Another Internet search directory bites the dust.  The company was founded during the Dot.com Boom.

Company officials who put Local.com Corp. into chapter 11 protection plan to sell the 48-worker company, which has patents for the way it generates search results for consumers who are looking for businesses, products and services by geographic area.

The company said that Local.com draws about 14 million monthly visitors, and took in $83 million in revenue last year from advertising such as pay-per-click, pay-per-call and banner ads.

The company struggled after a drop in visitors in the first quarter of last year, which meant that it collected less than the $1.6 million it expected to receive from Google Inc. and Yahoo Inc. for generating traffic for the search engines. Company officials weren’t specific about the severity of the drop.

The cash shortage caught the company off guard.  Chief Financial Officer Kenneth S. Cragun said that the company “periodically” spends more cash than it takes in “like most growing technology companies.”

“This ‘burn’ factor is largely attributable to the fact that a significant amount of corporate revenues are expended on developing and enhancing technological platforms and products,” he said in documents filed in U.S. Bankruptcy Court in Santa Ana, Calif. “Although these platforms and products will generate revenues in the future, the product cost is front-loaded and consequently this product development expense can create, or in this case, add to, a near term liquidity problem.”

Mr. Cragun said the industry of local searches on the Internet is expected to grow in the U.S. market from $6.3 billion in 2013 to $8.6 billion by 2017, citing a report from Virginia-based BIA/Kelsey, a local media research firm.

Founded in 1999, Local.com Corp. also delivers search results to a network of more than 1,600 other websites. That draws another five million monthly visitors.

“The value of the [company’s] business lies in its technologies, unique products, scalable platforms, extensive partner network, employees, and the thousands of customers and clients who use its services daily,” Mr. Cragun said.

Source: Wall Street Journal