Rainmaker Reports Second Quarter 2013 Financial Results

Rainmaker Reports Second Quarter 2013 Financial Results 
CAMPBELL, CA -- (Marketwired) -- 08/12/13 --  Rainmaker Systems, Inc.
(OTCQX: RMKR), a recognized technology leader in the rapidly emerging
Cloud-Based B2B e-Commerce market, today reported financial results
for its fiscal quarter ended June 30, 2013.  
Net revenue in the second quarter of 2013 was $4.7 million, compared
to net revenue in the preceding quarter of $4.7 million and net
revenue in the second quarter of 2012 of $6.9 million. Net revenue
for the six months ended June 30, 2013 was $9.4 million compared to
$13.3 million in the 2012 comparative period.  
Net loss from continuing operations for the second quarter of 2013
was $3.0 million, or a net loss of $0.08 per share, compared to a net
loss from continuing operations in the preceding quarter of $3.5
million, or a net loss of $0.12 per share, and a net loss from
continuing operations in the second quarter of 2012 of $0.9 million,
or a net loss of $0.03 per share. Net loss from continuing operations
for the six months ended June 30, 2013 was $6.4 million, or a net
loss of $0.19 per share, compared to a net loss from continuing
operations of $2.1 million, or a net loss of $0.08 per share, in the
2012 comparative period. 
Total cash and cash equivalents were $5.0 million at June 30, 2013,
compared to $4.5 million at December 31, 2012.  
"We have made significant progress in the last quarter toward
achieving stable revenue streams and operations," said Don Massaro,
President and CEO. "The second quarter results and the recently
announced $8.6 million of bookings activity were very encouraging and
demonstrate that the Company is setting the foundation to capitalize
on the next stage of revenue growth." 
Conference Call 
 Rainmaker Systems will host a conference call and
webcast today at 2 p.m. Pacific Daylight Time (5 p.m. Eastern
Daylight Time) to discuss its second quarter 2013 financial results.
Those wishing to participate in the live call should dial
888-438-5535 using the passcode 2771789. A replay of the call will be
available for one week beginning approximately two hours after the
call's conclusion by dialing 888-203-1112 and entering the passcode
2771789. To access the live webcast of the call, go to the Investors
section of Rainmaker's website at www.rainmakersystems.com. A webcast
replay of the conference call will be available for one year on the
Conference Calls/Events page of the Investors section at
www.rainmakersystems.com.  
About Rainmaker Systems, Inc. 
Rainmaker Systems is a B2B e-Commerce company that helps
organizations of all sizes, ranging from Fortune 500 enterprises to
small-to-medium-sized businesses, create new revenue streams from
segments of their customer base that extend beyond traditional sales
team capabilities. With its unique approach, Rainmaker Systems
delivers proprietary cloud-based e-Commerce technology, global and
localized sales-assist agents, and best-practice sales and marketing
expertise, allowing customers to discover and monetize untapped
revenue opportunities.
 Rainmaker trades in the U.S. on OTCQX under
the symbol "RMKR." 
NOTE: Rainmaker Systems and the Rainmaker logo are registered with
the U.S. Patent and Trademark Office. All other service marks or
trademarks are the property of their respective owners.  
Safe Harbor Statement
 This press release may contain forward-looking
statements regarding future events. These forward-looking statements
are based on information available to Rainmaker as of this date and
we assume no obligation to update any such forward-looking
statements. These statements are not guarantees of future
performance, and actual results could differ materially from current
expectations. Among the important factors which could cause actual
results to differ materially from those in the forward-looking
statements are our ability to raise additional equity or debt
financing to fund our operations, our client concentration, as we
depend on a small number of clients for a significant percentage of
our revenue, the possibility of the discontinuation and/or
realignment of some client relationships, general market conditions,
the current difficult macro-economic environment and its impact on
our business, as our clients are reducing their overall marketing
spending and our clients' customers are reducing their purchase of
services contracts, the high degree of uncertainty and our limited
visibility due to economic conditions, our ability to execute our
business strategy, our ability to integrate acquisitions without
disruption to our business, our ability to transition to a new Chief
Executive Officer without disruption to our business, the
effectiveness of our sales team and approach, our ability to target,
analyze and forecast the revenue to be derived from a client and the
costs associated with providing services to that client, the date
during the course of a calendar year that a new client is acquired,
the length of the integration cycle for new clients and the timing of
revenues and costs associated therewith, our ability to expand our
channel hosted contract solution and drive adoption of this solution
by resellers, potential competition in the marketplace, the ability
to retain and attract employees, market acceptance of our service
programs and pricing options, our ability to maintain our existing
technology platform and to deploy new technology, our ability to sign
new clients and control expenses, the financial condition of our
clients' businesses, and other factors detailed in the Company's
filings with the Securities and Exchange Commission ("SEC"),
including our filings on Forms 10-K and 10-Q.  
- Financial tables to follow -  


 
                                                                            
                                                                            
                           RAINMAKER SYSTEMS, INC.                          
                         CONSOLIDATED BALANCE SHEETS                        
                  (In thousands, except for per share data)                 
                                 (Unaudited)                                
                                                                            
                                                        June 30,   December 
                                                          2013     31, 2012 
                                                       ---------- ----------
                        ASSETS                                              
Current assets:                                                             
  Cash and cash equivalents                            $   4,970  $   4,494 
  Restricted cash                                             38         52 
  Accounts receivable, net                                 3,548      3,720 
  Prepaid expenses and other current assets                  949      1,292 
                                                       ---------  --------- 
    Total current assets                                   9,505      9,558 
Property and equipment, net                                2,483      2,455 
Goodwill                                                   5,245      5,337 
Other non-current assets                                     502        416 
                                                        --------  --------- 
      Total assets                                     $  17,735  $  17,766 
                                                       =========  ========= 
                                                                            
         LIABILITIES AND STOCKHOLDERS' DEFICIT                              
Current liabilities:                                                        
  Accounts payable                                     $   7,887  $   7,159 
  Accrued compensation and benefits                          965        425 
  Other accrued liabilities                                2,880      3,142 
  Deferred revenue                                         1,005      2,311 
  Current portion of notes payable                         2,540      2,727 
                                                       ---------  --------- 
    Total current liabilities                             15,277     15,764 
Deferred tax liability                                       595        567 
Long-term deferred revenue                                 1,230         44 
Common stock warrant liability                               134        348 
Notes payable, less current portion                        1,200      1,800 
                                                       ---------  --------- 
    Total liabilities                                     18,436     18,523 
                                                       ---------  --------- 
Commitments and contingencies                                               
Stockholders' deficit:                                                      
      Preferred stock, $0.001 par value; 5,000 shares                       
       authorized, none issued and outstanding                --         -- 
      Common stock, $0.001 par value; 50,000 shares                         
       authorized; 44,472 shares issued and 42,139                          
       shares outstanding at June 30, 2013, and 30,454                      
       shares issued and 28,428 shares outstanding at                       
       December 31, 2012                                      41         27 
Additional paid-in capital                               137,053    130,402 
Accumulated deficit                                     (134,523)  (128,198)
Accumulated other comprehensive loss                        (434)      (261)
      Treasury stock, at cost, 2,204 shares at June                         
       30, 2013 and 2,026 shares at December 31, 2012     (2,838)    (2,727)
                                                       ---------  --------- 
        Total stockholders' deficit                         (701)      (757)
                                                       ---------  --------- 
        Total liabilities and stockholders' deficit    $  17,735  $  17,766 
                                                       =========  ========= 
                                                                            
                                                                            
                                                                            
                                                                            
                           RAINMAKER SYSTEMS, INC.                          
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS               
                  (In thousands, except per share amounts)                  
                                 (Unaudited)                                
                                                                            
                                   Three Months Ended     Six Months Ended  
                                        June 30,              June 30,      
                                 --------------------- ---------------------
                                    2013       2012       2013       2012   
                                 ---------- ---------- ---------- ----------
Net revenue                      $   4,730  $   6,895  $   9,386  $  13,296 
Cost of services                     3,068      3,882      6,103      7,507 
                                 ---------  ---------  ---------  --------- 
Gross profit                         1,662      3,013      3,283      5,789 
                                 ---------  ---------  ---------  --------- 
Operating expenses:                                                         
  Sales and marketing                  852        505      1,517      1,045 
  Technology and development         1,472      1,530      2,594      3,119 
  General and administrative         1,771      1,384      4,751      2,752 
  Depreciation and amortization        439        402        845        806 
                                 ---------  ---------  ---------  --------- 
Total operating expenses             4,534      3,821      9,707      7,722 
                                 ---------  ---------  ---------  --------- 
Operating loss                      (2,872)      (808)    (6,424)    (1,933)
Gain due to change in fair value                                            
 of warrant liability                   11        (15)      (214)       (22)
Interest and other expense, net         53         43        146         71 
                                 ---------  ---------  ---------  --------- 
Loss before income tax expense      (2,936)      (836)    (6,356)    (1,982)
Income tax expense                      25         65         55        118 
                                 ---------  ---------  ---------  --------- 
  Net loss from continuing                                                  
   operations                       (2,961)      (901)    (6,411)    (2,100)
Net income (loss) from                                                      
 discontinued operations               (69) $  (1,710)        87     (1,986)
                                 ---------  ---------  ---------  --------- 
Net loss                         $  (3,030) $  (2,611) $  (6,324) $  (4,086)
                                 =========  =========  =========  ========= 
                                                                            
Foreign currency translation                                                
 adjustments                           (86)      (110)      (172)      (109)
                                 ---------  ---------  ---------  --------- 
Comprehensive loss               $  (3,116) $  (2,721) $  (6,496) $  (4,195)
                                 =========  =========  =========  ========= 
                                                                            
Basic and diluted net income                                                
 (loss) per per share:                                                      
  Net loss from continuing                                                  
   operations                    $   (0.08) $   (0.03) $   (0.19) $   (0.08)
                                 =========  =========  =========  ========= 
  Net income (loss) from                                                    
   discontinued operations       $      --  $   (0.07) $      --  $   (0.07)
                                 =========  =========  =========  ========= 
  Net loss                       $   (0.08) $   (0.10) $   (0.19) $   (0.15)
                                 =========  =========  =========  ========= 
                                                                            
Weighted average common shares:                                             
  Basic and diluted                 39,124     27,049     32,964     26,929 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            

 
                                                                            
                                                                            
                           RAINMAKER SYSTEMS, INC.                          
                    CONSOLIDATED STATEMENTS OF CASH FLOWS                   
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
                                                           Six Months Ended 
                                                               June 30,     
                                                         -------------------
                                                            2013      2012  
                                                         --------- ---------
Operating activities:                                                       
  Net loss                                               $ (6,324) $ (4,086)
  Adjustment for income (loss) from discontinued                            
   operations, net of tax                                     (87)    1,986 
  Adjustments to reconcile net loss to net cash used in                     
   operating activities:                                                    
    Depreciation and amortization of property and                           
     equipment                                                845       749 
    Amortization of intangible assets                          --        57 
    Gain due to change in fair value of warrant                             
     liability                                               (214)      (22)
    Stock-based compensation expense                        1,128       390 
    Provision (credit) for allowances for doubtful                          
     accounts                                                  13       (30)
    Provision for allowances for other assets                 280        -- 
    Changes in operating assets and liabilities:                            
      Accounts receivable                                     151      (647)
      Prepaid expenses and other assets                       (27)     (329)
      Accounts payable                                        785     2,461 
      Accrued compensation and benefits                       512       164 
      Other accrued liabilities                              (284)     (166)
      Income tax payable                                       23        40 
      Deferred tax liability                                   29        34 
      Deferred revenue                                       (120)     (646)
                                                         --------  -------- 
        Net cash used in continuing operations             (3,290)      (45)
        Net cash provided by (used in) discontinued                         
         operations                                            87      (410)
                                                         --------  -------- 
        Net cash used in operating activities              (3,203)     (455)
                                                         ========  ======== 
                                                                            
Investing activities:                                                       
  Purchases of property and equipment                        (873)     (553)
  Restricted cash, net                                         14         3 
                                                         --------  -------- 
        Net cash used in continuing operations               (859)     (550)
        Net cash used in discontinued operations               --      (751)
                                                         --------  -------- 
        Net cash used in investing activities                (859)   (1,301)
                                                         ========  ======== 
                                                                            
Financing activities:                                                       
  Proceeds from issuance of common stock                    5,534        -- 
  Proceeds from borrowings                                    200     4,493 
  Repayment of borrowings                                    (987)   (3,926)
  Repayment of acquisition earnout                             --      (113)
  Net proceeds from overdraft facility                         --      (381)
  Tax payments in connection with treasury stock                            
   surrendered                                               (111)     (191)
                                                         --------  -------- 
        Net cash provided by (used in) continuing                           
         operations                                         4,636      (118)
        Net cash used in discontinued operations               --      (680)
                                                         --------  -------- 
        Net cash provided by (used in) financing                            
         activities                                         4,636      (798)
                                                         ========  ======== 
                                                                            
Effect of exchange rate changes on cash                       (98)       96 
                                                         --------  -------- 
                                                                            
Net increase (decrease) in cash and cash equivalents          476    (2,458)
Cash and cash equivalents at beginning of year              4,494     8,490 
                                                         --------  -------- 
Cash and cash equivalents at end of year                 $  4,970  $  6,032 
                                                         ========  ======== 

  
CONTACT: 
Mallorie Burak
Chief Financial Officer
Rainmaker Systems, Inc.
(408) 340-2510
mallorie.burak@rmkr.com 
 
 
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