Bridgeline Digital(BLIN) - 2025 Q3 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Bridgeline Digital, Inc.'s unaudited condensed consolidated financial statements and notes for periods ended June 30, 2025, and September 30, 2024 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric (in thousands) | June 30, 2025 | September 30, 2024 | Change | % Change | | :-------------------- | :------------ | :----------------- | :----- | :------- | | Total Assets | $16,148 | $15,602 | $546 | 3.5% | | Total Liabilities | $6,199 | $5,596 | $603 | 10.8% | | Total Stockholders' Equity | $9,949 | $10,006 | $(57) | -0.6% | - Cash and cash equivalents increased by $713 thousand from $1,390 thousand as of September 30, 2024, to $2,103 thousand as of June 30, 2025[14] - Accounts receivable, net, increased by $113 thousand from $1,288 thousand as of September 30, 2024, to $1,401 thousand as of June 30, 2025[14] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Three Months Ended June 30, 2025 and 2024, in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Total Net Revenue | $3,846 | $3,936 | $(90) | -2.3% | | Gross Profit | $2,548 | $2,706 | $(158) | -5.8% | | Loss from Operations | $(689) | $(383) | $(306) | 79.9% | | Net Loss | $(789) | $(305) | $(484) | 158.7% | | Basic Net Loss Per Share | $(0.07) | $(0.03) | $(0.04)| 133.3% | Condensed Consolidated Statements of Operations (Nine Months Ended June 30, 2025 and 2024, in thousands) | Metric (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | :------- |\ | Total Net Revenue | $11,512 | $11,495 | $17 | 0.1% | | Gross Profit | $7,699 | $7,782 | $(83) | -1.1% | | Loss from Operations | $(1,945) | $(1,537) | $(408) | 26.5% | | Net Loss | $(2,153) | $(1,529) | $(624) | 40.8% | | Basic Net Loss Per Share | $(0.23) | $(0.15) | $(0.08)| 53.3% | Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Comprehensive Loss (Three Months Ended June 30, 2025 and 2024, in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net Loss | $(789) | $(305) | $(484) | 158.7% | | Net change in foreign currency translation adjustment | $(40) | $11 | $(51) | -463.6% | | Comprehensive Loss | $(829) | $(294) | $(535) | 182.0% | Condensed Consolidated Statements of Comprehensive Loss (Nine Months Ended June 30, 2025 and 2024, in thousands) | Metric (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net Loss | $(2,153) | $(1,529) | $(624) | 40.8% | | Net change in foreign currency translation adjustment | $22 | $(14) | $36 | -257.1% | | Comprehensive Loss | $(2,131) | $(1,543) | $(588) | 38.1% | Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric (in thousands) | As of Oct 1, 2024 | As of June 30, 2025 | Change | % Change | | :-------------------- | :---------------- | :------------------ | :----- | :------- | | Total Stockholders' Equity | $10,006 | $9,949 | $(57) | -0.6% | | Common Stock Shares Outstanding | 10,417,609 | 12,112,068 | 1,694,459 | 16.3% | | Accumulated Deficit | $(91,538) | $(93,691) | $(2,153)| 2.4% | - The company redeemed all 350 shares of Series C Convertible Preferred Stock on March 5, 2025, for $331 thousand, which was recognized as a reduction in additional paid-in capital[60][61] - Issuance of common stock, net of offering costs, contributed $1,983 thousand to additional paid-in capital during the nine months ended June 30, 2025[23] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Nine Months Ended June 30, 2025 and 2024, in thousands) | Metric (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net Cash Used in Operating Activities | $(759) | $(982) | $223 | -22.7% | | Net Cash Used in Investing Activities | $(12) | $(24) | $12 | -50.0% | | Net Cash Provided by (Used in) Financing Activities | $1,475 | $(189) | $1,664 | -880.4% | | Net Increase (Decrease) in Cash and Cash Equivalents | $713 | $(1,177) | $1,890 | -160.6% | | Cash and Cash Equivalents at End of Period | $2,103 | $1,200 | $903 | 75.3% | - Cash provided by financing activities significantly increased due to $1.983 million from common stock issuance, partially offset by Series C Preferred Stock redemption and long-term debt payments[27][153] Notes to Unaudited Condensed Consolidated Financial Statements 1. Description of Business - Bridgeline Digital is an AI-powered marketing technology company offering cloud-based SaaS and perpetual licensing software products like HawkSearch, Celebros Search, Woorank, Unbound, TruPresence, and OrchestraCMS[29][30][31] - The company has historically incurred operating losses and relies on cash on hand and financing activities to fund operations and product development, maintaining tight control over discretionary spending for fiscal year 2025[34] - The company completed a registered direct offering in March 2025, issuing 1,000,000 shares of common stock for gross proceeds of approximately $1.5 million ($1.3 million net), and a private placement of 473,979 unregistered shares for gross proceeds of approximately $720 thousand ($700 thousand net)[36][37][38] 2. Summary of Significant Accounting Policies - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include all adjustments necessary for fair presentation, with operating results for the interim periods not necessarily indicative of the full fiscal year[40] - The company is evaluating the impact of recently issued ASUs on Segment Reporting (ASU 2023-07), Income Taxes (ASU 2023-09), and Expense Disaggregation Disclosures (ASU 2024-03), expecting enhanced disclosures[41][42][43] 3. Accounts Receivable Accounts Receivable, Net (in thousands) | Metric (in thousands) | As of June 30, 2025 | As of September 30, 2024 | Change | % Change | | :-------------------- | :------------------ | :----------------------- | :----- | :------- | | Accounts receivable | $1,710 | $1,551 | $159 | 10.3% | | Allowance for credit losses | $(309) | $(263) | $(46) | 17.5% | | Accounts receivable, net | $1,401 | $1,288 | $113 | 8.8% | Allowance for Credit Losses Activity (in thousands) | Allowance for Credit Losses Activity (in thousands) | :----- | | :------------------------------------ | :----- | | Balance as of October 1, 2024 | $263 | | Credit loss expense (recovery) | $135 | | Write-off/adjustments | $(89) | | Balance as of June 30, 2025 | $309 | 4. Fair Value Measurement and Fair Value of Financial Instruments - The company's warrant liabilities are measured at fair value using Level 3 inputs and a Monte Carlo option-pricing model, considering volatilities of comparable public companies and company-specific volatility[51] Warrant Liabilities (in thousands) | Warrant Liabilities (in thousands) | As of June 30, 2025 | As of September 30, 2024 | Change | % Change | | :--------------------------------- | :------------------ | :----------------------- | :----- | :------- | | Montage | $4 | $10 | $(6) | -60.0% | | Series D | $150 | $88 | $62 | 70.5% | | Total Warrant Liabilities | $154 | $98 | $56 | 57.1% | Change in Fair Value of Warrant Liabilities (in thousands) | Change in Fair Value of Warrant Liabilities (in thousands) | :----- | | :------------------------------------------------- | :----- | | 3 Months Ended June 30, 2025 Gain | $31 | | 3 Months Ended June 30, 2024 Gain | $88 | | 9 Months Ended June 30, 2025 Loss | $(58) | | 9 Months Ended June 30, 2024 Gain | $81 | 5. Intangible Assets Intangible Assets, Net (in thousands) | Intangible Assets, Net (in thousands) | As of June 30, 2025 | As of September 30, 2024 | Change | % Change | | :------------------------------------ | :------------------ | :----------------------- | :----- | :------- | | Domain and trade names | $532 | $572 | $(40) | -7.0% | | Customer related | $2,669 | $3,048 | $(379) | -12.4% | | Technology | $158 | $288 | $(130) | -45.1% | | Balance at end of period | $3,359 | $3,908 | $(549) | -14.1% | - Total amortization expense for intangible assets was $549 thousand for the nine months ended June 30, 2025, a decrease from $796 thousand in the prior year, primarily due to certain intangible assets becoming fully amortized[54][139] 6. Accrued Liabilities Accrued Liabilities (in thousands) | Accrued Liabilities (in thousands) | As of June 30, 2025 | As of September 30, 2024 | Change | % Change | | :--------------------------------- | :------------------ | :----------------------- | :----- | :------- | | Compensation and benefits | $712 | $405 | $307 | 75.8% | | Professional fees | $247 | $268 | $(21) | -7.8% | | Insurance | $34 | $- | $34 | N/A | | Other | $197 | $315 | $(118) | -37.5% | | Balance at end of period | $1,190 | $988 | $202 | 20.4% | 7. Long-term Debt Long-term Debt (in thousands) | Long-term Debt (in thousands) | As of June 30, 2025 | As of September 30, 2024 | Change | % Change | | :---------------------------- | :------------------ | :----------------------- | :----- | :------- | | Term loan payable | $277 | $325 | $(48) | -14.8% | | Seller's note payable | $71 | $201 | $(130) | -64.7% | | Total debt | $348 | $526 | $(178) | -33.8% | | Less: current portion | $(156) | $(282) | $126 | -44.7% | | Long-term debt, net of current portion | $192 | $244 | $(52) | -21.3% | Future Maturities of Long-term Debt (in thousands) | Future Maturities of Long-term Debt (in thousands) | :----- | | :-------------------- | :----- | | Fiscal year 2025 (remaining) | $93 | | Fiscal year 2026 | $85 | | Fiscal year 2027 | $85 | | Fiscal year 2028 | $85 | | Total long-term debt | $348 | 8. Stockholders' Equity - On March 5, 2025, the company redeemed all 350 shares of Series C Preferred Stock, along with placement agent warrants and stock options, for an aggregate purchase price of $332.5 thousand, resulting in no Series C Preferred Stock outstanding as of June 30, 2025[60][61] Stock-based Compensation Expense (in thousands) | Stock-based Compensation Expense (in thousands) | :----- | | :-------------------------------- | :----- | | 3 Months Ended June 30, 2025 | $274 | | 3 Months Ended June 30, 2024 | $127 | | 9 Months Ended June 30, 2025 | $488 | | 9 Months Ended June 30, 2024 | $421 | - As of June 30, 2025, there were 1,799,477 stock options outstanding and 861,533 stock warrants outstanding, with 208 thousand shares available for future issuance under the 2016 Stock Incentive Plan[62][75] 9. Net Loss Per Share Attributable to Common Shareholders Net Loss Per Share Attributable to Common Shareholders (Three Months Ended June 30, 2025 and 2024, in thousands, except per share data) | Metric (in thousands, except per share data) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :------------------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net loss applicable to common shareholders | $(789) | $(305) | $(484) | 158.7% | | Basic net loss per share | $(0.07) | $(0.03) | $(0.04)| 133.3% | | Diluted net loss per share | $(0.07) | $(0.03) | $(0.04)| 133.3% | Net Loss Per Share Attributable to Common Shareholders (Nine Months Ended June 30, 2025 and 2024, in thousands, except per share data) | Metric (in thousands, except per share data) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :------------------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net loss applicable to common shareholders | $(2,484) | $(1,529) | $(955) | 62.5% | | Basic net loss per share | $(0.23) | $(0.15) | $(0.08)| 53.3% | | Diluted net loss per share | $(0.23) | $(0.15) | $(0.08)| 53.3% | - Potential common stock equivalents, including stock options and warrants, were excluded from diluted net loss per share computation for both periods as their inclusion would have been anti-dilutive[76][77] 10. Revenues and Other Related Items Revenue by Geography (Three Months Ended June 30, 2025 and 2024, in thousands) | Revenue by Geography (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :---------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | United States | $3,221 | $3,236 | $(15) | -0.5% | | International | $625 | $701 | $(76) | -10.8% | | Total | $3,846 | $3,936 | $(90) | -2.3% | Revenue by Type (Three Months Ended June 30, 2025 and 2024, in thousands) | Revenue by Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :----------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Subscription | $2,573 | $2,666 | $(93) | -3.5% | | Maintenance | $104 | $105 | $(1) | -1.0% | | Hosting | $445 | $242 | $203 | 83.9% | | Digital engagement services | $724 | $923 | $(199) | -21.6% | | Total | $3,846 | $3,936 | $(90) | -2.3% | - Deferred revenue (current portion) decreased from $2,189 thousand as of October 1, 2024, to $2,176 thousand as of June 30, 2025[83] 11. Income Taxes - The provision for income taxes remained consistent at $5 thousand for the three months ended June 30, 2025 and 2024, and $15 thousand for the nine months ended June 30, 2025 and 2024[84] - The company maintains a valuation allowance against its net deferred tax assets, as net operating loss carryforwards are estimated to offset potential taxable income[84][145] 12. Leases Net Lease Costs (Three Months Ended June 30, 2025 and 2024, in thousands) | Net Lease Costs (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :----------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Operating lease cost | $45 | $50 | $(5) | -10.0% | | Variable lease cost | $17 | $16 | $1 | 6.3% | | Sublease income, net | $(18) | $(18) | $0 | 0.0% | | Total | $44 | $48 | $(4) | -8.3% | - Cash paid for lease liabilities was $113 thousand for the nine months ended June 30, 2025, compared to $140 thousand in the prior year[88] - As of June 30, 2025, the weighted average remaining lease term was 2.2 years with a weighted average discount rate of 10.9%[88] 13. Commitments and Contingencies - The company provides warranties for its technology solutions, but its estimate of exposure to warranty-related claims is immaterial as of June 30, 2025, and September 30, 2024[91][92] - The company's agreements generally include indemnification clauses for third-party intellectual property infringement and product liability, but no significant claims or losses have been experienced[93] - As of June 30, 2025, the company was not involved in any material legal proceedings beyond those previously disclosed[94][183] 14. Related Party Transactions - Brandon Ross, a Class III Director and Head of Placements at WestPark Capital, Inc., was designated warrants to purchase 28,000 shares of common stock in March 2025[95][96] - Michael Ketslakh, a Class II Director, participated in a private placement and purchased 394,736 unregistered shares[98][99] - Michael Taglich resigned from the Board of Directors on February 10, 2025, preceding the redemption of Series C Preferred Stock[97] 15. Subsequent Events - The company evaluated subsequent events through the filing date and found no material events requiring adjustment or disclosure in the interim condensed consolidated financial statements[100] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, results of operations, liquidity, and capital resources for the three and nine months ended June 30, 2025 Overview - Bridgeline Digital is an AI-powered marketing technology company offering SaaS and perpetual license software products designed to increase online revenue for businesses[103][104] - The company's product suite includes HawkSearch, Celebros Search, Woorank, Unbound, TruPresence, and OrchestraCMS, catering to various digital engagement needs[104] - Bridgeline operates globally with its corporate office in Woburn, Massachusetts, and subsidiaries in India, Canada, and Belgium[105][106] Customer Information - The company currently serves over 2,000 active customers[107] - No single customer accounted for more than 10% of total revenue for the three and nine months ended June 30, 2025 and 2024[107] Results of Operations for the Three and Nine Months Ended June 30, 2025 compared to the Three and Nine Months Ended June 30, 2024 Revenue Revenue by Source (Three Months Ended June 30, 2025 and 2024, in thousands) | Revenue Source (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :---------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Subscription and perpetual licenses | $3,122 | $3,013 | $109 | 3.6% | | Digital engagement services | $724 | $923 | $(199) | -21.6% | | Total Net Revenue | $3,846 | $3,936 | $(90) | -2.3% | Revenue by Source (Nine Months Ended June 30, 2025 and 2024, in thousands) | Revenue Source (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :---------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Subscription and perpetual licenses | $9,222 | $9,109 | $113 | 1.2% | | Digital engagement services | $2,290 | $2,386 | $(96) | -4.0% | | Total Net Revenue | $11,512 | $11,495 | $17 | 0.1% | - Digital engagement services revenue decreased for the three months ended June 30, 2025, primarily due to additional services volumes, including a large customer project, in the prior year period[116] Cost of Revenue Cost of Revenue by Source (Three Months Ended June 30, 2025 and 2024, in thousands) | Cost of Revenue (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :----------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Subscription and perpetual licenses | $934 | $846 | $88 | 10.4% | | Digital engagement services | $364 | $384 | $(20) | -5.2% | | Total Cost of Revenue | $1,298 | $1,230 | $68 | 5.5% | Cost of Revenue by Source (Nine Months Ended June 30, 2025 and 2024, in thousands) | Cost of Revenue (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :----------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Subscription and perpetual licenses | $2,694 | $2,533 | $161 | 6.4% | | Digital engagement services | $1,119 | $1,180 | $(61) | -5.2% | | Total Cost of Revenue | $3,813 | $3,713 | $100 | 2.7% | - The increase in cost of subscription and perpetual licenses is primarily due to higher server costs, while the decrease in cost of digital engagement services is mainly due to lower personnel costs[120][124] Gross Profit Gross Profit (Three Months Ended June 30, 2025 and 2024, in thousands) | Gross Profit (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :-------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Gross Profit | $2,548 | $2,706 | $(158) | -5.8% | | Gross Profit Margin | 66% | 69% | -3% | -4.3% | Gross Profit (Nine Months Ended June 30, 2025 and 2024, in thousands) | Gross Profit (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :-------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Gross Profit | $7,699 | $7,782 | $(83) | -1.1% | | Gross Profit Margin | 67% | 68% | -1% | -1.5% | Operating Expenses Operating Expenses (Three Months Ended June 30, 2025 and 2024, in thousands) | Operating Expense (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Sales and marketing | $1,297 | $949 | $348 | 36.7% | | General and administrative | $774 | $878 | $(104) | -11.8% | | Research and development | $961 | $1,008 | $(47) | -4.7% | | Depreciation and amortization | $195 | $201 | $(6) | -3.0% | | Restructuring and acquisition related expenses | $10 | $53 | $(43) | -81.1% | | Total Operating Expenses | $3,237 | $3,089 | $148 | 4.8% | Operating Expenses (Nine Months Ended June 30, 2025 and 2024, in thousands) | Operating Expense (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Sales and marketing | $3,355 | $2,803 | $552 | 19.7% | | General and administrative | $2,343 | $2,425 | $(82) | -3.4% | | Research and development | $3,144 | $3,138 | $6 | 0.2% | | Depreciation and amortization | $585 | $885 | $(300) | -33.9% | | Restructuring and acquisition related expenses | $217 | $68 | $149 | 219.1% | | Total Operating Expenses | $9,644 | $9,319 | $325 | 3.5% | - Sales and marketing expenses increased due to higher marketing spend on leads and conferences, and higher personnel costs for the nine-month period[129][130] - Depreciation and amortization decreased for the nine-month period primarily because certain intangible assets became fully amortized[139] Loss from Operations Loss from Operations (Three Months Ended June 30, 2025 and 2024, in thousands) | Loss from Operations (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :---------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Loss from Operations | $(689) | $(383) | $(306) | 79.9% | Loss from Operations (Nine Months Ended June 30, 2025 and 2024, in thousands) | Loss from Operations (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :---------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Loss from Operations | $(1,945) | $(1,537) | $(408) | 26.5% | Interest expense and other, net Interest Expense and Other, Net (Three Months Ended June 30, 2025 and 2024, in thousands) | Interest Expense and Other, Net (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :--------------------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Interest expense and other, net | $(126) | $(5) | $(121) | 2420.0% | Interest Expense and Other, Net (Nine Months Ended June 30, 2025 and 2024, in thousands) | Interest Expense and Other, Net (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :--------------------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Interest expense and other, net | $(135) | $(58) | $(77) | 132.8% | - The increase in interest expense and other, net, is primarily due to stock-based compensation from restricted stock issued to board members in the three months ended June 30, 2025[143] Change in fair value of warrant liabilities Change in Fair Value of Warrant Liabilities (in thousands) | Change in Fair Value of Warrant Liabilities (in thousands) | :----- | | :------------------------------------------------- | :----- | | 3 Months Ended June 30, 2025 Gain | $31 | | 3 Months Ended June 30, 2024 Gain | $88 | | 9 Months Ended June 30, 2025 Loss | $(58) | | 9 Months Ended June 30, 2024 Gain | $81 | Provision for Income Taxes - The provision for income taxes remained constant at $5 thousand for the three months and $15 thousand for the nine months ended June 30, 2025 and 2024, respectively[110][145] - The company maintains a valuation allowance against its net deferred tax assets due to sufficient net operating loss carryforwards to offset potential taxable income[145] Adjusted EBITDA Adjusted EBITDA (Three Months Ended June 30, 2025 and 2024, in thousands) | Adjusted EBITDA (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :----------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Adjusted EBITDA | $(330) | $3 | $(333) | -11100.0%| | Net Loss | $(789) | $(305) | $(484) | 158.7% | Adjusted EBITDA (Nine Months Ended June 30, 2025 and 2024, in thousands) | Adjusted EBITDA (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :----------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Adjusted EBITDA | $(762) | $(197) | $(565) | 286.8% | | Net Loss | $(2,153) | $(1,529) | $(624) | 40.8% | - Adjusted EBITDA is a non-GAAP measure used by management and investors to evaluate operating performance, excluding items like interest, taxes, depreciation, amortization, and stock-based compensation[146][147][148] Liquidity and Capital Resources Cash Flows (Nine Months Ended June 30, 2025 and 2024, in thousands) | Cash Flows (in thousands) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change | % Change | | :------------------------ | :--------------------------- | :--------------------------- | :----- | :------- | | Operating Activities | $(759) | $(982) | $223 | -22.7% | | Investing Activities | $(12) | $(24) | $12 | -50.0% | | Financing Activities | $1,475 | $(189) | $1,664 | -880.4% | - Cash provided by financing activities significantly increased due to $2.0 million from common stock issuance, partially offset by Series C Preferred Stock redemption and long-term debt payments[153] - The company maintains tight control over discretionary spending and believes future revenues and cash flows will support working capital and revenue growth, despite historical operating losses[154] - The company has an effective shelf registration statement to offer up to $50 million in debt or equity securities, but there are no active offerings as of the filing date[155] Critical Accounting Policies - Key accounting policies requiring significant judgment include revenue recognition, accounts receivable valuation, goodwill and intangible asset accounting, business combinations, common stock purchase warrants, and stock-based compensation[161][165] - Revenue is recognized using a five-step model when control of services is transferred to customers, with estimates for variable consideration[163][166] - Stock-based compensation expense is recognized over the vesting period using the Black-Scholes-Merton option valuation model, with subjective estimates for stock price volatility, expected life, and forfeiture rates[172][173][174][175] Item 3. Qualitative and Quantitative Disclosures About Market Risk No qualitative and quantitative disclosures about market risk are required for this quarterly report - No qualitative and quantitative disclosures about market risk are required for this report[177] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[178] - There were no material changes to the internal control over financial reporting during the most recent fiscal quarter[179] - Management acknowledges that any control system provides reasonable, but not absolute, assurance of achieving objectives and cannot guarantee prevention or detection of all misstatements[180] PART II – OTHER INFORMATION Item 1. Legal Proceedings No material legal proceedings are currently active beyond those disclosed in the Annual Report on Form 10-K - The company is not currently involved in any material legal proceedings beyond those previously disclosed in its Annual Report on Form 10-K for the fiscal year ended September 30, 2024[183] Item 1A. Risk Factors No material changes to risk factors previously described in the Annual Report on Form 10-K have occurred - No material changes to the risk factors described in the Annual Report on Form 10-K for the fiscal year ended September 30, 2024, have occurred[184] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds are reported for the period - There were no unregistered sales of equity securities and use of proceeds to report[185] Item 3. Defaults Upon Senior Securities No defaults upon senior securities are reported for the period - There were no defaults upon senior securities[187] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable[188] Item 5. Other Information No other information is reported for the period - There is no other information to report[190] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and XBRL data - Exhibits include Amended and Restated Certificate of Incorporation, By-laws, Certificates of Designations for Series A and B Convertible Preferred Stock, and CEO/CFO certifications[192] - XBRL (Extensible Business Reporting Language) information is furnished but not filed for purposes of certain sections of the Securities Act of 1933 and Securities Exchange Act of 1934[193] Signatures The report is signed by Bridgeline Digital, Inc.'s President and CEO, Roger Kahn, and CFO, Thomas R. Windhausen, on August 14, 2025 - The report is signed by Roger Kahn, President and Chief Executive Officer, and Thomas R. Windhausen, Chief Financial Officer, on August 14, 2025[196]