##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Period from to.
 Commission File No. 000-31045
 Raindance Communications, Inc.
 (a Delaware Corporation)
 I.R.S. Employer Identification Number 84-1407805
1157 Century Drive; Louisville, Colorado 80027
(800) 878-7326
Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0015 Par Value Per Share
  Yes o           No þ
  Yes o           No þ
 þ o
 þ
  o þ o
  Yes o           No þ
  DOCUMENTS INCORPORATED BY REFERENCE:




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##### 



RAINDANCE COMMUNICATIONS, INC.
 Form 10-K
 For the Fiscal Year Ended December 31, 2005
 TABLE OF CONTENTS
 PagePART IItem
1
    
    
    
    
    
    Business
    
    
    3Item
1A
    
    
    
    
    
    Risk Factors
    
    
    11Item
1B
    
    
    
    
    
    Unresolved Staff Comments
    
    
    24Item
2
    
    
    
    
    
    Properties
    
    
    24Item
3
    
    
    
    
    
    Legal Proceedings
    
    
    24Item
4
    
    
    
    
    
    Submission of Matters to a Vote of Security Holders
    
    
    24PART IIItem
5
    
    
    
    
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    25Item
6
    
    
    
    
    
    Selected Financial Data
    
    
    27Item
7
    
    
    
    
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    28Item
7A
    
    
    
    
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    46Item
8
    
    
    
    
    
    Financial Statements and Supplementary Data
    
    
    46Item
9
    
    
    
    
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    46Item
9A
    
    
    
    
    
    Controls and Procedures
    
    
    46Item
9B
    
    
    
    
    
    Other Information
    
    
    47PART IIIItem
10
    
    
    
    
    
    Directors and Executive Officers of the Registrant
    
    
    48Item
11
    
    
    
    
    
    Executive Compensation
    
    
    48Item
12
    
    
    
    
    
    Security Ownership of Certain Beneficial Owners and Management
    
    
    48Item
13
    
    
    
    
    
    Certain Relationships and Related Transactions
    
    
    48Item
14
    
    
    
    
    
    Principal Accounting Fees and Services
    
    
    48PART IVItem
15
    
    
    
    
    
    Exhibits and Financial Statement Schedules
    
    
    49SIGNATURES AND CERTIFICATIONS
    
    
    51Offer Letter, dated January 2, 2006, between Registrant and Peter HolstConsent of KPMG LLPCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO & CFO Pursuant to Section 906
  2




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PART I
 Unless the context requires otherwise, references in this report to Raindance, the
Company, we, us, and our refer to Raindance Communications, Inc.
 This Report on Form 10-K contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, including without limitation, statements regarding our strategies, future financial
performance, and future operations that involve risks and uncertainties. These forward-looking
statements include, but are not limited to, statements regarding the extent and timing of future
revenues and expenses and customer demand, statements regarding the deployment of our products, and
statements regarding reliance on third parties. In some cases, these statements may be identified
by terminology such as may, will, should, believes, anticipates, expects, plans,
intends, estimates, predicts, potential and words of similar import. Our actual results
may differ significantly from the results discussed in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to; those discussed in this section and
in the sections entitled Managements Discussion and Analysis of Financial Condition and Results
of Operations and Risk Factors. All forward-looking statements included in this Report are
based on information available to us as of the date hereof and we undertake no obligation to revise
any forward-looking statements in order to reflect any subsequent events or circumstances. Readers
are urged to carefully review and consider the various disclosures made in this report and in our
other reports filed with the Securities and Exchange Commission (SEC) that attempt to advise
interested parties of certain risks and factors that may affect our business.
 You may read and copy materials that we file with the SEC at the SECs Public Reference Room
at 100 F Street NE; Room 1580, Washington, DC 20549. You may also obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other information
regarding issuers that, like us, file electronically with the SEC. The SECs Internet site can be
found at http://www.sec.gov. Our reports are available free of charge through our website as soon
as reasonably practicable after we file them with, or furnish them to, the SEC. Our website
address is www.raindance.com. Once at www.raindance.com, go to Investor Center/SEC Filings and
Financials. Our internet website and the information contained therein or connected thereto are not
intended to be incorporated into this Annual Report on Form 10-K.
 
 ITEM 1.
    
    BUSINESS
 Recent Developments
 , SHAREHOLDERS OF RAINDANCE ARE URGED
TO READ THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION.
   3




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Overview
   Remote Meeting Solutions
   
    
    Integrated Audio, Web and Video Functions.For everyday conference calls, meeting
moderators can use their personal ID to begin a phone conference at anytime without a
reservation or an operator. To add another layer of interaction and group collaboration,
moderators use the same ID to begin a web conference with interactive features to share
rich visual content and encourage higher levels of participation. We provide customers
simple and convenient remote communications solutions and we provide our customers access
to audio, web and video conferencing with one telephone access number, one user ID, one
technical support team and one billing solution. In June 2005 we released enhancements to
Raindance Meeting Edition such as integrated record and playback features, as well as
content management and enhanced participant interaction through such devices as question
and answer and polling. We released Raindance Seminar Edition in June 2005, which
complements Raindance Meeting Edition and is designed for large, planned seminar events
where there is one main presenter and hundreds or thousands of participants.
 4




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
    
    Reliability and Security. We designed our facilities and infrastructure to provide the
scalability and reliability required to meet the critical communication needs of our
customers. We incorporate telecommunications-grade reliability standards into our
communication technologies and design our infrastructure to accommodate more participants and usage than we expect. Our SwitchTower®
multimedia network is the foundation of our collaborative web, audio and desktop video
conferencing services and is a distributed network design allowing Raindance to deliver
interactive online meetings and events throughout our network, the Internet and into the
enterprise. We monitor servers in our data center with redundant network connections. In
addition to offering our services in a secure socket layer, or SSL, environment with
128-bit encryption, we provide a robust firewall configuration that offers layered
protection for customer data. Meeting moderators have the ability to further ensure and
monitor the security of their meetings using several layers of security, including PIN
codes, audio tones that signal when a participant enters or exits, conference lock to
prevent additional participants from joining a conference, a participant count feature and
unique security codes created by the meeting moderator.
    
    Flexible Pricing. Depending on the customers communication needs and selected remote
meeting solution, we offer a variety of pricing models to accommodate estimated service
usage as well as the customers preferred method of payment. A large portion of our
services are usage-based, which generally means that our customers pay on a per-minute,
per-participant basis. In addition, we also offer our customers monthly subscription rates
based on a fixed number of concurrent users. For our distribution partners, we may provide
our services through software licenses.
   Raindance Meeting Edition
 Raindance Seminar Edition.
 Reservationless Conferencing.
 5




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Web Conferencing Pro.
 Operator-Assisted Conferencing.
 Unlimited Conferencing.
 Future Service Offerings
  Customers
  6
    Table of Contents   Technology
  
    
    the ability to identify new, and enhance existing, web conferencing services;
    
    the ability to build integrated applications by combining traditional telephony, voice over Internet protocol (VoIP)
and Internet communication technologies; and
    
    the ability to build a reliable and scalable communication infrastructure.
  Data Infrastructure.
 Voice Infrastructure
 Application Infrastructure.
 Business Infrastructure.
 Research and Development
  7




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Sales and Marketing
 Sales
 Marketing
 Customer Service
   Competition
   
    
    pricing;
    
    ease of use of services and breadth of features;
    
    brand identity;
    
    quality and reliability of communication services;
    
    compatibility with new and existing communication formats;
    
    access to and penetration of distribution channels necessary to achieve broad distribution;
    
    ability to protect intellectual property;
 8




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
    
    quality of customer service;
    
    ability to develop and support secure formats for communication delivery;
    
    scalability of communication services; and
    
    challenges caused by bandwidth constraints and other limitations of the Internet infrastructure.
     Intellectual Property
  9




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Acquisition
  Employees
  Available Information
  10




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ITEM 1A.
    
    RISK FACTORS
  You should not rely on forward-looking statements because they are inherently uncertain.
   If the proposed acquisition of Raindance by West Corporation is not completed, our business could
be materially and adversely affected and our stock price could decline.
  The fact that there is an acquisition of our company pending could have an adverse effect on our
business, revenue and results of operations.
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We have a history of losses and we may not maintain profitability.
  We have a limited operating history, which makes it difficult to evaluate our business.
  We may fail to meet market expectations because of fluctuations or lack of growth in our quarterly
operating results, which would cause our stock price to decline.
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A high percentage of our revenue is attributable to repeat customers, none of whom are obligated to
continue to use our services. The failure of continued use of our services by existing customers
could harm our operating results and cause our stock price to decline.
  A significant portion of our revenue is attributable to large customers that have no obligation to
continue to use our services.
  If our revenue for a particular period is lower than we expect, our financial results will be
negatively impacted, which may require us to reduce our operating expenses.
  We have experienced significant pricing pressure, which is expected to continue and has negatively
impacted our financial results.
  13




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The growth of our business substantially depends on our ability to successfully develop and
introduce new services and features in a timely manner.
   Our next-generation services may impact the revenue we receive from existing services.
  Competition in the web conferencing services and software market is intense and we may be unable to
compete successfully, particularly as a result of recent announcements from large software
companies.
  14




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Competition in the conferencing services market may increase due to competitors entering or
expanding their positions in the marketplace.
   
    
    competitors could acquire or partner with companies with which we
have distribution relationships and discontinue our partnership,
resulting in the loss of distribution opportunities for our
services;
    
    competitors could be acquired by or enter into strategic
relationships with third parties that have greater resources and
experience than we do, such as the Cisco/Latitude,
Microsoft/Placeware, and West/Intercall and West/Sprint
acquisitions, thereby reducing our ability to compete with such
competitors; or
    
    competitors could acquire or partner with our key suppliers, such as the acquisition
of Voyant Technologies, our primary conferencing bridge supplier, by Polycom, Inc.
 Our sales cycle makes it difficult to predict our quarterly operating results.
  We have limited marketing, branding and lead-generation efforts, which may not be successful.
  15




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Our business and operating results may suffer if we do not retain our existing distribution
partners, if we fail to establish new distribution relationships or if our distribution partners do
not successfully market and sell our services.






If we do not attract or retain qualified management and personnel, our business may be harmed.






We have been sued for breach of contract and unjust enrichment and may be subject to additional
litigation.




We have been sued for patent infringement by a significant competitor and may be subject to
additional claims alleging patent and intellectual property infringement in the future.


16




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Our patents may not be sufficient to protect our technology, our competitors may be able to create
systems with similar functionality to ours and third parties may obtain unauthorized use of our
intellectual property.








17



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We substantially depend on a single supplier for conferencing bridges and a limited number of
sources for telephony services, the loss of which could cause significant delays and increased
costs in providing services to our existing and prospective customers.
  Due to increased price compression in the conferencing industry, we have altered the architecture
of our audio conferencing network.
  Our transition to VoIP technology is subject to significant risks, delays and costs.
  If any of the third party services that we use become unavailable to us, our services would be
subject to significant delays and increased costs.
  Our business will suffer if our systems or services fail or become unavailable.
 18
    Table of Contents     Our services are often used to share confidential and sensitive information and, as a result, if
our security system is breached, our business and reputation could suffer.
  Our business may be harmed if our services do not work with the various hardware and software
systems, including corporate security measures, used by our customers.
  If we do not increase the capacity of our infrastructure in excess of customer demand, customers
may experience service problems and choose not to use our services.
  19




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We may pursue additional business relationships through acquisitions, joint ventures, or other
investment prospects, which may not be successful, and we may not realize the benefits of any
acquisition, joint venture, or other investment.
   
    
    issue equity securities that would dilute our stockholders;
    
    expend cash;
    
    incur debt;
    
    assume unknown or contingent liabilities; and
    
    experience negative effects on our results of operations.
 Our failure to manage growth could cause increases in our operating costs, harm our ability to
maintain profitability, and therefore, decrease the value of our stock.
  If we do not expand further internationally, our ability to attract and retain multi-national
customers will be harmed and as a result our business and operating results may be harmed.
   
    
    difficulties in establishing and maintaining distribution channels and partners for our services;
    
    varying technology standards from country to country;
 20




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
    
    uncertain protection of intellectual property rights;
    
    inconsistent regulations and unexpected changes in regulatory requirements;
    
    difficulties and costs of staffing and managing international operations;
    
    linguistic and cultural differences;
    
    fluctuations in currency exchange rates;
    
    difficulties in collecting accounts receivable and longer collection periods;
    
    imposition of currency exchange controls; and
    
    potentially adverse tax consequences.
  Our Reservationless Conferencing service may become subject to traditional telecommunications
carrier regulation by federal and state authorities, which would increase the cost of providing our
services and may subject us to penalties.
  We may be subject to assessment of state sales, federal excise and other taxes for the sale of our
services, license of technology or provision of services, which we have not collected from our
customers.
  21




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Our current stock compensation expense negatively impacts our earnings, and when we are required to
report the fair value of employee stock options as an expense in conjunction with Financial
Accounting Standards Board 123R  Share-based Payment, our earnings will be adversely affected,
which may cause our stock price to decline.
  We disclose non-GAAP financial information.
  Our corporate compliance program cannot guarantee that we are in compliance with all potentially
applicable regulations.
  We are subject to risks associated with governmental regulation and legal uncertainties.
  
    
    changes in telecommunications regulations;
    
    copyright and other intellectual property rights;
    
    exporting technology
    
    encryption;
    
    personal privacy concerns, including the use of cookies and individual user information;
    
    e-commerce liability; and
    
    email, network and information security.
 22




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Our stock price is volatile and this volatility may depress our stock price, result in litigation
or indicate that our goodwill is impaired, resulting in further declines to our stock price.
  23




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
    
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  24




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information and Holders
   High
    
    Low2005:First Quarter
    
    $
    2.63
    
    
    $
    2.18Second Quarter
    
    $
    2.46
    
    
    $
    2.03Third Quarter
    
    $
    2.37
    
    
    $
    2.09Fourth Quarter
    
    $
    2.32
    
    
    $
    1.962004:First Quarter
    
    $
    3.51
    
    
    $
    2.51Second Quarter
    
    $
    2.84
    
    
    $
    1.92Third Quarter
    
    $
    2.01
    
    
    $
    1.27Fourth Quarter
    
    $
    2.40
    
    
    $
    1.49
 Dividends
  Securities Authorized for Issuance Under Equity Compensation Plans
  Recent Sales of Unregistered Securities
  Stock Repurchase Program and Issuer Purchases of Equity Securities
  25




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Total Number
    
    MaximumOf Shares
    
    Amount ofPurchased as Part
    
    Dollars that MayTotal number
    
    Average
    
    Of a Publicly
    
    Yet beOf Shares
    
    Price Paid
    
    Announced
    
    Purchased UnderPeriod
    
    Purchased
    
    Per Share (1)
    
    Repurchase Plan
    
    The PlanOctober 3, 2005  October 31, 2005
    
    
    15,000
    
    
    $
    2.02
    
    
    
    15,000
    
    
    $
    4,970,000November 1, 2005  November 30, 2005
    
    
    721,400
    
    
    $
    2.03
    
    
    
    721,400
    
    
    $
    3,505,000December 1, 2005  December 30, 2005
    
    
    673,200
    
    
    $
    2.02
    
    
    
    673,200
    
    
    $
    2,140,000Total
    
    
    1,409,600
    
    
    $
    2.03
    
    
    
    1,409,600
    
    
    $
    2,140,000
  
  26




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ITEM 6. SELECTED FINANCIAL DATA
  Goodwill and Other
Intangible Assets
 Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in thousands, except per share data and percentages)Statement of Operations Data:Revenue (1)
    
    $
    74,518
    
    
    $
    75,269
    
    
    $
    70,611
    
    
    $
    60,651
    
    
    $
    39,410Cost of Revenue (1) (3)
    
    $
    31,658
    
    
    $
    34,031
    
    
    $
    28,608
    
    
    $
    26,832
    
    
    $
    22,685Gross profit (1) (3)
    
    $
    42,860
    
    
    $
    41,238
    
    
    $
    42,003
    
    
    $
    33,819
    
    
    $
    16,725Gross profit %
    
    
    57.5
    %
    
    
    54.8
    %
    
    
    59.5
    %
    
    
    55.8
    %
    
    
    42.4
    %Operating expenses (2) (3)
    
    $
    40,002
    
    
    $
    44,757
    
    
    $
    38,486
    
    
    $
    37,175
    
    
    $
    68,847Operating expenses as a % of revenue
    
    
    53.7
    %
    
    
    59.5
    %
    
    
    54.5
    %
    
    
    61.3
    %
    
    
    174.7
    %Income (loss) from operations
    
    $
    2,858
    
    
    $
    (3,519
    )
    
    $
    3,517
    
    
    $
    (3,356
    )
    
    $
    (52,122
    )Net income (loss)
    
    $
    4,022
    
    
    $
    (3,325
    )
    
    $
    3,547
    
    
    $
    (3,354
    )
    
    $
    (52,723
    )Net income (loss) per share:Basic
    
    $
    0.07
    
    
    $
    (0.06
    )
    
    $
    0.07
    
    
    $
    (0.07
    )
    
    $
    (1.12
    )Diluted
    
    $
    0.07
    
    
    $
    (0.06
    )
    
    $
    0.06
    
    
    $
    (0.07
    )
    
    $
    (1.12
    )
 As of December 31,2005
    
    2004
    
    2003
    
    2002
    
    2001(in thousands)Balance Sheet Data:Cash and cash equivalents
    
    $
    11,115
    
    
    $
    10,458
    
    
    $
    39,607
    
    
    $
    31,699
    
    
    $
    34,222Short-term investments
    
    $
    32,981
    
    
    $
    32,935
    
    
    
    
    
    
    
    
    
    
    
    Working capital
    
    $
    45,830
    
    
    $
    44,246
    
    
    $
    37,179
    
    
    $
    31,622
    
    
    $
    31,567Total assets
    
    $
    122,042
    
    
    $
    118,725
    
    
    $
    122,557
    
    
    $
    113,005
    
    
    $
    110,252Cash dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt, less current portion
    
    
    
    
    
    
    
    
    
    $
    1,227
    
    
    $
    2,026
    
    
    $
    3,064Restructuring reserve, less current portion
    
    
    
    
    
    
    
    
    
    $
    187
    
    
    $
    518
    
    
    $
    914Total stockholders equity
    
    $
    112,003
    
    
    $
    108,006
    
    
    $
    107,922
    
    
    $
    100,323
    
    
    $
    94,768
 
 (1)
    
     Revenue for 2003 includes $4.0 million related to a software sale that had no
associated cost of revenue.(2)
    
     2001 operating expenses include $26.5 million in goodwill amortization.(3)
    
     Prior years cost of revenue and operating expenses have been changed from previous
filings to reclassify stock-based compensation from its own line in the statement of
operations to the respective cost of revenue or operating expense line.
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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 This Annual Report on Form 10-K contains forward-looking statements, including without
limitation, statements containing the words believes, anticipates, expects, and words of
similar import and statements regarding our strategy, financial performance, and our operations
that involve risks and uncertainties. Our actual results may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in part I, item 1A entitled Risk Factors. Readers are
urged to carefully review and consider the various disclosures made in this report and in our other
reports filed with the SEC that attempt to advise interested parties of certain risks and factors
that may affect our business. You should read this analysis in conjunction with our financial
statements and related notes that begin on page F-1.
 Overview
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Statement of Operations Overview
  
    
    Raindance Meeting Edition and Raindance Seminar Edition.Revenue for our Raindance Meeting Edition and Raindance
Seminar Edition services is derived from subscription and usage fees. Revenue from subscriptions is recognized monthly
regardless of usage, while usage fees are based upon either connections or minutes used. We recognize usage revenue
from our Raindance Meeting Edition and Raindance Seminar Edition services in the period the meeting is completed. We
recognize revenue associated with any initial set-up fees ratably over the term of the contract.
 29




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
    
    Reservationless Conferencing Revenue. Revenue for our Reservationless Conferencing service is generally based upon the
actual time that each participant is on the phone or logged onto the web. For example, a customer is charged a
per-minute, per-user fee for each participant listening and viewing a live or recorded simulcast. In addition, we
charge customers a one-time fee to upload visuals for a phone conference or a recorded simulcast. We recognize usage
revenue from our Reservationless Conferencing services in the period the call or simulcast of the call is completed. We
recognize revenue associated with any initial set-up fees ratably over the term of the contract.
 
    
    Web Conferencing Pro Revenue. Revenue for our Web Conferencing Pro service is derived from subscription and usage fees
in addition to event fees or, in more limited cases, a software license fee. Revenue from subscriptions is recognized
monthly regardless of usage, while usage fees are based upon either connections or minutes used. Event fees are
generally hourly charges that are recognized as the events take place. We recognize revenue associated with any initial
set-up fees ratably over the term of the contract. Revenue from software license agreements is either recognized upon
shipment of the software when all the following criteria have been met: persuasive evidence of an arrangement exists,
delivery has occurred, the fee is fixed or determinable, collectibility is probable, and vendor-specific objective
evidence is available for the fair value of all undelivered elements, or recognized ratably over the software support
period if we do not have vendor-specific objective evidence for all undelivered elements.
 
    
    Operator-Assisted Revenue. Revenue for our Operator-Assisted Conferencing service is generally based upon the actual
time that each participant is on the phone. In addition, we charge customers a fee for additional services such as call
taping, digital replay, participant lists and transcription services. We recognize usage revenue and related fees from
our Operator-Assisted Conferencing service in the period the call is completed.
 
    
    Unlimited Conferencing. Revenue from Unlimited Conferencing is derived from a flat, fixed charge per month depending on
the conference size limit selected by the customer. The fixed monthly charge is recognized as revenue each month.
    30




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Other Data  Non-GAAP Financial Measure
   Years Ended December 31,2005
    
    
    2004
    
    
    2003Net income (loss)
    
    $
    4,022
    
    
    $
    (3,325
    )
    
    $
    3,547Add: depreciation, amortization and
other income (expense), net
    
    
    7,424
    
    
    
    11,001
    
    
    
    10,265Add: provision for income taxes
    
    
    100
    
    
    
    
    
    
    
    Add: stock-based compensation
expense
    
    
    776
    
    
    
    2,211
    
    
    
    2,814Adjusted EBITDA
    
    $
    12,322
    
    
    $
    9,887
    
    
    $
    16,626
 31




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##### Table of Contents



32




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##### Table of Contents



Results of Operations
 Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
  Results of Operations, year ended December 31, 2005 compared to year ended December 31, 20042005, as
    
    
    Stock-based
    
    
    2005 adjusted for
    
    
    2004, as
    
    
    Stock-based
    
    
    2004 adjusted forreported
    
    
    Compensation
    
    
    MD&A analysis
    
    
    reported
    
    
    Compensation
    
    
    MD&A analysis(in thousands)Cost of revenue
    
    $
    31,658
    
    
    $
    
    
    
    $
    31,658
    
    
    $
    34,031
    
    
    $
    (2
    )
    
    $
    34,029Sales and marketing
    
    
    20,145
    
    
    
    (66
    )
    
    
    20,079
    
    
    
    24,076
    
    
    
    (32
    )
    
    
    24,044Research and development
    
    
    10,386
    
    
    
    (199
    )
    
    
    10,187
    
    
    
    10,617
    
    
    
    (151
    )
    
    
    10,466General and administrative
    
    
    9,471
    
    
    
    (511
    )
    
    
    8,960
    
    
    
    10,064
    
    
    
    (2,026
    )
    
    
    8,038Stock-based compensation expense
    
    
    
    
    
    
    776
    
    
    
    776
    
    
    
    
    
    
    
    2,211
    
    
    
    2,211Total expenses
    
    $
    71,660
    
    
    $
    
    
    
    $
    71,660
    
    
    $
    78,788
    
    
    $
    
    
    
    $
    78,788
 Revenue.
 Cost of Revenue.
 Sales and Marketing
 33




---



##### Table of Contents



Research and Development.
 General and Administrative.
 Stock-Based Compensation Expense.
 34




---



##### Table of Contents



Other Income (expense), net.
 Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
  Results of Operations, year ended December 31, 2004 compared to year ended December 31, 20032004, as
    
    
    Stock-based
    
    
    2004 adjusted for
    
    
    2003, as
    
    
    Stock-based
    
    
    2003 adjusted forreported
    
    
    Compensation
    
    
    MD&A analysis
    
    
    reported
    
    
    Compensation
    
    
    MD&A analysis(in thousands)Cost of revenue
    
    $
    34,031
    
    
    $
    (2
    )
    
    $
    34,029
    
    
    $
    28,608
    
    
    $
    (102
    )
    
    $
    28,506Sales and marketing
    
    
    24,076
    
    
    
    (32
    )
    
    
    24,044
    
    
    
    19,869
    
    
    
    (182
    )
    
    
    19,687Research and development
    
    
    10,617
    
    
    
    (151
    )
    
    
    10,466
    
    
    
    8,932
    
    
    
    (643
    )
    
    
    8,289General and administrative
    
    
    10,064
    
    
    
    (2,026
    )
    
    
    8,038
    
    
    
    9,089
    
    
    
    (1,887
    )
    
    
    7,202Stock-based compensation expense
    
    
    
    
    
    
    2,211
    
    
    
    2,211
    
    
    
    
    
    
    
    2,814
    
    
    
    2,814Total expenses
    
    $
    78,788
    
    
    $
    
    
    
    $
    78,788
    
    
    $
    66,498
    
    
    $
    
    
    
    $
    66,498
 Revenue.
 35




---



##### Table of Contents



Cost of Revenue.
 Sales and Marketing
 Research and Development.
 General and Administrative.
 36




---



##### Table of Contents



Stock-Based Compensation Expense.
  Severance.
 37




---



##### Table of Contents



Other Income, net.
 Income Taxes
  38




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##### Table of Contents



Quarterly Results of Operations
  Three Months EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,
    
    
    March 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2005
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2004
    
    
    2004
    
    
    2004(in thousands, except per share data)Revenue
    
    $
    19,065
    
    
    $
    18,693
    
    
    $
    17,981
    
    
    $
    18,779
    
    
    $
    19,582
    
    
    $
    19,328
    
    
    $
    18,408
    
    
    $
    17,951Cost of revenue
    
    
    7,772
    
    
    
    7,947
    
    
    
    7,542
    
    
    
    8,397
    
    
    
    8,558
    
    
    
    9,046
    
    
    
    8,431
    
    
    
    7,998Gross profit
    
    
    11,293
    
    
    
    10,746
    
    
    
    10,439
    
    
    
    10,382
    
    
    
    11,024
    
    
    
    10,282
    
    
    
    9,977
    
    
    
    9,953Operating expenses:Sales and marketing
    
    
    5,370
    
    
    
    5,104
    
    
    
    4,590
    
    
    
    5,080
    
    
    
    6,511
    
    
    
    6,297
    
    
    
    6,012
    
    
    
    5,256Research and development
    
    
    2,919
    
    
    
    2,792
    
    
    
    2,437
    
    
    
    2,239
    
    
    
    2,776
    
    
    
    2,446
    
    
    
    2,664
    
    
    
    2,731General and administrative
    
    
    2,442
    
    
    
    2,152
    
    
    
    1,855
    
    
    
    3,022
    
    
    
    2,459
    
    
    
    3,426
    
    
    
    1,780
    
    
    
    2,398Total operating expenses
    
    
    10,731
    
    
    
    10,048
    
    
    
    8,882
    
    
    
    10,341
    
    
    
    11,746
    
    
    
    12,169
    
    
    
    10,456
    
    
    
    10,385Income (loss) from operations
    
    
    562
    
    
    
    698
    
    
    
    1,557
    
    
    
    41
    
    
    
    (722
    )
    
    
    (1,887
    )
    
    
    (479
    )
    
    
    (432
    )Other income, net
    
    
    198
    
    
    
    312
    
    
    
    362
    
    
    
    392
    
    
    
    17
    
    
    
    13
    
    
    
    87
    
    
    
    78Income (loss) before provision for
income taxes
    
    
    760
    
    
    
    1,010
    
    
    
    1,919
    
    
    
    433
    
    
    
    (705
    )
    
    
    (1,874
    )
    
    
    (392
    )
    
    
    (354
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    760
    
    
    $
    1,010
    
    
    $
    1,819
    
    
    $
    433
    
    
    $
    (705
    )
    
    $
    (1,874
    )
    
    $
    (392
    )
    
    $
    (354
    )Net income (loss) per shareBasic
    
    $
    0.01
    
    
    $
    0.02
    
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    (0.03
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )Diluted
    
    $
    0.01
    
    
    $
    0.02
    
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    (0.03
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )Weighted average number of common
shares outstandingBasic
    
    
    54,581
    
    
    
    54,959
    
    
    
    55,268
    
    
    
    55,361
    
    
    
    53,548
    
    
    
    53,859
    
    
    
    54,079
    
    
    
    54,255Diluted
    
    
    56,287
    
    
    
    56,410
    
    
    
    56,843
    
    
    
    56,574
    
    
    
    53,548
    
    
    
    53,859
    
    
    
    54,079
    
    
    
    54,255
  Liquidity and Capital Resources
    39




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##### Table of Contents



40




---



##### Table of Contents



Payments Due by PeriodLess than 1Total
    
    
    year
    
    
    2-3 years
    
    
    4-5 years
    
    
    Over 5 yearsOperating leases
    
    $
    3,527
    
    
    $
    1,170
    
    
    $
    1,744
    
    
    $
    613
    
    
    $
    Purchase obligations
    
    
    1,355
    
    
    
    1,351
    
    
    
    4
    
    
    
    
    
    
    
    Total contractual obligations and commitments
    
    $
    4,882
    
    
    $
    2,521
    
    
    $
    1,748
    
    
    $
    613
    
    
    $
    
   Critical Accounting Policies and Estimates
  41




---



##### Table of Contents



Accounts Receivable
  Long-Lived Assets and Their Recoverability
 Accounting for the Impairment or Disposal of
Long-Lived Assets.
 Goodwill
  42




---



##### Table of Contents



Income Tax Valuation Allowances
  Stock-based compensation
  Accounting for Stock Issued to
Employees Accounting for Stock-Based Compensation
 Share-Based Payment Accounting for Stock Based Compensation
 43




---



##### Table of Contents



Loss contingencies
 Accounting for Contingencies
 
    
    Probable  accrued as a charge to income as of the date of the financial statements
    
    Reasonably possible  disclosed by note to the financial statements
    
    Remote  neither accrued nor disclosed
  
    
    It is probable that as of the date of the financial statements an asset has been
impaired or a liability incurred, based on information available before the actual issuance
date of the financial statements. It is implicit in this condition that it must be probable
that one or more future events will occur to confirm the loss.
    
    The amount of the loss can be reasonably estimated. If only a range of possible loss can
be established, then the minimum amount in the range should be accrued, unless some other
amount in the range appears to be a better estimate. The range of possible loss must also
be disclosed.
  Recent Accounting Pronouncements
 Share-Based Payment. Accounting for
Stock-Based Compensation Accounting for Stock Issued to
Employees, Statement of Cash Flows.
     44




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##### Table of Contents



Accounting
Changes and Error Corrections. Accounting
Changes, Reporting Accounting Changes in Interim Financial Statements,
 45




---



##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures
   Changes in Internal Controls
  Managements Report on Internal Control Over Financial Reporting
  46




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##### Table of Contents



Internal Control  Integrated Framework Internal Control  Integrated Framework
  
 ITEM 9B. OTHER INFORMATION
  47




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
   
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  48




---



##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
      Exhibit No.
    
    Description2.1(1)
    
    Agreement and Plan of Reorganization by and among Registrant, Contigo Software, Inc. and CSI
Acquisition Corporation dated as of March 24, 2000.2.2(1)
    
    Amendment to Agreement and Plan of Reorganization by and among Registrant, Contigo Software, Inc.
and CSI Acquisition Corporation dated as of April 7, 2000.2.3(3)
    
    Asset Purchase Agreement by and among Registrant, InterAct Conferencing, LLC and Carolyn
Bradfield dated as of April 17, 2002.2.4(9)
    
    Agreement and Plan of Merger among Raindance Communications, Inc., Rockies Acquisition
Corporation and West Corporation, dated as of February 6, 2006.3.1(1)
    
    Restated Certificate of Incorporation.3.2(1)
    
    Amended and Restated Bylaws.3.3(2)
    
    Certificate of Ownership, as filed May 15, 2001, merging EC Merger, Inc. into Evoke
Communications, Inc. under the name Raindance Communications, Inc.4.1
    
    Reference is made to Exhibits 3.1 and 3.2.4.2(2)
    
    Raindance Communications, Inc. specimen stock certificate representing shares of common stock.10.1(1)
    
    2000 Equity Incentive Plan.10.1.1(10)
    
    Form of Stock Bonus Agreement, pursuant to the 2000 Equity Incentive Plan10.1.2(10)
    
    Form of Stock Option Agreement, pursuant to the 2000 Equity Incentive Plan10.1.3(10)
    
    Form of Sock Purchase Agreement, pursuant to the 2000 Equity Incentive Plan10.2(1)
    
    2000 Employee Stock Purchase Plan.10.3(1)
    
    Amended and Restated Stockholders Agreement, among the Registrant, certain of its stockholders
and certain of its management, dated March 29, 2000.10.6(1)
    
    Form of Indemnity Agreement entered into between Registrant and each of its directors and
executive officers.10.12(1)
    
    Lease, dated March 3, 1997, between BMC Properties, LLC and Registrant.10.13(1)
    
    Lease, dated June 6, 1999, between BLC Properties, LLC and Registrant.10.14(1)+
    
    Source Code and Object Code License Agreement, dated December 29, 1999, between Registrant and
AudioTalk Networks, Inc.10.16(1)
    
    Personal Services Agreement, dated November 17, 1999, between Registrant and Paul Berberian.10.16.1(4)
    
    Amendment to Personal Services Agreement, dated June 26, 2002, between the Company and Paul
Berberian.10.17(5)
    
    Separation and Release Agreement, dated October 14, 2003, between Registrant and Paul Berberian.10.18(7)
    
    Offer Letter, dated January 27, 2004, between Registrant and Donald F. Detampel, Jr.10.18.1(8)
    
    Amendment to Offer Letter, dated August 20, 2004, between Registrant and Donald F. Detampel, Jr.10.18.2(11)
    
    Amendment, dated January 23, 2006, to Offer Letter dated January 27, 2004 between Raindance
Communications, Inc. and Donald F. Detampel, Jr.10.26(6)
    
    Executive Performance-Based Compensation Arrangement10.27(10)
    
    Form of 280G Letter Agreement10.28*
    
    Offer Letter, dated January 3, 2006, between Registrant and Peter Holst.23.1*
    
    Consent of KPMG LLP.
 49




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##### Table of Contents



Exhibit No.
    
    Description24.1*
    
    Powers of attorney (included on signature page).31.1*
    
    Certification pursuant to 18 U.S.C. Section 1350 by the Chief Executive Officer, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed with the Securities and Exchange
Commission as Exhibit 31.1 to the companys Annual Report on Form 10-K for the year ended
December 31, 2005.31.2*
    
    Certification pursuant to 18 U.S.C. Section 1350 by the Chief Financial Officer, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed with the Securities and Exchange
Commission as Exhibit 31.2 to the companys Annual Report on Form 10-K for the year ended
December 31, 2005.32.1*
    
    Certifications pursuant to 18 U.S.C. Section 1350 by the Chief Executive Officer and Chief
Financial Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
with the Securities and Exchange Commission as Exhibit 32.1 to the companys Annual Report on
Form 10-K for the year ended December 31, 2005.
 
 +
    
    Confidential treatment granted with respect to portions of these exhibits.*
    
    Filed herewith.(1)
    
    Incorporated by reference to the Registrants Registration Statement on Form S-1 No.
333-30708.(2)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q (File No.
000-31045) as filed on August 14, 2001.(3)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q (File No.
000-31045) as filed on May 15, 2002.(4)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q (File No.
000-31045) as filed on August 14, 2002.(5)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q (File No.
000-31045) as filed on November 14, 2003.(6)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K (File No. 000-31045)
as filed on March 26, 2003.(7)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K (File No. 000-31045)
as filed on March 12, 2004.(8)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q (File No.
000-31045) as filed on November 9, 2004.(9)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K (File No. 000-31045)
as filed on February 7, 2006.(10)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K (File No. 000-31045)
as filed on January 28, 2005.(11)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K (File No. 000-31045)
as filed on January 25, 2006. 50




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##### Table of Contents



SIGNATURES
 th
 Raindance Communications, Inc.By:
    
    /s/ Nicholas J. CuccaroNicholas J. CuccaroChief Financial Officer
 POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/s/ Donald F. Detampel, Jr.
    
    Chief Executive Officer (Principal
    
    March 10, 2006Donald F. Detampel, Jr.
    
    Executive Officer) and Director/s/ Nicholas J. Cuccaro
    
    Chief Financial Officer (Principal
    
    March 10, 2006Nicholas J. Cuccaro
    
    Financial and Accounting
Officer)/s/ Kathleen j. Cunningham
    
    Chairman of the Board of Directors
    
    March 10, 2006Kathleen J. Cunningham/s/ Cary l. Deacon
    
    Director
    
    March 10, 2006Cary L. Deacon/s/ William J. Elsner
    
    Director
    
    March 10, 2006William J. Elsner/s/ Patrick J. Lombardi
    
    Director
    
    March 10, 2006Patrick J. Lombardi
 51




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##### Table of Contents



INDEX TO FINANCIAL STATEMENTS
 Raindance Communications, Inc.
 PageReports of Independent Registered Public Accounting Firm
    
    F-2Balance Sheets as of December 31, 2005 and 2004
    
    F-4Statements of Operations for each of the years in the three-year period ended December 31, 2005
    
    F-5Statements of Stockholders Equity and Comprehensive Income (Loss) for each of the years in
the three-year period ended December 31, 2005
    
    F-6Statements of Cash Flows for each of the years in the three-year period ended December 31, 2005
    
    F-7Notes to Financial Statements
    
    F-8
 F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     KPMG LLP
 
 F-2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       KPMG LLP
 
 F-3




---



##### Table of Contents



RAINDANCE COMMUNICATIONS, INC.
 
 BALANCE SHEETS
 (In thousands, except share and per share data)
 December 31,2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    11,115
    
    
    $
    10,458Short-term investments
    
    
    32,981
    
    
    
    32,935Accounts receivable, net of allowance for doubtful accounts of $220 and $310 in 2005 and 2004,
respectively
    
    
    10,573
    
    
    
    9,922Prepaid expenses and other current assets
    
    
    1,194
    
    
    
    1,593Due from employees
    
    
    6
    
    
    
    12Total current assets
    
    
    55,869
    
    
    
    54,920Property and equipment, net
    
    
    15,641
    
    
    
    17,807Goodwill
    
    
    48,325
    
    
    
    45,587Intangible assets, net
    
    
    1,912
    
    
    
    Other assets
    
    
    295
    
    
    
    411Total Assets
    
    $
    122,042
    
    
    $
    118,725Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    7,864
    
    
    $
    7,447Accrued expenses
    
    
    223
    
    
    
    510Accrued compensation
    
    
    1,441
    
    
    
    1,506Accrued property tax
    
    
    207
    
    
    
    258Accrued severance obligation
    
    
    
    
    
    
    345Restructuring reserve
    
    
    
    
    
    
    188Current portion of deferred revenue
    
    
    304
    
    
    
    420Total current liabilities
    
    
    10,039
    
    
    
    10,674Deferred revenue
    
    
    
    
    
    
    45Total Liabilities
    
    
    10,039
    
    
    
    10,719Stockholders Equity:Common stock, par value $.0015, 130,000,000 shares authorized; issued and
outstanding 55,555,267 and 54,936,434 shares as of December 31, 2005 and 2004, respectively
    
    
    83
    
    
    
    82Additional paid-in capital
    
    
    280,571
    
    
    
    280,561Deferred stock-based compensation
    
    
    (996
    )
    
    
    (960
    )Accumulated deficit
    
    
    (167,655
    )
    
    
    (171,677
    )Total Stockholders Equity
    
    
    112,003
    
    
    
    108,006Commitments and contingencies (note 7)Total Liabilities and Stockholders Equity
    
    $
    122,042
    
    
    $
    118,725
  F-4




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##### Table of Contents



RAINDANCE COMMUNICATIONS, INC.
 
 STATEMENTS OF OPERATIONS

(In thousands, except per share data)
 Years ended December 31,2005
    
    
    2004
    
    
    2003Revenue:Service
    
    $
    74,518
    
    
    $
    75,269
    
    
    $
    66,611Software
    
    
    
    
    
    
    
    
    
    
    4,000Total revenue
    
    
    74,518
    
    
    
    75,269
    
    
    
    70,611Cost of revenue:Service
    
    
    31,658
    
    
    
    34,031
    
    
    
    28,608Software
    
    
    
    
    
    
    
    
    
    
    Total cost of revenue (inclusive of stock-based compensation expense of $,
$2 and $102 for the years ended December 31, 2005, 2004 and 2003)
    
    
    31,658
    
    
    
    34,031
    
    
    
    28,608Gross profit
    
    
    42,860
    
    
    
    41,238
    
    
    
    42,003Operating expenses:Sales and marketing (inclusive of stock-based compensation expense of
$66, $32 and $182 for the years ended December 31, 2005, 2004 and
2003)
    
    
    20,145
    
    
    
    24,076
    
    
    
    19,869Research and development (inclusive of stock-based compensation
expense of $199, $151 and $643 for the years ended December 31,
2005, 2004 and 2003)
    
    
    10,386
    
    
    
    10,617
    
    
    
    8,932General and administrative (inclusive of stock-based compensation
expense of $511, $2,026 and $1,887 for the years ended December 31,
2005, 2004 and 2003)
    
    
    9,471
    
    
    
    10,064
    
    
    
    9,089Severance charges
    
    
    
    
    
    
    
    
    
    
    596Total operating expenses
    
    
    40,002
    
    
    
    44,757
    
    
    
    38,486Income (loss) from operations
    
    
    2,858
    
    
    
    (3,519
    )
    
    
    3,517Other income (expense):Interest income
    
    
    1,297
    
    
    
    394
    
    
    
    250Interest expense
    
    
    
    
    
    
    (64
    )
    
    
    (149
    )Other, net
    
    
    (33
    )
    
    
    (136
    )
    
    
    (71
    )Total other income, net
    
    
    1,264
    
    
    
    194
    
    
    
    30Income (loss) before provision for income taxes
    
    
    4,122
    
    
    
    (3,325
    )
    
    
    3,547Provision for income taxes
    
    
    100
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    4,022
    
    
    $
    (3,325
    )
    
    $
    3,547Net income (loss) per share:Basic
    
    $
    0.07
    
    
    $
    (0.06
    )
    
    $
    0.07Diluted
    
    $
    0.07
    
    
    $
    (0.06
    )
    
    $
    0.06Weighted average number of common shares outstanding:Basic
    
    
    55,026
    
    
    
    53,937
    
    
    
    52,672Diluted
    
    
    56,640
    
    
    
    53,937
    
    
    
    54,774
  F-5




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##### Table of Contents



RAINDANCE COMMUNICATIONS, INC.
 
 STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS)
 (In thousands, except share data)
 AccumulatedAdditional
    
    
    Deferred
    
    
    otherCommon Stock
    
    
    paid-in
    
    
    stock-based
    
    
    comprehensive
    
    
    Accumulated
    
    
    
    
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    compensation
    
    
    Income (loss)
    
    
    Deficit
    
    
    Total
    
    
    Income (loss)Balances at January 1, 2003
    
    
    51,895,813
    
    
    $
    78
    
    
    $
    276,211
    
    
    $
    (4,067
    )
    
    $
    
    
    
    $
    (171,899
    )
    
    $
    100,323Issuance of common stock under
compensation arrangements
    
    
    1,262,788
    
    
    
    2
    
    
    
    1,236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,238Common stock options issued for services
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30Cancellation of common stock options
    
    
    
    
    
    
    
    
    
    
    (83
    )
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    Exercise of common stock warrant
    
    
    28,176
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock issued at less than fair value to
officers, net of forfeiture
    
    
    550,000
    
    
    
    1
    
    
    
    896
    
    
    
    (897
    )
    
    
    
    
    
    
    
    
    
    
    Common stock issued at less than fair value to
directors for services rendered
    
    
    47,650
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150Amortization of deferred stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,634
    
    
    
    
    
    
    
    
    
    
    
    2,634Net income and comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,547
    
    
    
    3,547
    
    
    $
    3,547Balances at December 31, 2003
    
    
    53,784,427
    
    
    
    81
    
    
    
    278,440
    
    
    
    (2,247
    )
    
    
    
    
    
    
    (168,352
    )
    
    
    107,922Issuance of common stock under
compensation arrangements
    
    
    876,007
    
    
    
    1
    
    
    
    1,197
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,198Common stock options issued for services
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14Common stock issued at less than fair value to
directors for services rendered
    
    
    1,000
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Common stock issued at greater than fair value
to officers for services
    
    
    275,000
    
    
    
    
    
    
    
    907
    
    
    
    (907
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of deferred stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,194
    
    
    
    
    
    
    
    
    
    
    
    2,194Net loss and comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,325
    )
    
    
    (3,325
    )
    
    $
    (3,325
    )Balances at December 31, 2004
    
    
    54,936,434
    
    
    
    82
    
    
    
    280,561
    
    
    
    (960
    )
    
    
    
    
    
    
    (171,677
    )
    
    
    108,006Issuance of common stock under
compensation arrangements
    
    
    1,719,467
    
    
    
    2
    
    
    
    2,087
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,089Common stock options issued for services
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87Cancellation of restricted common stock
    
    
    (39,034
    )
    
    
    
    
    
    
    (88
    )
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    (30
    )Common stock issued at fair value to officers
and employees for services rendered
    
    
    348,000
    
    
    
    1
    
    
    
    782
    
    
    
    (783
    )
    
    
    
    
    
    
    
    
    
    
    Purchase and retirement of common stock
    
    
    (1,409,600
    )
    
    
    (2
    )
    
    
    (2,858
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,860
    )Amortization of deferred stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    689
    
    
    
    
    
    
    
    
    
    
    
    689Net income and comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,022
    
    
    
    4,022
    
    
    $
    4,022Balances at December 31, 2005
    
    
    55,555,267
    
    
    $
    83
    
    
    $
    280,571
    
    
    $
    (996
    )
    
    $
    
    
    
    $
    (167,655
    )
    
    $
    112,003
  F-6




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##### Table of Contents



RAINDANCE COMMUNICATIONS, INC.
 
 STATEMENTS OF CASH FLOWS
 (In thousands)
 Years Ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income (loss)
    
    $
    4,022
    
    
    $
    (3,325
    )
    
    $
    3,547Adjustments to reconcile net income (loss) to net cash provided by operating
activities:Depreciation and amortization
    
    
    8,687
    
    
    
    11,195
    
    
    
    10,330Stock-based compensation
    
    
    776
    
    
    
    2,211
    
    
    
    2,814Other
    
    
    53
    
    
    
    139
    
    
    
    74Changes in operating assets and liabilities, excluding effect of business acquisition:Accounts receivable
    
    
    491
    
    
    
    (964
    )
    
    
    24Prepaid expenses and other current assets
    
    
    431
    
    
    
    (914
    )
    
    
    (1,025
    )Other assets
    
    
    (71
    )
    
    
    57
    
    
    
    (94
    )Accounts payable and accrued expenses
    
    
    (1,256
    )
    
    
    (1,340
    )
    
    
    2,791Deferred revenue
    
    
    (161
    )
    
    
    353
    
    
    
    (311
    )Net cash provided by operating activities
    
    
    12,972
    
    
    
    7,412
    
    
    
    18,150Cash flows from investing activities:Purchase of property and equipment
    
    
    (5,580
    )
    
    
    (2,614
    )
    
    
    (10,514
    )Proceeds from the disposition of property and equipment
    
    
    43
    
    
    
    18
    
    
    
    41Purchase of investments
    
    
    (56,542
    )
    
    
    (42,172
    )
    
    
    Proceeds from the maturities of investments
    
    
    56,496
    
    
    
    9,237
    
    
    
    Cash received from affiliate
    
    
    
    
    
    
    77
    
    
    
    Cash paid for acquisition of BCE Conferencing
    
    
    (5,930
    )
    
    
    
    
    
    
    Change in restricted cash
    
    
    
    
    
    
    236
    
    
    
    194Net cash used by investing activities
    
    
    (11,513
    )
    
    
    (35,218
    )
    
    
    (10,279
    )Cash flows from financing activities:Net proceeds from issuance of common stock
    
    
    2,058
    
    
    
    1,198
    
    
    
    1,237Purchase of treasury stock
    
    
    (2,860
    )
    
    
    
    
    
    
    Payments on debt
    
    
    
    
    
    
    (2,541
    )
    
    
    (1,200
    )Net cash provided (used) by financing activities
    
    
    (802
    )
    
    
    (1,343
    )
    
    
    37Increase (decrease) in cash and cash equivalents
    
    
    657
    
    
    
    (29,149
    )
    
    
    7,908Cash and cash equivalents at beginning of year
    
    
    10,458
    
    
    
    39,607
    
    
    
    31,699Cash and cash equivalents at end of year
    
    $
    11,115
    
    
    $
    10,458
    
    
    $
    39,607Supplemental cash flow information -Interest paid in cash
    
    $
    
    
    
    $
    71
    
    
    $
    158Supplemental non-cash investing and financing activities:Accounts payable incurred for purchases of property and equipment
    
    $
    730
    
    
    $
    60
    
    
    $
    323Deferred rent credit recorded for leasehold improvement
    
    $
    18
    
    
    $
    
    
    
    $
    Debt incurred for purchases of property and equipment
    
    $
    
    
    
    $
    
    
    
    $
    686
  F-7




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##### Table of Contents



RAINDANCE COMMUNICATIONS, INC.
 
 NOTES TO FINANCIAL STATEMENTS
 For the Years Ended December 31, 2005, 2004 and 2003
 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 (a) Business and Basis of Financial Statement Presentation
    (b) Reclassifications
  (c) Cash, Cash Equivalents and Investments in Debt Securities
  F-8




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##### Table of Contents



December 31,2005
    
    
    2004Amortized cost of held-to-maturity debt
securities (in thousands):United States Treasury note
    
    $
    
    
    
    $
    5,020Federal agency notes
    
    
    19,140
    
    
    
    16,911Commercial paper
    
    
    12,808
    
    
    
    9,977Certificate of deposit
    
    
    1,033
    
    
    
    1,027Total held-to-maturity debt securities
    
    $
    32,981
    
    
    $
    32,935
  (d) Restricted Cash
  (e) Accounts Receivable and Allowance for Doubtful Accounts
  (f) Property and Equipment
  (g) Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets
 F-9




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##### Table of Contents



Total2006
    
    $
    5522007
    
    
    4892008
    
    
    3692009
    
    
    3252010
    
    
    220Total future amortization expense
    
    $
    1,955
 (h) Income Taxes
 Accounting for Income Taxes
 (i) Fair Value of Financial Instruments and Concentrations of Credit Risk
  F-10




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##### Table of Contents



(j) Revenue Recognition
      (k) Software Development Costs and Research and Development
 Accounting
for the Cost of Computer Software to Be Sold, Leased, or Otherwise Marketed
 Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use
 F-11




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##### Table of Contents



(l) Long-Lived Assets
 Accounting for the Impairment or
Disposal of Long-Lived Assets.
 (m) Advertising Costs
  (n) Stock-Based Compensation
 Accounting for
Stock Issued to Employees Accounting
for Stock-Based Compensation,
  F-12




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##### Table of Contents



Years ended December 31,2005
    
    
    2004
    
    
    2003Net income (loss), as reported
    
    $
    4,022
    
    
    $
    (3,325
    )
    
    $
    3,547Add: Stock-based employee compensation expense
attributable to common stock options included in net income (loss)
    
    
    
    
    
    
    70
    
    
    
    1,304Deduct: Stock-based employee compensation expense attributable
to common stock options determined under fair value based method
    
    
    (8,649
    )
    
    
    (5,798
    )
    
    
    (7,388
    )Deduct: Stock-based employee compensation expense attributable
to employee stock purchase plan determined under fair value
based method
    
    
    (861
    )
    
    
    (580
    )
    
    
    (498
    )Net income (loss), as adjusted
    
    $
    (5,488
    )
    
    $
    (9,633
    )
    
    $
    (3,035
    )Income (loss) per share  basic, as reported
    
    $
    0.07
    
    
    $
    (0.06
    )
    
    $
    0.07Income (loss) per share  diluted, as reported
    
    $
    0.07
    
    
    $
    (0.06
    )
    
    $
    0.06Income (loss) per share  basic, as adjusted
    
    $
    (0.10
    )
    
    $
    (0.18
    )
    
    $
    (0.06
    )Income (loss) per share  diluted, as adjusted
    
    $
    (0.10
    )
    
    $
    (0.18
    )
    
    $
    (0.06
    )
  Years ended December 31,2005
    
    2004
    
    2003Expected life (years)
    
    
    3
    
    
    
    5
    
    
    
    5Risk-free interest rate
    
    
    4.33
    %
    
    
    3.63
    %
    
    
    3.25
    %Expected volatility
    
    
    173
    %
    
    
    191
    %
    
    
    123
    %Expected dividend yield
    
    None
    
    None
    
    None
  Share-Based Payment. Accounting for
Stock-Based Compensation Accounting for Stock Issued to
Employees, Statement of Cash Flows.
 F-13




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##### Table of Contents



(o) Comprehensive Income (Loss)
 Reporting Comprehensive Income
 (p) Net Income (Loss) Per Share
 Earnings Per Share
  Years ended December 31,2005
    
    
    2004
    
    
    2003Net income (loss)
    
    $
    4,022
    
    
    $
    (3,325
    )
    
    $
    3,547Common shares outstanding:Historical common shares outstanding at beginning of year
    
    
    54,261
    
    
    
    53,234
    
    
    
    51,896Weighted average common shares issued during year
    
    
    765
    
    
    
    703
    
    
    
    776Weighted average common shares at end of year  basic
    
    
    55,026
    
    
    
    53,937
    
    
    
    52,672Effect of potential common shares
    
    
    1,614
    
    
    
    
    
    
    
    2,102Weighted average common shares at end of year  diluted
    
    
    56,640
    
    
    
    53,937
    
    
    
    54,774Net income (loss) per share  basic
    
    $
    0.07
    
    
    $
    (0.06
    )
    
    $
    0.07Net income (loss) per share  diluted
    
    $
    0.07
    
    
    $
    (0.06
    )
    
    $
    0.06
   As of December 31,2005
    
    
    2004
    
    
    2003Shares issuable under stock options
    
    
    7,875,533
    
    
    
    8,096,391
    
    
    
    5,328,351Shares issuable pursuant to warrants
    
    
    
    
    
    
    10,000
    
    
    
    20,017
 (2) ACQUISITION OF A BUSINESS
  F-14




---



##### Table of Contents



Accounts receivable
    
    $
    1,151Goodwill
    
    
    2,739Non-compete agreements
    
    
    204Customer relationships
    
    
    1,836Total purchase consideration paid in cash
    
    $
    5,930
  (unaudited)Years ended December 31,2005
    
    
    2004Revenue
    
    $
    77,492
    
    
    $
    80,226Net income (loss)
    
    $
    4,334
    
    
    $
    (3,242
    )Basic loss per share
    
    $
    0.08
    
    
    $
    (0.06
    )Diluted loss per share
    
    $
    0.08
    
    
    $
    (0.06
    )
  (3) PROPERTY AND EQUIPMENT
  December 31,2005
    
    
    2004Computers and office equipment
    
    $
    43,316
    
    
    $
    40,571Software purchased or developed for internal use
    
    
    16,378
    
    
    
    15,119Furniture and fixtures
    
    
    1,941
    
    
    
    2,074Leasehold improvements
    
    
    2,327
    
    
    
    2,34963,962
    
    
    
    60,113Less accumulated depreciation and amortization
    
    
    (48,321
    )
    
    
    (42,306
    )$
    15,641
    
    
    $
    17,807
  F-15




---



##### Table of Contents



(4) DEBT AND LINE OF CREDIT
    (5) INCOME TAXES
  Years ended December 31,2005
    
    
    2004
    
    
    2003Expected tax expense (benefit)
    
    $
    1,443
    
    
    $
    (1,131
    )
    
    $
    1,206State income taxes, net of federal impact
    
    
    144
    
    
    
    (195
    )
    
    
    112Change in valuation allowance for deferred tax assets
    
    
    (1,803
    )
    
    
    2,143
    
    
    
    (1,235
    )Stock compensation/exercise stock option benefit
    
    
    167
    
    
    
    (214
    )
    
    
    199Goodwill amortization
    
    
    
    
    
    
    
    
    
    
    (212
    )Other, net
    
    
    149
    
    
    
    (603
    )
    
    
    (70
    )Income tax expense (benefit)
    
    $
    100
    
    
    $
    
    
    
    $
    
 F-16




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##### Table of Contents



December 31,2005
    
    
    2004Net operating loss carryforwards
    
    $
    44,809
    
    
    $
    46,950Property and equipment and intangible assets
    
    
    (1,828
    )
    
    
    (2,840
    )Stock-based compensation
    
    
    3,437
    
    
    
    3,325Accrued expenses and other
    
    
    1,709
    
    
    
    1,701Net deferred tax asset
    
    
    48,127
    
    
    
    49,136Valuation allowance
    
    
    (48,127
    )
    
    
    (49,136
    )Net deferred tax asset, less valuation
allowance
    
    $
    
    
    
    $
    
   (6) COMMON STOCK PLANS AND WARRANTS
 (a) Stock Options and Restricted Stock
   F-17




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##### Table of Contents



Number of
    
    
    Weighted-averageShares
    
    
    exercise priceBalance at January 1, 2003
    
    
    8,229,267
    
    
    $
    3.39Granted at fair value
    
    
    2,143,450
    
    
    $
    2.33Exercised
    
    
    (292,929
    )
    
    $
    1.47Cancelled
    
    
    (1,013,901
    )
    
    $
    4.42Balance at December 31, 2003
    
    
    9,065,887
    
    
    $
    3.09Granted at fair value
    
    
    1,376,545
    
    
    $
    2.22Granted at greater than fair value
    
    
    2,000,000
    
    
    $
    3.28Exercised
    
    
    (283,816
    )
    
    $
    1.00Cancelled
    
    
    (774,862
    )
    
    $
    3.25Balance at December 31, 2004
    
    
    11,383,754
    
    
    $
    3.06Granted at fair value
    
    
    195,000
    
    
    $
    2.25Exercised
    
    
    (421,070
    )
    
    $
    1.39Cancelled
    
    
    (730,879
    )
    
    $
    3.39Balance at December 31, 2005
    
    
    10,426,805
    
    
    $
    3.08
 F-18




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##### Table of Contents



Options outstanding
    
    
    Options exercisableWeightedaverageremaining
    
    
    Weighted
    
    
    Number
    
    
    WeightedRange of
    
    Number
    
    
    contractual
    
    
    average
    
    
    of
    
    
    averageexercise prices
    
    outstanding
    
    
    life
    
    
    exercise price
    
    
    Options
    
    
    exercise price$0.15  $1.67
    
    
    1,784,842
    
    
    
    5.2
    
    
    $
    1.20
    
    
    
    1,721,607
    
    
    $
    1.19$1.71  $2.56
    
    
    2,499,098
    
    
    
    6.9
    
    
    $
    2.20
    
    
    
    2,184,278
    
    
    $
    2.26$2.57  $3.17
    
    
    1,701,616
    
    
    
    7.1
    
    
    $
    2.73
    
    
    
    1,646,615
    
    
    $
    2.73$3.28  $3.28
    
    
    2,000,000
    
    
    
    8.1
    
    
    $
    3.28
    
    
    
    2,000,000
    
    
    $
    3.28$3.30  $5.63
    
    
    1,779,079
    
    
    
    5.8
    
    
    $
    4.06
    
    
    
    1,779,079
    
    
    $
    4.06$6.02  $10.80
    
    
    662,170
    
    
    
    4.6
    
    
    $
    9.20
    
    
    
    662,170
    
    
    $
    9.2010,426,805
    
    
    
    6.5
    
    
    $
    3.08
    
    
    
    9,993,749
    
    
    $
    3.14
   Share-Based Payment
  F-19




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##### Table of Contents



Number of
    
    
    Weighted-averageShares
    
    
    exercise priceBalance at January 1, 2003
    
    
    179,797
    
    
    $
    3.21Exercised
    
    
    (9,963
    )
    
    $
    0.45Balance at December 31, 2003
    
    
    169,834
    
    
    $
    3.37Exercised
    
    
    (7,814
    )
    
    $
    0.45Balance at December 31, 2004
    
    
    162,020
    
    
    $
    3.51Exercised
    
    
    (20,000
    )
    
    $
    0.72Balance at December 31, 2005
    
    
    142,020
    
    
    $
    3.91
  Options outstanding
    
    
    Options exercisableWeightedaverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRange of
    
    Number
    
    
    remaining
    
    
    average
    
    
    Number of
    
    
    averageexercise prices
    
    outstanding
    
    
    contractual life
    
    
    exercise price
    
    
    Options
    
    
    exercise price$1.70  $2.72
    
    
    21,706
    
    
    
    3.1
    
    
    $
    1.85
    
    
    
    21,706
    
    
    $
    1.85$3.92
    
    
    100,563
    
    
    
    4.1
    
    
    $
    3.92
    
    
    
    100,563
    
    
    $
    3.92$6.08
    
    
    19,751
    
    
    
    4.2
    
    
    $
    6.08
    
    
    
    19,751
    
    
    $
    6.08142,020
    
    
    
    3.9
    
    
    $
    3.91
    
    
    
    142,020
    
    
    $
    3.91
 (b) Employee Stock Purchase Plan
   F-20




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##### Table of Contents



c) Stock Purchase Warrants
  (d) Stock Repurchase Program
  (7) COMMITMENTS AND CONTINGENCIES
 (a) Operating Leases
  Portionattributableto relatedTotal
    
    
    parties2006
    
    $
    1,170
    
    
    $
    8992007
    
    
    912
    
    
    
    8232008
    
    
    832
    
    
    
    7962009
    
    
    613
    
    
    
    613Total future minimum lease
payments
    
    $
    3,527
    
    
    $
    3,131
  (b) Purchase Commitments
  F-21




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##### Table of Contents



(c) Employment Contracts
    (d) Severance Commitments
    (e) Legal and Tax Contingencies
   F-22




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##### Table of Contents



(8) EMPLOYEE BENEFIT PLAN
  F-23




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##### Table of Contents



(9) RESTRUCTURING RESERVES
  RestructuringReserve Balance
    
    
    Reserve
    
    
    
    
    
    
    Reserve BalanceJanuary 1, 2003
    
    
    Adjustments
    
    
    Payments
    
    
    December 31, 2003Lease
obligations, net of
estimated sublease
income
    
    $
    1,025
    
    
    
    
    
    
    
    (560
    )
    
    $
    465
 RestructuringReserve Balance
    
    
    Reserve
    
    
    
    
    
    
    Reserve BalanceJanuary 1, 2004
    
    
    Adjustments
    
    
    Payments
    
    
    December 31, 2004Lease
obligations, net of
estimated sublease
income
    
    $
    465
    
    
    
    
    
    
    
    (277
    )
    
    $
    188
 RestructuringReserve Balance
    
    
    Reserve
    
    
    
    
    
    
    Reserve BalanceJanuary 1, 2005
    
    
    Adjustments
    
    
    Payments
    
    
    December 31, 2005Lease
obligations, net of
estimated sublease
income
    
    $
    188
    
    
    
    
    
    
    
    (188
    )
    
    $
    
  (10) RELATED PARTY TRANSACTIONS
   (11) SIGNIFICANT CUSTOMERS AND SUPPLIERS
   F-24




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##### Table of Contents



(12) VALUATION AND QUALIFYING ACCOUNTS
  Balance at
    
    
    
    
    
    
    
    
    
    
    Balance atbeginning of
    
    
    
    
    
    
    
    
    
    
    end ofDescription
    
    year
    
    
    Additions
    
    
    Deductions
    
    
    yearYear ended December 31, 2005:Allowances deducted from asset accounts:Allowance for doubtful accounts
    
    $
    310
    
    
    
    373
    
    
    
    (463
    )
    
    $
    220Deferred tax asset valuation allowance
    
    $
    49,136
    
    
    
    
    
    
    
    (1,009
    )
    
    $
    48,127Year ended December 31, 2004:Allowances deducted from asset accounts:Allowance for doubtful accounts
    
    $
    300
    
    
    
    181
    
    
    
    (171
    )
    
    $
    310Deferred tax asset valuation allowance
    
    $
    46,993
    
    
    
    2,143
    
    
    
    
    
    
    $
    49,136Year ended December 31, 2003:Allowances deducted from asset accounts:Allowance for doubtful accounts
    
    $
    850
    
    
    
    371
    
    
    
    (921
    )
    
    $
    300Deferred tax asset valuation allowance
    
    $
    48,228
    
    
    
    
    
    
    
    (1,235
    )
    
    $
    46,993
 (13) SUBSEQUENT EVENTS
     F-25




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description2.1(1)
    
    Agreement and Plan of Reorganization by and among Registrant, Contigo Software, Inc. and CSI
Acquisition Corporation dated as of March 24, 2000.2.2(1)
    
    Amendment to Agreement and Plan of Reorganization by and among Registrant, Contigo Software, Inc.
and CSI Acquisition Corporation dated as of April 7, 2000.2.3(3)
    
    Asset Purchase Agreement by and among Registrant, InterAct Conferencing, LLC and Carolyn
Bradfield dated as of April 17, 2002.2.4(9)
    
    Agreement and Plan of Merger among Raindance Communications, Inc., Rockies Acquisition
Corporation and West Corporation, dated as of February 6, 2006.3.1(1)
    
    Restated Certificate of Incorporation.3.2(1)
    
    Amended and Restated Bylaws.3.3(2)
    
    Certificate of Ownership, as filed May 15, 2001, merging EC Merger, Inc. into Evoke
Communications, Inc. under the name Raindance Communications, Inc.4.1
    
    Reference is made to Exhibits 3.1 and 3.2.4.2(2)
    
    Raindance Communications, Inc. specimen stock certificate representing shares of common stock.10.1(1)
    
    2000 Equity Incentive Plan.10.1.1(10)
    
    Form of Stock Bonus Agreement, pursuant to the 2000 Equity Incentive Plan10.1.2(10)
    
    Form of Stock Option Agreement, pursuant to the 2000 Equity Incentive Plan10.1.3(10)
    
    Form of Sock Purchase Agreement, pursuant to the 2000 Equity Incentive Plan10.2(1)
    
    2000 Employee Stock Purchase Plan.10.3(1)
    
    Amended and Restated Stockholders Agreement, among the Registrant, certain of its stockholders
and certain of its management, dated March 29, 2000.10.6(1)
    
    Form of Indemnity Agreement entered into between Registrant and each of its directors and
executive officers.10.12(1)
    
    Lease, dated March 3, 1997, between BMC Properties, LLC and Registrant.10.13(1)
    
    Lease, dated June 6, 1999, between BLC Properties, LLC and Registrant.10.14(1)+
    
    Source Code and Object Code License Agreement, dated December 29, 1999, between Registrant and
AudioTalk Networks, Inc.10.16(1)
    
    Personal Services Agreement, dated November 17, 1999, between Registrant and Paul Berberian.10.16.1(4)
    
    Amendment to Personal Services Agreement, dated June 26, 2002, between the Company and Paul
Berberian.10.17(5)
    
    Separation and Release Agreement, dated October 14, 2003, between Registrant and Paul Berberian.10.18(7)
    
    Offer Letter, dated January 27, 2004, between Registrant and Donald F. Detampel, Jr.10.18.1(8)
    
    Amendment to Offer Letter, dated August 20, 2004, between Registrant and Donald F. Detampel, Jr.10.18.2(11)
    
    Amendment, dated January 23, 2006, to Offer Letter dated January 27, 2004 between Raindance
Communications, Inc. and Donald F. Detampel, Jr.10.26(6)
    
    Executive Performance-Based Compensation Arrangement10.27(10)
    
    Form of 280G Letter Agreement10.28*
    
    Offer Letter, dated January 3, 2006, between Registrant and Peter Holst.23.1*
    
    Consent of KPMG LLP.




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##### Table of Contents



Exhibit No.
    
    Description24.1*
    
    Powers of attorney (included on signature page).31.1*
    
    Certification pursuant to 18 U.S.C. Section 1350 by the Chief Executive Officer, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed with the Securities and Exchange
Commission as Exhibit 31.1 to the companys Annual Report on Form 10-K for the year ended
December 31, 2005.31.2*
    
    Certification pursuant to 18 U.S.C. Section 1350 by the Chief Financial Officer, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed with the Securities and Exchange
Commission as Exhibit 31.2 to the companys Annual Report on Form 10-K for the year ended
December 31, 2005.32.1*
    
    Certifications pursuant to 18 U.S.C. Section 1350 by the Chief Executive Officer and Chief
Financial Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
with the Securities and Exchange Commission as Exhibit 32.1 to the companys Annual Report on
Form 10-K for the year ended December 31, 2005.
 
 +
    
    Confidential treatment granted with respect to portions of these exhibits.*
    
    Filed herewith.(1)
    
    Incorporated by reference to the Registrants Registration Statement on Form S-1 No.
333-30708.(2)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q (File No.
000-31045) as filed on August 14, 2001.(3)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q (File No.
000-31045) as filed on May 15, 2002.(4)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q (File No.
000-31045) as filed on August 14, 2002.(5)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q (File No.
000-31045) as filed on November 14, 2003.(6)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K (File No. 000-31045)
as filed on March 26, 2003.(7)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K (File No. 000-31045)
as filed on March 12, 2004.(8)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q (File No.
000-31045) as filed on November 9, 2004.(9)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K (File No. 000-31045)
as filed on February 7, 2006.(10)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K (File No. 000-31045)
as filed on January 28, 2005.(11)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K (File No. 000-31045)
as filed on January 25, 2006.