RAINMAKER SYSTEMS INC

CIK:0001094007|SEC Filings

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Net revenue	$ 1,882	$ 4,160	$ 9,139	$ 13,546
Cost of services	1,834	3,008	8,068	9,324
Gross profit	48	1,152	1,071	4,222
Operating expenses:
Sales and marketing	445	905	2,260	2,422
Technology and development	778	1,231	2,517	3,613
General and administrative	699	2,102	2,577	6,853
Restructuring expense	365	0	365	0
Depreciation and amortization	117	396	286	1,241
Total operating expenses	2,404	4,634	8,005	14,129
Operating loss	(2,356)	(3,482)	(6,934)	(9,907)
(Gain) loss due to change in fair value of warrant liability and derivative liability	(1,267)	66	(1,284)	(148)
Loss on issuance of convertible notes payable	483	0	483	0
Interest and other expense, net	321	59	589	205
Loss before income tax expense	(1,893)	(3,607)	(6,722)	(9,964)
Income tax expense	(86)	(20)	(53)	35
Net loss from continuing operations	(1,807)	(3,587)	(6,669)	(9,999)
Net income (loss) from discontinued operations, net of tax	0	(34)	0	53
Net loss	(1,807)	(3,621)	(6,669)	(9,946)
Foreign currency translation adjustments	10	85	(26)	(87)
Comprehensive loss	$ (1,797)	$ (3,536)	$ (6,695)	$ (10,033)
Basic and diluted net income (loss) per share:
Net loss from continuing operations (USD per share)	$ (0.04)	$ (0.09)	$ (0.16)	$ (0.28)
Net income (loss) from discontinued operations (USD per share)	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Net loss (USD per share)	$ (0.04)	$ (0.09)	$ (0.16)	$ (0.28)
Weighted average common shares - basic and diluted (in shares)	41,891	40,684	41,980	35,566

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Operating activities:
Net loss	$ (6,669)	$ (9,946)
Adjustment for income from discontinued operations, net of tax	0	(53)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of property and equipment, incl. asset impairment	345	1,241
Amortization of debt discount	291	0
Gain due to change in fair value of warrant liability and derivative liability conversion feature	(1,284)	(148)
Stock-based compensation expense	291	1,352
Provision for allowance for doubtful accounts	(1)	0
Loss on issuance of convertible notes payable	483	0
Provision for allowance of credit card receivables	0	420
Provision for allowances for other assets	0	280
Changes in operating assets and liabilities:
Accounts receivable	2,318	(848)
Prepaid expenses and other assets	225	(207)
Accounts payable	2,557	3,475
Accrued compensation and benefits	(246)	576
Other accrued liabilities	(1,226)	230
Deferred tax liability	(26)	40
Deferred revenue	568	650
Net cash used in continuing operations	(2,374)	(2,938)
Net cash provided by discontinued operations	0	53
Net cash used in operating activities	(2,374)	(2,885)
Investing activities:
Purchases of property and equipment	(543)	(1,614)
Change in restricted cash, net	0	35
Net cash used in continuing operations	(543)	(1,579)
Net cash used in discontinued operations	0	0
Net cash used in investing activities	(543)	(1,579)
Financing activities:
Proceeds from issuance of common stock	0	5,534
Proceeds from borrowings	3,340	200
Repayment of borrowings	(3,787)	(1,397)
Restricted cash related to borrowings	(58)	0
Tax payments in connection with treasury stock surrendered	(5)	(132)
Net cash provided by (used in) continuing operations	(510)	4,205
Net cash provided by discontinued operations	0	0
Net cash provided by (used in) financing activities	(510)	4,205
Effect of exchange rate changes on cash	(36)	(69)
Net increase (decrease) in cash and cash equivalents	(3,463)	(328)
Cash and cash equivalents at beginning of period	3,633	4,494
Cash and cash equivalents at end of period	170	4,166
Supplemental disclosures of cash flow information:
Cash paid for interest	164	161
Cash paid for income taxes	16	49
Supplemental disclosures of non-cash investing and financing activities:
Retirement of fully depreciated property and equipment	0	590
Common stock issued in settlement of claim	200	0
Warrants issued to convertible note holders	2,050	0
Conversion feature of convertible notes payable	1,539	0
Supplemental notes payable	1,545	0
Accrued interest on convertible notes payable	$ 53	$ 0

CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 170	$ 3,633
Restricted cash	61	3
Accounts receivable, net of allowance of $10 and $11, respectively	1,262	3,554
Prepaid expenses and other current assets	1,287	1,618
Total current assets	2,780	8,808
Property and equipment, net	891	691
Other non-current assets	919	840
Total assets	4,590	10,339
Current liabilities:
Accounts payable	15,581	13,042
Accrued compensation and benefits	769	1,001
Other accrued liabilities	2,263	3,665
Deferred revenue	2,027	1,965
Convertible and supplemental notes payable, net of discount of $4,457 and $0	231	0
Derivative liability conversion option	952	0
Notes payable	200	3,641
Total current liabilities	22,023	23,314
Deferred tax liability	0	26
Deferred revenue, less current portion	2,135	1,629
Common stock warrant liability	1,446	93
Other long-term liabilities	90	172
Total liabilities	25,694	25,234
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $0.001 par value; 5,000 shares authorized, none issued and outstanding	0	0
Common stock, $0.001 par value; 50,000 shares authorized, 43,582 shares issued and 42,259 shares outstanding at September 30, 2014 and 43,795 shares issued and 41,495 shares outstanding at December 31, 2013	42	41
Additional paid-in capital	136,685	137,445
Accumulated deficit	(155,837)	(149,169)
Accumulated other comprehensive loss	(363)	(336)
Treasury stock, at cost; 1,323 shares at September 30, 2014 and 2,300 shares at December 31, 2013	(1,631)	(2,876)
Total stockholders’ deficit	(21,104)	(14,895)
Total liabilities and stockholders’ deficit	$ 4,590	$ 10,339