Rainmaker Systems Inc. (RMKR, Financial) filed Quarterly Report for the period ended 2009-03-31.
Rainmaker Systems is a leading outsource provider of sales and marketing programs. Rainmaker's cost-effective programs generate service revenue and promote customer retention for its clients. Core services include professional telesales direct marketing and hosted ecommerce. Additional services include customer database enhancement CRM technology integration and order management. These services are available individually or as an integrated solution. Rainmaker Systems Inc. has a market cap of $21.8 million; its shares were traded at around $1.03 with and P/S ratio of 0.3.
General and Administrative Expenses. General and administrative expenses decreased $672,000, or 20%, to $2.8 million during the three months ended March 31, 2009, as compared to the three months ended March 31, 2008. The decrease was primarily due to approximately $731,000 in decreased personnel costs related to the reduction in our workforce during 2008 and the first quarter of 2009. Additionally, audit fees decreased approximately $111,000 in the three months ended March 31, 2009 as compared to the 2008 comparable period. These decreases were partially offset by increased losses on retirement of assets of approximately $119,000 from the relocation of our facilities in Montreal and Manila, and increased legal fees of approximately $35,000 associated with new contract activity. In 2009, we will be required to comply with the Sarbanes-Oxley Act section 404(b) and have an audit of the Companys internal controls for the 2009 fiscal year. We were not required to do this in 2008. Because of this, we expect audit related fees to increase going forward for the 2009 fiscal year to maintain compliance with the Sarbanes-Oxley Act.
Cash used in operating activities for the three months ended March 31, 2009 was $1.3 million as compared to $284,000 in the three months ended March 31, 2008. Cash provided by operating activities in 2009 was primarily the result of a net loss totaling $3.9 million, non-cash expenditures of depreciation and amortization of property and intangibles of $1.7 million, stock-based compensation charges of $622,000, the credit for the recovery of allowance for doubtful accounts of $197,000, loss on disposal of fixed assets of $158,000, and changes in operating assets and liabilities that provided $373,000 of cash for the year.
Cash used in operating activities for the three months ended March 31, 2008 was primarily the result of a net loss totaling $277,000, non-cash expenditures of depreciation and amortization of property and intangibles of $1.8 million, stock-based compensation charges of $404,000, the provision for allowance for doubtful accounts of $172,000, amortization of discount on notes receivable of $68,000, and changes in operating assets and liabilities, net of assets acquired and liabilities assumed, that used $2.4 million of cash for the year.
Cash provided by investing activities was $177,000 in the three months ended March 31, 2009, as compared to cash used in investing activities of $2.7 million in the three months ended March 31, 2008. The change is primarily the result of $1 million paid in 2008 as additional purchase price from the CAS Systems acquisition in 2007 as the result of the achievement of certain performance metrics subsequent to the acquisition, decreases in capital expenditures of approximately $911,000 during the three months ended March 31, 2009 as compared to the three months ended March 31, 2008, and a decrease in the restricted cash balance of approximately $779,000 in the three months ended March 31, 2009, as compared to an increase of $182,000 in the restricted cash balance for the three months ended March 31, 2008. Restricted cash represents the reserve for the refund due for non-service payments inadvertently paid to the Company by our clients customers instead of paid directly to the Companys clients. At the time of cash receipt, the Company records a current liability for the amount of non-service payments received. The decrease in restricted cash represents the reduction of our balance of refunds due to customers.
Cash used in financing activities was approximately $1.3 million in the three months ended March 31, 2009, as compared to $992,000 in the three months ended March 31, 2008. Cash used in financing activities in 2009 was primarily a result of principal payments of $923,000 on our term loans and CAS notes, payments on our capital lease obligations of $226,000, purchases of treasury stock under company announced share repurchase plans of $56,000, and purchases of $45,000 of treasury stock from employees for shares withheld for income taxes payable on restricted stock awards vested during 2009. Cash used in financing activities in 2008 was primarily a result of principal payments of $938,000 on our term loans and CAS notes and purchases of $66,000 of treasury stock from employees and directors for shares withheld for income taxes payable on restricted stock awards vested. Additionally, we received approximately $12,000 from the exercise of stock options during the 2008 period.
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Rainmaker Systems is a leading outsource provider of sales and marketing programs. Rainmaker's cost-effective programs generate service revenue and promote customer retention for its clients. Core services include professional telesales direct marketing and hosted ecommerce. Additional services include customer database enhancement CRM technology integration and order management. These services are available individually or as an integrated solution. Rainmaker Systems Inc. has a market cap of $21.8 million; its shares were traded at around $1.03 with and P/S ratio of 0.3.
Highlight of Business Operations:
Net Revenue. Net revenue decreased $8.2 million, or 40%, to $12.4 million in the three months ended March 31, 2009, as compared to the three months ended March 31, 2008. Our lead development product line revenue was $6.2 million and decreased $3.5 million from the prior year due to decreases in revenues from existing clients as they reduced their marketing budgets. Revenue from our contract sales product line was $5.0 million and decreased approximately $4.7 million as compared to the prior year as a result of a $5.2 million reduction in revenue from Dell which was partially offset by increased revenue from new and existing clients. Revenue from our training sales product line was $1.1 million and increased approximately $43,000 as compared to the prior year as a result of increased sales to new and existing clients.General and Administrative Expenses. General and administrative expenses decreased $672,000, or 20%, to $2.8 million during the three months ended March 31, 2009, as compared to the three months ended March 31, 2008. The decrease was primarily due to approximately $731,000 in decreased personnel costs related to the reduction in our workforce during 2008 and the first quarter of 2009. Additionally, audit fees decreased approximately $111,000 in the three months ended March 31, 2009 as compared to the 2008 comparable period. These decreases were partially offset by increased losses on retirement of assets of approximately $119,000 from the relocation of our facilities in Montreal and Manila, and increased legal fees of approximately $35,000 associated with new contract activity. In 2009, we will be required to comply with the Sarbanes-Oxley Act section 404(b) and have an audit of the Companys internal controls for the 2009 fiscal year. We were not required to do this in 2008. Because of this, we expect audit related fees to increase going forward for the 2009 fiscal year to maintain compliance with the Sarbanes-Oxley Act.
Cash used in operating activities for the three months ended March 31, 2009 was $1.3 million as compared to $284,000 in the three months ended March 31, 2008. Cash provided by operating activities in 2009 was primarily the result of a net loss totaling $3.9 million, non-cash expenditures of depreciation and amortization of property and intangibles of $1.7 million, stock-based compensation charges of $622,000, the credit for the recovery of allowance for doubtful accounts of $197,000, loss on disposal of fixed assets of $158,000, and changes in operating assets and liabilities that provided $373,000 of cash for the year.
Cash used in operating activities for the three months ended March 31, 2008 was primarily the result of a net loss totaling $277,000, non-cash expenditures of depreciation and amortization of property and intangibles of $1.8 million, stock-based compensation charges of $404,000, the provision for allowance for doubtful accounts of $172,000, amortization of discount on notes receivable of $68,000, and changes in operating assets and liabilities, net of assets acquired and liabilities assumed, that used $2.4 million of cash for the year.
Cash provided by investing activities was $177,000 in the three months ended March 31, 2009, as compared to cash used in investing activities of $2.7 million in the three months ended March 31, 2008. The change is primarily the result of $1 million paid in 2008 as additional purchase price from the CAS Systems acquisition in 2007 as the result of the achievement of certain performance metrics subsequent to the acquisition, decreases in capital expenditures of approximately $911,000 during the three months ended March 31, 2009 as compared to the three months ended March 31, 2008, and a decrease in the restricted cash balance of approximately $779,000 in the three months ended March 31, 2009, as compared to an increase of $182,000 in the restricted cash balance for the three months ended March 31, 2008. Restricted cash represents the reserve for the refund due for non-service payments inadvertently paid to the Company by our clients customers instead of paid directly to the Companys clients. At the time of cash receipt, the Company records a current liability for the amount of non-service payments received. The decrease in restricted cash represents the reduction of our balance of refunds due to customers.
Cash used in financing activities was approximately $1.3 million in the three months ended March 31, 2009, as compared to $992,000 in the three months ended March 31, 2008. Cash used in financing activities in 2009 was primarily a result of principal payments of $923,000 on our term loans and CAS notes, payments on our capital lease obligations of $226,000, purchases of treasury stock under company announced share repurchase plans of $56,000, and purchases of $45,000 of treasury stock from employees for shares withheld for income taxes payable on restricted stock awards vested during 2009. Cash used in financing activities in 2008 was primarily a result of principal payments of $938,000 on our term loans and CAS notes and purchases of $66,000 of treasury stock from employees and directors for shares withheld for income taxes payable on restricted stock awards vested. Additionally, we received approximately $12,000 from the exercise of stock options during the 2008 period.
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