Local Corporation Reports Third Quarter 2013 Financial Results

  Local Corporation Reports Third Quarter 2013 Financial Results

                           Company Updates Guidance

Business Wire

IRVINE, Calif. -- November 7, 2013

Local Corporation (NASDAQ: LOCM), a leading online local media company, today
reported its financial results for the third quarter 2013.

“We are pleased to report that third quarter 2013 revenue increased 4 percent
sequentially to $23.5 million from $22.7 million, which was the third
consecutive quarter of revenue growth. GAAP net loss fell 51 percent, while
Adjusted EBITDA increased 12 percent from the second quarter. Positive third
quarter trends include a 190 percent year-over-year increase in Network
revenue, substantial progress in adding product inventory to our shopping data
business, Krillion®, and the development of our mobile shopping app, which we
expect to launch during the fourth quarter,” said Heath Clarke, Local
Corporation chairman and CEO. “Third quarter O&O revenue trend was
unfavorable, due to continued RPC softness from one of our larger ad partners,
and although the fourth quarter is our seasonally strong quarter, we do expect
some slowing in Network revenue growth and additional RPC softness.
Accordingly, we now expect full-year revenue to come in at the lower end of
prior guidance, and adjusted EBITDA of approximately $4.5 million. We have
spent the second half of 2013 making investments that enable us to enter 2014
with unique shopping search and mobile assets that we believe will give us
direct relationships with large advertisers and consumers, and allow us, for
the first time, to partner with some of the largest publishers on the
Internet. We remain firmly focused on growth and leveraging our many IP
resources.”

                                                            
SUMMARY RESULTS

(in thousands, except per share amounts)
                                                                    
                                      Q3 2013      Q2 2013      Q3 2012
Consumer Properties:
Owned & Operated                      $ 8,807        $ 10,917       $ 18,340
Network                                 14,540         11,590         4,961
Business Solutions                     125          149          1,064  
Revenue                               $ 23,472      $ 22,656      $ 24,365 
                                                                    
Adjusted EBITDA*                      $ 1,320        $ 1,175        $ 211
Plus interest and other income          (537   )       (420   )       (131   )
(expense), net
Less (provision for) benefit            109            (159   )       (22    )
from income taxes
Less non-cash depreciation,
amortization and                        (1,514 )       (1,691 )       (3,274 )

stock compensation
Less revaluation of derivatives         (413   )       638            65
Less net loss from discontinued         (154   )       (3,264 )       (507   )
operations
Plus accrual for lease                  -              155            -
(liability)/asset
Less severance charges                  (5     )       (20    )       (144   )
Less settlement accrual                (550   )      -            -      
GAAP net loss                         $ (1,744 )     $ (3,586 )     $ (3,802 )
                                                                    
Diluted Adjusted EBITDA per           $ 0.06         $ 0.05         $ 0.01
share*
Diluted GAAP net loss per share       $ (0.08  )     $ (0.16  )     $ (0.17  )

Diluted weighted average shares
used for Adjusted EBITDA per            23,191         23,051         22,245
share
Diluted weighted average shares
used for GAAP net loss per              22,962         22,877         22,092
share
                                                                    
Cash                                  $ 4,847        $ 4,806        $ 3,706
                                                                             
* See detailed reconciliation of GAAP to non-GAAP measures in the financial
tables attached to this release.
                                                                             

Adjusted EBITDA is defined as net income (loss) excluding: provision for
income taxes; interest and other income (expense), net; depreciation;
amortization; stock-based compensation charges; gain or loss on derivatives’
revaluation; net income (loss) from discontinued operations; accrued lease
liability/asset; severance charges; and cost related to a settlement accrual.

An explanation of the company’s use of non-GAAP financial measures, including
the limitations of such measures relative to GAAP measures, is included below,
and a reconciliation between GAAP and non-GAAP measures, where appropriate, is
included in the financial tables attached to this release.

Third Quarter 2013 Results Highlights:

“We were pleased to see another quarter of sequential revenue growth in the
third quarter 2013, coupled with improved bottom-line results and positive
cash flow,” added Ken Cragun, Local Corporation chief financial officer.

• Revenue – Third quarter 2013 revenue of $23.5 million represents an increase
of 4 percent over second quarter 2013 revenue of $22.7 million and a 4 percent
decrease from third quarter 2012 revenues of $24.4 million.

• GAAP Net Loss – Third quarter 2013 GAAP Net Loss was $1.7 million, or
($0.08) per diluted share, compared to a second quarter 2013 GAAP Net Loss of
$3.6 million, or ($0.16) per diluted share. This included a net loss from
discontinued operations of $154,000, a loss on the revaluation of derivatives
of $413,000, and an increase in general and administrative expense due to an
estimated accrual of $550,000 relating to litigation regarding licensing fees
and an increase in the allowance for doubtful accounts of $450,000.

• Adjusted EBITDA – The company reported positive Adjusted EBITDA for the
third quarter of 2013 of $1.3 million, or $0.06 per diluted share, a 12
percent increase over the second quarter 2013 positive Adjusted EBITDA.

• Cash – The company’s cash balance was $4.8 million as of September 30, 2013,
an increase compared to its June 30, 2013, cash balance.

• Debt – On September 30, 2013, the company had borrowings of $8.7 million
outstanding under its Square 1 Bank credit facility with availability of $3.3
million. The company also had $5 million due related to senior secured
convertible notes.

Third Quarter 2013 Operating Highlights:

• Overall, Organic and Mobile Traffic – Overall traffic on the site and
network was 80 million monthly unique visitors (MUVs) in the third quarter of
2013, down 14 percent from second quarter 2013 traffic and down 21 percent
from the year ago period. Organic traffic on the site and network was 35.1
million MUVs in the third quarter of 2013, down 18 percent from the second
quarter of 2013 and down 10 percent from the year ago period. Organic traffic
is defined as all non-SEM sourced traffic. Overall mobile traffic was 32
million MUVs in the third quarter of 2013, down 6 percent from the second
quarter of 2013 and up 30 percent from the year ago period. The decrease in
traffic during the third quarter of 2013 is due to seasonality and adjustments
made to the company’s search engine marketing campaigns in response to market
conditions.

Consumer Properties:

Owned & Operated (O&O):

• Revenue – Third quarter 2013 total revenue related to the O&O business unit
was $8.8 million, down 19 percent from second quarter of 2013 O&O revenue of
$10.9 million and down 52 percent from the third quarter of 2012 O&O revenue
of $18.3 million. The decline in O&O revenue relates to lower revenue per
click from a large ad partner coupled with lower traffic and seasonality. We
anticipate a seasonally strong fourth quarter.

• Monetization of Traffic – Revenue per thousand visitors (RKV) for the third
quarter of 2013 was $180, down 10 percent from the second quarter of 2013 RKV
of $199 and down 35 percent from the third quarter 2012 RKV of $276. This
decline was primarily due to lower revenue per click from a large ad partner.

Network:

• Revenue – Third quarter 2013 total revenue related to the Network business
unit was $14.5 million, up 25 percent from the $11.6 million Network revenue
recorded in the second quarter of 2013 and up 190 percent from the $5 million
Network revenue recorded in the third quarter of 2012. The increase in Network
revenue is mainly due to the increase in the number of Network sites during
the quarter from over 1,600 in the second quarter 2013, to over 2,100 for the
third quarter of 2013 as we executed on our stated goal to expand number of
sites via our business development team.

• Network Revenue ex-TAC – Third quarter 2013 total Network revenue ex-TAC was
$ 6.8 million, up 42 percent from the $4.8 million Network revenue ex-TAC
recorded in the second quarter of 2013 and up 134 percent from the $2.9
million Network revenue ex-TAC recorded in the third quarter of 2012.

Network Revenue ex-TAC is defined as GAAP Network revenue less network traffic
acquisition cost. An explanation of the company’s use of non-GAAP financial
measures, including the limitations of such measures relative to GAAP
measures, is included below and a reconciliation between GAAP and non-GAAP
measures, where appropriate, is included in the financial tables attached to
this release.

• Network Sites – The Network business unit ended the third quarter of 2013
with over 2,100 Network partner sites.

Business Solutions:

• Revenue – Third quarter 2013 revenue was $125,000, down 16 percent from
second quarter 2013 revenue of $149,000. This decline is expected after the
company’s decision to cease its direct sales efforts. Due to the
immateriality, the company will no longer be separately reporting its Business
Solutions revenue.

Recent News Highlights:

• Named New VP of Technology –  In October 2013, the company announced the
appointment of Joe Lindsay as its new vice president of technology. He brings
over 25 years of experience leading technology and engineering for well-known
public and private companies. Lindsay will be instrumental in leading the
company's strategic focus on mobile and the expansion of its powerful, next
generation Krillion local shopping platform, in addition to other technology
initiatives.

• Krillion Platform Powers Shopping Channel for Pittsburgh Post-Gazette – In
October 2013, the company announced that it is powering a new local shopping
channel for the Pittsburgh Post-Gazette through its online property,
post-gazette.com. Local Corporation’s new local shopping channel enables
publishers to drive new digital revenue and traffic through the integration of
dynamic local shopping content from the company’s patented Krillion local
shopping platform.

• Launched Next Generation Krillion Local Shopping Platform – In September
2013, the company announced that it launched the next generation of its
Krillion local shopping platform, which provides dynamic location-based
product search data for millions of local consumers nationwide.

• Announced Agreement to Provide Location-Based Product Data – In September
2013, the company announced that it signed an agreement with a major search
engine to provide location-based local product data. As part of the agreement,
Local Corporation's Krillion shopping data platform is helping power local
product search results, including relevant retail locations, brands,
categories, and product availability data and details.

• Appointed New VP of Product – In August 2013, the company announced the
appointment of Jesus Gaytan as its new vice president of product management.
Gaytan is responsible for leading the company's product management and
development initiatives, including the company's strategic focus on mobile and
the expansion of products connected to its growing local shopping platform.
Gaytan brings over 14 years of product strategy experience managing digital
product portfolios for both Fortune 500 and start-up companies.

Fiscal 2013 Financial Guidance:

During the fourth quarter, the company is seeing lower-than-expected RPCs from
a large ad partner and slower growth in the Network business, due to its
continuing efforts to maintain quality traffic for its advertising partners.
As a result, the company is updating its 2013 financial guidance.

Revenue - The company now expects 2013 revenue at the low end of the
previously provided guidance of between $95 million and $97 million.

Adjusted EBITDA – Positive Adjusted EBITDA for 2013 is now expected to be
approximately $4.5 million. **

Projected 2013 Adjusted EBITDA Factors:

  *Interest and other income (expense), net of $2.1 million;
  *Income tax provision of $200,000;
  *Depreciation expense of $3.8 million;
  *Amortization expense of $1.1 million;
  *Stock compensation expense of $1.7 million;
  *Severance and non-recurring charges of $1.7 million;
  *Loss from discontinued operations of $3.6 million; and
  *Warrant and conversion option revaluation expense items are
    undeterminable, but may be significant non-cash gains or losses**

** The valuation of the warrant liability and the conversion option liability
is based in large part on the underlying price and volatility of the company’s
common stock during the period. Since the company cannot predict this, the
company cannot project the non-cash gain or loss in connection with these
warrants and the conversion option, and therefore, cannot reasonably project
its GAAP net income (loss). Therefore, the company cannot provide GAAP
guidance, but does report GAAP results.

As previously announced, the company will no longer provide quarterly
guidance.

Conference Call Information:

Chairman and CEO Heath Clarke and CFO Ken Cragun will host a conference call
today at 5 p.m. ET to discuss the results and outlook. Investors and analysts
can participate in the call by dialing 1-877-454-9136 or 1-617-826-1724,
passcode # 87115923. To listen to the webcast, or to view the press release,
please visit the Investor Relations section of the Local Corporation website
at: http://ir.local.com. Institutional investors can access the call via
Thomson/CCBN's password-protected event management site, StreetEvents, at:
www.streetevents.com.

The replay can be accessed for approximately one week starting at 7:30 p.m.
Eastern Time the day of the call by dialing 1-800-585-8367 or 1-404-537-3406,
passcode #  87115923. A replay of the webcast will be available for
approximately 90 days on the company's website, starting approximately one
hour after the completion of the call.

About Local Corporation

Local Corporation (NASDAQ:LOCM) is a leading online local media company that
connects brick-and-mortar businesses with over a million online and mobile
consumers each day using a variety of innovative digital marketing products.
To advertise, or for more information, visit: http://www.localcorporation.com.

Forward Looking Statements

This press release contains certain “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Words or expressions such as 'anticipate,'
'believe,' 'estimate,' 'plans,' 'expect,' 'intend,' ‘project,’ ‘forecast,’
‘potential,’ ‘feel’ and similar expressions and phrases are intended to
identify such forward-looking statements. Any forward-looking statements are
based on the beliefs of our management as well as assumptions made by and
information currently available to our management. Actual results could differ
materially from those contemplated by the forward-looking statements as a
result of certain factors, including, but not limited to, our advertising
partners paying less revenue per click and revenues to us for our search
results, our ability to purchase advertising from third parties to drive users
to our sites, including at a profit, our ability to adapt our business
following the shifts in our monetization partners, our ability to monetize the
Local.com domain, including at a profit, our ability to retain a monetization
partner for the Local.com domain and other web properties under our management
that allows us to operate profitably, our ability to develop, market and
operate our local-search technologies, our ability to maintain and grow the
number of Network partner sites and the aggregate levels of user traffic from
such Network partner sites, our ability to market the Local.com domain as a
destination for consumers seeking local-search results, our ability to adapt
to policy changes promulgated by our advertising partners and traffic
acquisition partners, our ability to grow our business by enhancing our
local-search services, including through businesses we acquire, the
integration and future performance of our Krillion business, the possibility
that the information and estimates used to predict anticipated revenues and
expenses associated with the businesses we acquire are not accurate,
difficulties executing integration strategies or achieving planned synergies,
the possibility that integration costs and go-forward costs associated with
the businesses we acquire will be higher than anticipated, the possibility of
impairment of assets associated with the businesses we have acquired, our
ability to successfully expand our sales channels for new and existing
products and services, our ability to increase the number of businesses that
purchase our advertising products, our ability to expand our advertiser and
distribution networks, our ability to integrate and effectively utilize our
acquisitions' technologies, our ability to develop our products and sales,
marketing, finance and administrative functions and successfully integrate our
expanded infrastructure, as well as our dependence on major advertisers, our
ability to successfully assert our intellectual property rights, competitive
factors and pricing pressures, changes in legal and regulatory requirements,
and general economic conditions. Any forward-looking statements reflect our
current views with respect to future events and are subject to these and other
risks, uncertainties and assumptions relating to our operations, results of
operations, growth strategy and liquidity. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by this paragraph. Unless otherwise
stated, all site traffic and usage statistics are from third-party service
providers engaged by the company.

Our most recent Annual Report on Form 10-K, recent Current Reports on Form 8-K
and Form 8-K/A, and other Securities and Exchange Commission filings discuss
the foregoing risks as well as other important risk factors that could
contribute to such differences or otherwise affect our business, results of
operations and financial condition. The forward-looking statements in this
release speak only as of the date they are made. We undertake no obligation to
revise or update publicly any forward-looking statement for any reason.

Non-GAAP Financial Measures

This press release includes the non-GAAP financial measure of “Adjusted
EBITDA” which we define as net income (loss) excluding: provision for income
taxes; interest and other income (expense), net; depreciation; amortization;
stock based compensation charges; gain or loss on derivatives’ revaluation;
net income (loss) from discontinued operations; accrued lease liability/asset;
severance charges; and an expense related to a settlement accrual. Adjusted
EBITDA, as defined above, is not a measurement under GAAP. Adjusted EBITDA is
reconciled to net income (loss) which we believe is the most comparable GAAP
measure. A reconciliation of net income (loss) to Adjusted EBITDA is set forth
at the end of this press release.

Management believes that Adjusted EBITDA provides useful information to
investors about the company’s performance because it eliminates the effects of
period-to-period changes in income from interest on the company’s cash,
expense from the company’s financing transactions and the costs associated
with income tax expense, capital investments, stock-based compensation
expense, net income (loss) from discontinued operations, derivatives’
revaluation charges; accrued lease liability/asset; severance charges; and an
expense related to a settlement accrual; which are not directly attributable
to the underlying performance of the company’s business operations. Management
uses Adjusted EBITDA in evaluating the overall performance of the company’s
business operations.

A limitation of non-GAAP Adjusted EBITDA is that it excludes items that often
have a material effect on the company’s net income and earnings per common
share calculated in accordance with GAAP. Therefore, management compensates
for this limitation by using Adjusted EBITDA in conjunction with net income
(loss) and net income (loss) per share measures. The company believes that
Adjusted EBITDA provides investors with an additional tool for evaluating the
company’s core performance, which management uses in its own evaluation of
overall performance, and as a base-line for assessing the future earnings
potential of the company. While the GAAP results are more complete, the
company prefers to allow investors to have this supplemental metric since,
with reconciliation to GAAP; it may provide greater insight into the company’s
financial results. The non-GAAP measures should be viewed as a supplement to,
and not as a substitute for, or superior to, GAAP net income (loss) or
earnings (loss) per share.

This press release also includes the non-GAAP measure of “Network revenue
ex-TAC” which we define as GAAP network revenue less traffic acquisition cost.
Network revenue ex-TAC, as defined above, is not a measurement under GAAP.
Network revenue ex-TAC is reconciled to GAAP network revenue which we believe
is the most comparable GAAP measure. A reconciliation of GAAP network revenue
to Network revenue ex-TAC is set forth at the end of this press release.

Management believes that Network revenue ex-TAC provides useful information to
investors about the company’s performance because it eliminates the costs
associated with acquiring traffic to our Network websites, which we pay to our
Network publisher partners and which can vary, as new partners are added or as
we experience attrition in our partners. Management uses Network revenue
ex-TAC as a means of evaluating the overall performance of the company’s
Network business.

A limitation of non-GAAP Network revenue ex-TAC is that it excludes a portion
of our Revenue that is material to the calculation of the Company’s overall
Revenue. Therefore, management compensates for this limitation by using
Network revenue ex-TAC in conjunction with GAAP network revenue. The company
believes that Network revenue ex-TAC provides investors with an additional
tool for evaluating core performance of the company’s Network business, which
management uses in its own evaluation of Network’s performance. While the GAAP
results are more complete, the company prefers to allow investors to have this
supplemental metric since, with reconciliation to GAAP; it may provide greater
insight into the company’s financial results. The non-GAAP measures should be
viewed as a supplement to, and not as a substitute for, or superior to GAAP
network revenue.

                                                            
                                                                  
LOCAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(Unaudited)
                                                                  
                                                September 30,     December 31,
                                                2013              2012
ASSETS
Current assets:
Cash                                            $  4,847          $  3,696
Restricted cash                                    -                 42
Accounts receivable, net of allowances of          14,885            10,618
$548 and $250, respectively
Note receivable                                    167               319
Prepaid expenses and other current assets          1,405             648
Assets held for sale                              -               3,452   
Total current assets                               21,304            18,775
                                                                  
Property and equipment, net                        5,992             6,467
Goodwill                                           19,281            19,281
Intangible assets, net                             2,664             3,351
Long term receivable, net of allowances            1,722             1,585
of $1,710 and $1,710, respectively
Escrow receivable                                  390               390
Deposits                                          72              58      
Total assets                                    $  51,425        $  49,907  
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                                $  10,470         $  8,367
Accrued compensation                               1,264             829
Deferred rent                                      371               452
Warrant liability                                  766               5
Conversion option liability                        1,192             -
Other accrued liabilities                          3,244             1,315
Revolving line of credit                           6,417             10,000
Current portion of term loan                       1,500             -
Deferred revenue                                  162             203     
Total current liabilities                          25,386            21,171
                                                                  
Long-term portion of term loan                     750               -
Senior secured convertible notes, net of           3,227             -
debt discount of $1,773
Deferred income taxes                             302             302     
Total liabilities                                 29,665          21,473  
                                                                  
                                                                  
Stockholders’ 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; 23,035 and 22,172               -                 -
issued and outstanding, respectively
Additional paid-in capital                         124,045           122,036
Accumulated deficit                               (102,285 )       (93,602 )
Stockholders’ equity                              21,760          28,434  
Total liabilities and stockholders’             $  51,425        $  49,907  
equity
                                                                             
                                                                             

                                              
                                                    
LOCAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)
                                                    
                      Three Months Ended            Nine Months Ended
                      September 30,                 September 30,
                      2013         2012           2013         2012
Revenue               $ 23,472      $ 24,365      $ 67,591      $ 75,399  
Costs and
expenses:
Cost of                 16,208         18,407         48,253         55,632
revenues
Sales and               2,230          3,649          7,419          11,940
marketing
General and             3,894          2,522          9,685          7,706
administrative
Research and            1,664          1,240          4,900          3,666
development
Amortization of        225          1,754        687          3,211   
intangibles
                                                                   
Total operating        24,221       27,572       70,944       82,155  
expenses
                                                                   
Operating               (749   )       (3,207 )       (3,353 )       (6,756  )
income (loss)
                                                                   
Interest and
other income            (537   )       (131   )       (1,799 )       (325    )
(expense), net
Change in fair
value of
conversion             (413   )      65           229          173     
option and
warrant
liability
                                                                   
Income (loss)
from continuing
operations              (1,699 )       (3,273 )       (4,923 )       (6,908  )
before income
taxes
                                                                   
Provision for
(benefit from)         (109   )      22           121          121     
for income
taxes
                                                                   
Net income
(loss) from             (1,590 )       (3,295 )       (5,044 )       (7,029  )
continuing
operations
Income (loss)
from
discontinued           (154   )      (507   )      (3,639 )      (9,322  )
operations (net
of taxes)
Net income            $ (1,744 )     $ (3,802 )     $ (8,683 )     $ (16,351 )
(loss)
                                                                   
Per share data:
                                                                   
Basic and
diluted net
income (loss)         $ (0.07  )     $ (0.15  )     $ (0.22  )     $ (0.32   )
per share from
continuing
operations
Basic and
diluted net
income (loss)         $ (0.01  )     $ (0.02  )     $ (0.16  )     $ (0.42   )
per share from
discontinued
operations
Basic and
diluted net           $ (0.08  )     $ (0.17  )     $ (0.38  )     $ (0.74   )
income (loss)
per share
                                                                   
                                                                   
Basic and
diluted
weighted                22,962         22,092         22,802         22,087
average shares
outstanding
                                                                             
                                                                             

                                                       
                                                             
LOCAL CORPORATION

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION

STOCK-BASED COMPENSATION EXPENSE

(in thousands, except per share data)
                                                             
                                      Three Months Ended     Nine Months Ended
                                      September 30,          September 30,
                                      2013       2012       2013     2012
Cost of revenues                      $  26       $ 22       $ 85      $ 61
Sales and marketing                      83         207        333       657
General and administrative               192        320        787       988
Research and development                51        63        207      163
Total stock-based compensation        $  352      $ 612      $ 1,412   $ 1,869
expense*
                                                                       
Basic and diluted net
stock-based compensation              $  0.02     $ 0.03     $ 0.06    $ 0.08
expense per share
                                                                         
*- Excludes impact of discontinued operations.



                                           
                                               
LOCAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)
                                               
                                               Nine Months Ended September 30,
                                               2013              2012
Cash flows from operating activities:
Net loss                                       $  (8,683  )        $ (16,351 )
Adjustments to reconcile net loss to
cash provided by (used in) operating
activities:
Depreciation and amortization                     3,732              6,581
Provision for doubtful accounts                   809                138
Stock-based compensation expense                  1,431              2,176
Non-cash interest expense                         409                -
Loss on exchange of warrants                      723                -
Change in fair value of conversion                (229    )          (173    )
option and warrant liability
Impairment of goodwill and intangible             3,051              6,451
assets
Changes in operating assets and
liabilities:
Accounts receivable                               (4,866  )          497
Long term receivable                              (137    )          (1,133  )
Note receivable                                   152                167
Prepaid expenses and other                        (411    )          223
Accounts payable and accrued liabilities          4,386              (2,248  )
Deferred revenue                                 (41     )         (75     )
Net cash provided by (used in) operating         326              (3,747  )
activities
                                                                   
Cash flows from investing activities:
Capital expenditures                              (2,379  )          (2,553  )
Restricted cash                                  42               (32     )
Net cash used in investing activities            (2,337  )         (2,585  )
                                                                   
Cash flows from financing activities:
Proceeds from exercise of options                 22                 22
Proceeds from issuance of senior secured          5,000              -
convertible notes and warrants
Payment of financing related costs                (527    )          (5      )
Proceeds (payment) of revolving credit            (583    )          (373    )
facility
Payment of term loan                             (750    )         -       
Net cash provided by (used in) financing         3,162            (356    )
activities
Net increase (decrease) in cash                   1,151              (6,688  )
Cash, beginning of period                        3,696            10,394  
Cash, end of period                            $  4,847           $ 3,706   
                                                                   
Supplemental Cash Flow Information:
Interest paid                                  $  426             $ 320     
Income taxes paid                              $  7               $ 12      
                                                                             
Non-cash financing activities:
Derivative liabilities recorded in
connection with the issuance of senior         $  2,182           $ -       
secured convertible notes
                                                                             
                                                                             

                                                           
                                                                 
LOCAL CORPORATION

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

(in thousands, except per share amounts)

(Unaudited)
                                                                 
                                                                 
                                                                 Three Months
                            Three Months Ended September 30,     Ended June
                                                                 30,
                            2013              2012              2013
Net loss                    $   (1,744   )     $  (3,802  )      $   (3,586  )
                                                                 
Plus interest and
other income                    537               131                420
(expense), net
Plus provision for
(benefit from) income           (109     )        22                 159
taxes
Plus amortization of            225               1,754              231
intangibles
Plus depreciation               937               908                934
Plus stock-based                352               612                526
compensation
Plus revaluation of             413               (65     )          (638    )
derivatives
Plus net loss from
discontinued                    154               507                3,264
operations
Plus accrual for
lease                           -                 -                  (155    )
liability/(asset)
Plus severance                  5                 144                20
charges
Plus settlement                550             -                -       
accrual
                                                                 
Adjusted EBITDA             $   1,320         $  211           $   1,175   
                                                                 
Diluted Adjusted            $   0.06          $  0.01          $   0.05    
EBITDA per share
                                                                 
Diluted weighted
average shares                  23,191            22,245             23,051
outstanding
                                                                             


RECONCILIATION OF NETWORK GAAP REVENUE TO NETWORK REVENUE EX-TAC

(in thousands)

(Unaudited)
                                                          
                                                                
                                                                Three Months
                           Three Months Ended September 30,     Ended June 30,
                           2013               2012             2013
Network GAAP Revenue       $    14,540         $    4,961       $     11,590
Less Traffic                   7,788              2,048            6,811
Acquisition Cost
                                                                
Network Revenue            $    6,752          $    2,913       $     4,779
ex-TAC
                                                                      

Contact:

Investor Relations and Media Relations Contact:
Local Corporation
Cameron Triebwasser
949-789-5223
ctriebwasser@local.com
 
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