[PART I—FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income/(loss), stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, financial instruments, debt, equity, and recent acquisitions [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | ASSETS / LIABILITIES & EQUITY | Dec 31, 2021 | Sep 30, 2021 | Change (Dec 21 vs Sep 21) | | :---------------------------- | :----------- | :----------- | :------------------------ | | **ASSETS** | | | | | Cash and cash equivalents | $6,356 | $8,852 | $(2,496) | | Total current assets | $8,015 | $10,418 | $(2,403) | | Intangible assets, net | $7,354 | $7,755 | $(401) | | Goodwill | $15,985 | $15,985 | $0 | | Total assets | $32,158 | $34,967 | $(2,809) | | **LIABILITIES** | | | | | Total current liabilities | $6,018 | $8,335 | $(2,317) | | Warrant liabilities | $1,963 | $4,404 | $(2,441) | | Total liabilities | $12,605 | $17,390 | $(4,785) | | **STOCKHOLDERS' EQUITY** | | | | | Total stockholders' equity | $19,553 | $17,577 | $1,976 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over a period, including revenue, expenses, and net income or loss Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | YoY Change ($) | YoY Change (%) | | :---------------------------- | :------------------------------ | :------------------------------ | :------------- | :------------- | | Total net revenue | $4,286 | $2,836 | $1,450 | 51% | | Gross profit | $3,006 | $1,879 | $1,127 | 60% | | Total operating expenses | $3,485 | $1,700 | $1,785 | 105% | | Income (loss) from operations | $(479) | $179 | $(658) | (368%) | | Change in fair value of warrant liabilities | $2,441 | $(1,441) | $3,882 | 269% | | Net income (loss) | $1,872 | $(1,162) | $3,034 | 261% | | Basic net income (loss) per share | $0.18 | $(0.26) | $0.44 | 169% | | Diluted net income (loss) per share | $0.06 | $(0.26) | $0.32 | 123% | [Condensed Consolidated Statements of Comprehensive Income/(Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%2F%28Loss%29) This section reports the company's total comprehensive income or loss, including net income and other comprehensive income items Condensed Consolidated Statements of Comprehensive Income/(Loss) (in thousands) | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net income (loss) | $1,872 | $(1,162) | | Foreign currency translation adjustment | $41 | $10 | | Comprehensive income (loss) | $1,913 | $(1,152) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share data) | Metric | Oct 1, 2021 Balance | Stock-based Compensation | Net Income | Foreign Currency Translation | Dec 31, 2021 Balance | | :------------------------------------ | :------------------ | :----------------------- | :--------- | :--------------------------- | :------------------- | | Common Stock (Shares) | 10,187,128 | - | - | - | 10,204,276 |\n| Common Stock (Amount) | $10 | - | - | - | $10 |\n| Additional Paid-in Capital | $100,207 | $63 | - | - | $100,270 |\n| Accumulated Deficit | $(82,287) | - | $1,872 | - | $(80,415) |\n| Accumulated Other Comprehensive Loss | $(353) | - | - | $41 | $(312) |\n| Total Stockholders' Equity | $17,577 | $63 | $1,872 | $41 | $19,553 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities over a period Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | YoY Change ($) | | :------------------------------------ | :------------------------------ | :------------------------------ | :------------- | | Net cash provided by operating activities | $79 | $451 | $(372) | | Net cash used in investing activities | $(64) | $(41) | $(23) | | Net cash used in financing activities | $(2,504) | $0 | $(2,504) | | Net increase (decrease) in cash and cash equivalents | $(2,496) | $416 | $(2,912) | | Cash and cash equivalents at end of period | $6,356 | $1,277 | $5,079 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Description of Business](index=10&type=section&id=1.%20Description%20of%20Business) This note describes Bridgeline Digital's core business as a marketing technology software company and its key product offerings - **Bridgeline Digital** is a marketing technology software company focused on growing online revenue and sharing information[27](index=27&type=chunk) - Key products include: **Unbound platform**, **Unbound Franchise**, **OrchestraCMS**, **Celebros Search**, **Woorank**, and **Hawk Search**[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - Most software is offered via a **cloud-based Software as a Service (SaaS) model**; Unbound and Hawk Search also offer traditional perpetual licensing[33](index=33&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and new standards impacting the company's financial statement preparation - Financial statements are prepared in accordance with **U.S. GAAP** and Form 10-Q instructions, including all necessary recurring adjustments[39](index=39&type=chunk) - The Company is evaluating the impact of new accounting standards: **ASU No. 2016-13 (Credit Losses)**, **ASU No. 2020-06 (Debt with Conversion and Other Options)**, and **ASU No. 2021-08 (Business Combinations - Contract Assets/Liabilities)**[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) [3. Accounts Receivable](index=12&type=section&id=3.%20Accounts%20Receivable) This note details the company's accounts receivable, including the allowance for doubtful accounts and customer concentration Accounts Receivable (in thousands) | Metric | Dec 31, 2021 | Sep 30, 2021 | | :---------------------------- | :----------- | :----------- | | Accounts receivable | $1,324 | $1,403 | | Allowance for doubtful accounts | $(62) | $(33) | | Accounts receivable, net | $1,262 | $1,370 | - As of December 31, 2021, **one customer represented approximately 23% of accounts receivable**; no customers exceeded 10% of total revenues for the three months ended December 31, 2021[46](index=46&type=chunk) [4. Fair Value Measurement and Fair Instruments](index=12&type=section&id=4.%20Fair%20Value%20Measurement%20and%20Fair%20Value%20of%20Financial%20Instruments) This note describes the fair value measurement of financial instruments, particularly warrant liabilities and contingent consideration - Financial instruments include accounts receivable, accounts payable, **warrant liabilities**, **contingent consideration**, and long-term debt, with warrant liabilities and contingent consideration measured at fair value using **Level 3 inputs**[47](index=47&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[53](index=53&type=chunk) - The Company recognized a **gain of $2,441 thousand** for the three months ended December 31, 2021, from the change in fair value of warrant liabilities, contrasting with a **loss of $1,441 thousand** in the prior year[52](index=52&type=chunk) Fair Value of Liabilities (in thousands) | Liabilities (Level 3) | Dec 31, 2021 | Sep 30, 2021 | | :------------------------------- | :----------- | :----------- | | Total warrant liabilities | $1,963 | $4,404 | | Contingent consideration obligations | $3,210 | $3,649 | | Total Liabilities | $5,173 | $8,053 | [5. Intangible Assets](index=14&type=section&id=5.%20Intangible%20Assets) This note provides a breakdown of the company's intangible assets and their associated amortization expense Intangible Assets, Net (in thousands) | Component | Dec 31, 2021 | Sep 30, 2021 | | :-------------------- | :----------- | :----------- | | Domain and trade names | $720 | $732 | | Customer related | $5,201 | $5,465 | | Technology | $1,433 | $1,558 | | Total | $7,354 | $7,755 | - Total amortization expense for intangible assets was **$401 thousand** for the three months ended December 31, 2021, an increase from **$218 thousand** in the prior year[56](index=56&type=chunk) [6. Accrued Liabilities](index=14&type=section&id=6.%20Accrued%20Liabilities) This note details the composition of the company's accrued liabilities at specific reporting dates Accrued Liabilities (in thousands) | Component | Dec 31, 2021 | Sep 30, 2021 | | :------------------------ | :----------- | :----------- | | Compensation and benefits | $621 | $541 | | Professional fees | $119 | $81 | | Taxes | $72 | $84 | | Insurance | $134 | $0 | | Other | $115 | $202 | | Total | $1,061 | $908 | [7. Long-term debt](index=14&type=section&id=7.%20Long-term%20debt) This note outlines the company's long-term debt obligations, including various loan types and future maturity schedules Long-term Debt (in thousands) | Debt Type | Dec 31, 2021 | Sep 30, 2021 | | :------------------------ | :----------- | :----------- | | Vendor loan payable | $676 | $718 | | Term loan payable (Oct 2022) | $269 | $362 | | Term loan payable (Apr 2027) | $453 | $466 | | Seller's note payable | $344 | $383 | | Total debt | $1,742 | $1,929 | | Less: current portion | $(609) | $(732) | | Long-term debt, net | $1,133 | $1,197 | Future Maturities of Long-term Debt (in thousands) as of Dec 31, 2021 | Fiscal Year | Amount | | :----------------- | :----- | | 2022 (remaining) | $609 | | 2023 | $470 | | 2024 | $218 | | 2025 | $218 | | 2026 | $82 | | Thereafter | $145 | | Total debt | $1,742 | [8. Stockholders' Equity](index=15&type=section&id=8.%20Stockholders'%20Equity) This note provides details on the company's equity structure, including preferred stock, common stock offerings, stock-based compensation, and warrants - As of December 31, 2021, **350 shares of Series C Preferred Stock** were outstanding, convertible into **38,889 common shares**[62](index=62&type=chunk) - In May 2021, the Company conducted a registered direct offering of **1,060,000 common shares** and a private placement of **2,700 Series D Convertible Preferred Stock units**, with all Series D Preferred Stock converted to common shares during Q4 fiscal 2021[63](index=63&type=chunk)[64](index=64&type=chunk)[71](index=71&type=chunk) - Stock-based compensation expense for the three months ended December 31, 2021, was **$63 thousand**, an increase from **$51 thousand** in the prior year[79](index=79&type=chunk) Total Warrants Outstanding as of December 31, 2021 | Type | Issue Date | Shares | Price ($) | Expiration | | :------------------------ | :--------- | :---------- | :-------- | :----------- | | Investors | 11/9/2016 | 4,271 | 175.00 | 5/9/2022 | | Financing (Montage) | 10/10/2017 | 1,327 | 132.50 | 10/10/2025 | | Investors | 10/19/2018 | 3,120 | 25.00 | 10/19/2023 | | Placement Agent | 10/16/2018 | 10,000 | 31.25 | 10/16/2023 | | Investors | 3/12/2019 | 41,621 | 4.00 | 10/19/2023 | | Investors | 3/12/2019 | 872,625 | 4.00 | 9/12/2024 | | Investors | 3/12/2019 | 13,738 | 0.05 | 9/12/2024 | | Placement Agent | 3/12/2019 | 11,992 | 4.00 | 9/12/2024 | | Placement Agent | 2/4/2021 | 31,564 | 3.88 | 2/4/2026 | | Investors | 5/14/2021 | 592,106 | 2.51 | 11/16/2026 | | Placement Agent | 5/14/2021 | 179,536 | 2.85 | 5/12/2026 | | **Total** | | **1,761,900** | | | [9. Net Income (Loss) Per Share Attributable to Common Shareholders](index=24&type=section&id=9.%20Net%20Income%20%28Loss%29%20Per%20Share%20Attributable%20to%20Common%20Shareholders) This note presents the computation of basic and diluted net income or loss per share for common shareholders Net Income (Loss) Per Share Computation (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :-------------------------------------------- | :------------------------------ | :------------------------------ | | Net income (loss) - basic | $1,872 | $(1,162) | | Net income (loss) applicable to common shareholders – diluted | $625 | $(1,162) | | Weighted-average shares outstanding for basic EPS | 10,189,012 | 4,420,170 | | Weighted-average shares outstanding for diluted EPS | 10,625,617 | 4,420,170 | | Basic net income (loss) per share | $0.18 | $(0.26) | | Diluted net income (loss) per share | $0.06 | $(0.26) | - For the three months ended December 31, 2021, **244,348 stock options** and **976,520 warrants** were excluded from diluted EPS computation due to being anti-dilutive; all potential common stock equivalents were anti-dilutive in 2020 due to a net loss[96](index=96&type=chunk)[97](index=97&type=chunk) [10. Revenues and Other Related Items](index=24&type=section&id=10.%20Revenues%20and%20Other%20Related%20Items) This note provides a detailed breakdown of the company's revenue by geography and type, along with deferred revenue balances Revenue by Geography (in thousands) | Geography | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | YoY Change ($) | YoY Change (%) | | :------------ | :------------------------------ | :------------------------------ | :------------- | :------------- | | United States | $3,360 | $2,286 | $1,074 | 47% | | International | $926 | $550 | $376 | 68% | | Total | $4,286 | $2,836 | $1,450 | 51% | - The largest concentration within international revenue is **Canada**[101](index=101&type=chunk) Revenue by Type (in thousands) | Revenue Type | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :------------------------ | :------------------------------ | :------------------------------ | | Digital Engagement Services | $869 | $837 | | Subscription | $3,079 | $1,690 | | Maintenance | $117 | $92 | | Hosting | $221 | $217 | | Total | $4,286 | $2,836 | Deferred Revenue (in thousands) | Deferred Revenue | Oct 1, 2021 Balance | Increase (decrease) | Dec 31, 2021 Balance | | :--------------- | :------------------ | :------------------ | :------------------- | | Current | $2,097 | $(304) | $1,793 | | Long-Term | $418 | $(23) | $395 | [11. Income Taxes](index=25&type=section&id=11.%20Income%20Taxes) This note details the company's income tax expense or benefit and the utilization of net operating loss carryforwards Income Tax Expense (Benefit) (in thousands) | Period | Income Tax Expense (Benefit) | | :---------------------------- | :--------------------------- | | Three Months Ended Dec 31, 2021 | $3 | | Three Months Ended Dec 31, 2020 | $(6) | - Income tax expense consists of estimated state income taxes, with net operating loss carryforwards expected to offset potential taxable income[105](index=105&type=chunk) [12. Leases](index=25&type=section&id=12.%20Leases) This note provides information on the company's lease arrangements, including lease costs, terms, and future commitments Components of Net Lease Costs (in thousands) | Lease Cost Component | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :------------------------ | :------------------------------ | :------------------------------ | | Operating lease cost | $54 | $18 | | Variable lease cost | $14 | $14 | | Less: Sublease income, net | $(25) | $(25) | | Total | $43 | $7 | - As of December 31, 2021, the **weighted average remaining lease term was 3.1 years** and the **weighted average discount rate was 7.0%**[114](index=114&type=chunk) Future Minimum Rental Commitments (in thousands) as of Dec 31, 2021 | Fiscal year | Operating Leases | Receipts Subleases | Net Leases | | :----------------- | :--------------- | :----------------- | :--------- | | 2022 (remaining) | $130 | $76 | $54 | | 2023 | $173 | $101 | $72 | | 2024 | $116 | $34 | $82 | | 2025 | $69 | $0 | $69 | | 2026 | $7 | $0 | $7 | | Total lease commitments | $495 | $211 | $284 | [13. Commitments and Contingencies](index=28&type=section&id=13.%20Commitments%20and%20Contingencies) This note discusses the company's commitments and potential liabilities, including product warranties and indemnification obligations - The Company provides warranties for its technology solutions but has not paid any material amounts related to warranty claims[119](index=119&type=chunk)[120](index=120&type=chunk) - The Company indemnifies customers against third-party intellectual property infringement and product liability claims, with no significant claims outstanding[121](index=121&type=chunk) [14. Acquisitions](index=30&type=section&id=14.%20Acquisitions) This note details the company's recent acquisitions, including consideration transferred, goodwill recognized, and pro forma financial information - **Woorank Acquisition (March 1, 2021)** was for approximately **$2.4 million**, including cash, deferred cash, a seller note, common stock, and **$1.3 million in contingent consideration**[124](index=124&type=chunk)[129](index=129&type=chunk) - **Hawk Search Acquisition (May 28, 2021)** was for approximately **$9.9 million**, including cash, Series D Preferred Stock, deferred cash, and **$2.2 million in contingent consideration**[126](index=126&type=chunk)[129](index=129&type=chunk) Acquisition Date Fair Value of Consideration Transferred (in thousands) | Consideration Type | Woorank | Hawk Search | Total | | :---------------------------------- | :------ | :---------- | :------- | | Cash paid at or in close proximity to closing | $285 | $4,800 | $5,085 | | Future deferred payments | $376 | $2,000 | $2,376 | | Common stock | $99 | - | $99 | | Series D Convertible Preferred Stock | - | $930 | $930 | | Seller's note | $352 | - | $352 | | Contingent consideration (earn-outs) | $1,289 | $2,190 | $3,479 | | **Total consideration paid** | **$2,401**| **$9,920** | **$12,321**| - **Goodwill recognized totaled $10,428 thousand**, with **$2,888 thousand from Woorank** and **$7,540 thousand from Hawk Search**, attributed to expected synergies and cross-selling opportunities[130](index=130&type=chunk) Pro Forma Information (Unaudited) for Three Months Ended Dec 31, 2020 (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2020 | | :-------------------------------------------- | :------------------------------ | | Revenue | $4,471 | | Net income (loss) attributable to common shareholders - basic | $(1,687) | | Net income (loss) attributable to common shareholders - diluted | $(1,687) | | Basic EPS | $(0.38) | | Diluted EPS | $(0.38) | [15. Related Party Transactions](index=32&type=section&id=15.%20Related%20Party%20Transactions) This note discloses transactions with related parties, specifically involving a director and his affiliated investment banking firm - **Michael Taglich**, a director and shareholder, is Chairman and President of **Taglich Brothers, Inc.**, which provides advisory and investment banking services to the Company[134](index=134&type=chunk)[135](index=135&type=chunk) - **Taglich Brothers, Inc.** received warrants to purchase **82,945 common shares** with a weighted average exercise price of **$3.21** and a **5.0-year term** in connection with the February and May 2021 offerings[136](index=136&type=chunk) [16. Subsequent Events](index=32&type=section&id=16.%20Subsequent%20Events) This note confirms that no material subsequent events requiring adjustment or disclosure were identified through the filing date - No material subsequent events requiring adjustment or disclosure were identified through the filing date[137](index=137&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, including an overview of the business, a detailed comparison of financial performance for the quarter, a discussion of non-GAAP Adjusted EBITDA, liquidity and capital resources, and critical accounting policies [Overview](index=33&type=section&id=Overview) This section provides an overview of Bridgeline Digital's business, product portfolio, and growth strategy, including recent acquisitions - **Bridgeline Digital** is a marketing technology software company aiming to grow online revenue and facilitate information sharing for clients[141](index=141&type=chunk) - The company's product portfolio includes the **Unbound Digital Experience Platform**, **OrchestraCMS**, **Celebros Search**, **Woorank**, and **Hawk Search**[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) - Bridgeline's growth strategy involves expanding distribution and development through acquisitions, targeting new geographical opportunities, expanded customer/sales/developer bases, and consolidated operational expenses[153](index=153&type=chunk) - Recent acquisitions include **Woorank SRL (March 2021 for $2.4 million)** and **Hawk Search, Inc. (May 2021 for $9.9 million)**, expanding product offerings and customer base[154](index=154&type=chunk)[155](index=155&type=chunk) [Results of Operations for the Three Months Ended December 31, 2021 compared to the Three Months Ended December 31, 2020](index=35&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20December%2031%2C%202021%20compared%20to%20the%20Three%20Months%20Ended%20December%2031%2C%202020) This section analyzes the company's financial performance for the quarter, comparing key metrics year-over-year, including revenue, net income, and operating expenses Key Financial Highlights (in thousands, except per share data) | Metric | Dec 31, 2021 | Dec 31, 2020 | $ Change | % Change | | :---------------------------- | :----------- | :----------- | :------- | :------- | | Total net revenue | $4,286 | $2,836 | $1,450 | 51% | | Net income (loss) | $1,872 | $(1,162) | $3,034 | 261% | | Basic net income (loss) per share | $0.18 | $(0.26) | $0.44 | 169% | | Diluted net income (loss) per share | $0.06 | $(0.26) | $0.32 | 123% | - Net income for Q1 FY2022 was significantly impacted by a **$2.4 million gain** from the change in fair value of warrant liabilities, contrasting with a **$1.4 million loss** in the prior year[156](index=156&type=chunk) Revenue Breakdown (in thousands) | Revenue Source | Dec 31, 2021 | % of Total Revenue (2021) | Dec 31, 2020 | % of Total Revenue (2020) | $ Change | % Change | | :------------------------------ | :----------- | :------------------------ | :----------- | :------------------------ | :------- | :------- | | Digital engagement services | $869 | 20% | $837 | 30% | $32 | 4% | | Subscription and perpetual licenses | $3,417 | 80% | $1,999 | 70% | $1,418 | 71% | | **Total net revenue** | **$4,286** | **100%** | **$2,836** | **100%** | **$1,450** | **51%** | - Gross profit margin increased to **70% (from 66% YoY)**, primarily due to the higher proportion of license revenue, which generally has higher margins[158](index=158&type=chunk)[162](index=162&type=chunk) Operating Expenses (in thousands) | Operating Expense | Dec 31, 2021 | % of Total Revenue (2021) | Dec 31, 2020 | % of Total Revenue (2020) | $ Change | % Change | | :------------------------------ | :----------- | :------------------------ | :----------- | :------------------------ | :------- | :------- | | Sales and marketing | $1,231 | 29% | $444 | 16% | $787 | 177% | | General and administrative | $873 | 20% | $465 | 16% | $408 | 88% | | Research and development | $859 | 20% | $349 | 12% | $510 | 146% | | Depreciation and amortization | $424 | 10% | $232 | 8% | $192 | 83% | | Restructuring and acquisition-related expenses | $98 | 2% | $210 | 7% | $(112) | (53%) | | **Total operating expenses** | **$3,485** | **81%** | **$1,700** | **60%** | **$1,785** | **105%** | - Operating expenses increased significantly (**105% YoY**) primarily due to additional costs related to the fiscal 2021 business acquisitions[171](index=171&type=chunk) [Adjusted EBITDA](index=39&type=section&id=Adjusted%20EBITDA) This section defines and reconciles Adjusted EBITDA, a non-GAAP measure, to net income, explaining its use and key drivers - **Adjusted EBITDA** is a non-GAAP measure used by management and investors to evaluate operating performance, excluding items like interest, taxes, depreciation, amortization, stock-based compensation, and changes in fair value of warrant liabilities[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :-------------------------------------------- | :----------- | :----------- | | Net income (loss) | $1,872 | $(1,162) | | Provision for (benefit from) income tax | $3 | $(6) | | Interest expense and other, net | $87 | $(6) | | Government grant income | $0 | $(88) | | Change in fair value of warrants | $(2,441) | $1,441 | | Amortization of intangible assets | $401 | $218 | | Depreciation and other amortization | $23 | $14 | | Restructuring and acquisition related charges | $98 | $210 | | Stock-based compensation | $63 | $51 | | **Adjusted EBITDA** | **$106** | **$672** | - Adjusted EBITDA decreased year-over-year, primarily due to the **gain recognized from the change in fair value of warrants** and **additional costs from fiscal 2021 business acquisitions**[179](index=179&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flow, working capital, and future contractual obligations, including debt and acquisition-related payments Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $79 | $451 | | Net cash used in investing activities | $(64) | $(41) | | Net cash used in financing activities | $(2,504) | $0 | - Cash used in financing activities significantly increased to **$2.5 million** in Q1 FY2022, primarily due to payments on liabilities from 2021 acquisitions[183](index=183&type=chunk) - The Company expects future revenues and cash flows to supplement working capital and believes its cost structure supports future revenue growth, despite historical operating losses[187](index=187&type=chunk) - Contractual obligations include **$284 thousand in net operating lease commitments** and **$1.8 million in debt payments**; **$3.2 million in contingent consideration** and **$0.3 million in deferred purchase price obligations** from 2021 acquisitions are expected in the next twelve months[189](index=189&type=chunk) [Critical Accounting Policies](index=41&type=section&id=Critical%20Accounting%20Policies) This section highlights the company's critical accounting policies that require significant judgment and estimation in financial reporting - The preparation of financial statements requires significant estimates and assumptions, which, if actual results differ, could materially affect operating results[191](index=191&type=chunk) - Key critical accounting policies include: **Revenue recognition**, **Allowance for doubtful accounts**, **Accounting for goodwill and other intangible assets**, **Accounting for business combinations**, and **Accounting for stock-based compensation**[193](index=193&type=chunk)[194](index=194&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[206](index=206&type=chunk) [Item 3. Qualitative and Quantitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Qualitative%20and%20Quantitative%20Disclosures%20About%20Market%20Risk) This section states that the Company is not required to provide qualitative and quantitative disclosures about market risk - This item is not required for the Company[209](index=209&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2021, and reported no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of December 31, 2021[211](index=211&type=chunk) - There were no material changes to internal control over financial reporting during the most recent fiscal quarter[212](index=212&type=chunk) [PART II – OTHER INFORMATION](index=46&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, exhibits, and official signatures [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to routine litigation but is not currently involved in any material legal proceedings beyond those previously disclosed - The Company is subject to routine litigation and claims but is not currently involved in any material legal proceedings beyond those previously disclosed in its Annual Report on Form 10-K[216](index=216&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously described in the Annual Report on Form 10-K - There have been no material changes to the risk factors described in the Annual Report on Form 10-K for the fiscal year ended September 30, 2021[217](index=217&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company reports no unregistered sales of equity securities during the three months ended December 31, 2021 - There were no unregistered sales of equity securities during the three months ended December 31, 2021[219](index=219&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including organizational documents, employment agreements, and certifications - The report includes various exhibits such as Amended and Restated Certificate of Incorporation, By-laws, Certificates of Designations for Preferred Stock, Employment Agreement, and certifications (302 and 906)[222](index=222&type=chunk) [Signatures](index=48&type=section&id=Signatures) This section contains the signatures of the President and Chief Executive Officer, and the Chief Financial Officer, certifying the report - The report is signed by Roger Kahn, President and Chief Executive Officer, and Thomas R. Windhausen, Chief Financial Officer, on February 10, 2022[225](index=225&type=chunk)[226](index=226&type=chunk)

Financial Data and Key Metrics Changes - Total revenue increased 52% to $4.1 million for Q4 2021 compared to $2.7 million in Q4 2020 [19] - Subscription license revenue rose 67% to $3.4 million for Q4 2021 from $2 million in Q4 2020, accounting for 82% of total revenue [20] - Net loss for Q4 2021 was $1.4 million compared to a net income of $1.1 million in Q4 2020 [25] - Adjusted EBITDA for Q4 2021 was $200,000 compared to $500,000 for the same period in 2020 [26] Business Line Data and Key Metrics Changes - Subscription revenue for the year reached $10 million, with Q4 subscriptions growing to $3.35 million [9] - Site search now constitutes 40% of total revenue and is the fastest-growing product set [13] - R&D expenses were about 23% of revenue in Q4, while sales and marketing expenses were 24% of revenue [31] Market Data and Key Metrics Changes - The company has more than 400 customers in the site search market, with significant growth in the Midwestern region [13][36] - New customer acquisitions include B2B distributors, government contracts, and tech companies, with a focus on verticals like electronics and plumbing [37] Company Strategy and Development Direction - The company’s strategy, referred to as eCommerce 360, aims to increase recurring subscription and license revenue with minimal service requirements [21] - Investments in business development and marketing have been made, with a tripling of the marketing budget [10] - The integration of WooRank and Hawksearch is expected to enhance product offerings and drive revenue growth [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth in 2022, focusing on revenue growth, customer success, and technical innovations [29] - The company is leveraging partnerships with Salesforce, BigCommerce, and Optimizely to reduce customer acquisition costs [34] Other Important Information - The company ended the fiscal year with $9 million in cash and a comfortable cash buffer for future acquisitions [10] - All Series D preferred shares have been converted to common stock [29] Q&A Session Summary Question: Will R&D expenses remain high with the integration of WooRank and Hawksearch? - Management indicated that R&D expenses are at a steady state and will remain reasonable as revenue grows [31] Question: What is the lead generation and conversion experience with WooRank? - WooRank is generating numerous leads and new customers, with successful cross-selling into the Hawksearch pipeline [32] Question: How have customer acquisition costs changed? - Customer acquisition costs have improved significantly, aided by partnerships and cross-selling strategies [34] Question: What is the geographic distribution of new customers? - New customers are primarily from North America, with a notable presence in the Midwest [36] Question: What is the current number of common shares outstanding? - Approximately 10.2 million common shares are outstanding post-preferred conversion [39]

PART I [Business](index=3&type=section&id=Item%201.%20Business.) Bridgeline Digital offers a Digital Experience Platform (DXP) and expanded its product suite via key acquisitions in fiscal 2021 - The company's core offering is the Bridgeline Unbound platform, a comprehensive Digital Experience Platform (DXP) available as a SaaS or perpetual license[11](index=11&type=chunk)[12](index=12&type=chunk)[21](index=21&type=chunk) - Bridgeline expanded its product suite through two key acquisitions in fiscal 2021: Woorank, an SEO audit tool, for a total purchase price of **$2.4 million**, and Hawk Search, a search and personalization application, for **$9.9 million**[51](index=51&type=chunk)[52](index=52&type=chunk) - The company's sales strategy focuses on direct sales to mid-sized and large companies in specific vertical markets, including financial services, franchise networks, and retail[43](index=43&type=chunk) - As of September 30, 2021, the company had approximately **60 full-time employees**; for fiscal 2021, no single customer accounted for more than **10% of total revenues**, diversifying its customer base from the previous year where one customer represented 12%[57](index=57&type=chunk)[59](index=59&type=chunk) - Research and development expenses increased to approximately **$2.4 million (18% of revenues)** in fiscal 2021, up from **$1.6 million (15% of revenues)** in fiscal 2020, reflecting continued investment in product innovation[54](index=54&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks including historical net losses, financing needs, cloud platform reliance, competition, acquisition integration, and pandemic impacts - The company has a history of significant net losses, reporting a loss of **$6.7 million** for the year ended September 30, 2021, and has an accumulated deficit of approximately **$82.3 million** as of that date[71](index=71&type=chunk) - Bridgeline may require additional financing to execute its business plan; the company has recently raised capital through stock offerings and warrant exercises but also has significant deferred payment and contingent consideration obligations from its 2021 acquisitions of Woorank and Hawk Search[73](index=73&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - The business is dependent on a third-party cloud provider, Amazon Web Services (AWS), for its SaaS and managed hosting services; any disruption from this provider could harm the business[87](index=87&type=chunk)[88](index=88&type=chunk) - The company faces intense competition from a fragmented market with low barriers to entry, including larger competitors like Big Commerce, Salesforce, Optimizely, Hubspot, Sitecore, and Adobe[93](index=93&type=chunk)[96](index=96&type=chunk) - Future acquisitions, like the two completed in fiscal 2021, may be difficult to integrate, could disrupt business, dilute stockholder value, and divert management's attention[121](index=121&type=chunk)[122](index=122&type=chunk) - The COVID-19 pandemic is cited as a material risk that could adversely affect operations, financial condition, and liquidity due to economic uncertainty and potential disruptions[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) [Properties](index=21&type=section&id=Item%202.%20Properties.) The company leases all its office locations, including its corporate office and other professional spaces across multiple regions Leased Office Locations | Geographic Location | Address | Size | | :--- | :--- | :--- | | Woburn, Massachusetts | 100 Sylvan Rd Suite G-700 Woburn, MA 01801 | 775 square feet, professional office space | | Woodbury, New York | 150 Woodbury Road Woodbury, NY 11797 | 3,630 square feet, professional office space | | Brussels, Belgium | Cours Saint Michel 30B 1040 Brussels, Belgium | PO Box | | Raleigh, North Carolina | 4242 Six Forks Rd Suite 1550 North Hills Tower II Raleigh, NC 27609 | 202 square feet, professional office space | | Vancouver, Canada | 1055 West Hastings St, Suite 1700 Guinness Tower Vancouver BC V6E 2E9 | PO Box | | Des Plaines, Illinois | 2700 S River Rd, Suite 400 Des Plaines, IL 60018 | 2,500 square feet, professional office space | [Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings.) The company is not currently involved in any material legal proceedings - The Company is not currently involved in any material legal proceedings[137](index=137&type=chunk) PART II [Market for Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities](index=21&type=section&id=Item%205.%20Market%20for%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchase%20of%20Equity%20Securities.) The company's common stock is widely held, with no current dividend plans, and recent capital raises through preferred stock and warrant offerings - The company has never paid cash dividends on its common stock and does not plan to in the near future[140](index=140&type=chunk) - On May 14, 2021, the company raised approximately **$4.6 million** in net proceeds through a registered direct offering of common stock and a concurrent private placement of 2,700 shares of Series D Convertible Preferred Stock and warrants[142](index=142&type=chunk) - On May 28, 2021, 1,500 shares of Series D Convertible Preferred Stock were issued as part of the purchase price for the acquisition of Hawk Search; all 4,200 shares of Series D Preferred Stock (from both the private placement and acquisition) were converted into common shares by September 30, 2021[142](index=142&type=chunk)[144](index=144&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Fiscal 2021 saw revenue growth driven by acquisitions, improved gross profit, but a net loss due to warrant revaluation, with liquidity strengthened by financing activities Fiscal Year 2021 vs. 2020 Financial Performance (in thousands) | Metric | FY 2021 | FY 2020 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Net Revenue** | **$13,259** | **$10,907** | **+22%** | | Subscription & Licenses Revenue | $9,963 | $7,498 | +33% | | Digital Engagement Services Revenue | $3,296 | $3,409 | -3% | | **Gross Profit** | **$8,726** | **$6,400** | **+36%** | | Gross Profit Margin | 66% | 59% | +7 p.p. | | **Loss from Operations** | **($1,183)** | **($1,644)** | **-28%** | | **Net (Loss)/Income** | **($6,689)** | **$326** | **-2,152%** | | Change in Fair Value of Warrants | ($5,885) | $1,028 | -672% | | **Adjusted EBITDA (Non-GAAP)** | **$1,442** | **($116)** | **N/A** | - The **33% increase** in subscription and perpetual license revenue to **$10.0 million** was primarily due to significant multi-year license renewals and the inclusion of **$2.6 million** in revenue from the fiscal 2021 acquisitions[169](index=169&type=chunk) - Restructuring and acquisition-related expenses surged to **$1.2 million** in fiscal 2021 from **$366 thousand** in fiscal 2020, driven by legal and investment banking fees for the Woorank and Hawk Search acquisitions[180](index=180&type=chunk) - The company's net loss of **$6.7 million** in FY2021 was heavily impacted by a **$5.9 million non-cash loss** on the change in fair value of warrant liabilities, compared to a **$1.0 million gain** in FY2020[183](index=183&type=chunk) - Cash provided by financing activities was **$13.5 million**, primarily from approximately **$14.3 million** in proceeds from the issuance of common stock, preferred stock, and warrant exercises, which significantly improved the company's liquidity position[197](index=197&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) [Financial Statements and Supplementary Data](index=41&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section presents audited financial statements, highlighting critical audit matters, increased assets from acquisitions, and strengthened equity from financing activities Consolidated Balance Sheet Highlights (in thousands) | Account | As of Sep 30, 2021 | As of Sep 30, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $8,852 | $861 | | Total Current Assets | $10,418 | $1,905 | | Goodwill | $15,985 | $5,557 | | Intangible assets, net | $7,755 | $2,617 | | **Total Assets** | **$34,967** | **$10,660** | | Total Current Liabilities | $8,335 | $3,605 | | Warrant liabilities | $4,404 | $2,486 | | **Total Liabilities** | **$17,390** | **$6,304** | | **Total Stockholders' Equity** | **$17,577** | **$4,356** | Consolidated Statement of Operations Highlights (in thousands) | Account | Year Ended Sep 30, 2021 | Year Ended Sep 30, 2020 | | :--- | :--- | :--- | | Total net revenue | $13,259 | $10,907 | | Gross profit | $8,726 | $6,400 | | Loss from operations | ($1,183) | ($1,644) | | Change in fair value of warrant liabilities | ($5,885) | $1,028 | | **Net (loss) / income** | **($6,689)** | **$326** | | **Net loss per share (Basic & Diluted)** | **($1.47)** | **($0.59)** | - The auditor's report for FY2021 identified two critical audit matters: the valuation of intangible assets and contingent consideration related to the Woorank and Hawk Search acquisitions, and the valuation of derivative instruments (warrant liabilities)[251](index=251&type=chunk)[256](index=256&type=chunk) - The acquisitions of Woorank and Hawk Search added a combined **$10.4 million** in goodwill and **$6.3 million** in net intangible assets to the balance sheet in fiscal 2021[363](index=363&type=chunk)[472](index=472&type=chunk) - The company's **$1.05 million** Paycheck Protection Program (PPP) loan was fully forgiven by the SBA in August 2021; the company recognized the forgiveness as government grant income[373](index=373&type=chunk)[376](index=376&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=92&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) This section details biographical information for directors and executive officers, including a CFO change, and outlines the structure of independent board committees - Thomas R. Windhausen was appointed as Chief Financial Officer and Treasurer effective November 30, 2021, succeeding Mark G. Downey[501](index=501&type=chunk)[515](index=515&type=chunk) - The Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, with charters available on the company's website[521](index=521&type=chunk) - The Board has determined that directors Kenneth Galaznik and Scott Landers each qualify as an 'audit committee financial expert'[523](index=523&type=chunk) [Executive Compensation](index=97&type=section&id=Item%2011.%20Executive%20Compensation.) This section details compensation for named executive officers, including the CEO and former CFO, and outlines the compensation structure for non-employee directors Named Executive Officer Compensation (FY 2021 vs. FY 2020) | Name and Principal Position | Fiscal Year | Salary | Bonus | Total | | :--- | :--- | :--- | :--- | :--- | | **Roger Kahn** (President and CEO) | 2021 | $318,750 | $135,791 | $454,541 | | | 2020 | $300,000 | $15,624 | $315,624 | | **Mark G. Downey** (Former EVP & CFO) | 2021 | $240,000 | $58,949 | $298,949 | | | 2020 | $240,000 | $5,000 | $245,000 | - Non-employee directors receive an annual retainer of **$12,000**, **$1,500** per board meeting attended, and additional annual fees for committee membership and chair positions[537](index=537&type=chunk)[538](index=538&type=chunk) - Mark G. Downey resigned as CFO on November 30, 2021, and will provide transition services as a consultant until January 30, 2022[532](index=532&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=99&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) This section discloses beneficial ownership of common and preferred stock by management and directors, and summarizes equity compensation plan information - As of December 20, 2021, all current executive officers and directors as a group beneficially owned **676,236 shares**, or **6.28%** of the outstanding common stock[547](index=547&type=chunk)[554](index=554&type=chunk) - Director Michael Taglich and his spouse beneficially owned **100%** of the **350 outstanding shares** of Series C Preferred Stock[546](index=546&type=chunk) Equity Compensation Plan Information (as of Sep 30, 2021) | Plan Category | Securities to be Issued Upon Exercise (Options, Warrants) | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Approved by security holders | 799,201 | $4.66 | 4,045 | | Not approved by security holders | 1,788,745 | $4.18 | - | [Certain Relationships and Related Transactions, and Director Independence](index=102&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) This section discloses related-party transactions, primarily with director Michael Taglich and his firm, involving advisory services, fees, and warrant issuances - Director Michael Taglich is the Chairman and President of Taglich Brothers, Inc., a securities firm that has acted as a placement agent and advisor for many of the Company's financing and acquisition activities[562](index=562&type=chunk) - Taglich Brothers, Inc. earned a success fee of **$200,000** in connection with the asset purchase of Stantive and a fee of **$21,000** for advisory services related to the Series A Preferred Stock[568](index=568&type=chunk)[570](index=570&type=chunk) - In connection with the February and May 2021 offerings, Taglich Brothers, Inc. received warrants to purchase a combined **82,945 shares** of the Company's common stock[571](index=571&type=chunk)[572](index=572&type=chunk) [Principal Accounting Fees and Services](index=105&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services.) This section details fees paid to independent auditors for audit, audit-related, and tax services, all pre-approved by the Audit Committee Auditor Fees (Fiscal Year Ended September 30) | Type of Service | 2021 | 2020 | | :--- | :--- | :--- | | Audit Fees | $261,951 | $261,397 | | Audit-Related Fees | $68,544 | — | | Tax Fees | — | — | | **Total** | **$330,495** | **$261,397** | - The company changed its independent registered public accounting firm during the year, dismissing Marcum LLP on February 26, 2021, and engaging PKF O'Connor Davies LLP on February 27, 2021[485](index=485&type=chunk)[489](index=489&type=chunk) - Audit-related fees in 2021 consisted of services performed in connection with the company's acquisitions[577](index=577&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=106&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules.) This section lists all documents filed as part of the Form 10-K, including consolidated financial statements, notes, and a comprehensive index of exhibits - The filing includes the consolidated financial statements for the years ended September 30, 2021 and 2020[583](index=583&type=chunk) - A comprehensive list of exhibits is provided, including key agreements such as the Share Purchase Agreements for the Woorank and Hawk Search acquisitions and employment agreements for executive officers[587](index=587&type=chunk)[588](index=588&type=chunk) - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed as exhibits[588](index=588&type=chunk)

Bridgeline Digital, Inc. (NASDAQ:BLIN) Q3 2021 Earnings Conference Call August 16, 2021 4:30 PM ET Company Participants Ari Kahn - President and CEO Mark Downey - CFO Conference Call Participants Howard Halpern - Taglich Operator Good day and thank you for standing by. Welcome to the Bridgeline Digital Inc. Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. I'd now ...

Part I - Financial Information [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201%2E%20Condensed%20Consolidated%20Financial%20Statements) Unaudited condensed financial statements for June 30, 2021, show significant asset and liability growth driven by acquisitions, resulting in a $5.3 million net loss [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to **$32.1 million** by June 30, 2021, from **$10.7 million**, driven by acquisitions, while liabilities increased to **$23.7 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | September 30, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $4,768 | $861 | | Total current assets | $7,082 | $1,905 | | Goodwill | $15,961 | $5,557 | | Intangible assets, net | $8,159 | $2,617 | | **Total assets** | **$32,063** | **$10,660** | | **Liabilities & Equity** | | | | Total current liabilities | $12,837 | $3,605 | | Warrant liabilities | $8,823 | $2,486 | | **Total liabilities** | **$23,729** | **$6,304** | | **Total stockholders' equity** | **$8,334** | **$4,356** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2021 revenue rose **31%** to **$3.4 million**, but net loss widened to **$3.6 million** due to warrant liabilities Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total net revenue | $3,445 | $2,632 | $9,155 | $8,202 | | Gross profit | $2,252 | $1,553 | $5,939 | $4,580 | | Income (loss) from operations | ($615) | $150 | ($563) | ($1,808) | | Change in fair value of warrant liabilities | ($4,161) | ($1,843) | ($6,020) | $1,078 | | Net loss | ($3,609) | ($1,701) | ($5,327) | ($742) | | Net loss per share (Basic & Diluted) | ($0.61) | ($0.44) | ($1.04) | ($0.97) | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations improved to **$338,000**, with **$8.0 million** from financing activities, increasing cash to **$4.8 million** Cash Flow Summary for the Nine Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $338 | ($227) | | Net cash used in investing activities | ($4,440) | $0 | | Net cash provided by financing activities | $7,966 | $1,048 | | **Net increase in cash and cash equivalents** | **$3,907** | **$869** | | **Cash and cash equivalents at end of period** | **$4,768** | **$1,165** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business, accounting policies, and significant events, including acquisitions and equity financings - The company helps customers maximize their digital experience through its Bridgeline Unbound platform (a cloud-based SaaS), OrchestraCMS (native on Salesforce), Celebros Search (commerce-oriented site search), Woorank (SEO audit tool), and Hawk Search (search and personalization platform)[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - In February **2021**, the company raised approximately **$2.5 million** in net proceeds from a registered direct offering of **880,000** common shares at **$3.10** per share[45](index=45&type=chunk)[110](index=110&type=chunk) - In May **2021**, the company raised an aggregate of **$4.6 million** in net proceeds through a registered direct offering of common stock and a private placement of Series D Convertible Preferred Stock and warrants[42](index=42&type=chunk)[43](index=43&type=chunk)[90](index=90&type=chunk) - The company acquired Woorank SRL on March **1**, **2021**, and Hawk Search, Inc. on May **28**, **2021** These business combinations were funded with cash, stock, deferred payments, and contingent consideration[154](index=154&type=chunk)[156](index=156&type=chunk) Acquisition Consideration (in thousands) | Consideration Type | Woorank | Hawk Search | Total | | :--- | :--- | :--- | :--- | | Cash paid at closing | $285 | $4,800 | $5,085 | | Future deferred payments | $426 | $2,000 | $2,426 | | Stock (Common & Preferred) | $99 | $930 | $1,029 | | Seller's note | $352 | $0 | $352 | | Contingent consideration | $1,617 | $2,190 | $3,807 | | **Total consideration** | **$2,779** | **$9,920** | **$12,699** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2021 revenue growth, improved gross margin, operating loss, and strengthened liquidity from equity offerings [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Q3 2021 revenue increased **31%** to **$3.4 million**, with gross margin expanding to **65%** Revenue Comparison for the Three Months Ended June 30 (in thousands) | Revenue Source | 2021 | 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Digital engagement services | $821 | $713 | $108 | 15% | | Subscription and perpetual licenses | $2,624 | $1,919 | $705 | 37% | | **Total net revenue** | **$3,445** | **$2,632** | **$813** | **31%** | - The increase in subscription and license revenue for the three and nine months ended June **30**, **2021**, was primarily due to significant multi-year license renewals and the inclusion of revenue from the Company's fiscal **2021** acquisitions[191](index=191&type=chunk) - Gross profit margin increased to **65%** for the nine months ended June **30**, **2021**, from **56%** in the prior year, mainly due to decreases in headcount, reduced use of third-party consultants, and a higher proportion of license revenue[192](index=192&type=chunk) - Restructuring and acquisition-related expenses were **$862,000** for the nine months ended June **30**, **2021**, compared to **$373,000** in the prior-year period, reflecting costs from the Woorank and Hawk Search acquisitions[199](index=199&type=chunk)[200](index=200&type=chunk) [Adjusted EBITDA](index=46&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA for the nine months ended June 30, 2021, was **$1.2 million**, a significant improvement Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net loss | ($5,327) | ($742) | | Provision for (benefit from) income tax | ($1,175) | $9 | | Interest expense, net | $7 | $3 | | Government grant income | ($88) | - | | Change in fair value of warrants | $6,020 | ($1,078) | | Amortization of intangible assets | $726 | $678 | | Depreciation | $38 | $40 | | Restructuring and acquisition related charges | $862 | $373 | | Stock-based compensation | $133 | $133 | | **Adjusted EBITDA** | **$1,209** | **($571)** | - The year-over-year increase in Adjusted EBITDA is primarily attributable to increases in revenues and cost control measures[211](index=211&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity significantly enhanced by **$8.0 million** cash from financing activities, funding acquisitions and working capital - Cash from financing activities for the nine months ended June **30**, **2021**, was **$8.0 million**, mainly from **$8.5 million** in proceeds from stock/warrant issuances, offset by debt repayments[214](index=214&type=chunk) - Subsequent to the quarter end, in July **2021**, the company received approximately **$7.4 million** in cash from the exercise of Series A Warrants[216](index=216&type=chunk) - Acquisitions in fiscal **2021** created significant payment obligations, including a **$2.0 million** deferred payment due by Dec **31**, **2021**, and assumed long-term debt of **$2.1 million**[219](index=219&type=chunk)[221](index=221&type=chunk) [Item 3. Qualitative and Quantitative Disclosures About Market Risk](index=53&type=section&id=Item%203%2E%20Qualitative%20and%20Quantitative%20Disclosures%20About%20Market%20Risk) This section is not required for the company - As a smaller reporting company, Bridgeline Digital, Inc. is not required to provide disclosures about market risk[248](index=248&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June **30**, **2021**[250](index=250&type=chunk) - No changes occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[251](index=251&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=54&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - As of the filing date, the company is not engaged in any material legal proceedings beyond those previously disclosed[255](index=255&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity securities were sold during the nine months ended June 30, 2021 - There were no sales of unregistered equity securities in the nine months ended June **30**, **2021**[256](index=256&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206%2E%20Exhibits) This section lists exhibits filed with the Form 10-Q, including agreements and required certifications

Bridgeline Digital, Inc. (NASDAQ:BLIN) Q2 2021 Earnings Conference Call May 17, 2021 12:30 PM ET Company Participants Mark Downey - Chief Financial Officer Ari Kahn - President and Chief Executive Officer Conference Call Participants Howard Halpern - Taglich Operator Good day and thank you for standing by. Welcome to the Bridgeline Digital Inc. Second Quarter 2021 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number 333-139298 Bridgeline Digital, Inc. (Exact name of registrant as specified in its charter) Delaware 52-2263942 Sta ...

Bridgeline Digital, Inc. (NASDAQ:BLIN) Q1 2021 Earnings Conference Call February 11, 2021 4:30 PM ET Company Participants Mark Downey – Chief Financial Officer Ari Kahn – President and Chief Executive Officer Conference Call Participants Howard Halpern – Taglich Operator Good afternoon, ladies and gentlemen, and welcome to the Bridgeline Digital First Quarter 2021 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to you ...

Financial Performance - Total revenue for the three months ended December 31, 2020, was $2.8 million, a slight increase of $4 thousand compared to $2.8 million for the same period in 2019[132]. - The company reported a net loss of $1.2 million for the three months ended December 31, 2020, compared to a net income of $136 thousand for the same period in 2019[132]. - Adjusted EBITDA for the three months ended December 31, 2020, was $672 thousand, compared to a loss of $669 thousand for the same period in 2019[134]. - Adjusted EBITDA increased to $672 thousand for the three months ended December 31, 2020, compared to a loss of $669 thousand for the same period in 2019, primarily due to increases in revenues and cost control measures[156]. - Cash provided by operating activities was $451 thousand for the three months ended December 31, 2020, compared to $110 thousand for the same period in 2019[157]. Revenue Breakdown - Revenue from digital engagement services decreased by $259 thousand, or 24%, to $837 thousand for the three months ended December 31, 2020[136]. - Revenue from subscription and perpetual licenses increased by $263 thousand, or 15%, to $2.0 million for the three months ended December 31, 2020[137]. - Revenue is derived from two main sources: Software Licenses and Digital Engagement Services, with revenue recognized when control of services is transferred to customers[176][177]. Cost Management - Total cost of revenue decreased by $401 thousand, or 30%, to $957 thousand for the three months ended December 31, 2020[138]. - Cost of digital engagement services decreased by $194 thousand, or 34%, to $374 thousand for the three months ended December 31, 2020[139]. - Cost of subscription and perpetual licenses decreased by $207 thousand, or 26%, to $583 thousand for the three months ended December 31, 2020[140]. - Operating expenses decreased by $783 thousand, or 32%, to $1.7 million for the three months ended December 31, 2020, compared to $2.5 million for the same period in 2019[147]. - Sales and marketing expenses decreased by $588 thousand, or 57%, to $444 thousand for the three months ended December 31, 2020, compared to $1.0 million for the same period in 2019, representing 16% of total revenue in 2020 versus 36% in 2019[142]. - General and administrative expenses decreased by $286 thousand, or 38%, to $465 thousand for the three months ended December 31, 2020, compared to $751 thousand for the same period in 2019, representing 16% of total revenue in 2020 versus 27% in 2019[143]. - Research and development expenses decreased by $41 thousand, or 11%, to $349 thousand for the three months ended December 31, 2020, compared to $390 thousand for the same period in 2019, representing 12% of total revenue in 2020 versus 14% in 2019[144]. Restructuring and Acquisition - The company experienced a significant increase in restructuring and acquisition-related expenses, which rose to $210 thousand, a 4,100% increase compared to $5 thousand in the previous year[134]. - The company incurred acquisition-related expenses of $210 thousand during the three months ended December 31, 2020, related to the acquisition of Woorank, representing 7% of total revenue[146]. - The company entered into a Share Purchase Agreement to acquire Woorank for an unconditional purchase price of approximately €3.3 million, with certain conditions for adjustments based on revenue targets[163]. Accounting Policies - The company uses a five-step model for revenue recognition, which includes identifying customer contracts and performance obligations[178]. - An allowance for doubtful accounts is maintained to estimate losses from clients' inability to make payments, based on historical percentages and payment history[179][180]. - Implementation costs for cloud computing arrangements are capitalized and amortized over the term of the arrangement, in accordance with ASC 350-40[181]. - Goodwill is tested for impairment annually, with potential impairment factors including operational and economic uncertainties[183][184]. - Stock-based compensation is recognized based on fair values, with expenses recorded over the service period, generally three years[186][187]. - The company accounts for the Paycheck Protection Program (PPP) loan as a government grant, recognizing income separately within other income[190]. Lease Obligations - The company has total payment obligations for operating leases amounting to $683 million over the years FY21 to FY25, with $142 million in FY21 and $84 million in FY25[174]. Operational Strategy - The company executed an operating plan that reduced operating expenses, resulting in three consecutive quarters of operating income[167]. - The company plans to submit the PPP loan forgiveness application in the near term, having expended all loan proceeds on qualified expenses incurred during the period[150].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2020 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number 333-139298 | --- | --- | --- | |-------------------------------------------------------------------------------------- ...