##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-34197
 
 LOCAL.COM CORPORATION
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    33-0849123
(I.R.S. Employer
Identification Number)
 One Technology Drive, Building G
Irvine, CA 92618
 (949) 784-0800
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



LOCAL.COM CORPORATION
 Table of Contents
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets
As of March 31, 2010 (Unaudited) and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations
For the three months ended March 31, 2010 and 2009 (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 2010 and 2009 (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4T. Controls and Procedures
    
    
    21PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    23Item 4. Removed and Reserved
    
    
    23Item 5. Other Information
    
    
    23Item 6. Exhibits
    
    
    24Signatures
    
    
    25Index to Exhibits
    
    
    26EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 LOCAL.COM CORPORATION
 
 CONDENSED CONSOLIDATED
BALANCE SHEETS
 March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    10,934
    
    
    $
    10,080Restricted cash
    
    
    35
    
    
    
    35Accounts receivable, net of allowances of $204 and $205,
respectively
    
    
    10,706
    
    
    
    8,792Prepaid expenses and other current assets
    
    
    386
    
    
    
    439Total current assets
    
    
    22,061
    
    
    
    19,346Property and equipment, net
    
    
    2,380
    
    
    
    2,270Goodwill
    
    
    13,231
    
    
    
    13,231Intangible assets, net
    
    
    6,392
    
    
    
    6,406Total assets
    
    $
    44,064
    
    
    $
    41,253LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    10,279
    
    
    $
    8,891Accrued compensation
    
    
    1,132
    
    
    
    1,112Deferred rent
    
    
    34
    
    
    
    69Warrant liability
    
    
    3,999
    
    
    
    3,727Other accrued liabilities
    
    
    722
    
    
    
    876Revolving line of credit
    
    
    3,000
    
    
    
    3,000Deferred revenue
    
    
    479
    
    
    
    633Total liabilities, all
current
    
    
    19,645
    
    
    
    18,308Commitments and contingenciesStockholders equity:Convertible preferred stock, $0.00001 par value; 10,000 shares
authorized;
none issued and outstanding for all periods presented
    
    
    
    
    
    
    Common stock, $0.00001 par value; 65,000 shares authorized;
issued and
outstanding 14,762 and 14,523, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    83,308
    
    
    
    81,968Accumulated deficit
    
    
    (58,889
    )
    
    
    (59,023
    )Stockholders equity
    
    
    24,419
    
    
    
    22,945Total liabilities and stockholders equity
    
    $
    44,064
    
    
    $
    41,253
  3




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##### Table of Contents



LOCAL.COM CORPORATION
 
 CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
 Three Months Ended March 31,20092010
    
    
    (As restated)Revenue
    
    $
    18,631
    
    
    $
    11,064Operating Expenses:Cost of revenues
    
    
    10,802
    
    
    
    7,524Sales and marketing
    
    
    3,098
    
    
    
    3,080General and administrative
    
    
    1,914
    
    
    
    2,107Research and development
    
    
    1,112
    
    
    
    856Amortization and write-down of intangibles
    
    
    1,230
    
    
    
    355Total operating expenses
    
    
    18,156
    
    
    
    13,922Operating income (loss)
    
    
    475
    
    
    
    (2,858
    )Interest and other income (expense), net
    
    
    (56
    )
    
    
    3Change in fair value of warrant liability
    
    
    (272
    )
    
    
    (510
    )Income (loss) before income taxes
    
    
    147
    
    
    
    (3,365
    )Provision for income taxes
    
    
    13
    
    
    
    1Net income (loss)
    
    $
    134
    
    
    $
    (3,366
    )Per share data:Basic net income (loss) per share
    
    $
    0.01
    
    
    $
    (0.23
    )Diluted net income (loss) per share
    
    $
    0.01
    
    
    $
    (0.23
    )Basic weighted average shares outstanding
    
    
    14,605
    
    
    
    14,433Diluted weighted average shares outstanding
    
    
    15,918
    
    
    
    14,433
  4




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##### Table of Contents



LOCAL.COM CORPORATION
 
 CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
 Three Months Ended March 31,20092010
    
    
    (As restated)Cash flows from operating activities:Net income (loss)
    
    $
    134
    
    
    $
    (3,366
    )Adjustments to reconcile net income (loss) to cash provided by operating activities:Depreciation and amortization
    
    
    1,476
    
    
    
    525Provision for doubtful accounts
    
    
    
    
    
    
    75Stock-based compensation expense
    
    
    624
    
    
    
    486Change in fair value of warrant liability
    
    
    272
    
    
    
    510Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,914
    )
    
    
    (356
    )Prepaid expenses and other
    
    
    53
    
    
    
    121Accounts payable and accrued liabilities
    
    
    1,219
    
    
    
    2,256Deferred revenue
    
    
    (154
    )
    
    
    3,400Net cash provided by operating activities
    
    
    1,710
    
    
    
    3,651Cash flows from investing activities:Capital expenditures
    
    
    (356
    )
    
    
    (163
    )Decrease in restricted cash
    
    
    
    
    
    
    (50
    )Purchases of intangible assets
    
    
    (1,216
    )
    
    
    (4,267
    )Net cash used in investing activities
    
    
    (1,572
    )
    
    
    (4,480
    )Cash flows from financing activities:Proceeds from issuance of common stock:Exercise of options
    
    
    716
    
    
    
    Repurchases of common stock
    
    
    
    
    
    
    (237
    )Net cash provided by (used in) financing activities
    
    
    716
    
    
    
    (237
    )Net increase (decrease) in cash and cash equivalents
    
    
    854
    
    
    
    (1,066
    )Cash and cash equivalents, beginning of year
    
    
    10,080
    
    
    
    12,142Cash and cash equivalents, end of year
    
    $
    10,934
    
    
    $
    11,076Supplemental cash flow information:Interest paid
    
    $
    26
    
    
    $
    2Income taxes paid
    
    $
    169
    
    
    $
    1
  5




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##### Table of Contents



LOCAL.COM CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  1. The Company and Summary of Significant Accounting Policies
 Nature of operations
  Principles of consolidation and basis of presentation
     Use of estimates
  Fair Value of Financial Instruments
  6




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##### Table of Contents



2. Purchase of customer-related intangible assets
  3. Intangible assets
  March 31, 2010
    
    
    December 31, 2009Gross
    
    
    
    
    
    
    Net
    
    
    Weighted
    
    
    Gross
    
    
    
    
    
    
    Net
    
    
    WeightedCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AverageAmount
    
    
    Amortization
    
    
    Amount
    
    
    Useful Life
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Useful Life(years)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (years)Developed technology
    
    $
    2,233
    
    
    $
    (2,233
    )
    
    $
    
    
    
    
    5
    
    
    $
    2,233
    
    
    $
    (2,159
    )
    
    $
    74
    
    
    
    5Non-compete agreements
    
    
    13
    
    
    
    (13
    )
    
    
    
    
    
    
    2
    
    
    
    13
    
    
    
    (13
    )
    
    
    
    
    
    
    2Customer-related
    
    
    9,008
    
    
    
    (3,346
    )
    
    
    5,662
    
    
    
    5
    
    
    
    7,792
    
    
    
    (2,226
    )
    
    
    5,566
    
    
    
    5Patents
    
    
    431
    
    
    
    (402
    )
    
    
    29
    
    
    
    3
    
    
    
    431
    
    
    
    (366
    )
    
    
    65
    
    
    
    3Domain name  indefinite life
    
    
    701
    
    
    
    
    
    
    
    701
    
    
    
    
    
    
    
    701
    
    
    
    
    
    
    
    701$
    12,386
    
    
    $
    (5,994
    )
    
    $
    6,392
    
    
    
    
    
    
    $
    11,170
    
    
    $
    (4,764
    )
    
    $
    6,406
 4. Goodwill and Other Intangible Assets
  5. Web site development costs and computer software developed for internal use
  7




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6. Net income (loss) per share
   Three Months Ended March 31,2010
    
    
    2009(As restated)Numerator:Net income (loss)
    
    $
    134
    
    
    $
    (3,366
    )Denominator:Denominator for historical basic calculation weighted average shares
    
    
    14,605
    
    
    
    14,433Dilutive common stock equivalents:*Options
    
    
    966
    
    
    
    Warrants
    
    
    347
    
    
    
    Denominator for historical diluted calculation weighted average shares
    
    
    15,918
    
    
    
    14,433Net income (loss) per share:Historical basic net income (loss) per share
    
    $
    0.01
    
    
    $
    (0.23
    )Historical diluted net income (loss) per share
    
    $
    0.01
    
    
    $
    (0.23
    )
 
 *
    
    For the three months ended March 31, 2009, potentially dilutive securities, which
consist of options to purchase 3,532,245 shares of common stock at prices ranging from $1.28
to $16.59 per share and warrants to purchase 3,290,220 shares of common stock at prices
ranging from $4.32 to $25.53 per share were not included in the computation of diluted net
income per share because such inclusion would be antidilutive. 7. Composition of certain balance sheet and statement of operations captions
  March 31,
    
    
    December 31,2010
    
    
    2009Furniture and fixtures
    
    $
    229
    
    
    $
    228Office equipment
    
    
    143
    
    
    
    139Computer equipment
    
    
    2,130
    
    
    
    2,026Computer software
    
    
    3,269
    
    
    
    3,023Leasehold improvements
    
    
    585
    
    
    
    5856,356
    
    
    
    6,001Less accumulated depreciation and amortization
    
    
    (3,976
    )
    
    
    (3,731
    )Property and equipment, net
    
    $
    2,380
    
    
    $
    2,270
  Three Months Ended March 31,2010
    
    
    2009Interest income
    
    $
    6
    
    
    $
    5Interest expense
    
    
    (62
    )
    
    
    (2
    )Interest and other income (expense), net
    
    $
    (56
    )
    
    $
    3
 8




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##### Table of Contents



8. Credit facility
      9. Operating information
  Three Months Ended March 31,2010
    
    
    2009Revenue by geographic region:United States
    
    $
    18,631
    
    
    $
    10,933Europe
    
    
    
    
    
    
    131Total revenue
    
    $
    18,631
    
    
    $
    11,064Revenue by product:Pay-Per-Click (PPC)
    
    $
    14,797
    
    
    $
    9,260Local Promote (Subscription)
    
    
    2,727
    
    
    
    1,293Banner Advertisement
    
    
    1,095
    
    
    
    488Local Connect (License)
    
    
    12
    
    
    
    23Total revenue
    
    $
    18,631
    
    
    $
    11,064
 9




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##### Table of Contents



10. Stock-based compensation
  Weighted
    
    
    AggregateAverage
    
    
    Intrinsic ValueShares
    
    
    Exercise Price
    
    
    (in thousands)Outstanding at December 31, 2009
    
    
    3,998,790
    
    
    $
    4.33Granted
    
    
    80,500
    
    
    
    6.34Exercised
    
    
    (236,455
    )
    
    
    3.77Cancelled
    
    
    (115,415
    )
    
    
    6.68Outstanding at March 31, 2010
    
    
    3,727,420
    
    
    $
    4.34
    
    
    $
    9,603Exercisable at March 31, 2010
    
    
    1,799,176
    
    
    $
    5.09
    
    
    $
    3,851
     Options OutstandingWeighted
    
    
    
    
    
    
    Options ExercisableAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    AverageContractual
    
    
    Exercise
    
    
    
    
    
    
    ExerciseRange of Exercise Prices
    
    Shares
    
    
    Life
    
    
    Price
    
    
    Shares
    
    
    Price$1.01 - $2.00
    
    
    705,627
    
    
    8.8 years
    
    $
    1.57
    
    
    
    212,561
    
    
    $
    1.53$2.01 - $3.00
    
    
    146,111
    
    
    8.3 years
    
    
    2.28
    
    
    
    31,591
    
    
    
    2.21$3.01 - $4.00
    
    
    846,271
    
    
    6.5 years
    
    
    3.65
    
    
    
    526,653
    
    
    
    3.74$4.01 - $5.00
    
    
    1,257,971
    
    
    7.9 years
    
    
    4.58
    
    
    
    514,315
    
    
    
    4.64$5.01 - $6.00
    
    
    283,129
    
    
    8.3 years
    
    
    5.56
    
    
    
    93,999
    
    
    
    5.78$6.01 - $7.00
    
    
    145,023
    
    
    7.6 years
    
    
    6.50
    
    
    
    77,771
    
    
    
    6.50$7.01 - $8.00
    
    
    190,112
    
    
    5.4 years
    
    
    7.51
    
    
    
    189,110
    
    
    
    7.51$8.01 - $10.00
    
    
    70,000
    
    
    5.2 years
    
    
    9.17
    
    
    
    70,000
    
    
    
    9.17$10.01 -$15.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $15.01 -$16.59
    
    
    83,176
    
    
    4.2 years
    
    
    15.62
    
    
    
    83,176
    
    
    
    15.623,727,420
    
    
    7.5 years
    
    $
    4.34
    
    
    
    1,799,176
    
    
    $
    5.09
  Three Months Ended March 31,2010
    
    2009Risk-free interest rate
    
    
    3.28
    %
    
    
    2.50
    %Expected lives (in years)
    
    6.1 years
    
    7.0 yearsExpected dividend yield
    
    None
    
    NoneExpected volatility
    
    
    92.60
    %
    
    
    100.00
    %
 10




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Three Months Ended March 31,2010
    
    
    2009Cost of revenues
    
    $
    20
    
    
    $
    5Sales and marketing
    
    
    156
    
    
    
    178General and administrative
    
    
    301
    
    
    
    236Research and development
    
    
    147
    
    
    
    67Total stock-based compensation expense
    
    $
    624
    
    
    $
    486Basic and diluted net stock-based compensation expense per share
    
    $
    0.04
    
    
    $
    0.03
 11. Stock repurchase program
  12. Warrants
  WeightedAverageShares
    
    
    Exercise PriceOutstanding at December 31, 2009
    
    
    2,859,595
    
    
    $
    6.16Issued
    
    
    
    
    
    
    Exercised
    
    
    (49,525
    )
    
    
    2.31Expired
    
    
    
    
    
    
    Outstanding at March 31, 2010
    
    
    2,810,070
    
    
    $
    6.22Exercisable at March 31, 2010
    
    
    2,810,070
    
    
    $
    6.22
  Warrants Outstanding and ExercisableAverageRemaining
    
    
    WeightedContractual
    
    
    AverageRange of Exercise Price
    
    Shares
    
    
    Life
    
    
    Exercise Price$4.00 - $4.99
    
    
    867,662
    
    
    1.9 years
    
    $
    4.36$5.00 - $5.99
    
    
    867,662
    
    
    1.9 years
    
    
    5.17$7.00 - $7.99
    
    
    537,373
    
    
    2.8 years
    
    
    7.89$9.00 - $9.99
    
    
    537,373
    
    
    3.8 years
    
    
    9.262,810,070
    
    
    2.5 years
    
    $
    6.22
 11




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##### Table of Contents



13. Fair Value Measurement of Assets and Liabilities
  Quoted Prices inAs of
    
    
    Active Markets
    
    
    SignificantMarch 31,
    
    
    for Identical
    
    
    UnobservableDescription
    
    2010
    
    
    Assets (Level 1)
    
    
    Inputs (Level 3)Assets:Cash and cash equivalents:Bank deposits and money market funds
    
    $
    10,934
    
    
    $
    10,934
    
    
    $
    Restricted cash
    
    
    35
    
    
    
    35
    
    
    
    Total financial assets
    
    $
    10,969
    
    
    $
    10,969
    
    
    $
    Liabilities:Warrant liability
    
    $
    3,999
    
    
    $
    
    
    
    $
    3,999
  Quoted Prices inAs of
    
    
    Active Markets
    
    
    SignificantDecember 31,
    
    
    for Identical
    
    
    UnobservableDescription
    
    2009
    
    
    Assets (Level 1)
    
    
    Inputs (Level 3)Assets:Cash and cash equivalents:Bank deposits and money market funds
    
    $
    10,080
    
    
    $
    10,080
    
    
    $
    Restricted cash
    
    
    35
    
    
    
    35
    
    
    
    Total financial assets
    
    $
    10,115
    
    
    $
    10,115
    
    
    $
    Liabilities:Warrant liability
    
    $
    3,727
    
    
    $
    
    
    
    $
    3,727
   Exercise Price of Related Warrants$9.26
    
    $7.89Risk-free interest rate
    
    2.08%
    
    1.60%Expected lives (in years)
    
    3.8 years
    
    2.8 yearsExpected dividend yield
    
    None
    
    NoneExpected volatility
    
    90.70%
    
    94.90%
  Level 3Balance at December 31, 2009
    
    $
    3,727Change in fair value of warrant liability
    
    
    272Balance at March 31, 2010
    
    $
    3,999
  12




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14. Restatement
   15. Subsequent Events
   13




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 This Quarterly Report on Form 10-Q or certain information included or incorporated by reference in
this report, contains or may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact,
are statements that could be deemed forward-looking statements within the meaning of the federal
securities laws. These statements relate to our future operations, prospects, potential products,
services, developments and business strategies. These statements can, in some cases, be identified
by the use of terms such as may, will, should, could, would, expect, plan,
anticipate, believe, estimate, predict, project, and potential or the negative of such
terms or other comparable terminology. In addition, important factors to consider in evaluating
such forward-looking statements include changes or developments in social, economic, market, legal
or regulatory circumstances, changes in our business or growth strategy or an inability to execute
our strategy due to changes in our industry or the economy generally, the emergence of new or
growing competitors, the actions or omissions of third parties, including customers, competitors
and governmental authorities, and various other factors, including those described or referred to
in Item 1A of Part II of this Quarterly Report. Should any one or more of these risks or
uncertainties materialize, or the underlying estimates or assumptions prove incorrect, our actual
results could differ materially from those expressed in the forward-looking statements and there
can be no assurance that the forward-looking statements contained in this report will in fact
occur.
 The following discussion and analysis of our financial condition and results of operations should
be read in conjunction with the attached condensed consolidated financial statements and related
notes thereto, and with the audited consolidated financial statements and related notes thereto as
of December 31, 2009 and for the year ended December 31, 2009 included in our Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 16, 2010.
 Overview
       Recent Developments
   14




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##### Table of Contents



Outlook for Our Business
       Sources of Revenue
  
    
    click-throughs on sponsored listings;
    
    calls to cost-per-call advertiser listings;
    
    lead generation;
    
    banner ads;
    
    subscription advertiser listings; and
    
    subscription web hosting services.
 Operating Expenses
 Cost of Revenues
  15




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Sales and Marketing
  General and Administrative
  Research and Development
  Critical Accounting Policies
  Revenue Recognition
   Allowance for Doubtful Accounts
   16




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Stock Based Compensation
  Three Months Ended March 31,2010
    
    
    2009Cost of revenues
    
    $
    20
    
    
    $
    5Sales and marketing
    
    
    156
    
    
    
    178General and administrative
    
    
    301
    
    
    
    236Research and development
    
    
    147
    
    
    
    67Total stock-based compensation expense
    
    $
    624
    
    
    $
    486Basic and diluted net stock-based compensation expense per share
    
    $
    0.04
    
    
    $
    0.03
 Results of Operations
  Three Months Ended March 31,2010
    
    
    2009(As restated)Revenue
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Cost of revenues
    
    
    58.0
    
    
    
    68.0Sales and marketing
    
    
    16.6
    
    
    
    27.8General and administrative
    
    
    10.3
    
    
    
    19.0Research and development
    
    
    6.0
    
    
    
    7.7Amortization and write-down of intangibles
    
    
    6.6
    
    
    
    3.2Total operating expenses
    
    
    97.5
    
    
    
    125.8Operating income (loss)
    
    
    2.5
    
    
    
    (25.8
    )Interest and other income (expense), net
    
    
    (0.3
    )
    
    
    0.0Change in fair value of warrant liability
    
    
    (1.5
    )
    
    
    (4.6
    )Income (loss) before income taxes
    
    
    0.8
    
    
    
    (30.4
    )Provision for income taxes
    
    
    0.1
    
    
    
    0.0Net income (loss)
    
    
    0.7
    %
    
    
    (30.4)
    %
 Three months ended March 31, 2010 and 2009
 Revenue (dollars in thousands)
 Three Months Ended March 31,
    
    
    Percent2010
    
    
    (*)
    
    
    2009
    
    
    (*)
    
    
    change(in thousands)
    
    
    
    
    
    
    (in thousands)Owned and operated
    
    $
    10,717
    
    
    
    57.5
    %
    
    $
    8,215
    
    
    
    74.2
    %
    
    
    30.5
    %Network
    
    
    5,189
    
    
    
    27.9
    %
    
    
    1,566
    
    
    
    14.2
    %
    
    
    231.4
    %Sales and advertiser services
    
    
    2,725
    
    
    
    14.6
    %
    
    
    1,283
    
    
    
    11.6
    %
    
    
    112.4
    %Total revenue
    
    $
    18,631
    
    
    
    100.0
    %
    
    $
    11,064
    
    
    
    100.0
    %
    
    
    68.4
    %
   17




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##### Table of Contents



Percentage of Total RevenueThree Months Ended March 31,Customer
    
    2010
    
    
    2009Yahoo! Inc.
    
    
    49.4
    %
    
    
    51.4
    %SuperMedia Inc.
    
    
    20.7
    %
    
    
    18.5
    %
 Operating expenses:
  Three Months Ended March 31,Percent of
    
    
    
    
    
    
    Percent ofTotal
    
    
    
    
    
    
    Total
    
    
    Percent2010
    
    
    Revenue
    
    
    2009
    
    
    Revenue
    
    
    ChangeCost of revenues
    
    $
    10,802
    
    
    
    58.0
    %
    
    $
    7,524
    
    
    
    68.0
    %
    
    
    43.6
    %Sales and marketing
    
    
    3,098
    
    
    
    16.6
    %
    
    
    3,080
    
    
    
    27.8
    %
    
    
    0.6
    %General and administrative
    
    
    1,914
    
    
    
    10.3
    %
    
    
    2,107
    
    
    
    19.0
    %
    
    
    (9.2
    )%Research and development
    
    
    1,112
    
    
    
    6.0
    %
    
    
    856
    
    
    
    7.7
    %
    
    
    29.9
    %Amortization and write-down of intangibles
    
    
    1,230
    
    
    
    6.6
    %
    
    
    355
    
    
    
    3.2
    %
    
    
    246.5
    %Total operating expenses
    
    $
    18,156
    
    
    
    97.5
    %
    
    $
    13,922
    
    
    
    125.8
    %
    
    
    30.4
    %
 Cost of revenues
  Sales and marketing
  General and administrative
  Research and development
  18




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##### Table of Contents



Amortization of intangibles
  Interest and other income (expense), net
  Provision for income taxes
  Liquidity and Capital Resources
  March 31,
    
    
    December 31,2010
    
    
    2009Cash and cash equivalents
    
    $
    10,934
    
    
    $
    10,080Working capital
    
    $
    6,415
    
    
    $
    4,765Cash flow highlights (in thousands):Three Months Ended March 31,2010
    
    
    2009Net cash provided by operating activities
    
    $
    1,710
    
    
    $
    3,651Net cash used in investing activities
    
    
    (1,572
    )
    
    
    (4,480
    )Net cash provided by (used in) financing activities
    
    
    716
    
    
    
    (237
    )
     19




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##### Table of Contents



Three Months Ended March 31,2010
    
    
    2009
    
    
    Change(As restated)Net income (loss)
    
    $
    134
    
    
    $
    (3,366
    )
    
    $
    3,500Non-cash (1)
    
    
    2,372
    
    
    
    1,596
    
    
    
    776Subtotal
    
    
    2,506
    
    
    
    (1,770
    )
    
    
    4,276AR, AP and Other
    
    
    (796
    )
    
    
    5,421
    
    
    
    (6,217
    )Net cash provided by operations
    
    $
    1,710
    
    
    $
    3,651
    
    
    $
    (1,941
    )
 
 (1)
    
    Includes depreciation, amortization, change in fair value of warrant liability, non-cash
expense related to stock option issuances and provision for doubtful accounts.    Credit facility
      20




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##### Table of Contents



Shelf Registration Statement
  Stock repurchase program
  Subsequent events
   Off-Balance Sheet Arrangements
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4T.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   21




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##### Table of Contents



Managements Report on Internal Control over Financial Reporting
  Internal
Control-Integrated Framework
 Changes in Internal Control over Financial Reporting
  22




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 3.
    
    Defaults Upon Senior Securities
  
 Item 4.
    
    Removed and Reserved
 
 Item 5.
    
    Other Information
  23




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##### Table of Contents



Item 6.
    
    Exhibits
 ExhibitNumber
    
    Description3.1 (1)
    
    Amended and Restated Certificate of Incorporation of the Registrant3.2 (2)
    
    Amendment to Restated Certificate of Incorporation of the Registrant3.2 (3)
    
    Amended and Restated Bylaws of the Registrant3.3 (4)
    
    Certificate of Ownership and Merger of Interchange Merger Sub, Inc. with and into
Interchange Corporation3.4 (5)
    
    Certificate of Designation of Rights, Preferences and Privileges of Series A
Participating Preferred Stock of Local.com Corporation.4.1 (5)
    
    Preferred Stock Rights Agreement, dated as of October 15, 2008, by and between
Local.com Corporation and Computershare Trust Company, N.A., as Rights Agent (which
includes the form of Certificate of Designation of Rights, Preferences and Privileges
of Series A Participating Preferred Stock of Local.com Corporation as Exhibit A
thereto, the form of Rights Certificate as Exhibit B thereto, and the Stockholder
Rights Plan, Summary of Rights as Exhibit C thereto).10.1 (6)#
    
    Description of the Material Terms of the Companys Bonus Program as of January 27, 2010.10.2 (7)
    
    Second Amendment dated February 5, 2010 to Loan and Security Agreement dated June 26,
2009, by and among Registrant, Local.com PG Acquisition Corporation, and Square 1 Bank.10.3 (8)
    
    Asset Purchase Agreement by and among the Registrant and LaRoss Partners, LLC dated
February 12, 2010.31.1*
    
    Certification of Principal Executive Officer Required by Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Principal Financial Officer Required by Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
 
 *
    
    Filed herewith.#
    
    Indicates management contract or compensatory plan.(1)
    
    Incorporated by reference from the Registrants Statement on Form SB-2, Amendment No. 2,
filed with the Securities and Exchange Commission on September 16, 2004.(2)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on August 17, 2009(3)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on November 2, 2007.(4)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K/A, filed with the
Securities and Exchange Commission on November 2, 2006.(5)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 15, 2008.(6)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 1, 2010.(7)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 9, 2010.(8)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 16, 2010. 24




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##### Table of Contents



SIGNATURES
  LOCAL.COM CORPORATIONMay 10, 2010
    /s/ Heath B. ClarkeDate
    Heath B. ClarkeChief Executive Officer
(principal executive officer) and ChairmanMay 10, 2010
    /s/ Brenda AgiusDate
    Brenda AgiusChief Financial Officer (principal financial
and accounting officer) and Secretary 25




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Description3.1 (1)
    
    Amended and Restated Certificate of Incorporation of the Registrant3.2 (2)
    
    Amendment to Restated Certificate of Incorporation of the Registrant3.2 (3)
    
    Amended and Restated Bylaws of the Registrant3.3 (4)
    
    Certificate of Ownership and Merger of Interchange Merger Sub, Inc. with and into
Interchange Corporation3.4 (5)
    
    Certificate of Designation of Rights, Preferences and Privileges of Series A
Participating Preferred Stock of Local.com Corporation.4.1 (5)
    
    Preferred Stock Rights Agreement, dated as of October 15, 2008, by and between
Local.com Corporation and Computershare Trust Company, N.A., as Rights Agent (which
includes the form of Certificate of Designation of Rights, Preferences and Privileges
of Series A Participating Preferred Stock of Local.com Corporation as Exhibit A
thereto, the form of Rights Certificate as Exhibit B thereto, and the Stockholder
Rights Plan, Summary of Rights as Exhibit C thereto).10.1 (6)#
    
    Description of the Material Terms of the Companys Bonus Program as of January 27, 2010.10.2 (7)
    
    Second Amendment dated February 5, 2010 to Loan and Security Agreement dated June 26,
2009, by and among Registrant, Local.com PG Acquisition Corporation, and Square 1 Bank.10.3 (8)
    
    Asset Purchase Agreement by and among the Registrant and LaRoss Partners, LLC dated
February 12, 2010.31.1*
    
    Certification of Principal Executive Officer Required by Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Principal Financial Officer Required by Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
 
 *
    
    Filed herewith.#
    
    Indicates management contract or compensatory plan.(1)
    
    Incorporated by reference from the Registrants Statement on Form SB-2, Amendment No. 2,
filed with the Securities and Exchange Commission on September 16, 2004.(2)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on August 17, 2009(3)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on November 2, 2007.(4)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K/A, filed with the
Securities and Exchange Commission on November 2, 2006.(5)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on October 15, 2008.(6)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 1, 2010.(7)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 9, 2010.(8)
    
    Incorporated by reference from the Registrants Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 16, 2010. 26