##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q/AAmendment No. 1 to 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, 2009
 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 oAccelerated filer oNon-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 INFORMATIONExplanatory Note
    
    
    3Item 1. Financial StatementsCondensed Consolidated Balance Sheets
As of March 31, 2009  Restated  (Unaudited) and December 31, 2008
    
    
    4Condensed Consolidated Statements of Operations
For the three months ended March 31, 2009 (Restated) and 2008 (Unaudited)
    
    
    5Condensed Consolidated Statements of Comprehensive Income (Loss)
For the three months ended March 31, 2009 (Restated) and 2008 (Unaudited)
    
    
    6Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 2009 (Restated) and 2008 (Unaudited)
    
    
    7Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4T. Controls and Procedures
    
    
    25PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3. Defaults Upon Senior Securities
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    27Signatures
    
    
    28Index to Exhibits
    
    
    29EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



EXPLANATORY NOTE
    
    
    Part I  Item 1  Financial Statements and Notes 1, 6 and 13 to the Condensed
Consolidated Financial Statements
    
    Part I  Item 2  Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    Part I  Item 4T  Controls and Procedures
    
    Part II  Item 6  Exhibits
  3




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 LOCAL.COM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,2009
    
    
    December 31,(Restated)
    
    
    2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    11,076
    
    
    $
    12,142Restricted cash
    
    
    81
    
    
    
    31Accounts receivable, net of allowances of $118 and $60, respectively
    
    
    5,613
    
    
    
    5,270Prepaid expenses and other current assets
    
    
    253
    
    
    
    374Total current assets
    
    
    17,023
    
    
    
    17,817Property and equipment, net
    
    
    1,066
    
    
    
    1,073Goodwill
    
    
    13,231
    
    
    
    13,231Intangible assets, net
    
    
    6,008
    
    
    
    2,158Long-term restricted cash
    
    
    35
    
    
    
    35Deposits
    
    
    12
    
    
    
    12Total assets
    
    $
    37,375
    
    
    $
    34,326LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    7,303
    
    
    $
    5,608Accrued compensation
    
    
    1,038
    
    
    
    545Deferred rent
    
    
    168
    
    
    
    199Other accrued liabilities
    
    
    663
    
    
    
    564Warrant liability
    
    
    1,256
    
    
    
    Deferred revenue
    
    
    3,464
    
    
    
    64Total liabilities, all current
    
    
    13,892
    
    
    
    6,980Commitments and contingenciesStockholders equity:Convertible preferred stock, $0.00001 par value; 10,000,000 shares
authorized; none issued and outstanding for all periods presented
    
    
    
    
    
    
    Common stock, $0.00001 par value; 30,000,000 shares authorized;
14,347,042 and 14,446,107 issued and outstanding, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    79,605
    
    
    
    85,141Accumulated deficit
    
    
    (56,122
    )
    
    
    (57,795
    )Stockholders equity
    
    
    23,483
    
    
    
    27,346Total liabilities and stockholders equity
    
    $
    37,375
    
    
    $
    34,326
  4




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LOCAL.COM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended March 31,2009(Restated)
    
    
    2008Revenue
    
    $
    11,064
    
    
    $
    8,842Operating Expenses:Search serving
    
    
    1,109
    
    
    
    1,453Sales and marketing
    
    
    9,250
    
    
    
    7,643General and administrative
    
    
    2,352
    
    
    
    1,443Research and development
    
    
    856
    
    
    
    878Amortization of intangibles
    
    
    355
    
    
    
    318Total operating expenses
    
    
    13,922
    
    
    
    11,735Operating loss
    
    
    (2,858
    )
    
    
    (2,893
    )Interest and other income (expense), net
    
    
    3
    
    
    
    135Change in fair value of warrant liability
    
    
    (510
    )
    
    
    Loss before income taxes
    
    
    (3,365
    )
    
    
    (2,758
    )Provision for income taxes
    
    
    1
    
    
    
    1Net loss
    
    $
    (3,366
    )
    
    $
    (2,759
    )Per share data:Basic net loss per share
    
    $
    (0.23
    )
    
    $
    (0.19
    )Diluted net loss per share
    
    $
    (0.23
    )
    
    $
    (0.19
    )Basic weighted average shares outstanding
    
    
    14,433
    
    
    
    14,204Diluted weighted average shares outstanding
    
    
    14,433
    
    
    
    14,204
  5




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LOCAL.COM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 Three Months Ended March 31,2009(Restated)
    
    
    2008Net loss
    
    $
    (3,366
    )
    
    $
    (2,759
    )Other comprehensive income (loss):Net unrealized gain (loss) on marketable securities
    
    
    
    
    
    
    1Total comprehensive loss
    
    $
    (3,366
    )
    
    $
    (2,758
    )Supplemental comprehensive income (loss) information:Net unrealized gain (loss) on marketable securities
    
    $
    
    
    
    $
    1
  6




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LOCAL.COM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months Ended March 31,2009(Restated)
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (3,366
    )
    
    $
    (2,759
    )Adjustments to reconcile net loss to cash provided by (used in) operating activities:Depreciation and amortization
    
    
    525
    
    
    
    561Provision for doubtful accounts
    
    
    75
    
    
    
    Stock-based compensation expense
    
    
    486
    
    
    
    650Change in fair value of warrant liability
    
    
    510
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (356
    )
    
    
    (2,160
    )Prepaid expenses and other
    
    
    121
    
    
    
    24Accounts payable and accrued liabilities
    
    
    2,256
    
    
    
    2,226Deferred revenue
    
    
    3,400
    
    
    
    (50
    )Net cash provided by (used in) operating activities
    
    
    3,651
    
    
    
    (1,508
    )Cash flows from investing activities:Capital expenditures
    
    
    (163
    )
    
    
    4Proceeds from sales of marketable securities
    
    
    
    
    
    
    2,000Increase in restricted cash
    
    
    (50
    )
    
    
    Purchases of intangible assets
    
    
    (4,267
    )
    
    
    Net cash (used in) provided by investing activities:
    
    
    (4,480
    )
    
    
    2,004Cash flows from financing activities:Repurchases of common stock
    
    
    (237
    )
    
    
    Swing sale profit contribution
    
    
    
    
    
    
    3Payment of financing related costs
    
    
    
    
    
    
    (15
    )Net cash used in financing activities
    
    
    (237
    )
    
    
    (12
    )Net (decrease) increase in cash and cash equivalents
    
    
    (1,066
    )
    
    
    484Cash and cash equivalents, beginning of period
    
    
    12,142
    
    
    
    14,258Cash and cash equivalents, end of period
    
    $
    11,076
    
    
    $
    14,742Supplemental Cash Flow Information:Interest paid
    
    $
    2
    
    
    $
    Income taxes paid
    
    $
    1
    
    
    $
    1
  7




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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
   New accounting pronouncements
 Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly Fair Value
Measurements Recognition and
Presentation of Other-Than-Temporary Impairments
 8




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, Interim Disclosures about Fair Value of Financial Instruments Disclosures About Fair Value of
Financial Instruments
 Accounting Standards Adopted
 Business Combinations Accounting and
Reporting of Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No.
51.
  Disclosures about Derivative Instruments and Hedging
Activities
 Determining whether an
Instrument (or Embedded Feature) is Indexed to an Entitys Own Stock Accounting For Derivative Instruments and Hedging Activities
   Additional
    
    
    Warrant
    
    
    AccumulatedPaid-In-Capital
    
    
    Liability
    
    
    DeficitGrant date fair value of previously issued warrants
    
    $
    5,785
    
    
    $
    (5,785
    )
    
    $
    Change in fair value of previously issued
warrants outstanding as of January 1, 2009
    
    
    
    
    
    
    5,039
    
    
    
    (5,039
    )Cumulative effect of change in accounting principle
    
    $
    5,785
    
    
    $
    (746
    )
    
    $
    (5,039
    )
  Determination of the Useful Life of Intangible
Assets
 9




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Effective Date of FASB No. 157
 2. Purchase of customer-related intangible assets
   3. Intangible assets
      March 31,
    
    
    December 31,2009
    
    
    2008Developed technology
    
    $
    2,233
    
    
    $
    2,233Non-compete agreements
    
    
    13
    
    
    
    13Customer-related
    
    
    5,225
    
    
    
    1,020Patents
    
    
    431
    
    
    
    431Domain name  indefinite life
    
    
    701
    
    
    
    7018,603
    
    
    
    4,398Less accumulated amortization
    
    
    (2,595
    )
    
    
    (2,240
    )Intangible assets, net
    
    $
    6,008
    
    
    $
    2,158
 4. Goodwill
  10




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5. Web site development costs and computer software developed for internal use
  6. Net loss per share
     Three Months Ended March 31,2009(Restated)
    
    
    2008Numerator:Net loss
    
    $
    (3,366
    )
    
    $
    (2,759
    )Denominator:Denominator for basic calculation weighted average shares
    
    
    14,433
    
    
    
    14,204Dilutive common stock equivalents:Options
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    Denominator for diluted calculation weighted average shares
    
    
    14,433
    
    
    
    14,204Net loss per share:Basic net loss per share
    
    $
    (0.23
    )
    
    $
    (0.19
    )Diluted net loss per share
    
    $
    (0.23
    )
    
    $
    (0.19
    )
 11




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7. Composition of certain balance sheet and statement of operations captions
  March 31,
    
    
    December 31,2009
    
    
    2008Furniture and fixtures
    
    $
    204
    
    
    $
    203Office equipment
    
    
    132
    
    
    
    132Computer equipment
    
    
    1,427
    
    
    
    1,392Computer software
    
    
    1,887
    
    
    
    1,760Leasehold improvements
    
    
    583
    
    
    
    5834,233
    
    
    
    4,070Less accumulated depreciation and amortization
    
    
    (3,167
    )
    
    
    (2,997
    )Property and equipment, net
    
    $
    1,066
    
    
    $
    1,073
  Three Months Ended March 31,2009
    
    
    2008Interest income
    
    $
    5
    
    
    $
    135Interest expense
    
    
    (2
    )
    
    
    Interest and other income (expense), net
    
    $
    3
    
    
    $
    135
 8. Operating information
 Disclosures about Segments of an Enterprise and Related Information
 Three Months Ended March 31,2009
    
    
    2008Revenue by geographic region:United States
    
    $
    10,933
    
    
    $
    8,704Europe
    
    
    131
    
    
    
    138Total revenue
    
    $
    11,064
    
    
    $
    8,842Revenue by product:Pay-per-click (PPC)
    
    $
    9,260
    
    
    $
    8,076Local promote (subscription)
    
    
    1,293
    
    
    
    182Banner advertisement
    
    
    488
    
    
    
    484Local connect (license)
    
    
    23
    
    
    
    100Total revenue
    
    $
    11,064
    
    
    $
    8,842
 9. Stock-based compensation
  Weighted
    
    
    AggregateAverage
    
    
    Intrinsic ValueShares
    
    
    Exercise Price
    
    
    (in thousands)Outstanding at December 31, 2008
    
    
    3,070,790
    
    
    $
    4.87Granted
    
    
    576,783
    
    
    
    1.60Exercised
    
    
    
    
    
    
    Cancelled
    
    
    (115,328
    )
    
    
    4.80Outstanding at March 31, 2009
    
    
    3,532,245
    
    
    $
    4.34
    
    
    $
    689Exercisable at March 31, 2009
    
    
    1,682,031
    
    
    $
    5.52
    
    
    $
    60
 12




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Options Outstanding
    
    Options ExercisableAverageRemaining
    
    Weighted
    
    
    
    
    
    WeightedContractual
    
    Average
    
    
    
    
    
    AverageRange of Exercise rice
    
    Shares
    
    Life
    
    Exercise Price
    
    Shares
    
    Exercise Price$1.01 - $2.00
    
    
    873,265
    
    
    9.4 years
    
    $
    1.59
    
    
    
    84,996
    
    
    $
    1.74$2.01 - $3.00
    
    
    141,628
    
    
    6.2 years
    
    
    2.34
    
    
    
    82,426
    
    
    
    2.33$3.01 - $4.00
    
    
    758,787
    
    
    6.1 years
    
    
    3.76
    
    
    
    580,251
    
    
    
    3.74$4.01 - $5.00
    
    
    1,109,323
    
    
    8.5 years
    
    
    4.67
    
    
    
    325,291
    
    
    
    4.62$5.01 - $6.00
    
    
    121,207
    
    
    6.1 years
    
    
    5.70
    
    
    
    112,287
    
    
    
    5.70$6.01 - $7.00
    
    
    108,773
    
    
    5.0 years
    
    
    6.41
    
    
    
    105,521
    
    
    
    6.40$7.01 - $8.00
    
    
    190,112
    
    
    6.4 years
    
    
    7.51
    
    
    
    187,110
    
    
    
    7.52$8.01 - $10.00
    
    
    120,000
    
    
    7.1 years
    
    
    8.76
    
    
    
    94,999
    
    
    
    8.91$15.01 - $16.59
    
    
    109,150
    
    
    4.7 years
    
    
    15.62
    
    
    
    109,150
    
    
    
    15.623,532,245
    
    
    7.6 years
    
    $
    4.34
    
    
    
    1,682,031
    
    
    $
    5.52
  Three Months Ended March 31,2009
    
    2008Risk-free interest rate
    
    
    2.50
    %
    
    
    3.15
    %Expected lives (in years)
    
    
    7.0
    
    
    
    7.0Expected dividend yield
    
    None
    
    NoneExpected volatility
    
    
    100.00
    %
    
    
    100.00
    %
  Three Months Ended March 31,2009
    
    
    2008Sales and marketing
    
    $
    183
    
    
    $
    240General and administrative
    
    
    236
    
    
    
    339Research and development
    
    
    67
    
    
    
    71Total stock-based compensation expense
    
    $
    486
    
    
    $
    650Basic and diluted net stock-based compensation expense per share
    
    $
    0.03
    
    
    $
    0.05
 10. Warrants:
   Warrants Outstanding and ExercisableWeightedAverageRemaining
    
    WeightedContractual
    
    AverageRange of Exercise Price
    
    Shares
    
    Life
    
    Exercise Price$4.00 - $4.99
    
    
    867,662
    
    
    2.9 years
    
    $
    4.36$5.00 - $5.99
    
    
    867,662
    
    
    2.9 years
    
    
    5.17$7.00 - $7.99
    
    
    537,373
    
    
    3.8 years
    
    
    7.89$9.00 - $9.99
    
    
    537,373
    
    
    4.8 years
    
    
    9.26$10.00 - $19.99
    
    
    315,750
    
    
    0.6 years
    
    
    10.00$20.00 - $25.53
    
    
    164,400
    
    
    0.8 years
    
    
    25.533,290,220
    
    
    2.7 years
    
    $
    7.55
 13




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11. Stock repurchase program
  12. Subsequent events
   13. Restatement
    Three MonthsEndedMarch 31,2009Net loss, as previously reported
    
    $
    (2,856
    )Adjustment for change in fair value of warrant liability (pre-tax):
    
    
    (510
    )Tax effect of restatement adjustment
    
    
    Net loss, as restated
    
    $
    (3,366
    )Basic net loss per share, as restated
    
    $
    (0.23
    )Diluted net loss per share, as restated
    
    $
    (0.23
    )
 14




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LOCAL.COM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
 March 31, 2009(unaudited)As previouslyreported
    
    
    As restatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    11,076
    
    
    $
    11,076Restricted cash
    
    
    81
    
    
    
    81Accounts receivable, net of allowances of $118
    
    
    5,613
    
    
    
    5,613Prepaid expenses and other current assets
    
    
    253
    
    
    
    253Total current assets
    
    
    17,023
    
    
    
    17,023Property and equipment, net
    
    
    1,066
    
    
    
    1,066Goodwill
    
    
    13,231
    
    
    
    13,231Intangible assets, net
    
    
    6,008
    
    
    
    6,008Long-term restricted cash
    
    
    35
    
    
    
    35Deposits
    
    
    12
    
    
    
    12Total assets
    
    $
    37,375
    
    
    $
    37,375LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    7,303
    
    
    $
    7,303Accrued compensation
    
    
    1,038
    
    
    
    1,038Deferred rent
    
    
    168
    
    
    
    168Other accrued liabilities
    
    
    663
    
    
    
    663Warrant liability
    
    
    
    
    
    
    1,256Deferred revenue
    
    
    3,464
    
    
    
    3,464Total liabilities, all current
    
    
    12,636
    
    
    
    13,892Commitments and contingenciesStockholders equity:Convertible preferred stock, $0.00001 par
value; 10,000,000 shares authorized; none
issued and outstanding for all periods
presented
    
    
    
    
    
    
    Common stock, $0.00001 par value; 30,000,000
shares authorized; 14,347,042 issued and
outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    85,390
    
    
    
    79,605Accumulated deficit
    
    
    (60,651
    )
    
    
    (56,122
    )Stockholders equity
    
    
    24,739
    
    
    
    23,483Total liabilities and stockholders equity
    
    $
    37,375
    
    
    $
    37,375
 See accompanying notes to the consolidated financial statements.
 15




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LOCAL.COM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months EndedMarch 31, 2009As previouslyreported
    
    
    As restatedRevenue
    
    $
    11,064
    
    
    $
    11,064Operating Expenses:Search serving
    
    
    1,109
    
    
    
    1,109Sales and marketing
    
    
    9,250
    
    
    
    9,250General and administrative
    
    
    2,352
    
    
    
    2,352Research and development
    
    
    856
    
    
    
    856Amortization of intangibles
    
    
    355
    
    
    
    355Total operating expenses
    
    
    13,922
    
    
    
    13,922Operating loss
    
    
    (2,858
    )
    
    
    (2,858
    )Interest and other income (expense), net
    
    
    3
    
    
    
    3Change in fair value of warrant liability
    
    
    
    
    
    
    (510
    )Loss before income taxes
    
    
    (2,855
    )
    
    
    (3,365
    )Provision for income taxes
    
    
    1
    
    
    
    1Net loss
    
    $
    (2,856
    )
    
    $
    (3,366
    )Per share data:Basic net loss per share
    
    $
    (0.20
    )
    
    $
    (0.23
    )Diluted net loss per share
    
    $
    (0.20
    )
    
    $
    (0.23
    )Basic weighted average shares outstanding
    
    
    14,433
    
    
    
    14,433Diluted weighted average shares outstanding
    
    
    14,433
    
    
    
    14,433
 See accompanying notes to the consolidated financial statements.
 16




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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/A or certain information included or incorporated by reference
in this report, contains or may contain forward-looking statements that involve risks,
uncertainties and assumptions. 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. 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, 2008 and for the year ended December 31, 2008 included in our Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 30, 2009.
 Overview
      Outlook for Our Business
    17




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##### Table of Contents



Sources of Revenue
  
    
    click-throughs on sponsored listings;
    
    display of banner advertisements;
    
    subscription advertiser listing; and
    
    subscription web hosting services.
 Operating Expenses
 Search Serving
  Sales and Marketing
   General and Administrative
  18




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##### Table of Contents



Research and Development
  Critical Accounting Policies
  Revenue Recognition
   Allowance for Doubtful Accounts
   19




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##### Table of Contents



Stock Based Compensation
   Three Months Ended March 31,2009
    
    
    2008Sales and marketing
    
    $
    183
    
    
    $
    240General and administrative
    
    
    236
    
    
    
    339Research and development
    
    
    67
    
    
    
    71Total stock-based compensation expense
    
    $
    486
    
    
    $
    650Basic and diluted net stock-based compensation expense per share
    
    $
    0.03
    
    
    $
    0.05
 Warrant Liability
   
    
    Expected volatilityThe estimated stock price volatility is
derived based upon our actual historic stock prices over the
contractual life of the warrants, which represents our best
estimate of expected volatility.
    
    Risk-free interest rateWe use the yield on zero-coupon U.S.
Treasury securities for a period that is commensurate with the
warrant contractual life assumption as the risk-free interest
rate.
 Results of Operations
  Three Months Ended March 31,2009
    
    2008(Restated)Revenue
    
    
    100.0
    %
    
    
    100.0
    %Operating Expenses:Search serving
    
    
    10.0
    
    
    
    16.4Sales and marketing
    
    
    83.6
    
    
    
    86.4General and administrative
    
    
    21.3
    
    
    
    16.3Research and development
    
    
    7.7
    
    
    
    9.9Amortization and write-down of intangibles
    
    
    3.2
    
    
    
    3.6Total operating expenses
    
    
    125.8
    
    
    
    132.7Operating loss
    
    
    (25.8
    )
    
    
    (32.7
    )Interest and other income (expense)
    
    
    0.0
    
    
    
    1.5Change in fair value of warrant liability
    
    
    (4.6
    )
    
    
    Loss before income taxes
    
    
    (30.4
    )
    
    
    (31.2
    )Provision for income taxes
    
    
    0.0
    
    
    
    0.0Net loss
    
    
    (30.4
    )%
    
    
    (31.2
    )%
 20




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##### Table of Contents



Three months ended March 31, 2009 and 2008
 Revenue (dollars in thousands)
 Three Months Ended March 31,Percent of
    
    
    
    
    
    
    Percent ofTotal
    
    
    
    
    
    
    Total
    
    
    Percent2009
    
    
    Revenue
    
    
    2008
    
    
    Revenue
    
    
    ChangeLocal domestic
    
    $
    10,828
    
    
    
    97.9
    %
    
    $
    8,038
    
    
    
    90.9
    %
    
    
    34.7
    %Local international
    
    
    131
    
    
    
    1.2
    %
    
    
    138
    
    
    
    1.6
    %
    
    
    (5.1
    )%Total local
    
    
    10,959
    
    
    
    99.1
    %
    
    
    8,176
    
    
    
    92.5
    %
    
    
    34.0
    %National
    
    
    105
    
    
    
    0.9
    %
    
    
    666
    
    
    
    7.5
    %
    
    
    (84.2
    )%Total revenue
    
    $
    11,064
    
    
    
    100.0
    %
    
    $
    8,842
    
    
    
    100.0
    %
    
    
    25.1
    %
      Percentage of Total Revenue
    
    Percentage of Total RevenueThree Months Ended March 31, 2009
    
    Three Months Ended March 31, 2008Across all
    
    Local.com
    
    Across all
    
    Local.comCustomer
    
    product lines
    
    website only
    
    product lines
    
    website onlyYahoo! Inc.
    
    
    51.4
    %
    
    
    44.6
    %
    
    
    54.2
    %
    
    
    47.5
    %Idearc Media Corp.
    
    
    18.5
    %
    
    
    13.5
    %
    
    
    15.8
    %
    
    
    14.5
    %
  21




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##### Table of Contents



Operating expenses:
  Three Months Ended March 31,Percent of
    
    
    
    
    
    
    Percent ofTotal
    
    
    
    
    
    
    Total
    
    
    Percent2009
    
    
    Revenue
    
    
    2008
    
    
    Revenue
    
    
    ChangeSearch serving
    
    $
    1,109
    
    
    
    10.0
    %
    
    $
    1,453
    
    
    
    16.4
    %
    
    
    (23.7
    )%Sales and marketing
    
    
    9,250
    
    
    
    83.6
    %
    
    
    7,643
    
    
    
    86.4
    %
    
    
    21.0
    %General and administrative
    
    
    2,352
    
    
    
    21.3
    %
    
    
    1,443
    
    
    
    16.3
    %
    
    
    63.0
    %Research and development
    
    
    856
    
    
    
    7.7
    %
    
    
    878
    
    
    
    9.9
    %
    
    
    (2.5
    )%Amortization and write-down of intangibles
    
    
    355
    
    
    
    3.2
    %
    
    
    318
    
    
    
    3.6
    %
    
    
    11.6
    %Total operating expenses
    
    $
    13,922
    
    
    
    125.8
    %
    
    $
    11,735
    
    
    
    132.7
    %
    
    
    18.6
    %
 Search serving
  Sales and marketing
   General and administrative
  Research and development
  Amortization of intangibles
  Interest and other income (expense), net
  22




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##### Table of Contents



Change in Fair Value of Warrant Liability
  Provision for income taxes
  Liquidity and Capital Resources
  March 31,
    
    
    December 31,2009
    
    
    2008Cash and cash equivalents
    
    $
    11,076
    
    
    $
    12,142Working capital
    
    $
    4,387
    
    
    $
    10,837
  Three Months Ended March 31,2009
    
    2008Net cash provided by (used in) operating activities
    
    $
    3,651
    
    
    $
    (1,508
    )Net cash (used in) provided by investing activities
    
    $
    (4,480
    )
    
    $
    2,004Net cash used in financing activities
    
    $
    (237
    )
    
    $
    (12
    )
      Three Months Ended March 31,2009(Restated)
    
    
    2008
    
    
    ChangeNet loss
    
    $
    (3,366
    )
    
    $
    (2,759
    )
    
    $
    (607
    )Non-cash(1)
    
    
    1,596
    
    
    
    1,211
    
    
    
    385Subtotal
    
    
    (1,770
    )
    
    
    (1,548
    )
    
    
    (222
    )Deferred revenue
    
    
    3,400
    
    
    
    (50
    )
    
    
    3,450AR, AP and Other
    
    
    2,021
    
    
    
    90
    
    
    
    1,931Net cash provided by (used in) operations
    
    $
    3,651
    
    
    $
    (1,508
    )
    
    $
    5,159
 
 (1)
    
     Includes depreciation, amortization, change in fair value of warrant liability, non-cash
expense related to stock option issuances and provision for doubtful accounts. 23




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##### Table of Contents



Stock repurchase program
   Recent Accounting Pronouncements
  Off-Balance Sheet Arrangements
  24




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4T.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
         Managements Report on Internal Control over Financial Reporting
  Internal
Control-Integrated Framework
 Changes in Internal Control over Financial Reporting
  25




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  One of our significant advertising partners filed voluntary petitions for reorganization under
Chapter 11 of the U.S. Bankruptcy Code.
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  ApproximateTotal Number of
    
    
    Dollar Value ofShares Purchased
    
    
    Shares that Mayas Part of a
    
    
    Yet be PurchasedTotal Number
    
    
    Average
    
    
    Publicly
    
    
    Under theof Shares
    
    
    Price Paid
    
    
    Announced
    
    
    ProgramsPurchased (1)
    
    
    per Share
    
    
    Program
    
    
    (in 000s) (1)January 1  January 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    2,000February 1  February 28, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    2,000March 1  March 31, 2009
    
    
    99,065
    
    
    $
    2.40
    
    
    
    99,065
    
    
    $
    1,763Total
    
    
    99,065
    
    
    $
    2.40
    
    
    
    99,065
 
 (1)
    
    The shares repurchased in the three months ended March 31, 2009 were under our stock
repurchase program that was announced in October 2008 with an authorized level of $2.0
million. This program will expire in April 2010. 
 Item 3.
    
    Defaults Upon Senior Securities
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  
 Item 5.
    
    Other Information
  26




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##### Table of Contents



Item 6.
    
    Exhibits
 ExhibitNumber
    
    Description10.1 (1)
    
    Asset Purchase and Fulfillment Agreement, dated as of February 18, 2009, by and between LaRoss
Partners, Inc. and the Registrant10.2 (2)#
    
    Separation and General Release Agreement, dated as of February 23, 2009, by and between Douglas S.
Norman and the Registrant10.3 (2)#
    
    Employment Agreement, dated as of February 23, 2009, by and between Brenda Agius and the Registrant10.4 (3)
    
    Second Amendment to Amended and Restated PFP Advertiser Distribution Agreement, dated as of
February 27, 2009, by and between Idearc Media Corp. and the Registrant10.5 (4)
    
    Asset Purchase Agreement, dated as of March 9, 2009, by and between LiveDeal, Inc., Telco Billing,
Inc., a wholly owned subsidiary of LiveDeal, Inc and the Registrant31.1*
    
    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 200231.2*
    
    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 200232.1*
    
    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 Current Report on From 8-K, filed with the
Securities and Exchange Commission on February 23, 2009. Confidential portions omitted and
filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2
promulgated under the Securities and Exchange Act of 1934, as amended.(2)
    
    Incorporated by reference from the Registrants Current Report on From 8-K, filed with the
Securities and Exchange Commission on February 27, 2009.(3)
    
    Incorporated by reference from the Registrants Current Report on From 8-K, filed with the
Securities and Exchange Commission on March 5, 2009. Confidential portions omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 promulgated
under the Securities and Exchange Act of 1934, as amended.(4)
    
    Incorporated by reference from the Registrants Current Report on From 8-K, filed with the
Securities and Exchange Commission on March 12, 2009. 27




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##### Table of Contents



SIGNATURES
  LOCAL.COM CORPORATIONDate:  February 1, 2010
    /s/ Heath B. ClarkeHeath B. ClarkeChief Executive Officer
(principal executive officer) and Chairman/s/ Brenda AgiusBrenda AgiusChief Financial Officer (principal financial 
and accounting officer) and Secretary 28




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Description10.1 (1)
    
    Asset Purchase and Fulfillment Agreement, dated as of February 18, 2009, by and between LaRoss
Partners, Inc. and the Registrant10.2 (2)#
    
    Separation and General Release Agreement, dated as of February 23, 2009, by and between Douglas S.
Norman and the Registrant10.3 (2)#
    
    Employment Agreement, dated as of February 23, 2009, by and between Brenda Agius and the Registrant10.4 (3)
    
    Second Amendment to Amended and Restated PFP Advertiser Distribution Agreement, dated as of
February 27, 2009, by and between Idearc Media Corp. and the Registrant10.5 (4)
    
    Asset Purchase Agreement, dated as of March 9, 2009, by and between LiveDeal, Inc., Telco Billing,
Inc., a wholly owned subsidiary of LiveDeal, Inc and the Registrant31.1*
    
    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 200231.2*
    
    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 200232.1*
    
    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 Current Report on From 8-K, filed with the
Securities and Exchange Commission on February 23, 2009. Confidential portions omitted and
filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2
promulgated under the Securities and Exchange Act of 1934, as amended.(2)
    
    Incorporated by reference from the Registrants Current Report on From 8-K, filed with the
Securities and Exchange Commission on February 27, 2009.(3)
    
    Incorporated by reference from the Registrants Current Report on From 8-K, filed with the
Securities and Exchange Commission on March 5, 2009. Confidential portions omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 promulgated
under the Securities and Exchange Act of 1934, as amended.(4)
    
    Incorporated by reference from the Registrants Current Report on From 8-K, filed with the
Securities and Exchange Commission on March 12, 2009. 29