LOCM (MM)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of the Securities Exchange Act of 1934

September 17, 2015

Date of Report (Date of earliest event reported)

 

 

LOCAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-34197		33-0849123
(State or other jurisdiction		(Commission		(IRS Employer
of incorporation)		File Number)		Identification No.)

7555 Irvine Center Drive

Irvine, California 92618

(Address of principal executive offices, zip code)

(949) 784-0800

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the issuer under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 7.01

Regulation FD Disclosure.

As previously announced, on June 23, 2015, Local Corporation (the “Registrant” or the “Debtor”) filed a voluntary petition in the United States Bankruptcy Court for the Central District of California (the “Bankruptcy Court”) for reorganization relief (“Reorganization”) under Chapter 11 of title 11 of the United States Code, U.S.C. §§ 101 et seq., as amended (the “Bankruptcy Code”).

On September 17, 2015, the Debtor filed its monthly operating report for the period of August 2015 (the “Monthly Operating Report”) with the Bankruptcy Court. The Monthly Operating Report is attached hereto as Exhibit 99.1.

Cautionary Statement Regarding the Monthly Operating Report

The Company cautions investors and potential investors not to place undue reliance upon the information contained in the Monthly Operating Report, which was not prepared for the purpose of providing the basis for an investment decision relating to any of the securities of the Company. The Monthly Operating Report is limited in scope and has been prepared solely for the purpose of complying with requirements of the Bankruptcy Court. The Monthly Operating Report was not reviewed by independent accountants, is in a format prescribed by applicable bankruptcy laws, and is subject to future adjustment. The financial statements in the Monthly Operating Report are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and, therefore, may exclude items required by GAAP, such as certain reclassifications, eliminations, accruals, valuations and disclosures. The Monthly Operating Report also contains information for periods that are shorter or otherwise different from the historical periods required in the Company’s reports pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such information might not be indicative of the Company’s financial condition or operating results for a period that would be reflected in the Company’s financial statements or in its reports pursuant to the Exchange Act. Information set forth in the Monthly Operating Report should not be viewed as indicative of future results.

Cautionary Statements Regarding the Reorganization

The Company’s securityholders are cautioned that trading in the Company’s securities during the pendency of the Chapter 11 Cases will be highly speculative and will pose substantial risks. Trading prices for the Company’s securities may bear little or no relationship to the actual recovery, if any, by holders thereof in the Company’s Chapter 11 Case. At present, the Company does not expect that it will have any assets to deliver to the holders of the Company’s Common Stock, $0.00001 par value, following completion of the sale process based on current indications of interest and the total amount of debt owed by the Company. If certain requirements of the Bankruptcy Code are met, a Chapter 11 plan can be confirmed notwithstanding its rejection by the Company’s equity securityholders and notwithstanding the fact that such equity securityholders do not receive or retain any property on account of their equity interests under the plan. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.

Cautionary Statement Regarding Forward-Looking Statements

Certain information in this Current Report on Form 8-K and Exhibit 99.1 attached hereto (collectively, this “Current Report”) may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Current Report that are not statements of historical fact, including estimates, projections, future trends and the outcome of events that have not yet occurred referenced in this Current Report should be considered forward-looking statements. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “predict,” “will,” “would,” “could,” “should,” “target” and similar expressions are often used to identify forward-looking statements. Actual results or events could differ materially from those indicated in forward-looking statements as a result of risks and uncertainties, including, among others, the potential adverse impact of the Reorganization on the Company’s liquidity or results of operations, changes in the Company’s ability to meet financial obligations during the Chapter 11 process or to maintain contracts that are critical to the Company’s wind-down of its affairs, the outcome or timing of the Chapter 11 process, the effect of the proceedings that may be brought by third parties in connection with the Chapter 11 process, the ability of the Company to fund the wind-down of its affairs and the timing or amount of any distributions to the Company’s stakeholders. For a discussion of some of the additional risks and important factors that the Company believes could

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cause actual results or events to differ from the forward-looking statements that it makes, see the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015. In addition, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results or events to differ from those contained in any forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements contained in this Current Report. Any forward-looking statements speak only as of the date of this Current Report. The Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.

Limitation on Incorporation by Reference

The information contained in this Current Report, including the accompanying exhibit, is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report is not incorporated by reference into any filings of Local Corporation made under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing unless specifically stated so therein.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits:

 

Exhibit 99.1		Monthly Operating Report dated September 17, 2015.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				LOCAL CORPORATION
Date: September 23, 2015				By:		/s/ Kenneth S. Cragun
						Kenneth S. Cragun
						Chief Financial Officer

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Exhibit Index

 

Exhibit Number		Description
99.1		Monthly Operating Report dated August 17, 2015.

Exhibit 99.1

UNITED STATES DEPARTMENT OF JUSTICE

OFFICE OF THE UNITED STATES TRUSTEE

CENTRAL DISTRICT OF CALIFORNIA

 

In Re:				CHAPTER 11 (BUSINESS)
Local Corporation,				Case Number:		8:15-bk-13153 SC
dba Local.Com Corporation,				Operating Report Number:		3
Debtor(s).				For the Month Ending:		8/31/2015

I. CASH RECEIPTS AND DISBURSEMENTS

A. (GENERAL ACCOUNT*)

 

1.		TOTAL RECEIPTS PER ALL PRIOR GENERAL ACCOUNT REPORTS								$	4,377,455.44
2.		LESS: TOTAL DISBURSEMENTS PER ALL PRIOR GENERAL ACCOUNT REPORTS								$	851,967.65
3.		BEGINNING BALANCE:								$	3,525,487.79
4.		RECEIPTS DURING CURRENT PERIOD:
		Accounts Receivable - Post-filing
		Accounts Receivable - Pre-filing				$	2,350,389.17
		General Sales
		Other (Specify)
		**Other (Specify)
		TOTAL RECEIPTS THIS PERIOD:								$	2,350,389.17
5.		BALANCE:								$	5,875,876.96
6.		LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD
		Transfers to Other DIP Accounts (from page 2)				$	0.00
		Disbursements (from page 2)				$	1,507,196.85
		TOTAL DISBURSEMENTS THIS PERIOD:***								$	1,507,196.85
7.		ENDING BALANCE:								$	4,368,680.11

8.		General Account Number(s):		XXXXX1477
		Depository Name & Location:		Wells Fargo

 

*	All receipts must be deposited into the general account.

**	Include receipts from the sale of any real or personal property out of the ordinary course of business; attach an exhibit specifying what was sold, to whom, terms, and date of Court Order or Report of Sale.

***	This amount should be the same as the total from page 2.

 

Page 1 of 10

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GENERAL ACCOUNT

BANK RECONCILIATION

 

		Bank statement Date:		8/31/2015		Balance on Statement:		$	4,368,680.11
Plus deposits in transit (a):
				Deposit Date		Deposit Amount
TOTAL DEPOSITS IN TRANSIT									0.00
Less Outstanding Checks (a):
		Check Number		Check Date		Check Amount
TOTAL OUTSTANDING CHECKS:									0.00
Bank statement Adjustments:
Explanation of Adjustments-
ADJUSTED BANK BALANCE:								$	4,368,680.11

 

*	It is acceptable to replace this form with a similar form

**	Please attach a detailed explanation of any bank statement adjustment

 

Page 2 of 10

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I. CASH RECEIPTS AND DISBURSEMENTS

C. (Merchant Account)

 

1.		TOTAL RECEIPTS PER ALL PRIOR MERCHANT ACCOUNT REPORTS		$	4,386,700.00
2.		LESS: TOTAL DISBURSEMENTS PER ALL PRIOR Merchant ACCOUNT REPORTS		$	4,356,419.65
3.		BEGINNING BALANCE:		$	30,280.35
4.		RECEIPTS DURING CURRENT PERIOD: (Transferred from General Account)		$	2,281,786.67
5.		BALANCE:		$	2,312,067.02
6.		LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD TOTAL DISBURSEMENTS THIS PERIOD:***		$	2,312,067.02
7.		ENDING BALANCE:		$	0.00

 

8.		Merchant Account Number(s):		XXX0049
		Depository Name & Location:		Square 1 Merchant Account

 

Page 3 of 10

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I. D SUMMARY SCHEDULE OF CASH

ENDING BALANCES FOR THE PERIOD:

(Provide a copy of monthly account statements for each of the below)

 

				General Account:		$4,368,680.11
				Payroll Account:
				Tax Account:
*Other Accounts:				Merchant Account:		$0.00
*Other Monies:
		**Petty Cash (from below):				$0.00
TOTAL CASH AVAILABLE:								$4,368,680.11
Petty Cash Transactions:
Date		Purpose				Amount
TOTAL PETTY CASH TRANSACTIONS:								0.00

 

*	Specify the Type of holding (e.g. CD, Savings Account, Investment Security), and the depository name, location & account#

**	Attach Exhibit Itemizing all petty cash transactions

 

Page 4 of 10

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II. STATUS OF PAYMENTS TO SECURED CREDITORS, LESSORS

AND OTHER PARTIES TO EXECUTORY CONTRACTS

 

Creditor, Lessor, Etc.		Frequency of Payments (Mo/Qtr)		Amount of Payment		Post-Petition payments not made (Number)		Total Due
TOTAL DUE:									0.00

III. TAX LIABILITIES

FOR THE REPORTING PERIOD:

 

Gross Sales Subject to Sales Tax:
Total Wages Paid:			348,317.16

 

		Total Post-Petition Amounts Owing				Amount Delinquent				Date Delinquent Amount Due
Federal Withholding			69,434.26
State Withholding			28,139.90
FICA- Employer’s Share			27,372.22
FICA- Employee’s Share			28,353.59
Federal Unemployment
Sales and Use
Real Property
Other:
TOTAL:			153,299.97				0.00

 

Page 5 of 10

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IV. AGING OF ACCOUNTS PAYABLE AND RECEIVABLE

 

		*Accounts Payable Post-Petition				Accounts Receivable
						Pre-Petition				Post-Petition
30 days or less			2,916,203.83				0.00				2,986,627.00
31 - 60 days							0.00				1,282,351.00
61 - 90 days							1,422,433.71
91 - 120 days							1,519,632.18
Over 120 days							2,278,630.46
TOTAL:			2,916,203.83				5,220,696.35				4,268,978.00

V. INSURANCE COVERAGE

 

Name of Carrier

Amount of Coverage

Policy Expiration Date

Premium Paid Through (Date)

General Liability

Hartford

3,000,000.00

10/18/2016

Full Paid

Worker’s Compensation

One Beacon

1,000,000.00

4/10/2016

Full Paid

Casualty

Hartford

5,764,000.00

10/18/2016

Full Paid

Vehicle

Hartford

1,000,000.00

10/18/2016

Full Paid

Others:

VI. UNITED STATES TRUSTEE QUARTERLY FEES

(TOTAL PAYMENTS)

 

Quarterly Period Ending (Date)				Total Disbursements				Quarterly Fees				Date Paid				Amount Paid				Quarterly Fees Still Owing
	30-Jun-2015				256,888.91				1,950.00				1-Aug-2015				1,950.00				0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
																					0.00
									1,950.00								1,950.00				0.00

 

*

Post-Petition Accounts Payable SHOULD NOT include professionals’ fees and expenses which have been incurred but not yet awarded by the court. Post-Petition Accounts Payable SHOULD include professionals’ fees and expenses authorized by Court Order but which remain unpaid as of the close of the period report

 

Page 6 of 10

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VII SCHEDULE OF COMPENSATION PAID TO INSIDERS

 

Name of Insider		Date of Order Authorizing Compensation				*Authorized Gross Compensation				Gross Compensation Paid During the Month
Ken Cragun			7/6/2015			$	31,748.00			$	31,748.00
Scott Reinke			7/6/2015			$	30,806.73			$	30,806.73
Fred Thiel			7/6/2015			$	49,928.07			$	49,928.07

VIII. SCHEDULE OF OTHER AMOUNTS PAID TO INSIDERS

 

Name of Insider		Date of Order Authorizing Compensation		Description		Amount Paid During the Month

 

*	Please indicate how compensation was identified in the order (e.g. $1,000/week, $2,500/month)

 

Page 7 of 10

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IX. PROFIT AND LOSS STATEMENT

(ACCRUAL BASIS ONLY)

 

		Current Month				Cumulative Post-Petition
Sales/Revenue:
Gross Sales/Revenue		$	2,986,627.00			$	6,862,702.00
Less: Returns/Discounts
Net Sales/Revenue		$	2,986,627.00			$	6,862,702.00
Cost of Goods Sold:
Beginning Inventory at cost
TAC		$	2,468,881.00			$	5,576,367.00
Less: Ending Inventory at cost
Cost of Goods Sold (COGS)		$	2,468,881.00			$	5,576,367.00
Gross Profit		$	517,746.00			$	1,286,335.00
Other Operating Income (Itemize)
Operating Expenses:
Payroll - Insiders		$	88,667.00			$	197,485.51
Payroll - Other Employees		$	444,797.00			$	991,837.18
Payroll Taxes		$	40,810.00			$	90,983.19
Benefits		$	62,353.00			$	134,786.00
Connectivity & Content		$	113,228.00			$	253,911.63
Credit Card Fees		$	15,000.00			$	31,633.33
Other Taxes (Itemize)						$	0.00
Depreciation and Amortization		$	343,195.00			$	756,261.20
Rent Expense - Real Property		$	26,761.00			$	53,522.00
Lease Expense - Personal Property		$	2,300.00			$	17,666.67
Insurance		$	6,403.00			$	14,603.00
Real Property Taxes						$	0.00
Telephone, Utilities, Office Expense		$	56,610.00			$	117,466.67
Repairs and Maintenance		$	9,010.00			$	19,280.00
Travel and Entertainment (Itemize)		$	0.00			$	0.00
Consulting		$	13,000.00			$	30,200.00
Advertising and Marketing		$	32,750.00			$	73,025.00
Miscellaneous Operating Expenses (Itemize)		$	0.00			$	0.00
Total Operating Expenses		$	1,254,884.00			$	2,782,661.38
Net Gain/(Loss) from Operations		-$	737,138.00			-$	1,496,326.38
Non-Operating Income:
Interest Income		$	0.00			$	0.00
Net Gain on Sale of Assets (Itemize)		$	0.00			$	0.00
Other (Itemize)		$	0.00			$	0.00
Total Non-Operating income		$	0.00			$	0.00
Non-Operating Expenses:
Interest Expense
Legal and Professional (Itemize)		$	78,788.03			$	246,383.58
Stock Compensation		$	45,096.00			$	45,096.00
Other (Itemize)
Total Non-Operating Expenses		$	123,884.03			$	65,096.00
NET INCOME/(LOSS)		-$	861,022.03			-$	1,561,422.38

(Attach exhibit listing all itemizations required above)

 

Page 8 of 10

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X. BALANCE SHEET

(ACCRUAL BASIS ONLY)

 

		Current Month End
ASSETS
Current Assets:
Unrestricted Cash		$	4,368,680.11
Restricted Cash		$	0.00
Accounts Receivable		$	9,489,674.35
Inventory		$	0.00
Notes Receivable		$	0.00
Prepaid Expenses		$	824,833.00
Other (Itemize)
Total Current Assets						$	14,683,187.46
Property, Plant, and Equipment		$	21,135,233.00
Accumulated Depreciation/Depletion		-$	20,615,410.00
Net Property, Plant, and Equipment						$	519,823.00
Other Assets (Net of Amortization):
Due from Insiders		$	0.00
Goodwill		$	19,280,579.00
Intangible Assets		$	1,606,137.00
Deposits		$	60,005.00
Other (Itemize)		$	0.00
Total Other Assets						$	20,946,721.00
TOTAL ASSETS						$	36,149,731.46
LIABILITIES
Post-petition Liabilities:
Accounts Payable		$	2,916,203.83
Taxes Payable		$	0.00
Notes Payable		$	0.00
Professional fees		$	0.00
Secured Debt		$	0.00
Other (Itemize)
Total Post-petition Liabilities						$	2,916,203.83
Pre-petition Liabilities:
Secured Liabilities		$	2,124,099.94
Priority Liabilities		$	184,952.00
Unsecured Liabilities		$	26,404,640.72
Deferred Revenue		$	112,462.00
Total Pre-petition Liabilities						$	28,826,154.66
TOTAL LIABILITIES						$	31,742,358.49
EQUITY:
Pre-petition Owners’ Equity		$	5,144,510.97
Post-petition Profit/(Loss)		-$	737,138.00
Direct Charges to Equity		$	0.00
TOTAL EQUITY						$	4,407,372.97
TOTAL LIABILITIES & EQUITY						$	36,149,731.46

 

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XI. QUESTIONNAIRE

 

				No		Yes
1.		Has the debtor-in-possession made any payments on its pre-petition unsecured debt, except as have been authorized by the court? If “Yes”, explain below:		X
				No		Yes
2.		Has the debtor-in-possession during this reporting period provided compensation or remuneration to any officers, directors, principals, or other insiders without appropriate authorization? If “Yes”, explain below:		X
3.		State what progress was made during the reporting period toward filing a plan of reorganization Selected a stalking horse bidder candidate, working on an asset purchase agreement and drafting Section 363 bidding procedures.
4.		Describe potential future developments which may have a significant impact on the case: Future developments include the possible sale of assets through a Section 363 sales process.
5.		Attach copies of all Orders granting relief from the automatic stay that were entered during the reporting period.
				No		Yes
6.		Did you receive any exempt income this month, which is not set forth in the operating report? If “Yes”, please set forth the amounts and sources of the income below.		X
I,		Kenneth S. Cragun, Chief Financial Officer, declare under penalty of perjury that I have fully read and understood the foregoing debtor-in-possession operating report and that the information contained herein is true and complete to the best of my knowledge.

 

9/17/2015
Date				Principal for debtor-in-possession

 

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