Looksmart 8-K Other events

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

Date of Report (date of earliest event reported): October 24, 2002

LOOKSMART, LTD.

(Exact name of registrant as specified in its charter)

Delaware	000-26357	13-3904355
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

625 Second Street, San Francisco, California	94107
(Address of principal executive offices)	(Zip Code)

(415) 348-7000

Registrant’s telephone number, including area code

Item 5—Other Events.

On October 24, 2002, the Company announced the following financial results for the third quarter of 2002:

Revenue Increases to $23.8M:   Revenue for the third quarter grew to $23.8 million, a 13% increase from $21.0 million in the second quarter 2002 and a 35% increase from $17.6 million in the third quarter 2001.

Listings Revenue Grows 23%:   LookSmart reported continued strong growth in listings with revenue of $18.7 million, a 23% increase over $15.2 million in the prior quarter and a 105% increase over $9.1 million in the third quarter 2001. This is the tenth consecutive quarter that LookSmart has reported double-digit growth in paid listings, which now represents nearly 80% of total revenue.

Small Business Listings Revenue Rises 44%:   Small business listings revenue was $2.8 million, an increase of 44% over $2.0 million in the prior quarter. At the end of the third quarter, LookSmart had more than 26,000 active, paying small business listings.

Paid Clicks Increase 37%:  LookSmart recorded 120 million total paid clicks for the third quarter, a 37% increase over 87 million in the prior quarter and a 134% increase over 51 million clicks in the third quarter 2001.

EBITDA Profit More Than Doubles:   LookSmart’s EBITDA profit (earnings before interest, tax, depreciation, amortization and certain other items) more than doubled to a record $3.8 million or $0.04 per share, from $1.8 million or $0.02 per share in the prior quarter and a loss of ($1.7 million) or ($0.02) per share in the third quarter of 2001. GAAP net loss for the third quarter was ($0.5 million) or ($0.00) per share compared to a net loss of ($0.8 million), or ($0.01) per share in the second quarter, and ($10.2 million) or ($0.11) per share in the prior year quarter.

Cash Grows by $3.0M to $51.7M:   Unrestricted cash and short-term investments grew by $3.0 million over the prior quarter to $51.7 million as of September 30, 2002. This compares with $2.5 million in cash generated in the second quarter 2002.

	Q3 ‘01			Q2 ‘02			Q3 ‘02
Key Operating Metrics:
Paid Clicks (millions)		51			87			120
Average Revenue-per-Click	$	0.20		$	0.19		$	0.17
Average Distribution Costs		29	%		42	%		43	%

2

LOOKSMART, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS—GAAP BASIS

(In thousands, except per share amounts)

	Three Months Ended 30-Sep						Nine Months Ended 30-Sep
	2001			2002			2001			2002
Revenues:
Listings	$	9,140		$	18,747		$	23,651		$	47,403
Advertising		4,501			1,384			19,846			5,665
Licensing		3,421			3,635			11,470			11,135
Ecommerce		499			0			8,995			573
Total revenues		17,561			23,766			63,962			64,776
Cost of revenues:
Listings		2,321			8,406			5,538			18,655
Advertising		1,250			1,527			3,934			4,250
Ecommerce		221			0			5,559			64
Total cost of revenues		3,792			9,933			15,031			22,969
Gross profit		13,769			13,833			48,931			41,807
Operating expenses:
Sales and marketing		7,723			4,364			34,504			15,800
Product development		7,329			5,108			22,975			17,288
General and administrative		2,825			2,794			8,831			7,784
Amortization of goodwill and intangibles		1,276			—			5,033			—
Asset impairment and restructuring charges		—			—			11,791			—
Total operating expenses		19,153			12,266			83,134			40,872
Loss from operations		(5,384	)		1,567			(34,203	)		935
Non-operating income (expenses)		(4,655	)		(2,035	)		(13,547	)		(6,577	)
Loss from continuing operations before income taxes		(10,039	)		(468	)		(47,750	)		(5,642	)
Income taxes & minority interest		21			1			(55	)		(23	)
Loss from continuing operations		(10,018	)		(467	)		(47,805	)		(5,665	)
Loss on discontinued operations		(163	)		—			(678	)		(972	)
Net loss		(10,181	)		(467	)		(48,483	)		(6,637	)
Add back to calculate EBITDA:
Depreciation **		1,643			1,461			4,904			4,625
Amortization of goodwill and intangibles		1,276			437			5,033			1,048
Amortization of deferred stock compensation **		767			501			2,628			1,605
Stock compensation related to variable options **		—			(192	)		—			166
Non-operating (income)expenses		4,655			2,035			13,547			6,577
Asset impairment and restructuring charges		—			—			11,791			—
Income taxes & minority interest		(21	)		(1	)		55			23
Loss on discontinued operations		163			—			678			972
		8,483			4,241			38,636			15,016
EBITDA	($	1,698	)	$	3,774		($	9,847	)		8,379

** Refer to next page for breakdown by operating expense category

3

LOOKSMART, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS—GAAP BASIS

(In thousands, except per share amounts)

	Three Months Ended 30-Sep						Nine Months Ended 30-Sep
	2001			2002			2001			2002
Net income/ (loss) per common share:
EBITDA income /(loss) per share	$	(0.02	)	$	0.04		$	(0.11	)	$	0.09
Basic and diluted net per share
Loss from continuing operations	$	(0.11	)	$	(0.00	)	$	(0.52	)	$	(0.06	)
Loss from discontinued operations	$	(0.00	)		—		$	(0.01	)	$	(0.01	)
Net loss	$	(0.11	)	$	(0.00	)	$	(0.53	)	$	(0.07	)
Weighted average shares outstanding		92,406			97,246			91,648			95,798
Depreciation detail
Cost of revenues	$	514		$	464		$	1,523			1,417
Sales and marketing	$	177			118			498			415
Product development	$	848			821			2,594			2,598
General and administrative	$	104			58			289			195
Total depreciation	$	1,643		$	1,461		$	4,904			4,625
Amortization of deferred stock compensation detail
Cost of revenues	$	0			—			—			—
Sales and marketing		338			226			1,362			738
Product development		317			255			903			778
General and administrative		112			20			363			89
Total amortization of deferred stock compensation	$	767		$	501			2,628			1,605
Stock compensation related to variable options
Cost of revenues	$	0		$	(5	)	$	0			2
Sales and marketing		—			(64	)		—			54
Product development		—			(71	)		—			77
General and administrative		—			(52	)		—			33
Total stock compensation related to variable options	$	0		$	(192	)	$	0			166

Note: In accordance with generally accepted accounting principles, the three and six months ended Sept 30, 2001 have been restated to reflect the results of the Futurecorp subsidiary, which was disposed of on March 13, 2002, as discontinued operations.

4

LOOKSMART, LTD

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)

	31-Dec-01		30-Sep-02
ASSETS
Cash	$	29,766	$	50,487
Short-Term Investments		14,346		1,201
Total Unrestricted Cash and Short-Term Investments		44,112		51,688
Restricted Cash		3,728		1,750
Accounts Receivable, net		9,820		9,995
Other Current Assets		3,141		3,776
Total Current Assets		60,801		67,209
Property, Plant and Equipment, net		10,272		9,451
Goodwill and Intangibles, net		9,969		15,460
Other Assets		5,060		5,059
Total Assets	$	86,102	$	97,179
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	$	0	$	39,280
Accounts Payable		2,323		3,038
Deferred Revenue—current portion		9,152		8,038
Other Current Liabilities		14,647		15,614
Total Current Liabilities		26,122		65,970
Long Term Liabilities		36,336		1,851
Total Liabilities		62,458		67,821
Total Equity		23,644		29,358
Total Liabilities and Stockholders’ Equity	$	86,102	$	97,179

5

SIGNATURES

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

LOOKSMART, LTD.

(Registrant)

/s/    DIANNE DUBOIS        

Dianne Dubois

Chief Financial Officer

Date: October 24, 2002