Local Corporation Reports Fourth Quarter and Fiscal 2013 Financial Results

  Local Corporation Reports Fourth Quarter and Fiscal 2013 Financial Results

Business Wire

IRVINE, Calif. -- February 13, 2014

Local Corporation (NASDAQ: LOCM), a leading local advertising and technology
company, today reported its financial results for the fourth quarter and
fiscal 2013.

“We are pleased with the significant progress we made across the business in
2013. I would like to take this opportunity to thank founder and former
chairman and CEO, Heath Clarke, for his 15 years of service and innovation. He
built a great company and a talented management team able to lead the company
into the future,” said Fred Thiel, Local Corporation, chairman of the board.
“2014 represents a year that is focused on investing in initiatives that will
contribute to further growing and strengthening the business and enhancing
value, including the realization of products and services based on our
Krillion assets.”

Key Highlights

  *Reached fourth quarter revenue of $26.8 million, a 30 percent increase
    from fourth quarter 2012
  *Achieved positive cash flow for the fourth quarter
  *Reduced GAAP net loss year-over-year by more than 50 percent
  *Finished the fourth quarter with $1.4 million of Adjusted EBITDA*
  *Four consecutive quarters of Adjusted EBITDA growth
  *Fourth quarter mobile traffic was up 24 percent from the prior year period
  *Fourth quarter network revenue was up 112 percent from the prior year
    period
  *Reached fiscal year 2013 revenue of $94.4 million with Adjusted EBITDA of
    $4.5 million

* 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; cost related to a settlement accrual; LEC
reserve; and finance related charges.

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.

“2013 represented an important year for the company, and we made meaningful
progress in our shift to becoming a mobile-first, data-focused company,
including launching our powerful Krillion shopping platform, as well our
Havvit shopping app, which showcases how this valuable local shopping data can
be utilized,” added Michael Sawtell, Local Corporation, president and COO. “We
believe this shift, combined with our efforts towards growing our core
business, positions the company well for 2014.”

“We finished the year with revenue of $94.4 million along with Adjusted EBITDA
of $4.5 million, making it one of the strongest financial performances in
company history,” said Sawtell. “Positive fourth quarter trends include the
return of O&O revenue, up 20 percent quarter-over-quarter, even though we
experienced reduced organic search traffic, due to algorithmic changes made by
a large search engine resulting in margin headwinds.”

Full Year 2013 Results Highlights:

• Revenue – Revenue of $94.4 million for the year ended Dec. 31, 2013, a 2
percent decrease from $96.0 million for the year ended Dec. 31, 2012.

• GAAP net loss – GAAP net loss of $10.4 million, or ($0.45) per diluted
share, for the year ended Dec. 31, 2013. This compares to a GAAP net loss of
$24.2 million, or ($1.10) per diluted share, for the year ended Dec. 31, 2012.

• Adjusted EBITDA – The company reported positive Adjusted EBITDA of $4.5
million, or $0.20 per diluted share, for the year ended Dec. 31, 2013. This
compares to positive Adjusted EBITDA of $777,000, or $0.03 per diluted share,
for the year ended Dec. 31, 2012.

Fourth Quarter Results Highlights:

“We were pleased to see another quarter of sequential revenue growth in the
fourth quarter 2013, coupled with improved bottom-line results and positive
cash flow,” said Ken Cragun, Local Corporation, CFO. “In 2014, we expect to
grow the core business while we continue to invest in new initiatives,
including mobile and local shopping.”

SUMMARY RESULTS
(in thousands, except per share amounts)
                                                              
                                      Q4 2013      Q3 2013      Q4 2012
Consumer Properties:
Owned & Operated                      $ 10,701       $ 8,932        $ 12,940
Network                                16,104       14,540       7,636  
Revenue                               $ 26,805      $ 23,472      $ 20,576 
                                                                    
Adjusted EBITDA*                      $ 1,353        $ 1,320        $ (771   )
Plus interest and other income          (522   )       (537   )       (100   )
(expense), net
Less (provision for) benefit from       (18    )       109            9
income taxes
Less non-cash depreciation,
amortization and                        (1,552 )       (1,514 )       (2,132 )

stock compensation
Plus (less) revaluation of              871            (413   )       30
derivatives
Less net loss from discontinued         (90    )       (154   )       (3,469 )
operations
Less LEC reserve                        (1,721 )       -              (1,407 )
Less severance charges                  -              (5     )       (51    )
Less settlement accrual                -            (550   )      -      
GAAP net income (loss)                $ (1,679 )     $ (1,744 )     $ (7,891 )
                                                                    
Diluted Adjusted EBITDA per share *   $ 0.06         $ 0.06         $ (0.03  )
Diluted GAAP net income (loss) per    $ (0.07  )     $ (0.08  )     $ (0.36  )
share

Diluted weighted average shares         23,231         23,191         22,131
used for Adjusted EBITDA per share
Diluted weighted average shares
used for GAAP net income loss per       23,037         22,962         22,131
share
                                                                    
Cash                                  $ 5,069        $ 4,847        $ 3,696

 * See detailed reconciliation of GAAP to non-GAAP measures in the financial
                       tables attached to this release.

• Revenue – Fourth quarter 2013 revenue of $26.8 million represents an
increase of 14 percent over third quarter 2013 revenue of $23.5 million and a
30 percent increase over fourth quarter 2012 revenues of $20.6 million.

• GAAP net loss – Fourth quarter 2013 GAAP net loss was $1.7 million, or
($0.07) per diluted share, compared to a third quarter 2013 GAAP net loss of
$1.7 million, or ($0.08) per diluted share.

• Adjusted EBITDA – The company reported positive Adjusted EBITDA for the
fourth quarter of 2013 of $1.4 million, or $0.06 per diluted share, a 3
percent increase over the third quarter 2013 positive Adjusted EBITDA of $1.3
million, or $0.06 per diluted share.

• Cash – The company’s cash balance was $5.1 million as of Dec. 31, 2013, an
increase of approximately $300,000 compared to its Sept. 30, 2013 cash balance
of $4.8 million.

• Debt – On Dec. 31, 2013, the company had borrowings of $9.2 million
outstanding under its Square 1 Bank credit facilities with availability of
$2.8 million. The company also had $5 million outstanding related to its
subordinated secured convertible notes.

Fourth 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 fourth quarter
2013, on par with third quarter 2013 and down 20 percent from the year ago
period. The decrease in overall traffic from the prior year period is due to
lower organic traffic during the fourth quarter of 2013 from algorithmic
changes by a large search engine, affecting traffic to many of the company’s
network sites. Organic traffic on the site and network was 26 million MUVs in
the fourth quarter 2013, down 26 percent from the third quarter 2013 and down
42 percent from the year ago period. Organic traffic is defined as all non-SEM
sourced traffic. The company’s Network team is working on improving the
content and presentation of our Network sites, along with other efforts
intended to improve the relevance of these network sites and therefore the
level of organic traffic received by such sites. Overall mobile traffic was 31
million MUVs in the fourth quarter 2013, down 3 percent from the third quarter
2013 and up 24 percent from the year ago period.

• Long-term Receivable Reserve – During the fourth quarter 2013, the company
fully reserved its long-term receivable resulting in an additional charge to
the income statement of $1.7 million. The long-term receivable relates to
legacy subscribers that were billed via their phone bills from local exchange
carriers. The company recognized an excellent return on investment on the
legacy subscriber business, which it exited in 2012.

Consumer Properties:

Owned & Operated (O&O):

• Revenue – Fourth quarter 2013 total revenue related to the O&O business unit
was $10.7 million, up 20 percent from third quarter 2013 O&O revenue of $8.9
million and down 17 percent from fourth quarter 2012 O&O revenue of $12.9
million. The increase from the third quarter 2013 was mainly due to an
increase in traffic as a result of the seasonally strong fourth quarter. The
decline in O&O revenue from a year ago period was primarily due to ad policy
changes and reduced revenues per click from a major partner. During 2013, the
company expanded its analytics and testing platforms to provide its O&O team
with the tools to adapt to the dynamic search advertising environment.

• Monetization of Traffic – Revenue per thousand visitors (RKV) for fourth
quarter 2013 was $178, down 1 percent from third quarter 2013 RKV of $180 and
down 23 percent from fourth quarter 2012 RKV of $230. This decline was
primarily due to ad policy changes and declining revenue per click trends of a
major ad supplier. In response to recent ad policy changes, the company has
and will continue to focus on enhancing the user experience to extract value,
with the purpose of optimizing revenue and margins. The company is already
seeing positive monetization trends in the first quarter of 2014, based on
these efforts.

Network:

• Revenue – Fourth quarter 2013 total revenue related to the Network business
unit was $16.1 million, up 11 percent from the $14.5 million Network revenue
recorded in the third quarter 2013 and up 112 percent from fourth quarter 2012
Network revenue of $7.6 million. The increase in Network revenue is mainly due
to the increase in revenue from the company’s feed partner sites (sites that
receive its organic and third-party ad feeds) partially offset by a decrease
in organic traffic to certain regional media partner sites.

• Network Sites – The Network business unit ended the fourth quarter 2013 with
over 1,600 network partner sites, down from over 2,100 network partner sites
at the end of the third quarter 2013. As a result of the company’s screening
and detection efforts in the fourth quarter of 2013, it discontinued
relationships with a number of network partners, while increasing the volume
of business with its remaining network partners.

Krillion Highlights:

The company recently announced that it expanded its patented Krillion local
shopping platform and reached key data milestones, including approximately
120,000 store locations, over 4,300 categories and nearly 3 million localized
products, representing 90 percent coverage of the top 100 national retailers.

The enterprise-ready, flexible platform, seamlessly integrates local shopping
data across multiple distribution channels, which allows the company to
generate revenue from data licensing and performance ad units.

The industry has experienced a steady shift from consumers not only searching
for local businesses, but now they seek robust local product information with
comparative pricing, inventory visibility and location-based store details.

By connecting consumers with brands and retailers with critical data that
shoppers rely on, over time, the company expects to amass a vast repository of
data related to consumer behavior and retail trends, such as pricing and
inventory availability that is highly valuable to key industry stakeholders,
including brands and retailers.

• Launched Havvit™ Local Shopping App – The company launched version 1.0 of
its Havvit local shopping app for iOS® 7-enabled devices, powered by the
company’s Krillion local shopping platform.

• Powered Krillion Shopping Channel for NH.com – The company announced that
its Krillion platform is powering a new local shopping channel for the popular
New Hampshire site, NH.com.

Other Highlights:

• Launched Mobile Pay-Per-Call Lead Generation Network – The company launched
a mobile pay-per-call lead generation network that connects online and
on-the-go consumers searching for local businesses and services in specific
categories with relevant advertisers who provide those services via
pay-per-call ads.

• Ranked on Deloitte’s Technology Fast 500™ for Fourth Consecutive Year - The
company was ranked as a Deloitte Technology Fast 500™ company for the fourth
consecutive year in the technology, media, telecommunications, life sciences
and clean technology companies category in North America.

Fiscal 2014 Financial Guidance:

Revenue - The company expects 2014 revenue of between $103 million and $107
million, which at the mid-point, is an increase of 11 percent, over 2013
revenue.

Adjusted EBITDA** – Adjusted EBITDA for 2014 is expected to be between $3
million and $4 million or between $0.13 and $0.17 per diluted share, assuming
diluted weighted average shares of 23.5 million, taking into account the
dilutive effect of stock options and warrants. The decrease from 2013 Adjusted
EBITDA is a result of the company’s continued investments in expanding new
initiatives in shopping and mobile and due to lower than expected gross
margins from lower organic traffic.

Projected 2014 Adjusted EBITDA Factors:

  *Interest Expense of $1.7 million
  *Income Tax Provision of $200,000
  *Depreciation Expense of $4.0 million
  *Amortization Expense of $900,000
  *Stock Compensation Expense of $800,000
  *Severance Charges of $1.2 million
  *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 of the board, Fred Thiel, president and COO, Michael Sawtell, 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 1-877-883-4693 or 1-315-625-6982, passcode # 35571891. 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 # 35571891. 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 local advertising and technology
company that connects businesses with approximately a million online and
mobile consumers each day using a variety of innovative digital advertising
products. For more information, visit: http://www.localcorporation.com.

IOS is a trademark or registered trademark of Cisco in the U.S. and other
countries and is used under license.

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 and technological 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, our Quarterly Reports on Form
10-Q, 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; an expense related to a settlement accrual; LEC reserve;
and finance related charges. 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; an
expense related to a settlement accrual; LEC reserve; and finance related
charges 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.


LOCAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(Unaudited)
                                                             
                                                   December 31,   December 31,
                                                   2013           2012
ASSETS
Current assets:
  Cash                                             $ 5,069        $  3,696
  Restricted cash                                    -               42
  Accounts receivable, net of allowances of $533     17,298          10,618
  and $250, respectively
  Note receivable                                    -               319
  Prepaid expenses and other current assets          957             648
  Assets held for sale                              -             3,452   
              Total current assets                   23,324          18,775
                                                                  
Property and equipment, net                          6,073           6,467
Goodwill                                             19,281          19,281
Intangible assets, net                               2,439           3,351
Long-term receivable, net of allowances of           -               1,585
$3,431 and $1,710, respectively
Escrow receivable                                    390             390
Deposits                                            72            58      
Total assets                                       $ 51,579      $  49,907  
                                                                  
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
  Accounts payable                                 $ 12,786       $  8,367
  Accrued compensation                               1,462           829
  Deferred rent                                      323             452
  Warrant liability                                  537             5
  Conversion option liability                        550             -
  Other accrued liabilities                          2,403           1,315
  Revolving line of credit                           7,342           10,000
  Current portion of term loan                       1,500           -
  Deferred revenue                                  202           203     
              Total current liabilities              27,105          21,171
                                                                  
Long-term portion of term loan                       375             -
Senior secure convertible notes, net of discount     3,467           -
of $1,533
Deferred income taxes                               347           302     
Total liabilities                                   31,294        21,473  
                                                                  
Commitments and contingencies
                                                                  
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; 23,038 and 22,172 issued        -               -
  and outstanding, respectively
  Additional paid-in capital                         124,249         122,036
  Accumulated deficit                               (103,964 )     (93,602 )
              Stockholders’ equity                  20,285        28,434  
Total liabilities and stockholders’ equity         $ 51,579      $  49,907  


LOCAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
                                               
                     Three Months Ended December     Year Ended
                     31,
                                                     December 31,
                     2013            2012           2013         2012
Revenue              $  26,805       $ 20,576      $ 94,396     $ 95,975  
Costs and
expenses:
  Cost of revenues      20,288          15,802         68,541        71,434
  Sales and             2,610           3,249          10,029        15,189
  marketing
  General and           3,948           4,059          13,633        11,765
  administrative
  Research and          1,654           1,427          6,554         5,092
  development
  Amortization of      225           400          912         3,611   
  intangibles
                                                                   
       Total
       operating       28,725        24,937       99,669      107,091 
       expenses
                                                                   
Operating loss          (1,920  )       (4,361 )       (5,273  )     (11,116 )
                                                                   
  Interest and
  other income          (522    )       (100   )       (2,321  )     (425    )
  (expense), net
  Change in fair
  value of
  conversion           871           30           1,100       202     
  option and
  warrant
  liability
                                                                   
Loss from
continuing              (1,571  )       (4,431 )       (6,494  )     (11,339 )
operations before
income taxes
                                                                   
  Provision for
  (benefit from)       18            (9     )      139         111     
  income taxes
                                                                   
Net loss from
continuing              (1,589  )       (4,422 )       (6,633  )     (11,450 )
operations
Loss from
discontinued           (90     )      (3,469 )      (3,729  )    (12,792 )
operations (net of
taxes)
Net loss             $  (1,679  )     $ (7,891 )     $ (10,362 )   $ (24,242 )
                                                                   
Per share data:
Basic and diluted
net loss per share   $  (0.07   )     $ (0.20  )     $ (0.29   )   $ (0.52   )
from continuing
operations
Basic and diluted
net loss per share   $  (0.00   )     $ (0.16  )     $ (0.16   )   $ (0.58   )
from discontinued
operations
Basic and diluted    $  (0.07   )     $ (0.36  )     $ (0.45   )   $ (1.10   )
net loss per share
                                                                   
                                                                   
Basic weighted
average shares          23,037          22,131         22,862        22,098
outstanding
Diluted weighted
average shares          23,037          22,131         22,862        22,098
outstanding


LOCAL CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION
STOCK-BASED COMPENSATION EXPENSE*
(in thousands, except per share data)
(Unaudited)
                                                       
                               Three Months Ended            Year Ended
                               December 31,
                                                             December 31,
                               2013          2012           2013     2012
Cost of revenues               $   18         $   22         $ 104     $ 83
Sales and marketing                60             189          392       846
General and administrative         105            389          892       1,377
Research and development          23            64          231      227
Total stock-based              $   206        $   664        $ 1,619   $ 2,533
compensation expense
Net stock compensation
expense per share
Basic                          $   0.01       $   0.03       $ 0.07    $ 0.11
Diluted                        $   0.01       $   0.03       $ 0.07    $ 0.11
                                                                         
*- Excludes impact of discontinued operations.


LOCAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
                                               
                                                     Year Ended December 31,
                                                     2013        2012      
Cash flows from operating activities:
  Net loss                                           $ (10,362 )   $ (24,242 )
  Adjustments to reconcile net loss to cash used
  in operating activities:
     Depreciation and amortization                     5,077         8,173
     Provision for doubtful accounts                   2,330         1,507
     Stock-based compensation expense                  1,638         2,895
     Non-cash interest expense                         649           -
     Loss on exchange of warrants                      723           -
     Change in fair value of conversion option and     (1,100  )     (202    )
     warrant liability
     Deferred income taxes                             46            114
     Impairment of goodwill and intangible assets      3,051         10,551
     Gain on sale of assets                            -             (1,458  )
     Changes in operating assets and liabilities:
           Accounts receivable                         (7,078  )     (447    )
           Note receivable                             319           423
           Long-term receivable                        (137    )     193
           Prepaid expenses and other                  (309    )     86
           Other non-current assets                    (14     )     9
           Accounts payable and accrued                6,011         (6,392  )
           liabilities
           Deferred revenue                           (1      )    (101    )
                 Net cash provided by (used in)       843         (8,891  )
                 operating activities
                                                                   
Cash flows from investing activities:
  Capital expenditures                                 (3,580  )     (3,358  )
  Increase (decrease) in restricted cash               42            (32     )
  Proceeds from the sale of assets                    -           3,510   
                 Net cash provided by (used in)       (3,538  )    120     
                 investing activities
                                                                   
Cash flows from financing activities:
  Proceeds from exercise of options                    5             80
  Proceeds from issuance of senior secured             5,000         -
  convertible notes and warrants
  Proceeds from issuance of common stock               20            -
  Proceeds from revolving credit facility, net         342           2,000
  Payment of term loan                                 (1,125  )     -
  Payment of financing related costs                  (174    )    (7      )
                 Net cash provided by financing       4,068       2,073   
                 activities
Net increase (decrease) in cash                        1,373         (6,698  )
Cash, beginning of period                             3,696       10,394  
Cash, end of period                                  $ 5,069      $ 3,696   
                                                                   
Supplemental Cash Flow Information:
  Interest paid                                      $ 626        $ 425     
  Income taxes paid                                  $ 7          $ 12      


LOCAL CORPORATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(in thousands, except per share amounts)
(Unaudited)
                                                            
                                                                 Three Months
                               Three Months Ended December 31,   Ended

                                                                 September 30,
                               2013             2012            2013
GAAP net loss                  $   (1,679  )     $  (7,891  )    $  (1,744  )
Plus interest and other            522              100             537
income (expense), net
Plus provision for (benefit        18               (9      )       (109    )
from) income taxes
Plus amortization of               225              400             225
intangibles
Plus depreciation                  1,120            1,068           937
Plus stock-based                   207              664             352
compensation
Less revaluation of                (871    )        (30     )       413
derivatives
Plus net loss from                 90               3,469           154
discontinued operations
Plus LEC reserve                   1,721            1,407           -
Plus severance charges             -                51              5
Plus settlement accrual           -              -             550     
                                                                 
Adjusted EBITDA                $   1,353        $  (771    )    $  1,320   
                                                                 
Diluted Adjusted EBITDA per    $   0.06         $  (0.03   )    $  0.06    
share
                                                                 
Diluted weighted average           23,231           22,131          23,191
shares outstanding
                                                                            

Prior period balances have been reclassified to conform to current period
reporting

                                                        
                                 Year ended December 31,   Year ended December
                                 2013                      31, 2012
Net loss                         $     (10,362     )       $    (24,242    )
Plus interest and other income         2,321                    425
(expense), net
Plus provision for income              139                      111
taxes
Plus amortization of                   912                      3,611
intangibles
Plus depreciation                      3,896                    3,658
Plus stock-based compensation          1,619                    2,533
Less revaluation of                    (1,100      )            (202       )
derivatives
Plus net loss from                     3,729                    12,792
discontinued operations
Plus Settlement accrual                550                      -
Plus accrual for lease                 101                      -
liability/(asset)
Plus finance related charges           236                      -
Plus LEC reserve                       1,721                    1,407
Plus severance charges                771                    684        
                                                           
Adjusted EBITDA                  $     4,533              $    777        
                                                           
Diluted Adjusted EBITDA per      $     0.20               $    0.03       
share
                                                           
Diluted weighted average               22,967                   22,227
shares

Contact:

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