##### 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 June 30, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
 For the transition period from  to
 Commission File Number: 000-50989
 LOCAL.COM CORPORATION
  Delaware
    
    33-0849123(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 One Technology Drive, Building G
Irvine, CA 92618
 (949) 784-0800
 þ o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ
(Do not check if a smaller reporting company)
Smaller reporting company o
 o þ
 Number of shares outstanding at July 31, 2008:
    
    Common: 14,309,243Preferred: 0




---



##### 



LOCAL.COM CORPORATION
TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsCondensed Consolidated Balance Sheets as of June 30, 2008 (Unaudited) and December 31, 2007
    
    
    3Condensed Consolidated Statements of Operations for the three and six months ended  June 30, 2008 and 2007 (Unaudited)
    
     
    4Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2008 and 2007 (Unaudited)
    
     
    5Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007 (Unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4T.
    
    Controls and Procedures
    
    
    19PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    21Item 1A.
    
    Risk Factors
    
    
    21Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3.
    
    Defaults Upon Senior Securities
    
    
    21Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    21Item 5.
    
    Other Information
    
    
    21Item 6.
    
    Exhibits
    
    
    22EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 LOCAL.COM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,737
    
    
    $
    14,258Restricted cash
    
    
    30
    
    
    
    30Marketable securities
    
    
    
    
    
    
    1,999Accounts receivable, net of allowances of $25 and $15, respectively
    
    
    5,138
    
    
    
    3,595Prepaid expenses and other current assets
    
    
    161
    
    
    
    292Total current assets
    
    
    19,066
    
    
    
    20,174Property and equipment, net
    
    
    1,100
    
    
    
    1,473Intangible assets, net
    
    
    2,558
    
    
    
    3,156Goodwill
    
    
    13,231
    
    
    
    13,233Long-term restricted cash
    
    
    66
    
    
    
    66Deposits
    
    
    12
    
    
    
    12Total assets
    
    $
    36,033
    
    
    $
    38,114LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    4,729
    
    
    $
    4,029Accrued compensation
    
    
    723
    
    
    
    456Deferred rent
    
    
    261
    
    
    
    316Other accrued liabilities
    
    
    496
    
    
    
    194Deferred revenue
    
    
    88
    
    
    
    177Total liabilities, all current
    
    
    6,297
    
    
    
    5,172Commitments 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;
14,309,243 and 14,204,110 issued and outstanding, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    83,652
    
    
    
    82,176Accumulated comprehensive loss
    
    
    
    
    
    
    (1
    )Accumulated deficit
    
    
    (53,916
    )
    
    
    (49,233
    )Stockholders equity
    
    
    29,736
    
    
    
    32,942Total liabilities and stockholders equity
    
    $
    36,033
    
    
    $
    38,114
  3




---



##### Table of Contents



LOCAL.COM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue
    
    $
    9,646
    
    
    $
    5,098
    
    
    $
    18,488
    
    
    $
    9,979Operating expenses:Search serving
    
    
    1,320
    
    
    
    961
    
    
    
    2,773
    
    
    
    1,767Sales and marketing
    
    
    7,900
    
    
    
    4,701
    
    
    
    15,543
    
    
    
    9,400General and administrative
    
    
    1,400
    
    
    
    1,178
    
    
    
    2,842
    
    
    
    2,510Research and development
    
    
    755
    
    
    
    551
    
    
    
    1,632
    
    
    
    1,251Amortization of intangibles
    
    
    280
    
    
    
    244
    
    
    
    598
    
    
    
    481Total operating expenses
    
    
    11,655
    
    
    
    7,635
    
    
    
    23,388
    
    
    
    15,409Operating loss
    
    
    (2,009
    )
    
    
    (2,537
    )
    
    
    (4,900
    )
    
    
    (5,430
    )Interest and other income (expense), net
    
    
    84
    
    
    
    (614
    )
    
    
    218
    
    
    
    (806
    )Loss before income taxes
    
    
    (1,925
    )
    
    
    (3,151
    )
    
    
    (4,682
    )
    
    
    (6,236
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Net loss
    
    $
    (1,925
    )
    
    $
    (3,151
    )
    
    $
    (4,683
    )
    
    $
    (6,237
    )Per share data:Basic net loss per share
    
    $
    (0.14
    )
    
    $
    (0.34
    )
    
    $
    (0.33
    )
    
    $
    (0.67
    )Diluted net loss per share
    
    $
    (0.14
    )
    
    $
    (0.34
    )
    
    $
    (0.33
    )
    
    $
    (0.67
    )Basic weighted average shares outstanding
    
    
    14,242,162
    
    
    
    9,325,817
    
    
    
    14,223,136
    
    
    
    9,312,125Diluted weighted average shares outstanding
    
    
    14,242,162
    
    
    
    9,325,817
    
    
    
    14,223,136
    
    
    
    9,312,125
  4




---



##### Table of Contents



LOCAL.COM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss
    
    $
    (1,925
    )
    
    $
    (3,151
    )
    
    $
    (4,683
    )
    
    $
    (6,237
    )Other comprehensive income (loss):Net unrealized gain (loss) on marketable securities
    
    
    
    
    
    
    5
    
    
    
    1
    
    
    
    11Total comprehensive loss
    
    $
    (1,925
    )
    
    $
    (3,146
    )
    
    $
    (4,682
    )
    
    $
    (6,226
    )Supplemental comprehensive income (loss) information:Unrealized holding gains (losses) arising during period
    
    $
    
    
    
    $
    5
    
    
    $
    1
    
    
    $
    11Reclassification adjustment for losses included in net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net unrealized gain (loss) on marketable securities
    
    $
    
    
    
    $
    5
    
    
    $
    1
    
    
    $
    11
  5




---



##### Table of Contents



LOCAL.COM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six months endedJune 30,2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (4,683
    )
    
    $
    (6,237
    )Adjustments to reconcile net loss to cash used in operating activities:Depreciation and amortization
    
    
    1,036
    
    
    
    1,025Provision for doubtful accounts
    
    
    10
    
    
    
    9Non-cash stock based compensation
    
    
    1,223
    
    
    
    836Non-cash interest expense
    
    
    
    
    
    
    612Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,553
    )
    
    
    (1,051
    )Prepaid expenses and other
    
    
    164
    
    
    
    (369
    )Accounts payable and accrued liabilities
    
    
    1,214
    
    
    
    979Deferred revenue
    
    
    (89
    )
    
    
    (28
    )Net cash used in operating activities
    
    
    (2,678
    )
    
    
    (4,224
    )Cash flows from investing activities:Capital expenditures
    
    
    (98
    )
    
    
    (315
    )Proceeds from sales of marketable securities
    
    
    2,000
    
    
    
    Decrease in restricted cash
    
    
    
    
    
    
    41Change in acquisition,price
    
    
    2
    
    
    
    Net cash provided by (used in) investing activities
    
    
    1,904
    
    
    
    (274
    )Cash flows from financing activities:Proceeds from issuance of senior secured convertible notes
    
    
    
    
    
    
    8,000Proceeds from issuance of common stock from exercise of options
    
    
    158
    
    
    
    14Proceeds from issuance of common stock from exercise of warrants
    
    
    112
    
    
    
    7Proceeds from swing-sale profits
    
    
    3
    
    
    
    5Payment of notes payable
    
    
    
    
    
    
    (63
    )Payment of financing related costs
    
    
    (20
    )
    
    
    (3
    )Net cash provided by financing activities
    
    
    253
    
    
    
    7,960Net (decrease) increase in cash and cash equivalents
    
    
    (521
    )
    
    
    3,462Cash and cash equivalents, beginning of period
    
    
    14,258
    
    
    
    3,264Cash and cash equivalents, end of period
    
    $
    13,737
    
    
    $
    6,726Supplemental cash flow information:Interest paid
    
    $
    
    
    
    $
    134Income taxes paid
    
    $
    1
    
    
    $
    1Non-cash investing and financing transactions:Debt discount related to issuance of senior secured convertible notes
    
    
    
    
    
    $
    6,221Warrants issued for financing costs
    
    
    
    
    
    $
    458Common stock issued for asset purchase
    
    
    
    
    
    $
    431
  6




---



##### Table of Contents



LOCAL.COM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of presentation
  2. Significant accounting policies
 Principles of consolidation
  Intangible assets
      Goodwill
 Goodwill and Other Intangible Assets
 7




---



##### Table of Contents



Web site development costs and computer software developed for internal use
 Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use Accounting for Web Site Development Costs
 Stock-based compensation
 Share-Based
Payment
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Risk-free interest rate
    
    
    3.49
    %
    
    
    4.70
    %
    
    
    3.47
    %
    
    
    4.78
    %Expected lives (in years)
    
    
    7.0
    
    
    
    7.0
    
    
    
    7.0
    
    
    
    7.0Expected dividend yield
    
    None
    
    None
    
    None
    
    NoneExpected volatility
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Sales and marketing
    
    $
    234
    
    
    $
    93
    
    
    $
    474
    
    
    $
    213General and administrative
    
    
    286
    
    
    
    200
    
    
    
    626
    
    
    
    492Research and development
    
    
    52
    
    
    
    53
    
    
    
    123
    
    
    
    132Total stock-based compensation expense
    
    $
    572
    
    
    $
    346
    
    
    $
    1,223
    
    
    $
    837Basic and diluted net compensation
expense per share
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.09
    
    
    $
    0.09
 Net loss per share
 Earnings per Share
  8




---



##### Table of Contents



Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Net loss
    
    $
    (1,925
    )
    
    $
    (3,151
    )
    
    $
    (4,683
    )
    
    $
    (6,237
    )Denominator:Denominator for basic
calculation weighted average
shares
    
    
    14,242
    
    
    
    9,326
    
    
    
    14,223
    
    
    
    9,312Dilutive common stock equivalents:Options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted
calculation weighted average
shares
    
    
    14,242
    
    
    
    9,326
    
    
    
    14,223
    
    
    
    9,312Net loss per share:Basic net loss per share
    
    $
    (0.14
    )
    
    $
    (0.34
    )
    
    $
    (0.33
    )
    
    $
    (0.67
    )Diluted net loss per share
    
    $
    (0.14
    )
    
    $
    (0.34
    )
    
    $
    (0.33
    )
    
    $
    (0.67
    )
 New accounting pronouncements
 The Hierarchy of
Generally Accepted Accounting Principles The Meaning of Accounting Changes and Error Corrections
 3. Composition of certain balance sheet and statement of operations captions
  June 30,
    
    
    December 31,2008
    
    
    2007Furniture and fixtures
    
    $
    203
    
    
    $
    203Office equipment
    
    
    119
    
    
    
    119Computer equipment
    
    
    1,964
    
    
    
    1,889Computer software
    
    
    1,831
    
    
    
    1,841Leasehold improvements
    
    
    583
    
    
    
    5834,700
    
    
    
    4,635Less accumulated depreciation and amortization
    
    
    (3,600
    )
    
    
    (3,162
    )Property and equipment, net
    
    $
    1,100
    
    
    $
    1,473
 9




---



##### Table of Contents



June 30,
    
    
    December 31,2008
    
    
    2007Developed technology
    
    $
    2,233
    
    
    $
    2,233Non-compete agreements
    
    
    274
    
    
    
    274Purchased technology
    
    
    1,239
    
    
    
    1,239Customer-related
    
    
    1,020
    
    
    
    1,020Patents
    
    
    431
    
    
    
    431Domain name
    
    
    701
    
    
    
    7015,898
    
    
    
    5,898Less accumulated amortization
    
    
    (3,340
    )
    
    
    (2,742
    )Intangible assets, net
    
    $
    2,558
    
    
    $
    3,156
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest income
    
    $
    84
    
    
    $
    96
    
    
    $
    218
    
    
    $
    167Interest expense
    
    
    
    
    
    
    (258
    )
    
    
    
    
    
    
    (361
    )Interest expense  non-cash
    
    
    
    
    
    
    (452
    )
    
    
    
    
    
    
    (612
    )Interest and other income (expense), net
    
    $
    84
    
    
    $
    (614
    )
    
    $
    218
    
    
    $
    (806
    )
 4. Operating segment information
 Disclosures about Segments of an Enterprise and Related Information
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue by geographic region:United States
    
    $
    9,471
    
    
    $
    4,980
    
    
    $
    18,175
    
    
    $
    9,854Europe
    
    
    175
    
    
    
    118
    
    
    
    313
    
    
    
    125Total revenue
    
    $
    9,646
    
    
    $
    5,098
    
    
    $
    18,488
    
    
    $
    9,979
 5. Stock option plans
 1999 Plan
  10




---



##### Table of Contents



2000 Plan
  2004 Plan
  2005 Plan
  2007 Plan
  2008 Plan
  11




---



##### Table of Contents



AggregateWeighted Average
    
    
    Intrinsic ValueShares
    
    
    Exercise Price
    
    
    (in thousands)Outstanding at December 31, 2007
    
    
    2,703,850
    
    
    $
    5.04Granted
    
    
    341,556
    
    
    
    4.65Exercised
    
    
    (69,762
    )
    
    
    2.26Cancelled
    
    
    (145,587
    )
    
    
    3.65Outstanding at June 30, 2008
    
    
    2,830,057
    
    
    $
    5.13
    
    
    $
    461Exercisable at June 30, 2008
    
    
    1,433,585
    
    
    $
    5.51
    
    
    $
    438
    Options OutstandingWeighted
    
    
    
    
    
    Options ExercisableAverage
    
    Weighted
    
    
    
    
    
    WeightedRemaining
    
    Average
    
    
    
    
    
    AverageContractual
    
    Exercise
    
    
    
    
    
    ExerciseRange of Exercise Prices
    
    Shares
    
    Life
    
    Price
    
    Shares
    
    Price$1.01 - $2.00
    
    
    140,000
    
    
    4.5 years
    
    $
    2.00
    
    
    
    140,000
    
    
    $
    2.00$2.01 - $3.00
    
    
    94,792
    
    
    5.6 years
    
    $
    2.25
    
    
    
    94,792
    
    
    $
    2.25$3.01 - $4.00
    
    
    711,912
    
    
    6.5 years
    
    $
    3.70
    
    
    
    510,768
    
    
    $
    3.72$4.01 - $5.00
    
    
    1,210,554
    
    
    9.3 years
    
    $
    4.67
    
    
    
    124,945
    
    
    $
    4.54$5.01 - $6.00
    
    
    133,459
    
    
    7.7 years
    
    $
    5.68
    
    
    
    103,677
    
    
    $
    5.69$6.01 - $7.00
    
    
    117,578
    
    
    7.4 years
    
    $
    6.39
    
    
    
    104,422
    
    
    $
    6.38$7.01 - $8.00
    
    
    190,112
    
    
    7.2 years
    
    $
    7.51
    
    
    
    173,331
    
    
    $
    7.54$8.01 - $10.00
    
    
    120,000
    
    
    7.8 years
    
    $
    8.76
    
    
    
    70,000
    
    
    $
    9.17$15.01 - $16.59
    
    
    111,650
    
    
    6.1 years
    
    $
    15.61
    
    
    
    111,650
    
    
    $
    15.612,830,057
    
    
    7.8 years
    
    $
    5.13
    
    
    
    1,433,585
    
    
    $
    5.51
 6. Warrants
  Weighted AverageShares
    
    
    Exercise PriceOutstanding at December 31, 2007
    
    
    3,470,278
    
    
    $
    7.34Exercised
    
    
    (35,371
    )
    
    
    3.18Expired
    
    
    (625
    )
    
    
    4.00Outstanding and exercisable at June 30, 2008
    
    
    3,434,282
    
    
    $
    7.38
 12




---



##### Table of Contents



Warrants Outstanding and ExercisableWeightedAverage
    
    
    WeightedRemaining
    
    
    AverageContractual
    
    
    ExerciseRange of Exercise Prices
    
    Shares
    
    
    Life
    
    
    Price$0.00  $3.99
    
    
    144,062
    
    
    
    0.3
    
    
    $
    3.60$4.00  $4.99
    
    
    867,662
    
    
    
    3.6
    
    
    $
    4.36$5.00  $5.99
    
    
    867,662
    
    
    
    3.6
    
    
    $
    5.17$7.00  $7.99
    
    
    537,373
    
    
    
    4.1
    
    
    $
    7.89$9.00  $9.99
    
    
    537,373
    
    
    
    4.1
    
    
    $
    9.26$10.00  $19.99
    
    
    315,750
    
    
    
    1.3
    
    
    $
    10.00$20.00  $25.53
    
    
    164,400
    
    
    
    1.5
    
    
    $
    25.533,434,282
    
    
    
    3.3
    
    
    $
    7.38
 13




---



##### Table of Contents



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 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 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, 2007 and for the year ended December 31, 2007 included in our Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 10, 2008.
 Overview
   Stock-based compensation
 Share-Based Payment,
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Sales and marketing
    
    $
    234
    
    
    $
    93
    
    
    $
    474
    
    
    $
    213General and administrative
    
    
    286
    
    
    
    200
    
    
    
    626
    
    
    
    492Research and development
    
    
    52
    
    
    
    53
    
    
    
    123
    
    
    
    132Total stock-based compensation expense
    
    $
    572
    
    
    $
    346
    
    
    $
    1,223
    
    
    $
    837Basic and diluted net compensation
expense per share
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.09
    
    
    $
    0.09
 14




---



##### Table of Contents



Results of Operations
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Search serving
    
    
    13.7
    
    
    
    18.9
    
    
    
    15.0
    
    
    
    17.7Sales and marketing
    
    
    81.9
    
    
    
    92.2
    
    
    
    84.1
    
    
    
    94.2General and administrative
    
    
    14.5
    
    
    
    23.1
    
    
    
    15.4
    
    
    
    25.2Research and development
    
    
    7.8
    
    
    
    10.8
    
    
    
    8.8
    
    
    
    12.5Amortization of intangibles
    
    
    2.9
    
    
    
    4.8
    
    
    
    3.2
    
    
    
    4.8Total operating expenses
    
    
    120.8
    
    
    
    149.8
    
    
    
    126.5
    
    
    
    154.4Operating loss
    
    
    (20.8
    )
    
    
    (49.8
    )
    
    
    (26.5
    )
    
    
    (54.4
    )Interest and other income
(expense), net
    
    
    0.9
    
    
    
    (12.0
    )
    
    
    1.2
    
    
    
    (8.1
    )Loss before income taxes
    
    
    (19.9
    )
    
    
    (61.8
    )
    
    
    (25.3
    )
    
    
    (62.5
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    0.0
    
    
    
    0.0Net loss
    
    
    (19.9
    )%
    
    
    (61.8
    )%
    
    
    (25.3
    )%
    
    
    (62.5
    )%
 Revenue
  Three months ended June 30,
    
    Percent
    
    Six months ended June 30,
    
    Percent2008
    
    (*)
    
    2007
    
    (*)
    
    change
    
    2008
    
    (*)
    
    2007
    
    (*)
    
    changeLocal domestic
    
    $
    9,150
    
    
    
    94.9
    %
    
    $
    4,011
    
    
    
    78.7
    %
    
    
    128.1
    %
    
    $
    17,188
    
    
    
    93.0
    %
    
    $
    8,096
    
    
    
    81.1
    %
    
    
    112.3
    %Local international
    
    
    175
    
    
    
    1.8
    %
    
    
    118
    
    
    
    2.3
    %
    
    
    48.3
    %
    
    
    313
    
    
    
    1.7
    %
    
    
    125
    
    
    
    1.3
    %
    
    
    150.4
    %Total local
    
    
    9,325
    
    
    
    96.7
    %
    
    
    4,129
    
    
    
    81.0
    %
    
    
    125.8
    %
    
    
    17,501
    
    
    
    94.7
    %
    
    
    8,221
    
    
    
    82.4
    %
    
    
    112.9
    %National
    
    
    321
    
    
    
    3.3
    %
    
    
    969
    
    
    
    19.0
    %
    
    
    (66.9
    )%
    
    
    987
    
    
    
    5.3
    %
    
    
    1,758
    
    
    
    17.6
    %
    
    
    (43.9
    )%Total revenue
    
    $
    9,646
    
    
    
    100.0
    %
    
    $
    5,098
    
    
    
    100.0
    %
    
    
    89.2
    %
    
    $
    18,488
    
    
    
    100.0
    %
    
    $
    9,979
    
    
    
    100.0
    %
    
    
    85.3
    %
 
 (*) 
    
    Percent of total revenue.  15




---



##### Table of Contents



Percentage of total revenueThree months ended
    
    Six months endedJune 30,
    
    June 30,Customer
    
    2008
    
    2007
    
    2008
    
    2007Yahoo! Inc.
    
    
    44.0
    %
    
    
    48.9
    %
    
    
    45.7
    %
    
    
    48.4
    %Idearc Media Corp.
    
    
    20.4
    %
    
    
    12.0
    %
    
    
    17.6
    %
    
    
    13.7
    %
 Operating expenses:
  Three months ended June 30,
    
    Percent
    
    Six months ended June 30,
    
    Percent2008
    
    (*)
    
    2007
    
    (*)
    
    change
    
    2008
    
    (*)
    
    2007
    
    (*)
    
    changeSearch serving
    
    $
    1,320
    
    
    
    13.7
    %
    
    $
    961
    
    
    
    18.9
    %
    
    
    37.4
    %
    
    $
    2,773
    
    
    
    15.0
    %
    
    $
    1,767
    
    
    
    17.7
    %
    
    
    56.9
    %Sales and marketing
    
    
    7,900
    
    
    
    81.9
    %
    
    
    4,701
    
    
    
    92.2
    %
    
    
    68.0
    %
    
    
    15,543
    
    
    
    84.1
    %
    
    
    9,400
    
    
    
    94.2
    %
    
    
    65.4
    %General and administrative
    
    
    1,400
    
    
    
    14.5
    %
    
    
    1,178
    
    
    
    23.1
    %
    
    
    18.8
    %
    
    
    2,842
    
    
    
    15.4
    %
    
    
    2,510
    
    
    
    25.2
    %
    
    
    13.2
    %Research and development
    
    
    755
    
    
    
    7.8
    %
    
    
    551
    
    
    
    10.8
    %
    
    
    37.0
    %
    
    
    1,632
    
    
    
    8.8
    %
    
    
    1,251
    
    
    
    12.5
    %
    
    
    30.5
    %Amortization of intangibles
    
    
    280
    
    
    
    2.9
    %
    
    
    244
    
    
    
    4.8
    %
    
    
    14.8
    %
    
    
    598
    
    
    
    3.2
    %
    
    
    481
    
    
    
    4.8
    %
    
    
    24.3
    %Total operating expenses
    
    $
    11,655
    
    
    
    120.8
    %
    
    $
    7,635
    
    
    
    149.8
    %
    
    
    52.6
    %
    
    $
    23,388
    
    
    
    126.5
    %
    
    $
    15,409
    
    
    
    154.4
    %
    
    
    51.8
    %
 
 (*) 
    
    Percent of total revenue. Search serving
   Sales and marketing
  16




---



##### Table of Contents



General and administrative
   Research and development
   Amortization of intangibles
  Interest and other income (expense)
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest income
    
    $
    84
    
    
    $
    96
    
    
    $
    218
    
    
    $
    167Interest expense
    
    
    
    
    
    
    (258
    )
    
    
    
    
    
    
    (361
    )Interest expense  non-cash
    
    
    
    
    
    
    (452
    )
    
    
    
    
    
    
    (612
    )Interest and other income (expense), net
    
    $
    84
    
    
    $
    (614
    )
    
    $
    218
    
    
    $
    (806
    )
 17




---



##### Table of Contents



Provision for income taxes
  Liquidity and Capital Resources
  June 30,
    
    
    December 31,2008
    
    
    2007Cash and cash equivalents
    
    $
    13,737
    
    
    $
    14,258Marketable securities
    
    
    
    
    
    
    1,999Total cash, cash equivalents and marketable
securities
    
    $
    13,737
    
    
    $
    16,257Working capital
    
    $
    12,769
    
    
    $
    15,002
  Six months ended June 30,2008
    
    2007Net cash used in operating activities
    
    $
    (2,678
    )
    
    $
    (4,224
    )Net cash provided by (used in) investing activities
    
    $
    1,904
    
    
    $
    (274
    )Net cash provided by financing activities
    
    $
    253
    
    
    $
    7,960
      18




---



##### Table of Contents



Off-Balance Sheet Arrangements
  New Accounting Pronouncements
 The Hierarchy of
Generally Accepted Accounting Principles The Meaning of Accounting Changes and Error Corrections
 
 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
 19




---



##### Table of Contents



Changes in Internal Control over Financial Reporting
  20




---



##### 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. Submission of Matters to a Vote of Security Holders.
  Election of Directors
 FOR
    
    AGAINST
    
    ABSTAINNorman K. Farra Jr.
    
    
    10,944,011
    
    
    
    0
    
    
    
    358,322Philip K. Fricke
    
    
    10,942,134
    
    
    
    0
    
    
    
    360,199
  Ratification of the appointment of Haskell & White LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2008
 FOR
    
    AGAINST
    
    ABSTAIN11,085,272
    
    
    207,805
    
    
    
    9,256
  Approval of the 2008 Equity Incentive Plan
 FOR
    
    AGAINST
    
    ABSTAIN
    
    NON-VOTES1,522,564

    
    
    405,981
    
    
    
    31,649
    
    
    
    9,342,139
  
 Item 5. Other Information.
  21




---



##### Table of Contents



Item 6. Exhibits.
 ExhibitNumber
    
    Description31.1*
    
    
    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. 22




---



##### Table of Contents



SIGNATURES
  LOCAL.COM CORPORATIONAugust 6, 2008
    
    /s/ Heath B. ClarkeDate
    
    Heath B. ClarkeChief Executive Officer
(principal executive officer) and Chairman/s/ Douglas S. NormanDouglas S. NormanChief Financial Officer (principal financial

and accounting officer) and Secretary 23




---



##### Table of Contents



EXHIBITS FILED WITH THIS REPORT
 ExhibitNumber
    
    Description31.1*
    
    
    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. 24