Rainmaker Reports Second Quarter 2013 Financial Results

Marketwired

CAMPBELL, CA--(Marketwired - Aug 12, 2013) - 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, 2013   December 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:
CONTACT:
Mallorie Burak
Chief Financial Officer
Rainmaker Systems, Inc.
(408) 340-2510
Email Contact
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