SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of such terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under Part II Item 1A - "Risk Factors" of this Quarterly Report on Form 10-Q that may cause our, or our industry's, actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activities, performance or achievements expressed in or implied by such forward-looking statements.

Among the important factors which could cause actual results to differ materially from those in the forward-looking statements include 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 very 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, 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 client concentration given that we are currently dependent on a few significant client relationships, 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, our ability to raise additional equity or debt financing and other factors detailed in Part II Item 1A - "Risk Factors" of this Quarterly Report on Form 10-Q.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We assume no obligation to update such forward-looking statements publicly for any reason even if new information becomes available in the future, except as may be required by law.

Overview

We are a leading provider of sales and marketing solutions, combining hosted application software and execution services designed to drive more revenue for our clients. We have three primary product lines as follows: contract sales, lead development and training sales. We have developed an integrated solution, the Rainmaker Revenue Delivery PlatformSM, that combines proprietary, on-demand application software and advanced analytics with specialized sales and marketing execution services, which can include marketing strategy development, websites, e-commerce portal creation and hosting, both inbound and outbound e-mail, chat, direct mail and telesales services.

We use the Rainmaker Revenue Delivery Platform to drive more revenue for our clients in a variety of ways to:

• provide a hosted technology portal for our clients and their resellers to assist in selling renewals;

• sell, on behalf of our clients, the renewal of service contracts, software licenses and subscriptions, and warranties;

• generate, qualify and develop corporate leads, turning these prospects into qualified appointments for our clients' field sales forces or leads for their channel partners; and

• provide a hosted application software platform that enables our clients to more effectively generate additional revenue from sales of Internet-based and in-person training.

We operate as an extension of our clients, in that all of our interactions with our clients' customers, utilizing our multi-channel communications platform, incorporate our clients' brands and trademarks, complementing and enhancing our clients' sales and marketing efforts. Thus, our clients entrust us with some of their most valuable assets - their brand and reputation. In the course of delivering these services, we utilize our proprietary databases to access the appropriate technology buyers and key decision makers.

We currently have approximately 113 clients, primarily in the computer hardware and software, telecommunications and financial services industries.

We have acquired several businesses that have expanded our client base and geographic presence to include international operations in Canada and the Philippines and enhanced the functionality of our Revenue Delivery Platform. These acquisitions have extended our technology capabilities and added new services which we offer across our expanding client base.

Critical Accounting Policies/Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to our revenues, asset impairments, income taxes, stock-based compensation and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Although actual results have historically been reasonably consistent with management's expectations, the actual results may differ from these estimates or our estimates may be affected by different assumptions or conditions.

Management has discussed the development of our critical accounting policies with the audit committee of the board of directors and they have reviewed the disclosures of such policies and management's estimates in this Management's Discussion and Analysis of Financial Condition and Results of Operations.

On January 1, 2007, we adopted Financial Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." Accordingly, we have disclosed that our policy for recording interest and penalties associated with audits is to record such items as a component of income before taxes. Penalties, interest paid and interest received are recorded in interest and other income (expense), net, in the statement of operations. Interest and penalties were immaterial at the date of adoption of FIN 48.

With the establishment of our Canadian foreign subsidiary and the subsequent purchase of Canadian based assets in 2007, we adopted a policy for recording foreign currency transactions and translation in accordance with SFAS No. 52, "Foreign Currency Translation" (SFAS No. 52). For our Canadian subsidiary, the functional currency has been determined to be the local currency, and therefore, assets and liabilities are translated at period-end exchange rates, and statement of operations items are translated at an average exchange rate prevailing during the period. Such translation adjustments are recorded in accumulated comprehensive income (loss), a component of stockholders' equity. Also in 2007, we acquired Qinteraction Limited and its Philippine-based subsidiary. As a result of this acquisition, we also adopted the policy mentioned above for recording foreign currency transactions and translations for this subsidiary as the functional currency has been determined to be the local currency for the Philippine-based subsidiary. In January of 2009, we established our Rainmaker Europe subsidiary in the United Kingdom. We adopted the policy mentioned above for recording foreign currency transactions and translations for this subsidiary as the functional currency has been determined to be the local currency (Great Britain Pound) for the UK based subsidiary. Gains and losses from foreign currency denominated transactions are included in interest and other income (expense), net in the consolidated statements of operations. Gains from foreign currency denominated transactions amounted to approximately $63,000 and $17,000 for the three months ended June 30, 2009 and 2008, respectively. Losses from foreign currency denominated transactions amounted to $14,000 for the six months ended June 30, 2009, as compared to gains of approximately $9,000 for the six months ended June 30, 2008.

Management believes there have been no significant changes during the six months ended June 30, 2009 to the items that we disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 as filed with the Securities and Exchange Commission ("SEC") on March 31, 2009.

Results of Operations

The following table sets forth for the periods given selected financial data as a percentage of our revenue. The table and discussion below should be read in conjunction with the financial statements and the notes thereto which appear elsewhere in this report as well as with our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2008, and with our financial statements and notes thereto included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.

                                       Three Months Ended June 30,              Six Months Ended June 30,
                                        2009                  2008              2009                 2008
Net revenue                               100.0 %               100.0 %           100.0 %              100.0 %
Costs of services                          54.3                  58.5              56.0                 54.7

Gross margin                               45.7                  41.5              44.0                 45.3

Operating expenses:
Sales and marketing                         9.0                  12.3              10.3                 11.1
Technology and development                 20.7                  20.4              22.8                 18.0
General and administrative                 19.7                  20.3              21.0                 18.3
Depreciation and amortization              12.7                  10.9              13.2                  9.6

Total operating expenses                   62.1                  63.9              67.3                 57.0

Operating (loss) income                   (16.4 )               (22.4 )           (23.3 )              (11.7 )
Interest and other income
(expense), net                              0.4                   1.0              (0.4 )                1.4

Income (loss) before income tax
expense                                   (16.0 )               (21.4 )           (23.7 )              (10.3 )
Income tax expense                          0.8                   0.6               0.7                  0.6

Net income (loss)                         (16.8 )%              (22.0 )%          (24.4 )%             (10.9 )%

Comparison of Three Months Ended June 30, 2009 and 2008

Net Revenue. Net revenue decreased $6.3 million, or 35%, to $11.5 million in the three months ended June 30, 2009, as compared to the three months ended June 30, 2008. Our contract sales product line revenue was $5.7 million and decreased $450,000 from the prior year primarily resulting from a $527,000 reduction in revenue from Dell which was partially offset by increased revenue from new and existing clients. Revenue from our lead development product line was $4.7 million and decreased approximately $5.8 million as compared to the prior year due to decreases in revenues from existing clients as they reduced their marketing budgets. Revenue from our training sales product line was $1.1 million and was flat compared to the prior year.

Costs of Services and Gross Margin. Costs of services decreased $4.2 million, or 40%, to $6.3 million in the three months ended June 30, 2009, as compared to the 2008 comparative period. The decrease is attributable primarily to reductions in telesales workforce related to declining sales from our contract sales and lead development product lines. Our gross margin percentage increased to 46% in the three months ended June 30, 2009, as compared to 42% for the three months ended June 30, 2008, primarily as a result of the shift in the mix of our business from lead development to contract sales.

Sales and Marketing Expenses. Sales and marketing expenses decreased $1.1 million, or 53%, to $1.0 million in the three months ended June 30, 2009, as compared to the 2008 comparative period. The decrease is primarily due to approximately $776,000 in decreased personnel costs due to decreases in sales & marketing personnel, decreased commissions from reductions in sales, and decreases in severance and recruiting & relocation. Additionally consulting fees decreased approximately $131,000 and marketing costs decreased approximately $82,000 due to reduced corporate marketing project spending related to corporate website development. Travel and entertainment costs decreased approximately $78,000 due to corporate initiatives put in place to reduce these expenses. We expect sales and marketing expenses to decrease for the remainder of the year as compared to 2008 as the Company continues to reduce costs due to the challenging macroeconomic environment which has caused a slowdown in marketing spending by our customers.

Technology and Development Expenses. Technology and development expenses decreased $1.3 million, or 34%, to $2.4 million during the three months ended June 30, 2009, as compared to the 2008 comparative period. The decrease is primarily attributable to an approximately $664,000 reduction in fees paid to outside consultants and service providers as a result of reduced usage of these services, decreases in personnel costs of approximately $573,000, decreases in temporary employee costs of approximately $159,000,

and decreased travel & entertainment costs of approximately $110,000 due to the reduction in our workforce. These decreases were partially offset by increased equipment and maintenance expenses of approximately $218,000 during the 2009 quarter. We expect technology and development expenses to decrease for the remainder of the year as compared to 2008 as we continue to reduce spending due to the challenging macroeconomic environment.

General and Administrative Expenses. General and administrative expenses decreased $1.3 million, or 37%, to $2.3 million during the three months ended June 30, 2009, as compared to the three months ended June 30, 2008. The decrease was primarily due to approximately $678,000 in decreased personnel costs related to the reduction in our workforce during 2008 and the first two quarters of 2009. We also reduced temporary employee expense by $116,000 during 2009 and decreased travel & entertainment expenses approximately $77,000. Rent decreased approximately $309,000 during the quarter ended June 30, 2009, due primarily to our reduction in office space in the Philippines. In 2009, we will be required to comply with the Sarbanes-Oxley Act section 404(b) and have an audit of the Company's 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.

Depreciation and Amortization Expenses. Depreciation and amortization expenses decreased $488,000, or 25%, to $1.5 million for the three months ended June 30, 2009, as compared to the 2008 period. Amortization of intangible assets decreased by approximately $536,000 in the 2009 period, primarily as a result of the write-off of approximately $2.2 million of our amortizable intangible assets in the fourth quarter of our 2008 fiscal year. This decrease was partially offset by increases in depreciation expense related to depreciation on assets placed in service during our 2008 and 2009 fiscal year and the reduction of the useful life of leasehold improvements at our Austin facility. Because of the write-off of our amortizable intangible assets during 2008 and the reduction in our capital expenditures during 2009, we expect depreciation and amortization expense to be relatively flat as compared to the prior year for the remainder of 2009.

Interest and Other Income (Expense), Net. The components of interest and other income (expense), net are as follows (in thousands):

                                          Three Months Ended
                                               June 30,
                                          2009            2008       Change
            Interest income             $     28         $  210      $  (182 )
            Interest expense                 (49 )          (19 )        (30 )
            Currency translation gain         63             17           46
            Other                             -             (22 )         22

                                        $     42         $  186      $  (144 )

The decrease in interest income is attributable to our decrease in cash from $24.5 million as of June 30, 2008 to $16.7 million at June 30, 2009 as we had historically invested the net proceeds received from our follow-on offering of common stock in April 2007 in interest bearing deposit accounts. Interest expense is the result of interest incurred on the notes payable issued with the purchase of the assets of CAS Systems and interest incurred on the Bridge Bank Equipment Sub-facility portion of our Revolving Line of Credit which converted to term debt at a minimum interest rate of 6% in January 2009. We made principal payments on the Bridge Bank loan during the quarter ended June 30, 2009.

The currency translation gain is primarily due to the fluctuation of currency exchange rates on a note payable to a third party denominated in United States dollars that is owed by our Canadian subsidiary in connection with our acquisition of CAS Systems. Fluctuations of currency exchange rates may have a negative effect in future periods on our financial results.

Income Tax Expense. Income tax expense decreased $22,000, or 19%, to $92,000 for the three months ended June 30, 2009, as compared to the three months ended June 30, 2008. Our income tax expense for the three month period ended June 30, 2009, is based on our estimate of taxable income for the full year ending December 31, 2009, and primarily consists of estimates of foreign taxes and domestic gross margin taxes for certain states. We do not anticipate material changes to our implied effective tax rate for the year.

Comparison of Six Months Ended June 30, 2009 and 2008

Net Revenue. Net revenue decreased $14.5 million, or 38%, to $23.9 million in the six months ended June 30, 2009, as compared to the six months ended June 30, 2008. Our lead development product line revenue was $10.9 million and decreased $9.4 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 $10.8 million and decreased approximately $5.2 million as compared to the prior year as a result of a $5.7 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 $2.2 million and increased approximately $41,000 as compared to the prior year as a result of increased sales to new and existing clients.

Costs of Services and Gross Margin. Costs of services decreased $7.7 million, or 36%, to $13.4 million in the six months ended June 30, 2009, as compared to the 2008 comparative period. The decrease is attributable primarily to reductions in telesales workforce related to declining sales from our contract sales and lead development product lines. Our gross margin percentage decreased to 44% in the six months ended June 30, 2009 as compared to 45% for the six months ended June 30, 2008 primarily as a result of the loss of the Dell business during 2008. We estimate that gross margin will remain at the current level for the remainder of the year.

Sales and Marketing Expenses. Sales and marketing expenses decreased $1.8 million, or 42%, to $2.5 million in the six months ended June 30, 2009, as compared to the 2008 comparative period. The decrease is primarily due to approximately $1.1 million in decreased personnel costs due to decreases in sales & marketing personnel, decreased commissions from reductions in sales, and decreases in recruiting & relocation Additionally marketing costs decreased approximately $195,000 and consulting fees decreased approximately $223,000 due to reduced corporate marketing project spending related to corporate website development and travel costs decreased approximately $145,000 due to corporate initiatives put in place to reduce these expenses. We expect sales and marketing expenses to decrease for the remainder of the year as compared to 2008 as the Company has reduced costs due to the challenging macroeconomic environment which has caused a slowdown in marketing spending by our customers.

Technology and Development Expenses. Technology and development expenses decreased $1.4 million, or 21%, to $5.5 million during the six months ended June 30, 2009, as compared to the 2008 comparative period. The decrease is primarily attributable to an approximately $838,000 reduction in fees paid to outside consultants and service providers as a result of reduced usage of these services, decreases in personnel costs of approximately $571,000, decreases in temporary employee costs of approximately $347,000, and decreased travel & entertainment costs of approximately $169,000 due to the reduction in our workforce. These decreases were partially offset by increased equipment and maintenance expenses of approximately $426,000 during the 2009 period. We expect technology and development expenses to decrease for the remainder of the year as compared to 2008 as we reduce spending due to the challenging macroeconomic environment.

General and Administrative Expenses. General and administrative expenses decreased $2.0 million, or 29%, to $5.0 million during the six months ended June 30, 2009, as compared to the six months ended June 30, 2008. The decrease was primarily due to approximately $1.4 million in decreased personnel costs related to the reduction in our workforce during 2008 and the first half of 2009. We also reduced temporary employee expense by $190,000 during 2009 and decreased travel & entertainment expenses approximately $137,000. Rent decreased approximately $388,000 during the six months ended June 30, 2009, due primarily to our reduction in office space in the Philippines. In 2009, we will be required to comply with the Sarbanes-Oxley Act section 404(b) and have an audit of the Company's 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.

Depreciation and Amortization Expenses. Depreciation and amortization expenses decreased $559,000, or 15%, to $3.1 million for the six months ended June 30, 2009, as compared to the 2008 period. Amortization of intangible assets decreased by approximately $1.1 million in the 2009 period, primarily as a result of the write-off of approximately $2.2 million of our amortizable intangible assets in the fourth quarter of our 2008 fiscal year. This decrease was partially offset by increases in depreciation expense of approximately $545,000 related to depreciation on assets placed in service during our 2008 and 2009 fiscal years and the reduction of the useful life of leasehold improvements at our Austin facility. Because of the write-off of our amortizable intangible assets during 2008 and the reduction in our capital expenditures during 2009, we expect depreciation and amortization expense to be relatively flat as compared to the prior year for the remainder of 2009.

Interest and Other Income (Expense), Net. The components of interest and other income (expense), net are as follows (in thousands):

                                               Six Months Ended
                                                   June 30,
                                               2009          2008       Change
          Interest income                    $      55       $ 562      $  (507 )
          Interest expense                        (132 )       (41 )        (91 )
          Currency translation (loss)/gain         (14 )         9          (23 )

                                             $     (91 )     $ 530      $  (621 )

The decrease in interest income is attributable to our decrease in cash from $24.5 million as of June 30, 2008 to $16.7 million at June 30, 2009 as we had historically invested the net proceeds received from our follow-on offering of common stock in April 2007 in interest bearing deposit accounts. Interest expense is the result of interest incurred on the notes payable issued with the purchase of the assets of CAS Systems and interest incurred on the Bridge Bank Equipment Sub-facility portion of our Revolving Line of Credit which converted to term debt at a minimum interest rate of 6% in January 2009. We made principal payments on the CAS Systems loan and the Bridge Bank loan during the six months ended June 30, 2009.

The currency translation loss is primarily due to the fluctuation of currency exchange rates on a note payable to a third party denominated in United States dollars that is owed by our Canadian subsidiary in connection with our acquisition of CAS Systems. Fluctuations of currency exchange rates may have a negative effect in future periods on our financial results.

Income Tax Expense. Income tax expense decreased $47,000, or 21%, to $177,000 for the six months ended June 30, 2009, as compared to the six months ended June 30, 2008. Our income tax expense for the 2009 period is based on our . . .