Dr. Dexmier continued, "With our new optimization techniques combined with our strong existing AdCenter platform, we are well-positioned to capitalize on the large market opportunity. We believe that our turnaround effort is putting the company on a path to growth and sustainable profitability. We will continue to carefully manage our expenses and ensure that we are operating as an efficient organization. We are now focusing on building the longer term value of LookSmart by bringing the necessary talent on board and implementing our strategic initiatives for 2011."

Revenues from the Company's Advertiser Network were $10.4 million in the third quarter of 2010, a decrease of 12% from $11.8 million in the third quarter of 2009 and a decrease of 14% from $12.1 million in the second quarter of 2010. Revenues from the Company's Publisher Solutions were $0.9 million in the third quarter of 2010, an increase of 18% from $0.7 million in the third quarter of 2009 and relatively flat with the second quarter of 2010.

Gross margins from continuing operations increased to 44% in the third quarter of 2010 from 31% in the third quarter of 2009 and from 42% in the second quarter of 2010. The sequential improvement in gross margins reflects the diligent monitoring and adjustments to the Company's traffic acquisition costs (TAC).

Total operating expenses in the third quarter of 2010 were $4.3 million, which includes $0.2 million of non-cash, share-based compensation. Operating expenses for the third quarter of 2009 were $6.0 million, which includes $0.4 million of non-cash, share-based compensation charges, $0.3 million of severance expense, and $0.1 million of expense related to the evaluation of strategic growth alternatives. Operating expenses for the second quarter of 2010 were $4.9 million, which includes $0.2 million of non-cash, share-based compensation charges. The Company's improved operating expenses on a year-over-year basis include the benefit of the relocation of headquarters in November 2009.