112 for domestic callers or 719-457-0820 for international callers and entering access code 4440224. Online webcast replay will be available for 90 days from the date of the call.

About iMergent

iMergent provides eCommerce solutions to entrepreneurs and businesses enabling them to market and sell their business products or ideas via the Internet. The company sells its proprietary software and training services which help users implement Internet strategies to allow entrepreneurs and businesses to market and sell their products, accept online orders, analyze marketing performance and manage pricing and customers over the Internet. In addition to software and training, iMergent offers site development, web hosting and search engine optimization (SEO). iMergent, StoresOnline and Crexendo Business Solutions, Inc. are trademarks of iMergent, Inc.

Safe Harbor Statement

This press release contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. The words "believe," "expect," "anticipate," "estimate," "will" and other similar statements of expectation identify forward-looking statements. Specific forward-looking statements in this press release include information about iMergent or its officers, (i) being pleased with the progress we have made in our strategy to provide a broad range of business managed services and training to its future and current customers; (ii) believing that the SaaS model is both a business benefit and a benefit to our customers as the Workshop sale is coupled with promoting training which is important for our clients to be able to build and market world class web sites; (iii) anticipating transitioning an additional workshop team to the SaaS model during the third quarter of 2010 with the goal of converting all of workshop teams to the SaaS model by the first quarter of 2011; (iv)  believing that transition from a software license sale to a SaaS model should enable us the Company to open new sales channels, such as through affiliate marketing, private label partnerships, and direct online channels to compliment the current workshop model; (v) being pleased with the progress of the Crexendo Web Services and Crexendo Telecom divisions; (vi)  believing that the time has come to increase investment in the Crexendo divisions.; (vii) believing the timing is right to increase direct sales efforts by hiring additional direct sales representatives; (viii)   believing that the increased development will allow the Company to go to market with a robust offering which will include premium services such as operator services, to service the expected needs of Customers; (ix) the belief that the additional investments in sales and research and development may impact short term profitability and  that these are necessary investments to achieve future long term success; (x) being confident in the long term direction of the company and the belief that there is continued focus on product and channel development which will lead to future growth for the Company as well as higher shareholder value;(xi) belief that Company stock continues to be undervalued; (xii) the Board will approve a tender offer to purchase between 250,000 and 1,000,000 shares of iMergent's common stock at a range of $4.25 to $4.75 per share; (xiii) that a tender offer is in the best interest of shareholders and the Company; and (xiv) the tender offer will be a more effective mechanism to acquire stock than the repurchase program has been to date.

For a more detailed discussion of risk factors that may affect iMergent's operations and results, please refer to the Company's Form 10- KT for the period ended December 31, 2009 and the Company's form 10Q for the period ended March 31, 2010. These forward-looking statements speak only as of the date on which such statements are made, and the company undertakes no obligation to update such forward-looking statements, except as required by law.

iMERGENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except par value and share data)
(unaudited)
	June 30, 2010		December 31, 2009
Assets
Current Assets:
Cash and cash equivalents	$ 18,453		$ 21,549
Restricted cash	1,088		1,088
Trade receivables, net of allowance for doubtful accounts of $11,383 as of June 30, 2010 and $11,827 as of December 31, 2009	12,045		14,162
Inventories	471		243
Income taxes receivable	898		387
Deferred income tax assets, net	236		1,009
Prepaid expenses and other	2,189		2,988
Total Current Assets	35,380		41,426
Certificate of deposit	500		500
Long-term trade receivables, net of allowance for doubtful accounts of $7,034 as of June 30, 2010 and $5,882 as of December 31, 2009	7,125		6,264
Property and equipment, net	3,237		1,446
Deferred income tax assets, net	5,694		5,298
Intangible assets, net	1,199		1,206
Goodwill	406		--
Other	291		302
Total Assets	$ 53,832		$ 56,442
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable	$ 2,748		$ 3,154
Accrued expenses and other	4,077		4,588
Dividend payable	229		229
Income taxes payable			24
Deferred revenue, current portion	13,551		15,827
Total Current Liabilities	20,605		23,822
Deferred revenue, net of current portion	6,930		6,447
Other long-term liabilities	259		191
Total Liabilities	27,794		30,460
Commitments and contingencies
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; 11,402,341 shares outstanding as of June 30, 2010 and 11,446,320 shares outstanding as of December 31, 2009	11		11
Additional paid-in capital	52,915		53,033
Accumulated deficit	(26,888)		(27,062)
Total Stockholders' Equity	26,038		25,982
Total Liabilities and Stockholders' Equity	$ 53,832		$ 56,442

	iMERGENT, INC. AND SUBSIDIARIES
	Condensed Consolidated Statements of Operations
	(In thousands, except per share and share data)
	(unaudited)
		Three Months Ended June 30,				Six Months Ended June 30,
		2010		2009		2010		2009
	Revenue	17,448		19,370		34,542		40,291
	Operating expenses:
	Cost of revenue	5,228		5,533		10,325		11,334
	Selling and marketing	8,913		8,452		17,787		17,788
	General and administrative	3,634		3,711		7,100		7,762
	Research and development	715		582		1,253		1,097
	Total operating expenses	18,490		18,278		36,465		37,981
	Income (Loss) from operations	(1,042)		1,092		(1,923)		2,310
	Other income (expense):
	Interest income	1,246		1,492		2,434		3,118
	Interest expense	(1)		(3)		(2)		(6)
	Other expense, net	(76)		78		(134)		15
	Total other income, net	1,169		1,567		2,298		3,127
	Income before income tax benefit (provision)	127		2,659		375		5,437
	Income tax benefit (provision)	(76)		5,876		(201)		4,649
	Net income	$ 51		$ 8,535		$ 174		$ 10,086
	Net income per common share:
	Basic	$ 0.00		$ 0.75		$ 0.02		$ 0.89
	Diluted	$ 0.00		$ 0.74		$ 0.02		$ 0.88
	Dividends per common share:	$ 0.02		$ 0.02		$ 0.04		$ 0.04
	Weighted average common shares outstanding:
	Basic	11,402,806		11,416,723		11,413,246		11,392,022
	Diluted	11,419,919		11,496,482		11,439,788		11,401,717

	iMERGENT, INC. AND SUBSIDIARIES
	Condensed Consolidated Statements of Cash Flows
	(In thousands)
	(unaudited)
			Six Months Ended June 30,
			2010		2009
	CASH FLOWS FROM OPERATING ACTIVITIES
	Net income		$ 174		$ 10,086
	Adjustments to reconcile net income to net
	cash used for operating activities:
	Depreciation and amortization		678		746
	Expense for stock options issued to employees		533		734
	Tax benefit upon issuance of common stock		(3)		--
	Deferred income tax provision		377		378
	Changes in assets and liabilities net of effects from acquisition:
	Restricted cash		--		(605)
	Trade receivables		1,257		6,960
	Inventories		(228)		464
	Income taxes receivable		(511)		(1,040)
	Prepaid expenses and other		799		491
	Other		13		48
	Accounts payable, accrued expenses and other		(1,290)		(2,999)
	Income taxes payable		(21)		41
	Deferred revenue		(1,793)		(7,099)
	Other long-term liabilities		(10)		(9,107)
	Net cash used for operating activities		(25)		(902)
	CASH FLOWS FROM INVESTING ACTIVITIES
	Acquisition of property and equipment		(2,053)		(138)
	Acquisition of company		(250)		--
	Proceeds from sale of available-for-sale securities		--		2,900
	Net cash provided by (used for) investing activities		(2,303)		2,762
	CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from exercise of stock options and related income tax benefit		13		371
	Purchase of common stock		(323)		--
	Principal payments on note payable		--		(64)
	Dividend payments		(458)		(455)
	Net cash used for financing activities		(768)		(148)
	NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(3,096)		1,712
	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		21,549		18,762
	CASH AND CASH EQUIVALENTS, END OF PERIOD		$ 18,453		$ 20,474
	Supplemental disclosure of cash flow information:
	Cash paid during the period:
	Interest		2		--
	Income taxes		356		5,334

iMERGENT, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (CONTINUED)
(In thousands)
		Six Months Ended June 30,
		2010		2009
Supplemental disclosure of non-cash investing and financing information:
Dividends declared		$ 229		$ 229
Purchase of property and equipment with accounts payable		110		--
Acquisition of company with stock		117		--
Contingent consideration related to acquisition		269		--

CONTACT:  iMergent, Inc.
          Steven G. Mihaylo, CEO
          775-530-3955
          Stevemihaylo@imergentinc.com